EXHIBIT 99.1
LIMITED LIABILITY COMPANY AGREEMENT
OF
TANKSAT SOLUTIONS, LLC
JANUARY 16, 2001
LIMITED LIABILITY COMPANY AGREEMENT
OF
TANKSAT SOLUTIONS, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "AGREEMENT") is entered into
as of January 16, 2001 (the "EXECUTION DATE"), among NCJV, LLC, a California
limited liability company ("NC") and TankLink, LLC, a Delaware limited liability
company ("TANKLINK"), a wholly owned subsidiary of DecisionLink, Inc
("DECISIONLINK"), a Delaware corporation.
RECITALS
A. NC and TankLink (each, a "MEMBER") wish to form a limited liability
company to market a propane tank telemetry application on a global basis.
B. The Members desire to enter into this Agreement in order to provide for
the governance of the Company and to supercede any prior oral or written
agreement regarding their respective rights and obligations as members of the
Company.
C. The Members desire to promote the long-term interests of the Company by
providing customers, strategic partners, officers, managers and other employees
of the Company with an incentive to promote the financial success of the Company
through the future issuance of Class B Shares, subject to compliance with
federal and state securities laws. The Class B Members will not be anticipated
to make any capital contributions to the Company in exchange for their Class B
Shares. The Class B Shares shall be non-voting and their only interest in the
Company will be in future profits.
D. The Company may issue other interests in the Company to other investors
on such terms, which may include priority over existing Members, as the Board
may determine.
E. The Members anticipate that the Company will enter into contracts with
each Member for: (i) specific services or products to be provided to the
Company; or (ii) services to be provided to Affiliates of a Member by the
Company.
F. Certain of the defined terms used in this Agreement have the meanings
referred to in Section 1.6.
IN THIS FACTUAL CONTEXT, the Members, intending to be legally bound, agree
as follows:
SECTION 1. FORMATION
SECTION 1.1 FORMATION OF THE COMPANY. The Company has been organized as a
Delaware limited liability company by the filing on or before the Execution Date
of a Certificate of Formation with the Secretary of State (as originally filed
and as amended
or restated from time to time in accordance with this Agreement and the Act, the
"CERTIFICATE OF FORMATION"). A copy of the Certificate of Formation as filed on
or before the Execution Date is attached to this Agreement as EXHIBIT A. To the
fullest extent permitted by law, the Members shall not have any rights or
obligations, pursuant to the Act or otherwise, except as expressly set forth in
this Agreement or the Certificate of Formation.
SECTION 1.2 NAME. The name of the Company is "TANKSAT SOLUTIONS, LLC" and
all Company business shall be conducted under that name or any other names that
comply with applicable law as the Board may select from time to time.
SECTION 1.3 PURPOSE AND SCOPE.
(a) The stated purpose of the Company shall be to engage in the worldwide
marketing and sale of products used to measure the liquid level of compressed
hydrocarbon vessels containing propane and the delivery of the corresponding
tank data to Company customers subscribing for such service (the "PROPANE
MONITORING SERVICE"). The Propane Monitoring Service shall also include, where
applicable, the supply of the necessary software and operating systems to
provide customers with a dispatch system for delivery vehicles, inventory
control, and operational management tools for a propane usage system.
(b) The markets for the Propane Monitoring Service shall be worldwide and
shall include the market for tanks holding under 30,000 US gallons and the
market for tanks holding over 30,000 US gallons.
(c) The Members acknowledge that TankLink will provide the hardware to the
Company that meets the needs of the propane industry to remotely monitor tank
propane levels and have the data reported to the customer in a timely fashion.
TankLink, through its expertise and partnerships with key communications
systems, will assist in identifying the most viable communications medium for
the Company's product that meets the environmental and financial needs of the
propane industry.
(d) Subject to Section 13.1, NC and Cornerstone Propane, L.P. ("CNO") will
provide the basis for generating volume, through their own implementation of the
Company's units and through the marketing to other North American and
international customers, necessary for the Company to produce an affordable
product. NC and CNO will provide the opportunity, at CNO facilities, for the
Company to develop the first fully implemented Company product installation to
serve as a model site for prospective customers. CNO will continue to provide
the market and industry field operations and expertise that will help develop
the Company hardware provided by TankLink into a market accepted product. NC
will continue to create the resource management software to be delivered to the
Company's customers as outlined in Section 13.5.
(e) The Members acknowledge that CNO shall enter into a long-term service
contract with the Company (the "LONG-TERM CNO COMMITMENT") as set forth in
EXHIBIT B.
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(f) NC's underlying principles and motivations in forming the Company are
as follows:
(1) NC is in the business of supplying propane (and related services)
to residential, commercial, agricultural and industrial customers and
NC desires to establish a method to remotely monitor propane levels in
vessels in order to effect cost savings and increase efficiencies in
the distribution of propane.
(2) CNO has a substantial customer base and its operations would
benefit from the remote monitoring of customers' propane vessels.
(3) NC has developed software that integrates tank level data that can
be used in customer routing applications.
(4) NC offers market expertise in identifying and applying
technological applications and NC offers marketing expertise in
customer evaluation and justification of future product purchases.
(5) NC believes that there is a large domestic and international market
for a cost effective Propane Monitoring Service and that other propane
suppliers would benefit from the Propane Monitoring Service and would
be willing to contract for the Propane Monitoring Service at
economically justified rates.
(6) NC believes that upon final completion of TankLink's monitoring
equipment utilizing sensors and satellite communication that a cost
effective system can be established for monitoring its own tank
installations, the tank installations of its domestic competitors and
the tank installations of international propane suppliers.
(g) TankLink's underlying principles and motivations in forming the Company
are as follows:
(1) TankLink has developed technology that will allow the measurement
of fluid levels in propane tanks via satellite and other means.
(2) TankLink is in the business of remotely monitoring assets and
wishes to expand its market areas and the propane business provides a
large-scale opportunity to do so.
(3) TankLink believes that CNO can provide the initial installations
necessary (first location and subsequent roll out) to justify the
development of lower cost equipment for monitoring purposes within the
propane industry.
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(4) TankLink believes that given cost effective pricing, CNO intends to
equip a majority portion of its installations over several years
following successful completion of a developed TankSat product.
(5) TankLink, through Intrex Data Communications Group ("INTREX"), a
subsidiary of DecisionLink, is a value added reseller for Orbcomm LLC
("ORBCOMM") and its low-earth-orbit satellite communications system and
that relationship could provide an avenue for entry into foreign
markets for TankLink's other products and the Propane Monitoring
Service.
(6) TankLink believes that there is a large domestic and international
market for a cost effective Propane Monitoring Service and that all
propane suppliers would benefit from the Propane Monitoring Service and
would be willing to contract for the Propane Monitoring Service at
economically justified rates.
(7) TankLink believes that NC has the necessary skills, experience and
commitment to jointly market the Propane Monitoring Service to both
U.S. domestic and international markets in partnership with TankLink.
(h) TankLink acknowledges that CNO and Northwestern Corporation each hold
fifty percent (50%) membership interests in NC. NC acknowledges that TankLink is
a subsidiary of DecisionLink.
(i) In accordance with Sections 9.1 and 11.1(e), each of the Members
acknowledge that each of NC and TankLink, without the prior written consent of
the other, may bring in additional investors to each of NC and TankLink so long
as the interest retained by the current investors in each of NC and TankLink is
more than 50%.
(j) The Members acknowledge that much of the international marketing may be
through partnerships established by Intrex through its license agreements with
Orbcomm, Orbcomm's international licensees, and other satellite service
providers (collectively referred to as the "SERVICE PROVIDERS"). It is further
acknowledged that this may necessitate the formation of joint ventures or other
business arrangements by Intrex with the Service Providers or their value added
resellers in such international jurisdictions. However, if such joint ventures
or business arrangements are necessary, then Intrex will make those joint
ventures or business arrangements, as they pertain to the Propane Monitoring
Service, available to the Company on a flow through basis.
SECTION 1.4 TERM. The Company was formed on August 1, 2000 (the date upon
which the Certificate of Formation was filed with the Secretary of State) and
shall continue indefinitely unless dissolved pursuant to the terms of this
Agreement or the Act.
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SECTION 1.5 OFFICE; AGENT; LOCATIONS.
(a) REGISTERED OFFICE AND AGENT. The registered agent for the service of
process and the registered office required by the Act to be maintained in the
State of Delaware shall be that Person and location reflected in the Certificate
of Formation. The Board may, from time to time, change the registered agent or
office through appropriate filings with the Secretary of State. In the event
that the registered agent ceases to act as such for any reason or the registered
office shall change, the Board shall promptly designate a replacement registered
agent or file a notice of change of address, as the case may be, provided,
however, that if the Board fails to so designate a replacement registered agent
or change of address of the registered office, any Member may designate a
replacement registered agent or file a notice of change of address.
(b) LOCATION. The initial principal office of the Company shall be located
at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Board may change the
principal office from time to time.
SECTION 1.6 DEFINED TERMS. As used in this Agreement, capitalized terms
shall have the meanings set out on Appendix 1.
SECTION 2. CAPITALIZATION OF THE COMPANY
SECTION 2.1 INITIAL CAPITAL CONTRIBUTIONS. The Class A Members shall
provide the Company with its initial capitalization of $100,000 in the ratio of
fifty percent (50%) from NC and fifty percent (50%) from TankLink (the "INITIAL
CAPITAL CONTRIBUTIONS").
SECTION 2.2 ADDITIONAL CAPITAL CONTRIBUTIONS. The Class A Members may be
requested to make capital contributions in accordance with the budget approved
by the Board or capital contributions in excess of the budget when approved in
accordance with this Section 2.2 (the "ADDITIONAL CAPITAL CONTRIBUTIONS"). The
Board has approved an initial budget only through February 2001, a copy of which
is attached as EXHIBIT C. If the Company's Chief Executive Officer and Chief
Operating Officer determine that a request should be made for Additional Capital
Contributions they shall provide a written notice to each Class A Member and the
Board of (i) the total amount of Additional Capital Contributions required, (ii)
the reason the Additional Capital Contributions are required, and (iii) the
amount of each Member's proportionate share of the total Additional Capital
Contributions based upon their existing Percentage Interests. Before any
Additional Capital Contributions are required to be paid, they must be approved
by the Board in accordance with Section 5 and by the Class A Members in
accordance with Section 4. The Class A Members shall contribute the Additional
Capital Contributions to the Company in readily available funds in proportion to
their then Percentage Interests within 30 days after receipt of notice of the
Board's approval. If any Class A Member fails to make an Additional Capital
Contribution within the 30-day period, the Chief Executive Officer shall, or any
member of the Board may, send a written delinquency notice to the Member. The
Member's failure to make the
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Additional Capital Contribution within five (5) Business Days after receipt of
the delinquency notice shall be a failure to contribute for purposes of Section
2.3.
SECTION 2.3 FAILURE TO CONTRIBUTE. If a Class A Member fails to contribute
its Proportionate Share of any Additional Capital Contribution when due or fails
to make any Additional Capital Contribution within the 5-Business Day period
following the 30-day period described in Section 2.2 (a "NONCONTRIBUTING
MEMBER") then the other Class A Member shall have the following remedies in the
following order:
(a) Subject to the agreement of the Noncontributing Member, the other Class
A Member may contribute the Noncontributing Member's Proportionate Share of the
Additional Capital Contribution. A contribution on behalf of a Noncontributing
Member is referred to as a "DEFICIT CONTRIBUTION" and shall be added to the
Noncontributing Member's Capital Account. A Class A Member (the "CONTRIBUTING
MEMBER") who makes a Deficit Contribution shall be entitled to receive
distributions under Section 3.1 that would otherwise be distributed to the
Noncontributing Member until the Contributing Member receives a special
adjusting distribution equal to the Deficit Contribution plus 12% per annum
cumulative but not compounded (the "SPECIAL ADJUSTMENT"). The Members agree that
no portion of the Special Adjustment shall be treated as interest by any Member.
Amounts that would otherwise be distributable to the Noncontributing Member
shall be paid directly to the Contributing Member until it has received the
amount of the Special Adjustment and the Special Adjustment shall be treated on
the books of the Company as distributions to the Noncontributing Member under
Sections 3.1 or 12.3, and the distributions shall not affect the allocations of
Net Income or Net Loss. If the Members do not agree to a Deficit Contribution
with a Special Adjustment, then, and only then shall (b) apply.
(b) Subject to the agreement of the Noncontributing Member, the other Class
A Member may make a Deficit Contribution and adjust the Percentage Interests and
the Capital Account balances of the Contributing Member and the Noncontributing
Member, as follows: divide (i) the amount of the Deficit Contribution which was
made by the Contributing Member by (ii) the total Unreturned Capital (including
any Deficit Contributions) of the Members, and multiply the quotient thereof by
100% (the "CAPITAL ADJUSTMENT"). The result of the foregoing computation shall
be expressed as a percentage, and rounded to the nearest hundredth place, and
the percentage amount shall be added to the Contributing Member's Percentage
Interest and shall be subtracted from the Noncontributing Member's Percentage
Interest. At the time of the adjustment in the Percentage Interests, the Capital
Account balances of the Contributing Member and the Noncontributing Member shall
be adjusted so that, if the aggregate Capital Account balances of the Members
were distributed in cash to the Members pursuant to Section 3.1 (immediately
following the adjustment to the Percentage Interests pursuant to this
paragraph), each Member's Capital Account balance would equal zero after such
distribution. If the Members do not agree to a Deficit Contribution with a
Capital Adjustment then, and only then shall (c) apply.
(c) The other Class A Member may buy the Noncontributing Member's
Membership Interest pursuant to Section 11.3(b).
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(d) THE MEMBERS ACKNOWLEDGE THAT THE REMEDIES IN THIS AGREEMENT FOR A
MEMBER'S FAILURE TO CONTRIBUTE CAPITAL ARE REASONABLE UNDER THE CIRCUMSTANCES
THAT EXIST AS OF THE EXECUTION DATE.
SECTION 2.4 CAPITAL ACCOUNTS. A separate Capital Account (a "CAPITAL
ACCOUNT") shall be maintained for each Member for the full term of this
Agreement in accordance with the capital accounting rules of Section
1.704-1(b)(2)(iv) of the Treasury Regulations. Pursuant to the basic rules of
Section 1.704-l(b)(2)(iv) of the Treasury Regulations, the balance in each
Member's Capital Account shall be:
(a) increased by the amount of money contributed by the Member (or the
Member's predecessor in interest) to the capital of the Company pursuant to this
Section 2 and decreased by the amount of money distributed to the Member (or the
Member's predecessor in interest) pursuant to Section 3 or Section 12 of this
Agreement;
(b) increased by the fair market value of each item of property (determined
with regard to Section 7701(g) of the Code) contributed by the Member (or the
Member's predecessor in interest) to the capital of the Company pursuant to this
Section 2 (net of all liabilities secured by the property that the Company is
considered to assume or take subject to, under Section 752 of the Code) and
decreased by the fair market value of each item of property (determined without
regard to Section 7701(g) of the Code) distributed to the Member (or the
Member's predecessor in interest) by the Company pursuant to Section 3 or
Section 12 of this Agreement (net of all liabilities secured by the property
that the Member is considered to assume or take subject to, under Section 752 of
the Code);
(c) increased by the amount of Net Income and items of income or gain
allocated to the Member (or the Member's predecessor in interest) pursuant to
Section 3 of this Agreement;
(d) decreased by the amount of Net Loss and items of loss or expense
allocated to the Member (or the Member's predecessor in interest) pursuant to
Section 3 of this Agreement;
(e) to the extent that Company property is reflected in the Capital
Accounts and on the books of the Company at a book value that differs from the
adjusted tax basis of the property, adjusted in accordance with Treasury
Regulations Section 1.704-1(b)(2)(iv)(g) for allocations to Members of
depreciation, depletion, amortization, and gain or loss, as computed for book
purposes, with respect to the property;
(f) adjusted as provided in Section 2.3 upon a Member's failure to make
Initial Capital Contributions or Additional Capital Contributions; and
(g) otherwise adjusted in accordance with the other Capital Account
maintenance rules of Section 1.704-l(b)(2)(iv) of the Treasury Regulations.
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SECTION 2.5 VALUATION OF COMPANY ASSETS. The book values of all Company
assets shall be adjusted to equal their respective fair market values (taking
Code Section 7701(g) into account), as reasonably determined by the Board, upon
the occurrence of any of the following events: (i) a contribution of money or
property (other than an immaterial amount) to the Company by a new or existing
Member as consideration for a Membership Interest; (ii) a distribution of money
or property (other than an immaterial amount) by the Company to a Member as
consideration for a Membership Interest; and (iii) the liquidation of the
Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that the adjustments pursuant to clauses (i) and (ii) of this
sentence shall be made only if the Board reasonably determines that the
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members. Any adjustments shall be reflected by corresponding
adjustments to the Capital Accounts which reflect the manner in which the
unrealized income, gain, loss, or deduction inherent in the property (that has
not been reflected in the Capital Accounts previously) would be allocated among
the Members if there were a taxable disposition of the assets for fair market
values.
SECTION 2.6 WITHDRAWALS. Except as provided in this Agreement, a Member
shall not be entitled to (1) withdraw from the Company any part of the Member's
Initial Capital Contributions or any Additional Capital Contributions or (2)
receive any distributions, whether of money or property, unless unanimously
approved by the Board.
SECTION 3. DISTRIBUTIONS AND ALLOCATIONS
SECTION 3.1 NONLIQUIDATING DISTRIBUTIONS. Except as otherwise provided in
Section 12 and subject to the provisions of Section 2.3(a), Distributable Cash
shall be allocated and distributed to the Members as follows:
(a) First, to the Class A Members in proportion to their Percentage
Interests until distributions under this section equal the Class A Member's
total capital contributions plus the Preferred Return;
(b) Thereafter, to the Class A Members and the Class B Members in
proportion to their Percentage Interests.
SECTION 3.2 ALLOCATION OF NET INCOME. After giving effect to the special
allocations set forth in Section 3.4, Net Income for any Fiscal Year or other
taxable period shall be allocated among the Members as of the end of the Fiscal
Year or other period as follows:
(a) First, to the Class A Members in proportion to their Percentage
Interests until distributions under this section equal the Preferred Return;
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(b) Thereafter, Net Income shall be allocated to the Class A Members and
Class B Members in proportion to their Percentage Interests as in effect at the
end of the Fiscal Year or other period.
SECTION 3.3 ALLOCATION OF NET LOSS. After giving effect to the special
allocations set forth in Section 3.4, Net Loss for any Fiscal Year or other
taxable period shall be allocated among the Members as of the end of the Fiscal
Year or other period as follows:
(a) First, Net Loss shall be allocated to the Class A Members and Class B
Members in proportion to their Percentage Interests to the extent they have
previously been allocated income under Section 3.2(b);
(b) Next, Net Loss shall be allocated to the Class A Members in proportion
to their Percentage Interests; and
(c) In no event shall Net Loss be allocated to any Class A Member if the
allocation would reduce the Class A Member's Capital Account balance to a
deficit amount which is greater than the amount the Class A Member is deemed
obligated to restore to its Capital Account pursuant to the next to last
sentences of Treasury Regulations Sections 1.704-2(g)(1) and (i)(5).
SECTION 3.4 SPECIAL ALLOCATIONS. Prior to making the allocations described
in Sections 3.2 and 3.3, Company income, gain, loss and deduction shall be
allocated in accordance with the following provisions and applied in the
following order:
(a) Except as otherwise provided in Section 1.704-2(f) of Treasury
Regulations, if there is a net decrease in Company Minimum Gain (as defined
below) during any Company taxable year, each Member shall be specially allocated
items of Company income and gain for the year (and, if necessary, subsequent
years) in an amount equal to the portion of the Member's share of the net
decrease of Company Minimum Gain, determined in accordance with Treasury
Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member. The items to be so allocated shall be determined in accordance
with Treasury Regulations Section 1.704-2(j)(2). This Section 3.4 is intended to
comply with the "minimum gain chargeback" requirements of Treasury Regulations
Section 1.704-2(f) and shall be interpreted consistently with those regulations.
"COMPANY MINIMUM GAIN" shall have the same meaning as "partnership minimum gain"
in Treasury Regulations Section 1.704-2(b)(2).
(b) If a Member unexpectedly receives an adjustment, allocation or
distribution of any item described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), and the adjustment, allocation or
distribution creates a deficit balance in the Member's Capital Account in excess
of the amount the Member is deemed obligated to restore to its Capital Account
pursuant to the next to last sentences of Treasury Regulations Sections
1.704-2(g)(1) and (i)(5) (an "EXCESS DEFICIT"), items of income and gain shall
be allocated to the Member in an amount and manner sufficient to eliminate the
excess
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deficit as soon as possible. Solely for purposes of applying this Section 3.4,
each Member's Capital Account shall be reduced to the extent of adjustments,
allocations or distributions described in subparagraphs (4), (5) and (6) of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d) which are reasonably expected
as of the end of the taxable year. This Section 3.4(b) is intended to comply
with the "qualified income offset" provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and these provisions shall be interpreted, and allocations
hereunder shall be made, in conformity with the regulations.
(c) Nonrecourse Deductions for any taxable year or other period shall be
allocated to the Members in proportion to their Percentage Interests. The term
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
(d) If the Internal Revenue Service reallocates an item of income,
deduction, or loss to a Member pursuant to Code Section 482 (the "MEMBER SECTION
482 ALLOCATION"), and the Company has a corresponding correlative item of
deduction, loss or income (as determined under Regulation section 1.482-1(g))
(the "COMPANY CORRELATIVE ITEM"), the Company Correlative Item shall be
specially allocated to the Member that received the Member Section 482
Allocation.
(e) If the Internal Revenue Service reallocates an item of income,
deduction or loss to the Company pursuant to Code Section 482 (the "COMPANY
SECTION 482 ALLOCATION"), and a Member has a corresponding correlative item of
deduction, loss or income (as determined under Regulation section 1.482-1(g))
(the "MEMBER CORRELATIVE ITEM"), the item of income, deduction or loss
constituting the Company Section 482 Allocation shall be specially allocated to
the Member who received the Member Correlative Item.
(f) The allocations set forth in Section 3.2 through Section 3.4, inclusive
(the "REGULATORY ALLOCATIONS") are intended to comply with certain requirements
of Treasury Regulations Section 1.704-1(b). The Regulatory Allocations shall be
taken into account in allocating other net profits, net losses, and items of
income, gain, loss and deduction among the Members so that, to the extent
possible, the net amount of the allocations of other net profits, net losses,
and other items and the Regulatory Allocations to each Member shall be equal to
the net amount that would have been allocated to each Member if the Regulatory
Allocations had not occurred.
SECTION 3.5 TAX ALLOCATIONS. Except as otherwise provided in the second
sentence of this Section 3.5, all items of Company taxable income, gain, loss
and deduction shall be allocated among the Members consistent with the
allocations of Net Income and Net Loss under Sections 3.2 and 3.3. If Company
property is reflected in the Capital Accounts and on the books of the Company at
a book value that differs from the adjusted tax basis of the property, then
depreciation, depletion, amortization, and gain or loss, as computed for tax
purposes, with respect to the property, shall be determined and allocated among
the Members, solely for tax purposes, so as to take
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account of the variation between the adjusted tax basis and the book value of
the property using the remedial method under Treasury Regulations Section
1.704-3(d)(1).
SECTION 3.6 OTHER ALLOCATION AND DISTRIBUTION RULES.
(a) For purposes of determining Net Income or Net Loss, or any other items
allocable to any period, Net Income, Net Loss and any other items shall be
determined on a daily, monthly, or other basis, as determined by the Board using
any permissible method under Code Section 706 and under Treasury Regulations.
(b) Any amounts withheld by the Company pursuant to the Code or any
provision of any state or local law with respect to any allocation or
distribution to a Member shall be treated as a distribution to the Member for
all purposes under this Agreement.
(c) If the Internal Revenue Service reallocates an item of income to the
Company, then any cash received by the Company from the Member from which the
item was reallocated in respect of the reallocation shall be immediately
distributed to the Member.
(d) If the Internal Revenue Service reallocates an item of income to a
Member, then the Member shall immediately contribute to the capital of the
Company an equivalent amount of cash which shall thereupon be paid to the
Member.
(e) If the Internal Revenue Service makes any other reallocation, the
Company shall, to the extent possible, specially allocate the reallocated items
or correlative items so as to eliminate the effect of the special allocation,
and the Company and the affected member shall, to the extent possible, make the
distributions, contributions and payments as shall be necessary to maintain the
Members' Capital Accounts in the position they would have been had the Internal
Revenue Service made no reallocations under Section 482.
(f) No Member shall become entitled to any distribution from the Company
until the distribution is actually paid by the Company. No Member has any right
to demand and receive any distribution from the Company in any form other than
money. No Member may be compelled to accept from the Company a distribution of
any asset in kind in lieu of a proportionate distribution of money being made to
other Members.
(g) If any asset of the Company is to be distributed in kind to one or more
Members, the asset shall be valued at its fair market value (taking Code Section
7701(g) into account) on the date of distribution, and the Capital Accounts of
the Members shall be adjusted to reflect the manner in which the unrealized
income, gain, loss, or deduction inherent in the asset (that has not been
reflected in the Capital Accounts previously) would be allocated among the
Members if there were a taxable disposition of the asset at its fair market
value on the date of distribution.
(h) No distribution shall be made by the Company if the distribution is
prohibited by Sections 18-607 and/or 18-804 of the Act or other applicable law.
Any Member who
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receives a distribution from the Company, which is determined to have been
prohibited by Section 18-607 and/or 18-804 of the Act, shall, within 30 days
following notice, return the distribution to the Company.
(i) In the event the Company elects to be taxed as a corporation, then the
provisions relating to partnership taxation shall no longer apply to the
Company.
SECTION 3.7 INTEREST ON CAPITAL. Except as otherwise expressly provided in
this Agreement, no Member shall receive any interest on its capital
contributions or its Capital Account.
SECTION 3.8 DETERMINING NET INCOME AND NET LOSS. "NET INCOME" and "NET
LOSS" shall mean, for each Fiscal Year or other taxable period, an amount equal
to the Company's taxable income or loss for the year or period, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income that is exempt from federal income tax shall be added to the
Company's gross income;
(b) Any expenditures of the Company described in Code Section 705(a)(2)(B)
(or treated by Treasury Regulations as if described in that section) shall be
treated as a deduction of the Company;
(c) Gain or loss from any disposition of Company property shall be computed
with reference to the book value of the property if its book value differs from
its adjusted tax basis;
(d) If the book value of any Company property differs from its adjusted tax
basis, depreciation, amortization, or other cost recovery deductions with
respect to the property shall be computed with reference to the book value;
(e) Any items which are specially allocated pursuant to Section 3.4 of this
Agreement shall be taken into account prior to computing, and shall be excluded
from the computation of, Net Income or Net Loss for purposes of this Section
3.8; and
(f) Any other adjustments that the Board determines are necessary to comply
with Treasury Regulations Section 1.704-1(b) shall be made.
SECTION 4. MEMBERS
SECTION 4.1 OWNERSHIP RIGHTS. Ownership rights of the Members in the
Company are reflected in Membership Interests.
(a) Class A Members shall have the voting and management rights provided in
this Agreement, the interest in profits, losses and distributions provided for
in this Agreement and the rights to receive corporate stock in any conversion of
the Company
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into a corporation. The Class A Members shall have all residual rights of
Members under this Agreement or under the Act not specifically granted to
another class of Members.
(b) Class B Members shall have no voting or management rights and shall
have the right to profits, losses and distributions provided for in this
Agreement and the rights to receive corporate stock in any conversion of the
Company into a corporation. The Class B Members shall have no rights other than
those specifically enumerated in this Agreement. A Class B Member's Percentage
Interest shall be a fixed percentage based upon the number of Class B Shares
held by the Class B Member.
SECTION 4.2 LIMITED LIABILITY. Except as otherwise required by any
non-waivable provision of the Act, other applicable law, or as expressly set
forth in this Agreement: (a) no Member shall be personally liable in any manner
whatsoever for any debt, liability or other obligation of the Company, whether
the debt, liability or other obligation arises in contract, tort, or otherwise;
and (b) to the fullest extent permitted by law, no Member shall in any event
have any liability whatsoever in excess of (i) the total amount of its Initial
Capital Contribution and any Additional Capital Contributions, (ii) its share of
any assets and undistributed profits of the Company, and (iii) the amount of any
wrongful distribution to a Member, if, and only to the extent, the Member has
actual knowledge (at the time of the distribution) that the distribution is made
in violation of Section 18-607 or Section 18-804(c) of the Act.
SECTION 4.3 ADMISSION OF ADDITIONAL MEMBERS. After the Execution Date and
subject to compliance with federal and state securities laws, no Person (other
than an Affiliate of a Class A Member pursuant to Section 9.1 or employees of
the Company pursuant to an employee stock option or equity plan approved by the
Board) shall be admitted as a Member of the Company without the prior written
approval of each Class A Member.
SECTION 4.4 MEMBERS NOT AGENTS. Pursuant to the provisions of Section 5 and
the Certificate of Formation, the management of the Company is vested in the
Board. No Member, acting solely in the capacity of a Member, is an agent of the
Company nor can any Member acting as an agent bind, nor execute any instrument
on behalf of, the Company.
SECTION 4.5 VOTING RIGHTS. Except as expressly provided in this Agreement
or in the Certificate of Formation, only Class A Members shall have voting,
approval or consent rights with respect to matters subject to a vote, approval
or consent of the Members. Unless otherwise specified, the approval or consent
requires a majority of the Percentage Interests held by Class A Members who are
entitled to vote. Each of the following actions by the Company requires the
unanimous approval of the Class A Members as long as each Class A Members's
Percentage Interest exceeds forty percent (40%):
(a) Approval of the budget or material changes to the budget or proposals
to raise capital by seeking Additional Capital Contributions from Class A
Members;
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(b) any merger of the Company with or into another business entity;
(c) the dissolution of the Company pursuant to Section 12;
(d) proposals to borrow money or to incur debt other than as set out in the
approved budget plus allowable budget over-runs;
(e) proposals to make distributions to the Members pursuant to Section 3 or
otherwise; and
(f) any amendment of this Agreement or the Certificate of Formation.
The resolution of any dispute as to whether a proposed action is included within
Section 4.5(a)-(f) shall require a vote of the Class A Members.
SECTION 4.6 ACTIONS BY MEMBERS. A Member shall not act or make any public
statements on behalf of the Company unless specifically authorized to do so by
the other Member or by express provisions of this Agreement or as required by
law.
SECTION 5. MANAGEMENT OF THE COMPANY
SECTION 5.1 INITIAL START-UP MANAGEMENT. The powers of the Company shall be
exercised and its business conducted by the Members for the initial start-up
period of the Company. Management of the Company pursuant to Section 5.2 and
formal Board meetings in accordance with Section 5.4 shall commence on a date as
agreed to by the Members but in any event not later than 120 days from the date
of signing this Agreement.
SECTION 5.2 POWERS OF THE BOARD OF DIRECTORS.
(a) GENERAL POWERS. Subject to Sections 4.5 and 5.1, the powers of the
Company shall be exercised and its business conducted by the Board, except as
may be otherwise provided by the Certificate of Formation. Unless otherwise
stated, the authority and duties of the Board will be substantially similar to
the authority and duties of a board of directors of a Delaware corporation. The
Board shall have responsibility for establishing the bylaws, policies and
operating procedures with respect to the business and affairs of the Company and
for making all decisions as to all matters which the Company has authority to
perform. All decisions with respect to the management and control of the Company
approved by the Board shall be binding upon the Company and all Members. The
Board shall delegate, unless the Board determines otherwise, certain management
functions to one or more officers appointed by the Board. The officers shall be
responsible for performing, or causing to be performed, the duties described in
this Agreement, and in the Business Plan and for assuring that the Company does
not act in contravention of Section 4.5 of this Agreement.
(b) VOTING: MAJORITY. Except as otherwise provided in this Agreement,
actions of the Board may be approved by a majority of the members of the Board.
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(c) ISSUANCE OF ADDITIONAL MEMBERSHIP INTERESTS. The Board may authorize
the Company to issue additional Membership Interests on any terms and for any
capital contributions that the Board may determine in its sole discretion. The
issuance of additional Membership Interests may have priority over any other
Member's Interests in profits, losses and distributions or in voting or
management, provided however the impact of the grant of the new interests in
profits, losses and distributions or in voting or management shall be fairly
apportioned among all Members, as reasonably determined by the Board.
SECTION 5.3 MEMBERS OF THE BOARD OF DIRECTORS.
(a) NUMBER; DESIGNATION. The Board shall initially consist of four (4)
members (the "DIRECTORS"). Each Class A Member may designate two (2) individuals
to serve as Directors. The number of Board members may be increased upon the
Unanimous Vote of the current Board members, so long as the Class A Members have
equal Percentage Interests. Should the Class A Members' Percentage Interests be
adjusted pursuant to Section 2.3(b), then the Board representation shall be
adjusted as agreed upon by the Class A Members to equitably reflect the
adjustment in Percentage Interests. The Class A Members' initial appointees
shall be the individuals whose names are set forth in EXHIBIT D. If for any
reason, the Directors shall not have been elected at an annual meeting following
the appointment of the initial representatives, they may be elected as soon as
it is convenient.
(b) REMOVAL; REPLACEMENT. Each Class A Member may remove or replace any
director it has appointed by written notice to that effect to the other Member.
(c) RESIGNATION. Any Director may resign by delivering a written
resignation to the Company at its principal office or to the Chief Executive
Officer, the Secretary or directly to the Board. A resignation shall be
effective upon receipt unless it is specified to be effective at some other time
or upon the happening of some other event.
(d) TIME COMMITMENT. The Directors shall devote such time as shall be
reasonably necessary to manage and operate the business affairs of the Company.
SECTION 5.4 BOARD MEETINGS.
(a) MEETING LOCATION. The Board may hold meetings, both regular and
special, either within or without the State of Delaware.
(b) FIRST MEETING. The first meeting of each newly elected Board shall be
held at a time and place as shall be fixed by the vote of the Class A Members at
the annual meeting and no notice of a meeting shall be necessary to the newly
elected Directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the Class A Members to fix the
time or place of the first meeting of the newly elected Board, or in the event
the meeting is not held at the time and place so fixed by the Members, the
meeting may be held at a time and place as shall be
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specified in the notice given for special meetings of the Board, or as shall be
specified in a written waiver signed by all of the Directors.
(c) REGULAR MEETINGS; NOTICE AND LOCATION. Regular meetings of the Board
may be held with notice or pursuant to a written waiver of notice at a time and
at a place as shall from time to time be determined by the Board on at least a
semi-annual basis; provided, however, that any Director who is absent when a
determination is made shall be given waivable notice of the determination.
(d) SPECIAL MEETING: LOCATION. Special meetings of the Board may be held at
any time and place, within or without the State of Delaware, and shall be called
by the Chairman of the Board.
(e) SPECIAL MEETING: NOTICE. Notice of special meetings of the Board shall
be given to each Director by the Chief Executive Officer. Notice shall be duly
given to each Director (a) by telephone 48 hours in advance of the meeting, or
(b) by sending a telegram, telex or facsimile or delivering written notice by
hand, to his or her last known business or home address at least 48 hours in
advance of the meeting. A notice of a Board meeting need not specify the
purposes of the meeting.
(f) CONDUCT OF BOARD DISCUSSIONS. Unless otherwise restricted by the
Certificate of Formation or this Agreement, Directors may participate in a Board
meeting by means of video or telephone conference or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and the participation in a meeting shall constitute presence in
person at the meeting.
(g) QUORUM; MAJORITY VOTE. Attendance by all of the Directors shall
constitute a quorum for the transaction of business. When a quorum is present at
any Board meeting, the vote of a majority of Directors present shall be
sufficient to take any action, except as may be otherwise specifically provided
in this Agreement, by statute or by the Certificate of Formation. Each Board
member shall have one vote.
(h) UNANIMOUS WRITTEN CONSENT; PROXIES. Unless otherwise restricted by the
Certificate of Formation or this Agreement, any action required or permitted to
be taken at any Board meeting may be taken without a meeting, if all Board
members consent in writing, and the writing or writings are filed with the
minutes of proceedings of the Board. Each Director shall be entitled to
authorize another person or persons, at the Director's sole discretion, to vote
or act on his or her behalf by written proxy executed by that Director or his or
her authorized agent and delivered to the other Directors. No proxy shall be
voted or acted upon after three (3) years from the date of its execution unless
the proxy provides for a longer period.
(i) RECORDS OF MEETINGS AND BUSINESS PLAN. A written record of all Board
meetings and all decisions made by it shall be kept by the Board in the records
of the Company, and shall be initialed or signed by an officer appointed by the
Board. The Secretary shall provide each Member with copies of any Board minutes
whenever the minutes are prepared. The approval of the Business Plan, and any
amendments, will
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be evidenced by the signing or initialing of a copy of the approved version by a
designated representative of the Board.
(j) DECISIONS AFFECTING OFFICERS. Decisions affecting personnel matters
with respect to the Chief Executive Officer or Chief Operating Officer will be
taken in a meeting of the Board at which the affected officers will not be
present. Other provisions of Section 5 notwithstanding, decisions regarding
hiring, firing or changes to the compensation of the Chief Executive Officer or
the Chief Operating Officer shall require the unanimous approval of the
Directors.
(k) COST REIMBURSEMENT FOR DIRECTORS. Reasonable out of pocket costs and
expenses of the Chief Executive Officer and the Chief Operating Officer
associated with attending regular or special Board meetings shall be paid by the
Company. Reasonable out of pocket costs and expenses of the directors shall be
paid by the Company.
SECTION 5.5 OFFICERS OF THE COMPANY.
(a) DESIGNATED OFFICERS; DUTIES. The officers of the Company shall be
chosen by the Board and shall consist of a President designated as the Chief
Executive Officer, a senior officer designated as the Chief Operating Officer, a
Secretary and the officers and vice-presidents as the Board may from time to
time deem appropriate, with the titles as the Board may from time to time deem
appropriate. Any number of offices may be held by the same person, unless the
Certificate of Formation or this Agreement provides otherwise. The officers
shall hold their offices for the relevant terms and shall exercise the powers
and perform the duties as shall be determined from time to time by the Board.
(b) BOARD APPOINTMENT. The Board shall choose a Chairman of the Board, a
Chief Executive Officer, a Chief Operating Officer and a Secretary. No officer
need be an employee or agent of a Member.
(c) TERM. The officers of the Company shall hold office until their
resignation, retirement or removal. Any officer elected or appointed by the
Board may be removed at any time, with or without cause, by vote of a majority
of the Board. Any vacancy occurring in any office of the Company shall be filled
by the Board.
(d) RESIGNATION. Any officer may resign by delivering a written resignation
to the Company at its principal office or to the Chief Executive Officer or the
Secretary. A resignation shall be effective upon receipt unless it is specified
to be effective at some other time or upon the happening of some other event.
(e) COMPENSATION AFTER RESIGNATION. Except as the Board may otherwise
determine, no officer who resigns or is removed shall have any right to any
compensation as an officer for any period following his or her resignation or
removal, or any right to damages on account of a removal, whether compensation
be by the month
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or by the year or otherwise, unless compensation is expressly provided in a duly
authorized written agreement with the Company.
(f) VACANCIES. The Board may fill any vacancy occurring in any office for
any reason and may, in its discretion, leave unfilled for any period as it may
determine any offices other than those of Chairman of the Board, Chief Executive
Officer, Chief Operating Officer and Secretary. Each successor shall hold office
for the un-expired term of his or her predecessor and until his or her successor
is elected and qualified, or until his or her earlier death, resignation or
removal.
SECTION 5.6 CHAIRMAN OF THE BOARD. The Board shall appoint from among the
eligible members of the Board a Chairman of the Board (the "CHAIRMAN") who shall
perform the duties and possess the powers as are assigned to him or her by the
Board, including, but not limited to conducting all meetings of the Board. The
Chairman shall not simultaneously hold the position of Chairman and any position
as an officer of the Company. Each Chairman shall serve a term of six (6)
months. The Chairman's position shall alternate between an individual appointed
to the Board by NC and an individual appointed to the Board by TankLink
SECTION 5.7 CHIEF EXECUTIVE OFFICER.
(a) The Chief Executive Officer shall (i) be responsible for the future
development and profitability of the business and the Company, (ii) conduct the
business on a day-to-day basis in accordance with the standard of care required
of prudent and experienced chief executive officers of Delaware corporations,
and will use commercially reasonable efforts to conduct the business in
accordance with this Agreement and with the approved Business Plan for the
applicable Fiscal Year and other guidelines as may be adopted by the Board,
(iii) perform the duties assigned to him or her under this Agreement and (iv)
carry out all decisions and resolutions of the Board.
(b) Subject to the limitations set forth in this Agreement and the
guidelines adopted by the Board, the Chief Executive Officer, on behalf of the
Company, shall have the power and authority to enter into contracts on behalf of
the Company, to execute and deliver deeds, leases, mortgages, assignments, bills
of sale, releases and other instruments and documents and to make expenditures
as are required to implement the Business Plan, but only to the extent that the
aggregate of any the expenditures and amounts required to be paid by the Company
under any contracts, deeds, leases, assignments, bills of sale, releases and
other instruments and documents do not exceed the aggregate expenditures
provided for in the Business Plan by more than an amount to be determined by the
Board, or which have otherwise been approved by the Board; provided, however,
that the Chief Executive Officer may incur expenditures in emergency
circumstances which do not allow the Chief Executive Officer to seek approval
from the Board on an expedited basis and where the Chief Executive Officer acts
to protect the best interests of the Company.
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(c) To the extent not specifically enumerated in this Agreement, the Chief
Executive Officer shall have the same powers as customarily bestowed upon, and
the same duties of, a chief executive officer of a Delaware corporation.
SECTION 5.8 CHIEF OPERATING OFFICER.
(a) The Chief Operating Officer shall (i) be responsible for the overall
operations of the business and the Company, (ii) conduct the operations of the
Company on a day-to-day basis in accordance with the standard of care required
of prudent and experienced senior executives performing similar functions in
accordance with customary industry standards, and will use commercially
reasonable efforts to conduct the operations of the Company in accordance with
the approved Business Plan for the applicable Fiscal Year and other guidelines
as may be adopted by the Board, (iii) perform the duties assigned to him or her
under this Agreement and (iv) carry out all decisions and resolutions of the
Board.
(b) Subject to the limitations set forth in this Agreement and the
guidelines adopted by the Board, the Chief Operating Officer shall manage the
day-to-day operations of the Company and provide advice and counsel to the Chief
Executive Officer and the Board on operations, policy and long range planning
issues relating to all Company activities. He or she shall maintain an
up-to-date, in depth, and comprehensive knowledge of all significant policy,
long range planning, and operational issues relating to the Company.
(c) To the extent not specifically enumerated in this Agreement, the Chief
Operating Officer shall have the same powers as customarily bestowed upon, and
the same duties of, a chief operating officer of a Delaware corporation.
SECTION 5.9 SECRETARY. The Secretary shall attend, or designate at his or
her discretion an alternate to attend, all Board meetings and record all the
proceedings of meetings in a minute book to be kept for that purpose. The
Secretary shall give, or cause to be given, notice of all special meetings of
the Board, and shall perform other duties as may be prescribed by the Board or
Chief Executive Officer, under whose supervision he or she shall be.
SECTION 6. DISPUTE RESOLUTION
SECTION 6.1 DISPUTE; CONFIDENTIALITY.
(a) Any Board Deadlock shall be subject to private negotiation among the
Class A Members, and if then not resolved shall be subject to non-binding
mediation, both as set forth below, before any Class A Member may institute
litigation. Each Member agrees that any Board Deadlock, and all matters
concerning any Board Deadlock, will be considered confidential and will not be
disclosed to any Person outside the Company except as provided below with
respect to the mediation or as otherwise required by applicable laws. The
buy/sell provisions of Section 6.4 may be
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implemented in accordance with their terms at any time after the mediation of a
Board Deadlock.
(b) A "BOARD DEADLOCK" shall be deemed to exist if the Board is unable to
reach agreement by the vote required by Section 5 on any matter set forth in
this Agreement or on any other matter requiring the approval of the Board, after
any matter has been submitted to the Board for consideration at two successive
meetings. For the purposes of this section a Board Deadlock shall include
deadlocks in matters submitted for the vote of the Class A Members not resolved
within two weeks of the deadlock vote.
SECTION 6.2 PRIVATE NEGOTIATION. If a Board Deadlock occurs, the Class A
Members agree to negotiate in good faith to resolve the Board Deadlock among
themselves. If the negotiations do not resolve the Board Deadlock to the
reasonable satisfaction of all Class A Members within 15 days following the
commencement of negotiations, then each Class A Member shall give notice to the
other Class A Member identifying the representative designated by the Member to
meet in person with the other Member's representative. The representatives
identified by the Class A Members shall meet in person for one day during the
5-day period following the expiration of the 15-day period referred to in the
preceding sentence and the representatives shall attempt in good faith to
resolve the Board Deadlock. The meeting shall be held in San Francisco,
California, at a location designated by the first Class A Member's
representative to be named and may be attended only by the Class A Members'
representatives and by one assistant for each representative. If the
representatives are unable to resolve the Board Deadlock, then the Board
Deadlock shall be submitted to mediation pursuant to Section 6.3.
SECTION 6.3 MEDIATION.
(a) Within 15 days following the representatives' meeting described in
Section 6.2, any Class A Member may initiate non-binding mediation (the
"MEDIATION"), conducted by a retired judge or other mediator who is a member of
Judicial Arbitration & Mediation Services, Inc./Endispute ("JAMS") or other
agreed upon mediator. Any Class A Member or the Company may initiate the
Mediation by written notice to the other Class A Member. The date the notice is
given is called the "MEDIATION INITIATION DATE."
(b) The mediator shall be a retired judge or other mediator, selected by
mutual agreement of the Class A Members, and if they cannot agree within 15 days
after the Mediation Initiation Date, the mediator shall be selected through the
procedures JAMS regularly follows. The Mediation shall be held within 15 days
after the Mediator is selected, or any longer period as the Members and the
mediator mutually decide.
(c) If the Board Deadlock is not fully resolved by mutual agreement of the
Class A Members as a result of the Mediation, upon completion of the Mediation
any Member may commence binding arbitration proceedings administered by the
American Arbitration Association (the "AAA") under its Commercial Arbitration
Rules (the "ARBITRATION RULES") and judgment on the award rendered by the
arbitrators may be
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entered in any court having jurisdiction hereof. However, nothing in this
Section 6 shall limit a Class A Member's right to seek an injunction or
restraining order in circumstances where that relief is deemed necessary to
preserve assets.
(d) The Company shall bear the cost of the mediator's and arbitrator's fees
and expenses, but each Class A Member shall pay its own attorneys' and expert
witness fees and any other associated costs.
SECTION 6.4 BUY/SELL
(a) If a Board Deadlock has not been resolved within 15 days after the
completion of the mediation under Section 6.3, then any Class A Member (other
than a Member as to whom there is an outstanding Event of Default) (the
"INITIATING MEMBER") shall have the right to cause the other Class A Member (the
"RESPONDING MEMBER") either to purchase the Initiating Member's Membership
Interest or to sell the Responding Member's Membership Interest to the
Initiating Member. The Initiating Member may exercise this right by delivering
written notice to the Responding Member and to the Company's Accountant (the
"BUY/SELL NOTICE"), setting forth the Initiating Member's estimate of the
Company Value. If a Buy/Sell notice is delivered, the Company shall not make any
distributions to Members until after the closing of the purchase and sale of
Membership Interests or until the buy/sell procedures of this Section 6.4 are
otherwise terminated.
(b) Within 20 days after receipt of the Buy/Sell Notice, the Company's
Accountant shall, based upon the Company Value set forth in the Buy/Sell Notice,
compute the amount of distributions each Member would receive if the Company
were dissolved following a sale and assignment of all of the assets and
liabilities of the Company in exchange for cash equal to the Company Value. The
calculation of the amount of distributions to each Member shall be based upon
the then-current Percentage Interests of the Class A Members. The Company
Accountant shall send to each Class A Member a summary of its computations.
(c) Within 30 days following receipt of the Company's Accountant's
computations, the Responding Member shall notify the Initiating Member whether
the Responding Member elects (1) to purchase the Initiating Member's Membership
Interest for a cash sum equal to the aggregate amount the Initiating Member
would receive in dissolution of the Company (as determined by the Company's
Accountant), or (2) to sell to the Initiating Member the Membership Interest of
the Responding Member for a cash sum equal to the aggregate amount the
Responding Member would receive in dissolution of the Company (as determined by
the Company's Accountant). If the Responding Member fails to make any election
within the 30-day period, the Responding Member shall be deemed to have elected
to sell its Membership Interest to the Initiating Member.
(d) Within seven (7) days following the Responding Members' election (or
deemed election) to buy or sell, the Member purchasing (the "BUYING MEMBER") the
Membership Interest of the Selling Member (the "SELLING MEMBER") shall deposit
into
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an escrow account established for the purpose of completing the sale (the
"BUY/SELL DEPOSIT") an amount equal to 20% of the purchase price. The closing of
the purchase and sale shall take place through the escrow on a date selected by
the purchaser, but not more than 60 days following the Responding Member's
election (or deemed election) or longer period if needed to satisfy applicable
regulatory approval requirements. The purchase price of the Membership Interest
being conveyed shall be paid in cash at the closing, after taking into account
the Buy/Sell Deposit.
(e) If a Class A Member who is obligated to purchase a Membership Interest
fails to do so (the "NONPERFORMING MEMBER") in accordance with this Section 6.4,
including the failure to timely deposit the Buy/Sell Deposit, the Selling Member
shall have the right to purchase the Membership Interest of the Nonperforming
Member for a purchase price equal to 80% of the amount the Nonperforming Member
would receive in dissolution of the Company (as determined by the Company's
Accountant in response to the Buy/Sell Notice).
If a Selling Member elects to purchase all of the Membership Interest of
the Nonperforming Member as provided in this paragraph (e), the Selling Member
shall make the election at any time within 45 days after the default and by
giving written notice to the Nonperforming Member and shall deposit its Buy/Sell
Deposit into escrow within 60 days following its delivery of notice of exercise
of this election.
(f) At the time of the closing of the transfer of a Membership Interest
under this Section 6.4, the Buying Member shall indemnify, defend and hold the
Selling Member harmless from any loss, cost or expense arising out of (i) any
liability of the Company that the Company's Accountant took into account under
paragraph (b) in the computation of the purchase price and (ii) any liability
incurred by the Company or the Buying Member on or after the closing date of
purchase.
At the time of the closing of the transfer of a Membership Interest under
this Section 6.4, the Selling Member shall indemnify, defend and hold the Buying
Member harmless from any loss, cost or expense arising out of (i) anyone
claiming a lien or interest in the Membership Interest being transferred or (ii)
any liability incurred by Selling Member which was not taken into account by the
Company's Accountant under paragraph (b).
SECTION 7. RELATIONSHIPS BETWEEN MEMBERS AND COMPANY
SECTION 7.1 NONCOMPETITION. NC and TankLink agree not to, and agree to
cause their Affiliates not to, compete with the Company in the development,
production or sale of products that compete with products as they apply to the
Propane Monitoring Services. NC and TankLink agree that their promises not to
compete shall remain in effect for three (3) years after the termination of this
Agreement.
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SECTION 7.2 CONTRACTS BETWEEN MEMBERS AND COMPANY.
(a) TRANSACTIONS WITH THE COMPANY. Subject to any limitations set forth in
this Agreement and with the prior written approval of the Board after full
disclosure of the Member's involvement, a Member may lend money to and transact
other business with the Company. Subject to other applicable law, the Member has
the same rights and obligations with respect to transacting other business with
the Company as a Person who is not a Member.
(b) BUSINESS JUDGMENT; WAIVER OF CONFLICT OF INTEREST. When a Member,
Director or officer, or an Affiliate of any Member, Director or officer (each, a
"RESPONSIBLE PARTY") is required or permitted to make a decision, take or
approve an action, or omit to do any of the foregoing under this Agreement, it
shall be an exercise of business judgment. The Members and the Company agree
that they shall not have a cause of action against each other with respect to
any dispute within the scope of Sections 4.5 and 5.4 among them or their
respective Affiliates relating to the exercise of business judgment by a
Responsible Party and that no litigation or other proceeding shall be instituted
among the Members or their Affiliates with respect to the exercise of business
judgment by a Responsible Party, even if the exercise of business judgment in
the particular situation solely furthers the best interests of a Member
exercising that business judgment without regard to or to the detriment of the
interests of the Company or the other Member or its Affiliates, unless the
exercise of the particular business judgment at issue is in clear violation of
an obligation under a provision of this Agreement or any other agreement in
effect between the Members which specifically and unambiguously imposes a
standard of conduct with respect to the decision at issue. Whenever a
Responsible Party is required or permitted to make a decision, take or approve
an action, or omit to do any of the foregoing: (a) in its discretion or, under a
similar grant of authority or latitude, or without an express standard of
behavior, then the Responsible Party shall be entitled to consider the interests
and factors, including its own, as it desires, and shall have no duty or
obligation to consider any other interests or factors whatsoever, or (b) with an
express standard of behavior (including, without limitation, standards such as
"reasonable") then the Responsible Party shall comply with the express standard
but shall not be subject to any other, different, or additional standard imposed
by this Agreement or otherwise applicable law.
(c) RELIANCE ON AGREEMENT. To the extent that any Responsible Party has, at
law or in equity, duties (including, without limitation, fiduciary duties) to
the Company or to a Member, the Responsible Party acting in accordance with this
Agreement shall not be liable to the Company, any Member, or any other Person
for its good faith reliance on the provisions of this Agreement. The provisions
of this Agreement, to the extent that they alter the duties of a Responsible
Party otherwise existing at law or in equity, are agreed to replace the other
duties to the greatest extent permitted under applicable law.
(d) NO ADDITIONAL OBLIGATIONS. No Member shall have any obligation to
provide any assistance, products or services to the Company whatsoever except in
accordance with this Agreement. Unless otherwise expressly provided in this
Agreement, a
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Member shall not be entitled to reimbursement by the Company of any of the
Member's costs or expenses.
SECTION 7.3 CONFIDENTIALITY.
(a) PROTECTION OF CONFIDENTIAL INFORMATION. TankLink, NC, and the Company,
(each a "DISCLOSING PARTY" as the case may be) all agree to protect the
Disclosing Party's Confidential Information from unauthorized access, use,
dissemination, or publication with the same degree of care as they use to
protect their own Confidential Information, and in no event using less than a
reasonable degree of care. Neither TankLink, NC, nor the Company shall access or
use the Disclosing Party's Confidential Information for purposes other than
those necessary to directly further the purposes of this Agreement. Except as
expressly provided in this Agreement, no ownership, intellectual property or
license rights are granted in any Confidential Information. TankLink, NC and the
Company shall each be permitted to make disclosures of Confidential Information
only to those of its Affiliates with a need to know that have agreed to be bound
by this Section 7.3.
(b) EXCLUSIONS. Confidential Information does not include information that
(i) is or becomes generally known or available by publication, commercial use or
otherwise through no fault of the receiving party; (ii) is rightfully known by
the receiving party prior to the time of disclosure and is not subject to
restriction; (iii) is independently developed by the receiving party without the
use of the Disclosing Party's Confidential Information; (iv) is disclosed by the
Disclosing Party to a third party without a duty of confidentiality on the third
party; (v) is rightfully received by the receiving party from a third party not
known to the receiving party to have a duty of confidentiality to the Disclosing
Party; (vi) is disclosed by the receiving party with the Disclosing Party's
prior written approval; or (vii) is disclosed in accordance with Section 7.3(c).
TankLink, NC, and the Company's obligations of confidentiality under this
Agreement shall not be construed to limit any party's right to independently
develop or acquire products without the use of the Disclosing Party's
Confidential Information.
(c) REQUIRED DISCLOSURE. Nothing in this Agreement shall prohibit a Member
or the Company from disclosing Confidential Information of the Disclosing Party
if legally required to do so by judicial or governmental order or regulation or
by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process in a judicial or governmental proceeding
("REQUIRED DISCLOSURE"); provided that the Disclosing Party shall (i) give the
other Member prompt notice of the Required Disclosure prior to disclosure, (ii)
cooperate with the other Member or the Company in the event that it elects to
contest the disclosure or seek a protective order with respect to the disclosure
and/or (iii) in any event only disclose the exact Confidential Information, or
portion thereof, specifically requested by the Required Disclosure.
(d) OWNERSHIP; RETURN OF MATERIALS. All Confidential Information, including
without limitation all documentation, drawings, and specifications furnished
hereunder shall remain the property of the Disclosing Party. Upon the later of
the expiration of the five (5) year period in Section 7.3(g) or the termination
of this Agreement, TankLink, NC
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and the Company shall, following written request, promptly return or destroy all
tangible Confidential Information covered by this Agreement except for an
archival copy of the materials comprising the Confidential Information for
retention in the central files of the parties as a record of their respective
obligations under this Section 7.3.
(e) LIMITED DISCLOSURES. TankLink, NC and the Company will each be
permitted to make limited disclosures of Confidential Information in confidence
as may be reasonably necessary to their respective suppliers of goods and
services and outside legal and financial advisors. TankLink, NC and the Company
shall not disclose the terms of this Agreement to any Person, or otherwise
disclose to any Person the Members' relationship (including press releases),
except as may be agreed in writing or as may be required pursuant to a Required
Disclosure; provided that the Members may disclose the terms of this Agreement
in confidence to their attorneys, accountants and bankers.
(f) EXPORT CONTROLS. TankLink, NC and the Company shall adhere to all
applicable laws, regulations and rules relating to the export of technical data,
and shall not export or re-export any technical data, any products received from
the Disclosing Party, or the direct product of the technical data to any
proscribed country listed in the applicable laws, regulations and rules unless
properly authorized and shall require any third party recipients of technical
data to confirm in writing that they will comply with the applicable laws
regulations and rules relating to the export of technical data.
(g) TERM OF CONFIDENTIALITY. The obligations of TankLink, NC and the
Company under this Section 7.3 shall survive for a period of five (5) years from
the date of disclosure of the Confidential Information unless the period is
specifically shortened or extended by the Disclosing Party in writing.
SECTION 8. RECORDS AND REPORTS
SECTION 8.1 MAINTENANCE OF RECORDS. The Board shall maintain, or cause to
be maintained, at the expense of the Company, in a manner customary and
consistent with generally accepted accounting principles, practices and
procedures, a comprehensive system of office records, books and accounts (which
books, records and accounts shall be and remain the property of the Company) in
which shall be entered fully and accurately each and every financial transaction
of the Company. The Board shall maintain said books, records and accounts in a
safe manner and separate from any records not having to do directly with the
Company. Without limiting the generality of the foregoing, the Company shall
maintain at the office of the Board all of the following:
(a) A current list of the full name and last known business or residence
address of each Member set forth in alphabetical order, together with the
contribution and share in profits and losses of each Member.
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(b) A copy of the Certificate of Formation and all amendments, together
with any powers of attorney pursuant to which the Certificate of Formation or
any amendments were executed.
(c) Copies of the Company's federal, state and local income tax or
information returns and reports, if any, for the six most recent taxable years.
(d) A copy of this Agreement and any amendments, together with any powers
of attorney pursuant to which this Agreement or any amendments were executed.
(e) Copies of the financial statements of the Company, if any, for the six
most recent Fiscal Years.
(f) The books and records of the Company as they relate to the internal
affairs of the Company for at least the current and past four Fiscal Years.
SECTION 8.2 DELIVERY TO MEMBERS AND INSPECTION.
(a) Upon the request of a Member, for purposes reasonably related to the
interest of that Person as a Member, the Board shall promptly deliver to the
Member, at the expense of the Company, a copy of the information required to be
maintained by Section 8.1(a), (b) or (d).
(b) Each Member has the right upon reasonable request, for purposes
reasonably related to the interest of that Person as a Member, to each of the
following:
(1) To inspect and copy during normal business hours any of the
records required to be maintained by Section 8.1.
(2) To obtain from the Board promptly after becoming available, a copy
of the Company's federal, state, and local income tax or information
returns for each year.
(c) The Board shall promptly furnish to a Member a copy of any amendment to
the Certificate of Formation or this Agreement executed by the Board pursuant to
a power of attorney from the Member.
(d) Any request, inspection, or copying by a Member may be made by the
Member or by its agent or attorney.
SECTION 8.3 REPORTS.
(a) The Board will prepare or cause to be prepared, at the expense of the
Company, and furnish to each Class A Member within ten (10) business days after
the end of each calendar month an unaudited statement of cash receipts and
disbursements for that month.
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(b) The Board will prepare or cause to be prepared, at the expense of the
Company, and furnish to each Class A Member within 45 calendar days after the
end of each fiscal quarter of the Company (i) unless the fiscal quarter is the
last quarter of any Fiscal Year, (A) an unaudited balance sheet of the Company
dated as of the end of the fiscal quarter, (B) an unaudited related income
statement of the Company for the fiscal quarter, (C) an unaudited statement of
each Member's Capital Account for the fiscal quarter, and (D) an unaudited
statement of cash receipts and disbursements for the fiscal quarter, and (ii) a
status report of the Company's activities during the fiscal quarter (and in the
case of the last fiscal quarter, a report on activities, issues and performance
for the Fiscal Year) reflecting summary descriptions of material activities, a
comparison of the Company's budgetary and financial performance during the
quarter compared to the operating plan for the quarter in the Business Plan, any
substantive discussions with prospective purchasers of the licensed products,
and any material legal issues such as material claims filed or threatened
against the Company and material claims by the Company against other parties and
developments in any then pending material legal actions affecting the Company
during the fiscal quarter, all of which shall be certified by the Board as
being, to the best of its knowledge, true and correct.
(c) The Board will prepare or cause to be prepared, at the expense of the
Company, and furnish to each Member within 60 days after the end of each Fiscal
Year (i) an unaudited balance sheet of the Company dated as of the end of the
Fiscal Year, (ii) an unaudited related income statement of the Company for the
Fiscal Year, (iii) an unaudited statement of each Member's Capital Account for
the Fiscal Year, and (iv) an unaudited statement of cash receipts and
disbursements for the Fiscal Year, all of which shall be certified by the Board
as being, to the best of its knowledge, true and correct. In addition, within 90
days after the end of each Fiscal Year, the Board will decide to either cause
the Company's Accountant to review the unaudited financial statements or to
prepare and furnish to each Member (i) an audited balance sheet of the Company
dated as of the end of the Fiscal Year, (ii) an audited related income statement
of the Company for the Fiscal Year, (iii) an audited statement of cash flows for
the Fiscal Year, and (iv) an audited statement of each Member's Capital Account
for the Fiscal Year, together with a report from the Company's Accountant that
the balance sheet, related income statements and statement of cash flows present
fairly, in all material respects, the Company's financial position and results
of operations, and cash flow in conformity with generally accepted accounting
principles.
(d) The Board will cause the Company's Accountant to prepare all federal,
state and local tax returns required of the Company, submit those returns to the
Chief Executive Officer, or his or her designee, for his or her approval no
later than 90 days after the end of each Fiscal Year, and file the tax returns
after they have been approved by the Chief Executive Officer, or his or her
designee. If the Chief Executive Officer, or his or her designee, has not
approved any tax return prior to the required filing date (including any
extensions granted), the Chief Executive Officer, or his or her designee, will
timely obtain an extension of the date to the extent an extension is available.
The Chief Executive Officer, or his or her designee, will cause the Company's
Accountant to
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provide to each Member as of the end of each fiscal quarter an estimate of the
Company's taxable income for the current Fiscal Year.
SECTION 8.4 TAX MATTERS. The Company's taxable year and accounting method
for income tax purposes shall be as determined under the Code and Treasury
Regulations. NC shall be the "tax matters partner" within the meaning of Section
6231(a)(7) of the Code, unless and until another Member is appointed to be the
tax matters partner by the Board. The tax matters partner shall have all of the
authority granted by the Code to a tax matters partner, provided that the tax
matters partner shall keep each Member informed as to the status of any audit of
the Company's tax affairs.
SECTION 8.5 ANNUAL BUSINESS PLANS.
(a) The Board shall adopt the Company's Business Plan. The "BUSINESS PLAN"
shall include an annual budget and those items that the Board reasonably
determines, in its sole discretion, to be necessary for the operation of the
Company. The Board shall adopt a Business Plan annually not later than 60 days
prior to the start of the Fiscal Year. The Board has approved an initial budget
only through February 2001, a copy of which is attached as EXHIBIT C.
SECTION 9. INTERESTS OF MEMBERS
SECTION 9.1 TRANSFERS OF INTERESTS. Except as otherwise provided in this
Agreement, a Member may not sell, assign, transfer, pledge, encumber or
otherwise dispose of all or any part of its Membership Interest to any party.
The foregoing notwithstanding, a Class A Member may transfer its entire interest
to an Affiliate or to the other Class A Member if the Affiliate or other Class A
Member assumes the obligations of the transferring Member contained in this
Agreement. All reasonable costs and expenses incurred by the Company and/or the
other Class A Member in connection with any transfer or proposed transfer of all
or part of a Membership Interest shall be paid by the transferring Member. A
Class A Member that transfers to an Affiliate shall not be released from its
obligations contained in this Agreement.
SECTION 9.2 RIGHT OF FIRST REFUSAL FOR INTERESTS OWNED BY MEMBERS. If a
Member wishes to transfer all of its Membership Interests to an entity other
than an Affiliate following receipt of a bona fide offer, then within ten (10)
Business Days after receipt of the offer, the Member desiring to transfer its
Membership Interests shall deliver a notice of offer describing the name of the
offeror and the consideration and other terms and conditions of the offer (the
"OFFER NOTICE") to the non-Selling Member. The non-Selling Member shall then
have 30 Business Days from the date of receipt of the Offer Notice to agree to
purchase all of the Membership Interests subject to the Offer Notice. To
exercise the right of first refusal, the non-Selling Member shall give notice to
the Member desiring to transfer its Membership Interests that the non-Selling
Member desires to purchase all of the Membership Interests.
SECTION 9.3 SECTION 754 BASIS ELECTION. In connection with any transfer of
any Membership Interest in accordance with this Section 9, the Members shall
cause the
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Company, at the written request of the transferee, to make an election
pursuant to Code Section 754 to adjust the basis of the Company's assets in
the manner provided in Code Sections 734(b) and 743(b), and the transferee
shall pay all costs incurred by the Company in connection with the transfer,
including, without limitation, reasonable attorneys' and accountants' fees
with respect to the election and the annual accounting for the resulting
adjustments to the Company's books and records.
SECTION 9.4 RIGHTS OF LEGAL REPRESENTATIVES. If a Member is a corporation,
limited liability company, or other entity and is dissolved or terminated, the
powers of that Member may be exercised by its legal representative or successor.
SECTION 10. EXCULPATION, INDEMNIFICATION AND INSURANCE
SECTION 10.1 EXCULPATION. No Director, member or shareholder, partner, or
other holder of an equity interest in any Member, or officer or director of any
of the foregoing, shall be personally liable for the performance of any of the
Member's obligations under this Agreement.
SECTION 10.2 INDEMNIFICATION.
(a) The Members and Directors shall be indemnified, defended and held
harmless by the Company from and against any and all claims, demands,
liabilities, costs, damages, expenses and causes of action of any nature
whatsoever arising out of or incidental to any act performed or omitted to be
performed by any one or more of the Members or Directors in connection with the
business of the Company; provided, however, that the act or omission was taken
in good faith, was reasonably believed by the applicable Member or Director to
be within the scope of authority granted to the Member or Director under this
Agreement, and, in the case of a Member or Director, did not constitute fraud,
bad faith, willful misconduct, or gross negligence. Any indemnity and/or defense
under this Section 10.2 shall be paid solely out of and to the extent of Company
assets and shall not be a personal obligation of any Member and in no event will
any Member be required without the consent of all of the Members, to make
Additional Capital Contributions under Section 2.2 to enable the Company to
satisfy any obligation under this Section 10.2. All judgments against the
Company and any of the Members or Directors, in which a Member or Director is
entitled to indemnification, must first be satisfied from Company assets before
any Member will be responsible.
(b) In each case where an indemnification payment is required under this
Agreement, the payment shall be increased by interest at the prime commercial
rate, cumulative but not compounded, computed from the date that the indemnified
party made the payment for which indemnification is provided.
SECTION 10.3 INSURANCE.
(a) COVERAGE. The Company shall ensure that the following insurance
coverage, with financially responsible and properly licensed insurance
companies, is available for the Company with respect to the activities and
operations of the Company with
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minimum limits as set forth below. The insurance shall be maintained in full
force and effect until the time that the Company ceases to exist.
(1) WORKERS' COMPENSATION: Statutory Workers' Compensation as required
by applicable law and Employer's Liability with a minimum limit of the
greater of $1,000,000 or any statutory minimum.
(2) COMMERCIAL GENERAL LIABILITY INSURANCE including PRODUCTS,
COMPLETED OPERATIONS AND CONTRACTUAL LIABILITY INSURANCE with minimum
limits of $1,000,000 per occurrence and $2,000,000 annual aggregate
for Bodily Injury, Property Damage, Personal Injury and Advertising
Injury on an occurrence basis.
(3) COMPREHENSIVE AUTOMOBILE LIABILITY INSURANCE covering owned,
non-owned and hired automobiles in connection with operations of the
Company covering Bodily Injury and Property Damage with a minimum
limit of the greater of $1,000,000 per accident or any Statutory
Minimum per accident.
(4) EXCESS UMBRELLA LIABILITY INSURANCE naming the coverages required
in items (1) to (3) above as primary, with a minimum limit of
$5,000,000.
(5) PROPERTY INSURANCE covering all owned, leased, or other property
for which the Company has legal responsibility, on a replacement cost
basis. The policy shall also include coverage for loss of income and
extra expense. The insurance shall provide "all risk" coverage at
least as broad as found on an Extended Coverage policy form. In the
event the insurance is not reasonably available in the Company's
jurisdiction, coverage shall be provided on a policy form as broad as
is typically provided in the jurisdiction.
(6) DIRECTORS AND OFFICERS LIABILITY INSURANCE covering the Directors
and officers of the Company, with a minimum limit set by the Board.
(7) Any other insurance coverage deemed appropriate by the Board. The
Company acknowledges that it and the Board have the primary
responsibility for implementing and maintaining a comprehensive
insurance program that is appropriate in the circumstances, based on
the size and operations of the Company. The Board or its designees
shall meet annually to review the existing insurance program and
implement changes, consistent with the coverages required in (1)
through (6) above, that they believe are appropriate in the
circumstances.
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(b) ADDITIONAL INSUREDS. Each Class A Member shall be named as an
additional insured on the policies described in Paragraphs (2), (3) and (4)
above for any claims or losses arising out of the operations of the Company.
(c) CERTIFICATES OF INSURANCE. Upon request, the Company shall furnish a
Certificate of Insurance, satisfactory to the TankLink and NC, showing that the
above insurance is in force, stating policy numbers, dates of expiration and
limits of liability, and further providing that the insurance will not be
canceled or changed until the expiration of at least 30 days after written
notice of the cancellation or change has been mailed and received by each Class
A Member. The Company shall provide the Certificate of Insurance annually upon
request to TankLink and to NC.
(d) CLAIMS HANDLING. The Company shall be responsible for claims handling,
claims and litigation management, and settlement decisions related to the above
insurance. The Company shall advise TankLink and NC of any claim or claims that
may exceed fifty percent (50%) of the applicable policy limits. The Members
shall have the right, but not the obligation, to associate in the claims
handling, claims and litigation management, and settlement decisions for any
claims in excess of this reporting threshold. The Company shall not settle any
claim covered under its insurance program, in excess of the applicable policy
limits without the prior written approval of TankLink and NC.
(e) LOSS CONTROL STANDARDS AND AUDITS. The Company shall be responsible for
maintaining its facilities in accordance with applicable and prudent safety,
security, fire protection, and loss control standards. Upon request, the Company
shall allow TankLink and NC and/or their designated representatives to visit and
perform loss control audits of the Company facilities and will cooperate in the
resolution of recommendations made.
(f) INSURANCE COST AND NATURE OF COVERAGE. The Members and the Company
acknowledge and agree that the Company shall pay the full cost of its selected
insurance program, and that the program shall be primary with respect to covered
losses.
SECTION 10.4 INDIVIDUAL MEMBER INSURANCE REQUIREMENTS.
(a) Each Class A Member shall be responsible for providing any insurance it
deems necessary to protect its interest in the Company.
(b) Any insurance coverage described in Section 10.4(a) that is purchased
by any individual Class A Member, will be for the sole benefit of the purchasing
Member and is not intended to protect the Company or any other Member's interest
in the Company.
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SECTION 11. DEFAULT BY MEMBER
SECTION 11.1 EVENTS OF DEFAULT. Any one or more of the following acts,
events or omissions by or involving a Member (the "DEFAULTING MEMBER") shall if
not cured within the cure period in Section 11.2 be deemed an Event of Default
under this Agreement:
(a) CAPITAL CONTRIBUTIONS. The Class A Member fails to make a capital
contribution in the amount and within the time required by Section 2;
(b) INSOLVENCY; BANKRUPTCY; WRONGFUL TRANSFERS. The Member becomes
insolvent or files for Bankruptcy, or Transfers or attempts to Transfer its
Membership Interest, except as permitted under Sections 9.1 or 6.4, or in
compliance with Section 9.2;
(c) BREACH CAUSING LIEN. The Member breaches or fails to perform any
covenant or obligation under any agreement or instrument if the breach or
failure would give any other Person the right to enforce a lien, pledge, or
other security agreement that encumbers the Member's Membership Interest;
(d) MATERIAL BREACH. The material breach of, or failure to comply with, any
other material term or provision of this Agreement, by the Member; or
(e) CHANGE IN CONTROL. A Class A Member has a Change in Control.
SECTION 11.2 NOTICE AND CURE.
(a) CAPITAL CONTRIBUTION. Upon a contribution by the Defaulting Member
within the 30 day grace period of any amounts due and owing, including the
repayment of any Deficit Contribution(s) under Section 2.3(a) or upon a Capital
Adjustment under Section 2.3(b), the Defaulting Member shall no longer be
considered in default under Section 11.1(a); provided, however, that the
Defaulting Member, following its cure of the event of default, may not invoke
the buy/sell provisions of Section 6.4 for a period of 90 days following cure.
(b) INSOLVENCY; BANKRUPTCY; WRONGFUL TRANSFER. A default under Section
11.1(b) may not be cured.
(c) BREACHES. The Defaulting Member shall have a grace period of 30 days in
which to cure the default under Sections 11.1(c) or (d) after receipt of written
notice from the Board or from the non-defaulting Member specifying the default
or, if the nature of the default is such that cure within 30 days is not
possible, the Defaulting Member shall have 30 days after receipt of a notice
within which to commence curing the default; the failure to diligently pursue a
cure shall constitute a default for which there is no cure; provided, however,
if any Person has a right to enforce a lien, pledge or other security agreement
against the Defaulting Member's Membership Interest, the grace period to cure
the default shall be reduced, if necessary, so that it expires three Business
Days prior to the Person having the right to exercise any power of sale or
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similar remedy. Neither the Company nor the non-defaulting Member shall
unreasonably reject the cure offered by the Defaulting Member.
(d) CHANGE IN CONTROL. A default under Section 11.1(e) may not be cured.
SECTION 11.3 REMEDIES. Upon the occurrence of an Event of Default, the
Company shall have all of the following remedies, in addition to any other
remedies provided in this Agreement or available at law or in equity:
(a) VOTING LIMITATION. The Defaulting Class A Member shall not be entitled
to vote on any matters on which the Class A Members are entitled to vote;
provided, however, if a Member is a Defaulting Member solely by reason of the
failure to make a Capital Contribution or an Additional Capital Contribution,
the Class A Member's voting rights shall be restored when the Class A Member
subsequently makes the capital contribution or a Capital Adjustment is made
pursuant to Section 2.3(b).
(b) COMPANY OPTION TO PURCHASE INTEREST. The Company shall be entitled at
any time to purchase the entire Membership Interest of the Defaulting Member as
follows:
(1) The Company may exercise this right by delivering written notice
to the Class A Members, to the Defaulting Member and to the Company's
Accountant (the "DEFAULT PURCHASE NOTICE"), setting forth the Company
Value. The Company Value shall have been determined either (i) by the
mutual agreement of the Class A Members (or between the Board and the
Defaulting Member if the Defaulting Member is not a Class A Member) or
(ii) in accordance with subsection (2) below. If a Default Purchase
Notice is delivered, the Company shall not make any distributions to
Members until after the closing of the purchase and sale of Membership
Interests or until the procedures of this Section 11.3(b) are
otherwise terminated.
(2) If the Class A Members (or the Board and the Defaulting Member)
are unable to agree upon a mutually acceptable Company Value within 20
days, the Class A Members (or the Board and the Defaulting Member)
shall each simultaneously exchange with each other and the Company a
sealed envelope with a written determination of the fair market value
of the Company at 12 p.m. on the second day after the expiration of
that 20-day period. If only one valuation is submitted within the
requisite time period, the fair market value contained in that
valuation shall be the Company Value to be included in the Default
Purchase Notice and shall be final and binding on the Class Members.
If both valuations are timely submitted and they differ by less than
5% of the lower of the two, the average of the two valuations shall be
the Company Value to be included in the Default Purchase Notice and
shall be final and binding on the Members. If the two valuations
differ by more than 5% of the lower of the two, the Class A Members
(or the Board and the Defaulting Member) shall select a neutral
evaluator (the "REFEREE") within 20 days thereafter. The
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Class A Members (or the Board and the Defaulting Member) shall deliver
copies of both valuations to the Referee, and the Referee shall
select, within 5 days after receipt, the valuation which he or she
believes most accurately represents the fair market value of the
Company and the selected valuation shall be the Company Value to be
included in the Default Purchase Notice and shall be final and binding
on the Company and the Members. The Referee appointed pursuant to this
Section shall have not less than 10 years experience evaluating
similar interests. If the Class A Members (or the Board and the
Defaulting Member) cannot agree upon the Referee, the Referee shall be
appointed by the San Francisco office of JAMS. The cost of the Referee
shall be borne equally by the Class A Members (or by the Company and
the Defaulting Member).
(3) Promptly after receipt of the Default Purchase Notice, the
Company's Accountant shall, based upon the Company Value set forth in
the Default Purchase Notice, compute the amount of distributions each
Member would receive if the Company were dissolved following a sale
and assignment of all of the assets and liabilities of the Company in
exchange for cash equal to the Company Value. The calculation of the
amount of distributions to each Member shall be based upon the
then-current Percentage Interests of the Members. The Company
Accountant shall send to the Company and each Class A Member (and the
Defaulting Member) a summary of its computations.
(4) Within 30 days following receipt of the Company's Accountant's
computations, the Company shall notify the Members whether the Company
elects to purchase the Defaulting Member's Membership Interest for a
cash sum equal to 90% of the aggregate amount the Defaulting Member
would receive in dissolution of the Company (as determined by the
Company's Accountant).
(5) If the Company elects to purchase the Defaulting Member's
Membership Interest, the closing of the purchase shall occur on a date
selected by the Company, but in any event not more than 30 days after
the election. Upon the closing of the purchase, the Defaulting Member
shall be deemed to have withdrawn from the Company and shall have no
further rights to receive distributions of cash or property or other
benefits from the Company. The Company's rights under this Section
11.3(b) may be assigned to the other Class A Member or Members or to
another Person.
SECTION 11.4 NO LIMITATION ON REMEDIES. The election by the Company to
exercise its rights under the buy/sell provisions of Section 6.4 shall not
constitute a waiver of or limitation on any other rights the Company or the
Class A Member may have under this Agreement or by operation of law or in equity
with respect to damages or any other claims arising as a result of the
occurrence of an Event of Default under this Agreement.
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SECTION 12. DISSOLUTION AND LIQUIDATION
SECTION 12.1 EVENTS OF DISSOLUTION. Except as otherwise provided in this
Agreement and subject to the exercise by a Member of its rights under Section 6,
the Company shall be dissolved and its affairs shall be wound up upon the
happening of the first to occur of the following:
(a) Upon the unanimous decision of the Class A Members at any time to
dissolve the Company.
(b) Upon the sale or other disposition of all or substantially all of the
assets and properties of the Company and distribution to the Members of the
proceeds of the sale or other disposition.
(c) Upon the dissolution of a Class A Member, unless the remaining Class A
Member or Members elect, within 90 days of the happening of that event, to
continue the business of the Company.
(d) Upon the failure of CNO to enter into the Long-Term CNO Commitment
other than for the failure to meet the conditions set forth in EXHIBIT B.
SECTION 12.2 EFFECT OF DISSOLUTION. Upon any dissolution of the Company
under this Agreement or the Act, except as otherwise provided in this Agreement,
the continuing operation of the Company's business shall be confined to those
activities reasonably necessary to wind up the Company's affairs, discharge its
obligations, and liquidate its assets and properties in a businesslike manner.
Upon the occurrence of an event of dissolution, unless the business of the
Company is continued as provided in this Agreement, the Board shall cause to be
filed a certificate of cancellation under Section 18-203 of the Act.
SECTION 12.3 CONVERSION TO CORPORATION. It is contemplated by the Members
that at a certain time in the development of the Company, the Company shall
convert to corporate status. The Board shall determine the appropriate time of
the conversion and the exact legal mechanism of conversion, including the state
of incorporation. The conversion of Membership Interests into corporate stock of
the new corporation shall be upon the following basis:
(a) Within 15 days of the Board approval of the conversion, the Board shall
appoint an investment banker to value the Company. Promptly upon determination,
the Board shall deliver written notice to the Company's Accountant (the
"CONVERSION NOTICE") setting forth the Company Value as determined by the
Company's investment bankers.
(b) Within 15 days after receipt of the Conversion Notice, the Company's
Accountant shall, based upon the Company Value set forth in the Conversion
Notice, compute the amount of distributions each Member would receive if the
Company were dissolved following a sale and assignment of all of the assets and
liabilities of the
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Company in exchange for cash equal to the Company Value. The calculation of the
amount of distributions to each Member shall be based upon the then-current
Percentage Interests and Capital Accounts of the Members. The Company Accountant
shall send to the Company and each Member a summary of its computations.
(c) The Company Accountant's computations shall show the amount each Member
would have received in distributions for the life of the Company including
distributions each would receive in dissolution of the Company (each amount a
"CONVERSION DISTRIBUTION"). The Company Accountant shall then divide each
Member's Conversion Distribution by the total of all the Conversion
Distributions. The result shall be each Member's "CONVERSION PERCENTAGE".
(d) Each Member shall then receive a percentage amount of stock of the new
corporation equal to its Conversion Percentage. Class A Members of the Company
shall receive voting common stock of the corporation. Class B Members of the
Company shall receive non-voting common stock of the corporation. The voting and
non-voting common stock shall share prorata in dividends and liquidation
proceeds of the new corporation.
(e) Upon an initial public offering or a merger of the new corporation,
each share of non-voting common stock shall be converted into one share of
voting common stock upon the consummation of the initial public offering or
merger.
SECTION 12.4 ACCOUNTING AND ALLOCATION UPON DISSOLUTION, LIQUIDATION AND
TERMINATION.
(a) Notwithstanding any other provision in this Agreement, if the Company
is dissolved, then an accounting of the Company's assets, liabilities and
operations through the last day of the month in which the dissolution occurs
shall be made, and the affairs of the Company shall then be promptly wound up
and terminated. The Board will appoint one or more Persons (who may be Members)
to serve as the liquidating trustee(s) of the Company. The liquidating
trustee(s) will be responsible for winding up and terminating the affairs of the
Company and will determine all related matters (including, without limitation,
the arrangements to be made with creditors, to what extent and under what terms
the assets of the Company are to be sold, and the amount or necessity of cash
reserves to cover contingent liabilities) as the liquidating trustee(s) deem
advisable and proper; PROVIDED, HOWEVER, that all decisions of the liquidating
trustee(s) will be made in accordance with the fiduciary duty owed by the
liquidating trustee(s) to the Company and each of the Members. The liquidating
trustee(s) will liquidate the assets of the Company as promptly as is consistent
with obtaining the fair market value of the assets, and the proceeds from the
liquidation, to the extent sufficient, will be applied and distributed in the
following order:
(1) To the payment and discharge of all of the Company's debts and
liabilities to creditors (including Members) in the order of priority
as provided by law, other than liabilities for distributions to
Members;
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(2) To the payment of any Special Adjustment; and
(3) The balance, if any, in proportion to the positive Capital Account
balances of the Members. The distributions shall be made by the end of
the Fiscal Year in which the liquidation occurs or, if later, within
90 days after the date of the liquidation.
(b) After all of the assets of the Company have been distributed, the
Company shall terminate; however, if at any time after termination of the
Company any funds in any cash reserve fund referred to in Section 12.4(a) are
released because the need for the cash reserve fund has ended, the funds shall
be distributed to the Members in the same manner as if the distribution had been
made pursuant to Sections 12.4(a)(1) and (2) above.
(c) Notwithstanding anything to the contrary in this Agreement, upon a
liquidation within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g), if any Member has a deficit or negative balance in the
Member's Capital Account (after giving effect to all contributions,
distributions, allocations, and other Capital Account adjustments for all
taxable years, including the year during which the liquidation occurs), the
Member shall have no obligation to make any capital contribution to the Company,
and the negative balance of the Member's Capital Account shall not be considered
a debt owed by the Member to the Company or to any other Person for any purpose
whatsoever.
SECTION 12.5 CERTIFICATE OF CANCELLATION. Upon the completion of the
winding up of the affairs of the Company, the Board shall prepare, execute and
deliver to the Secretary of State a certificate of cancellation in accordance
with Section 18-203 of the Act.
SECTION 13. OWNERSHIP, RIGHT AND OBLIGATIONS, LICENSING AND FUTURE DEVELOPMENT
OF TECHNOLOGY
SECTION 13.1 LICENSES GRANTED. Prior to the formation of the Company,
Intrex has developed certain sensors, low cost satellite radios and other
technology useful in developing and providing Propane Monitoring Services and in
addition, during the Term of the Company, Intrex expects to continue to develop
technology pertaining to Propane Monitoring Services (collectively "INTREX
TECHNOLOGY"). Prior to the formation of the Company, NC or CNO has developed
certain software, systems and business methods useful in developing and
providing Propane Monitoring Services and in addition, during the Term of the
Company, NC and/or CNO expects to continue to develop technology pertaining to
Propane Monitoring Services (collectively "CNO TECHNOLOGY"). Specifically, CNO
will be responsible for developing a marketable and commercial propane tank
level reporting system and resource management software system as a part of the
CNO Technology. Intrex and CNO each grant to the Company an exclusive worldwide
license to make, have made, use offer to sell and sell the Intrex Technology and
the CNO Technology, including but not limited to, all Patents, Copyrights and
know-how related to their respective technology, systems, software, finance,
middleware, and hardware developed or owned prior to and during the Term of the
Company. The
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licenses granted by Intrex and CNO shall terminate upon the completion of the
liquidation and windup of the Company.
The above-described exclusive licenses are for: (i) the global marketing of
products used to measure the liquid level of any propane vessels and delivery of
corresponding tank data to the customer; and (ii) the marketing of software
solutions that provide the end user with an array of data products that include
basic data delivery to resource management software applications. The ranges of
products marketed by the Company may be increased subject to the unanimous
agreement of NC and TankLink.
SECTION 13.2 LICENSE FEES.
(a) The license fees for the Intrex Technology and the CNO Technology are
to be calculated to provide the respective technology developer a normal
commercial return on the developed technology. Each respective licensor may, in
its sole discretion, reduce the license fee to the Company on a negotiated
basis.
(b) If either Intrex or CNO develop technologies or systems outside of the
Company that may evidence the products, technologies or systems used by the
Company, then the developing party will use its best efforts to make that
technology or product available to the Company on similar terms it is made
available to third parties. However, if third parties are involved in the
development of the technologies or products, then the contractual obligations to
those third parties will take precedence.
SECTION 13.3 LIMITATION ON USE OF LICENSED TECHNOLOGY. As provided in this
Agreement, the Company acquires only the right to use the Intrex Technology and
CNO Technology and does not acquire any other rights or ownership therein. The
Company shall not reverse engineer the Intrex Technology or CNO Technology
through decompiling, disassembling or otherwise, except to the extent provided
by law. In no event shall the Company use the respective technologies other than
as set forth in Section 13.1 above.
SECTION 13.4 PROPRIETARY PROTECTION. The Company shall take all reasonable
measures to protect Intrex's and CNO's ownership rights and interest in all
Patents, Copyrights, Trade Secrets, Trademarks and other intellectual property.
The Company shall promptly during the Term of this Agreement and thereafter,
notify Intrex and CNO of any actual or suspected unauthorized use or disclosure
of the Intrex Technology or CNO Technology of which the Company has knowledge
and the Company shall cooperate fully in the investigation of such unauthorized
use or disclosure.
In the event of a breach of any of the provisions of this section, the
respective licensors shall not have an adequate remedy in monetary damages, and
accordingly shall, in addition to any other available legal or equitable
remedies, be entitled to an injunction against such breach from any court of
competent jurisdiction immediately upon request without any requirement to post
bond or other security as a condition of such relief.
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SECTION 13.5 FUTURE DEVELOPMENT OF TECHNOLOGY. NC and TankLink agree that a
cost effective software package and a cost effective radio and communications
package needs to be created in order to accomplish the overall goal of a low
cost total product application.
NC has indicated that the current back-office software package of CNO will
not be adequate for the Company's marketing purposes and that up to an
additional $150,000 may be required to be expended to create a customized
software package for the Company based on CNO's existing software. CNO will be
entitled to reimbursement of costs up to $150,000 for the back-office software
technology created for the Company by CNO. If the costs associated with the
creation of the back-office software exceed $150,000, NC and TankLink agree to
evaluate the needed contribution and related ownership at that time.
CNO has indicated that in order for the Propane Monitoring Service to be
cost effective for CNO, the cost of the radio and communications package needs
to be lower than the present cost that existing technology provides. Intrex has
indicated that it can produce a lower cost communications package through itself
and third parties, but that this will involve the expenditure by Intrex of
substantial non-recurring engineering fees or royalty payments to those third
parties. Intrex has indicated that it is prepared to enter into agreements with
third parties to produce the lower cost radio and communications systems
providing that CNO enters into the Long-Term CNO Commitment referenced in
Section 1.3.
If either NC, TankLink, CNO or Intrex decide not to bear the responsibility
or sole cost of development of certain parts of their technology development and
the Members decide that the Company should develop the product, then the Company
will fund and own the product and no license fee will be payable for the Company
developed or financed portion. The Company may use the product for its own use
and/or license the product back to NC, TankLink, CNO or Intrex on an exclusive
or other basis.
SECTION 13.6 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Class A Member and
CNO and Intrex, respectively represents and warrants to the other during the
Term of the Agreement and thereafter during any period that a separate software
maintenance agreement shall be in effect that:
(a) all CNO Technology and Intrex Technology shall function for the
machines for which they are designed.
(b) all CNO Technology and Intrex Technology shall conform to the
specifications and functions set forth in the documentation relating thereto.
(c) no Intrex or CNO software shall contain: (i) any self-help code
(including, without limitation, any back door, software locks, drop-dead
devices, date/time expiration codes, or serial number dependent passwords) that
at some specific time or on a specific instruction or occurrence of a given
event shall stop, limit, impair or interfere with the operation of any of the
Company's software subject, nevertheless, to
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the provisions of Section 13.3; or (ii) any unauthorized code (including,
without limitation, viruses, Trojan Horses, worms or other software routines)
that shall damage or materially alter or render inaccessible any of the
Company's software, or any other hardware, software or data which the Company'
software is designed to process or use, or any other hardware, programs or data
attached to, resident on, or accessible to the system on which the Company's
software is executed or stored.
(d) the tapes, diskettes or other media of the Intrex or CNO software shall
be free of defects in materials and workmanship under normal use during the
warranty period.
(e) It is the sole owner of all Patent, Copyright, Trade Secret, Trademark
and other intellectual property rights in the Intrex or CNO software or, if
Intrex or CNO software contains third party software or other materials, the
licensor has the right to grant to the Company all of the licenses and other
rights granted under this Agreement, and in any event has the full power and
authority to sell, convey, license, and deliver a license to the Intrex or CNO
software free from any liens and encumbrances of all kinds.
(f) the Intrex or CNO software does not infringe any third party
intellectual property rights for which Intrex or CNO has not obtained any
required permission to utilize in, or in connection with, the Intrex or CNO
software.
(g) The warranties of CNO and Intrex to the Company under this Agreement
are in lieu of all other warranties express or implied, including without
limitation, any warranty of merchantability or fitness for a particular purpose.
SECTION 14. GENERAL PROVISIONS
SECTION 14.1 GOVERNING LAW. This Agreement and the rights of the parties
hereunder will be governed by, interpreted, and enforced in accordance with the
laws of the State of Delaware without reference to its conflict of laws
principles.
SECTION 14.2 ATTORNEYS' FEES. If any legal action or other proceeding is
commenced to enforce or interpret any provision of, or otherwise relating to,
this Agreement, the losing party or parties shall pay the prevailing party's or
parties' actual expenses incurred in the investigation of any claim leading to
the proceeding, preparation for and participation in the proceeding, any appeal
or other post judgment motion, and any action to enforce or collect the judgment
including without limitation contempt, garnishment, levy, discovery and
bankruptcy. For this purpose "EXPENSES" include, without limitation, court or
other proceeding costs and experts' and attorneys' fees and their expenses. The
phrase "PREVAILING PARTY" shall mean the party who is determined in the
proceeding to have prevailed or who prevails by dismissal, default or otherwise.
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SECTION 14.3 MEDIATION. Except as provided in Section 6 with respect to
Board Deadlocks, all disputes or questions of interpretation relating to or
arising out of this Agreement shall be resolved as follows:
(a) Prior to submitting a dispute concerning or related to the subject
matter of or interpretation of this Agreement to mediation the Members shall
attempt in good faith to resolve such dispute promptly by negotiation. If the
parties are unable to negotiate a resolution of the dispute within 30 days after
written notice of dispute is received, the parties shall endeavor to settle the
dispute by mediation as described in the following Section 14.3(b). All
negotiations pursuant to this Section 14.3 shall be confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.
(b) If the dispute has not been resolved by negotiation as set forth in
Section 14.3(a), the parties shall, prior to the filing in any state, federal or
foreign court, first endeavor to settle the dispute by mediation administered by
the AAA under its Commercial Mediation Rules then in effect (the "MEDIATION
RULES"). A party seeking to initiate mediation shall notify the other party in
writing in accordance with Section 14.11. Within 20 days after receipt of such
written notice, the parties shall select a mediator jointly. If the parties do
not select a mediator within the 20-day period, a party may request the AAA, by
written notice to the AAA and the other party, to select a mediator in
accordance with the Mediation Rules. If the dispute cannot be resolved within
the period the mediator deems reasonable, which period shall not exceed 60 days,
the mediator shall declare that further efforts at mediation are no longer
worthwhile and either Member or the Company shall be free to commence
arbitration proceedings administered by the AAA under the Arbitration Rules and
judgment on the award rendered by the administrators may be entered in any court
having jurisdiction thereof.
SECTION 14.4 BINDING EFFECT. This Agreement will be binding upon and inure
to the benefit of the Members, and their respective distributees, successors and
assigns; PROVIDED, HOWEVER, nothing contained in this Section 14.4 shall limit
the effectiveness of any restriction on transfers of Membership Interests.
SECTION 14.5 TERMS. Any reference to the Act, the Code or other statutes or
laws will include all amendments, modifications, or replacements of the specific
Sections and provisions concerned.
SECTION 14.6 HEADINGS. All headings are inserted only for convenience and
ease of reference and are not to be considered in the construction or
interpretation of any provision of this Agreement.
SECTION 14.7 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under the present or future laws effective
during the term of this Agreement, the provision will be fully severable; this
Agreement will be construed and enforced as if the illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement will remain in
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full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of the illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a provision as similar in terms to the
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.
SECTION 14.8 MULTIPLE COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and
counterpart signature pages may be detached and assembled to form a single
original document. Furthermore, this Agreement may be executed and delivered by
the exchange of electronic facsimile copies or counterparts of the signature
page, which facsimile copies or counterparts shall be binding upon the parties.
SECTION 14.9 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute
and deliver any additional documents and instruments and to perform any
additional acts as may be necessary or appropriate to effectuate, carry out and
perform all of the terms, provisions and conditions of this Agreement and the
transactions contemplated by this Agreement.
SECTION 14.10 NO THIRD PARTY BENEFICIARY. This Agreement is made solely and
specifically among and for the benefit of the parties, Members and Directors and
their respective successors and assigns subject to the express provisions
relating to successors and assigns, and no other Person will have any rights,
interest or claims or be entitled to any benefits under or on account of this
Agreement as a third party beneficiary or otherwise.
SECTION 14.11 NOTICES.
(a) All notices, consents, requests, demands or other communications to or
upon the respective parties shall be in writing and shall be effective for all
purposes upon receipt on any Business Day before 5:00 PM local time and on the
next Business Day if received after 5:00 PM or on other than a Business Day,
including without limitation, in the case of (i) personal delivery, (ii)
delivery by messenger, express or air courier or similar courier, (iii) delivery
by United States first class certified or registered mail return receipt
requested, postage prepaid and (iv) transmittal by telecopier or facsimile,
addressed to the addresses set forth on the signature pages to this Agreement.
(b) Any party may change its address by written notice to the other parties
in the manner set forth above. Receipt of communications by United States first
class or registered mail will be sufficiently evidenced by return receipt. In
the case of illegible or otherwise unreadable facsimile transmissions, the
receiving party shall promptly notify the transmitting party of any transmission
problem and the transmitting party shall promptly resend any affected pages.
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SECTION 14.12 AMENDMENTS.
(a) Any amendment to this Agreement shall be in writing, dated and signed
by the Members who have unanimously approved it. If any conflict arises between
the provisions of the amendment, or amendments, and the terms of this Agreement,
the most recent provisions shall govern and control. No amendment may affect the
rights of a withdrawn Member under this Agreement without the written consent of
the withdrawn Member.
(b) The Certificate of Formation shall be amended whenever required by the
provisions of this Agreement or by the Act. Any amended Certificate of Formation
shall be filed for record by the Members as required by the Act, and this
Agreement shall also be amended as necessary to reflect the change.
SECTION 14.13 TITLE TO COMPANY PROPERTY. Legal title to all property of the
Company will be held and conveyed in the name of the Company.
SECTION 14.14 WAIVER. No waiver of any obligations under this Agreement
will be enforceable or admissible unless set forth in a writing signed by the
party against which enforcement or admission is sought. No delay or failure to
require performance of any provision of this Agreement shall constitute a waiver
of that provision as to that or any other instance. Any waiver granted shall
apply solely to the specific instance expressly stated.
SECTION 14.15 ENTIRE AGREEMENT. This Agreement and the Exhibits contain the
entire understanding between the Members and supersede any prior written or oral
agreements between them regarding the same subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between the Members relating to the subject matter of this Agreement that are
not fully expressed in this Agreement. In the event of a conflict between the
provisions of the Business Plan and this Agreement, the provisions of this
Agreement shall control.
SECTION 14.16 NO STATE LAW PARTNERSHIP. The Members intend that the Company
not be a partnership (including, without limitation, a limited partnership) or
joint venture, and that no Member be an agent, partner or joint venturer of any
other Member, for any purposes other than federal and state tax purposes, and
this Agreement shall not be construed to suggest otherwise.
SECTION 14.17 FORCE MAJEURE. Either Member shall be excused from delays in
performing or from its failure to perform hereunder (except any failure to pay
any amount due) to the extent that such delays or failures result from any (a)
act of God, (b) fire, flood, earthquake, blizzard, storm or other casualty, (c)
strike, lockout or other labor dispute, (d) riot, insurrection, civil commotion,
sabotage, vandalism or enemy or hostile government action, (e) inability to
procure labor, materials, or supplies, (f) transportation delay or freight
embargo, (g) law, stature, ordinance, order, rule, regulation or requirement of
any federal, state or municipal government, or any appropriate agency, officer,
department, board or commission thereof, whether now or hereafter in force, (h)
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judicial or other legal restriction or proceeding, actual or threatened,
pertaining to or affecting the performance of any covenant to be performed
hereunder, (i) failure or delay by the other Member in the full and prompt
performance of its obligations under this Agreement, or (j) any other condition
beyond the control of the party suffering the delay.
SECTION 14.18 PUBLIC ANNOUNCEMENTS. Any press releases or other public
announcements with respect to any matters contemplated by this Agreement or any
other public matter related to the Company or this Agreement shall be subject to
the prior review and approval of and shall be jointly issued by both NC and
TankLink
SECTION 14.19 EXHIBITS. The following Exhibits attached to this Agreement
shall be deemed to be a part of this Agreement and are fully incorporated by
this reference:
Appendix 1: Defined Terms
Exhibit A: Certificate of Formation
Exhibit B: Long-Term CNO Commitment
Exhibit C: Approved Budget
Exhibit D: Individuals on Board of Directors
Appointed by the Members
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IN WITNESS WHEREOF, the Members have executed this Agreement as of the
Execution Date.
TANKLINK, LLC NCJV, LLC
By: Cornerstone Propane, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- -------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------ ---------------
Title: President Title: Chief Executive Officer
--------- -----------------------
By: Northwestern Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------
Title: President & Chief Operating Officer
-----------------------------------
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AS TO SECTIONS 1.3, 7.1, 7.3 AND 13:
CORNERSTONE PROPANE, L.P. DECISIONLINK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------- --------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------- ----------------
Title: Chief Executive Officer Title: President
----------------------- ---------
NORTHWESTERN CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------
Title: President & Chief Operating Officer
-----------------------------------
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APPENDIX 1
DEFINED TERMS
(a) DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
"ACT": The Delaware Limited Liability Company Act, 6 Del. C. Section 18-101
et seq., as amended from time to time.
"ADDITIONAL CAPITAL CONTRIBUTIONS": Contributions of capital, if any,
required by the Class A Members under Section 2.2.
"AFFILIATE": When used with reference to a specified Person, (i) any Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled or is under common control with the specified Person, (ii) any Person
that is a partner, member, or trustee of, or serves in a similar capacity with
respect to, the specified Member or of which the specified Person is a partner,
member, or trustee, or with respect to which the specified Person serves in a
similar capacity, (iii) any Person that, directly or indirectly, is the
beneficial owner of fifty percent (50%) or more of any class or voting
securities of, or otherwise has a substantial beneficial interest in, the
specified Person or of which the specified Person has a substantial beneficial
interest, or (iv) any immediate family member or spouse of the specified Person.
"BANKRUPTCY": With respect to a Person, being the subject of an order for
relief under Title 11 of the United States Code, or any successor statute or
other statute in any foreign jurisdiction having like import or effect.
"BOARD": The Board of Directors of the Company, as described in Section
5.2(a).
"BUSINESS DAY": Any day other than Saturday and Sunday on which national
banking associations in New York, New York are open for business.
"BUSINESS PLAN": As defined in Section 8.5. Unless otherwise indicated by
the context, references to the Business Plan shall mean the Business Plan most
recently approved by the Board.
"BUYING MEMBER": As defined in Section 6.4(d).
"CAPITAL ACCOUNTS": As defined in Section 2.4.
"CHANGE IN CONTROL": A Change in Control shall be deemed to have occurred
when more than fifty percent (50%) of the outstanding shares or securities or
other evidence of ownership (representing the right to vote for the election of
directors or other managing authority), or more than fifty percent (50%) of the
assets of the entity or
the right to effectively control the entity through contract or otherwise
becomes owned or controlled, directly or indirectly, by a third party.
"CLASS A MEMBERS": As defined in Section 4.1(a). The initial Class A
Members of the Company are NC and TankLink.
"CLASS B MEMBERS": Members who hold Class B Shares.
"CLASS B SHARES": The Membership Interests with no voting rights, as
provided in this Agreement, as to which each Class B Share shall be entitled to
a Percentage Interest equal to 0.001% and with the other rights and interests as
provided in this Agreement.
"CODE": The Internal Revenue Code of 1986 or any successor statute, as
amended from time to time.
"COMPANY": TankSat Solutions, LLC, a Delaware limited liability company.
"COMPANY VALUE": the value of the Company on an "all cash" basis after
payment of all sales and closing costs.
"COMPANY'S ACCOUNTANT": The independent certified public accountancy firm
retained by the Board from time to time to render accounting services to the
Company.
"CONFIDENTIAL INFORMATION": The nonpublic information that a Member or the
Company (i) discloses in tangible form and designates in writing or marks as
"confidential" at the time of disclosure or (ii) discloses orally or in other
intangible form but identifies as "confidential" at the time of disclosure and
designates in writing as confidential in a written memorandum sent to the
recipient of the information within 30 days of disclosure, summarizing the
confidential information sufficiently for identification. Confidential
Information includes, without limitation, any and all product pricing and naming
information, customer lists, the terms and conditions of this Agreement,
contents of negotiations, as well as any information or correspondence relating
to products, the marketing or promotion of any product, business policies or
practices, source code, personnel, research, development or know-how and all
other technical and market product requirements and organizational and financial
information received from others that a Member and/or the Company is obligated
to treat as confidential.
"COPYRIGHTS": All copyright rights, and all other literary property and
author rights, and all right, title and interest in all copyrights, copyright
registrations, certificates of copyright and copyrighted interests throughout
the world.
"DEFAULTING MEMBER": As defined in Section 11.1.
"DEFICIT CONTRIBUTION": As defined in Section 2.3(a).
"DISTRIBUTABLE CASH": Cash funds of the Company from any source, less the
sum of (i) an amount sufficient for the payment of all expenses of the Company
then due and payable and (ii) reasonable working capital reserves for the
Company as determined by the Board.
"ECONOMIC INTEREST": A Person's right to share in the income, gains,
losses, deductions, credit, or similar items of, and to receive distributions
from, the Company, but the term does not include any other rights of a Member
including, without limitation, the right to vote or to participate in
management, or, except as provided in the Act, any right to information
concerning the business and affairs of the Company.
"EXECUTION DATE": The date on which this Agreement is signed by the
Members, as specified in the introductory paragraph of this Agreement.
"EVENTS OF DEFAULT": As defined in Section 11.1.
"FISCAL YEAR": The taxable year of the Company, shall be a calendar year.
"INITIAL CAPITAL CONTRIBUTIONS": The initial contributions of capital by NC
and TankLink required to be made pursuant to Section 2.1.
"LONG-TERM CNO COMMITMENT": As defined in Section 1.3(e).
"MEMBER": A Person who (i) has been admitted to the Company as a Member in
accordance with this Agreement and (ii) has not resigned, withdrawn, or been
expelled as a Member or, if other than an individual, been dissolved.
"MEMBERSHIP INTEREST": A Member's rights in the Company, collectively,
including the Member's Economic Interest, any right to vote or participate in
management, and any right to information concerning the business and affairs of
the Company provided by the Act.
"NET INCOME AND NET LOSS": As defined in Section 3.8.
"NONCONTRIBUTING MEMBER": As defined in Section 2.3.
"NONPERFORMING MEMBER". As defined in Section 6.4(e).
"PATENTS": All issued utility patents, including all continuations,
divisions, re-issues, reexams, patents of addition, extensions and any other
patent claiming the priority of a patent application, but only to the extent
that the invention is disclosed in the prior application, and all corresponding
counterparts in any country, but excluding design patents, design registrations
or industrial designs.
"PERCENTAGE INTERESTS": Initially, 50% for each of the Class A Members, as
those percentages may be adjusted from time to time pursuant to the terms of
this Agreement and the admission of additional Members. The Percentage Interests
attributable to newly issued Class B Shares shall be deducted from the Class A
Members in the proportion to the Class A
Member's relative Percentage Interests. The aggregate Percentage Interests of
all Members shall at all times equal 100%.
"PERSON": An individual, partnership, limited partnership, trust, estate,
association, corporation, limited liability company, or other entity, whether
domestic or foreign.
"PREFERRED RETURN": a return of eight percent (8%) per annum calculated on
a daily basis upon a Class A Member's Unreturned Capital.
"PROPANE MONITORING SERVICE": As defined in Section 1.3(a).
"PROPORTIONATE SHARE": With respect to a Member, the ratio of the Member's
Percentage Interest to the Percentage Interest of all the Members.
"SECRETARY OF STATE": the Secretary of State of the State of Delaware.
"SELLING MEMBER": As defined in Section 6.4(d).
"SHARES": The Class A Shares and the Class B Shares together. The Company
shall not issue fractional Shares. An assignment of a Share shall be deemed to
be the assignment of the Economic Interest that is represented by the Share.
"TRADEMARKS": All trademark and service ▇▇▇▇ rights arising under the
common law, state law, federal law and laws of foreign countries, all right,
title and interest in all trademarks, service marks, trademark and service ▇▇▇▇
applications and registrations and trademark and service ▇▇▇▇ interests
throughout the world.
"TRADE SECRETS": All right, title and interest in all trade secrets and
trade secret rights arising under the common law, state law, federal law or laws
of foreign countries.
"TRANSFER": With respect to a Membership Interest or any element of a
Membership Interest, any sale, assignment, gift, encumbrance, or other
disposition of a Membership Interest or any element of a Membership Interest,
directly or indirectly, whether voluntary or involuntary.
"TREASURY REGULATIONS": Final and temporary income tax regulations issued
by the U.S. Treasury Department.
"UNANIMOUS VOTE". The affirmative vote or written consent by members of the
Board representing all of the Members entitled to vote.
"UNRETURNED CAPITAL": As of the date of determination, the sum of all
capital contributions of a Class A Member as of that date less the aggregate
amount of distributions made (or deemed made under Section 2.3(a)) to the Member
pursuant to Section 3.1.
(b) CONSTRUCTION AND REFERENCE. Words used in this Agreement, regardless of
the number or gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context shall require. Unless otherwise specified, all
references in this Agreement to Sections are deemed references to the
corresponding Sections in this Agreement, and all references in this Agreement
to Exhibits are references to the corresponding Exhibits attached to this
Agreement.
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SECTION 1. FORMATION .....................................................................1
Section 1.1 Formation of the Company ............................................1
Section 1.2 Name.................................................................2
Section 1.3 Purpose and Scope....................................................2
Section 1.4 Term.................................................................4
Section 1.5 Office; Agent; Locations.............................................5
Section 1.6 Defined Terms........................................................5
SECTION 2. CAPITALIZATION OF THE COMPANY ................................................ 5
Section 2.1 Initial Capital Contributions .......................................5
Section 2.2 Additional Capital Contributions.....................................5
Section 2.3 Failure to Contribute................................................6
Section 2.4 Capital Accounts.....................................................7
Section 2.5 Valuation of Company Assets..........................................8
Section 2.6 Withdrawals..........................................................8
SECTION 3. DISTRIBUTIONS AND ALLOCATIONS .................................................8
Section 3.1 Nonliquidating Distributions ........................................8
Section 3.2 Allocation of Net Income.............................................8
Section 3.3 Allocation of Net Loss...............................................9
Section 3.4 Special Allocations..................................................9
Section 3.5 Tax Allocations.....................................................10
Section 3.6 Other Allocation and Distribution Rules.............................11
Section 3.7 Interest on Capital.................................................12
Section 3.8 Determining Net Income and Net Loss.................................12
SECTION 4. MEMBERS ......................................................................12
Section 4.1 Ownership Rights ...................................................12
Section 4.2 Limited Liability...................................................13
Section 4.3 Admission of Additional Members.....................................13
Section 4.4 Members Not Agents..................................................13
Section 4.5 Voting Rights.......................................................13
Section 4.6 Actions by Members..................................................14
SECTION 5. MANAGEMENT OF THE COMPANY ....................................................14
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Section 5.1 Initial Start-up Management ........................................14
Section 5.2 Powers of the Board of Directors....................................14
Section 5.3 Members of the Board of Directors...................................15
Section 5.4 Board Meetings......................................................15
Section 5.5 Officers of the Company.............................................17
Section 5.6 Chairman of the Board...............................................18
Section 5.7 Chief Executive Officer.............................................18
Section 5.8 Chief Operating Officer.............................................19
Section 5.9 Secretary...........................................................19
SECTION 6. DISPUTE RESOLUTION ...........................................................19
Section 6.1 Dispute; Confidentiality ...........................................19
Section 6.2 Private Negotiation.................................................20
Section 6.3 Mediation...........................................................20
Section 6.4 Buy/Sell............................................................21
SECTION 7. RELATIONSHIPS BETWEEN MEMBERS AND COMPANY ....................................22
Section 7.1 Noncompetition .....................................................22
Section 7.2 Contracts Between Members and Company...............................23
Section 7.3 Confidentiality.....................................................24
SECTION 8. RECORDS AND REPORTS ..........................................................25
Section 8.1 Maintenance of Records .............................................25
Section 8.2 Delivery to Members and Inspection..................................26
Section 8.3 Reports.............................................................26
Section 8.4 Tax Matters.........................................................28
Section 8.5 Annual Business Plans...............................................28
SECTION 9. INTERESTS OF MEMBERS .........................................................28
Section 9.1 Transfers of Interests .............................................28
Section 9.2 Right of First Refusal for Interests Owned by Members...............28
Section 9.3 Section 754 Basis Election..........................................28
Section 9.4 Rights of Legal Representatives.....................................29
SECTION 10. EXCULPATION, INDEMNIFICATION AND INSURANCE ...................................29
Section 10.1 Exculpation ........................................................29
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Section 10.2 Indemnification.....................................................29
Section 10.3 Insurance...........................................................29
Section 10.4 Individual Member Insurance Requirements............................31
SECTION 11. DEFAULT BY MEMBER ............................................................32
Section 11.1 Events of Default ..................................................32
Section 11.2 Notice and Cure.....................................................32
Section 11.3 Remedies............................................................33
Section 11.4 No Limitation on Remedies...........................................34
SECTION 12. DISSOLUTION AND LIQUIDATION ..................................................35
Section 12.1 Events of Dissolution ..............................................35
Section 12.2 Effect of Dissolution...............................................35
Section 12.3 Conversion to Corporation...........................................35
Section 12.4 Accounting and Allocation Upon Dissolution, Liquidation
and Termination ....................................................36
Section 12.5 Certificate of Cancellation.........................................37
SECTION 13. OWNERSHIP, RIGHT AND OBLIGATIONS, LICENSING AND FUTURE DEVELOPMENT
OF TECHNOLOGY ................................................................37
Section 13.1 Licenses Granted ...................................................37
Section 13.2 License Fees........................................................38
Section 13.3 Limitation on Use of Licensed Technology............................38
Section 13.4 Proprietary Protection..............................................38
Section 13.5 Future Development of Technology....................................39
Section 13.6 Mutual Representations and Warranties...............................39
SECTION 14. GENERAL PROVISIONS ...........................................................40
Section 14.1 Governing Law ......................................................40
Section 14.2 Attorneys' Fees.....................................................40
Section 14.3 Mediation...........................................................41
Section 14.4 Binding Effect......................................................41
Section 14.5 Terms...............................................................41
Section 14.6 Headings............................................................41
Section 14.7 Severability........................................................41
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Section 14.8 Multiple Counterparts...............................................42
Section 14.9 Additional Documents and Acts.......................................42
Section 14.10 No Third Party Beneficiary..........................................42
Section 14.11 Notices.............................................................42
Section 14.12 Amendments..........................................................43
Section 14.13 Title to Company Property...........................................43
Section 14.14 Waiver..............................................................43
Section 14.15 Entire Agreement....................................................43
Section 14.16 No State Law Partnership............................................43
Section 14.17 Force Majeure.......................................................43
Section 14.18 Public Announcements................................................44
Section 14.19 Exhibits............................................................44