EXHIBIT 3.4
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
REPUBLIC ENGINEERED PRODUCTS HOLDINGS LLC
(a Delaware limited liability company)
Dated as of February 10, 2003
TABLE OF CONTENTS
Page
Article I. DEFINITIONS; CONSTRUCTION...................................................1
1.1 Definitions..........................................................1
1.2 Usage Generally......................................................6
Article II. GENERAL PROVISIONS.........................................................6
2.1 Name.................................................................6
2.2 Place of Business....................................................6
2.3 Formation; Term......................................................7
2.4 Purpose; Powers......................................................7
2.5 Members..............................................................7
2.6 Competition..........................................................7
2.7 Member Liability.....................................................7
2.8 Admission of New Members.............................................8
Article III. MANAGEMENT AND OPERATION OF THE COMPANY...................................8
3.1 Management...........................................................8
3.2 Composition of Board of Managers.....................................8
3.3 Compensation of Managing Directors...................................9
3.4 Meetings of Managing Directors.......................................9
3.5 Managing Director Committees........................................10
3.6 Time Commitment; Resignations.......................................11
3.7 Officers............................................................11
3.8 Members; Certain Duties and Obligations.............................12
3.9 Approval by Members.................................................12
Article IV. MEMBERS' INTERESTS........................................................13
4.1 Form of Units.......................................................13
4.2 Transfers of Interests Generally....................................13
4.3 Transfers Affecting Tax Status......................................15
Article V. INDEMNIFICATION............................................................15
5.1 Exculpation.........................................................15
5.2 Indemnification.....................................................15
5.3 Insurance...........................................................16
Article VI. CAPITAL CONTRIBUTIONS; DISTRIBUTIONS......................................16
6.1 Capital Contributions...............................................16
6.2 Distributions.......................................................17
Article VII. BOOKS AND REPORTS; TAX MATTERS; CAPITAL ACCOUNTS; ALLOCATIONS............18
7.1 General Accounting Matters..........................................18
7.2 Certain Tax Matters.................................................19
7.3 Capital Accounts....................................................20
7.4 Allocations.........................................................21
7.5 Withholding.........................................................23
7.6 Distributions by Subsidiaries.......................................23
Article VIII. DISSOLUTION; WINDING UP; TERMINATION....................................23
8.1 Dissolution.........................................................23
8.2 Winding Up and Termination..........................................24
8.3 Assets Reserved and Pending Claims..................................24
Article IX. MISCELLANEOUS.............................................................25
9.1 Equitable Relief....................................................25
9.2 Amendments; Waivers.................................................25
9.3 Successors and Assigns..............................................25
9.4 Successor Agreement.................................................26
9.5 No Waiver...........................................................26
9.6 Notices.............................................................26
9.7 Severability........................................................26
9.8 Counterparts........................................................26
9.9 Headings, Etc.......................................................26
9.10 No Right to Partition...............................................26
9.11 No Third Party Rights...............................................26
9.12 Entire Agreement....................................................26
9.13 Applicable Law......................................................27
9.14 Power of Attorney...................................................27
9.15 Effectiveness of Agreement..........................................27
Schedule A: Members' Interest
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF REPUBLIC
ENGINEERED PRODUCTS HOLDINGS LLC, a Delaware limited liability company (the
"Company"), entered into as of February 10, 2003, pursuant to and in accordance
with the Limited Liability Company Act of the State of Delaware (6 Del. C. ss.
18-101 et seq.), as amended from time to time (the "Act"), by and among the
members (the "Members") listed on Schedule A hereto and such other persons as
shall hereinafter become members as hereinafter provided.
BACKGROUND
WHEREAS, the Company was formed as a single member limited liability
company under the name Republic Engineered Products Holdings LLC pursuant to the
Act on January 28, 2003 by the filing of the Certificate of Formation with the
Secretary of State of the State of Delaware;
WHEREAS, prior to the date hereof, Blue Bar Holdings, L.P.
("Blue Bar Holdings"), as the sole member of the Company, caused the Company to
be merged with Blue Bar, L.P., a Delaware limited partnership ("Blue Bar"), with
the Company as the surviving entity;
WHEREAS, the current Member of the Company wishes to amend and restate
the Limited Liability Company Agreement in its entirety in order to, among other
things, establish the terms and conditions pursuant to which the Company will be
managed and to set forth the respective rights and obligations of the Member;
and
WHEREAS, this Agreement will be effective automatically upon the
effectiveness of the merger of Blue Bar, L.P. with and into the Company.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, mutually covenant and
agree as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
1.1 Definitions. For the purpose of this Agreement, the following terms
shall have the following meanings:
"Act" has the meaning set forth in the preamble.
"Affiliate" means, as to any Person (a) any Person which directly or
indirectly controls, is controlled by, or is under common control with such
Person, and (b) any Person who is a director, officer, partner or principal of
such Person or of any Person which directly or indirectly controls, is
controlled by, or is under common control with such Person. For purposes of this
definition, "control" of a Person means the power, direct or indirect, to direct
or cause the
direction of the management and policies of such Person whether by ownership of
capital stock, by contract or otherwise.
"Agreement" means this Amended and Restated Limited Liability Company
Agreement, as it may be amended, supplemented, modified or restated from time to
time in accordance with its terms.
"Available Cash" means at any point in time all cash and cash
equivalents on hand of the Company from any source (including, without
limitation, any proceeds from borrowing in excess of any loan repayment) less
cash reasonably reserved or reasonably anticipated to be required for debts and
expenses, interest and scheduled principal payments on any indebtedness, capital
expenditures, taxes or the activities of the Company, with the amount of such
reserves to be determined by the Board of Managers (acting reasonably and in
good faith).
"Blue Bar" has the meaning set forth in the preamble.
"Blue Bar Holdings" has the meaning set forth in the preamble.
"Board of Managers" means the board of managers of the Company.
"Capital Account" has the meaning set forth in Section 7.3.
"Capital Contribution" means any capital contribution of a Member.
"Carrying Value" means, with respect to any Company Asset, the asset's
adjusted basis for federal income tax purposes, except as otherwise provided
herein. The Carrying Values of all Company Assets shall be adjusted to equal
their respective fair market values, in accordance with the rules set forth in
Regulation Section 1.704-1(b)(2)(iv)(f), as of: (a) the date of the acquisition
of any additional Interest by any new or existing Member in exchange for more
than a de minimis Capital Contribution; (b) the date of the distribution of more
than a de minimis amount of Company Assets to a Member; or (c) the liquidation
of the Company within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g)
exclusive of a deemed liquidation under Code Section 708(b)(1)(B); provided,
however, that adjustments pursuant to clauses (a), (b) and (c) above shall be
made only if the Board of Managers reasonably determines that such adjustments
are necessary or appropriate to reflect the relative economic interests of the
Members. The Carrying Value of any Company Asset distributed to any Member shall
be adjusted immediately prior to such distribution to equal its fair market
value. Depreciation shall be calculated by reference to Carrying Value, instead
of tax basis once Carrying Value differs from tax basis. The Carrying Value of
any asset contributed (or deemed contributed under Regulation Section
1.704-1(b)(1)(iv)) by a Member to the Company will be the fair market value of
the asset at the date of its contribution thereto.
"Certificate of Formation" means the certificate of formation of the
Company filed with the Secretary of State of the State of Delaware on January
28, 2003, as it may be amended, supplemented or otherwise modified from time to
time.
"Chief Executive Officer" has the meaning set forth in Section 3.7(b).
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"Chief Financial Officer" has the meaning set forth in Section 3.7(c).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" has the meaning set forth in the caption to this Agreement.
"Company Assets" means all right, title and interest of the Company in
and to all or any portion of the assets of the Company and any property (real or
personal) or estate acquired in exchange therefor or in connection therewith.
"Contest" has the meaning set forth in Section 7.2(c).
"Depreciation" means, for each Fiscal Year or portion thereof, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such
period; provided, however, that if the Carrying Value of an asset differs from
its adjusted basis for federal income tax purposes at any time, Depreciation
shall be computed from and after that time in the manner described in Regulation
Section 1.704-3.
"Dissolution Event" has the meaning set forth in Section 8.1.
"Fiscal Period" means each fiscal period (other than a Fiscal Year) as
may be established by the Board of Managers.
"Fiscal Year" means the calendar year ending on December 31 of each
year.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time.
"Interest" means a Member's share of the profits and losses of the
Company and a Member's right to receive distributions of the assets of the
Company. Interests will be expressed as a number of Units. The Voting Interest
is not an "Interest" under this Agreement.
"Liabilities" has the meaning set forth in Section 5.2(a).
"Managing Director" means a member of the Board of Managers.
"Members" has the meaning set forth in the caption.
"Member Nonrecourse Debt" has the meaning ascribed to the term "partner
nonrecourse debt" in Regulation Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" has the meaning ascribed to the
term "partner nonrecourse debt minimum gain" in Regulation Section
1.704-2(i)(2).
"Member Nonrecourse Deductions" means any item of company loss or
deduction (including any expenditure under Section 705(a)(2)(B) of the Code)
that is attributable to a Member Nonrecourse Debt, as determined pursuant to
Regulation Section 1.704-2(i)(2).
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"Membership Register" means the register of Interests that shall be
kept and maintained by the Company.
"Minimum Gain" has the meaning set forth in Regulation Section
1.704-2(d)(1) and means the amount determined by (i) computing for each
nonrecourse liability of the Company any gain the Company would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability and (ii) aggregating the separately
computed gains. If, pursuant to Regulation Section 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2)(iv)(f), Company Assets are properly reflected on the books of the
Company at a Carrying Value that differs from the adjusted tax basis of such
property, the calculation of Minimum Gain pursuant to the preceding sentence
shall be made by reference to such Carrying Value. For purposes hereof, a
liability of the Company is a nonrecourse liability to the extent that no Member
or related person bears the economic risk of loss for that liability within the
meaning of Regulation Section 1.752-2.
"Net Income (Loss)" for any Fiscal Year or portion thereof means the
taxable income or loss of the Company for such period as determined in
accordance with the accounting method used by the Company for federal income tax
purposes with the following adjustments: (i) items of income, gain, loss or
deduction allocated pursuant to paragraphs 7.4(c)-(e) shall not be taken into
account in computing such taxable income or loss; (ii) any income of the Company
that is exempt from federal income taxation and not otherwise taken into account
in computing Net Income (Loss) shall be added to such taxable income or loss;
(iii) in lieu of the depreciation, amortization, or other cost recovery
deduction taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such taxable year; (iv) upon an
adjustment to the Carrying Value of any asset, pursuant to the definition of
Carrying Value, the amount of the adjustment shall be included as gain or loss
in computing such taxable income or loss; (v) gain or loss resulting from any
disposition of any asset with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Carrying Value
of such asset notwithstanding that the adjusted tax basis of such asset differs
from its Carrying Value; and (vi) except for items described in (i) above, any
expenditures of the Company not deductible in computing taxable income or loss,
not properly capitalizable and not otherwise taken into account in computing Net
Income (Loss) pursuant to this definition shall be treated as deductible items.
"Nonrecourse Deductions" has the meaning ascribed to such term in
Regulation Section 1.704-2(b)(l).
"Payment Date" has the meaning set forth in Section 6.2(c)(i).
"Percentage Interest" means, with respect to any Member, the Interest
of that Member expressed as a percentage of the Interests of all Members.
"Person" means an individual or a corporation, association,
partnership, limited liability company, joint venture, organization, business,
trust, or any other entity or organization, including a government or any
subdivision or agency thereof.
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"Protected Person" means: (i) each Member and its respective
Affiliates; (ii) any Managing Director; (iii) any Person who serves at the
request of the Company as an officer, director, partner, member or employee of
any other Person; (iv) any officer, employee or expressly authorized agent of
the Company; and (v) ▇▇▇▇ Investment Group, L.P. and any of its Affiliates for
so long as Blue Bar Holdings is a Member and ▇▇▇▇ Investment Group, L.P. or any
of its Affiliates is a limited partner of Blue Bar Holdings.
"Regulation" means the temporary or final regulations promulgated under
the Code, as amended from time to time. Any reference herein to any particular
provision of a Regulation means, where appropriate, the corresponding provision
in any successor Regulation.
"Republic" means Republic Engineered Products LLC, a Delaware limited
liability company and the Company's wholly-owned subsidiary.
"Secretary" has the meaning set forth in Section 3.7(d).
"Subsidiary" of a specified Person means any corporation, partnership,
limited liability company, joint venture or other legal entity of which a
specified Person (either alone and/or through and/or together with any other
Subsidiary) owns, directly or indirectly, more than 50% of the Voting Stock or
other equity interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such entity or
of which the specified Person controls the management.
"Tax" means any and all taxes (including net income, gross income,
franchise, value added, ad valorem, gross receipts, leasing, excise, fuel,
excess profits, sales, use, property (personal or real, tangible or intangible
or stamp taxes)), licenses, imposts, duties, charges, assessments, or
withholdings, of any nature whatsoever, general or special, ordinary or
extraordinary, now existing or hereafter created or adopted, together with any
and all penalties, fines, additions to tax and interest thereon.
"Tax Distribution" has the meaning set forth in Section 6.2(c)(i).
"Tax Matters Member" has the meaning set forth in Section 7.2(d).
"Tax Reorganization" has the meaning set forth in Section 4.3.
"Transfer" means, directly or indirectly, to offer, sell, exchange,
pledge, hypothecate, encumber, transfer, assign, or otherwise dispose of.
"Termination" means the date of the cancellation of the Certificate of
Formation of the Company following the end of the Winding Up Period by the
filing of a Certificate of Cancellation in the Office of the Secretary of State
of the State of Delaware.
"Unit" means all or a fractional share, as appropriate, of an Interest
in the Company. The number of Units outstanding and the holders thereof are set
forth on Schedule A, as such schedule may be amended from time to time pursuant
to Section 2.5. The Voting Unit is not a "Unit" under this Agreement.
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"USWA" means the United Steelworkers of America, AFL-CIO CLC.
"Voting Interest" means the interest held by the USWA, which interest
does not entitle the beneficial owner thereof to share in the profits and losses
of the Company or to receive distributions of the assets of the Company. The
Voting Interest shall be represented by one (1) Voting Unit at all times and
shall only entitle the USWA to exercise the rights set forth in Article III
hereof.
"Voting Stock" means any class or classes of capital stock or equity
interests, the holders of which are ordinarily entitled to vote for the election
of corporate directors (or Persons performing similar functions).
"Voting Unit" means the unit representing the Voting Interest.
"Winding Up Period" means the period from the Dissolution Event to the
Termination of the Company.
1.2 Usage Generally. The definitions in this Article I shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Articles, Sections, and
Schedules shall be deemed to be references to Articles and Sections of, and
Schedules to, this Agreement unless the context shall otherwise require. All
Schedules attached hereto shall be deemed incorporated herein as if set forth in
full herein and, unless otherwise defined therein, each term used in any
Schedule has the meaning ascribed to such term in this Agreement. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." Each accounting term not defined in this Agreement
has the meaning determined by GAAP. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II.
GENERAL PROVISIONS
2.1 Name. The Company shall conduct its activities under the name of
Republic Engineered Products Holdings LLC. The Managing Directors shall have the
power at any time and from time to time to change the name of the Company.
Prompt notice shall be given to each Member of such change.
2.2 Place of Business. The principal place of business and office of
the Company shall be located at, and the Company's business shall be conducted
from, such place or places as the Managing Directors may designate from time to
time. The street address of the registered office of the Company in Delaware
shall be at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, and the Company's registered agent at such address shall be
Corporation Service Company. The Managing Directors may from time to time change
the registered agent or office by an amendment to the Certificate of Formation
of the Company.
6
2.3 Formation; Term. The Company was formed upon the filing of the
Certificate of Formation of the Company on January 28, 2003 with the Secretary
of State of the State of Delaware. The term of the Company commenced on the date
of the filing of the Certificate of Formation in accordance with the Act and
shall continue in perpetuity, unless sooner dissolved, wound up and terminated
in accordance with Section 8.2.
2.4 Purpose; Powers. The Company is formed for the purpose of engaging
in any lawful business permitted by the Act or the laws of any jurisdiction in
which the Company may do business. The Company shall have the power to engage in
all activities and transactions that the Managing Directors from time to time
deem necessary or advisable in connection with the foregoing.
2.5 Members; Holder of Voting Unit. Schedule A hereto contains the
name, address, Capital Contribution and number of Units owned by each Member as
of the date of this Agreement. Schedule B hereto contains the name and address
of the holder of the Voting Unit as of the date of this Agreement. Schedule A
shall be revised from time to time to reflect (i) the admission or withdrawal of
Members, (ii) the Transfer of Units in accordance with the terms of this
Agreement, (iii) Capital Contributions, (iv) changes in the number of Units held
by each Member, (v) changes in the total number of Units outstanding and (vi)
other modifications to or changes in the information set forth therein. Schedule
B shall be revised from time to time to reflect changes in the holder of the
Voting Unit. Unless otherwise provided herein, a Person shall be deemed a Member
and shall have all rights and obligations of a Member hereunder upon the
recording of any such Transfer of Units in the records of the Company.
2.6 Competition. Each of the Members understands and acknowledges that
the other Members and their Affiliates may be interested or become interested,
directly or indirectly, in various other businesses and undertakings not
included in the Company and its Subsidiaries and such businesses and undertaking
may compete, either directly or indirectly, with the conduct of the business of
the Company and its Subsidiaries. The Members hereby agree that (i) the creation
of the Company and the assumption by each of the Members of their duties
hereunder shall be without prejudice to their rights (or the rights of their
Affiliates) to have such other interests and activities and to receive and enjoy
profits or compensation therefrom; (ii) each Member consents to the pursuit of
other ventures by the other Members or their Affiliates, even if such other
ventures are competitive with the business of the Company and its Subsidiaries,
without having or incurring any obligation to offer any interest in such venture
to the Company, its Subsidiaries or any Member; and (iii) no Member nor any
Affiliate thereof shall be obligated to present any particular investment
opportunity to the Company or its Subsidiaries even if such opportunity is of a
character which, if presented to the Company or its Subsidiaries, could be taken
by the Company or its Subsidiaries. For the purposes of this Section 2.6, the
term "Affiliate" shall include ▇▇▇▇ Investment Group, L.P. and its Affiliates
for so long as Blue Bar Holdings is a Member and ▇▇▇▇ Investment Group, L.P. or
its Affiliates is a limited partner of Blue Bar Holdings.
2.7 Member Liability. Each Member's liability shall be limited as set
forth in the Act. It is intended that a Member will not personally be liable for
any debts or losses of the Company beyond its respective Capital Contributions,
except as otherwise required by the Act or by a written agreement executed and
delivered by such Member.
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2.8 Admission of New Members. A Person shall be deemed admitted as a
Member at the time that such Person is named on the Membership Register as a
holder of Interests.
ARTICLE III.
MANAGEMENT AND OPERATION OF THE COMPANY
3.1 Management. Except as expressly provided herein, the management,
control and operation of the Company and the formulation and execution of
business and investment policy shall be vested exclusively in the Board of
Managers, and the Board of Managers shall have all of the rights, powers and
authority generally conferred under the Act or other applicable law on behalf
and in the name of the Company and to perform, negotiate and execute any
instruments, contracts or agreements on behalf of the Company that the Board of
Managers, exercising its sole discretion, deems necessary or desirable. Each
Managing Director shall hold office as a Managing Director until his or her
successor is duly elected or until his or her resignation, removal or death.
Managing Directors may be, but are not required to be, Members.
3.2 Composition of Board of Managers.
(a) The Board of Managers shall consist of nine (9) individuals
designated and appointed from time to time as provided in this Section 3.2. Blue
Bar Holdings and any transferee of more than 50% of Blue Bar Holdings' Units in
the Company shall be entitled to designate and appoint six (6) Managing
Directors and to remove and replace such individuals at any time and from time
to time, with or without cause. The USWA shall be entitled to designate and
appoint one (1) Managing Director and to remove and replace such individual at
any time and from time to time, with or without cause. The individual that is
serving as the duly appointed Chief Executive Officer shall also serve as a
Managing Director for so long as he or she serves as the Chief Executive Officer
or until removed by the Board of Managers, with or without cause, or until his
or her resignation or death. The Board of Managers shall from time to time
designate a duly appointed officer of the Company or Republic in addition to the
Chief Executive Officer to serve as a Managing Director, and such officer shall
serve as a Managing Director until removed by the Board of Managers, with or
without cause, or until his or her resignation or death. The initial Managing
Directors shall be those individuals set forth on Exhibit A attached hereto.
(b) Any Managing Director may be removed by the Board of Managers
without cause by the Board of Managers; provided, however, that a Managing
Director designated by a Member may not be removed without such Member's prior
written consent so long as such Member is then entitled to designate a Managing
Director to fill the vacancy that would be caused by such removal. The Board of
Managers may remove any Managing Director for cause without the prior written
consent of any Member, which removal for cause shall be determined in the sole
discretion of a majority of the entire Board of Managers, other than the
Managing Director to be removed. For the purposes of this Section 3.2(b), the
term "cause" shall mean gross negligence or willful misconduct by the Managing
Director in the performance of his or her duties in such capacity, conviction or
plea of guilty or nolo contendere by the
8
Managing Director to any felony or the taking of any action or omission that
could reasonably be expected to subject the Company to potential material civil
or criminal liability or to affect materially and adversely the reputation of
the Company.
(c) In the event that a vacancy is created on the Board of Managers at
any time by the death, disability, retirement, resignation or removal of any
Managing Director that had been designated by a Member pursuant to Section
3.2(a), the Member that had designated such individual shall be entitled to
designate another individual to serve as a Managing Director by delivering
notice to the Board of Managers, which shall cause the Company to deliver such
notice to the Members. Upon receipt of such notice, the other Members shall take
all actions necessary or convenient to cause the Managing Directors to appoint
such individual so designated as a Managing Director. In the event that a
vacancy is created on the Board of Managers at any time by the death,
disability, retirement, resignation or removal of any Managing Director that had
been designated by a Member pursuant to Section 3.2(a) and such Member is not
entitled to designate an individual to fill such vacancy, then a majority of the
entire Board of Managers shall be entitled to fill such vacancy.
(d) Notwithstanding anything herein to the contrary, the right of the
USWA to designate and remove Managing Directors pursuant to this Article III
shall terminate and be of no further force or effect immediately upon the USWA
ceasing to be the collective bargaining representative for any employees of
Republic and its Subsidiaries. For avoidance of doubt, upon the happening of
such event the Board of Managers shall be entitled to remove from office any
individual then serving as the Managing Director designated by the USWA pursuant
to Section 3.2(b) and either fill such vacancies pursuant to Section 3.2(c) or
reduce the size of the Board of Managers.
3.3 Compensation of Managing Directors. The Board of Managers shall
have the authority to fix the compensation of Managing Directors. The Managing
Directors may be reimbursed for their expenses, if any, of attendance at each
meeting of the Board of Managers and may be paid either a fixed sum for
attendance at each meeting of the Board of Managers or a stated salary as a
Managing Director. No such payment shall preclude any Managing Director from
serving the Company in any other capacity and receiving compensation therefor.
Members of committees of the Board of Managers may be allowed like compensation
for attending committee meetings.
3.4 Meetings of Managing Directors.
(a) Regularly scheduled, periodic meetings of the Board of Managers may
be held at such times and places and with such manner of notice as shall from
time to time be determined by resolution of the Board of Managers and
communicated to all Managing Directors; provided, however, that notice of the
time and place of each such meeting and any changes therein shall be given to
each Managing Director at least five (5) days in advance of the meeting.
(b) Special meetings of the Board of Managers may be called from time
to time upon the request of the Chief Executive Officer or a majority of the
Managing Directors then in office. Notice of each special meeting of the Board
of Managers shall be given, either
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personally or as hereinafter provided, to each Managing Director at least 24
hours before the meeting if such notice is delivered personally or by means of
telephone, telegram, telex, facsimile or electronic mail transmission and
delivery; two (2) days before the meeting if such notice is delivered by a
recognized express delivery service; and three (3) days before the meeting if
such notice is delivered through the United States mail. Any and all business
may be transacted at a special meeting that may be transacted at a regular
meeting of the Board of Managers. Neither the business to be transacted at, nor
the purpose of, any special meeting need be specified in the notice or waiver of
notice of such meeting.
(c) A majority of the Managing Directors then in office, including at
least two (2) Managing Directors designated by Blue Bar Holdings or its
successor, shall constitute a quorum for the transaction of business at any
meeting of the Board of Managers, and the act of a majority of the Managing
Directors present at any meeting at which there is a quorum shall be the act of
the Board of Managers. If a quorum shall not be present at any meeting, a
majority of the Managing Directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present.
(d) Any action required or permitted to be taken at any meeting of the
Board of Managers or any committee thereof may be taken without a meeting, if
all members of the Board of Managers or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Managers or committee.
(e) Managing Directors may participate in a meeting of the Board of
Managers by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear and be heard at the same
time. Participation in a meeting by these means shall constitute presence in
person at any such meeting.
3.5 Managing Director Committees.
(a) The Board of Managers may by resolution establish, name or dissolve
one or more committees, each committee to consist of one or more of the Managing
Directors. Each committee shall keep regular minutes of its meetings and report
the same to the Board of Managers when required.
(b) Any committee established pursuant to this Section 3.5, but only to
the extent provided in the resolution of the Board of Managers establishing such
committee or otherwise delegating specific power and authority to such committee
and as limited by this Agreement, shall have and may exercise all the powers and
authority of the Board of Managers in the management of the business and affairs
of the Company.
(c) Time, place and notice, if any, of meetings of a committee shall be
determined by any such committee. At meetings of a committee, a majority of the
number of committee members designated by the Board of Managers shall constitute
a quorum for the transaction of business. The act of a majority of the committee
members present at any meeting at which a quorum is present shall be the act of
the committee, except as otherwise specifically provided by law, the Certificate
of Formation or this Agreement. If a quorum is not present at a
10
meeting of a committee, the committee members present may adjourn the meeting
from time to time, without notice other than an announcement at the meeting,
until a quorum is present.
3.6 Time Commitment; Resignations.
(a) The Managing Directors will devote so much of their time to the
business of the Company as, in their sole discretion, will be required for the
proper performance of their duties under this Agreement, and it is expressly
understood and agreed that the Managing Directors as such shall not be required
to devote their entire time to the business of the Company.
(b) Any Managing Director may resign at any time by giving written
notice to the Board of Managers. The resignation of any Managing Director shall
take effect upon receipt of notice thereof or at such later time as shall be
specified in such notice, and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
3.7 Officers.
(a) The Board of Managers and any committee thereof may employ and
retain Persons as may be necessary, appropriate or convenient to manage the
execution of the Company's business and investment policies, including employees
and agents who may be designated as officers with titles, including, but not
limited to "chairman of the board", "chief executive officer," "vice president,"
"secretary" and "chief financial officer."
(b) The Board of Managers shall appoint an individual to serve as the
"chairman of the board of managers" of the Company (the "Chairman"), and such
officer shall shall preside at all meetings of the Board of Managers and shall
perform such other duties as may be assigned to such person by the Board of
Managers. In the absence of the Chairman, the Chief Executive Officer (as
defined below) shall preside over meetings of the Board of Managers, and shall
have such other duties as may be assigned to such person by the Board of
Managers.
(c) The Board of Managers shall appoint an individual to serve as the
"chief executive officer" of the Company (the "Chief Executive Officer"), and
such officer shall have general and active management of the business of the
Company and shall see that all orders and resolutions of the Board of Managers
are carried into effect. The Board of Managers may also delegate to the Chief
Executive Officer the power to appoint and remove such other officers, assistant
officers and agents as he or she shall from time to time deem necessary,
appropriate or convenient.
(d) The Board of Managers shall appoint an individual to serve as the
"chief financial officer" of the Company (the "Chief Financial Officer"), and,
unless the Board of Managers by resolution otherwise provides, the Chief
Financial Officer shall be the treasurer and chief accounting and financial
officer of the Company. The Chief Financial Officer shall have the custody of
the Company's funds and securities, shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Company and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Company in such depositories as may be designated by the Board of Managers. The
Chief Financial Officer shall disburse the funds of the Company as may be
ordered by the Board of Managers, taking proper vouchers for such
11
disbursements, and shall render to the Chief Executive Officer and the Board of
Managers, at its regular meetings, or when the Board of Managers so requires, an
account of all his or her transactions as Chief Financial Officer and of the
financial condition of the Company. The Chief Financial Officer shall perform
such other duties and have such other powers as the Board of Managers or the
Chief Executive Officer may from time to time prescribe.
(e) The Board of Managers shall appoint an individual to serve as the
"secretary" of the Company (the "Secretary"), and the Secretary shall attend all
meetings of the Members, the Board of Managers and (as required) committees of
the Board of Managers and shall record all the proceedings of such meetings in
books to be kept for that purpose. The Secretary shall give, or cause to be
given, notice of all meetings of the Members and special meetings of the Board
of Managers and shall perform such other duties as may be prescribed by the
Board of Managers or the Chief Executive Officer. The Secretary shall have
custody of the seal of the Company and the Secretary, or an assistant secretary,
shall have authority to affix the same to any instrument requiring it, and when
so affixed, it may be attested by his signature or by the signature of such
assistant secretary. The Board of Managers may give general authority to any
other officer to affix the seal of the Company and to attest the affixing
thereof by his signature.
(f) Any officer of the Company, or other agent acting in such capacity,
may be removed, either with or without cause, by the Board of Managers.
3.8 Members; Certain Duties and Obligations.
(a) The duties and obligations imposed on each Member in its capacity
as a Member shall be those set forth in this Agreement. Each Member shall be
entitled to rely on the provisions of this Agreement, and no Member shall be
liable to the Company or to any Member for any action or refusal to act taken in
good faith reliance on the terms of this Agreement.
(b) Except as otherwise provided herein, no Member shall take any
action that could cause the Company to be classified for federal income tax
purposes as an association taxable as a corporation and not as a partnership.
(c) No Member shall take, or cause to be taken, any action that would
result in any Member having any personal liability for the obligations of the
Company.
(d) Nothing in this Agreement shall prevent any Member from making
secured or unsecured loans to the Company by agreement with the Company.
3.9 Approval by Members. (a) Except as otherwise provided herein, all
actions of the Company requiring the approval of the Members in either their
capacity as Members under this Agreement or the Act shall be approved by the
Members holding a majority of the Interests, either at a meeting of the Members
or by written consent in lieu thereof. Any action requiring the approval of the
Members may be taken without a meeting, without prior notice and without a vote,
if a consent or consents in writing, setting forth the action to be taken, is
signed by the Members beneficially owning a majority of the Interests.
12
ARTICLE IV.
MEMBERS' INTERESTS
4.1 Form of Units. Units and the Voting Unit will be held in
"book-entry" form and will not be certificated unless and until otherwise
determined by the Board of Managers. In the event that the Board of Managers
determines to cause the Units and the Voting Unit to be certificated, any such
certificates that have not been registered pursuant to the Securities Act shall
be imprinted with a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY
HAVE BEEN REGISTERED OR AN EXEMPTION THEREFROM IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AND SHALL BE TRANSFERABLE ONLY UPON THE TERMS AND CONDITIONS
OF THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT OF THE COMPANY, A COPY OF WHICH IS ON FILE WITH THE
COMPANY."
Upon registration of any Units under the Securities Act, the holder thereof
shall be entitled to receive from the Company, without expense, upon delivery to
the Company of the existing certificate representing the Units and satisfactory
evidence of such registration, a new certificate not bearing the restrictive
legend otherwise required by this Section 4.1.
4.2 Transfers of Interests Generally.
(a) Any purported Transfer by a Member of all or any part of its Units
to any Person in violation of this Article IV shall be null and void and of no
force or effect.
(b) Blue Bar Holdings may Transfer all or any of its Units in the
Company to any Person at any time. Subject to the provisions of this Article IV,
if Blue Bar Holdings Transfers any Units by way of assignment, the assignee of
such Units shall become a substituted Member with respect to the Units so
assigned when all of the following conditions have been satisfied:
(i) A duly executed and acknowledged written instrument of assignment
shall have been filed with the Company, which instrument shall (A) specify
the Units being assigned, and (B) set forth the intention of the assignor
that the assignee succeed to the assignor's Units as a substituted Member;
(ii) The assignor and assignee shall have executed such other
instrument(s) as Blue Bar Holdings may deem necessary or desirable to
effect such substitution, including the written acceptance and assumption
by the assignee of the provisions of this Agreement; and
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(iii) The other provisions of this Section 4.2 shall have been
complied with.
(c) A Member shall have no right to withdraw from the Company prior to
its termination without the prior consent of the Board of Managers (or officers
authorized by the Board of Managers to give such consent), other than following
a Transfer of all of such Member's Units in accordance with this Article IV.
(d) Concurrently with the admission of any additional Member, the Board
of Managers (or officers authorized by the Board of Managers) shall forthwith
cause any necessary papers to be filed and recorded and notices to be given
wherever and to the extent required showing the admission of an additional
Member, all at the expense, including payment of any professional and filing
fees incurred, of such additional Member.
(e) If any Unit is Transferred during any accounting period in
compliance with the provisions of this Article IV, each item of income, gain,
loss, expense, deduction and credit and all other items attributable to such
Interest for such period shall be divided and allocated between the transferor
and the transferee by taking into account their varying interests during such
period in accordance with Section 706(d) of the Code and the Regulations
thereunder, using any conventions permitted by law and selected by the Board of
Managers. All such distributions with respect to the Transferred Units on or
before the date of such Transfer shall be made to the transferor, and all
distributions thereafter shall be made to the transferee. Solely for purposes of
making such allocations and distributions, the Company shall recognize a
Transfer on the date that the Company receives notice of the Transfer from the
Member Transferring its Units which complies with this Article IV.
(f) The USWA shall not Transfer the Voting Unit, and any purported
Transfer of all or any part of the Voting Unit to any Person in violation of
this Article IV shall be null and void and of no force or effect. Unless
otherwise agreed to by the Company, immediately upon the USWA ceasing to be the
collective bargaining representative for any of the employees of the Company and
its Subsidiaries, and without any action on the part of the Company or any of
its agents, the Voting Unit shall no longer represent any voting or other
interest whatsoever in the Company.
(g) Section 4.2(c), (d) and (e) do not apply to any Transfer of Units
by Blue Bar Holdings by way of pledge to one or more secured lenders to the
Company or any of its Subsidiaries.
14
4.3 Transfers Affecting Tax Status. No Member shall be permitted to
effect any Transfer of Units that could cause the Company to be classified for
federal income tax purposes as an association taxable as a corporation and not
as a partnership, and any such Transfer shall be null and void unless and until
the Board of Managers has expressly approved such Transfer. In the event that
the Board of Managers consents to any such Transfer, the Board of Managers may
delay any such Transfer for a period of up to 180 days for the purpose of
reorganizing the Company as a corporation, amending this Agreement or taking any
other action that the Board of Managers may deem necessary, appropriate or
convenient (a "Tax Reorganization").
ARTICLE V.
INDEMNIFICATION
5.1 Exculpation. No Protected Person shall be liable to the Company or
any Member for any action taken or omitted to be taken by it or by any other
Member or other Person with respect to the Company, including, without
limitation, any negligent act or failure to act, except in the case of a
liability resulting from such Protected Person's own fraud, gross negligence or
willful malfeasance. Any Protected Person may consult with legal counsel and
accountants with respect to Company affairs (including interpretations of this
Agreement) and shall be fully protected and justified in any action or inaction
which is taken or omitted in good faith, in reliance upon and in accordance with
the opinion or advice of such counsel or accountants. In determining whether a
Protected Person acted with the requisite degree of care, such Protected Person
shall be entitled to rely on written or oral reports, opinions, certificates and
other statements of the directors, officers, employees, consultants, attorneys,
accountants and professional advisors of the Company, selected with reasonable
care; provided, that no such Protected Person may rely upon such statements if a
reasonable person in similar circumstances should have believed that such
statements were materially false.
5.2 Indemnification.
(a) To the fullest extent permitted by law, the Company shall
indemnify, hold harmless, protect and defend each Protected Person against any
losses, claims, damages or liabilities, including without limitation reasonable
legal fees or other expenses incurred in investigating or defending against any
such losses, claims, damages or liabilities, and any amounts expended in
settlement of any claims approved by the Company (collectively, "Liabilities"),
to which any Protected Person may become subject: (i) by reason of any act or
omission or alleged act or omission (even if negligent) performed or omitted to
be performed in connection with the activities of the Company; (ii) by reason of
the fact that it is or was acting in connection with the activities of the
Company in any capacity or that it is or was serving at the request of the
Company as a partner, stockholder, member, manager, director, officer, employee
or agent of any Person; or (iii) by reason of any other act or omission or
alleged act or omission arising out of or in connection with the activities of
the Company; unless such Liability results from such Protected Person's own
fraud, gross negligence or willful malfeasance. A Protected Person shall have no
personal liability to the Company or any Member for monetary damages for breach
of fiduciary duty as a Protected Person; provided, however, that the foregoing
provision
15
shall not eliminate the liability of a Protected Person for acts or omissions
which involve gross negligence, fraud or intentional misappropriation of funds.
(b) The Company shall promptly reimburse (or advance to the extent
reasonably required) each Protected Person for reasonable legal or other
expenses (as incurred) of each Protected Person in connection with
investigating, preparing to defend or defending any claim, lawsuit or other
proceeding relating to any Liabilities for which the Protected Person may be
indemnified pursuant to this Section 5.2; provided, that such Protected Person
executes a written undertaking to repay the Company for such reimbursed or
advanced expenses if it is finally judicially determined that such Protected
Person is not entitled to the indemnification provided by this Section 5.2.
(c) The provisions of this Section 5.2 shall continue to afford
protection to each Protected Person regardless of whether such Protected Person
remains in the position or capacity pursuant to which such Protected Person
became entitled to indemnification under this Section 5.2 and regardless of any
subsequent amendment to this Agreement; provided, that no such amendment shall
reduce or restrict the extent to which these indemnification provisions apply to
actions taken or omissions made prior to the date of such amendment.
(d) Any indemnification under this Section 5.2 or otherwise shall be
paid out of and to the extent of the Company's assets only.
5.3 Insurance. The Company may purchase and maintain insurance on
behalf of any Protected Person, or any other Person that is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of such person's status as such, whether or not the
Company would have the power to indemnify such person against such liability
under applicable law or this Article V.
ARTICLE VI.
CAPITAL CONTRIBUTIONS; DISTRIBUTIONS
6.1 Capital Contributions.
(a) As of the date of this Agreement, each Member has contributed,
transferred, assigned and conveyed to the Company an aggregate amount in cash or
in kind as set forth opposite such Member's name in Schedule A attached hereto.
Other than as provided in this Section 6.1, or as otherwise agreed by the
Members, no Member shall have any obligation to make any additional
contributions to the capital of the Company. No Member shall have the right to
withdraw capital from the Company, to receive interest on such Member's Capital
Contributions or to receive any distribution or return of such Member's Capital
Contributions.
(b) The Board of Managers shall have the authority to offer Units in
the Company and admit additional Members on such terms and conditions as the
Board of Managers may determine, and any such additional Capital Contributions
may entitle the Members making such Capital Contributions to different rights
regarding voting, appointing Managing Directors,
16
profit and loss allocations and distributions, whether subordinate or preferred,
as the Board of Managers may determine in its sole discretion.
6.2 Distributions.
(a) Distributions shall be made in such amounts and at such times, in
cash or in kind, as the Board of Managers shall determine from time to time.
(b) Except as provided in Section 6.2(c), each distribution shall be
made as follows:
(i) First, among the Members in such ratio as necessary to cause,
to the maximum extent possible, each Member (and its predecessors in
interest) to have received a cumulative amount of distributions from
the Company equal to the product of (1) its Percentage Interest (as
the same may have varied from time to time) multiplied by (2) the
cumulative distributions theretofore made by the Company under this
Section 6.2, the intent of the Members being that distributions made
under Section 6.2(c) shall be treated as advance distributions of
amounts to be distributed under Section 6.2(b)(ii), and
(ii) Thereafter, to the Members pro rata in accordance with their
respective Percentage Interests.
(c) Subject to the provisions of the outstanding indebtedness of the
Company or its Subsidiaries, Available Cash shall be distributed in the
following manner:
(i) To each Member on or before the fifth business day prior to
the date a tax payment (estimated or otherwise) is due for a Member
(the "Payment Date"), in respect of the federal (including alternative
minimum), state, or local income, franchise, capital stock or similar
tax liability of such Member as computed in Section 6.2(c)(iii) (a
"Tax Distribution").
(ii) The Tax Distributions payable to the Members shall be made
in an amount equal to the sum of the actual separate tax payments for
each Member made, or to be made, on the relevant Payment Date in
respect of taxable income, assets, property or capital of the Company.
(iii) The amount to be distributed, shall equal the following
(calculated separately for each Member): the product of (1) the
highest combined marginal corporate federal, state, and local income
tax rates (including to the extent applicable, if any, alternative
minimum tax) applicable to the Member's allocable share of taxable
income of the Company and in effect at the time of the distribution,
times (2) the remainder, if any, of (A) the product of (i) the number
of fiscal quarters during such Fiscal Year which have elapsed on or
before such Payment Date, times (ii) 25% of the positive excess, if
any, of (a) the cumulative net taxable income, if any, to be allocated
to such Member pursuant to this Agreement for such Fiscal Year, as
estimated by the Board of Managers in good faith as of the applicable
Payment Date, less (b) the cumulative taxable loss that has been
allocated to such Member in prior Fiscal Years to the extent such loss
has not previously been taken into account pursuant to this provision,
minus (B) the sum of the cumulative
17
distributions theretofore made to the Member pursuant to this Section
6.2(c)(iii) in respect of such Fiscal Year.
(iv) Upon notice from the Board of Managers, the Tax
Distributions made to all Members in respect of a given Fiscal Year
shall be adjusted so as to eliminate any differences between the
actual Tax Distributions made for such year and the amount of such Tax
Distributions that would have been made based on actual taxable income
reported on the Members' tax returns for such Fiscal Year (or, if
applicable, the amount of taxable income of the Company allocated to
the Members as a result of a final adjustment by a taxing authority).
The Board of Managers shall provide notice to the Members of the
adjustments as soon as practicable after the end of each Fiscal Year
of the Company. Such adjustments shall, if the requirement therefor is
not eliminated by operation of Section 6.2(b)(i) be effected by
adjusting Tax Distributions under this Section 6.2(c) made to all
Members in the next succeeding taxable year and, thereafter, as
necessary until the differences are eliminated.
(d) For purposes of this Agreement, amounts distributed to the Members
pursuant to Section 6.2(c) shall be deemed to be advance distributions of
amounts to be distributed pursuant to Section 6.2(b).
ARTICLE VII.
BOOKS AND REPORTS; TAX MATTERS;
CAPITAL ACCOUNTS; ALLOCATIONS
7.1 General Accounting Matters.
(a) Allocations of Net Income (Loss) pursuant to Section 7.4 shall be
made by or under the direction of the Board of Managers at the end of each
Fiscal Period.
(b) Each Member shall be supplied with the Company information
necessary to enable such Member to prepare in a timely manner its federal, state
and local income tax returns and such other financial or other statements and
reports that are approved by the Board of Managers, provided, that each Member
will receive a good faith estimate of taxable income of the Company allocated to
such Member for each taxable year, no later than July 15th of the calendar year
following the calendar year in which the Company's applicable taxable year ends.
As soon as reasonably practicable after the filing of the Company's income tax
return, each Member will be provided a copy of the tax return as filed.
(c) The Board of Managers shall keep or cause to be kept books and
records pertaining to the Company's business showing all of its assets and
liabilities, receipts and disbursements, realized profits and losses, Members'
Capital Accounts and all transactions entered into by the Company. Such books
and records of the Company shall be kept at the office of the Company and the
Members and their representatives shall at all reasonable times have free access
thereto for the purpose of inspecting or copying the same. The Company's books
of account shall be kept on an accrual basis or as otherwise provided in this
Agreement or by the
18
Board of Managers and otherwise in accordance with GAAP, except that for income
tax purposes such books shall be kept in accordance with applicable tax
accounting principles.
(d) Unless otherwise provided in this Agreement, all determinations,
valuations and other matters of judgment required to be made for accounting and
tax purposes under this Agreement shall be made by or under the direction of the
Board of Managers and in accordance with this Agreement, and shall be conclusive
and binding on all Members, former Members, their successors or legal
representatives and any other Person except for computational errors or fraud,
and to the fullest extent permitted by law no such person shall have the right
to an accounting or an appraisal of the assets of the Company or any successor
thereto except for computational errors or fraud.
(e) The books of the Company shall be examined, certified and audited
annually as of the end of a Fiscal Year, by a recognized firm of independent
certified public accountants. For each Fiscal Year of the Company, such
accountants shall determine and prepare full financial statements, including,
without limitation, a balance sheet, an income statement and a statement of
changes in financial position of the Company. The Tax Matters Member shall
promptly upon receipt of any such financial statements transmit copies thereof
to each Member, together with the report and management letter of such
accountants covering the results of such audit. The cost of all audits and
reports provided to the Members pursuant to this Section 7.1 shall be an expense
of the Company.
7.2 Certain Tax Matters.
(a) The taxable year of the Company shall be the same as its Fiscal
Year (unless otherwise required by applicable law).
(b) The Tax Matters Member shall cause to be prepared all federal,
state and local tax returns of the Company for each year for which such returns
are required to be filed and, after approval of such returns by the Board of
Managers, shall cause such returns to be timely filed. The Board of Managers
shall determine the appropriate treatment in accordance with this Agreement, of
each item of income, gain, loss, deduction and credit of the Company and the
accounting methods and conventions under the tax laws of the United States, the
several states and other relevant jurisdictions as to the treatment of any such
item or any other method or procedure related to the preparation of such tax
returns and shall take all steps necessary to ensure that the other Members are
"notice partners" within the meaning of Section 6231 (a) (8) of the Code.
Notwithstanding anything in this Section 7.2 to the contrary, the Tax Matters
Member shall provide all material income tax returns of the Company or its
Subsidiaries to the Members no later than the earlier of (x) August 15th (other
than for the first taxable year of the Company) of the calendar year following
the calendar year in which the Company's applicable taxable year ends, or (y) 30
days prior to the date on which the Board of Managers intends to file such tax
return, for review and comment. Such Members shall provide to the Tax Matters
Member any comments they have within 20 days after receipt of such tax returns.
The Tax Matters Member shall consult in good faith and shall take all reasonable
efforts to incorporate all such reasonable comments into the tax returns prior
to filing.
19
(c) If a claim for Tax is asserted in a Contest (as defined below), the
Tax Matters Member shall (i) represent the Company's interests in any such
Contest and may employ counsel of its choice at the Company's expense, and (ii)
control the conduct of such Contest, including the settlement or other
disposition thereof, provided, that the Tax Matters Member shall not enter into
any settlement or compromise with respect to allocation issues without the
consent of the Members, which consent shall not be unreasonably withheld. If the
Tax Matters Member (acting in good faith) reasonably determines not to continue
a Contest involving allocation issues, the other Members may continue the
Contest on behalf of the Company, provided, that, any costs and expenses
(including the fees and expenses of any consultants, attorneys, accountants or
other persons) incurred by such Members shall be solely for their account,
provided, however, that no settlement shall be made without the prior written
consent of the Tax Matters Member, which consent shall not be unreasonably
withheld. For purposes of this Agreement, a "Contest" is any audit, court
proceeding or other dispute with respect to any Tax matter that affects the
Company or, to the extent derivative from the Company, any of its Members, and
is determinable at the Company level.
(d) The "tax matters partner" for purposes of Section 6231(a)(7) of the
Code (the "Tax Matters Member") shall be Blue Bar Holdings.
(e) In connection with any Transfer of a Member's Interest or any
portion thereof permitted by this Agreement or in connection with the
distribution of any Company property to a Member, the Tax Matters Member shall,
at the written request of the transferor or transferee or distributee, cause the
Company to make an election in accordance with Regulation Section 1.754-1(b) to
adjust the basis of the Company's property in the manner provided in Code
Sections 734(b) or 743(b), as applicable, and such transferor, transferee or
distribute shall pay all costs incurred by the Company in connection therewith,
including, without limitation, reasonable attorney's and accountant's fees.
(f) Unless approved by the Board of Managers, the Company shall not
file any election pursuant to sections 761 or 7701 of the Code or Regulation
Section 301.7701-3 that would cause the Company to be treated as an entity other
than a partnership for federal income tax purposes.
7.3 Capital Accounts. There shall be established for each Member on the
books of the Company as of the date hereof, or such later date on which such
Member is admitted to the Company, a capital account (each being a "Capital
Account"). Each Capital Contribution shall be credited to the Capital Account of
such Member on the date of such Capital Contribution. In addition, each Member's
Capital Account shall be (a) credited with such Member's allocable share of any
Net Income (Loss) of the Company (to the extent that such Net Income (Loss)
represents taxable income of the Company), or items of income or gain allocated
pursuant to Section 7.4(c) or (d), (b) debited with (i) distributions to such
Member of cash or the fair market value of property distributed to such Member
(reduced by the amount of any Company liabilities assumed by such Member or
secured by the distributed property), (ii) the amount of any liabilities of such
Member assumed by the Company or which are secured by any property contributed
by such Member to the Company, and (iii) such Member's allocable share of Net
Income (Loss) of the Company (to the extent that such Net Income (Loss)
represents taxable loss of the Company) and expenditures of the Company
described or treated under
20
Section 704(b) of the Code as described in Section 705(a)(2)(B) of the Code, and
other items of loss or deduction allocated pursuant to Section 7.4(c) or 7.4(d),
and (c) otherwise maintained in accordance with the provisions of the Code. Any
other item which is required to be reflected in a Member's Capital Account under
Section 704(b) of the Code or otherwise under this Agreement shall be so
reflected. Capital Accounts shall be appropriately adjusted to reflect transfers
of part (but not all) of a Member's Interest in the Company. Interest shall not
be payable on Capital Account balances. The foregoing and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Regulation Section 1.704-1(b)(2)(iv) and, to the greatest extent
practicable, shall be interpreted and applied in a manner consistent with such
Regulation. The Board of Managers, to the extent otherwise consistent with this
Agreement, shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Members and the amount of
capital reflected on the Company's balance sheet, in accordance with Regulation
Section 1.704-1(b)(2)(iv)(q), (ii) make any appropriate modifications in the
event that unanticipated events might otherwise cause the Agreement not to
comply with Regulation Section 1.704-1(b)(2)(iv), and/or (iii) make any further
adjustments that are necessary or appropriate so as to preserve, to the maximum
extent possible, the economic arrangement among the Members as set forth in this
Agreement.
7.4 Allocations.
(a) Subject to Sections 7.4(b), 7.4(c) and 7.4(d), Net Income (Loss) of
the Company shall be allocated among all Members in proportion to their
respective Percentage Interests.
(b) The Board of Managers shall use all reasonable efforts to prevent
any allocation from causing or increasing a negative balance in a Member's
Capital Account to the extent such negative balance would impair the validity of
allocations made under this Section 7.4.
(c) Notwithstanding any other provisions of this Section 7.4, Net
Income (Loss) (or items of income, gain, loss or deduction, as the case may be)
shall be allocated in accordance with the following provisions of this Section
7.4(c) to the extent such provisions shall be applicable.
(i) Nonrecourse Deductions of the Company for any Fiscal Year
shall be allocated to the Members in proportion to their Percentage
Interests. Member Nonrecourse Deductions of the Company or deductions
for which a Member bears the economic risk of loss for any Fiscal Year
shall be specially allocated to the Member who bears the economic risk
of loss under Regulation Section 1.752-2 for the liability in
question. The provisions of this Section 7.4(c)(i) are intended to
satisfy the requirements of Regulation Sections 1.704-2(e)(2) and
1.704-2(i)(1) and shall be interpreted in accordance therewith for all
purposes under this Agreement.
(ii) Except as otherwise provided in Regulation Section
1.704-2(f), if there is a net decrease in the Minimum Gain of the
Company during any Fiscal Year, each Member shall be specially
allocated items of Company income and gain for such
21
year in proportion to, and to the extent of that Member's share of the
net decrease in Minimum Gain, within the meaning of Regulation Section
1.704-2(g)(2). The provisions of this Section 7.4(c)(ii) are intended
to comply with the minimum gain chargeback requirements of Regulation
Section 1.704-2(f) and shall be interpreted in accordance therewith for
all purposes under this Agreement.
(iii) Except as otherwise provided in Regulation Section
1.704-2(i)(4), if there is a net decrease in Member Nonrecourse Debt
Minimum Gain during any Fiscal Year, each Member that has a share of
such Member Nonrecourse Debt Minimum Gain, determined in accordance
with Regulation Section 1.704-2(i)(5), as of the beginning of such
year shall be specially allocated items of Company income and gain for
such year (and, if necessary, for succeeding years) in proportion to,
and to the extent of such Member's share of the net decrease in Member
Nonrecourse Debt Minimum Gain. The provisions of this Section
7.4(c)(iii) are intended to comply with the partner nonrecourse debt
minimum gain chargeback requirement of Regulation Section
1.704-2(i)(4) and shall be interpreted in accordance therewith for all
purposes under this Agreement.
(iv) In the event any Member unexpectedly receives any
adjustments, allocations or distributions described in paragraphs
(b)(2)(ii)(d)(4), (5) or (6) of Regulation Section 1.704-1, there
shall be specially allocated to such Member such items of Company
income and gain, at such times and in such amounts as will eliminate
as quickly as possible that portion of any deficit in its Capital
Account (as the same is permitted to be specially adjusted for
purposes of applying this test under Section 1.704-1(b)(2)(ii)(d) of
the Regulations) caused or increased by such adjustments, allocations
or distributions. The provisions of this Section 7.4(c)(iv) are
intended to qualify as a "qualified income offset" under Section
704(b) of the Code and Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted in accordance therewith for all purposes under
this Agreement.
(d) To the extent permitted by the Code and the Regulations thereunder,
any special allocations pursuant to Section 7.4(c) or any adjustments
necessitated by the provisions of Section 7.4(b) shall be taken into account in
computing subsequent allocations of Net Income (Loss) pursuant to Section 7.4(a)
so that the net amount of any items so allocated and the subsequent allocations
of Net Income (Loss) to the Members shall, to the extent possible, be equal to
the net amounts that would have been allocated to each such Member pursuant to
the provisions of Section 7.4(a) if such allocations and/or adjustments under
Section 7.4(c) or Section 7.4(b), respectively, had not occurred.
(e) For federal, state and local income tax purposes:
(i) Except as hereafter provided in this Section 7.4(e) or as may
otherwise be provided by the Code, all items of income, gain, loss,
deduction and credit of the Company shall be allocated among the
Members in a manner consistent with the manner that the corresponding
constituent items of Net Income (Loss) or items of income, gain, loss
or deduction are allocated among the Members pursuant to the other
provisions of this Section 7.4.
22
(ii) If a Member contributes property to the Company, either upon
formation of the Company or otherwise, with a fair market value that
differs from its adjusted basis at the time of contribution, or if the
Carrying Value of any Company asset is adjusted so as to differ from
the asset's adjusted basis, then income, gain, loss and deductions in
respect of such asset shall, solely for federal income tax purposes,
be allocated among the Members so as to take account of any such
variation in accordance with Regulation Section 1.704-3 under the
traditional method unless otherwise approved by the Board of Managers.
(iii) In the event there is any recapture of Depreciation or item
of tax credit, the allocation thereof shall be made among the Members
in accordance with the provisions of Regulation Sections 1.1245-1(e)
and 1.1250-1(f).
(iv) The allocations made pursuant to this Section 7.4(e) shall
not be reflected in any Member's Capital Account.
7.5 Withholding. Each Member hereby authorizes the Company to withhold
and to pay over any Taxes payable by the Company or any of its affiliates as a
result of such Member's participation in the Company; if and to the extent that
the Company shall be required to withhold any such taxes, such Member shall be
deemed for all purposes of this Agreement to have received a payment from the
Company as of the time such withholding is required to be paid, which payment
shall be deemed to be a distribution to such Member to the extent that the
Member is entitled to receive a distribution. To the extent that the aggregate
of such payments to a Member for any period exceeds the distributions to which
such Member is entitled for such period, the amount of such excess shall be
considered a demand loan from the Company to such Member, with interest at an
interest rate of 5% compounded annually, which interest shall be treated as an
item of Company income until discharged by such Member by repayment, which may
be made in the sole discretion of the Manager out of distributions to which such
Member would otherwise be subsequently entitled. The withholdings referred to in
this Section 7.5 shall be made at the maximum applicable statutory rate under
the applicable tax law unless the Manager receives documentation, satisfactory
to the Board of Managers, to the effect that a lower rate is applicable, or that
no withholding is applicable.
7.6 Distributions by Subsidiaries. The Board of Managers shall cause
any Subsidiary of the Company to make such distributions of cash to the Company
(to the extent funds are legally available therefor and permitted by applicable
debt instruments) as are necessary for the Company to make the distributions
contemplated under Article VI.
Article VIII.
DISSOLUTION; WINDING UP; TERMINATION
8.1 Dissolution. The Company shall commence its winding up upon the
first to occur of the following (the "Dissolution Event"): (i) the written
consent of each of the Members; or (ii) the entry of a decree of judicial
dissolution under Section 18-802 of the Act. The Dissolution Event shall be
effective on the day on which such event occurs and immediately
23
thereafter the Company shall commence the Winding Up Period during which its
affairs shall be wound up in accordance with Sections 8.2 and 8.3.
8.2 Winding Up and Termination.
(a) Upon the occurrence of the Dissolution Event, the property and
business of the Company shall be wound up by the Board of Managers. Subject to
the requirements of applicable law and the further provisions of this Section
8.2, the Board of Managers shall determine whether to sell or otherwise dispose
of Company assets or to distribute the same in kind and the timing and manner of
such disposition or distribution.
(b) Within a reasonable period of time following the occurrence of the
Dissolution Event, after allocating all Net Income (Loss) and other items of
income, gain, loss or deduction, the Company's assets shall be applied and
distributed in the following manner and order of priority:
(i) the claims of all creditors of the Company (including Members
except to the extent not permitted by law) shall be paid and
discharged other than liabilities for which reasonable provision for
payment has been made; and
(ii) to the Members in accordance with the positive balances of
their respective Capital Accounts.
Notwithstanding anything to the contrary in this Agreement, liquidating
distributions shall be made no later than the last to occur of (x) 90 days after
the date of disposition of the last remaining asset of the Company and (y) the
end of the Company's taxable year in which the disposition referred to in clause
(x) above shall occur. This Section 8.2(b) is intended to comply with, and shall
be interpreted consistently with, the requirements of Regulation Section
1.704-1(b)(2)(ii)(b)(2).
(c) Securities for distribution in kind shall be allocated to the
Members. Notwithstanding any other provision of this Agreement, the amount by
which the fair market value of any property to be distributed in kind to the
Members exceeds or is less than the adjusted basis of such property shall, to
the extent not otherwise recognized by the Company, be taken into account in
computing income, gains and losses of the Company for purposes of crediting or
charging the Capital Accounts of, and distributing proceeds to, the Members,
pursuant to this Agreement.
(d) When the Board of Managers has completed the winding up described
in this Section 8.2, the Members shall cause the Termination of the Company.
8.3 Assets Reserved and Pending Claims.
(a) If, upon a Dissolution Event, there are any assets that, in the
judgment of the Members, cannot be sold or distributed in kind without
sacrificing a significant portion of the value thereof or where such sale or
distribution is otherwise impractical at the time of the Dissolution Event, such
assets may be retained by the Company if the Board of Managers determines that
the retention of such assets is in the best interests of the Members and
permitted
24
by Regulation Section 1.704-1(b)(2)(ii)(b)(2). Upon the sale of such assets or a
determination by the Board of Managers that circumstances no longer require
their retention, such assets (at their fair market value) or the proceeds of
their sale shall be taken into account in computing Capital Accounts on winding
up and amounts distributable pursuant to Section 8.2(b), and distributed in
accordance with such value.
(b) If there are any claims or potential claims (including potential
Company expenses in connection therewith) against the Company (either directly
or indirectly, including potential claims for which the Company might have an
indemnification obligation) for which the possible loss cannot, in the judgment
of the Board of Managers, be definitively ascertained, then such claims shall
initially be taken into account in computing Capital Accounts upon winding up
and distributions pursuant to Section 8.2(b) at an amount estimated by the Board
of Managers to be sufficient to cover any potential loss or liability on account
of such claims (including such potential Company expenses), and the Company
shall retain funds (or assets) determined by the Board of Managers as a reserve
against such potential losses and liabilities, including expenses associated
therewith to the maximum extent permitted by Regulation Section
1.704-1(b)(2)(ii)(b)(2). The Board of Managers may obtain insurance or create
escrow accounts or make other similar arrangements with respect to such losses
and liabilities. Upon final settlement of such claims (including such potential
Company expenses) or a determination by the Members that the probable loss
therefrom can be definitively ascertained, such claims (including such potential
Company expenses) shall be taken into account in the amount at which they were
settled or in the amount of the probable loss therefrom in computing Capital
Accounts on winding up and amounts distributable pursuant to Section 8.2(b), and
any excess funds retained shall be distributed.
Article IX.
MISCELLANEOUS
9.1 Equitable Relief. The Members hereby confirm that damages at law
may be an inadequate remedy for a breach or threatened breach of this Agreement
and agree that, in the event of a breach or threatened breach of any provision
hereof, the respective rights and obligations hereunder shall be enforceable by
specific performance, injunction or other equitable remedy, nothing herein
contained is intended to, nor shall it, limit or affect any right or rights at
law or by statute or otherwise of a Member aggrieved as against any other Member
for a breach or threatened breach of any provision hereof, it being the
intention by this Section 9.1 to make clear the agreement of the Members that
the respective rights and obligations of the Members hereunder shall be
enforceable in equity as well as at law or otherwise and that the mention herein
of any particular remedy shall not preclude a Member from any other remedy it,
he or she or it might have, either in law or in equity.
9.2 Amendments; Waivers. Any provision of this Agreement may be amended
or waived by the affirmative vote of the Members holding at least a majority of
the Interests.
9.3 Successors and Assigns. This Agreement shall inure to the benefit
of, and shall be binding upon, the parties hereto and their respective permitted
successors and assigns.
25
9.4 Successor Agreement. In the event that the Board of Managers
determines to cause the Company to be merged with or consolidated into another
entity in connection with a Tax Reorganization, the parties hereto shall cause a
stockholders' agreement or other form of investors' rights agreement to be
negotiated in good faith and executed by each of the parties hereto, which
successor agreement shall be effective not later than the effectiveness of such
Tax Reorganization and which shall contain substantially the same terms as
contained in this Agreement. The terms of any such successor agreement shall not
diminish the rights of the parties hereunder, except as may be agreed by the
party or parties materially and adversely affected thereby or as may be required
by applicable law.
9.5 No Waiver. The failure of any Member to seek redress for violation,
or to insist on strict performance, of any covenant or condition of this
Agreement shall not prevent a subsequent act which would have constituted a
violation from having the effect of an original violation.
9.6 Notices. Whenever notice is required or permitted by this Agreement
to be given, such notice may be in writing (including facsimile) and if in
writing shall be given to any Member at its address or facsimile number shown in
the Company's books and records (including Schedule A hereto).
9.7 Severability. In case any provision in this Agreement shall be
deemed to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired hereby.
9.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
9.9 Headings, Etc. The headings in this Agreement are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement.
9.10 No Right to Partition. The Members, on behalf of themselves and
their shareholders, partners, successors and assigns, if any, hereby
specifically renounce, waive and forfeit all rights, whether arising under
contract or statute or by operation of law, except as otherwise expressly
provided in this Agreement, to seek, bring or maintain any action in any court
of law or equity for partition of the Company or any asset of the Company, or
any interest which is considered to be Company property, regardless of the
manner in which title to such property may be held.
9.11 No Third Party Rights. Except as expressly provided in this
Agreement, this Agreement is intended solely for the benefit of the parties
hereto and is not intended to confer any benefits upon, or create any rights in
favor of, any Person other than the parties hereto.
9.12 Entire Agreement. This Agreement (together with the Schedules and
Exhibit attached hereto) constitutes the entire agreement among the Members with
respect to the matters described herein and supersedes any prior agreement or
understanding among them with respect to such subject matter.
26
9.13 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
9.14 Power of Attorney.
(a) Each Member hereby irrevocably makes, constitutes and appoints each
of the Managing Directors and any of their respective successors as his true and
lawful attorney-in-fact to make, execute, sign, acknowledge and file with
respect to this or any successor Company, in each case after due authorization
pursuant to Section 3.4(c): (i) such amendments to or restatements of the
Company's Certificate of Formation as may be required or appropriate pursuant to
the provisions of this Agreement, or otherwise under the Act; (ii) all
statements of intent to dissolve, notices, articles of dissolution or
cancellations of foreign registration and other documents or instruments which
may be deemed necessary or desirable by the Members to effect the dissolution
and liquidation of the Company after its termination as provided herein; (iii)
all such other instruments, documents and certificates that may from time to
time be required by the laws of the State of Delaware, the United States of
America or any political subdivision or agency thereof, to effectuate,
implement, continue and defend the valid and subsisting existence of the Company
and any other instruments, documents or certificates required to qualify the
Company to do business in any other State where it is required to so qualify and
(iv) any instrument acceding to the rights and obligations as a Member under
this Agreement.
(b) The Members hereby agree that the grant of the foregoing power of
attorney is coupled with an interest and survives the death, disability, legal
incapacity, bankruptcy, insolvency, dissolution, or cessation of existence of a
Member and shall survive the delivery of a Transfer by any Member of the whole
or any part of his or its Interests.
9.15 Effectiveness of Agreement. This Agreement shall be effective
automatically upon the effectiveness of the merger of Blue Bar with and into the
Company.
[Rest of Page Intentionally Left Blank]
27
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
BLUE BAR HOLDINGS, L.P.
By: BLUE STEEL CORPORATION,
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
SCHEDULE A
Members Capital Contribution Units
------- -------------------- -----
Blue Bar Holdings, L.P. $52,000,000.00 1,000 Units
c/o Blue Steel Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE B
Voting Unit Holders
-------------------
United Steelworkers of America $0 One (1) Voting ▇▇▇▇
▇/▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT A
INITIAL MANAGING DIRECTORS
DESIGNATED BY MEMBERS
Designees of Blue Bar Holdings:
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇▇
Designee of USWA:
----------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇