EXHIBIT 2
OPERATING AGREEMENT
OF
LABEL VENTURE GROUP LLC
DATED: APRIL 15, 1996
OPERATING AGREEMENT
OF
LABEL VENTURE GROUP, LLC
OPERATING AGREEMENT dated as of April 15, 1996 is among the Managers
and the Members referred to in this Agreement..
W I T N E S S E T H
WHEREAS, Label Venture Group LLC, a Delaware limited liability company
(the "Company"), is a shelf-corporation which was formed on May 25, 1995 and
until the offering of the securities contemplated hereby has done no business,
except to change its name to "Label Venture Group LLC"; and
WHEREAS, the Members and the Managers of the Company desire to set
forth their agreement with respect to (a) the business of the Company, (b) the
conduct of the Company's affairs and (c) the rights, powers, preferences,
limitations and responsibilities of the Members and the Managers, as the case
may be.
NOW, THEREFORE, in consideration of the mutual covenants and premises
hereof and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
indicated meanings:
1.1. "Agreement" means this Operating Agreement of the Company, by and
among the Managers and the Members referred to herein.
1.2. "Capital Account" means, with respect to any Member, the capital
account maintained for such Member in accordance with the provisions of
Section 7.
1.3. "Capital Contribution" means the total amount of capital actually
contributed to the Company by each Member pursuant to the terms of this
Agreement.
1.4. "Capital Interest" shall mean the proportion that a Member's
positive Capital Account bears to the aggregate positive Capital Accounts of all
Members whose Capital Accounts have positive balances, as may be adjusted from
time to time.
1.5. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or corresponding provisions of future laws.
1.6. "Company" means the limited liability company formed pursuant to
this Agreement and the LLC Law.
1.7. "Convertible Preferred Stock" means the 60,000 shares of Series A
Convertible Preferred Stock issued by Multi-Color Corporation to the Company in
consideration of $3,000,000 upon the terms and conditions as further described
in the attached letter of intent.
1.8. "Dispose" means to make a Disposition
1.9. "Disposition" means a transfer, gift, assignment, sale, pledge or
other disposition of all or any part of a Percentage Interest.
1.10. "LLC Law" means the Delaware Limited Liability Company Law and
any successor statute, as amended from time to time.
1.11. "Managers" shall mean one or more managers, which for purposes
hereof shall mean initially ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, or any other Person
or Persons who become managers in accordance with the terms of this Agreement.
1.12. "Managers' Management Fee" means the annual fee to be paid to the
Managers at the beginning of each fiscal year equal to two and one-half percent
(2 1/2%) of all the Members Capital Contribution to the Company. In the event
that the Managers' Management Fee has not been paid, it shall accrue and shall
be paid out of the first available cash flow of the Company.
1.13. "Member" means each of the parties who executes a counterpart of
this Agreement as a Member and each of the parties who may hereafter become
Members. To the extent a Manager has purchased and/or acquired, as the case may
be, Percentage Interests in the Company, he will have all the rights of a Member
with respect to such Percentage Interests.
1.14. "Member's Preferred Return" means each Member's cumulative annual
return in an amount equal to six percent (6%) of such Member's Capital
Contribution to the Company.
1.15. "Membership Interest" means the percentage interest of a Member
in the Company, as set forth in Section 4.2 and Exhibit A annexed hereto.
1.16. "Multi-Color Corporation" means the Ohio corporation which is the
issuer of the Convertible Preferred Stock.
1.17. "Net Cash Flow" means all funds from whatever source which are
available for distribution or payment to a Member (such as the Management Fee
and the Members' Preferred Return) after payment of all expenses of the Company,
arising from the Company's ownership of the Convertible Preferred Stock,
including, but not limited to, (a) the net proceeds realized from the sale of
such securities, (b) dividends and (c) distributions of any kind or nature with
respect thereto.
1.18. "Net Losses" shall mean net losses of the Company (including any
amounts paid for the Management Fee and the Members' Preferred Return)
determined, except as otherwise
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provided in this Agreement, in accordance with generally accepted accounting
principles as in effect in the United States.
1.19. "Net Profits" shall mean net profits of the Company determined,
except as otherwise provided in this Agreement, in accordance with generally
accepted accounting principles as in effect in the United States.
1.20. "Person" means any association, corporation, joint stock company,
estate, general partnership, limited association, limited liability company,
foreign limited liability company, joint venture, limited partnership, natural
person, real estate investment trust, business trust or other trust, custodian,
nominee or any other individual or entity in its own or any representative
capacity.
2. FORMATION OF THE COMPANY.
2.1. FORMATION. On May 25, 1995, the Company was organized as a
Delaware limited liability company by the filing of the Articles of Organization
with the Delaware Department of State. On April 3, 1996, the Company filed an
Amendment to Articles of Organization changing the name of the corporation to
"Label Venture Group LLC". This Agreement is executed and delivered pursuant to
Section 18-301 of the LLC Law.
2.2. NAME. The name of the Company shall be Label Venture Group LLC.
2.3. PRINCIPAL OFFICE. The principal office of the Company in the State
of Delaware shall be c/o ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc., ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Company shall have such other
offices as the Managers shall determine and as to which the Managers shall
promptly notify all Members.
2.4. REGISTERED AGENT; REGISTERED OFFICE. The registered agent at the
registered office of the Company in the State of Delaware is c/o ▇▇▇▇▇▇▇▇-▇▇▇▇
Corporation System, Inc., ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or such other office (which need not be a place of business of the
Company) as the Managers may designate from time to time in the manner provided
by the LLC Law. Any and all other correspondence may be sent to Company's
counsel c/▇ ▇▇▇▇▇▇▇ & Ellenoff, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
2.5. TERM. The term of the Company commenced upon the filing of the
Articles of Organization with the Delaware Department of State and shall
continue until terminated upon the events of dissolution set forth in Section
18-801 of the LLC Law, or as otherwise provided in this Agreement.
2.6. TITLE TO COMPANY PROPERTY. All of the Company's right, title and
interest in tangible property, intangible property, real property, personal
property and other assets acquired by the Company shall be held in the name of
the Company as an entity. Upon the acquisition of any such property, the
Managers shall execute such documents as may be necessary to reflect the
Company's ownership interest in such property. No Member shall have an ownership
interest in
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any property of the Company in his individual name or right and each Member's
Membership Interest shall be personal property for all purposes.
3. PURPOSES OF THE COMPANY.
Assuming that the Company finalizes all of the necessary documentation
with Multi-Color Corporation, and raises the funds required to fund that
transaction, the Company intends to use the proceeds raised hereunder to
purchase the Convertible Preferred Stock. Members acknowledge that they do not
own, directly or indirectly, any shares of capital stock of Multi-Color
Corporation other than for their respective interests acquired hereunder, and
agree to forbear from acquiring any interest in shares of capital stock of
Multi-Color Corporation without the written approval of the Managers.
4. MEMBERS; MEMBERSHIP INTERESTS.
4.1. MEMBERS. The Members are those Persons who execute a counterpart
of this Agreement as Members.
4.2. MEMBERSHIP INTEREST. The names and addresses of the Members and
their respective Membership Interests are set forth on Exhibit A annexed hereto
as said Exhibit A may be amended from time to time.
5. MEMBERS' CAPITAL CONTRIBUTIONS.
5.1. CAPITAL CONTRIBUTION. Each Member shall initially contribute in
cash to the capital of the Company as is set forth in Exhibit A attached hereto
and made a part hereof. The Company intends to raise up to $3,045,000;
$3,000,000 for the purchase of the Convertible Preferred Stock and $45,000 to
fund administrative expenses of the Company.
5.2. ADDITIONAL CAPITAL CONTRIBUTIONS. Except as set forth in Section
5.1 above, no Member shall be required to make any Capital Contributions. To the
extent unanimously approved by the Members, from time to time, the Members may
be permitted to make additional Capital Contributions if and to the extent they
so desire. In that event, the Members shall have the opportunity, but not the
obligation, to participate in such additional Capital Contributions on a pro
rata basis in accordance with their Membership Interests.
6. INTEREST ON CAPITAL CONTRIBUTIONS.
6.1. NO INTEREST ON CAPITAL CONTRIBUTIONS. Members shall not receive
interest on Capital Contributions.
6.2. NO RIGHTS TO WITHDRAW CAPITAL CONTRIBUTIONS. Members shall not
have the right to demand the return of or otherwise withdraw their Capital
Contributions, except as specifically set forth in this Agreement. Members
recognize that the Company shall be utilizing the proceeds raised to invest in
restricted securities of Multi-Color Corporation, and consequently, there shall
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be limited liquidity with respect to the Company being able to sell any of the
Convertible Preferred Stock or underlying securities.
7. CAPITAL ACCOUNTS.
Each Member's Capital Account shall be maintained in accordance with
the following provisions:
7.1. INITIAL CAPITAL ACCOUNT. Each Member's Capital Account shall
initially equal the cash such Member contributes to the capital of the Company
upon his admission to the Company.
7.2. INCREASES IN CAPITAL ACCOUNT. Each Member's Capital Account shall
be increased by (a) the amount of any additional cash or the fair market value
of property (net of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under the Code) subsequently
contributed by such Member to the capital of the Company; and (b) the amount of
any profits or item thereof allocated to such Member pursuant to Section 8.
7.3. REDUCTIONS IN CAPITAL ACCOUNT. Each Member's Capital Account shall
be reduced by (a) the amount of all cash distributions made to such Member
pursuant to Section 9; (b) the fair market value of any property (net of
liabilities secured by such distributed property that the Member is considered
to assume or take subject to under the Code) distributed by the Company to such
Member; and (c) the amount of any losses or item thereof allocated to such
Member pursuant to Section 8.
8. ALLOCATIONS OF PROFITS AND LOSSES.
Net Profits and Net Losses of the Company shall be allocated to the
Capital Account of each Member as follows:
8.1. At the end of each taxable year, Net Profits or Net Losses, as the
case may be, shall be allocated to the Members in proportion to their respective
Membership Interest for such period.
8.2. At the end of each taxable year, following the allocation in
Section 8.1, there shall be a second allocation, representing the Managers'
twenty percent (20%) incentive net profits allocation (the "Incentive
Allocation"). After allocating Net Profits and Net Losses for the fiscal year
pursuant to Section 8.1, twenty percent (20%) of the Net Profits so allocated to
each Member for such fiscal year, after adjustment for accumulated Net Losses as
described in Section 8.3, shall be reallocated to the Capital Account of the
Manager. In the event of withdrawal by a Member of any Capital from the Company
prior to the end of the fiscal year, for any reason, the Manager shall be
entitled to reduce the amount of Capital being received by such Member by twenty
percent (20%) of the Net Profit allocable to such withdrawn Capital.
8.3. Prior to crediting the Capital Account of the Manager with any of
its Incentive Allocation, all or a portion of such amount shall first be
credited to the Capital Accounts of all of
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the Members in proportion to their respective interests in the Company, in an
amount necessary to satisfy the accumulated Net Losses allocated to such
Member's Capital Account, if any, resulting from any accumulated Net Losses.
If a Member withdraws any of its capital, then notwithstanding anything to the
contrary, the Manager shall be credited its Incentive Allocation attributable
to the withdrawn capital and the Member shall not recover the accumulated Net
Losses allocable to such withdrawn amounts. The Manager shall calculate the
percentage withdrawal of the Member's capital as it bears relation to that
Member's Capital Account in the Company by means of a fraction, the numerator
of which is the amount of capital being withdrawn by the Member and the
denominator of which is the Capital Account prior to the withdrawal (the
"Withdrawing Capital Ratio"). The Manager shall then multiply the Withdrawing
Capital Ratio by the accumulated Net Losses allocable to the Member's Capital
Account, prior to the withdrawal of capital, to determine the accumulated Net
Losses allocable to the capital being withdrawn (the "Withdrawn Losses"). The
adjusted accumulated losses are determined by subtracting the Withdrawn Losses
from the accumulated Net Losses allocable to the withdrawing Member's Capital
Account (the "Adjusted Accumulated Losses"). Subsequent to the withdrawal of
the capital from the Capital Account by the Member, the Manager shall be
entitled to its Incentive Allocation if the Capital Account of the Member has
first been credited with an amount necessary to satisfy the Adjusted
Accumulated Losses allocated to such Member's Capital Account, if any.
9. CASH DISTRIBUTIONS.
IN GENERAL. In general, Net Cash Flow shall be distributed in the
following order of priority:
9.1. The Managers' Management Fee; and
9.2. The Members' Preferred Return; and
9.3. To the Members, an amount equal to, in the aggregate, the Members'
Capital Contributions to the Company; and
9.4. The balance, if any, eighty percent (80%) to the Members in
accordance with their Capital Accounts and twenty percent (20%) to the Managers.
10. POWERS AND RESPONSIBILITIES OF THE MANAGERS.
10.1. MANAGERS. The Managers as of the date of this Agreement are ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇. Other Persons may become Managers as provided by this
Section 10.
10.2. MANAGEMENT. The business and affairs of the Company shall be
managed by its Managers, subject to the terms and conditions hereof. In
consideration of the Management Fee, the Managers shall be responsible for and
pay for out of the Managers' Management Fee the routine and ordinary annual
legal affairs (not including any litigation or transactions), the annual
accounting and administration of the Company. The Managers shall direct, manage
and control the business of the Company to the best of their ability. ▇▇▇▇▇
▇▇▇▇▇▇▇ shall be the designated
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representative of the Company to the board of directors of Multi-Color
Corporation. Except for situations in which the approval of the Members is
expressly required by this Agreement or by non-waivable provisions of
applicable law, the Managers shall have full and complete authority, power and
discretion to manage and control the business, affairs and properties of the
Company, to make all decisions regarding those matters and to perform any and
all other acts or activities customary or incident to the management of the
Company's business. Notwithstanding anything to the contrary, the Managers may
establish reasonable reserves, in amounts and for periods of time, as they
deem necessary and appropriate. At any time when there is more than one
Manager, any one Manager may take any action permitted to be taken by the
Managers for any non-extraordinary matter of the Company; provided, however,
that neither Manager shall expend or commit to expend more than $500 of the
Company without the written approval of the other Managers. The approval of
both Managers is necessary, assuming more than one Manager has been appointed
and remains in office, for the voting, transfer and/or encumbrance of the
Convertible Preferred Stock.
10.3. MANAGEMENT FEE. In consideration of the Managers' obligation
hereunder, the Company agrees to pay an annual fee equal to two and one-half
percent (2 1/2%) of all the Members' Capital Contribution to the Company. In the
event that the Managers' Management Fee has not been paid, it shall accrue and
shall be paid out of the first available cash flow of the Company.
Notwithstanding the failure of the Company to pay the Managers the Managers'
Management Fee, the Managers shall continue to be obligated for the
responsibilities described above.
10.4. NUMBER, TENURE AND QUALIFICATIONS. The Company shall initially
have two Managers. One of the Managers shall be selected by the Member, ▇▇▇▇▇
▇▇▇▇▇▇▇ (the "LP Appointee") and one of the Managers shall be selected by the
Member, ▇▇▇▇▇▇ ▇▇▇▇ (the "JM Appointee"). The number of Managers of the Company
shall be fixed from time to time by the affirmative vote of Members holding at
least two-thirds of the Membership Interests in the Company, but in no instance
shall there be less than one Manager. Each Manager shall hold office for a
period of three (3) years and thereafter until a successor shall have been
elected and qualified. Managers shall be elected by the affirmative vote of
Members holding at least two-thirds of all Membership Interests in the Company
and each of the Members shall vote their respective Membership Interests
affirmatively for the appointees of the other Members; provided, however, ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ must approve of such appointments otherwise a new vote
must occur. Managers need not be residents of the State of Delaware or Members
of the Company.
10.5. CERTAIN POWERS OF MANAGERS. Without limiting the generality of
Section 10.2 above, but subject to the limitations contained in Section 10.5
hereof, the Managers shall have power and authority, on behalf of the Company:
10.5.1. To acquire the Convertible Preferred Stock. The fact
that a Manager or a Member is directly or indirectly affiliated or connected
with any such Person of Multi-Color Corporation shall not prohibit the
Managers from dealing with that Person.
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10.5.2. To purchase liability and other insurance to protect
the Company's property and business;
10.5.3. To invest any Company funds temporarily including,
without limitation, in time deposits, short-term governmental obligations,
commercial paper or other investments;
10.5.4. To vote all of the shares of the Convertible Preferred
Stock (although no such voting rights are anticipated) and/or the underlying
shares of common stock acquired upon the conversion thereof;
10.5.5. To sell, transfer or assign or otherwise dispose of any
or all of the Convertible Preferred Stock and/or the underlying shares of
common stock acquired upon the conversion thereof as part of a single
transaction or plan so long as that disposition is not in violation of or a
cause of a default under any other agreement to which the Company may be bound;
10.5.6. To execute on behalf of the Company all instruments and
documents, including, without limitation, subscription agreements, purchaser
questionnaires, bank opening documentation, checks and other negotiable
instruments, powers of attorney, stock powers, documents providing for the
acquisition or disposition of the Convertible Preferred Stock and/or the
underlying shares of common stock acquired upon the conversion thereof,
assignments, bills of sale, operating agreements of other limited liability
companies, and other instruments or documents necessary, in the opinion of the
Managers, to the business of the Company;
10.5.7. To employ accountants, legal counsel, managing agents,
or other experts to perform services for the Company and to compensate them
from Company funds;
10.5.8. To enter into any and all other agreements on behalf of
the Company, with any other Person for any purpose, in such forms as the
Managers may approve; and
10.5.9. To do and perform all other acts as may be necessary or
appropriate to the conduct of the Company's business.
10.6. LIMITATION ON MANAGERS' AUTHORITY. Notwithstanding the provisions
of Sections 10.2 and 10.4 or any other provision of this Agreement to the
contrary, the Managers shall not take any of the following actions without the
written consent of two-thirds in interest of the Members:
10.6.1. Invest the proceeds raised by the Company except for the
Convertible Preferred Stock;
10.6.2. Make any material change in the nature of the business
of the Company;
10.6.3. Sell any securities of the Company, convertible or
otherwise, through a public offering, private placement or otherwise, except
for the purpose of raising the $3,045,000
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necessary to fund the purchase of the Convertible Preferred Stock and the
operations of the Company to administer and monitor such investment;
10.6.4. Admission of new Members;
10.6.5. Any amendment to the Company's organization
documentation, or a material change in its capital structure;
10.6.6. Setting or amending compensation for any of the
Managers and other key employees and consultants of the Company;
10.6.7. Borrowing money or committing the credit of the Company
in any amount or undertaking any contractual or other obligations which can
reasonably be foreseen to include the expenditure by the Company of an amount
in excess of $100,000; and
10.6.8. Forming or creating any subsidiaries, joint ventures,
partnerships, businesses, enterprises, or other entities.
10.7. LIABILITY FOR CERTAIN ACTS. The Managers shall perform their
managerial duties in good faith, in a manner they reasonably believe to be in
the best interests of the Company, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances. A Manager who
so performs the duties of a Manager shall not have any liability by reason of
being or having been a Manager of the Company. A Manager does not, in any way,
guarantee the return of the Members' Capital Contributions or a profit for the
Members from the operations of the Company. A Manager shall not be liable to the
Company or to any Member for any loss or damage sustained by the Company or any
Member, unless the loss or damage shall have been the result of fraud, deceit,
gross negligence, willful misconduct, or a wrongful taking by the Manager.
10.8. CERTAIN MANAGERS HAVE NO EXCLUSIVE DUTY TO COMPANY. The Managers
shall not be required to manage the Company as their sole and exclusive function
and they may have other business interests and may engage in other activities in
addition to those relating to the Company. Neither the Company nor any Member
shall have any right, by virtue of this Agreement, to share or participate in
such other investments or activities of the Managers or to the income or
proceeds derived therefrom. The Managers shall incur no liability to the Company
or to any of the Members as a result of engaging in any other business or
venture.
10.9. BANK ACCOUNTS. The Managers may from time to time open bank
accounts in the name of the Company, and one or more of the Managers shall be
the signatories thereon, unless the Managers determine otherwise.
10.10. INDEMNIFICATION OF MANAGERS. In any threatened, pending or
completed action, suit or proceeding to which any Manager was or is threatened
to be made a party in his capacity as Manager of the Company (other than an
action by or in the right of the Company) involving an alleged cause of action
arising from the performance of the business of the Company or activities
relative to the management to the Company's real property, the Company shall
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indemnify such Manager against all costs and expenses, including reasonable
attorneys' fees, the costs and expenses of investigation, and judgments and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding, if such Manager acted in good faith and in a
manner in which such party reasonably believed to be in or not opposed to the
best interest of the Company. The termination of any action, suit or proceeding
by judgment, order or settlement shall not, of itself, create a presumption that
the Manager did not act in good faith and in a manner which such party
reasonably believed to be in or not opposed to the best interests of the
Company.
10.11. RESIGNATION. Any Manager of the Company may resign at any time
by giving written notice to the Members of the Company. The resignation of any
Manager shall take effect upon receipt of that notice or at such later time as
shall be specified in the notice; and, unless otherwise specified in the notice,
the acceptance of the resignation shall not be necessary to make it effective.
The resignation of a Manager who is also a Member shall not affect the Manager's
rights as a Member and shall not constitute a withdrawal of a Member.
10.12. REMOVAL. No Manager may be removed without the affirmative vote
of the Member who appointed such Manager. The removal of a Manager who is also a
Member shall not affect the Manager's rights as a Member and shall not
constitute a withdrawal of a Member.
10.13. VACANCIES. Any vacancy occurring for any reason in the number of
Managers of the Company may be filled only by the affirmative vote of the Member
who appointed the Manager being replaced.
10.13.1. Any Manager's position to be filled by reason of an
increase in the number of Managers shall be filled by the affirmative vote of a
majority of the Managers then in office or by an election at an annual meeting
or at a special meeting of Members called for that purpose or by the Members'
unanimous written consent.
10.13.2. A Manager elected to fill a vacancy shall be elected
for the unexpired term of the Manager's predecessor in office and shall hold
office until the expiration of that term and until the Manager's successor shall
be elected and shall qualify or until the Manager's earlier death, resignation,
or removal.
10.13.3. A Manager chosen to fill a position resulting from an
increase in the number of Managers shall hold office until the next annual
meeting of Members and until a successor shall be elected and shall qualify, or
until the Manager's earlier death, resignation, or removal.
10.14. TAXES. The Managers may, at least once during each fiscal year
if requested by any Member, distribute to such Member an amount of cash
representing such Member's Company Tax Liability with respect to the prior
fiscal year of the Company. The "Company Tax Liability" for any Member in any
fiscal year shall mean the amount of Federal Income tax that would be payable by
such Member in respect of such Member's interest in the Company during such
Fiscal Year, calculated upon the assumptions that (i) all such Member's share of
the Net Profits of the Company would be taxed at the highest applicable tax rate
then in effect; and (ii)
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no deductions, credits, set-offs or other factors personal to such Member
shall be taken into account to increase or reduce the amount of tax that would
be payable as computed hereunder.
11. POWER AND RESPONSIBILITY OF MEMBERS.
11.1. LIMITATION OF LIABILITY. The Members shall have no personal
liability with respect to the liabilities and obligations of the Company.
Without limiting the foregoing, each Member's liability shall be limited as set
forth in this Agreement, the LLC Law and other applicable law.
11.2. COMPANY DEBT LIABILITY. A Member will not be personally liable
for any debts or losses of the Company beyond the Member's respective Capital
Contributions and any obligation of the Member under Section 5 to make Capital
Contributions, except as provided by the LLC Law.
12. MEETINGS OF MEMBERS.
12.1. ANNUAL MEETING. The annual meeting of the Members shall be held
within 60 days of the mailing by the Company of the Schedule K-1s or at such
other time as shall be determined by resolution of the Members, commencing with
the year 1997, for the purpose of the transaction of such business as may come
before the meeting.
12.2. SPECIAL MEETINGS. Special meetings of the Members, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by a
Manager or by any Member or Members.
12.3. PLACE OF MEETINGS. The Members may designate any place, either
within or outside the State of Delaware, as the place of meeting for any of the
Members. All meetings may be held telephonically if permitted under the LLC Law.
12.4. NOTICE OF MEETINGS. Except as provided in Section 12.5 below,
written notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered no fewer than 10 nor
more than 50 days before the date of the meeting, either personally or by mail,
by or at the direction of the Managers or Person calling the meeting, to each
Member entitled to vote at the meeting.
12.5. MEETING OF ALL MEMBERS. If all of the Members shall meet at any
time and place, either within or outside of the State of Delaware, and consent
to the holding of a meeting at that time and place, the meeting shall be valid
without call or notice, and at the meeting lawful action may be taken.
12.6. RECORD DATE. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment of the
meeting, or Members entitled to receive payment of any distribution, or to make
a determination of Members for any other purpose, the date on which notice of
the meeting is mailed or the date on which the resolution declaring the
distribution is adopted, as the case may be, shall be the record date for the
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determination of Members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this Section, the
determination shall apply to any adjournment of the meeting.
12.7. QUORUM. Members holding at least two-thirds of all Membership
Interests in the Company, represented in person or by proxy, shall constitute a
quorum at any meeting of Members. In the absence of a quorum at any meeting of
Members, a majority of the Membership Interests in the Company so represented
may adjourn the meeting from time to time for a period not to exceed 60 days
without further notice. However, if the adjournment is for more than 60 days, or
if after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each Member of record entitled
to vote at the meeting. At an adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The Members present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal during the meeting of that number of Membership
Interests in the Company whose absence would cause less than a quorum.
12.8. MANNER OF ACTING. If a quorum is present, the affirmative vote of
Members holding a majority of the Membership Interests in the Company shall be
the act of the Members, unless the vote of a greater or lessor proportion or
number is otherwise required by the LLC Law, the Articles of Organization or by
this Agreement. Unless otherwise provided in this Agreement or required under
applicable law, Members who have an interest in the outcome of any particular
matter upon which the Members vote or consent may vote or consent upon any such
matter and their Membership Interest in the Company, vote or consent, as the
case may be, shall be counted in the determination of whether the requisite
matter was approved by the Members.
12.9. PROXIES. At all meetings of Members, a Member may vote in person
or by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. The proxy shall be filed with the Managers before or at the
time of the meeting. No proxy shall be valid 12 months from the date of its
execution unless otherwise provided in the proxy.
12.10. ACTION BY MEMBERS WITHOUT A MEETING. Action required or
permitted to be taken at a meeting of Members may be taken without a meeting if
the action is evidenced by one or more written consents describing the action
taken, signed by each Member entitled to vote, and delivered to the Managers for
inclusion in the minutes or for filing with the Company records. Action taken
under this Section is effective when all members entitled to vote have signed
the consent, unless the consent specifies a different effective date. The record
date for determining Members entitled to take action without a meeting shall be
the date the first member signs a written consent.
12.11. WAIVER OF NOTICE. When any notice is required to be given to any
member, a waiver of the Notice in writing signed by the Person entitled to the
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of the notice.
12
13. DISPOSITION OF MEMBER'S MEMBERSHIP INTERESTS.
13.1. RESTRICTION ON DISPOSITION BY MEMBERS. Although the Members
recognize that Members' Membership Interests generally may be Disposed of under
the LLC Law, each Member agrees that no part of his Membership Interest may be
Disposed of, except as permitted by this Section 13.
13.2. PERMITTED DISPOSITION BY MEMBERS. All or part of the Membership
Interest of any Member may be Disposed:
13.2.1. By will, or in the case of intestacy, by the laws of
descent and distribution, to any Person; and
13.2.2. During such Member's lifetime, by gift or inter vivos
trust, to or for the sole benefit of such Member, his spouse or issue, or any of
them.
13.3. CONSENT OF MEMBERS TO A DISPOSITION. Except for Dispositions
described in Section 13.2, a Member may not Dispose of his Membership Interest
without the prior written consent of all of the Managers.
13.4. EFFECT OF DISPOSITION. At the time of the Disposition of any
Member's Membership Interest, all of the rights possessed as a Member in
connection with the assigned Membership Interest (other than the right to share
in cash distributions, profits or losses and tax items), which rights otherwise
would be held either by the assignor or the assignee, shall terminate unless the
assignee is admitted as a substitute Member pursuant to the provisions of
Section 13.5 below.
13.5. ADMISSION AS A SUBSTITUTE MEMBER. No purchaser, assignee, donee,
or other transferee shall become a substituted Member unless all of the
following conditions have been satisfied:
13.5.1. The written consent of all Members is obtained;
13.5.2. The Disposition complies with Sections 13.2 and 13.3 of
this Agreement;
13.5.3. The prospective transferee has executed an instrument,
in form and substance satisfactory to the Managers, accepting and agreeing to be
bound by all terms and conditions of this Agreement and to pay all expenses of
the Company in effecting the Disposition; and
13.5.4. All requirements of the LLC Law have been complied with
by the transferee and the transferring Member and the Company.
13.6. EFFECTIVE DATE OF DISPOSITION. A Disposition of a Member's
Membership Interest shall be effective as of the first day of the calendar month
succeeding the month in which the
13
Disposition occurs. All allocations and distributions made after such
effective date on account of the Disposed Membership Interest shall be
allocated and paid to the transferee. In the absence of notice to the Managers
of the Disposition of a Membership Interest, whether by operation of law or
otherwise, administrators or legal representatives shall acquit the Company
and the Managers of liability, to the extent of such payment, to any other
person and/or entity who may be interested in such payment.
13.7. TRANSFEROR REMAINS LIABLE FOR EXISTING OBLIGATIONS. A Disposition
of a Membership Interest by a Member, including Dispositions of all or less than
all rights hereunder, shall not relieve him of any obligations under this
Agreement, the LLC Law, or otherwise imposed by law, arising prior to such
Disposition.
14. BOOKS AND RECORDS; ACCOUNTING AND TAX ACCOUNTING.
14.1. BOOKS AND RECORDS; RIGHT TO INSPECT. The Company shall keep
adequate books and records reflecting all financial activities of the Company.
Such books and records may be inspected and audited by any Member or his duly
authorized representative, at the Member's sole expense, at any time during
business hours, at the principle office of the Company upon reasonable notice by
the Member to the Company.
14.2. FEDERAL INCOME TAX INFORMATION RETURN; TAX MATTERS MANAGER. The
Managers shall cause the Company to file a Federal income tax information return
and all other tax returns required to be filed by the Company for each taxable
year or part thereof. Within three months after the end of each taxable year of
the Company, the Managers shall cause each Member to be furnished with
information necessary for preparing such Member's income tax return. In
connection with any examination of the Company's Federal income tax information
returns, ▇▇▇▇▇ ▇▇▇▇▇▇▇ is hereby appointed as the "tax matters manager." As
such, he shall have substantial responsibility and authority in connection with
any examination of the Company's Federal income tax information returns,
including, without limitation, the authority to enter into agreement with the
Internal Revenue Service on behalf of each Member to extend the period for
assessing against such Member a Federal income tax deficiency attributable to
"limited liability company items" as that term is defined in Section 6231(a)(3)
of the Code.
14.3. FEDERAL INCOME TAX ELECTIONS. Subject to the approval of all of
the Managers, the "tax matters manager" is authorized to cause the Company to
make such elections for Federal income tax purposes as he deems advisable,
including, in the event of a transfer of all or part of the Membership Interest
of any Member, an election pursuant to Section 754 of the Code to adjust the
basis of the assets of the Company.
15. DISSOLUTION AND TERMINATION.
15.1. EVENTS CAUSING DISSOLUTION. The Company shall be dissolved as
expressly provided by any provision of this Agreement, or upon the expiration of
the term of the Company or upon the occurrence of any event which under the LLC
Law causes the dissolution of a limited liability company, except as otherwise
provided in this Agreement.
14
15.2. LIQUIDATION OF ASSETS UPON DISSOLUTION. Upon dissolution of the
Company, Articles of Dissolution shall be filed pursuant to Section 18-801 of
the LLC Law and the Managers (or another party designated by the holders of a
majority of Membership Interests in the Company if the Managers cannot or will
not so serve) shall cause the Company assets to be sold in such manner as to
obtain the highest price therefor. Pending the sale thereof, the Managers or
such other party may continue to operate and otherwise deal with the assets of
the Company.
15.3. DISTRIBUTION OF LIQUIDATION PROCEEDS. The proceeds of any sales
made pursuant to Section 15.2, plus any unsold assets of the Company, shall be
distributed as follows:
15.3.1. First, all Company debts and liabilities to Persons
other than Members shall be paid and discharged;
15.3.2. Second, to the setting up of any funds or reserves
which the Managers may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Company. Such funds or reserves
shall be placed in escrow by the Managers for the purpose of disbursing such
amounts in payment of any of the contingencies, liabilities or obligations of
the Company and, at the expiration of such period as the Managers shall deem
advisable, the balance remaining shall be distributed in the manner hereinafter
provided;
15.3.3. Third, to the repayment of any loans or advances that
may have been made by any of the Members to the Company;
15.3.4. Fourth, to any Members with positive Capital Accounts
in proportion to such Members' Capital Interests until such Capital Accounts
have been reduced to zero; and
15.3.5. Finally, any remaining assets of the Company shall be
deemed to be cash distribution and shall be distributed among the Members in
accordance with the provisions of Section 9.
16. AMENDMENT.
Amendments to this Agreement may be only adopted by the affirmative
vote of two-thirds of all of the Membership Interests of Members.
17. CONFLICT WAIVER.
Each of the prospective investors and each of the Members is hereby
advised that ▇▇▇▇▇▇ ▇▇▇▇, one of the Managers of the Company and an intended
investor himself of certain Membership Interests of the Company, is also a
Managing Director of Hambro America Securities, Inc. ("Hambro"), the investment
banking firm which has been engaged by Multi-Color Corporation, the issuer of
the Convertible Preferred Stock, to act as its advisor for the purpose of
identifying possible sources of capital for this financing. Hambro will be
receiving a fee for services rendered in connection with this financing. As a
result of the relationship of these parties, there may be possible conflicts of
interest. To the extent that a prospective investor
15
desires to be included in this offering of Membership Interests by the Company
and the Company's purchase of the Convertible Preferred Stock, such
prospective investor and/or Member, as the case may be, is hereby
acknowledging the potential existence of such conflicts and waives the same
and any and all claims which he/she may have with respect thereto.
18. MISCELLANEOUS.
18.1. RIGHTS OF MANAGER AND MEMBERS TO ENGAGE IN OTHER BUSINESS
VENTURES. Nothing in this Agreement shall be deemed to prohibit any Member or
Manager from engaging in or owning any interest in any other business ventures
or activities.
18.2. PROHIBITION AGAINST PARTITION. Each Member hereby permanently
waives and relinquishes any and all rights that he may have to cause all or any
part of the property of the Company to be partitioned, it being the intention of
the Members to prohibit any Member from bringing a suit for partition against
the other Members, or any of them.
18.3. CHOICE OF LAW. This Agreement and all matters relating to the
Company shall be governed and construed in accordance with the law of the State
of Delaware.
18.4. NOTICES. Notices or other communications of any kind shall be
in writing and shall be deemed given when sent by mail:
18.4.1. If to the Managers, as follows:
If to: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ America Securities, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
With a courtesy
copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
18.4.2. If to a Member, at the address shown on Exhibit
"A" hereto as being his address; and
18.4.3. All notices required or permitted under this Agreement
shall be in writing and shall be sufficiently given only if (a) mailed by
registered or certified mail, return receipt requested, in which case they shall
be effective upon the actual receipt, (b) sent by expedited or overnight
delivery service with return receipt, in which case they shall be effective when
delivered, or (c) sent by facsimile with confirmed receipt (provided same is
followed by a hard copy of same sent by first class mail), in which case they
shall be effective when the sender has received facsimile transmission
confirmation, to the party to receive notice at the addresses first set forth.
The address for notices may be changed by the applicable Manager by written
16
notice to the Members and the other Managers and by any Member by written notice
to the Managers.
18.5. EXECUTION IN COUNTERPART; BINDING EFFECT. This Agreement may be
executed in counterparts and shall be binding upon each party executing this or
any counterpart. This Agreement shall be binding upon and inure to the benefit
of the parties, their heirs, devisees, personal representatives, successors and
permitted assigns.
18.6. ENTIRE AGREEMENT. This Agreement constitutes the entire
contract between the parties.
18.7. SECTION HEADINGS. The section and subsection headings in this
Agreement are for convenience only, and shall not be used to construe or
interpret this Agreement.
18.8. SECTION REFERENCES. Except as otherwise indicated, all
references to Sections shall refer to sections or subsections of this
Agreement.
18.9. ARBITRATION. All disputes, controversies, or differences, whether
arising or commenced during or subsequent to the term hereof, which may arise
between the parties out of or in relation to or in connection with this
Agreement, or for the breach of this Agreement, shall be settled by arbitration
in New York City, before three arbitrators, under the commercial arbitration
rules of the American Arbitration Association then in effect. Each of the
arbitrators shall be appointed by the American Arbitration Association. Such
arbitration shall be final and binding and shall be limited to an interpretation
and application of the provisions of this Agreement and any related agreements
or documents. Any arbitral award shall be enforceable in any court, wherever
located, having jurisdiction over the party against whom the award was rendered.
With respect to any such arbitration or enforcement proceedings, each party
thereto shall bear its respective attorneys' fees, and all other costs and
expenses reasonably associated with such arbitration or enforcement proceedings
(i.e., travel, lodging, telecommunications charges) and shall split equally
arbitration costs and court costs.
17
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and date first above written.
MEMBERS:
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For Purposes of Accepting Position
as Manager:
----------------------------------
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Mr. ▇▇▇▇▇▇ ▇▇▇▇
LABEL VENTURE GROUP, LLC
By:
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18
EXHIBIT "A"
MEMBER AND ADDRESS INITIAL CAPITAL CONTRIBUTION MEMBERSHIP INTEREST (1)
------------------ ---------------------------- -----------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 150,000 5.61%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $ 100,000 3.74%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
JTWROS
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ $ 125,000 4.68%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ $ 200,000 7.49%
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
JTWROS
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ $ 150,000 5.61%
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Sun Holdings Limited $ 20,000 .74%
c/▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 150,000 5.61%
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
JTWROS
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Living Trust $ 200,000 7.49%
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 500,000 18.72%
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
19
MEMBER AND ADDRESS INITIAL CAPITAL CONTRIBUTION MEMBERSHIP INTEREST (1)
------------------ ---------------------------- -----------------------
Tajchner Tsipora $ 200,000 7.49%
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇ $ 100,000 3.74%
▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 250,000 9.36%
Basic Search
Park Place
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 25,000 .93%
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 50,000 1.87%
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
J. ▇▇▇▇▇▇ ▇▇▇▇▇ $ 50,000 1.87%
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 187,500 7.02%
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 187,500 7.02%
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III $ 25,000 .93%
----------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
TOTAL: $2,670,000
----------
----------
(1) All figures are calculated to the nearest one-hundredth.
20