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OPERATING AGREEMENT
OF
SPECIALTIES ENVIRONMENTAL MANAGEMENT COMPANY, LLC
THIS OPERATING AGREEMENT is made and entered into this 18th day of
October, 1996, by and among Pine Tree Waste Inc., a Maine corporation with a
mailing address of X.X. Xxx 0000, Xxxxx Xxxxxxxx, Xxxxx 00000 ("Pine Tree") and
KTI Specialty Waste Services, Inc., a Maine corporation with a mailing address
of 000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("KTI") and is to take
effect on the date this Operating Agreement is executed ("the Effective Date").
WITNESSETH:
SPECIALTIES ENVIRONMENTAL MANAGEMENT COMPANY, LLC, (the "Company")
filed Articles of Organization with the Secretary of State's office on October
1, 1996, pursuant to the Act; and,
WHEREAS, the parties are entering into this Agreement to set forth
their respective rights and obligations with respect to each other and the
Company.
NOW THEREFORE, in consideration of the mutual agreements hereinafter
set forth and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1 In addition to the terms otherwise defined in this Operating
Agreement, the following terms shall have the following respective meanings:
(a) "Act". means the Maine Limited Liability Company Act, 31 M.R.S.A.
Section 601, et seq.,, and all amendments thereto.
(b) "Additional Member". A Person who becomes a Member (a) by acquiring
an Interest from the Company in accordance with the provisions of this
Agreement, or (b) by acquiring an Interest from an existing Member and
being admitted as a Member pursuant to Article VIII of this Agreement.
(c) "Adjusted Capital Account Deficit". Adjusted Capital Account
Deficit means, with respect to any Member, the deficit balance, if any,
in such Member's Capital Account as of the end of the relevant fiscal
period after giving effect to the following adjustments: (i) the credit
to such Capital Account
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of any amounts which such Member is obligated to restore under this
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Section 1.7042(g)(1) and
Treasury Regulations Section 1.704-2(i)(5); and (ii) the debit to such
Capital Account of the amounts described in Treasury Regulations
Section 1.704-l(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition
of Adjusted Capital Account Deficit is intended to comply with the
provisions of Treasury Regulations Section l.704-l(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
(d) "Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by, or under common
control with such Person, (ii) any Person owning or controlling ten
percent (10%) or more of the outstanding voting interests of such
Person, (iii) any officer, director, or general partner of such Person,
or (iv) any Person who is an officer, director, general partner,
trustee, or holder of ten percent (10%) or more of the voting interests
of any Person described in clauses (i) through (iii) of this sentence.
For purposes of this definition, the term "controls" "is controlled
by", or "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a person or entity, whether through the
ownership of voting securities, by contract or otherwise.
(e) "Agreement". This Operating Agreement, as amended from time to time
in accordance with its terms.
(f) "Appraisal". A determination of the Fair Value of an Interest made
in accordance the following procedure: The Fair Value of an Interest
shall be determined by a Qualified Appraiser acceptable to the selling
party or parties (collectively, "Seller") and the buying party or
parties (collectively,"Buyer"). Upon the occurrence of any event which
requires the parties to purchase and/or sell an Interest hereunder,
either the Buyer or Seller may give written notice to the other party
proposing a Qualified Appraiser. If within twenty (20) days thereof the
parties do not agree in writing on such proposed Qualified Appraiser
and are unable during such period to agree in writing on a different
Qualified Appraiser, each party shall designate one Qualified
Appraiser. The two Qualified Appraisers shall then submit their
respective written appraisals of the fair market value of the Company
determined pursuant to this Agreement to the Buyer and the Seller as
soon as practicable after their selection. If the values set forth in
the appraisals are equal to or within ten percent (10%) of the average
value of both such appraisals, then the fair market value shall be
equal to such average, and such determination shall be final and
binding.
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Otherwise, the two Qualified Appraisers shall mutually select and
appoint a third Qualified Appraiser, who shall determine which of the
two prior appraisals best reflects the fair market value. The decision
of the third Qualified Appraiser shall be final and binding. The Buyer
and the Seller shall bear equally the fees and expenses of the
Qualified Appraiser jointly named, but each party shall solely be
responsible for the fees and expenses of any Qualified Appraiser
selected by such party.
(g) "Articles of Organization" means the Articles of Organization of
the Company as filed with the Secretary of State as the same may be
amended from time to time by the Members.
(h) "Bankruptcy". Bankruptcy of a Member or a Member becoming Bankrupt
means any of the following:
(i) Such Member makes an assignment for the benefit of
creditors;
(ii) Such Member files a voluntary petition in bankruptcy;
(iii) Such Member becomes the subject of an order for relief
under the federal bankruptcy laws;
(iv) Such Member files a petition or answer seeking for the
Member any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
any statute, law or regulation;
(v) Such Member files an answer or other pleading admitting or
failing to contest the material allegations of a petition
filed against such Member in any proceeding under the
preceding clause (iv);
(vi) Such Member seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of such
Member or of all or any substantial part of the Member's
properties;
(vii) At the expiration of one hundred twenty (120) days after
the commencement of any involuntary proceeding against such
Member seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
any statute, law or regulation, if the proceeding has not been
dismissed; or
(viii) At the expiration of one hundred twenty (120) days
after the appointment without such Member's consent or
acquiescence of a trustee, receiver or liquidator of
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such Member or of all or any substantial part of such Member's
properties, if the appointment is not vacated or stayed, or at
the expiration of 120 days after the expiration of any stay,
if the appointment is not vacated.
(i) "Capital Account" means, as of any given date, the Capital
Contribution to the Company by a Member as adjusted up to the date in
question pursuant to Article III.
(j) "Capital Contributions" means the total amount of cash, tangible or
intangible property, or services which a Member or his predecessor in
interest has contributed or has agreed to contribute to the Company,
net of liabilities secured thereby that Company is considered to assume
or to be subject to under Section 752 of the Code.
(k) "Capital Interest" means the proportion that a Member's positive
Capital Account bears to the aggregate positive Capital Accounts of all
Members whose Capital Accounts have positive balances as may be
adjusted from time to time.
(l) "Code" means the Internal Revenue Code of 1986, as amended.
(m) "Company" means SPECIALTIES ENVIRONMENTAL MANAGEMENT COMPANY, LLC,
a Maine Limited Liability Company.
(n) "Deficit Capital Account" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end
of the taxable year, after giving effect to the following adjustments:
(i) credit to such Capital Account any amount which such
Member is obligated to restore under Section
1.704-1(b)(2)(ii)(c) of the Treasury Regulations, as well as
any addition thereto pursuant to the next to last sentence of
Sections 1.704-2(g)(1) and (i)(5) of the Treasury Regulations,
after taking into account thereunder any changes during such
year in partnership minimum gain attributable to any partner
nonrecourse debt (as determined under Section 1.704-2(i)(3) of
the Treasury Regulations); and
(ii) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury
Regulations.
This definition of Deficit Capital Account is intended to comply with
the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and 1.704-2,
and will be interpreted consistently with those provisions.
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(o) "Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable
with respect to any asset for such Fiscal Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such Fiscal Year,
Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such Fiscal Year
bears to such beginning adjusted tax basis; provided, however, that if
the adjusted basis for federal income tax purposes of an asset at the
beginning of such Fiscal Year is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable
method selected by the Manager(s).
(p) "Distributable Cash" means all cash, revenues and funds received by
the Company, less the sum of the following to the extent paid or set
aside by the Company: (i) all principal and interest payments on
indebtedness of the Company and all other sums paid to lenders; (ii)
all cash expenditures incurred incident to the normal operation of the
Company's business; (iii) such Reserves as the Managers deem reasonably
necessary to the proper operation of the Company's business.
(q) "Distribution". A direct or indirect transfer by the Company of
money or other property, other than an Interest, to or for the benefit
of the Members in respect of their Interests.
(r) "Entity" means any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business
trust, cooperative or association or any foreign trust or foreign
business organization.
(s) "Event of Withdrawal". An Event of Withdrawal as to a Member means
the occurrence of any of the following events, and shall not include
any other events:
(i) The Member withdraws by voluntary act from the Company,
regardless of whether such withdrawal is a breach of this
Agreement or occurs as a result of otherwise wrongful conduct
of the Member.
(ii) A Member Transfers all of the Member's Interest and the
Transferee or Transferees of such Interest become an
Additional Member or Members;
(iii) The Member becomes Bankrupt;
(iv) If such Member is an individual, (a) the death of the
Member or (b) the entry of an order by a court of
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competent jurisdiction adjudicating the Member incompetent to
manage the Member's person or estate;
(v) If the Member is a trust or is acting as a Member by
virtue of being a trustee of a trust, the termination of the
trust, but not merely a substitution of a new trustee;
(vi) If the Member is a limited liability company or a
partnership, the dissolution and commencement of winding up of
such limited liability company or partnership;
(vii) If the Member is a corporation, the filing of articles
of dissolution for the corporation or the revocation of its
charter and the lapse of time provided by the laws of the
state of incorporation without a reinstatement of its charter;
and
(viii) If the Member is an estate, the distribution by the
fiduciary of the estate's entire Interest.
(t) "Fair Value of an Interest". The fair value of a Member's Interest
which shall be equal to the value of the Company as a going concern, as
determined by Appraisal, multiplied by the Percentage Interest
represented by the Interest which is being valued. The value of the
Company shall be based on the assumption that all then existing
agreements between the Company and the Members and their Affiliates
will continue indefinitely.
(u) "Fiscal year" means the Company's fiscal year which shall be the
calendar year.
(v) "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value
of such asset, as determined by the contributing member and
the managers provided that the initial gross asset values of
the assets contributed to the company pursuant to Article III
hereof shall be as set forth on Schedule A and provided
further that if the determination of the fair market value of
any other contributed assets shall require the consent of a
Supermajority of the other members;
(ii) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values,
as determined by the Manager(s) as of the following times: (a)
the acquisition of an additional
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interest by any new or existing Member in exchange for more
than a de minimis contribution of property (including cash);
(b) the distribution by the Company to a Member of more than a
de minimis amount of property as consideration for a
Membership Interest; and (c) the liquidation of the Company
within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments
pursuant to clauses(a) and (b) above shall be made only if the
Manager(s) reasonably determine(s) that such adjustments are
necessary or appropriate to reflect the relative Economic
Interest of the Members in the Company;
(iii) The Gross Asset Value of any Company asset distributed
to any Member shall be adjusted to equal the gross fair market
value of such asset on the date of distribution as determined
by the distributee and the Manager(s), provided that, if the
distributee is a Manager, the determination of the fair market
value of the distributed asset shall require the consent of a
Supermajority of the Members; and
(iv) The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(v)
or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m)
and Article III and subparagraph (iv) under the definition of
Net Profits and Net Losses; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this definition
to the extent the Manager(s) determine(s) that an adjustment
pursuant to subparagraph (ii) of this definition is necessary
or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this
subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraph (i), (ii) or (iv) of this definition, then such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Profits and Net Losses.
(w) "KTI" - KTI Specialty Waste Services, Inc., a Maine corporation
located at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000.
(x) "Majority Interest" means one or more Interest of Members which
taken together exceed 50% of the aggregate of all Capital Interests.
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(y) "Manager" means a Person initially designated as such by this
Operating Agreement in accordance with Section 5.4 and their
successors.
(z) "Member" means each of the parties who executes a counterpart of
this Operating Agreement as a Member and each of the parties who may
hereafter become Members. To the extent a Manager has purchased
Membership Interests in the Company, he will have all the rights of a
Member with respect to such Membership Interests, and the term "Member"
as used herein shall include a Manager to the extent he has purchased
such Membership Interest in the Company.
(aa) "Net Cash Flow" means the Net Profits (or Net Losses) for the
Fiscal Year as shown on the Company's financial statement, including
dividends, capital gains, involuntary conversions, and gains or losses
from Section 1231 property, as defined in the Code:
(i) increased by the amount of Depreciation deductions taken
in computing such taxable income;
(ii) increased by any non-taxable income received by the
Company;
(iii) decreased by payments upon the principal of any
indebtedness, secured or unsecured, of the Company;
(iv) decreased by expenditures for the acquisition of
property, capital improvements, additions or replacements
(except to the extent financed through any Company
indebtedness, secured or unsecured); and
(v) increased or decreased as appropriate for changes in
reserves for additional acquisitions of property,
improvements, replacements, and such reserves for repairs and
to meet anticipated expenses or unexpected and unforeseen
expenses and for working capital as the Managers shall deem to
be reasonably necessary in the efficient conduct of the
Company's business, and any cash outlays not otherwise taken
into account in this definition.
(bb) "Net Profits" and "Net Losses" mean for each taxable year of the
Company an amount equal to the Company's net taxable income or loss for
such year as determined for federal income tax purposes (including
separately stated items) in accordance with the accounting method and
rules used by the Company and in accordance with Section 703 of the
Code with the following adjustments:
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(i) any items of income, gain, loss and deduction allocated to
Members pursuant to special allocations pursuant to Sections
4.4 - 4.10 shall not be taken into account in computing Net
Profits or Net Losses for purposes of this Operating
Agreement;
(ii) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing
Net Profits and Net Losses (pursuant to this definition) shall
be added to such taxable income or loss;
(iii) any expenditure of the Company described in Section
705(a)(2)(B) of the Code and not otherwise taken into account
in computing Net Profits and Net Losses (pursuant to this
definition) shall be subtracted from such taxable income or
loss; and
(iv) in the event the Gross Asset Value of any Company asset
is adjusted pursuant to clause (ii) or (iii) of the definition
of Gross Asset Value, the amount of such adjustment shall be
taken into account as gain or loss from the disposition of
such asset for purposes of computing Net Profits and Net
Losses;
(v) gain or loss resulting from any disposition of any Company
asset with respect to which gain or loss is recognized for
federal income tax purposes shall be computed with reference
to the Gross Asset Value of the asset disposed of,
notwithstanding that the adjusted tax basis of such asset
differs from its Gross Asset Value;
(vi) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year; and
(vii) to the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Section 734(b) of the Code of
Section 743(b) of the code is required pursuant to Section
1.7041(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken
into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Membership
Interest or Economic Interest, the amount of such adjustment
shall be treated as an item of gain (if the adjustment
decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of
computing Net Profits of Net Losses.
(cc) "Operating Agreement" means this Operating Agreement as originally
executed and as amended from time to time.
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(dd) "Partnership Minimum Gain". The amount of gain (of whatever
character), if any, determined by and computed in accordance with the
principles set forth in Treasury Regulations Section 1.704-2(b) and
(d), with respect to each nonrecourse liability of the Company, that
would be realized by the Company if it disposed of (in a taxable
transaction) the property subject to such liability in full
satisfaction thereof (and for no other consideration) and then by
aggregating the amounts so computed.
(ee) "Partner Minimum Gain". Partner nonrecourse debt minimum gain, as
determined in accordance with Treasury Regulations Section 1.704-2 (i).
(ff) "Partner Nonrecourse Debt". Partner nonrecourse debt, as
determined in Treasury Regulations Section 1.704-2 (b) (4).
(gg) "Partner Nonrecourse Deductions". Partner nonrecourse deductions,
as determined in Treasury Regulations Section 1.704-2 (i) (2).
(hh) "Percentage Interest". A Member's percentage interest in the
Distributions and Profits and Losses of the Company, as initially
determined in accordance with Section 3.1 and as may be subsequently
adjusted in accordance with the provisions of this Agreement and the
Act.
(ii) "Person" shall mean any individual or other legal or commercial
entity, its or their heirs, executors, administrators, legal
representatives, successors and assigns of such "person" where the
context so permits.
(jj) "Pine Tree" - Pine Tree Waste, Inc., a Maine corporation with a
mailing address of X.X. Xxx 0000, Xxxxx Xxxxxxxx, Xxxxx 00000-0000.
(kk) "Profits or Losses". Profits or Losses means, for each fiscal year
or other period of the Company, an amount equal to the Company's
taxable income or loss for such year or other period, determined in
accordance with Section 703(a) of the Code (including all items of
income, gain, loss or deduction required to be stated separately under
Section 703(a)(1) of the Code), except that (a) any income of the
Company that is exempt from federal income tax and not otherwise taken
into account in computing Profits or Losses will be added to taxable
income or loss; and (b) any expenditures of the Company described in
Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B)
expenditures under Treasury Regulations Section 1.704 l(b), or any
other corresponding provision under future regulations and not
otherwise taken into account in computing Profit or Losses, will be
subtracted from taxable income or loss.
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(ll) "Qualified Appraiser". Any appraiser who (a) is not an Affiliate
of the Company or other party to the transaction for which an Appraisal
is obtained, (b) is of recognized standing, and (c) has not less than
five (5) years experience in appraising business interests.
(mm) "Related Person". A Related Person, with respect to a Member who
is an individual, means (a) a spouse of such Member, (b) a sibling or a
lineal descendant or lineal ancestor of such Member, (c) a custodian,
guardian or personal representative of any of the foregoing
individuals, or (d) a trust for the exclusive benefit of any one or
more of the foregoing individuals. In the event that an individual is a
Related Person with respect to a Member by virtue of being a spouse of
such Member, such individual shall no longer be considered a Related
Person upon the termination of the marital relationship between the
Member and such individual.
(nn) "Reserves" shall mean with respect to any fiscal period, funds set
aside or amounts allocated during such period to reserves which shall
be maintained in amounts deemed prudent and sufficient by the Managers
for working capital and to pay taxes, insurance, debt service or other
costs or expenses incident to the ownership, operation and/or
protection of the Company's business.
(oo) "Secretary of State" means the Secretary of State of the State of
Maine.
(pp) "Selling Member" means any Member which sells, assigns, or
otherwise transfers for consideration all or any portion of its
Membership Interest.
(qq) "Supermajority Vote". The affirmative vote, approval or consent,
as the case may be, of Members holding more than seventy percent (70%)
of the total Percentage Interests held by all Members entitled to vote
on, approve or consent to the particular matter, decision or action.
(rr) "Transfer". Any sale, gift, transfer, assignment or other
disposition of an Interest, including without limitation a transfer by
operation of law, pledge or the granting of any security interest, lien
or other encumbrance in or against an Interest, and whether or not the
Transferee of such Interest becomes an Additional Member.
Notwithstanding the foregoing, a Transfer does not include the
acquisition by a spouse of a Member of a marital or community property
interest in an Interest held by such Member, as long as such Member
retains the right to receive Distributions and to vote and otherwise
participate in the management of the Company with respect to such
Interest to the extent provided by this Agreement and the Act.
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(ss) "Transferor". Any Member who Transfers an Interest to another
Person, whether or not such Person becomes an Additional Member.
(tt) "Transferee". Any Person who acquires an Interest from a Member
pursuant to a Transfer, whether or not such Person becomes an
Additional Member.
(uu) "Treasury Regulations" shall include proposed, temporary and final
regulations promulgated under the Code in effect as of the date of
filing the Articles of Organization and the corresponding sections of
any regulations subsequently issued that amend or supersede such
regulations.
(vv) "Unanimous Vote". The affirmative vote, approval or consent, as
the case may be, of all of the Members entitled to vote on, approve or
consent to the particular matter, decision or action.
ARTICLE II
FORMATION OF COMPANY
2.1 Intent. The Members intend that the Company shall always be
operated in a manner consistent with its treatment as a partnership for federal
income tax purposes, and that the Company not be operated or treated as a
partnership for purposes of Section 303 of the federal Bankruptcy Code. No
Member shall take any action inconsistent with the intent of the parties set
forth in this Section 2.1.
2.2 Purpose. The purpose of the Company shall be to engage in any
lawful business or activity permitted under the Act.
2.3 Powers. The Company shall have the same powers as an individual to
do all things necessary and convenient to carry out its business, to the fullest
extent provided by the Act.
2.4 Principal Place of Business. The Company's principal place of
business shall be __________________. The Company may relocate its principal
place of business from time to time as the Managers deem advisable.
2.5 Registered office and Registered Agent. The address of the
Company's initial registered office shall be 000 Xxxx Xxxxxx, Xxxx, Xxxxx. The
name and address of the Company's initial registered agent shall be Xxxxxxx X.
Xxxxxx, Esq. The registered office and registered agent may be changed from time
to time as the Managers deem advisable by filing notice of such changes with the
Secretary of State in accordance with the Act.
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2.6 Term. The term of the Company shall continue until dissolution of
the Company pursuant to Article X hereof.
2.7 Documents. The Managers shall promptly execute and file all
certificates or other documents, including without limitation amendments to the
Company's Articles of Organization and fictitious name or assumed name
certificates, and shall execute such other documents and take such other acts,
as shall from time to time be required by the Act, other applicable laws of the
State of Maine and applicable laws of other states in which the Company conducts
its business. Unless otherwise required by law, the Managers shall not be
required to deliver or mail a copy of the Company's Articles of Organization or
any amendment thereto, Articles of Dissolution or any certificate to any Member
unless the Member requests in writing a copy thereof.
ARTICLE III
CAPITAL CONTRIBUTIONS AND LOANS
3.1 Percentage Interests. Each Member shall contribute the capital as
described in Exhibit A and, shall, as of the date hereof, have the Percentage
Interest shown opposite such Member's name, until changed in accordance with
this Agreement.
Percentage
Member Interest
------ --------
KTI 55%
PINE TREE 45%
3.2 Additional Capital Contributions. Except as provided in this
Agreement, no Member shall have the right or obligation to make additional
Capital Contributions without a Supermajority Vote. If additional Capital
Contributions are made by the Members, other than prorata in cash according to
their Percentage Interests, the Percentage Interests of each Member shall be
revised as of the date such Capital Contributions as determined by such vote.
3.3 Interest Earned on Company Capital. Interest earned on Company
funds shall inure to the benefit of the Company, and no Member shall be entitled
to receive interest on such Member's Capital Contributions.
3.4 Withdrawal of Capital. Prior to the dissolution and the
liquidation of the Company under Article X, no Member shall be entitled to
withdraw all or any part of such Member's Capital Account.
3.5 Capital Accounts. A separate Capital Account shall be maintained
for each Member. Each Member's Capital Account shall be increased by (a) the
amount of money and the fair market value of
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property contributed by the Member to the Company (net of liabilities secured by
such property which the Company is considered to assume or take subject to
pursuant to Section 752 of the Code) and (b) allocations to the Member of
Profits, and shall be decreased by (c) the amount of money and fair market value
of property distributed to the Member by the Company (net of liabilities secured
by such property which the Member is considered to assume or take subject to
pursuant to Section 752 of the Code), (d) allocations to the Member of Losses,
and shall be increased or decreased by (e) special allocations of income, gain,
loss or deduction as provided in Article IV (excluding Section 4.10, and (f) any
other allocation or adjustment as provided under Treasury Regulations Section
1.704-1(b). In the event of a Transfer of an Interest to a Transferee who
becomes an Additional Member, such Transferee shall succeed to the Transferor's
Capital Account as of the effective date of the Transfer.
3.6 Member Loans. No Member or Affiliate of a Member shall have any
obligation to make loans or advances to the Company, nor shall a Member or
Affiliate of a Member have any right to make loans or advances to the Company,
except upon a Supermajority Vote, and then only on such terms and conditions as
are authorized by such Supermajority Vote.
ARTICLE IV
PROFITS AND LOSSES; DISTRIBUTIONS
For purposes of this Article IV, all references to "partnership" shall
mean the Company, and all references to a "partner" shall mean a Member.
4.1 Profits and Losses. Profits and Losses for any fiscal year of the
Company shall be allocated between the Members in proportion to their Percentage
Interests; provided, however, that in the event of a Transfer of an Interest
during a fiscal year or other change in the Percentage Interest of a Member
during the year due to the purchase or sale by the Company of an Interest from
or to such Member, Profits and Losses for such year will be allocated to the
Members in accordance with Section 706 of the Code and the Treasury Regulations
thereunder so as to take into account their varying Percentage Interests during
the year. In the event of a Transfer of an Interest from a Member to another
Person who becomes an Additional Member, upon the election of the Transferor and
Transferee and the consent of the Managers, such allocation may be based on the
actual Profits and Losses determined by closing the Company's books as of
effective date of the Transfer.
4.2 Distributions. Except for Distributions upon liquidation of the
Company (which are governed by Section 10.3), Cash from Operations for each
fiscal year of the Company shall be applied and distributed in the following
order of priority:
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(a) first, to pay all operating expenses of the Company;
(b) second, to make any payments required to be made in order for the
Company to be current and perform all covenants and obligations
relating to any loan of the Company, including any loan from any
Member;
(c) third, to fund the Reserves; and
(d) fourth, upon a Supermajority Vote of the Members, any remainder
shall be distributed to the Members according to their Percentage
Interest.
Notwithstanding the foregoing, for each fiscal year of the Company, the
Company shall make a Distribution after the payments referred to in Sections
4.2(a), 4.2(b), and 4.2(c) but before the payment referred to in Section 4.2(d),
to the extent there exists Cash from Operations after establishment of Reserves.
The Distribution shall be made prorata to the Members, based on each Member's
Percentage Interest. The aggregate amount of the distribution (the "Tax
Reimbursement Amount") to be paid to each Member shall equal forty-five percent
(45%) of the Member's share of the Company's taxable income (including
separately stated items), as shown on the Member's Federal Schedule K-1 for the
fiscal year. In the event of disagreement, the amount of the Tax Reimbursement
Amount shall be determined by an independent certified public accounting firm
selected by the Managers, which may be the Company's independent public
accounting firm, and such determination shall be final and binding. To the
extent practicable, such Tax Reimbursement Amount for a fiscal year shall be
paid by the Company in installments which precede or coincide with the due dates
for federal estimated income tax installments for individuals for such fiscal
year (i.e., April 15, June 15, September 15 and January 15), with each
installment based on the Profits for the relevant period covered by the
applicable due date, but in any event the entire Tax Reimbursement Amount shall
be paid by no later than the ninetieth (9Oth) day following such fiscal year. In
the event an adjustment to Profits and Losses as reported by the Company for a
fiscal year occurs as a result of an audit, amended return or otherwise, which
results in taxable income to Members without a corresponding decrease in taxable
income in other prior open years, the amount of the Distribution for such year
which would have been made pursuant to this Section 4.2 had such adjusted
Profits or Losses been known shall be calculated, and an additional Distribution
for such year shall be made within thirty (30) days following the date on which
such adjustment becomes final (or the date on which the Company determines not
to contest such adjustment) in an amount equal to the excess of the revised
Distribution amount and the amount of the Distribution originally made.
4.3 Limitations Upon Distributions. No Distribution shall be declared
or made if, after giving effect to the Distribution, the Company would be unable
to pay its debts as they become due in the
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usual course of business or if the fair market value of the total assets of the
Company would be less than the sum of all liabilities of the Company. For
purposes of the preceding sentence, the fair market value of the total assets of
the Company and the sum of all liabilities of the Company may be determined on
the basis of either: (a) financial statements prepared in accordance with
generally accepted accounting principles consistently applied, or (b) a fair
valuation or other method which is reasonable under the circumstances. Except as
otherwise may be permitted upon liquidation of the Company under Section 9.3 or
as may be approved by Majority Vote, the Company shall not make any Distribution
to the Members in property other than in cash.
4.4 Qualified Income Offset. Notwithstanding any other provision of
this Agreement:
(a) No allocation of deductions, losses or items thereof under this
Agreement shall be made to any Member to the extent that such
allocation (i) would cause such Member to have an Adjusted Capital
Account Deficit as of the last day of such taxable year, (ii) would
increase any Member's Adjusted Capital Account Deficit, or (iii) in the
good faith judgment of the Managers or upon advice of the Company's
independent certified public accounting firm or legal counsel, would
otherwise not likely be respected under Section 704(b) of the Code. In
any such event, the allocation of such deductions, losses or items
thereof to such Member shall be reduced to the extent necessary to
comply with the first sentence of this Section 4.4(a) and the
allocation of such deductions, losses or items thereof to the other
Members shall be increased to the same extent. No such determination by
the Managers in their good faith judgment or upon the advice of such
accounting firm or legal counsel shall give rise to any claim or cause
of action by any Member.
(b) To the extent any Losses have been specially allocated to any
Member in accordance with Section 4.4(a), then Profits shall thereafter
first be specially allocated to such Member in proportion to and in an
amount up to, but not exceeding, the amount of any such allocations of
Losses made to the Member under such Section 4.4(a).
(c) If any Member unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulations Sections 1.704-1(b) (2)
(ii) (d) (4), (5) or (6) in an amount not reasonably expected, and if
such Member has an Adjusted Capital Account Deficit as of the last day
of such taxable year, then the Member shall be allocated all items of
income and gain, including gross income, of the Company for such year
and for all subsequent taxable years of the Company in the manner
provided in Treasury Regulations Section 1.704-l(b)(2)(ii)(d) until
such Adjusted Capital Account Deficit has been eliminated. This Section
4.4(c) is intended
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to constitute a "qualified income offset" within the meaning of
Treasury Regulations Section 1.704-l(b)(2)(ii)(d) and all allocations
shall be made so as to comply therewith.
4.5 Company Minimum Gain Chargeback. Notwithstanding any provision
hereof to the contrary, if there is a net decrease in Partnership Minimum Gain
for a taxable year of the Company within the meaning of Treasury Regulations
Section 1.704-2(f)(1), each Member shall be specially allocated items of income
and gain for such taxable year (and, if necessary, for subsequent taxable years)
in an amount equal to such Member's share of the net decrease in Partnership
Minimum Gain, computed in accordance with Treasury Regulations Sections
1.704-2(f)(1) and l.704-2(g)(2) and subject to the exceptions set forth in
Treasury Regulations Sections 1.704-2(f)(2), (3) and (4). The Members intend
that items with respect to nonrecourse liabilities, if any, shall be determined
and allocated in accordance with the so-called "minimum gain chargeback"
provisions of Treasury Regulations Section 1.704-2.
4.6 Member Minimum Gain Chargeback. Notwithstanding any other provision
hereof to the contrary (except Section 4.5 hereof), if there is a net decrease
in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any
taxable year of the Company, then each Member who has a share of the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt (as determined in
accordance with Treasury Regulations Section 1.704-2(i)(5)) shall be specially
allocated items of income and gain for such taxable year (and if necessary,
subsequent taxable years) in an amount equal to the portion of such Member's
share of the net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt (as determined in accordance with Treasury Regulations Section
1.704-2(i)(4)). Any allocations made pursuant to this Section shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items of income or gain to be specially allocated under
this Section 4.6 shall be determined in accordance with Treasury Regulations
Section l.704-2(i)(4). This Section 4.6 is intended to comply with the minimum
gain chargeback requirements of Treasury Regulations Section 1.7042(i)(4) and
shall be interpreted consistently therewith.
4.7 Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i).
4.8 Section 754 Adjustment. To the extent an adjustment to the
adjusted tax basis of any Company Property undertaken pursuant to Section 734(b)
or 743(b) of the Code is required to be taken into account in determining the
Capital Accounts of the Members under Treasury Regulations Section 1. 704-1 (b)
(2) (iv) (m), then the amount of such adjustment to the Capital Accounts shall
be treated as an item of gain (if the adjustment increases the basis
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of the asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Members in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m).
4.9 Effect of Revaluations. Gain or loss resulting from any disposition
of Company Property which has been revalued pursuant to Treasury Regulations
Section l.704-l(b)(2)(iv)(f) and with respect to which gain or loss is
recognized for federal income tax purposes, shall be computed by reference to
the adjusted value of such property, notwithstanding the fact that the adjusted
tax basis of such property differs from the adjusted value. Any depreciation,
amortization or other cost recovery deductions taken into account in computing
such taxable income or loss shall be recomputed based on the adjusted value of
any Company Property which has been revalued in accordance with Treasury
Regulations Section 1.704-l(b)(2)(iv)(f).
4.10 Contribution of Property. In the event any Member actually
contributes to the Company any property other than cash, any portion of any
income, gain, loss or deduction with respect to such property shall be allocated
between or among the Members in accordance with Section 704(c) of the Code and
Treasury Regulations Sections 1.704-3 and 1.704-3T, and the Members' Capital
Accounts shall be adjusted pursuant to the rules set forth in Treasury
Regulations Sections 1.704-l(b)(2)(iv)(d) and 1.704-l(b)(2)(iv)(g) for
allocations to the Members of income, gain, loss and deduction (including
depreciation, amortization or other cost recovery) as computed for book purposes
with respect to such property, so as to take account of the variation, if any,
between the adjusted tax basis of such property to the Company and its fair
market value at the time of its contribution. Allocations of income, gain, loss
and deduction to Members under this Section 4.10 shall not affect a Member's
Capital Account.
4.11 Curative Allocations. The special allocations set forth in
Sections 4.4 through 4.10 hereof are intended to comply with the requirements of
Treasury Regulations Section 1.704-1(b) and Treasury Regulations Section
1.704-2. These special allocations may lead to results which are inconsistent
with the Members' intentions concerning their sharing in Distributions.
Accordingly, the Managers are hereby authorized and directed to specially
allocate other items of Company income, gain, loss and deduction among the
Members, to the extent permitted by the Treasury Regulations, so as to prevent
the special allocations required under Sections 4.4 through 4.10 from distorting
the Members' intentions of the manner in which Distributions are to be made to
the Members upon the dissolution and termination of the Company.
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ARTICLE V
RIGHTS AND DUTIES OF MANAGERS
5.1 Management. The business and affairs of the Company shall be
managed exclusively by its Managers. Unless the vote, consent or approval of the
Members is expressly required by this Agreement, or by provisions of the Act
which can not be modified by agreement of the Members, the Managers shall have
full and complete authority, power and discretion, to direct, manage and control
the business, affairs and properties of the Company, to make all decisions
regarding such matters and to perform any and all acts and to engage in any and
all activities necessary, customary or incident to the management of the
Company's business, affairs and properties. Persons dealing with the Company
shall be entitled to rely exclusively upon the power and authority of the
Managers set forth in this Agreement. At any time when there is more than one
Manager, all actions reserved or permitted to be taken by the Managers hereunder
shall be taken by a majority vote of the Managers then serving, after all
Managers are given reasonable notice of the proposed action and are afforded the
opportunity to participate in any discussion concerning same, provided that the
Managers, acting pursuant to said majority vote, may delegate the right to take
all or any portion of such actions to one or more specified Managers. No Member
other than a Manager shall have the authority to act for or on behalf of the
Company. Without limiting the generality of the foregoing, but subject to
Section 5.2, the Managers' specific authority to act on behalf of the Company
shall include the following:
(a) Performing any and all acts for or relating, customary or incident
to the acquisition, ownership, management, leasing, and/or sale or
other disposition of Company property;
(b) Entering into and executing agreements and any and all other
documents and instruments deemed by the Managers to be necessary or
appropriate for Company purposes or to otherwise perform effectively
and properly their duties hereunder;
(c) Borrowing money from banks, other lending institutions and other
lenders for Company purposes, and in connection therewith issuing
notes, debentures and other debt securities and hypothecating and
mortgaging the assets of the Company to secure repayment of the
borrowed sums; and no bank, other lending institution or other lender
to which application is made for a loan by the Company shall be
required to inquire as to the Company purposes for which such loan is
sought; and as between the Company and such bank, other lending
institution or other lender, it shall be conclusively presumed that the
proceeds of such loan are to be and will be used for the purposes
authorized under this Agreement; and the signature of the Managers or
any of them shall be sufficient on all notes, debentures, mortgages and
other similar or related documents;
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(d) Entering into agreements and contracts with parties and giving
receipts, releases, and discharges with respect to all of the foregoing
and any matters incident thereto as the Managers may deem advisable or
appropriate, including agreements with a Manager and its Affiliates to
the extent permitted by Section 5.16;
(e) Signing checks drawn on the Company's bank accounts.
(f) Granting powers of attorney to one or more Persons incident to, in
connection with or in furtherance of the Company's business, and any
such power of attorney so executed by any Manager in the Company's name
shall be deemed executed on behalf of the Company;
(g) Paying compensation to Persons (which subject to Section 5.16 and
the provisions of that certain Management Services Agreement by and
between the Company and American, may include the Managers' Affiliates)
for accounting, administrative, legal, engineering, technical,
financial, management, consulting or other services rendered to the
Company;
(h) Acting as tax matters partner for the Company within the meaning of
Section 6231 of the Code (and if there is more than one Manager, the
tax matters partner shall be the Manager who is designated by a
Supermajority vote of the Members).
(i) Making all elections permitted to be made by the Company under
federal or state income, franchise or other tax laws, including without
limitation the elections referred to in Sections 734, 743 and 754 of
the Code, and each of the Members, upon request, shall supply to the
Company such information as may be necessary to give proper effect to
any such election;
(j) Commencing any legal action or other proceeding of any kind;
(k) Engaging in any kind of activity and performing and carrying out
contracts of any kind necessary to, or in connection with, or
incidental to the accomplishment of the purposes of the Company as may
be lawfully performed or carried on by a limited liability company
under the Act and the laws of other states in which the Company
conducts business; and
(l) Subject to Sections 4.2 and 4.3, making any Distribution.
5.2 Limitation of Authority of Managers.
(a) Notwithstanding Section 5.1 hereof, the Managers and Members must
unanimously approve any expenditure which is not in the ordinary course
of business and which exceeds One
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Thousand Dollars ($1000.00), including but not limited to,
expenditures for the purposes of capital acquisitions, employment or
consulting services and any other action of the Company which is
outside the ordinary course of the Company's business. The Managers
and Members agree that the initial scope and purpose of the Company's
business is as defined in a certain Joint Venture Term sheet dated
September 19, 1996 the terms of which shall survive this agreement
unless inconsistent herewith.
(b) No Manager shall have any authority to take any of the following
actions without first obtaining the unanimous consent of the Managers:
(i) dispose or contract for a disposition of all or substantially
all of the Company's property, other than a disposition having a
value of less than $30,000 or a disposition in the process of
winding up the affairs of the Company following its dissolution;
(ii) incur any indebtedness on behalf of Company in excess of
$50,000 or refinancing any indebtedness of Company in excess of
$50,000;
(iii) confess a judgment against the Company in an amount in excess
of $10,000;
(iv) cause the Company to enter into any contract and/or incur any
liabilities in any single transaction involving in excess of
$100,000;
(v) cause the Company to make any capital expenditure in any single
transaction in excess of $50,000; or,
(vi) initiate any litigation.
5.3 Duties of the Managers. The Managers shall use reasonable efforts
and devote such time as they deem necessary to carry out the business and
activities of the Company, and shall promptly take all action that the Managers
deem necessary or appropriate for the organization and continuance of the
Company and the investment and protection of the Company's assets. Without
limiting the generality of the foregoing, and in addition to the other duties of
the Managers set forth in this Agreement, the Managers shall:
(a) Cause the Company to obtain and keep in force insurance of such
types, including, without limitation, fire, extended coverage and
public liability insurance, in such amounts and with such carriers as
will, in the judgment of the Managers, adequately protect the Company
and Company Property;
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(b) Use their best efforts to cause the Company to remain in compliance
with all statutes and regulations governing the Company and its
business operations and to cause all Company reports, documents and
income tax reports to be prepared and timely filed with the appropriate
authorities;
(c) Cause to be prepared and furnished to the Members:
(i) An annual financial report for each fiscal year, within
ninety (90) days after the end of such fiscal year, which
shall include financial statements of the Company;
(ii) Schedules K-l and other required tax reports for each
fiscal year within ninety (90) days following the end of such
fiscal year, containing information necessary for preparation
of the Members' tax returns;
(iii) Such other reports from time to time which the Managers
deem necessary regarding the business of the Company; and
(d) Appropriately safeguard and use the funds and assets of the
Company, whether or not in the Managers' immediate possession or
control, and not employ or permit another to employ such funds or
assets in any manner except for the exclusive benefit of the Company.
5.4 Number, Tenure and Qualification; Initial Managers. Managers need
not be residents of the State of Maine or Members. The number of Managers of the
Company shall, initially, be four (4) and the Managers shall be Xxxxxxx X.
Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxx. As long as Pine
Tree and/or KTI owns an interest in the Company, both Pine Tree and KTI shall be
entitled to appoint two (2) Managers. Each Member agrees to execute any
documents and take all actions necessary to carry out the foregoing. Each
Manager shall hold office until the next annual meeting of the Members and until
such Managers' successor's duly elected and qualified or until such Managers'
earlier death, resignation or removal.
5.5 Resignation of Managers. Any Manager may resign as a Manager at any
time by giving written notice to all of the Members. The resignation of any
Manager shall take effect at a time specified in such notice. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Such resignation shall not affect such Manager's rights and
obligations as a Member.
5.6 Removal of Managers. Any Manager may be removed at any time, with
cause by a Supermajority Vote of the Members, or without cause by the Member
having the power to appoint such Manager. No
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such removal shall affect such Manager's rights and obligations as a Member, if
applicable.
5.7 Vacancies. Any vacancy occurring for any reason in the office of a
Manager shall be filled by the Member having the power to appoint the Manager
whose office is vacant. A Manager elected to fill a vacancy shall serve for the
unexpired term of such Manager's predecessor in office and shall hold office
until the expiration of such term and until such Manager's successor is duly
elected and qualified, or until such Manager's earlier death, resignation or
removal.
5.8 Records and Information. (a) The Managers shall maintain or cause
to be maintained at the Company's principal place of business and at such other
locations required by law complete and accurate books and records with respect
to all Company business transactions, including without limitation the records
and information required by Section 655 of the Act. Each Member shall have the
right to inspect and copy the Company's records in accordance with the Act.
(b) Upon reasonable request a Member may, at the Member's expense,
inspect and copy during ordinary business hours any record required to
be kept pursuant to this Section 5.8 and any other record of the
Company, wherever the record is located. The Managers shall provide, to
the extent the circumstances are just and reasonable, true and full
information of all things affecting the Members to any Member or to a
legal representative of any Member upon reasonable request of such
Member or legal representative.
5.9 Bank Accounts. The Managers may from time to time open accounts at
such banks or other financial institutions in the name of the Company as they
determine, the signatory requirements to be unanimously approved by the
Managers.
5.10 Ratification of Acts; Reliance. The Members hereby ratify, affirm,
acknowledge and agree to be bound by all acts performed and contracts entered
into on behalf of the Company by the Managers in accordance with this Agreement.
No party shall be required to inquire as to the purposes for which such an act
is performed or such a contract is entered into, it being conclusively presumed
that such act or contract is authorized by all of the Members. Any Person
dealing with the Company may rely (without any duty of further inquiry) upon a
certificate signed by any Manager as to:
(a) The identity of any Manager or any Member;
(b) The existence or nonexistence of any fact or facts which constitute
a condition precedent to acts by any Manager or which are in any other
manner relevant to the affairs of the Company;
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(c) The Persons who are authorized to execute and deliver any
instrument or document of the Company; or
(d) Any act or failure to act by the Company or any other matter
whatsoever involving the Company or any Member.
5.11 Other Activities of the Managers and Affiliates. The Managers
shall not be required to manage the Company as their sole function, and the
Managers and their Affiliates may have other business interests and may engage
in other ventures or activities in addition to those relating to the Company,
including the rendering of advice or services of any kind to other investors and
the making or management of other investments. Neither the Company nor any
Member shall have any right by virtue of this Agreement or the membership
relationship created hereby in or to such other ventures or activities or to the
income or proceeds derived therefrom, and the pursuit of such ventures or
activities, even if competitive with the business of the Company, shall not be
deemed wrongful or improper.
5.12 Expenses; Reimbursement to the Manager. Except as otherwise
specifically provided in this Agreement, all expenses of the Company may be
billed directly to, and shall be paid by, the Company. The Managers shall be
reimbursed by the Company for all out-of-pocket expenses reasonably incurred or
paid by them on behalf of the Company pursuant to a reimbursement policy
established by the unanimous vote of the Managers.
5.13 Salaries. No Manager shall be entitled to receive any salary or
other compensation for serving as a Manager.
5.14 Liability of the Managers. No Manager shall have any liability to
the Company or to any Member for any loss suffered by the Company except:
(a) A willful failure to deal fairly with the Company or the Members in
connection with a matter in which the Manager has a material conflict
of interest;
(b) A violation of criminal law, unless the Manager had reasonable
cause to believe that its conduct was lawful, or no reasonable cause to
believe that it was unlawful;
(c) A transaction from which the Manager derived an improper pecuniary
profit; or
(d) Willful misconduct.
5.15 Indemnification of the Managers. Each Manager shall be indemnified
by the Company against any losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained by it in connection with any action
or inaction taken in its capacity of Manager, provided that the Manager, in good
faith,
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determines that such action or inaction is in the best interest of the Company,
and further provided that such action or inaction does not constitute gross
negligence or intentional misconduct of the Manager or conduct described in
Section 654 (i) A and B of the Act. Company funds shall be advanced to the
Manager for legal expenses and other costs incurred by the Manager as a result
of any legal action for which indemnification by the Company is claimed by the
Manager if (a) the legal action relates to the performance of duties or services
by the Manager on behalf of the Company, and (b) the Manager undertakes to repay
the advanced funds to the Company in cases in which it is found by any court of
competent jurisdiction not to be entitled to indemnification pursuant to the
provisions of this Agreement or the Act. Any indemnity under this Section 5.15
shall be paid from, and only to the extent of, Company Property, and no Member
shall have any personal liability on account thereof. The foregoing provisions
also apply to Affiliates of the Manager when acting on behalf of and within the
scope of authority of such Manager.
5.16 Transactions with Members, Managers and Affiliates. The Company
may enter into agreements with any Member, Manager or any Affiliate thereof for
the provisions of property, goods or services to the Company, provided that the
price and terms for such property, goods or services are no less favorable to
the Company than the price and terms for property, goods or services reasonably
available from unrelated Persons for comparable property, goods or services in
the same geographic area.
5.17 Fiscal Year; Method of Accounting. The Company's fiscal year for
both tax and financial reporting purposes shall be December 31. Unless otherwise
required by the Code, the method of accounting shall be the accrual method for
both tax and financial reporting purposes.
5.18 Officers. The Managers may in their discretion determine that the
Company shall have officers, in which event the following provisions of this
Section 5.18 shall apply:
(a) The officers of the Company may, but need not, include a Chief
Execute Officer, President, Vice President, Secretary, Treasurer,
Controller and other officers appointed in accordance with the
provisions of this Section 5.18. Any number of offices may be held by
the same person. Officers may, but need not, be Managers and/or
Members.
(b) Each officer of the Company shall be chosen by the Managers and
shall serve at the pleasure of the Managers.
(c) Any officer may be removed, with or without cause, by the Managers
or by such other officer, if any, upon whom such power of removal may
be conferred by the Managers. Any officer may resign at any time by
giving written notice to the Company. Any resignation shall take effect
at the time of the
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receipt of that notice or at any later time specified in that notice.
Unless otherwise specified in such notice, the acceptance of the
resignation shall not be necessary to make it effective.
(d) Any vacancy in any office because of death, resignation, removal,
disqualification or other cause shall be filled by the Managers. The
President may make temporary appointments to a vacant office (other
than the President's office) pending action by the Managers.
(e) The President and Chief Executive Officer ("President") shall be
the principal executive officer and, subject to the control and
direction of the Managers, shall in general supervise and control all
of the day-to-day business and affairs of the Company. He or she shall
preside at all meetings of the Members. The President shall have
authority, subject to such rules as may be prescribed by the Managers,
to appoint such agents and employees of the Company as he or she shall
deem necessary, to prescribe their powers, duties and compensation, and
to delegate authority to them such agents and employees shall hold
office at the discretion of the President and the Managers. The
President shall have authority to sign, execute and acknowledge, on
behalf of the Company, all authority as from time to time may be
delegated or assigned to him or her by President or by the Managers.
(f) In the absence of the President, or in the event of the President's
death, inability or refusal to act, or in the event for any reason it
shall be impracticable for the President to act personally, a Vice
President (or in the event there be more than one Vice President, the
Vice Presidents in the order designated by the Managers, or in the
absence of any designation, then in the order of their appointment)
shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions on the
President. Any Vice President may sign, with the Secretary or Assistant
Secretary, certificates representing interests in the Company, if the
issuance thereof shall have been authorized by the Managers; and shall
perform such other duties and have such authority as from time to time
may be delegated or assigned to him or her by the President or the
Managers. The execution of any agreement, document or instrument of the
Company by any Vice President shall be conclusive evidence, as to third
parties, of the Vice President's authority to act in the stead of the
President.
(g) The Secretary shall: (i) keep (or cause to be kept) regular minutes
of all meetings of the Members, the Managers and any committees of the
Managers and records of all other official actions of the Members or
Managers in one or more books provided for that purpose; (ii) use his
or her best efforts to ensure that all notices are duly given in
accordance with the provisions of this Operating Agreement or
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as required by law; (iii) be custodian of the records of the Company;
(iv) sign with the President, or a Vice President, certificates
representing interests in the Company, if the issuance thereof shall
have been authorized by resolution of the Managers; (v) have general
charge of the transfer books of the Company; and (vi) in general
perform all duties incident to the office of Secretary and have such
other duties and exercise such authority as from time to time may be
delegated or assigned to him or her by the President or by the
Managers.
(h) The Treasurer shall: (i) have charge and custody of and be
responsible for all funds and securities of the Company; (ii) receive
and give receipts for moneys due and payable to the Company from any
source whatsoever, and deposit all such moneys in the name of the
Company in such banks, trust companies or other depositaries as shall
be selected by the Company; and (iii) in general perform all of the
duties incident to the office of Treasurer and have such other duties
and exercise such other authority as from time to time may be delegated
or assigned to him or her by the President or by the Managers.
(i) The Controller works with the Treasurer to keep the necessary
financial records, books, and generally to assist the Treasurer in
performing the duties incident to the office of Treasurer and shall
have such other duties and exercise such other authority as from time
to time may be delegated or assigned to him or her by the President or
by the Manager. (j) The Managers, and the President, shall have the
power to appoint any person to act as assistant to any officer, or as
agent for the Company in the officer's stead, or to perform the duties
of such officer whenever for any reason it is impracticable for such
officer to act personally, and such assistant or acting officer or
other agent so appointed by the Managers or President shall have the
power to perform all the duties of the office to which that person is
so appointed to be assistant, or as to which he or she is so appointed
to act, except as such power may be otherwise defined or restricted by
the Managers or the President.
(k) The salaries of the principal officers, if any, shall be fixed from
time to time by the Managers or (unless the Managers provide otherwise)
by the President, except that the salary of the President shall be
fixed by the Managers.
(l) Nothing contained in this Section 5.18 shall affect or be construed
as affecting the terms of any contract of employment between the
Company and any officer.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
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6.1 Limitation of Liability. Each Member's liability shall be limited
as set forth in this Operating Agreement, the Act and other applicable law.
6.2. Company Debt Liability. A Member will not be personally liable for
any debts or losses of the Company beyond his respective Capital Contributions
and any obligation of the Member under Section 3.1 or 3.2 to make Capital
Contributions, except as provided in this agreement herein or as otherwise
required by law.
6.3 List of Members. Upon written request of any Member, the Managers
shall provide a list showing the names, addresses and percentage of interest of
all Members.
6.4 Priority and Return of Capital. Except as may be expressly provided
in this Agreement no Member shall have priority over and any other Member either
as to the return of Capital Contributions or as to Net Profits, Net Losses or
Distributions; provided that this section shall not apply to loans (as
distinguished from Capital Contributions) which a Member may have made to the
Company.
6.5 Right to Bring an Action. One or more member may bring legal action
in the name of the Company upon a unanimous vote of the Members, excluding the
vote of any Member who has an interest in the outcome in the action that is
adverse to the interest of the Company.
6.6 Confidentiality. Except as contemplated by this Agreement, each
Member shall keep confidential and not disclose to other Persons which are not
Members, and shall use reasonable efforts to prevent such Member and such
Member's Affiliates, and their respective employees, agents and representatives,
from disclosing to Persons which are not Members, any information or materials
which (a) pertain to this Agreement or any of the transactions contemplated
hereby, or the business of the Company, or (b) pertain to confidential or
proprietary information of any other Member or of the Company; provided however,
that a Member may disclose to the respective employees, agents and
representatives of such Member and its Affiliates any information or materials
to the extent it is reasonably necessary for any such employee, agent or
representative to possess or use such information in connection with the
Member's interest in the Company or the conduct of business by such Member on
behalf of the Company. Notwithstanding the foregoing, information of the Company
or a Member shall not be deemed confidential to the extent it is (i) known to
the receiving party prior to disclosure by the disclosing party; (ii) disclosed
to the receiving party by a third party without any obligation of
confidentiality to the disclosing party; (iii) publicly available or becomes
publicly available other than as a result of a breach by the receiving party of
such party's obligation of confidentiality set forth herein; or (iv) required to
be disclosed in any legal proceeding. The obligations of confidentiality
contained herein shall survive the termination of this Agreement.
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6.7 Representations and Warranties. Each Member ("Representing Member")
represents and warrants to the Company and the other Members that:
(a) the Representing Member has full power and authority to execute and
deliver this Agreement, and to perform all of its obligations
hereunder, and that this Agreement constitutes a legally binding
agreement of the Representing Member, enforceable against it in
accordance with its terms;
(b) the execution, delivery and performance of this Agreement and the
transactions contemplated herein by such Representing Member do not and
will not conflict with or violate any law, judgment, order, decree, the
articles of incorporation or bylaws of the Representing Member or any
contractor agreement to which the Representing Member is a party or by
which the Representing Member is bound;
(c) the Representing Member is acquiring Interests for its own account
and not with a view to, or for sale in connection with, the
distribution of such Interests and not with the present intention of
selling, offering to sell or otherwise disposing of the Interests or
any portion thereof;
(d) no Interests have been sold or offered for sale by the Company or a
Person representing the Company by means of any form of general
advertising or general solicitation;
(e) the Representing Member has such knowledge and experience on
financial and business matters and to be capable of evaluating the
merits and risks of its investment in the Interests and the
Representing Member can bear the full risk of its investment for an
indefinite period of time; and
(f) the Representing Member will not attempt to effect any Transfer or
the disposition of any Interests except: (i) in compliance with the
terms of this Agreement and (ii) unless a registration statement under
the Securities Act of 1933, as amended (the "Act"), or other applicable
law relating to the Interests has been filed unless an exemption from
the registration requirements of the Act or other applicable law is
available.
6.8 Covenant of Good Faith and Fair Dealing. The Members covenant to
deal with each other and the Company fairly and in good faith.
ARTICLE VII
VOTING AND MEETINGS
7.1 Meetings. Meetings of the Members for any purpose may be called by
any Manager or by a Supermajority of the Members. The Annual Meeting shall take
place on the second Wednesday in February
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of each year or at such other time as shall be determined by the Managers, for
the purpose of electing Managers and transacting such other business as may
properly be brought before the meeting.
7.2 Place of Meetings. The Managers or Members may designate any place,
either within or outside the State of Maine, as the place of meeting for any
meeting of the Members. If no designation is made, the place of meeting shall be
the principal executive office of the Company in the State of Maine.
7.3 Notice of Meetings. Except as provided in Section 7.4, written
notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than three
(3) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the Managers or person calling
the meeting, to each Member entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered two calendar days after being deposited
in the United States mail, addressed to the Member at its address as it appears
on the books of the Company, with postage thereon prepaid.
7.4 Meeting of all Members. If all of the Members shall meet at any time
and place and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting lawful action
may be taken.
7.5 Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of members or any adjournment thereof, or
Members entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record date for such
determination of members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this Section , such
determination shall apply to any adjournment thereof.
7.6 Quorum. Members holding a Supermajority Interest represented in
person or by proxy, shall constitute a quorum at any meeting of Members. In the
absence of a quorum at any such meeting, a majority of the Capital Interests so
represented may adjourn the meeting from time to time for a period not to exceed
60 days without further notice. However, if the adjournment is for more than 60
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Member of
record entitled to vote at the meeting. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. The Members
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal during such meeting of that number
of Capital Interests whose absence would cause less than a quorum.
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7.7 Manner of Acting. If a quorum is present, the affirmative vote of
Members holding a majority of the Capital Interest represented in person or by
proxy shall be the act of the Members, unless the vote of a greater or lesser
proportion or number is otherwise required by the Act, by the Articles of
Organization, or by this Operating Agreement. Unless otherwise expressly
provided herein or required under applicable law, Members who have an interest
(economic or otherwise) in the outcome of any particular matter upon which the
Members vote or consent, may vote or consent upon any such matter and their
Capital Interest, vote or consent, as the case may be, shall be counted in the
determination of whether the requisite matter was approved by the Members.
7.8 Proxies. At all meetings of Members a member may vote in person or
by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the Managers of the Company
before or at the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the proxy.
7.9 Action by Members Without a Meeting. Action taken under this Section
7.9 is effective when Members owning, in the aggregate the requisite percentage
interests have signed the consent, unless the consent specifies a different
effective date. Any action required or permitted to be taken without a meeting
if the action is evidenced by one or more written consents describing the action
taken at a meeting of the Members may be taken, signed by each Member entitled
to vote and delivered to the Managers of the Company for inclusion in the
minutes or for filing with the Company records. Action taken under this Section
is effective when all Members entitled to vote have signed the consent, unless
the consent specifies a different effective date. The record date for
determining Members entitled to take action without a meeting shall be the date
the first Member signs a written consent.
7.10 Waiver of Notice. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the person entitled to such
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
7.11 Meetings By Telephone or Other Communication Technology. Any or
all Members may participate in a regular or special meeting by, or conduct the
meeting through the use of, telephone or any other means of communication by
which either: (a) all participating Members may simultaneously hear each other
during the meeting or (b) all communication during the meeting is immediately
transmitted to each participating Member, and each participating Member is able
to immediately send messages to all other participating Members. If a meeting
will be conducted through the use of any means described in this Section 7.11,
all participating Members shall be informed that a meeting is taking place at
which official business may be transacted. A Member participating in a meeting
by any means
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described in this Section 7.11 is deemed to be present in person at the meeting.
ARTICLE VIII
WITHDRAWAL; SALES AND TRANSFERS OF INTERESTS; ADMISSION OF NEW
MEMBERS
8.1 Withdrawal. No Member shall voluntarily withdraw from the Company
or cause any other Event of Withdrawal unless such withdrawal or other Event of
Withdrawal is expressly authorized by this Agreement or by a Supermajority Vote
of the Members, excluding the vote of Member who is seeking to withdraw or cause
such other Event of Withdrawal. For purposes of this Section 8.1, a Member shall
be treated as causing an Event of Withdrawal if such Member becomes Bankrupt or,
if such Member who is not an individual dissolves voluntarily or involuntarily.
In the event of a withdrawal or other Event of Withdrawal of a Member in
violation of this Agreement which does not cause a dissolution of the Company,
such former Member shall be entitled to receive from the Company, in exchange
for such former Member's Interest, an amount equal to the Fair Value of the
former Member's Interest as of the date of withdrawal or other Event of
Withdrawal, less any damages incurred by the Company.
8.2 Sale by the Company of Interests. The Company may not sell or issue
additional Interests except upon the Supermajority Vote of the Members. In such
event, the Percentage Interests of new and existing Members shall be adjusted
immediately following such sale or issuance as determined by such vote.
Notwithstanding the foregoing, the Company may sell additional Interests upon a
Supermajority Vote if (a) the Company first gives notice to all existing Members
of its desire to offer for sale additional Interests in the Company, specifying
the material terms and conditions of such proposed offer (the "Proposed Offer"),
(b) the Company offers existing Members the opportunity to purchase such
additional Interests in the Company upon the terms and conditions set forth in
the Proposed Offer, in proportion to their Percentage Interests and (c) the
Company agrees not to make any offer to sell such additional Interests to any
other Person until the time period specified in the Proposed Offer expires. The
Proposed Offer may, but need not, contain a right of over-subscription. The
Proposed Offer may be accepted by a Member by written notice to the Company in
the manner and within the period of time (which shall not be less than thirty
(30) days) specified in the Proposed Offer and the failure of a Member to timely
respond shall be deemed to constitute a rejection of the Proposed Offer.
Notwithstanding the foregoing, in connection with any such offer to existing
Members, the Company need not make any offer to any particular Member under this
Section 8.2 if, in the opinion of legal counsel to the Company, such offer or
the sale of Interests contemplated thereby would contravene applicable federal
or state securities laws or in the judgment of the Company would entail undue
expense in order to comply therewith.
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Nothing contained in this Section 8.2 shall require the Company to register any
Interests under the Securities Act of 1933, as amended.
8.3 Transfers by the Members. (a) Except for Transfers contemplated by
Section 8.4, Section 8.5, and Section 8.6, a Member shall not Transfer any
Interest. Any Transfer or purported Transfer of any Interest in violation of
this Agreement shall be null, void and ineffective. No Transferee acquiring an
Interest in accordance with this Article VIII shall become an Additional Member
unless expressly provided in this Article VIII.
8.4 Transfers Between Members. A Member may sell or otherwise Transfer
such Member's Interest to another Member on such terms as they mutually agree
upon (which may include the right of the Transferee to become a Member with
respect to such Interest).
8.5 Transfers to Affiliates. A Member may sell or otherwise Transfer an
Interest to an Affiliate on such terms as they mutually agree upon. No such
Transferee shall have the right to become a Member unless and until the Members
agree to admit such Transferee as an Additional Member by a Supermajority Vote,
excluding the vote of the Member making such Transfer.
8.6 Security Interest. No member may grant a security interest in such
Members interest to a bank, other financial institution or other third party,
without the prior written consent of all of the other Members.
ARTICLE IX
ADDITIONAL MEMBERS
From the date of the formation of the Company, any Person or Entity
which becomes a Member pursuant to the terms of this Agreement, for such
consideration as the Members by their Supermajority votes shall determine, or as
a transferee of a Member's Membership Interest or any portion thereof, shall be
subject to the terms and conditions of this Operating Agreement. No new Members
shall be entitled to any retroactive allocation of losses, income or expense
deductions incurred by the Company. The Managers may, at their option, at the
time a Member is admitted, close the Company books (as though the Company's tax
year had ended) or make prorata allocations of loss, income and expense
deductions to a new Member for that portion of the Company's tax year in which a
Member was admitted in accordance with the provisions of Section 706(d) of the
Code and the Treasury Regulations promulgated thereunder.
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ARTICLE X
DISSOLUTION AND TERMINATION
10.1 Events Causing Dissolution. Upon the occurrence of any one of the
following events, the Company shall be immediately dissolved:
(a) The sale or other disposition by the Company of all or
substantially all of its assets;
(b) The Supermajority Vote of the Members to dissolve the Company;
(c) The happening of any event which makes it unlawful for the
Company's business to be conducted;
(d) The entry of a decree of dissolution under Section 702 of the Act;
(e) A Transfer of one or more Interests such that the Company has only
one Member; and
(f) An Event of Withdrawal as to any Member, other than an Event of
Withdrawal which occurs due to the transfer of an Interest by such
Member to another Member or to a Transferee(s) that becomes an
Additional Member(s)), unless the Company's business is continued by a
Majority Vote of the remaining Members given within ninety (90) days
following such Event of Withdrawal and there are at least two remaining
Members.
10.2 Winding Up of the Company. Upon the dissolution of the Company, the
Managers shall wind up the affairs of the Company and sell or otherwise dispose
of all Company property. The Managers shall have full right and unlimited
discretion to determine the time, manner and terms of any sale or sales of
Company Property pursuant to such liquidation, giving due regard to the
activities and condition of the relevant market and general, financial and
economic conditions. The Members shall continue to share Profits and Losses
following the dissolution and before liquidation in the same proportion as
before the dissolution.
10.3 Liquidating Distributions. Following the winding up of the Company,
and subject to the right of the Managers to set up such Reserves as they may
deem reasonably necessary for any known, contingent or unforeseen expenses,
liabilities or obligations of the Company, the cash and other assets of the
Company shall be applied first to the payment of all liabilities and obligations
of the Company including Member Loans, which for such purpose shall be treated
the same as all other Company liabilities and all expenses of liquidation, and
the remainder shall be distributed to the Members in accordance with the
positive balances in their Capital Accounts as determined after taking into
account all Capital
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Account adjustments for the taxable year during which such liquidation occurs,
as required by Treasury Regulations Section l.704-l(b), with such adjustments to
be made within the time specified by such Section 1.704-1(b), other than those
made pursuant to this Section 10.3, by the end of such taxable year (or, if
later, within ninety (90) days after the date of liquidation). Any funds
constituting Reserves shall be paid to the extent remaining after a reasonable
passage of time in accordance with the provisions of this Section 10.3. If there
are insufficient assets to pay the Member Loans in full, they shall be paid in
proportion to the unpaid principal and interest balances thereof.
10.4 Payment of Capital Account Deficits. If following the dissolution
and liquidation of the Company, the Company's assets remaining after payment and
discharge of the liabilities, obligations and expenses of the Company, including
any liabilities to any one or more of the Members, are insufficient to return
any amount to a Member, such Member shall have no recourse or further right or
claim against the Managers or any other Member by reason of such insufficiency.
No Member shall be obligated to eliminate any deficit balance in such Member's
Capital Account.
10.5 Final Report. Within ninety (90) days following the completion of
the liquidation of the Company, the Managers shall provide to each of the
Members a statement which shall set forth the assets and the liabilities of the
Company as of the date of complete liquidation and the amounts, if any,
distributed to the Members pursuant to Section 10.3.
10.6 Articles of Dissolution. Upon the completion of the liquidation of
the Company and the distribution of all Company funds, the Company shall
terminate and the Managers shall promptly execute and file Articles of
Dissolution of the Company in accordance with the provisions of the Act,
together with any and all other documents required to effectuate the dissolution
and termination of the Company.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Operating Agreement shall be
deemed to have been sufficiently given or serviced for all purposes if delivered
personally to the party or to an executive officer of the party to whom the same
is directed or, if sent by registered or certified mail, postage and charges
prepaid, addressed to the Member's and/or Company's address, as appropriate,
which is set forth in this Operating Agreement. Except as otherwise provided
herein, any such notice shall be deemed to be given three business days after
the date on which the same was deposited in a regularly maintained receptacle
for the deposit of United States mail, addressed and sent as aforesaid.
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11.2 Books of Account and Records. Proper and complete records and
books of account shall be kept or shall be caused to be kept by the Managers in
which shall be entered fully and accurately all transactions and other matters
relating to the Company's business in such detail and completeness as is
customary and usual for businesses of the type engaged in by the Company. Such
books and records shall be maintained as provided in Section 5.8. The books and
records shall be at all times be maintained at the principal executive office of
the Company and shall be open to the reasonable inspection and examination of
the Members or their duly authorized representatives, during reasonable business
hours.
11.3 Application of Maine Law. This Operating Agreement, and the
application and interpretation hereof, shall be governed exclusively by its
terms and by the laws of the State of Maine.
11.4 Waiver of Action for Partition. Each Member and every successor
interest, irrevocably waives during the term of the Company any right that it
may have to maintain any action for partition with respect to the property of
the Company and to file a complaint or institute any proceeding at law or in
equity to have such property partitioned.
11.5 Amendments. This Operating Agreement may not be amended except by
the unanimous written agreement of all of the Members.
11.6 Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
11.7 Construction. Whenever the singular number is used in this
Operating Agreement and when required by the context, the same shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter genders and vice versa.
11.8 Headings and Pronouns. The headings in this Operating Agreement
are inserted for convenience only and are in no way intended to describe,
interpret, define, or limit the scope, extent or intent of this Operating
Agreement or any provision hereof. All pronouns and only variations thereof
shall be deemed to refer to masculine, feminine, or neuter, singular or plural
as the identity of the Person or Persons may require.
11.9 Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
11.10 Rights and Remedies Cumulative. The rights and remedies provided
by this Operating Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive the
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right to use any or all other remedies. Said rights and remedies are given in
addition to any other rights the parties may have by law, statute, ordinance or
otherwise.
11.11 Severability. If any provision of this Operating Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent permitted by law.
11.12 Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the parties hereto and, to the extent permitted by this
Operating Agreement, their respective heirs, legal representatives, successors
and assigns.
11.13 Creditors. None of the provisions of this Operating Agreement
shall be for the benefit of or enforceable by any creditors of the Company
except as required by the Act.
11.14 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
11.15 Indemnification. From and after the Closing, each Member (the
"Indemnifying Member") will indemnify the other Members and the Company (the
"Indemnified Parties") for, and defend and hold them harmless from and against,
any and all actions, causes of action claims, losses, costs, liabilities,
damages, deficiencies and expenses (including reasonable attorneys' fees)
resulting from or arising out of any misrepresentation, breach of warranty or
non-fulfillment by the Indemnifying Member of any of its agreements, covenants
or obligations to the Indemnified Parties contained in this Agreement or in any
other instrument, document or agreement delivered by the Indemnifying Member to
the Indemnified Parties pursuant to this Agreement.
11.16 Specific Performance. Each Member agrees it is impossible to
measure in money the damages which will accrue to the Company and other Members
or their successors by reason of a failure to perform any obligations under this
Agreement. Therefore, if the Company or any Member institutes any action or
proceeding to enforce the provisions hereof, the Person against whom such action
or proceeding is brought thereby waives the claim or defense that such Person
has an adequate remedy at law, and such Person shall not assert in any action or
proceeding the claim or defense that such remedy at law exists.
11.17 Certificates Representing Interests. The Managers may in their
discretion determine that the Interests shall be evidenced by certificates, in
which event the Managers may from time to time prescribe rules relating thereto,
including without limitation the form of such certificates and the manner of
transfer and registration thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement the date
first written above.
MEMBERS
PINE TREE WASTE, INC.
/s/ By: /s/ ILLEGIBLE
------------------------- ---------------------------------------
Its: Chairman
KTI SPECIALTY WASTE SERVICES,
INC.
/s/ By: /s/ ILLEGIBLE
------------------------- ---------------------------------------
Its: Senior Vice President
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EXHIBIT A
Capital Contributions
Pine Tree Waste, Inc. __________
KTI Specialty Waste Services, Inc. __________
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