EXHIBIT 3.4
ATLANTA RESIDUALS COMPANY, LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
This Agreement is made as of 12th day of June, 2001 by and among
Atlanta Residuals Company, LLC (the "LLC"), and SYNAGRO - WWT, Inc. ("SYNAGRO"),
Xxxx X. Xxxxx & Associates, P.C. ("Xxxxx") and Xxxxxxx Operating Company
("Xxxxxxx"), (such persons and their respective successors in interests being
hereinafter referred to individually as "Member" or collectively as "Members").
WHEREAS, the LLC has been formed as a limited liability company under
the Delaware Limited Liability Company Act (as amended from time to time, the
"Act") on the 12th day of June, 2001; and
WHEREAS, the Members wish to set out fully their respective rights,
obligations and duties regarding the LLC and its assets and liabilities;
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein, the parties hereby agree as follows:
ARTICLE 1 - Organization and Powers
1.01 Organization. The LLC has been formed by the filing of its
Certificate of Formation with the Secretary of State of Delaware pursuant to the
Act. The Certificate of Formation may be restated by the Members as provided in
the Act or amended by the Members to change the address of the office of the LLC
in Delaware and the name and address of its resident agent in Delaware or to
make corrections required by the Act. Other additions to or amendments of the
Certificate of Organization shall be authorized by the Members as provided in
Section 2.07. The Certificate of Formation as so amended from time to time, is
referred to herein as the "Certificate."
1.02 Purposes and Powers. The business activity and purposes of the LLC
shall be limited to performing the services described in the bid documents
annexed hereto as Exhibit 1.02 and any activities related thereto or useful in
connection therewith. The LLC shall possess and may exercise all of the powers
and privileges granted by the Act or which may be exercised by any person,
together with any powers incidental thereto, so far as such powers or privileges
are necessary or convenient to the conduct, promotion or attainment of the
business purposes or activities of the LLC, including without limitation the
following powers:
(a) to purchase, receive, take, lease or otherwise acquire,
own, hold, improve, maintain, use or otherwise deal in and with, sell, convey,
lease, exchange, transfer or otherwise dispose of, mortgage, pledge, encumber or
create a security interest in all or any of its real or personal property, or
any interest therein, wherever situated.
(b) to borrow or lend money or obtain or extend credit and
other financial accommodations, to invest and reinvest its funds in any type of
security or obligation of or interest in any public, private or governmental
entity, and to give and receive interests in real and personal property as
security for the payment of funds so borrowed, loaned or invested;
(c) to make contracts, including contracts of insurance, incur
liabilities and give guaranties, including without limitation, guaranties of
obligations of other persons who are interested in the LLC or in whom the LLC
has an interest;
(d) to appoint one or more Managers of the LLC, to employ
officers, employees, agents and other persons, to fix the compensation and
define the duties and obligations of such personnel, to establish and carry out
retirement, incentive and benefit plans for such personnel, and to indemnify
such personnel to the extent permitted by this Agreement and the Act;
(e) to make donations irrespective of benefit to the LLC for
the public welfare or for community, charitable, religious, educational,
scientific, civic or similar purposes; and
(f) to institute, prosecute, and defend any legal action or
arbitration proceeding involving the LLC, and to pay, adjust, compromise,
settle, or refer to arbitration any claim by or against the LLC or any of its
assets.
1.03 Principal Place of Business. The principal office and place of
business of the LLC shall initially be 000 Xxxxxxxx Xxx XX Xxxxxxx, Xxxxxxx. The
Members may change the principal office or place of business of the LLC at any
time and may cause the LLC to establish other offices or places of business.
1.04 Registered Agent. The LLC's agent for service of process in the
State of Delaware shall be the Corporation Service Company, 0000 Xxxxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, or such other agent as the Members
shall designate from time to time.
1.05 Fiscal Year. The fiscal year of the LLC shall end on December 31
in each year.
1.06 Qualification in Other Jurisdictions. The Members shall cause the
LLC to be qualified or registered under applicable laws of any jurisdiction in
which the LLC transacts business and shall be authorized to execute, deliver and
file any certificates and documents necessary to effect such qualification or
registration, including without limitation the appointment of agents for service
of process in such jurisdictions.
ARTICLE 2 - Members
2.01 Members. The initial Members of the LLC and their addresses shall
be listed on Schedule A and said schedule shall be amended from time to time by
the Members to reflect the withdrawal of Members or the admission of additional
Members pursuant to this Agreement. The Members shall constitute a single class
or group of Members of the LLC for all purposes of the Act, unless otherwise
explicitly provided herein. Schedule A shall constitute the record list of the
Members for all purposes of this Agreement.
2.02 Management. The LLC shall be Member managed. The Members shall
have the authority to (i) exercise all powers and privileges granted by the Act
or any other law or this Agreement, together with any powers incidental thereto,
so far as such powers are necessary or convenient to the conduct, promotion, or
attainment of the business, trade, purposes or activities
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of the LLC and (ii) to take any other action not prohibited under the Act, any
applicable law or this Agreement.
2.03 Compliance with Securities Laws and Other Laws and Obligations.
Each Member hereby represents and warrants to the LLC and acknowledges that (a)
it has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of an investment in the LLC and
making an informed investment decision with respect thereto, (b) it is able to
bear the economic and financial risk of an investment in the LLC for an
indefinite period of time and understands that it has no right to withdraw and
have its interest repurchased by the LLC, (c) it is acquiring an interest in the
LLC for investment only and not with a view to, or for resale in connection
with, any distribution to the public or public offering thereof, (d) it
understands that the equity interests in the LLC have not been registered under
the securities laws of any jurisdiction and cannot be disposed of unless they
are subsequently registered and/or qualified under applicable securities laws
and the provisions of this Agreement have been complied with and (e) if it is an
entity, the execution, delivery and performance of this Agreement do not require
it to obtain any consent or approval that has not been obtained and do not
contravene or result in a default under any provision of any existing law or
regulation applicable to it, any provision of its charter, by-laws or other
governing documents (if applicable) or any agreement or instrument to which it
is a party or by which it is bound.
2.04 Admission of New Members. Additional persons may be admitted to
the LLC as Members and may participate in the profits, losses, distributions,
allocations and capital contributions of the LLC upon such terms as are
established by the Members, by amendment of this Agreement by unanimous vote of
the Members provided that such admission does not violate the terms of the bid
documents annexed hereto as Exhibit 1.02 and all regulations, ordinances and
other laws applicable thereto. New Members shall be admitted at the time when
all conditions to their admission have been satisfied, as determined by the
Members, and their identity, Membership Interests (as defined in Section 2.05)
and Contributions (if any) under Section 5.02 have been established by amendment
of Schedule A. Existing Members shall have no preemptive or similar right to
subscribe to the purchase of new Membership interests in the LLC.
2.05 Meetings of Members.
(a) Meetings of Members may be called for any proper purpose
at any time by the holders of five percent (5%) or more of the Membership
Interests. The Members calling the meeting shall determine the date, time and
place of each meeting of Members, and written notice thereof shall be given to
each Member not less than ten days or more than 60 days prior to the date of the
meeting. Notice shall be sent to Members of record on the date when the meeting
is called. The business of each meeting of Members shall be limited to the
purposes described in the notice. A written waiver of notice, executed before or
after a meeting by a Member or its authorized attorney shall be deemed
equivalent to notice of the meeting. Any Member wishing to reschedule a meeting
shall have one opportunity to reschedule a meeting by notifying the other
Members within four days after receiving notice of the meeting. In the event
such a notice to reschedule is timely provided, the Members calling the meeting
shall select an alternative date
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for the meeting, and written notice thereof shall be given to each Member not
less than five days prior to the rescheduled date of the meeting.
(b) Persons holding a majority of the Membership Interests
shall constitute a quorum for the transaction of any business at a meeting of
Members. Members may attend a meeting in person or by proxy. Members may also
participate in a meeting by means of conference telephone or similar
communications equipment that permits all Members present to hear each other. If
less than a quorum of the Members is present, the meeting may be adjourned by
the chairman to a later date, time and place, and the meeting may be held as
adjourned without further notice. When an adjourned meeting is reconvened, any
business maybe transacted that might have been transacted at the original
meeting.
(c) The Members shall make available at any meeting of Members
and for a period of ten days prior thereto a complete list of Members entitled
to vote at such meeting or any adjournment thereof. The list shall reflect the
current names and addresses of each Member and their Membership Interests and
shall be subject to inspection by any Member at the meeting and during the
ten-day period prior thereto at the principal office of the LLC.
(d) The Members shall elect from representatives of the
Membership a chairman of the meeting. The chairman shall determine the order of
business and the procedures to be followed at each meeting of Members.
2.06 Action Without a Meeting. There is no requirement that the Members
hold a meeting in order to take action on any matter. Any action required or
permitted to be taken by the Members may be taken without a meeting if one or
more written consents to such action shall be signed by all Members of record.
2.07 Voting Rights. Unless otherwise required by the Act, all actions,
approvals and consents to be taken or given by the Members under the Act, this
Agreement or otherwise shall require the affirmative vote or written consent of
Members holding a majority of the percentage interests of Members in the profits
and losses of the LLC as specified on Schedule A (herein the "Membership
Interests").
2.08 Limitation of Liability of Members. Except as otherwise provided
in the Act, no Member of the LLC shall be obligated personally for any debt,
obligation or liability of the LLC or of any other Member, whether arising in
contract, tort or otherwise, solely by reason of being a Member of the LLC.
Except as otherwise provided in the Act, by law or expressly in this Agreement,
no Member shall have any fiduciary or other duty to another Member with respect
to the business and affairs of the LLC, and no Member shall be liable to the LLC
or any other Member for acting in good faith reliance upon the provisions of
this Agreement. No Member shall have any responsibility to restore any negative
balance in its Capital Account (as defined in Section 5.01) or to contribute to
or in respect of the liabilities or obligations of the LLC or return
distributions made by the LLC except as required by the Act or other applicable
law; provided, however, that (i) Members are responsible for their failure to
make required Contributions under Section 5.02, and (ii) the Members must
maintain Capital Account balances in accordance with Section 5.01. The failure
of the LLC to observe any formalities or requirements relating to the
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exercise of its powers or the management of its business or affairs under this
Agreement or the Act shall not be grounds for making its Members responsible for
the liabilities of the LLC.
2.09 Passive Membership. If a Member elects to become a Passive Member,
then starting on the first day of the month following written notification to
all other Members of the LLC of this intention, notwithstanding anything else
contained in this Agreement, the Passive Member will no longer participate in
the operations of the LLC or be entitled to or receive any salary or
distributions in accordance with the provisions of this Section.
(a) When a Member elects to become a Passive Member, it will
not be allowed to vote or otherwise participate in the management of the LLC or
in its day to day operations, and it will not be allowed to determine the
methods and manner of performance of the LLC.
(b) When a Member elects to become a Passive Member, it will
not receive any net profits or net losses from the LLC pursuant to Article 6 and
its share of any net profits or net losses shall be divided proportionally among
the non-Passive Members.
(c) When a Member elects to become a Passive Member, it will
not be entitled to receive any distributions of assets pursuant to Article 6 and
its share of any distributions of assets shall be divided proportionally among
the non-Passive Members.
(d) A Member's election to become a Passive Member pursuant to
this Section does not otherwise affect its Membership Interest in the LLC.
(e) No Member may elect to become a Passive Member if such
election would cause the LLC to violate any contractual obligation owed to, or
legal requirement of, the City of Atlanta.
(f) The election to become a Passive Member may be revoked by
the Passive Member upon no fewer than 30 days advance written notice to all
non-Passive Members, effective upon the first day of the full calendar month
following the expiration of the 30 day notice period. For purposes of this
Section, "Passive Member" means a Member who has elected to relinquish all
personal participation in the day to day operation of the Company.
2.10 Rights to Information. Members shall have the right to receive
upon request a copy of the Certificate and of this Agreement, as amended from
time to time, and such other information regarding the LLC as is required by the
Act, subject to reasonable conditions and standards established by the other
Members, as permitted by the Act, which may include, without limitation,
withholding or restrictions on the use of confidential information.
2.11 Reports. Within 120 days after the end of each fiscal year of the
LLC, Synagro shall cause to be prepared and sent to all Members an audited
financial report of the LLC including a balance sheet, a profit and loss
statement and, unless the profit and loss statement is prepared on a cash basis,
a statement of changes in financial position. Within 90 days after the end of
each fiscal year the Members shall furnish to all Members such information as
may be needed to permit Members to file their federal income tax returns and any
required state income tax returns. The cost of such reports shall be an expense
of the LLC.
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2.12 Reliance by Third Parties. Any person dealing with the LLC or any
Member may rely upon a certificate signed by any Member as to (i) the identity
of any Members; (ii) any factual matters relevant to the affairs of the LLC;
(iii) the persons who are authorized to execute and deliver any document on
behalf of the LLC; or (iv) any action taken or omitted by the LLC or any Member.
2.13 Obligation of Members. The specific obligations of each Member to
the LLC are to be set forth in separate sub-contracting agreements between each
Member and the LLC, which agreements are to be annexed to this Agreement as
Exhibit 2.13.
ARTICLE 3 - Indemnification
3.01 Right to Indemnification. Except as limited by law and subject to
the provisions of this Article, the LLC shall indemnify each of its Members
against all expenses incurred by them in connection with any proceeding in which
a Member is involved as a result of serving in such capacity, except that no
indemnification shall be provided for a Member regarding any matter as to which
it shall be finally determined that said Member did not act in good faith and in
the reasonable belief that its action was in the best interests of the LLC.
Subject to the foregoing limitations, such indemnification may be provided by
the LLC with respect to a proceeding in which it is claimed that a Member
received an improper personal benefit by reason of its position, regardless of
whether the claim arises out of the Member's service in such capacity, except
for matters as to which it is finally determined that an improper personal
benefit was received by the Member.
3.02 Award of Indemnification. The determination of whether the LLC is
authorized to indemnify a Member hereunder and any award of indemnification
shall be made in each instance (a) by independent legal counsel appointed by the
Members, or (b) by the holders of a majority of the Membership Interests of the
Members who are not parties to the proceeding in question. The LLC shall be
obliged to pay indemnification applied for by a Member unless there is an
adverse determination (as provided above) within forty-five (45) days after the
application. If indemnification is denied, the applicant may seek an independent
determination of its right to indemnification pursuant to Section 13.11 hereof,
and in such event, the LLC shall have the burden of proving that the applicant
was ineligible for indemnification under this Article. Notwithstanding the
foregoing, in the case of a proceeding by or in the right of the LLC in which a
Member is adjudged liable to the LLC, indemnification hereunder shall be
provided to said Member only upon a determination by a court having jurisdiction
that in view of all the circumstances of the case, said Member is fairly and
reasonably entitled to indemnification for such expenses as the court shall deem
proper.
3.03 Successful Defense. Notwithstanding any contrary provisions of
this Article, if a Member has been wholly successful on the merits in the
defense of any proceeding in which it was involved by reason of its position as
Member or as a result of serving in such capacity (including termination of
investigative or other proceedings without a finding of fault on the part of the
Member), the Member shall be indemnified by the LLC against all expenses
incurred by the Member in connection therewith.
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3.04 Advance Payments. Except as limited by law, expenses incurred by a
Member in defending any proceeding, including a proceeding by or in the right of
the LLC, shall be paid by the LLC to the Member in advance of final disposition
of the proceeding upon receipt of its written undertaking to repay such amount
if the Member is determined pursuant to this Article or adjudicated to be
ineligible for indemnification, which undertaking shall be an unlimited general
obligation but need not be secured and may be accepted without regard to the
financial ability of the Member to make repayment; provided, however, that no
such advance payment of expenses shall be made if it is determined pursuant to
Section 3.02 of this Article on the basis of the circumstances known at the time
(without further investigation) that the Member is ineligible for
indemnification:
3.05 Definitions. For purposes of this Article:
"expenses" means all expenses, including attorneys' fees and
disbursements, actually and reasonably incurred in defense of a proceeding or in
seeking indemnification under this Article, and except for proceedings by or in
the right of the LLC or alleging that a Member received an improper personal
benefit, any judgments, awards, fines, penalties and reasonable amounts paid in
settlement of a proceeding; and
"proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, and any claim which could be the subject of a proceeding.
3.06 Insurance. The LLC shall have power to purchase and maintain
insurance on behalf of any Member, officer, agent or employee against any
liability or cost incurred by such person in any such capacity or arising out of
its status as such, whether or not the LLC would have power to indemnify against
such liability or cost.
3.07 Intentionally Deleted.
3.08 Heirs and Personal Representatives. The indemnification provided
by this Article shall inure to the benefit of the heirs and personal
representatives of each Member.
3.09 Non-Exclusivity. The provisions of this Article shall not be
construed to limit the power of the LLC to indemnify its Members, officers,
employees or agents to the full extent permitted by law or to enter into
specific agreements, commitments or arrangements for indemnification permitted
by law. The absence of any express provision for indemnification herein shall
not limit any right of indemnification existing independently of this Article.
3.10 Amendment. The provisions of this Article may be amended or
repealed in accordance with Section 13.04; however, no amendment or repeal of
such provisions that adversely affects the rights of a Member under this Article
with respect to its acts or omissions at any time prior to such amendment or
repeal, shall apply to said Member without its consent.
ARTICLE 4 - Conflicts of Interest
4.01 Transactions with Interested Persons. Unless entered into in bad
faith, no contract or transaction between the LLC and one or more of its
Members, or between the LLC and any
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other corporation, partnership, association or other organization in which one
or more of its Members have a financial interest or are directors, partners,
Managers or officers, shall be voidable solely for this reason or solely because
said Member was present or participated in the authorization of such contract or
transaction if.
(a) the material facts as to the relationship or interest of
said Member and as to the contract or transaction were disclosed or known to the
other Members and the contract or transaction was authorized by the
disinterested Members; or
(b) the contract or transaction was fair to the LLC as of the
time it was authorized, approved or ratified by the disinterested Members;
and no Member interested in such contract or transaction, because of such
interest, shall be considered to be in breach of this Agreement or liable to the
LLC, or Member, or any other person or organization for any loss or expense
incurred by reason of such contract or transaction or shall be accountable for
any gain or profit realized from such contract or transaction.
4.02 Outside Businesses. Any Member may engage or have an interest in
other business ventures which are similar to or competitive with the business of
the LLC, and the pursuit of such ventures, even if competitive, shall not be
deemed wrongful or improper or give the LLC, or the other Members any rights
with respect thereto. No Member shall be obligated to present an investment
opportunity to the LLC even if it is similar to or consistent with the business
of the LLC, and such Member shall have a right to take for his own account or
recommend to others any such investment opportunity.
ARTICLE 5 - Capital Accounts and Contributions
5.01 Capital Accounts.
(a) There shall be established on the books of the LLC a
single capital account (a "Capital Account") for each Member.
(b) The Capital Account of each Member (regardless of the time
or manner in which such Member's interest was acquired) shall be maintained in
accordance with the rules of Section 704(b) of the Code (together with Section
1.704-1(b)(2)(iv) of the Treasury Regulations). Adjustments shall be made to the
Capital Accounts for distributions and allocations as required by the rules of
Section 704(b) of the Code and the Treasury Regulations thereunder. In general,
a Capital Account shall be:
(1) increased by (i) the amount of money contributed
by the Member to the LLC (including the amount of any LLC liabilities that are
assumed by such Member other than in connection with the distribution of LLC
property as described in Treasury Regulations Sections 1.704-1(b)(2)(iv)(b) and
(c)), (ii) the fair market value of property contributed by the Member to the
LLC (net of liabilities secured by such contributed property that the LLC is
considered to assume or take subject to under Section 752 of the Code), and
(iii) except as provided in paragraph (4) below, allocations to the Member of
LLC profits and gain for federal income tax purposes (or items thereof),
including profits and gain exempt from taxation; and
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(2) decreased by (i) the amount of money distributed
to the Member by the LLC (including the amount of such Member's individual
liabilities that are assumed by the LLC (other than in connection with
contributions of property to the LLC as described in Treasury Regulations
Section 1.704-1(b)(2)(iv)(b) and (c)), (ii) the fair market value of property
distributed to the Member by the LLC (net of liabilities secured by such
distributed property that such Member is considered to assume or take subject to
under Section 752 of the Code), (iii) allocations to the Member of expenditures
of the LLC not deductible in computing the LLC's taxable income and not properly
chargeable to capital, and (iv) except as provided in paragraph (4) below,
allocations to the Member of LLC loss and deductions for federal income tax
purposes (or items thereof);
If there is a transfer of all or a part of an interest in the LLC by a Member,
the Capital Account of the transferor that is attributable to the transferred
interest shall carry over to the transferee of such Member. Notwithstanding any
provision contained herein to the contrary, no Member shall be required to
restore any negative balance in its Capital Account, except as specifically
required under this Agreement.
5.02 Contributions. Each Member shall make the contributions to the
capital of the LLC (herein "Contributions") specified on Schedule A. All
Contributions shall be paid in cash unless otherwise specified on Schedule A or
agreed to by the Members. Except as set forth on Schedule A, no Member shall be
entitled or required to make any contribution to the capital of the LLC;
however, the LLC may borrow from its Members as well as from banks or other
lending institutions to finance its working capital or the acquisition of assets
upon such terms and conditions as shall be approved by the Members, and any such
borrowing from Members shall not be considered Contributions or reflected in
their Capital Accounts. The value of all non-cash Contributions made by Members
shall be set forth on Schedule A. No Member shall be entitled to any interest or
compensation with respect to its Contribution or any services rendered on behalf
of the LLC except as specifically provided in this Agreement or approved by the
other Members. No Member shall have any liability for the repayment of the
Contribution of any other Member and each Member shall look only to the assets
to the LLC for return of its Contribution.
ARTICLE 6 - Distributions and Allocations
6.01 Allocation of Profit, Loss, Cash Flow and Proceeds of Sale or
Refinancing. The net profits, net losses, net cash flow and net proceeds of any
sale or refinancing of any property of the LLC, except upon liquidation of the
LLC, shall be allocated among the Members according to the Membership Interests
of each Member. Upon liquidation, distributions shall be made to the Members in
the amount of the positive balance in their respective Capital Accounts and then
any remaining Assets shall be distributed according to the Membership Interest
of each Member. Subject to the foregoing, distributions to the Members shall be
made at such times and in such amounts as the Members shall determine.
6.02 Determination of Profit and Loss. Net profits and net losses
shall, for both accounting and tax purposes, be as determined under the Internal
Revenue Code for reporting on the LLC's U.S. federal income tax return. For tax
purposes, all items of depreciation, gain, loss, deduction or credit in respect
of the LLC shall be determined in accordance with the Internal
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Revenue Code and, except to the extent otherwise required by the Internal
Revenue Code, allocated to and among the Members in accordance with their
respective Membership Interests.
6.03 Tax Matters Partner. SYNAGRO - WWT, Inc. shall be the "tax matters
partner" of the LLC for purposes of the Internal Revenue Code.
6.04 Distribution of Assets in Kind. No Member shall have the right to
require any distribution of any assets of the LLC to be made in cash or in kind.
If the Members determine to distribute assets of the LLC in kind, such assets
shall be distributed on the basis of their fair market value as determined by
the Members. Any Member entitled to any interest in such assets shall, unless
otherwise determined by the Members, receive separate assets of the LLC, and not
an interest as tenant-in-common with other Members so entitled in each asset
being distributed. Distributions in kind need not be made on a pro-rata basis
but may be made on any basis which the Members determine to be reasonable under
the circumstances.
6.05 Limitation on Distributions. No Member shall be entitled to any
distribution or payment with respect to its interest in the LLC upon the
resignation or withdrawal of such Member except to the extent otherwise provided
in this Agreement. Distributions may be limited and repayable as provided in the
Act.
ARTICLE 7 - Transfers of Interests
7.01 General Restrictions on Transfer. Except as provided in Section
7.05 below, no Member may sell, assign, give, pledge, hypothecate, encumber or
otherwise transfer, including without limitation, any assignment or transfer by
operation of law or by order of court, such Member's interest in the LLC or any
part thereof, or in all or any part of the assets of the LLC, without the
affirmative vote of the Members, and any purported assignment without such
consent shall be null and void and of no effect whatsoever.
The LLC and its Members shall be entitled to treat the record owner of
an interest in the LLC as the absolute owner thereof in all respects, and shall
incur no liability for distributions of cash or other property made in good
faith to such owner until such time as a written assignment of such interest has
been received and accepted by the Members and recorded on the books of the LLC.
The LLC may refuse to accept and record an assignment until the end of the next
successive quarterly accounting period of the LLC.
7.02 Requirements for Transfer. Every transfer of an interest in the
LLC permitted hereunder shall be subject to the following requirements:
(a) The transferee shall establish that the proposed transfer
will not cause or result in a breach of any agreement binding upon the LLC or
any violation of law, including without limitation, the documents annexed hereto
as Exhibit 1.02 and federal or state securities laws, and that the proposed
transfer would not cause the LLC to be an investment company as defined in the
Investment Company Act of 1940, as amended;
(b) The transferee shall establish that the transferee is
financially responsible and of good character and that the transfer would not
adversely affect the classification of the LLC as a partnership for federal tax
purposes, terminate its classification as a partnership under
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Code Section 708, or have a substantial adverse effect with respect to federal
income taxes payable by the LLC; and
(c) The transferee shall execute a counterpart of this
Agreement and such other documents or instruments as may be required by the LLC
to reflect the provisions hereof.
Until the foregoing requirements are met, the LLC need not recognize
the transferee for any purpose under this Agreement.
7.03 Effect of Transfer.
(a) If the transferee is admitted as a Member or is already a
Member, the Member transferring its interest shall be relieved of liability with
respect to the transferred interest arising or accruing under this Agreement on
or after the effective date of the transfer, unless the transferor affirmatively
assumes such liability; provided, however, that the transferor shall not be
relieved of any liability for prior distributions unless the transferee
affirmatively assumes such liabilities.
(b) Any person who acquires in any manner an interest or any
part thereof in the LLC, whether or not such person has accepted and assumed in
writing the terms and provisions of this Agreement or been admitted as a Member,
shall be deemed by the acquisition of such interests to have agreed to be
subject to and bound by all of the provisions of this Agreement with respect to
such interest, including without limitation, the provisions hereof with respect
to any subsequent transfer of such interest.
7.04 Prohibited Transfers. Any transfer in violation of any provisions
of this Agreement shall be null and void and ineffective to transfer any
interest in the LLC and shall not be binding upon or be recognized by the LLC,
and any such transferee shall not be treated as or deemed to be a Member for any
purpose. In the event that any Member shall at any time transfer its interest in
violation of any of the provisions of this Agreement, the LLC and the other
Members, in addition to all rights and remedies at law and equity, shall have
and be entitled to an order restraining or enjoining such transaction, it being
expressly acknowledged and agreed that damages at law would be an inadequate
remedy for a transfer in violation of this Agreement.
7.05 Right of First Refusal.
(a) If a Member (the "Transferring Member") desires to sell or
transfer all or any part of his ownership interest in the LLC ("Interest") to
any person pursuant to a Bona Fide Offer, Transferring Member must promptly and
prior to consummation of the sale, send written notice to the remaining Members.
The notice shall contain a statement setting forth the price and all conditions
of such offer, and the name and address of the maker of such offer. If the maker
of the offer is an agent or nominee, the notice shall also contain the name and
address of the principal involved.
(b) For a period of ninety (90) days following the giving of
notice to the remaining Members, one or more of the remaining Members may elect
to purchase or arrange for the purchase of the Transferring Member's Interest
proposed to be sold by the Transferring Member (or any other mutually agreed
upon share as long as all of the Transferring Member's
11
interest is purchased) for a purchase price equal to the lesser of (i) the
purchase price contained in the Bona Fide Offer, or (ii) the Membership Interest
of the Transferring Member multiplied by the appraised value of the LLC pursuant
to an independent appraisal performed not more than ninety (90) days prior to
the date of the Bona Fide Offer. Such appraisal shall be paid for equally by the
remaining Members, or paid for by the LLC if unanimously agreed to by the
remaining Members. The purchase price shall be payable, at the remaining
Members' option, either upon the same terms as are contained in the Bona Fide
Offer or in one hundred and twenty (120) equal monthly installments of principal
and interest, bearing interest at the Wall Street Journal prime rate, as it
shall fluctuate from time to time. Installment payments shall be evidenced by a
promissory note (the "Promissory Note"). Payments under the Promissory Note
shall commence one month after the acquisition of the Transferring Member's
Interest and shall be on the same day of each month thereafter to maturity. The
Promissory Note shall:
(i) provide for acceleration of all unpaid
installments of principal and interest upon default in the payment of any
installment thereunder that is not cured within 60 days of notice of default.
(ii) give the maker the option of prepayment, in
whole or in part, at any time, without penalty; and
(iii) provide for the recovery by the holder of all
costs of collection in the event of a default which is not cured within 60 days
of notice of such default. The Promissory Note shall also be secured by a pledge
of the Transferring Member's Interest, in a form reasonably satisfactory to
counsel for the Transferring Member.
(c) If one or all of the remaining Members timely elect to
purchase the Interest proposed to be sold by the Transferring Member, the
purchasing Members must close such purchase within thirty (30) days after the
day of giving notice of their election to purchase.
(d) If the remaining Members do not give the Transferring
Member timely notice of their intention to purchase the Interest proposed to be
sold, the LLC shall have the option (without the vote of the Transferring Member
to the extent he has a vote), for thirty (30) days after the expiration of the
remaining Members' ninety day election period in paragraph (b) above, to
purchase the Interest proposed to be sold at the same purchase price and on the
same terms as were available to the remaining Members.
(e) If LLC does not give timely notice of its intention to
purchase the interest proposed to be sold, the Transferring Member may sell such
interest to the person(s) who made the Bona Fide Offer pursuant to the same
terms and conditions contained in the Bona Fide Offer; provided, however, that
as a condition to such transfer, the transferee shall agree in writing to be
bound by the terms and conditions of this Agreement. If such sale is not
consummated in accordance with the terms and conditions of the initial Bona Fide
Offer within sixty (60) days of the expiration of the LLC's thirty (30) day
option period, the Interest proposed to be sold by the Transferring Member shall
again be subject to the transfer restrictions of this Agreement.
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(f) At the closing, the Transferring Member shall submit a
written resignation pursuant to which he (or his representative) shall resign as
a Member and all other official positions within the LLC.
For purposes of this Section, the following definitions will apply:
"Bona Fide Offer" means an offer in writing, signed by the offeror, in
a form legally enforceable against an offeror who is financially and legally
capable of carrying out the terms of the Bona Fide Offer in full compliance with
this Agreement. No offer shall be a Bona Fide Offer unless it proposes a
transfer or sale of an Interest to an entity or person in compliance with the
Minority Business Enterprise requirements of the City of Atlanta.
ARTICLE 8 - Redemption of Interests of Certain Members
At any time during the thirty (30) day period following the occurrence
of any of the following events, the LLC may in its sole discretion, by notice in
writing sent to the Member described below, expel such Member and redeem all,
but not less than all, of the Membership Interests then owned by such Member:
(a) the dissolution or termination of the existence of a
Member or the bankruptcy of a Member;
(b) a material breach by a Member of any provision of this
Agreement provided that the Member has been given written notice of such breach
and has failed to cure such breach within thirty days from the date of such
notice;
(c) a material breach by a Member or any affiliate of such
Member of any provision of any agreement entered into by such Member or
affiliate with the LLC, provided that the Member or affiliate has been given
written notice of such breach and has failed to cure such breach within thirty
days from the date of such notice;
(d) the termination of any Member's certification as a
minority business enterprise or any equivalent certification if such
certification was or is necessary to obtain or maintain the contracts and
business described in the bid documents annexed hereto as Exhibit 1.02.
(e) fraud on or theft from the LLC, or commission of, or
indictment, charge or conviction of, any felony, or deliberate and material act
in opposition to the LLC's business interest.
The consideration to be paid by the LLC to such expelled Member in
exchange for its Membership Interest shall be the balance of such Member's
capital account at the end of the then most recent calendar quarter.
ARTICLE 9 - Terms of Payment
With respect to any redemption pursuant to Article 8, the LLC shall pay
against the purchase price an amount of funds in cash not less than twenty-five
percent (25%) of the total
13
purchase price. Any remaining balance of any purchase price shall be paid in the
form of a negotiable promissory note of the LLC calling for equal quarterly
payments of principal over three (3) years accompanied by interest at the Wall
Street Journal prime rate, as it shall fluctuate from time to time.
ARTICLE 10 - Failure to Cooperate with Transfer
If a Member shall become obligated to sell Membership Interests to the
LLC hereunder and shall fail to deliver such interests in accordance with the
terms of this Agreement, each Member agrees that the LLC may, ten (10) days
after giving written notice to such person, at its option exercised by vote of
the Members, in addition to all other remedies it may have, send to said Member,
the purchase price for such Interest, in the form of cash and promissory notes
as herein specified. Thereupon the LLC shall cancel on its books said Interest
and all of the former Member's rights in and to such Interest shall terminate.
ARTICLE 11 - Proprietary Information
Except as required in the performance of its duties on behalf of the
LLC, each Member agrees that it will not at any time while it is associated with
the LLC or thereafter, divulge or disclose to anyone outside of the LLC any
information not already lawfully available to the public concerning proprietary
information of the LLC or any research, know-how, marketing data, operating or
cost data, customer or supplier lists, proposals, bids, price lists or any other
confidential information of the LLC or its customers.
ARTICLE 12 - Dissolution, Liquidation, and Termination
12.01 Dissolution. The LLC shall dissolve and its affairs shall be
wound up upon the first to occur of the following:
(a) the affirmative vote of the Members occurring after the
completion of the project described in Exhibit 1.02;
(b) the termination of the membership of a Member due to
expulsion by the LLC; the dissolution or termination of the existence of a
Member; or the bankruptcy of a Member; provided, however, that the LLC maybe
continued with the consent of the remaining Members as provided in Section 2.07,
such consent to be given within ninety (90) days following such event;
(c) the entry of a decree of judicial dissolution under the
Act; or
(d) the consolidation or merger of the LLC in which it is not
the resulting or surviving entity.
12.02 Liquidation. Upon dissolution of the LLC, the remaining Members
shall act as its liquidating trustee. The liquidating trustee shall proceed
diligently to liquidate the LLC, to wind up its affairs and to make final
distributions as provided in Section 6.01 and in the Act. The costs of
dissolution and liquidation shall be an expense of the LLC. Until final
distribution, the liquidating trustee may continue to operate the business and
properties of the LLC with all of the
14
power and authority of the Members. As promptly as possible after dissolution
and again after final liquidation, the liquidating trustee shall cause an
accounting of the LLC's assets, liabilities, operations and liquidating
distributions to be given to the Members.
12.03 Certificate of Cancellation. Upon completion of the distribution
of LLC assets as provided herein, the LLC shall be terminated, and the Members
shall file a Certificate of Cancellation with the Secretary of State of Delaware
under the Act, cancel any other filings made pursuant to Sections 1.01, 1.03 and
1.06, and take such other actions as may be necessary to terminate the existence
of the LLC.
ARTICLE 13 - General Provisions
13.01 Offset. Whenever the LLC is obligated to make a distribution or
payment to any Member, any amounts that Member owes the LLC may be deducted from
said distribution or payment.
13.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests, or consents required or permitted to be given
under this Agreement must be in writing and shall be deemed to have been given
(i) five (5) days after the date mailed by registered or certified mail,
addressed to the recipient, with return receipt requested, (ii) upon delivery to
the recipient in person or by courier, or (iii) upon receipt of a facsimile
transmission by the recipient. Such notices, requests and consents shall be
given (x) to Members at their addresses on Schedule A, or such other address as
a Member may specify by notice to all of the other Members, or (y) to the LLC at
the address of the principal office of LLC specified in Section 1.03. Whenever
any notice is required to be given by law, the Certificate or this Agreement, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
13.03 Entire Agreement. This Agreement constitutes the entire agreement
of the Members relating to the LLC and supersedes all prior contracts or
agreements with respect to the LLC, whether oral or written.
13.04 Amendment or Modification. This Agreement may be amended or
modified from time to time only by a written instrument signed by Members
holding a majority of the Membership Interests; provided, however, that (a) an
amendment or modification reducing a Member's Membership Interest or changing
adversely the rights of a Member with respect to distributions, allocations or
voting, (other than to reflect the admission of new Members or changes otherwise
provided by this Agreement) shall be effective only with that Member's consent;
(b) an amendment or modification to reflect the admission of a new Member who is
an assignee of an existing Member, shall be subject to approval as provided in
Section 2.07; (c) an amendment or modification increasing any liability of a
Member to the LLC or Members, or adversely affecting the limitation of the
liability of a Member with respect to the LLC, shall be effective only with that
Member's consent; (d) an amendment or modification reducing the required
percentage of Membership Interests for any consent or vote in this Agreement
shall be effective only with the consent or vote of Members having the
percentage of Membership Interests theretofore required; and (e) an amendment of
this section shall require the unanimous consent of the Members.
15
13.05 Binding Effect. Subject to the restrictions on transfers set
forth in this Agreement, this Agreement is binding on and inures to the benefit
of the parties and their respective heirs, legal representatives, successors and
assigns.
13.06 Governing Law; Severability. This Agreement is governed by and
shall be construed in accordance with the law of the State of Delaware,
exclusive of its conflict-of-laws principles. In the event of a conflict between
the provisions of this Agreement and any provision of the Certificate or the
Act, the applicable provision of this Agreement shall control, to the extent
permitted by law. If any provision of this Agreement or the application thereof
to any person or circumstance is held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of that provision shall be
enforced to the fullest extent permitted by law.
13.07 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and' perform any additional acts that may
be necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
13.08 Third-Party Beneficiaries. The provisions of this Agreement are
not intended to be for the benefit of any creditor or other person to whom any
debts or obligations are owed by, or who may have any claim against, the LLC or
any of its Members, except for Members in their capacities as such.
Notwithstanding any contrary provision of this Agreement, no such creditor or
person shall obtain any rights under this Agreement or shall, by reason of this
Agreement, be permitted to make any claim against the LLC or any Member.
13.09 Interpretation. For the purposes of this Agreement, terms not
defined in this Agreement shall be defined as provided in the Act; and all
nouns, pronouns and verbs used in this Agreement shall be construed as
masculine, feminine, neuter, singular, or plural, whichever shall be applicable.
Titles or captions of Articles and Sections contained in this Agreement are
inserted as a matter of convenience and for reference, and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any
provision hereof.
13.10 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document, and all counterparts shall be construed together and shall constitute
the same instrument.
13.11 Mediation and Arbitration. If at any time during the term of this
Agreement any dispute, difference, or disagreement shall arise upon or in
respect of this Agreement, or the meaning and construction hereof, after thirty
days written notice from any Member to the remaining Members, such Member may
request review and mediation before the Director of the Office of Contract
Compliance having jurisdiction over the project described on Exhibit 1.02. In
the absence of such a request or upon failure of such review and mediation to
produce agreement among the parties, every such dispute, difference, and
disagreement shall be referred to a single arbiter agreed upon by the parties,
or if no single arbiter can be agreed upon, an arbiter or arbiters shall be
selected in accordance with the rules of the American Arbitration Association
and such dispute, difference or disagreement shall be settled by arbitration in
accordance with the then
16
prevailing commercial rules of the American Arbitration Association. Judgment
upon the award rendered by the arbiter may be entered in any court having
jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date set forth above.
Attest: Atlanta Residuals Company, LLC
[Witness] By: /s/ Xxxx Rome
-------------------------------------------- ------------------------------------------------
Attest: Synagro - WWT, Inc.
[Witness] By: /s/ Xxxx Rome
-------------------------------------------- ------------------------------------------------
Attest: Xxxx X. Xxxxx and Associates, P.C.
[Witness] By: /s/ Xxxx X. Xxxxx
-------------------------------------------- ---------------------------------------
Attest: Xxxxxxx Operating Company
[Witness] By: /s/ Signature
-------------------------------------------- ------------------------------------------------
17
Schedule A
NAME AND ADDRESS CONTRIBUTION MEMBERSHIP
OF MEMBER: INTEREST
----------------------------------------------------------------------------------------
Synagro - WWT, Inc. $6,000 60%
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
----------------------------------------------------------------------------------------
Xxxx X. Xxxxx and Associates $500 5%
0000 Xxxxxx Xxxxxx Xxxx Xx. Xxxxxx X.X.
Xxxxxxxxxx, XX 00000
----------------------------------------------------------------------------------------
Xxxxxxx Operating Company $3,500 35%
000 Xxxxxxxx Xxx XX
Xxxxx 000
Xxxxxxx, XX 00000
