EXHIBIT 3.4
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
INERGY PROPANE, LLC
THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (the
"Agreement") is entered into as of September 30, 1999, between Inergy Partners,
LLC, a Delaware limited liability company ("IP"), ▇▇▇▇▇▇ Oil Company of ▇▇▇▇▇▇▇▇
County, Inc., a North Carolina corporation ("▇▇▇▇▇▇ Oil") and Rolesville Gas and
Oil Company, Inc., a North Carolina corporation ("Rolesville Oil").
RECITALS
A. IP and ▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇") caused ▇▇▇▇▇▇▇▇▇ Oil &
Propane Company, LLC ("▇▇▇▇▇▇▇▇▇") to be formed as a limited liability company
under the Delaware Limited Liability Company Act on October 25, 1996.
B. IP, ▇▇▇▇▇▇ and the Employee Investor Group (as defined in the
Amendment) were parties to the Limited Liability Company Agreement of ▇▇▇▇▇▇▇▇▇,
dated November 4, 1996 (the "Initial LLC Agreement"), as amended by that certain
Amendment to Limited Liability Company Agreement of ▇▇▇▇▇▇▇▇▇, dated October 21,
1997 (the "Amendment").
▇. ▇▇▇▇▇▇ and the members of the Employee Investor Group exchanged their
membership interests in ▇▇▇▇▇▇▇▇▇ for cash or certain membership interests in IP
pursuant to those certain Consents to Exchange of Interests, each dated as of
September 30, 1998, and as a result are no longer members of the Company.
D. IP then amended and restated in its entirety the Initial LLC Agreement
in that certain Amended and Restated Limited Liability Company Agreement of
▇▇▇▇▇▇▇▇▇, dated as of September 30, 1998 (the "First Amended and Restated LLC
Agreement") to, among other things, eliminate various provisions applicable only
to ▇▇▇▇▇▇ and the Employee Investor Group.
E. IP, ▇▇▇▇▇▇ Oil and Rolesville Oil now desire to amend and restate in
its entirety the First Amended and Restated LLC Agreement to, among other
things, provide for common and preferred limited liability company interests,
change the name of the limited liability company to Inergy Propane, LLC (the
"Company") and admit certain new Members to the Company.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree to amend and restate the First
Amended and Restated LLC Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions Generally. Unless defined specifically herein, terms
relating to a limited liability company shall have the meanings given to them in
the Delaware Limited Liability Company Act.
1.2 Terms Defined Herein. As used herein, the following terms shall have
the following meanings, unless the context otherwise specifies:
"ACT" means the Delaware Limited Liability Company Act, as amended from
time to time.
"ADDITIONAL CAPITAL CALL" has the meaning set forth in Section 3.2 hereof.
"ADDITIONAL DISTRIBUTIONS" has the meaning set forth in Section 4.3 hereof.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to each Member, the
deficit balance, if any, in such Member's Common Capital Account and/or
Preferred Capital Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments: (i) increased for any amounts such
Member is unconditionally obligated to restore and the amount of such Member's
share of Company Minimum Gain and Member Minimum Gain after taking into account
any changes during such year; and (ii) reduced by the items described in
Treasury Regulations (S) 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"AFFILIATE" means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person. For
the purposes of this definition, "control," when used with respect to any Person
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AGREEMENT" means this Second Amended and Restated Limited Liability
Company Agreement of Inergy Propane, LLC, as amended from time to time.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement, dated
November 6, 1996 between ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Enterprises, Inc. under which
▇▇▇▇▇▇▇▇▇ purchased from ▇▇▇▇▇▇▇▇▇ Enterprises, Inc. certain real estate, fixed
assets and related properties, assets and facilities.
"BANKRUPTCY", with respect to any Person, means the entry of an order for
relief against such Person under the Federal Bankruptcy Code or the insolvency
of such Person under any state insolvency act.
"BUSINESS DAY" shall mean any day other than a Saturday or Sunday or a day
on which banking institutions in Wake Forest, North Carolina are authorized or
obligated to close.
"CERTIFICATE" means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware, as amended from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or the corresponding provisions of future laws.
"COMMON CAPITAL ACCOUNT" means the separate account established and
maintained by the Company for each Common Member pursuant to Section 3.5 hereof.
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"COMMON INTEREST" means any Interest designated as such on Schedule A
attached hereto.
"COMMON MEMBER" means any Member to the extent that such Member holds a
Common Interest. All Common Members shall be Voting Members to the extent of
their Common Interest.
"COMMON PERCENTAGE INTEREST" means a Common Member's percentage of the
Common Interests in the Company including such Common Member's percentage of the
net income, gain, loss, deductions and credits of the Company allocated to such
Common Members. The Common Percentage Interest of each Common Member, prior to
any adjustments thereto required by the provisions of this Agreement, shall be
as set forth on Schedule A attached hereto.
"COMPANY" means Inergy Propane, LLC, a Delaware limited liability company.
"COMPANY MINIMUM GAIN" shall have the same meaning as the term "partnership
minimum gain" set forth in Treasury Regulation (S) 1.704-2(d)(1). Company
Minimum Gain shall be determined, first, by computing for each Nonrecourse Debt
any gain that the Company would realize if the Company disposed of the property
subject to that liability for no consideration other than full satisfaction of
such liability and, then, aggregating the separately computed gains. For
purposes of computing gain, the Company shall use the basis of such property
that is used for purposes of determining the amount of the Common Capital
Accounts and the Preferred Capital Accounts under Section 3.5 hereof. In any
taxable year in which a Revaluation occurs, the net increase or decrease in
Company Minimum Gain for such taxable year shall be determined by: (1)
calculating the net decrease or increase in Company Minimum Gain using the
current year's book value and the prior year's amount of Company Minimum Gain,
and (2) adding back any decrease in Company Minimum Gain arising solely from the
Revaluation.
"CONTRIBUTING MEMBER" has the meaning set forth in Section 3.3 hereof.
"CREDITS" means all tax credits allowed by the Code with respect to
activities of the Company or the Property.
"DISTRIBUTIONS" means any distributions by the Company to the Common
Members or Preferred Members of Liquidation Proceeds, Tax Distributions,
Preferred Distributions or Additional Distributions.
"FAIR VALUE" of an asset means its fair market value.
"GAAP" means generally accepted accounting principles.
"ILLIQUID ASSETS" has the meaning set forth in Section 3.4 hereof.
"INCOME" and "LOSS" mean, respectively, for each fiscal year or other
period, an amount equal to the Company's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a), except that for this
purpose (i) all items of income, gain, deduction or loss required to be
separately stated by Code Section 703(a)(1) shall be included in taxable income
or loss; (ii) tax exempt income shall be added to taxable income or loss; (iii)
any
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expenditures described in Code Section 705(a)(2)(B) (or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Treasury Regulation
(S) 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing
taxable income or loss shall be subtracted; and (iv) taxable income or loss
shall be adjusted to reflect any item of income or loss specially allocated in
Article IV hereof.
"INITIAL CONTRIBUTIONS" means either the initial or the restated value of
the capital contributed by the Members for their Interests.
"INITIAL LLC AGREEMENT" means the Limited Liability Company Agreement of
▇▇▇▇▇▇▇▇▇, dated November 24, 1996.
"INTEREST" means either a Preferred Interest or a Common Interest. The
type of Interest held by each Member shall be as set forth on Schedule A
attached hereto.
"LIQUIDATION PROCEEDS" means all Property at the time of liquidation of the
Company and all proceeds thereof.
"MEMBER" means each Person executing this Agreement, including a Substitute
Member, if any.
"MEMBER MINIMUM GAIN" shall have the same meaning as the term "partner
nonrecourse debt minimum gain" as set forth in Treasury Regulation
(S) 1.704-2(i)(3). With respect to each Member Nonrecourse Debt, Member Minimum
Gain shall be determined by computing for each Member Nonrecourse Debt any gain
that the Company would realize if the Company disposed of the property subject
to that liability for no consideration other than full satisfaction of such
liability. For purposes of computing gain, the Company shall use the basis of
such property that is used for purposes of determining the amount of the Common
Capital Accounts and the Preferred Capital Accounts under Section 3.5 hereof. In
any taxable year in which a Revaluation occurs, the net increase or decrease in
Member Minimum Gain for such taxable year shall be determined by: (1)
calculating the net decrease or increase in Member Minimum Gain using the
current year's book value and the prior year's amount of Member Minimum Gain,
and (2) adding back any decrease in Member Minimum Gain arising solely from the
Revaluation.
"MEMBER NONRECOURSE DEBT" shall have the same meaning as the term "partner
nonrecourse debt" set forth in Treasury Regulation (S) 1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" shall have the same meaning as the term
"partner nonrecourse deductions" set forth in Treasury Regulation
(S) 1.704-2(i)(2). Generally, the amount of Member Nonrecourse Deductions with
respect to a Member Nonrecourse Debt for a fiscal year equals the net increase
during the year in the amount of the Member Minimum Gain (determined in
accordance with Treasury Regulation (S) 1.704-2(i)) reduced (but not below zero)
by the aggregate distributions made during the year of proceeds of Member
Nonrecourse Debt and allocable to the increase in Member Minimum Gain determined
according to the provisions of Treasury Regulation (S) 1.704-2(i).
"NON-CONTRIBUTING MEMBER" has the meaning set forth in Section 3.3 hereof.
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"NONRECOURSE DEBT" means a Company liability with respect to which no
Member bears the economic risk of loss as determined under Treasury Regulations
(S)(S) 1.752-1(a)(2) and 1.752-2.
"NONRECOURSE DEDUCTIONS" shall have the same meaning as the term
"nonrecourse deductions" set forth in Treasury Regulation (S) 1.704-2(c).
Generally, the amount of Nonrecourse Deductions for a fiscal year equals the net
increase in the amount of Company Minimum Gain (determined in accordance with
Treasury Regulation (S) 1.704-2(d)) during such year reduced (but not below
zero) by the aggregate distributions made during the year of proceeds of a
Nonrecourse Debt that are allocable to the increase in Company Minimum Gain,
determined according to the provisions of Treasury Regulation (S) 1.704-2(c) and
(h).
"NON-VOTING MEMBER" is a Member who is not entitled to vote in any matter
requiring a vote under the terms of this Agreement.
"OPERATING INCOME" means the gross receipts of the Company minus the cost
of goods sold of the Company.
"PERSON" means any individual, partnership, limited liability company,
corporation, association, cooperative, estate, trust, custodian, nominee or any
other individual or entity in its own or any representative capacity.
"PREFERRED CAPITAL ACCOUNT" means the separate account established and
maintained by the Company for each Preferred Member pursuant to Section 3.5
hereof.
"PREFERRED DISTRIBUTION" has the meaning set forth in Section 4.2 hereof.
"PREFERRED INTEREST" means any Interest designated as such on Schedule A
attached hereto.
"PREFERRED MEMBER" means any Member to the extent that such Member holds a
Preferred Interest. All Preferred Members shall be Non-Voting Members to the
extent of their Preferred Interest.
"PREFERRED PERCENTAGE INTEREST" means a Preferred Member's percentage of
the Preferred Interests in the Company including such Preferred Member's
percentage of the net income, gain, loss, deductions and credits of the Company
allocated to such Preferred Members. The Preferred Percentage Interest and the
initial Preferred Capital Account balance of each Preferred Member, prior to any
adjustments thereto required by the provisions of this Agreement, shall be as
set forth on Schedule A attached hereto.
"PROPERTY" means all properties and assets, including intellectual
property, contract rights and other intangible assets, that the Company may own
or otherwise have an interest in from time to time.
"REPRESENTATIVE" has the meaning set forth in Section 5.1 hereof.
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"RESERVES" means amounts set aside from time to time by the Members
pursuant to Section 4.10 hereof.
"REVALUATION" shall mean the occurrence of any event described in clause
(x), (y) or (z) of Section 3.5(b) hereof in which the book basis of Property is
adjusted to its Fair Value.
"SUBSTITUTE MEMBER" has the meaning set forth in Section 7.6 hereof.
"TAX DISTRIBUTION" has the meaning set forth in Section 4.1 hereof.
"TAX MATTERS PARTNER" means the Member designated pursuant to Section 6.4
hereof to represent the Company in matters before the Internal Revenue Service.
"TRANSFER" means (i) when used as a verb, to give, sell, exchange, assign,
transfer, lease, pledge, hypothecate, bequeath, devise or otherwise dispose of
or encumber, and (ii) when used as a noun, the nouns corresponding to such
verbs, in either case voluntarily or involuntarily, by operation of law or
otherwise.
"TRANSFEREE" has the meaning set forth in Section 7.1 hereof.
"TRANSFEROR" means any Member Transferring his or her Interest in
accordance with the provisions of this Agreement.
"TREASURY REGULATIONS" means the regulations promulgated by the Treasury
Department with respect to the Code, as such regulations are amended from time
to time, or the corresponding provisions of future regulations.
"VOTING MEMBER" is a Member who is entitled to vote in all matters
requiring a vote under the terms of this Agreement.
"VOTING MEMBER MAJORITY" means those Voting Members holding a majority of
the Common Percentage Interests held by all Voting Members.
1.3 Other Definitional Provisions.
(a) As used in this Agreement, accounting terms not defined in this
Agreement, and accounting terms partly defined to the extent not defined,
shall have the respective meanings given to them under GAAP.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
(c) Words of the masculine gender shall be deemed to include the
feminine or neuter genders, and vice versa, where applicable. Words of the
singular number shall be deemed to include the plural number, and vice
versa, where applicable.
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ARTICLE II
BUSINESS PURPOSES AND OFFICES
2.1 Name; Business Purpose.
(a) The name of the Company shall be as stated in the Certificate.
The name of the Company may be changed from time to time by the Voting
Member Majority.
(b) The purpose of the Company is to own the assets, properties and
facilities purchased by the Company pursuant to the Asset Purchase
Agreement, to use such assets to market and distribute propane gas and
other petroleum related products (including, without limitation, short
truck delivery of distillates and gasoline), selling parts, appliances and
supplies related thereto, and operating a Radio Shack franchise, to do any
and all things necessary or incidental thereto, and to engage in such other
business as the Voting Member Majority deems in the best interests of the
Company.
2.2 Powers. The Company may carry on any lawful business, purpose or
activity permitted by the Act and shall possess and may exercise all the powers
granted by the Act, any other law, or this Agreement, together with any powers
incidental thereto, as far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business, purposes or
activities of the Company.
2.3 Principal Office. The principal office of the Company shall be
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or at
such other place(s) as the Voting Member Majority may determine from time to
time.
2.4 Registered Office and Registered Agent. The location of the
registered office and the name of the registered agent of the Company in the
State of Delaware shall be as stated in the Certificate. The registered office
and registered agent of the Company in the State of Delaware may be changed,
from time to time, by the Voting Member Majority.
2.5 Amendment of the Certificate. The Company shall amend the Certificate
at such time or times and in such manner as may be approved by the Voting Member
Majority or as required by the Act or this Agreement.
2.6 Liability of Members. No Member, Representative or officer, solely by
reason of being a Member, Representative or officer, shall be liable, under a
judgment, decree or order of a court, or in any other manner, for any debt,
obligation or liability of the Company, whether arising in contract, tort or
otherwise, or for the acts or omissions of the other Members or any other
Representative or officer of the Company. The failure of the Company to observe
any formalities or requirements relating to the exercise of its powers or
management of its business or affairs under this Agreement or the Act shall not
be grounds for imposing liability on the Members, Representatives or officers
for liabilities of the Company.
2.7 Authority; Investment Intent; Restriction Against Transfer. Each
Member warrants to the Company and to the other Members that: (a) the Member is
duly organized, validly existing and in good standing under the laws of its
state of organization, if applicable, and that the Member has the requisite
power and authority to execute this Agreement and to perform its obligations
hereunder; (b) the Member is acquiring an Interest for such Member's own
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account as an investment and without any intent to distribute such Interest or
any portion thereof or interest therein; and (c) the Member acknowledges that
the Interests have not been registered under the Securities Act of 1933 or any
state securities laws, and such Member's Interest may not be resold or
transferred except as provided in Article VII hereof and except pursuant to a
registration statement under or an exemption from the registration provisions of
the federal and applicable state securities laws.
ARTICLE III
CAPITAL CONTRIBUTIONS AND LOANS
3.l Initial Capital Accounts and Percentage Interests. The initial or
restated Common Capital Account, the initial Preferred Capital Account, the
initial or restated Common Percentage Interest and/or the initial Preferred
Percentage Interest, as the case may be, of each Member shall be as set forth
opposite such Member's name on Schedule A attached hereto.
3.2 Additional Capital Calls. The Common Members recognize that the
Company may require from time to time, in addition to the Initial Contributions,
capital in order to accomplish the purpose and business of the Company.
Accordingly, additional cash capital contributions ("Additional Capital Calls")
may be called for from time to time by the Voting Member Majority. Within ten
Business Days after the date such Additional Capital Call is declared by the
Voting Member Majority, each Common Member shall be entitled to contribute, in
cash, to the capital of the Company an amount (the "Additional Contribution")
equal to such Common Member's Common Percentage Interest at the time of the
Additional Capital Call multiplied by the aggregate additional capital
contributions. No Common Member shall be obligated to make any Additional
Contributions to the Company and, accordingly, no Common Member shall be liable
for damage to the Company or any other Common Member as a result of the failure
of such Common Member to make any such Additional Contributions. The remedies
set forth in Section 3.3 below shall be the sole remedies for any such failure.
3.3 Percentage Interest Adjustments.
(a) If the Common Capital Accounts of the Common Members are adjusted
pursuant to Section 3.5(b), then, after such adjustments are made, the
Common Percentage Interests of the Common Members will be correspondingly
adjusted as follows:
(i) Effective as of ten Business Days after the last date a
capital contribution under Section 3.2 above may be made, the Common
Percentage Interests of the Common Members shall be automatically
adjusted to take account of such failure of such Common Member to make
such capital contribution. The Common Percentage Interest of each
Common Member shall be the respective percentage obtained by dividing
the total balance in such Common Member's Common Capital Account as of
such date by the total balance in all Common Members' Common Capital
Accounts as of such date. Any payment by a Contributing Member of all
or a portion of a Non-Contributing Member's contribution pursuant to
Section 3.3(a)(ii) below shall result in a comparable adjustment in
the Common Percentage Interests of the Common Members. The sum of the
Common Percentage Interests of the Common Members, as adjusted
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in accordance with this Section 3.3(a)(i), shall equal 100%. Any
increase in the Common Percentage Interest of a Common Member pursuant
to this Section 3.3(a)(i) shall have the same designation as a Common
Interest as the Common Percentage Interest held by such Common Member
prior to any such increase.
(ii) If any Common Member fails for any reason to make in a
timely manner any part or all of an Additional Contribution called for
under Section 3.2 (the "Unpaid Additional Contribution"), such Common
Member shall be deemed a "Non-Contributing Member" and the Company
shall promptly give written notice of the failure to contribute to all
Common Members. Each of the Common Members contributing their pro-
rata share of an Additional Contribution (the "Contributing Members")
shall have the right, but not the obligation, for a period of 10 days
after notice of such failure to contribute by a Non-Contributing
Member is given, to contribute to the Company an amount equal to (A)
the amount of each Non-Contributing Member's Unpaid Additional
Contribution multiplied by a fraction the numerator of which is the
Contributing Member's Common Percentage Interest at the time of the
Additional Capital Call and the denominator of which is the sum of the
Common Percentage Interests of all Contributing Members who desire to
contribute to the Company such Contributing Members' pro-rata share of
the Non-Contributing Member's Unpaid Additional Contribution or (B)
such greater amount of the Non-Contributing Member's Unpaid Additional
Contribution as shall be agreed upon by all of such Contributing
Members. Upon the payment by the Contributing Members of all or a
portion of the Non-Contributing Member's Unpaid Additional
Contribution, the Common Percentage Interests of the Common Members
shall be adjusted as provided in Section 3.3(a)(i) above. Any
increase in the Common Percentage Interest of a Common Member pursuant
to this Section 3.3(a)(ii) shall have the same designation as a Common
Interest as the Common Percentage Interest held by such Common Member
prior to any such increase.
(b) The Company shall not dissolve as a result of any failure by a
Common Member to make a capital contribution under Section 3.2 above,
unless the Voting Member Majority following such a failure elects to
dissolve the Company.
3.4 Capital Account Adjustments and Revaluation. If a Common Member fails
for any reason to make a capital contribution under Section 3.2 above within ten
Business Days after the last date such capital contribution may be made (the
"Default Date"), then the Common Capital Accounts of the Common Members will be
adjusted pursuant to Section 3.5(b) hereof. For purposes of adjustments made
pursuant to this Section 3.4, the Fair Value of the Company's assets shall be
determined as follows:
(i) Cash, deposit accounts, United States securities with a
maturity of 90 days or less or other cash equivalents shall be valued
at the principal or par amounts with accrued interest thereon, if any,
through the Default Date.
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(ii) All securities and commodities which are traded on a
generally recognized exchange shall be valued at the closing price, or
if applicable the average of the bid and ask price, on the Default
Date.
(iii) All assets of the Company which are not described in
subparagraphs (i) or (ii) above and which would be current assets of
the Company under the accrual method of accounting shall be valued in
an amount equal to their book value determined in accordance with
generally accepted accounting principles consistently applied as if
the Company applied the accrual method of accounting.
(iv) All assets not described in the preceding subparagraphs (i)
through (iii) (the "Illiquid Assets") shall be valued in an amount
equal to the Fair Value of such Illiquid Assets as determined by a
Voting Member Majority.
3.5 Capital Accounts.
(a) A separate Common Capital Account shall be maintained for each
Common Member. Each Common Member's Common Capital Account shall be (i)
increased by (a) the amount of money contributed by such Common Member, (b)
the Fair Value of property contributed by such Common Member (net of
liabilities secured by such contributed property that the Company is
considered to assume or take subject to under Code Section 752), (c)
allocations to such Common Member, pursuant to Article IV hereof, of
Company income and gain (or items thereof), and (d) to the extent not
already netted out under clause (ii)(b) below, the amount of any Company
liabilities assumed by the Common Member or which are secured by any
property distributed to such Common Member; and (ii) decreased by (a) the
amount of money distributed to such Common Member, (b) the Fair Value of
property distributed to such Common Member (net of liabilities secured by
such distributed property that such Common Member is considered to assume
or take subject to under Code Section 752), (c) allocations to such Common
Member, pursuant to Article IV hereof, of Company loss and deductions (or
items thereof), and (d) to the extent not already netted out under clause
(i)(b) above, the amount of any liabilities of the Common Member assumed by
the Company or which are secured by any property contributed by such Common
Member to the Company.
A separate Preferred Capital Account shall be maintained for each
Preferred Member. Each Preferred Member's Preferred Capital Account shall
be (i) increased by (a) the amount of money contributed by such Preferred
Member, (b) the Fair Value of property contributed by such Preferred Member
(net of liabilities secured by such contributed property that the Company
is considered to assume or take subject to under Code Section 752), (c)
allocations to such Preferred Member, pursuant to Article IV hereof, of
Company income and gain (or items thereof), and (d) to the extent not
already netted out under clause (ii)(b) below, the amount of any Company
liabilities assumed by the Preferred Member or which are secured by any
property distributed to such Preferred Member; and (ii) decreased by (a)
the amount of money distributed to such Preferred Member, (b) the Fair
Value of property distributed to such Preferred Member (net of
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liabilities secured by such distributed property that such Preferred Member
is considered to assume or take subject to under Code Section 752), (c)
allocations to such Preferred Member, pursuant to Article IV hereof, of
Company loss and deductions (or items thereof), and (d) to the extent not
already netted out under clause (i)(b) above, the amount of any liabilities
of the Preferred Member assumed by the Company or which are secured by any
property contributed by such Preferred Member to the Company.
In the event any Interest is transferred in accordance with the terms
of this Agreement, the Transferee shall succeed to the Common Capital
Account and/or the Preferred Capital Account of the Transferor to the
extent it relates to the transferred interest, and the Common Capital
Account and/or the Preferred Capital Account of each Transferee shall be
increased and decreased in the manner set forth above.
(b) In the event of (x) an additional capital contribution by a Common
Member that results in a shift in Common Percentage Interests, (y) the
distribution by the Company to a Common Member of more than a de minimis
amount of property (other than cash) or a distribution of property as
consideration for a Common Interest or (z) the liquidation of the Company
within the meaning of Treasury Regulation (S) 1.704-1(b)(2)(ii)(g), the
book basis of the Property shall be adjusted to Fair Value and the Common
Capital Accounts of the Common Members shall be adjusted simultaneously to
reflect the aggregate net adjustment to book basis as if the Company
recognized gain or loss equal to the amount of such aggregate net
adjustment.
(c) In the event that Property is subject to Code Section 704(c) or is
revalued on the books of the Company in accordance with paragraph (b) above
pursuant to Treasury Regulation (S) 1.704-1(b)(2)(iv)(f), the Members'
Common Capital Accounts and/or Preferred Capital Accounts shall be adjusted
in accordance with Treasury Regulation (S) 1.704-1(b)(2)(iv)(g) for
allocations to the Members of depreciation, amortization and gain or loss,
as computed for book purposes (and not tax purposes) with respect to such
Property.
(d) The foregoing provisions of this Section 3.5 and the other
provisions of this Agreement relating to the maintenance of the Common
Capital Accounts and/or the Preferred Capital Accounts are intended to
comply with Treasury Regulations (S)(S) 1.704-1(b) and 1.704-2, and shall
be interpreted and applied in a manner consistent with such Treasury
Regulations. In the event the Members determine that it is prudent or
advisable to modify the manner in which the Common Capital Accounts and/or
the Preferred Capital Accounts, or any increases or decreases therein, are
computed in order to comply with such Treasury Regulations, the Members may
cause such modification to be made, provided such modification is not
likely to have a material effect on the amounts distributable to any Member
upon the dissolution of the Company.
3.6 Capital Withdrawal Rights, Interest and Priority. Except as expressly
provided in this Agreement, no Member shall be entitled to withdraw or reduce
such Member's Common Capital Account or Preferred Capital Account or to receive
any Distributions. No Member shall be entitled to demand or receive any
Distributions in any form other than in cash. No Member shall be entitled to
receive or be credited with any interest on the balance in such Member's
11
Common Capital Account or Preferred Capital Account at any time. Except as may
be otherwise expressly provided herein, no Member shall have any priority over
any other Member as to the return of the balance in such Member's Common Capital
Account or Preferred Capital Account.
3.7 Loans. Any Member may advance funds as a loan to the Company in such
amounts, at such times and on such terms and conditions as may be approved by
the Voting Member Majority. Loans by a Member to the Company shall not be
considered as contributions to the capital of the Company.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
4.1 Distributions to Pay Taxes. With respect to any tax year in which the
Company shall report taxable income, the Company shall distribute to the Common
Members, based upon their respective Common Percentage Interests at the time of
such distribution, an aggregate amount equal to the Company's taxable income,
plus or minus other items of income, gain, loss or deduction passing through to
the Common Members, times the sum of the effective applicable Federal income tax
rate and the higher of North Carolina or Missouri state income tax rates and
assuming that each Common Member is an individual paying Federal and state
income tax at the highest marginal income tax rates with respect to the
applicable type of income (a "Tax Distribution"). All Tax Distributions shall
be made at a time sufficient to enable the Common Members to pay any required
estimated tax payments.
4.2 Preferred Distributions. On or before the last Business Day of each
month immediately following the end of each calendar quarter (a "Due Date"),
commencing with the calendar quarter ending December 31, 1999, the Company shall
distribute cash to each Preferred Member in an amount equal to the initial
balance in such Preferred Member's Preferred Capital Account multiplied by 2.0%
(a "Preferred Distribution"); provided, however, no such Preferred Distribution
shall be required if such distribution would, as reasonably determined by a
Voting Member Majority, cause a default under any agreement or covenant between
a bank or other lending institution and the Company or any one of its Affiliates
(any such limitation that precludes payment of a Preferred Distribution being
referred to as the "Limitation"). In the event any Preferred Distribution, or
portion thereof, is not made with respect to a calendar quarter, such Preferred
Distribution, or portion thereof (the "Accrued Preferred Distribution"), shall
accumulate and be payable at such time as the Limitation no longer prevents
payment. In addition, with respect to any such Accrued Preferred Distribution
there shall be payable an amount equal to (A) times (B) times (C), where (A)
equals such Accrued Preferred Distribution, (B) equals a percentage equal to the
higher of the Company's cost of funds or the cost of funds of any of the
Affiliates of the Company, and (C) equals a fraction, the numerator of which is
the number of days since the Due Date of such Accrued Preferred Distribution or
the most recent anniversary thereof, and the denominator of which is 365 (such
additional amount and any unpaid portion thereof is hereinafter referred to as
the "Arrearage"). If any Arrearage is not paid by an anniversary of the Due
Date of the related Accrued Preferred Distribution, then such Arrearage shall be
added to and become a part of the Accrued Preferred Distribution as of such
anniversary date and shall no longer be an "Arrearage" hereunder. All payments
made pursuant to this Section 4.2 shall be applied first to any Arrearage and
then to the Accrued Preferred Distribution.
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4.3 Additional Cash Distributions. The Company shall make, from time to
time, such distributions as shall be determined by the Voting Member Majority
(an "Additional Distribution"); provided, however, no such Additional
Distributions shall be made if there are accrued but unpaid Preferred
Distributions under Section 4.2 hereof. Such Additional Distributions shall be
distributed to the Common Members in accordance with their respective Common
Percentage Interests, as adjusted.
4.4 Liquidation Distributions. Liquidation Proceeds shall be distributed
in the following order of priority:
(a) First, to the payment of any Accrued Preferred Distributions and
Arrearages under Section 4.2 hereof.
(b) Next, to the payment of debts and liabilities of the Company
(including to Members to the extent otherwise permitted by law) and the
expenses of liquidation.
(c) Next, to the setting up of such reserves as the Person required or
authorized by law to wind up the Company's affairs may reasonably deem
necessary or appropriate for any disputed, contingent or unforeseen
liabilities or obligations of the Company, provided that any such reserves
shall be paid over by such Person to an independent escrow agent, to be
held by such agent or its successor for such period as such Person shall
deem advisable for the purpose of applying such reserves to the payment of
such liabilities or obligations and, at the expiration of such period, the
balance of such reserves, if any, shall be distributed as hereinafter
provided.
(d) Next, to the Preferred Members in proportion to and to the extent
of their respective positive Preferred Capital Account balances.
(e) Next, to the Common Members in proportion to and to the extent of
their respective positive Common Capital Account balances after taking into
account the allocation of all Operating Income, Income or Loss pursuant to
this Agreement for the fiscal year(s) in which the Company is liquidated.
(f) Next, to the Common Members in accordance with their respective
Common Percentage Interests, as adjusted.
4.5 Profits, Losses and Distributive Shares of Tax Items. The Company's
net income or net loss, as the case may be, for each fiscal year of the Company
or part thereof, as determined in accordance with such method of accounting as
may be adopted for the Company pursuant to Article VI hereof, shall be allocated
to the Members for both financial accounting and income tax purposes as set
forth in this Article IV, except as otherwise provided for herein or unless
decided otherwise by the Voting Member Majority.
4.6 Allocation of Operating Income, Income, Loss and Credits.
(a) Operating Income, Income or Loss and Credits shall be allocated
among the Members as follows:
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(i) Loss shall be allocated among the Members in the following
order of priority:
(A) First to the Common Members in proportion to and to the
extent of their respective positive Common Capital Account
balances; then
(B) To the Preferred Members in proportion to and to the
extent of their respective positive Preferred Capital Account
balances; then
(C) To the Common Members in accordance with their
respective Common Percentage Interests, as adjusted.
(ii) Operating Income, Income and Credits shall be allocated
among the Members in the following order of priority:
(A) First, Operating Income shall be allocated to the
Preferred Members in accordance with their respective Preferred
Percentage Interests until the cumulative amount of Operating
Income allocated pursuant to this subparagraph (A) equals the
cumulative amount of cash actually distributed to the Preferred
Members pursuant to Section 4.2 hereof; then
(B) Income shall be allocated to the Common Members, on a
pro rata basis in accordance with the amounts previously
allocated to such Common Members under Section 4.6(a)(i)(C)
hereof, until the cumulative amount of Income allocated pursuant
to this subparagraph (B) equals the cumulative amount of Losses
allocated to the Common Members pursuant to Section 4.6(a)(i)(C)
hereof; then
(C) Income shall be allocated to the Preferred Members, on
a pro rata basis in accordance with the amounts previously
allocated to such Preferred Members under Section 4.6(a)(i)(B)
hereof, until the cumulative amount of Income allocated pursuant
to this subparagraph (C) equals the cumulative amount of Losses
allocated to the Preferred Members pursuant to Section
4.6(a)(i)(B) hereof; then
(D) Income shall be allocated to the Common Members, on a
pro rata basis in accordance with the amounts previously
allocated to such Common Members under Section 4.6(a)(i)(A)
hereof, until the cumulative amount of Income allocated pursuant
to this subparagraph (D) equals the cumulative amount of Losses
allocated to the Common Members pursuant to Section 4.6(a)(i)(A)
hereof; then
(E) Income and Credits shall be allocated to the Common
Members in accordance with their respective Common Percentage
Interests, as adjusted.
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To the extent there is any adjustment in the respective Common
Percentage Interests of the Common Members or the respective Preferred
Percentage Interests of the Preferred Members, as the case may be,
Operating Income, Income, Loss and Credits shall be allocated among the
pre-adjustment and post-adjustment periods as provided in Section 4.7(k)
below.
4.7 Special Rules Regarding Allocations. Notwithstanding the foregoing
provisions of this Article IV, the following special rules shall apply in
allocating the net income or net loss of the Company:
(a) Section 704(c) and Revaluation Allocations. In accordance with
Code Section 704(c) and the Treasury Regulations thereunder, income, gain,
loss and deduction with respect to any property contributed to the capital
of the Company shall, solely for tax purposes, be allocated between the
Members so as to take account of any variation between the adjusted basis
of such property to the Company for federal income tax purposes and its
Fair Value at the time of contribution. In the event of a Revaluation,
subsequent allocations of income, gain, loss and deduction with respect to
such property shall take account of any variation between the adjusted
basis of such property to the Company for federal income tax purposes and
its Fair Value immediately after the adjustment in the same manner as under
Code Section 704(c) and the Treasury Regulations thereunder. Any elections
or other decisions relating to such allocations shall be made by the
Members in a manner that reasonably reflects the purpose and intention of
this Agreement. Allocations pursuant to this Section 4.7(a) are solely for
income tax purposes and shall not affect, or in any way be taken into
account in computing, for book purposes, each Member's Common Capital
Account, Preferred Capital Account or share of income or loss, pursuant to
any provision of this Agreement.
(b) Minimum Gain Chargeback. Notwithstanding any other provision of
this Article IV, if there is a net decrease in Company Minimum Gain during
a Company taxable year, each Member shall be allocated items of income and
gain for such year (and, if necessary, for subsequent years) in an amount
equal to that Member's share of the net decrease in Company Minimum Gain
during such year (hereinafter referred to as the "Minimum Gain Chargeback
Requirement"). A Member's share of the net decrease in Company Minimum
Gain is the amount of the total decrease multiplied by the Member's
percentage share of the Company Minimum Gain at the end of the immediately
preceding taxable year. A Member is not subject to the Minimum Gain
Chargeback Requirement to the extent: (1) the Member's share of the net
decrease in Company Minimum Gain is caused by a guarantee, refinancing or
other change in the debt instrument causing it to become partially or
wholly recourse debt or a Member Nonrecourse Debt, and the Member bears the
economic risk of loss for the newly guaranteed, refinanced or otherwise
changed liability; (2) the Member contributes capital to the Company that
is used to repay the Nonrecourse Debt and the Member's share of the net
decrease in Company Minimum Gain results from the repayment; or (3) the
Minimum Gain Chargeback Requirement would cause a distortion and the
Commissioner of the Internal Revenue Service waives such requirement.
15
A Member's share of Company Minimum Gain shall be computed in
accordance with Treasury Regulation (S) 1.704-2(g) and as of the end of any
Company taxable year shall equal: (1) the sum of the Nonrecourse
Deductions allocated to that Member up to that time and the distributions
made to that Member up to that time of proceeds of a Nonrecourse Debt
allocable to an increase of Company Minimum Gain, minus (2) the sum of that
Member's aggregate share of net decrease in Company Minimum Gain plus that
Member's aggregate share of decreases resulting from revaluations of
Property subject to Nonrecourse Debts. In addition, a Member's share of
Company Minimum Gain shall be adjusted for the conversion of recourse and
Member Nonrecourse Debts into Nonrecourse Debts in accordance with Treasury
Regulation (S) 1.704-2(g)(3). In computing the above, amounts allocated or
distributed to the Member's predecessor in interest shall be taken into
account.
(c) Member Minimum Gain Chargeback. Notwithstanding any other
provision of this Article IV other than Section 4.7(b) above, if there is a
net decrease in Member Minimum Gain during a Company taxable year, each
Member who has a share of the Member Minimum Gain (determined under
Treasury Regulation (S) 1.704-2(i)(5) as of the beginning of the year)
shall be allocated items of income and gain for such year (and, if
necessary, for subsequent years) equal to that Member's share of the net
decrease in Member Minimum Gain. In accordance with Treasury Regulation
(S) 1.704-2(i)(4), a Member is not subject to this Member Minimum Gain
Chargeback requirement to the extent the net decrease in Member Minimum
Gain arises because the liability ceases to be Member Nonrecourse Debt due
to a conversion, refinancing or other change in the debt instrument that
causes it to be partially or wholly a Nonrecourse Debt. The amount that
would otherwise be subject to the Member Minimum Gain Chargeback
requirement is added to the Member's share of Company Minimum Gain.
(d) Qualified Income Offset. In the event a Member unexpectedly
receives an adjustment, allocation or distribution described in Treasury
Regulation (S)1.704.1(b)(2)(ii)(d)(4), (5) or (6), that causes or increases
such Member's Adjusted Capital Account Deficit, items of Company income and
gain shall be specially allocated to such Member in an amount and manner
sufficient to eliminate such Adjusted Capital Account Deficit as quickly as
possible, provided that an allocation under this Section 4.7(d) shall be
made if and only to the extent such Member would have an Adjusted Capital
Account Deficit after all other allocations under this Article IV have been
made.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year or other period shall be allocated to the Common Members in proportion
to their Common Percentage Interests, as adjusted.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
shall be allocated to the Member that bears the risk of loss with respect
to the loan to which such Member Nonrecourse Deductions are attributable in
accordance with Treasury Regulation (S) 1.704-2(i).
(g) Curative Allocations. Any special allocations of items of income,
gain, deduction or loss pursuant to Sections 4.7(b), (c), (d), (e) and (f)
hereof shall be taken
16
into account in computing subsequent allocations of income and gain
pursuant to this Article IV, so that the net amount of any items so
allocated and all other items allocated to each Member pursuant to this
Article IV shall, to the extent possible, be equal to the net amount that
would have been allocated to each such Member pursuant to the provisions of
this Article IV if such adjustments, allocations or distributions had not
occurred. In addition, allocations pursuant to this Section 4.7(g) with
respect to Nonrecourse Deductions in Section 4.7(e) above and Member
Nonrecourse Deductions in Section 4.7(f) above shall be deferred to the
extent the Members reasonably determine that such allocations are likely to
be offset by subsequent allocations of Company Minimum Gain or Member
Minimum Gain, respectively.
(h) Loss Allocation Limitation. Notwithstanding the other provisions
of this Article IV, unless otherwise agreed to by the Voting Member
Majority, no Member shall be allocated Loss in any taxable year that would
cause or increase an Adjusted Capital Account Deficit as of the end of such
taxable year.
(i) Share of Nonrecourse Liabilities. Solely for purposes of
determining a Common Member's proportionate share of the "excess
nonrecourse liabilities" of the Company within the meaning of Treasury
Regulation (S) 1.752-3(a)(3), each Common Member's interest in Company
profits is equal to such Common Member's respective Common Percentage
Interest, as adjusted.
(j) Compliance with Treasury Regulations. The foregoing provisions of
this Section 4.7 are intended to comply with Treasury Regulation (S)(S)
1.704-1(b), 1.704-2 and 1.752-1 through 1.752-5, and shall be interpreted
and applied in a manner consistent with such Treasury Regulations. In the
event it is determined by the Voting Member Majority that it is prudent or
advisable to amend this Agreement in order to comply with such Treasury
Regulations, the Voting Member Majority is empowered to so amend or modify
this Agreement, notwithstanding any other provision of this Agreement.
(k) General Allocation Provisions. For purposes of determining the
Operating Income, Income, Loss or any other items for any period, Operating
Income, Income, Loss or any such other items shall be determined on a daily
basis, using any permissible method under Code Section 706 and the Treasury
Regulations thereunder.
4.8 Withholding of Distributions. Notwithstanding any other provision of
this Agreement, a Voting Member Majority (or any Person required or authorized
by law to wind up the Company's affairs) may suspend, reduce or otherwise
restrict Distributions of Liquidation Proceeds or Additional Distributions for
such time as a Voting Member Majority deems appropriate.
4.9 No Priority. Except as may be otherwise expressly provided herein, no
Member shall have priority over the other Members as to Company income, gain,
loss, credits and deductions or distributions.
4.10 Tax Withholding. Notwithstanding any other provision of this
Agreement, the Voting Member Majority is authorized to take any action that they
determine to be necessary or
17
appropriate to cause the Company to comply with any withholding requirements
established under any federal, state or local tax law, including, without
limitation, withholding on any Distribution to any Member. For the purposes of
this Article IV, any amount withheld on any Distribution and paid over to the
appropriate governmental body shall be treated as if such amount had in fact
been distributed to the Member.
4.11 Reserves. The Voting Member Majority shall have the right to
establish, maintain and expend Reserves to provide for working capital, for
future maintenance, repair or replacement of the Property, for debt service, for
future investments and for such other purposes as the Voting Member Majority may
deem necessary or advisable.
ARTICLE V
MANAGEMENT
5.1 Management. The business and affairs of the Company shall be managed
by the Voting Member Majority. A Voting Member shall act through one or more
persons (a "Representative") as it shall designate by notice to the other Voting
Members.
5.2 Voting. All Preferred Members shall be Non-Voting Members to the
extent of their Preferred Interests. All Common Members shall be Voting Members
to the extent of their Common Interests. The Voting Members shall be entitled
to vote on all matters requiring a vote under the terms of this Agreement. Each
Voting Member shall vote according to their respective Common Percentage
Interests in the Company. Upon the Transfer of an Interest pursuant to the
terms of this Agreement, each Interest shall retain any and all voting rights
associated therewith.
5.3 Officers. The Voting Members may delegate their powers and authority
under this Agreement in whole or in part to one or more officers of the Company
as the Voting Member Majority deems appropriate, which officer shall have such
power and authority as the Voting Member Majority deems appropriate. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ is the president and chief executive officer of the Company until he
resigns or is removed by the Voting Member Majority.
5.4 Meetings of the Voting Members. Meetings of the Voting Members shall
not be required to be held at any regular frequency, but, instead, shall be held
upon the call of any Voting Member holding more than 20% in Common Percentage
Interest, acting through one or more of its Representatives. All meetings of
the Voting Members shall be held at the principal office of the Company or at
such other place, either within or without the State of Delaware, as shall be
designated by the person calling the meeting and stated in the notice of the
meeting or in a duly executed waiver of notice thereof. Representatives may
participate in a meeting of the Voting Members by means of conference telephone
or video equipment or similar communications equipment whereby all
Representatives participating in the meeting can hear each other, and
participation in a meeting in this manner shall constitute presence in person at
the meeting.
5.5 Notice of Meeting. Notice of each meeting of the Voting Members,
stating the place, day and hour of the meeting, shall be given by the Voting
Member calling the meeting to the other Voting Members at least three Business
Days before the day on which the meeting is to be held. "Notice" and "call" with
respect to such meetings shall be deemed to be synonymous.
18
5.6 Waiver of Notice. Whenever any notice is required to be given to any
Voting Member under the provisions of this Agreement, a waiver thereof in
writing signed by such Member, acting through one or more of its
Representatives, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice. Attendance of a Representative
at any meeting of the Voting Members shall constitute a waiver of notice of such
meeting by the Voting Member he/she represents except where a Representative
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
5.7 Action Without a Meeting. Any action that is required to or may be
taken at a meeting of the Voting Members may be taken without a meeting if
consents in writing, setting forth the action so taken, are signed by one or
more of the Representatives of the Voting Member Majority. Such consents shall
have the same force and effect as a unanimous vote at a meeting duly held.
5.8 Non-Voting Members. Non-Voting Members shall have no right to notice
of or to attend any meeting of the Voting Members.
5.9 Definitions. For purposes of Sections 5.9 through 5.17 hereof,
inclusive, references to:
(a) The "Company" shall include, in addition to the resulting or
surviving limited liability company, any constituent limited liability
company (including any constituent of a constituent) absorbed in a
consolidation or merger so that any Person who is or was a manager or
officer of such constituent limited liability company, or is or was serving
at the request of such constituent limited liability company as a director,
officer or in any other comparable position of any Other Enterprise shall
stand in the same position under the provisions of this Article V with
respect to the resulting or surviving limited liability company as such
Person would if such Person had served the resulting or surviving limited
liability company in the same capacity;
(b) "Other Enterprises" or "Other Enterprise" shall include, without
limitation, any other limited liability company, corporation, partnership,
joint venture, trust or employee benefit plan, in which a Person is serving
at the request of the Company;
(c) "fines" shall include any excise taxes assessed against a person
with respect to an employee benefit plan;
(d) "defense" shall include investigations of any threatened, pending
or completed action, suit or proceeding as well as appeals thereof and
shall also include any defensive assertion of a cross-claim or
counterclaim;
(e) "serving at the request of the Company" shall include any service
as a director, officer, Representative or in any other comparable position
that imposes duties on, or involves services by, a Person with respect to
any Other Enterprise; and a Person who acted in good faith and in a manner
such Person reasonably believed to be in or not opposed to the interest of
any Other Enterprise shall be deemed to have acted "in the best interest of
the Company" as referred to in this Article V; and "Officer" shall include
any
19
"Authorized Person" who is authorized to act on behalf of the Company
pursuant to the terms hereof, whether or not such person has been
designated an officer of the Company; and
(f) "officer" shall include an "authorized person" who is authorized
to act on behalf of the Company pursuant to the terms hereof, whether or
not such person has been designated an officer of the Company.
5.10 Limitation of Liability. No Person shall be liable to the Company or
its Members for any loss, damage, liability or expense suffered by the Company
or its Members on account of any action taken or omitted to be taken by such
Person as an officer of the Company or as a Representative or by such Person
while serving at the request of the Company as a director, officer or in any
other comparable position of any Other Enterprise, if such Person discharges
such Person's duties in good faith, and in a manner such Person reasonably
believes to be in or not opposed to the best interests of the Company. The
liability of an officer or Representative hereunder shall be limited only for
those actions taken or omitted to be taken by such Person in the discharge of
such Person's obligations in connection with the management of the business and
affairs of the Company or any Other Enterprise. The foregoing limitation of
liability shall apply to all officers and to all Persons who serve as a
Representative at any time.
5.11 Right to Indemnification. The Company shall indemnify each Person
who has been or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or appellate (regardless of whether such
action, suit or proceeding is by or in the right of the Company or by third
parties) by reason of the fact that such Person is or was a Voting Member of the
Company, an officer of the Company, a Representative or is or was serving at the
request of the Company as a director, officer or in any other comparable
position of any Other Enterprise, against all liabilities and expenses,
including, without limitation, judgments, amounts paid in settlement, attorneys'
fees, ERISA excise taxes or penalties, fines and other expenses, actually and
reasonably incurred by such Person in connection with such action, suit or
proceeding (including, without limitation, the investigation, defense,
settlement or appeal of such action, suit or proceeding); provided, however,
that the Company shall not be required to indemnify or advance expenses to any
Person on account of such Person's conduct that was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct;
provided, further, that the Company shall not be required to indemnify or
advance expenses to any Person in connection with an action, suit or proceeding
initiated by such Person unless the initiation of such action, suit or
proceeding was authorized in advance by the Voting Members; provided, however,
that an officer or Representative shall be indemnified hereunder only for those
actions taken or omitted to be taken by such Person in the discharge of such
Person's obligations in connection with the management of the business and
affairs of the Company or any Other Enterprise. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or under a plea of
nolo contendere or its equivalent shall not, of itself, create a presumption
that such Person's conduct was finally adjudged to have been knowingly
fraudulent, deliberately dishonest or willful misconduct. The foregoing right
to indemnification shall apply to all Persons serving as officers and to all
Persons who serve as a Representative at any time or who serve at any time at
the request of the Company as a director, officer or in any other comparable
position of any Other Enterprise. Nothing herein prevents any Member from
20
indemnifying its representatives or officers under such Member's organizational
documents or other agreements. If any Person is entitled to indemnification
both from the Company and from a Member, then indemnification would come first
from the Company and thereafter from the Member.
5.12 Enforcement of Indemnification. In the event the Company refuses to
indemnify any Person who may be entitled to be indemnified or to have expenses
advanced under this Article V, such Person shall have the right to maintain an
action in any court of competent jurisdiction against the Company to determine
whether or not such Person is entitled to such indemnification or advancement of
expenses hereunder. If such court action is successful and the Person is
determined to be entitled to such indemnification or advancement of expenses,
such Person shall be reimbursed by the Company for all fees and expenses
(including attorneys' fees) actually and reasonably incurred in connection with
any such action (including, without limitation, the investigation, defense,
settlement or appeal of such action).
5.13 Advancement of Expenses. Expenses (including attorneys' fees)
reasonably incurred in defending an action, suit or proceeding, whether civil,
criminal, administrative, investigative or appellate, shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the Person subject thereto to
repay such amount if it shall ultimately be determined that such Person is not
entitled to indemnification by the Company. In no event shall any advance be
made in instances where the Voting Members or legal counsel for the Company
reasonably determines that such Person would not be entitled to indemnification
hereunder.
5.14 Non-Exclusivity. The indemnification and advancement of expenses
provided by this Article V shall not be exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any statute, or any agreement, vote of Voting Members, policy of insurance or
otherwise, both as to action in their official capacity and as to action in
another capacity while holding their respective offices, and shall not limit in
any way any right that the Company may have to make additional indemnifications
with respect to the same or different Persons or classes of Persons. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article V shall continue as to a Person who has ceased to be an officer of
the Company, a Representative or a Person eligible for designation as a
Representative and as to a Person who has ceased serving at the request of the
Company as a director, officer or in any other comparable position of any Other
Enterprise and shall inure to the benefit of the heirs, executors and
administrators of such Person.
5.15 Insurance. The Voting Member Majority may cause the Company to
purchase and maintain insurance on behalf of any Person who is or was an
officer, agent or employee of the Company or a Representative or is or was
serving at the request of the Company as a director, officer or in any other
comparable position of any Other Enterprise, against any liability asserted
against such Person and incurred by such Person in any such capacity, or arising
out of such Person's status as such, whether or not the Company would have the
power, or the obligation, to indemnify such Person against such liability under
the provisions of this Article V.
5.16 Amendment and Vesting of Rights. The rights granted or created
hereby shall be vested in each Person entitled to indemnification hereunder as a
bargained-for, contractual
21
condition of such Person's serving or having served as an officer of the Company
or a Representative or serving at the request of the Company as a director,
officer or in any other comparable position of any Other Enterprise and, while
this Article V may be amended or repealed, no such amendment or repeal shall
release, terminate or adversely affect the rights of such Person under this
Article V with respect to any (a) act taken or the failure to take any act by
such Person prior to such amendment or repeal, or (b) any action, suit or
proceeding concerning such act or failure to act filed after such amendment or
repeal.
5.17 Severability. If any provision of this Article V or the application
of any such provision to any Person or circumstance is held invalid, illegal or
unenforceable for any reason whatsoever, the remaining provisions of this
Article V and the application of such provision to other Persons or
circumstances shall not be affected thereby and, to the fullest extent possible,
the court finding such provision invalid, illegal or unenforceable shall modify
and construe the provision so as to render it valid and enforceable as against
all Persons and to give the maximum possible protection to Persons subject to
indemnification hereby within the bounds of validity, legality and
enforceability. Without limiting the generality of the foregoing, if any
officer of the Company, any Representative or any Person who is or was serving
at the request of the Company as a director, officer or in any other comparable
position of any Other Enterprise is entitled under any provision of this Article
V to indemnification by the Company for some or a portion of the judgments,
amounts paid in settlement, attorneys' fees, ERISA excise taxes or penalties,
fines or other expenses actually and reasonably incurred by any such Person in
connection with any threatened, pending or completed action, suit or proceeding
(including, without limitation, the investigation, defense, settlement or appeal
of such action, suit or proceeding), whether civil, criminal, administrative,
investigative or appellate, but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify such Person for the portion
thereof to which such Person is entitled.
5.18 Contracts with Members or their Affiliates. All contracts or
transactions between the Company and one of its Members or officers or between
the Company and another limited liability company, corporation, partnership,
association or other organization in which a Member has a financial interest or
with which such Member is affiliated are permissible if such contract or
transaction, and such Member's or officer's interest therein, are fully
disclosed to the Voting Members and approved by the Voting Member Majority.
5.19 Other Business Ventures. Any Member may engage in, or possess an
interest in, other business ventures of every nature and description,
independently or with others, whether or not similar or identical to the
business of the Company, and neither the Company nor any other Member shall have
any right by virtue of this Agreement in or to such other business ventures or
to the income or profits derived therefrom. The Members and Representatives
shall not be required to devote all of their time or business efforts to the
affairs of the Company, but shall devote so much of their time and attention to
the Company as is reasonably necessary and advisable to manage the affairs of
the Company to the best advantage of the Company. The foregoing shall not
supersede any employment, confidentiality, noncompete or other specific
agreement that may exist between the Company (or an Affiliate of the Company)
and any Member (or an Affiliate of any Member).
22
ARTICLE VI
ACCOUNTING AND BANK ACCOUNTS
6.1 Fiscal Year. The fiscal year and taxable year of the Company shall
end on September 30 of each year, unless a different year is required by the
Code, or is adopted by the Voting Member Majority.
6.2 Books and Records. At all times during the existence of the Company,
the Company shall cause to be maintained full and accurate books of account,
which shall reflect all Company transactions and be appropriate and adequate for
the Company's business. The books and records of the Company shall be
maintained at the principal office of the Company. Each Member or its
representatives shall have the right during ordinary business hours and upon
reasonable notice to inspect and copy (at such Member's own expense) all books
and records of the Company. The Voting Member Majority may cause the Company to
retain a firm of certified public accountants of recognized standing to audit
the financial statements of the Company.
6.3 Financial Reports.
(a) Within 15 days after the end of each month, there shall be
prepared and delivered to each Member:
(i) an unaudited balance sheet as of the end of such month and
related unaudited financial statements for the month then ended; and
(ii) other pertinent information regarding the Company.
(b) Within 90 days after the end of each fiscal year, there shall be
prepared and delivered to each Member:
(i) an audited balance sheet as of the end of such year and
related audited financial statements for the year then ended; and
(ii) other pertinent information regarding the Company.
(c) Within 75 days after the end of each fiscal year, there shall be
prepared and delivered to each Member all information with respect to the
Company necessary for the preparation of the Members' federal and state
income tax returns.
6.4 Tax Returns and Elections; Tax Matters Partner. The Company shall
cause to be prepared and timely filed all federal, state and local income tax
returns and other returns or statements required of the Company by applicable
law. The Company shall claim all deductions and make such elections for federal
or state income tax purposes that the Members reasonably believe will produce
the most favorable tax results for the Members. IP is hereby designated as the
Company's "Tax Matters Partner," as defined in the Code, and in such capacity is
hereby authorized and empowered to act for and represent the Company and each of
the Members before the Internal Revenue Service in any audit or examination of
any Company tax return and before any court selected by the Members for judicial
review of any adjustment assessed by the Internal Revenue Service. IP does
hereby accept such designation. IP shall provide the other Members with written
notice of any federal income tax audit and shall keep the other Members
23
informed of all material developments involved in such proceedings. The Members
specifically acknowledge, without limiting the general applicability of this
Section 6.4, that IP shall not be liable, responsible or accountable in damages
or otherwise to the Company or any Member with respect to any action taken by it
in its capacity as the Tax Matters Partner, provided that IP acted in a manner
it believed to be in the best interests of the Company and its Members. All
reasonable out-of-pocket expenses incurred by IP in its capacity as the Tax
Matters Partner shall be considered expenses of the Company for which IP shall
be entitled to full reimbursement. Nothing in this Section 6.4 shall limit the
ability of the Members to take any action in their individual capacity relating
to tax audit matters that is left to the determination of an individual partner
under Code Section 6222 through Code Section 6232.
6.5 Section 754 Election. In the event a distribution of Company assets
occurs that satisfies the provisions of Section 734 of the Code, upon the
determination of the Voting Member Majority, the Company shall elect, pursuant
to Section 754 of the Code, to adjust the basis of the Property to the extent
allowed by Section 734 and shall cause such adjustments to be made and
maintained. Any additional accounting expenses incurred by the Company in
connection with making or maintaining any such basis adjustment shall be
reimbursed to the Company from time to time by the distributee who benefits from
the making and maintenance of such basis adjustment.
6.6 Bank Accounts. All funds of the Company shall be deposited in a
separate bank, money market or similar account(s) approved by the Voting Member
Majority and in the Company's name. Withdrawals therefrom shall be made only by
such persons as are authorized by the Voting Member Majority.
ARTICLE VII
TRANSFERS OF INTERESTS
7.1 General Transfer Restrictions. No Member may Transfer all or any part
of such Member's Interest, except (i) as provided in this Agreement under
Section 7.3, 7.4 or otherwise, (ii) pursuant to an Exempt Transfer or (iii) with
the written consent of all the Voting Members; provided, however, that,
notwithstanding, the described clauses (i), (ii) and (iii) above, no Transfer
shall be permitted if it would result in the "termination" of the Company
pursuant to (S) 708 of the Code. Any purported Transfer of an Interest in
violation of the terms of this Agreement shall be null and void and of no
effect. Any permitted Transfer shall be effected by a written instrument and
shall be effective as of the date specified in such instrument. Any person
receiving an Interest from a Member in a permitted Transfer shall not become a
Substitute Member except in accordance with Section 7.6. Any assignee of an
Interest as allowed by this Section 7.1 who does not become a Substitute Member
as provided in Section 7.6 (a "Transferee") shall not be a Member and shall not
have any right to vote as a Member or to participate in the management of the
business and affairs of the Company, such right to vote such Interest and to
participate in the management of the business and affairs of the Company
continuing with the Transferor. The Transferee shall, however, be entitled to
distributions and allocations of the Company, as provided in Article IV of this
Agreement, attributable to the Interest that is the subject of the Transfer to
such Transferee. Any Transferee desiring to make a further Transfer shall
become subject to all of the provisions of this Article VII to the same extent
and in the same manner as any Member desiring to make any Transfer.
24
7.2 Exempt Transfers. The restrictions contained in this Article VII will
not apply with respect to:
(i) any Transfer to the spouse of a Member;
(ii) any Transfer to a lineal descendant, natural or adopted, of
a Member or to the spouse of any such lineal descendant;
(iii) any Transfer to the trustee of a trust for the substantial
benefit of a Member and/or one or more persons described in (i) or
(ii) above;
(iv) any Transfer to ▇▇▇▇ ▇▇▇▇▇▇▇ or any entity of which the vote
is controlled by ▇▇▇▇ ▇▇▇▇▇▇▇; or
(v) any Transfer to the Company;
provided, however, that the restrictions contained in this Article VII will
continue to be applicable to the Interests after any such Transfer, other than a
Transfer to the Company, and before any such Transfer is effected the
transferees of such Interests, other than the Company, shall agree in writing to
be bound by all of the provisions of this Agreement and shall execute and
deliver to the Company a counterpart of this Agreement.
7.3 Third Party Offer to Purchase. If a third party (a "Proposed
Purchaser") makes an offer (the "Third Party Offer") to purchase the Common
Interest of a Member or Members, and such purchase would enable the Proposed
Purchaser to acquire one or more Members' Interests, which Members' Interests
include in the aggregate more than 50% in Common Percentage Interest, then
within ten Business Days after the issuance of the Third Party Offer to a Member
or Members, the Proposed Purchaser shall issue to the other Members an offer
(the "Tag-Along Offer") whereby such Members, individually, may elect, within 30
days after receipt of the Tag-Along Offer, one of the following alternatives:
(a) If a Common Member, to sell any or all of its Common Interest to
the Proposed Purchaser under the same terms and conditions as the Third
Party Offer; or
(b) If a Preferred Member, to sell any or all of its Preferred
Interest to the Proposed Purchaser for a purchase price equal to the
balance in such Preferred Member's Preferred Capital Account plus all
Accrued Preferred Distributions and Arrearages under Section 4.2 hereof; or
(c) To take no action and continue to hold its Interest in the
Company.
7.4 Third Party Offer to Acquire the Entire Company. If a third party
makes an offer (the "Purchase Offer") to purchase all of the Common Interests in
the Company for an identical price per Common Percentage Interest, and the
holders of more than 50% in Common Percentage Interest desire to accept the
Purchase Offer, then the other Members hereby agree to participate in such sale
(i) if a Common Member, on the same terms and conditions as the Purchase Offer
and (ii) if a Preferred Member, at a purchase price equal to the balance in such
25
Preferred Member's Preferred Capital Account plus all Accrued Preferred
Distributions and Arrearages under Section 4.2 hereof.
7.5 Designation of Interests. The designation of an Interest as a
Preferred Interest or a Common Interest will continue and any and all rights
associated therewith shall be retained by each Interest sold or otherwise
Transferred pursuant to the terms of this Agreement.
7.6 Substitute Members. No assignee of all or part of a Member's Interest
shall become a Member in place of the Member assigning the Interest (a
"Substitute Member") unless and until:
(a) The transferring Member has stated such intention in the
instrument of assignment;
(b) The Transferee has executed an instrument accepting and adopting
the terms and provisions of this Agreement;
(c) The Transferee delivers an opinion of Counsel acceptable to the
Company that the Transfer will not result in a termination of the Company
pursuant to Section 708 of the Code and such Transfer is exempt from
registration under all applicable securities laws;
(d) The transferring Member or Transferee has paid all reasonable
expenses of the Company in connection with the admission of the Transferee
as a Substitute Member; and
(e) All non-transferring Voting Members in their sole and absolute
discretion have consented in writing to such Transferee becoming a
Substitute Member.
Upon satisfaction of all of the foregoing conditions with respect to a
particular Transferee, the Voting Members shall cause this Agreement to be duly
amended to reflect the admission of the Transferee as a Substitute Member.
7.7 Effect of Admission as a Substitute Member. Unless and until admitted
as a Substitute Member pursuant to Section 7.6 hereof, a Transferee shall not be
entitled to exercise any rights of a Member in the Company, including the right
to vote, grant approvals or give consents with respect to such Interest, the
right to require any information or accounting with respect to the Company's
business or the right to inspect the Company's books and records, but such
Transferee shall only be entitled to receive, to the extent of the Interest
transferred to it, the Distributions to which the transferring Member would be
entitled. A Transferee that has become a Substitute Member has, to the extent
of the Interest transferred to it, all the rights and powers of the Person for
whom it is substituted and is subject to the restrictions and liabilities of a
Member under this Agreement and the Act. Upon admission of a Transferee as a
Substitute Member, the transferring Member shall cease to be a Member of the
Company to the extent of such Interest. A Person shall not cease to be a Member
upon assignment of all of such Member's Interest unless and until the Transferee
becomes a Substitute Member.
26
7.8 Additional Members. Additional Members (whether Voting Members or
Non-Voting Members) may be admitted to the Company and additional Interests may
be issued only by the consent of a Voting Member Majority, and the Common
Percentage Interests and the Preferred Percentage Interests shall be adjusted as
approved by such Voting Member Majority.
7.9 Resignation. No Member may resign or withdraw from the Company.
Except as provided in Section 8.1(c) of this Agreement, upon the occurrence of
any event that terminates the continued membership of a Member in the Company,
the Company shall not be dissolved.
7.10 Miscellaneous Provisions Regarding Article VII.
(a) Without limiting any of the foregoing, the Members shall not, and
shall cause each of their respective affiliates not to, (i) take any action
the effect of which would prevent or frustrate the carrying out of the
procedures contemplated by this Article VII or (ii) at any time (whether
before or after any termination of this Agreement) make any assertion,
claim or defense that this Article VII or any of the provisions hereof
violate or are inconsistent with the terms of this Agreement or any laws or
public policies.
(b) At the closing of any purchase and sale of a Common Interest or a
Preferred Interest under this Article VII, the purchaser and the selling
Member shall deliver such certificates and such assignment documents in
customary form as may be reasonably requested in order to consummate the
transaction, and, unless otherwise specified herein, the purchaser shall
deliver the purchase price in immediately available funds to such bank
account as shall have been specified by the selling Member at least three
Business Days prior to the closing (or, if no such notice has been given,
by delivery of a certified or bank check). At such closing, the selling
Member shall sell and transfer its Common Interest and/or its Preferred
Interest to the purchaser free and clear of Liens other than Liens arising
out of Company financing and shall so warrant to the purchaser. The
selling Member shall also represent and warrant to the purchaser that the
selling Member has good and marketable title to the Common Interest or
Preferred Interest being sold and transferred. In addition, each of the
selling Member and the purchaser shall make customary representations and
warranties to the other including representations and warranties with
respect to organization, valid existence, authorization, and non-
contravention. With respect to obligations arising out of Company
financing, the purchaser shall, in addition to paying the purchase price,
either (i) satisfy or otherwise obtain release from all liability on the
part of the selling Member and its Affiliates with respect to all
obligations of the Company, including debt and lease obligations, which
such selling Member and/or its Affiliates shall have guaranteed, or (ii)
indemnify and hold harmless the selling Member and its Affiliates against
such liability and secure such indemnification with a letter of credit or
payment bond reasonably satisfactory to such selling Member. As used
herein, "Lien" shall mean, as to any Interest, liens, encumbrances,
security interests and other rights, interest or claims of others therein
(including, without limitation, warrants, options, rights of first refusal,
rights of first offer, co-sale and similar rights).
(c) If, with respect to any purchase and sale of a Common Interest or
a Preferred Interest under this Article VII, the selling Member is not
present at the time and
27
place designated for a closing, or, if present, fails to produce the
certificates or assignment documents reasonably requested to consummate the
transaction or fails to satisfy any other obligation to be satisfied at the
closing, as aforesaid, for any reason whatsoever or no reason, then the
purchase price and any other document or instrument required by the Company
at the closing ("Closing Documentation") shall be deposited with the
President of the Company. The foregoing shall constitute valid payment even
though the selling Member shall voluntarily encumber and dispose of said
Interests contrary to the provisions hereof and irrespective of the fact
that any pledgee, transferee or other person may thereby have acquired said
Interests or the fact that certificates or assignment documents for any of
said Interests may have been delivered to any pledgee, transferee or other
person.
If the Closing Documentation is deposited with the President of the
Company as provided herein, then from and after the date of such deposit
and even if the certificates evidencing said Interests or the assignment
documents have not been delivered to the Company, the purchase of said
Interests shall be deemed to have been fully effected and all title and
interest in and to the Interests so purchased shall be deemed to have been
vested in the Company, and all rights of the selling Member or of any
transferee, assignee or any other person having an interest therein, as a
Member of the Company or otherwise, shall terminate except for the right to
receive the Closing Documentation, but without interest; and the President
of the Company, as attorney-in-fact for and in the name of the selling
Member, shall cause the Interests so purchased to be transferred on the
books and records of the Company to the Company, and shall issue a new
certificate or certificates therefor to the purchaser(s) thereof. The
selling Member does hereby irrevocably appoint and designate the President
of the Company and his successors in office as his attorney-in-fact, for
and on his behalf, to receive, receipt for, hold and collect the said
Closing Documentation, to effect the transfer of said Interests on the
books and records of the Company, and to issue said certificate or
certificates in the manner above provided. The selling Member shall be
entitled to receive the Closing Documentation upon delivery to the Company
of the certificates evidencing the Interests so purchased, and assignment
documents duly indorsed for transfer, as aforesaid, together with any
document or instrument required of such Member.
ARTICLE VIII
DISSOLUTION AND TERMINATION
8.1 Events Causing Dissolution. The Company shall be dissolved only upon
the first to occur of the following events:
(a) December 31, 2026.
(b) The election to dissolve being made by a Voting Member Majority.
(c) At any time there are no Members, provided that the Company shall
not be dissolved if within 90 days after the occurrence of the event that
terminated the continued membership of the last remaining Member, the
personal representative of the last remaining Member agrees in writing to
continue the Company and to the admission of the personal representative of
such Member or its nominee or designee to the Company
28
as a Member, effective as of the occurrence of the event that terminated
the continued membership of the last remaining Member.
(d) Upon the entry of a decree of dissolution with respect to the
Company under Section 18-802 of the Act.
(e) When the Company is not the surviving entity in a merger or
consolidation under the Act.
8.2 Effect of Dissolution. Except with respect to an event referred to in
Section 8.1(e) of this Agreement, and except as otherwise provided in this
Agreement, upon the dissolution of the Company, the Voting Members or surviving
Voting Member, as the case may be, shall take such actions as may be required
pursuant to the Act and shall proceed to wind up, liquidate and terminate the
business and affairs of the Company. In connection with such winding up, the
Voting Members or surviving Voting Member shall have the authority to liquidate
and reduce to cash (to the extent necessary or appropriate) the assets of the
Company as promptly as is consistent with obtaining Fair Value therefor, to
apply and distribute the proceeds of such liquidation and any remaining assets
in accordance with the provisions of Section 8.3 hereof, and to do any and all
acts and things authorized by, and in accordance with, the Act and other
applicable laws for the purpose of winding up and liquidation.
8.3 Application of Proceeds. Upon dissolution and liquidation of the
Company, the assets of the Company shall be applied and distributed in the order
of priority set forth in Section 4.4 hereof.
8.4 Continuing Obligations. In the event any Member is required to assume
or pay any debt, expense, obligation or liability of the Company following
dissolution or termination, first, the Common Members shall pay and indemnify
such Member for their respective Common Percentage Interest of such debt,
expense, obligation or liability required to be paid by such Member to the
extent of assets distributed to such Common Members, then, the Preferred Members
shall pay and indemnify such Member for their respective Preferred Percentage
Interest of such debt, expense, obligation or liability required to be paid by
such Member to the extent of assets distributed to such Preferred Members.
ARTICLE IX
MISCELLANEOUS
9.1 Title to Assets. Title to the Property and all other assets acquired
by the Company shall be held in the name of the Company. No Member shall
individually have any ownership interest or rights in the Property or any other
assets of the Company, except indirectly by virtue of such Member's ownership of
an Interest. No Member shall have any right to seek or obtain a partition of
the Property or other assets of the Company, nor shall a Member have the right
to any specific assets of the Company upon the liquidation of or any
distribution from the Company.
9.2 Nature of Interest in the Company. An Interest shall be personal
property for all purposes.
29
9.3 Notices. Any notice, demand, request or other communication required
or permitted to be given pursuant to this Agreement or the Act to the Company, a
Member, or any other Person (a "Notice") shall be sufficient if in writing and
if hand-delivered, mailed or sent by commercial overnight delivery service, to
the Company at its principal office or to a Member at the address of the Member
as it appears on the records of the Company or if sent by facsimile transmission
to the telephone number, if any, of the recipient's facsimile machine as such
telephone number appears on the records of the Company. All Notices that are
mailed shall be deemed to be given when deposited in the United States mail,
postage prepaid. All Notices that are hand-delivered shall be deemed to be
given upon delivery. All notices that are given by commercial overnight
delivery shall be deemed to be given upon delivery by the delivery service. All
Notices that are given by facsimile transmission shall be deemed to be given
upon receipt.
9.4 Waiver of Default. No consent or waiver, express or implied, by the
Company or a Member with respect to any breach or default by the other Members
hereunder shall be deemed or construed to be a consent or waiver with respect to
any other breach or default by such Member of the same provision or any other
provision of this Agreement. Failure on the part of the Company or a Member to
complain of any act or failure to act of the other Members or to declare such
other Member in default shall not be deemed to constitute a waiver by the
Company or the Members of any rights hereunder.
9.5 No Third Party Rights. None of the provisions contained in this
Agreement shall be for the benefit of or enforceable by any third parties,
including, but not limited to, creditors of the Company; provided, however, the
Company may enforce any right granted to the Company under the Act, the
Certificate or this Agreement.
9.6 Entire Agreement. This Agreement, together with the Certificate,
constitutes the entire agreement between the Members, in such capacity, relative
to the formation, operation and continuation of the Company.
9.7 Amendments to this Agreement.
(a) Except as otherwise provided herein, this Agreement shall not be
modified or amended in any manner other than by the written agreement of
the Voting Member Majority at the time of such modification or amendment
(which agreement need not be executed by any Members other than Members
constituting such Voting Member Majority); provided, however, any amendment
affecting the allocation of Income and Loss to a Member shall be approved
by that Member.
(b) In addition to the rights of the Voting Member Majority to modify
or amend this Agreement pursuant to Section 9.7(a) hereof, this Agreement
may be amended by the Voting Member Majority, without any execution of such
amendment by all Members, in order to reflect the occurrence of any of the
following events provided that all of the conditions, if any, contained in
the relevant sections of this Agreement with respect to such event have
been satisfied:
30
(i) an adjustment of the Common Percentage Interests of the
Common Members and the Preferred Percentage Interests of the Preferred
Members, as the case may be, upon a Common Member's or a Preferred
Member's failure to make a capital contribution as required hereunder;
and
(ii) the modification of this Agreement to comply with the
relevant tax laws pursuant to Sections 3.6 or 4.7(j) hereof.
9.8 Severability. In the event any provision of this Agreement is held to
be illegal, invalid or unenforceable to any extent, the legality, validity and
enforceability of the remainder of this Agreement shall not be affected thereby
and shall remain in full force and effect and shall be enforced to the greatest
extent permitted by law.
9.9 Binding Agreement. Subject to the restrictions on the disposition of
Interests herein contained, the provisions of this Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.
9.10 Headings. The headings of Sections of this Agreement are for
convenience of reference only and shall not be considered in construing or
interpreting any of the terms or provisions hereof.
9.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one agreement.
9.12 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
9.13 Remedies. In the event of a default by a Member in the performance
of any obligation undertaken in this Agreement, in addition to any other remedy
available to the non-defaulting Members, the defaulting Member shall pay to the
non-defaulting Members all costs, damages, and expenses, including reasonable
attorneys' fees, incurred by the non-defaulting Member as a result of such
default. In the event that any dispute arises with respect to the enforcement,
interpretation, or application of this Agreement and court proceedings are
instituted to resolve such dispute, the prevailing party in such court
proceedings shall be entitled to recover from the non-prevailing party all costs
and expenses, including, but not limited to, reasonable attorneys' fees,
incurred by the prevailing party in such court proceedings.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
INERGY PARTNERS, LLC
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
31
▇▇▇▇▇▇ OIL COMPANY OF ▇▇▇▇▇▇▇▇ COUNTY, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
ROLESVILLE GAS AND OIL COMPANY, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
32
SCHEDULE A
INITIAL OR RESTATED CAPITAL ACCOUNTS
AND PERCENTAGE INTERESTS
Initial or Common Preferred
Restated Common Initial Preferred Percentage Percentage
Capital Account Capital Account Interest Interest
------------------ ------------------- ----------------- --------------
Inergy Partners, LLC $ $ -0- 100% 0%
▇▇▇▇▇▇ Oil Company of
▇▇▇▇▇▇▇▇ County, Inc. $-0- $2,608,385 0% 48.4075%
Rolesville Gas and Oil
Company, Inc. $-0- $2,780,000 0% 51.5925%
33