OPERATING AGREEMENT OF HO CAPITAL MANAGEMENT LLC a Delaware Limited Liability Company Dated as of November ___, 2007
OF
HO
CAPITAL MANAGEMENT LLC
a
Delaware Limited Liability Company
Dated
as
of November ___, 2007
Prepared
By:
▇▇▇▇▇▇▇
▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
OF
HO
CAPITAL MANAGEMENT LLC
THIS
OPERATING AGREEMENT (this
“Agreement“) of HO
CAPITAL MANAGEMENT LLC (the
“Company”) is entered into as of the ___ day of November, 2007, by and among the
Person(s) whose name(s) and address(es) appear on Exhibit
A
annexed
hereto (individually,
a “Member” and collectively, the “Members”), as the same may be amended from
time to time, and the Company, pursuant to the provisions of the Delaware
Limited Liability Company Act, on the following terms and
conditions:
W
I T N E S S E T H:
WHEREAS,
the
Members have formed a limited liability company subject to the conditions and
for the purposes stated herein known as HO
CAPITAL MANAGEMENT LLC;
and
WHEREAS,
the
Members and the Company wish to state the terms of the Member’s relationship to
the Company and method of operations of the Company;
NOW,
THEREFORE,
in
consideration of the mutual agreements, covenants and undertakings herein
contained, the parties hereto, intending to be legally bound, hereby agree
as
follows:
ARTICLE
I
CERTAIN
DEFINITIONS
For
purposes of this Agreement, the following terms shall have the meanings set
forth in this Article I (such meanings to be equally applicable in both the
singular and plural forms of the term defined).
1.1 “Affiliate”
means
any (i) corporation, partnership, trust, limited liability company or other
entity controlled by or under common control with any Member or in which a
Member is or may be an officer, director, shareholder, partner (general or
limited), trustee, member, owner or employee; (ii) officer, director,
shareholder, partner (general or limited), trustee, member, owner or employee
of
any corporation, partnership, trust, limited liability company or other entity
controlled by or under common control with a Member; and (iii) corporation,
partnership, trust, limited liability company or other entity or business in
which a Member has any interest whatsoever.
1.2 “Agreement”
or
“Operating
Agreement”
means
this Operating Agreement, as amended, restated, supplemented or otherwise
modified in writing from time to time by the parties hereto or their successors
and assigns. Words such as “herein”, “hereinafter”, hereof”, and “hereunder”
refer to this Agreement as a whole, unless the context otherwise
requires.
1.3 “ASSAC
Shares”
means
the 1,312,500 Ordinary Shares of ASSAC owned of record by to the Company as
at
the date of this Agreement.
1.4 “Available
Cash”
means
the excess, if any, of (a) the Revenue (as defined in this Subsection) of the
Company resulting from the sale of (i) the ASSAC Shares, (ii) the Warrants,
and/or (iii) the Warrant Shares, over (b) the Expenses (as defined in this
Subsection) of the Company.
(a) The
term
“Revenue”
shall
have its customary meaning, but shall also include previously accumulated
reserves no longer required as determined at the discretion of the
Manager.
(b) The
term
“Expenses”
shall
have its customary meaning, but shall also include, without limitation, the
following:
(i) capital
expenditures necessary to maintain, preserve or restore any real property owned
by the Company not paid for out of the proceeds of any loan or casualty loss
recovery;
(ii) sums
credited to reserves for Expenses incurred but unpaid;
(iii) amortization
on any loans affecting the Company or on any other indebtedness of the Company;
and
(iv) depreciation
and amortization of intangible assets of the Company.
Available
Cash shall be determined for each fiscal year of the Company.
1.5 “Capital
Account”
means,
with respect to any Member, the Capital Account maintained for such Member
in
accordance with the following provisions:
(i) To
each
Member’s Capital Account there shall be credited such Member’s Capital
Contributions, such Member’s distributive share of Profits and any items in the
nature of income or gain which are allocated to such Member pursuant to Article
IV hereof.
(ii) To
each
Member’s Capital Account there shall be debited the amount of cash distributed
to such Member pursuant to any provision of this Agreement, such Member’s
distributive share of Losses and any items in the nature of expenses or losses
which are allocated to such Member pursuant to Article IV hereof.
2
The
foregoing provisions and the other provisions of this Agreement relating to
the
maintenance of Capital Accounts are intended to comply with Internal Revenue
Code Regulations Sections 1.704-1 (b) and 1.704-2, and shall be interpreted
and
applied in a manner consistent with such Regulations. In the event the Manager
shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto are computed in order to comply
with
such Regulations, the Manager may make such modification; provided that it
is
not likely to have a material adverse effect on the amounts distributable to
any
Member upon the dissolution of the Company.
1.6 “Capital
Contribution”
means
the contribution or contributions to the capital of the Company previously
made
by each Member, as modified and updated from time to time.
1.7 “Certificate”
means
the Certificate of Formation of the Company filed with the Secretary of State
of
Delaware in accordance with the DLLCA, as such Certificate may be amended from
time to time.
1.8 “Code”
means
the Internal Revenue Code of 1986, as amended from time to time (or any
corresponding provisions of succeeding law) and “Regulations” means the
regulations of the Code, as amended from time to time.
1.9 “Disability”
means
death, insanity, incompetency (as declared by two independent medical doctors),
retirement, bankruptcy or insolvency (as determined pursuant to Delaware State
Law).
1.10 “Interest”
means
a
Member’s ownership interest in the Company, including any and all benefits to
which the holder of such Interest may be entitled as provided in this Agreement,
together with all obligations of such Member to comply with the terms and
provisions of this Agreement.
1.11 “Company”
means
the limited liability company formed pursuant to this Agreement and the company
continuing the business of this Company in the event of dissolution as herein
provided.
1.12 “DLLCA”
means
the Delaware Limited Liability Company Act as amended from time to time (or
any
corresponding provisions of succeeding law).
1.13 “Initial
Members”
shall
mean ▇▇▇▇▇▇ ▇▇ and Noble or their respective Affiliates.
1.14 “Manager”
shall
mean ▇▇▇▇▇▇ ▇▇, who,
following a Noble Withdrawal,
shall be
the sole Manager of the Company, or her successor(s) appointed in accordance
with the terms of this Agreement.
1.15 “Members”
means
the Initial Members and any Person who subsequently becomes a Member pursuant
to
the terms of this Agreement and who has not ceased to be a Member pursuant
to
the terms of this Agreement.
3
1.16 “Noble”
means
Noble Investment Fund Limited, one of the Initial Members.
1.17 “Noble
Withdrawal”
shall
mean the election by Noble or the Manager (as the case may be), exercised at
any
time following the occurrence of a Warrant Distribution, to cause Noble to
withdraw as an Initial Member of the Company and terminate and relinquish its
Members Interest in the Company, all in accordance with the provisions of
Section
10.2
of this
Agreement.
1.18 “Note”
means
the 5% Promissory Note of the Company in the principal amount of Five Million
Seven Hundred Twenty Five Thousand Dollars ($5,725,000) dated as of November
___, 2007 issued to Noble Investment Fund Limited, the proceeds of which are
to
be used by the Company to purchase the Warrants.
1.19 “Officers”
means
the executive officers of the Company, as appointed from time to time by the
Manager pursuant to the terms of this Agreement.
1.20 “Ordinary
Shares”
means
the ordinary shares, par value $.0001 per share, of Asia Special Situation
Acquisition Corp., a business combination
company formed under the laws of the Cayman Islands (“ASSAC”).
1.21 “Percentage
Interest”
means
the percentage set forth opposite the names of each of the Members on
Exhibit
A
annexed
hereto and made a part hereof.
1.22 “Person”
means
any individual, general partnership, limited partnership, corporation, trust,
limited liability company or other association or entity.
1.23 “Profits”
and
“Losses”
means,
for each fiscal year, an amount equal to the Company’s federal taxable income or
loss of such fiscal year.
1.24 “Transfer”
means,
as a noun, any voluntary or involuntary transfer, sale, pledge, hypothecation
or
other disposition or encumbrance and, as a verb, voluntarily or involuntarily
to
transfer, sell, pledge, hypothecate or otherwise dispose of or
encumber.
1.25 “Transferee”
means
any Person who has acquired a beneficial interest in the Interest of a Member
of
the Company.
1.26 “Warrants”
means
the warrants to purchase Ordinary Shares of ASSAC to be purchased by the Company
at
a
price equal to $1.00 per warrant in a private placement made in accordance
with
Regulation D under the Securities Act of 1933, as amended, which are subject
to transfer restrictions which expire on the earlier of (i) the consummation
of
a business combination by ASSAC, or (ii) the liquidation and dissolution of
ASSAC.
1.27 “Warrant
Shares”
means
the Ordinary Shares of ASSAC that are issuable upon the full or any partial
exercise of the Warrants.
4
ARTICLE
II
THE
COMPANY
2.1 Formation.
The
Company has been formed as a limited liability company under the DLLCA, and
all
actions taken by ▇▇▇▇ ▇▇▇▇▇▇▇▇, Organizer, an authorized person who executed
and
filed the Certificate, are hereby approved, adopted and ratified. The affairs
of
the Company and the conduct of its business shall be governed by the terms
and
subject to the conditions set forth in this Agreement.
2.2 Company
Name.
The
name of the Company shall be HO
CAPITAL MANAGEMENT LLC
and all
business of the Company shall be conducted in such name or such other name
as
the Members shall determine. The Company shall hold all of its property in
the
name of the Company and not in the name of any Member.
2.3 Purpose.
The
purpose and business of the Company shall be engage in any and all business
activities permitted under the laws of the State of Delaware. In furtherance
thereof, the Company shall do any and all acts and things which may be necessary
or incidental to the foregoing or the promotion or conduct of the business
of
the Company or any of the Company assets.
2.4 Principal
Place of Business.
The
principal place of business of the Company shall be at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇.
▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other location as may be designated
by
the Manager from time to time.
2.5 Duration.
The
Company commenced on the date that its Certificate was filed in the office
of
the Secretary of State of Delaware in accordance with the DLLCA and shall
continue until dissolved and its affairs wound up in accordance with the DLLCA
or this Agreement.
2.6 Filings;
Agent of Service of Process.
(a) The
Certificate has been filed in the office of the Secretary of State of Delaware
in accordance with the provisions of the DLLCA. The Manager shall take any
and
all other actions reasonably necessary to perfect and maintain the status of
the
Company under the laws of the State of Delaware. The Members shall cause
amendments to the Certificate to be filed whenever required by the DLLCA. An
Officer designated by the Manager shall execute such amendments.
(b) The
Manager shall cause to be executed, filed and published such forms or
certificates and shall take any and all other actions as may be reasonably
necessary to perfect and maintain the status of the Company under the laws
of
any other states or jurisdictions in which the Company engages in
business.
(c) The
Secretary of State of Delaware is designated as the agent of the Company for
service of process on the Company. The address of the registered office of
the
Company in the State of Delaware is c/o United Corporate Services, Inc., ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the name of the Company’s
registered agent to which the Secretary of State shall mail a copy of any
process against the Company served upon the Secretary of State is United
Corporate Services, Inc. The Manager may change such registered agent and
address at any time in their discretion.
5
(d) Upon
the
dissolution of the Company, the Manager (or, in the event there are no remaining
Manager, such Members as are responsible for winding up and dissolution of
the
Company pursuant to Article XI hereof), shall promptly execute and cause to
be
filed a certificate of cancellation in accordance with the DLLCA and the laws
of
any other states or jurisdictions in which the Company has registered to
transact business or otherwise filed a certificate.
2.7 Reservation
of Other Business Opportunities.
No
business opportunities other than those actually exploited by the Company
pursuant to Section 2.3 shall be deemed the property of the Company, and any
Member or Manager may engage in or possess an interest in any other business
venture (including those which may be a direct competitor of the Company),
independently or with others of any nature or description; and neither any
other
Member nor any other Manager nor the Company shall have any rights by virtue
hereof in and to such other business ventures, or to the income or profits
derived therefrom. The provisions of Section 2.3 shall be subject to and shall
not in any way affect the enforceability of any separate agreement by a Member,
any Manager, or any Affiliate of either, restricting or prohibiting certain
business activities of such Member or Manager.
ARTICLE
III
CAPITAL
CONTRIBUTIONS;
ADDITIONAL
FINANCING AND CONTRIBUTIONS
3.1 Members.
The
names, addresses and Percentage Interests of each of the Members are set forth
on Exhibit
A.
With
the approval of all Initial Members, the Manager shall update Exhibit
A
from
time to time to reflect any changes to the information set forth
thereon.
3.2 Initial
Capital Contribution.
The
initial Capital Contribution to the Company as set forth on Exhibit
A
shall
consist of Thirteen Thousand One Hundred Twenty Five Dollars ($13,125) that
have
been made by the Initial Members as provided on Exhibit A hereto.
3.3 The
ASSAC Shares. As
at the
date of this Agreement, the Company is the record owner of an aggregate of
1,312,500 ASSAC Shares which have been purchased by the Company for a purchase
price equal to $.01 per share. The Initial Members are the beneficial owners
of
the ASSAC Shares to the extent of their respective Percentage Interests in
the
Company, all as set forth on Exhibit
A
hereto.
3.3 The
Note.
The
Company shall issue the Note to Noble, a copy of which is annexed hereto as
Exhibit
B,
as
consideration for a loan to be made by Noble to the Company in the amount of
Five Million Seven Hundred Twenty Five Thousand Dollars ($5,725,000), the
proceeds of which shall be used by the Company to purchase the Warrants from
ASSAC in
a
private placement made in accordance with Regulation D under the Securities
Act
of 1933, as amended.
6
3.4 The
Warrants and the Warrant Distribution.
(a) At
all
times prior to the Warrant Distribution as contemplated by Section 3.4(b) below,
each of the Initial Members or their Affiliates or designated assigns shall
have
a fifty percent (50%) beneficial interest in the Warrants and the Warrant
Shares.
(b) All
right, title and legal ownership to the Warrants shall remain with the Company;
provided
that, upon
the
consummation by ASSAC of an acquisition of one or more operating businesses,
an
aggregate of fifty percent (50%) of the Warrants entitling the holder to
purchase up to 2,862,500 Warrant Shares shall be assigned and distributed by
the
Company to Noble or such of its Affiliate(s) or assignees as shall be designated
in writing by Noble to the Company (the “Warrant
Distribution”).
Simultaneous with such Warrant Distribution:
(i) one
hundred percent (100%) of the beneficial interest in the remaining Warrants
owned of record by the Company and entitling the holder to purchase up to
2,862,500 Warrant Shares shall be vested solely in ▇▇▇▇▇▇ ▇▇ or her Affiliates
or designated assigns; and
(ii) the
outstanding principal amount of the Note shall be automatically deemed to be
partially prepaid and reduced to Two Million Eight Hundred and Sixty Two
Thousand Five Hundred Dollars ($2,862,500). In addition, the aggregate amount
of
interest accrued on such reduced principal amount of the Note as at the date
of
such Warrant Distribution shall similarly be reduced to that amount equal to
the
product of multiplying $2,862,500 by 5% from the date of issuance of the Note
to
the date of the Warrant Distribution.
(c) As
a
material inducement to Noble to loan the principal amount of the Note to the
Company, the Company has pledged to Noble, all of the Warrants owned and to
be
owned of record by the Company as collateral security for the timely and full
satisfaction of all obligations of the Company pursuant to this Note; all in
accordance with the pledge agreement dated of even date herewith between Noble
and the Company, a copy of which is annexed hereto as Exhibit
C
(the
“Pledge
Agreement”).
(d) If,
at
any time or from time to time prior to the Maturity Date of the Note, the
Company shall sell, transfer or otherwise dispose of the Warrants for cash
consideration, or exercise the Warrants and thereafter sell, transfer or
otherwise dispose of any of the Warrant Shares for cash consideration, then
the
Company shall remit the all of the proceeds received by the Company from any
such sale, transfer or disposition to Noble to prepay this Note, in whole or
in
part, to be allocated as follows:
(i) First,
to
pay accrued and unpaid interest due pursuant to the Note; and
7
(ii) Second,
to pay the outstanding principal amount due pursuant to the Note.
(e) The
Company shall not sell, transfer, pledge, hypothecate or assign any or all
of
the Warrants and Warrant Shares and all right, title and legal ownership to
the
Warrants and Warrant Shares will remain with the Company at all times until
the
date of the Warrant Distribution. Following the date of the Warrant Distribution
and the resulting reduction amount of the Warrants and in the principal amount
of and accrued interest on the Note, the Company shall continue to retain legal
ownership and title to all of the remaining Warrants and Warrant Shares not
sold
for cash, until such time as the Maker shall have prepaid or paid in full all
principal of and interest accrued on this Note, as reduced pursuant to this
Section 3.4.
3.5 Additional
Financing.
(a) The
sums
of money required to finance the business and affairs of the Company shall
be
derived from the initial and subsequent Capital Contributions made by the
Members to the Company, from funds generated from the operation and the business
of the Company and from any loans or other indebtedness which the Initial
Members may mutually approve for the Company.
(b) The
Members shall not be required to make additional Cash Capital Contributions
(beyond their initial Capital Contribution), but may make additional
contributions with the consent of both of the Initial Members, or after the
Warrant Distribution and if Noble shall .
(c) No
Member
shall be required to guarantee any loan or indebtedness of the Company, though
any of the Members may voluntarily agree to do so.
3.6 Other
Matters.
(a) Except
as
otherwise provided in this Agreement, no Member shall demand or receive a return
of his Capital Contributions from the Company without the consent of both of
the
Initial Members or after Noble Withdrawal, the Manager. Under circumstances
requiring a return of any Capital Contributions, no Member shall have the right
to receive property other than cash except as may be specifically provided
herein.
(b) No
Member
shall receive any interest, salary or drawing with respect to his, or her or
its
Capital Contributions or his or her or its Capital Account or for services
rendered on behalf of the Company or otherwise in its capacity as a Member
or a
Manager except as otherwise provided in this Agreement or any written employment
or management agreements subsequently entered into between the Company and
the
applicable Member or Manager.
8
ARTICLE
IV
ALLOCATIONS
4.1 Profits
and Losses.
(a) Subject
to the Other Allocation Rules in Section 4.2 hereof, Profits for any fiscal
year
in respect of the ASSAC Shares shall be allocated among the Members in
proportion to their respective Percentage Interests in the Company, and Profits
for any fiscal year in respect of the Warrants or Warrant Shares shall be
allocated among the Initial Members equally, unless otherwise agreed to by
all
Initial Members.
(b) Subject
to the Other Allocation Rules in Section 4.2 hereof, Losses for any fiscal
year
in respect of the ASSAC Shares shall be allocated among the Members in
proportion to their respective Percentage Interests in the Company, and Losses
for any fiscal year in respect of the Warrants or Warrant Shares shall be
allocated among the Initial Members equally, unless otherwise agreed to by
all
Initial Members.
4.2 Other
Allocation Rules.
(a) In
the
event any new Member is admitted to the Company pursuant to this Agreement
on
different dates, the Profits (or Losses) allocated to the Members for each
fiscal year during which any new Member(s) are so admitted shall be allocated
among the Members in proportion to their respective Percentage Interests during
such fiscal year in accordance with Code §706
using
any convention permitted by law and selected by the Manager.
(b) For
purposes of determining the Profits, Losses or any other items allocable to
any
period, Profits, Losses and any such other items shall be determined on a daily,
monthly or other basis, as determined by the Manager using any method that
is
permissible under Code §706
and
the Treasury Regulations thereunder.
(c) Except
as
otherwise provided in this Agreement, all items of income, gain, loss, deduction
and any other allocations not otherwise provided for shall be divided among
the
Members in the same proportions as they share Profits or Losses, as applicable,
for the fiscal year in question.
ARTICLE
V
DISTRIBUTIONS
5.1 Distributions
of Available Cash.
(a) Except
as
otherwise provided in Article XI hereof, Available Cash, if any, from the sale
or distribution by the Company of any of the ASSAC Shares owned of record by
the
Company, and any dividends paid in respect of such ASSAC Shares, shall be
distributed to the Members in accordance with their respective Percentage
Interests.
9
(b) Prior
to
the Warrant Distribution, except as otherwise provided in Article XI hereof,
Available Cash, if any, from the sale or distribution by the Company of any
of
the Warrants or the Warrant Shares owned of record by the Company, and any
dividends paid in respect of such Warrant Shares, shall be distributed, as
follows:
(i) First,
to
pay accrued and unpaid interest due pursuant to the Note; and
(ii) Second,
to pay the outstanding principal amount due pursuant to the Note;
and
(iii) Third,
in
equal amounts to the Initial Members or their Affiliates or designated
assigns.
(c) Following
the Warrant Distribution, except as otherwise provided in Article XI hereof,
Available Cash, if any, from the sale or distribution by the Company of any
of
the Warrants or the Warrant Shares owned of record by the Company, and any
dividends paid in respect of such Warrant Shares, shall be distributed, as
follows:
(i) First,
to
pay accrued and unpaid interest due pursuant to the Note;
(ii) Second,
to pay the outstanding principal amount due pursuant to the Note;
and
(iii) Third,
one hundred percent (100%) to ▇▇▇▇▇▇ ▇▇, or her Affiliates or designated
5.2 Withholding.
All
amounts withheld pursuant to the Code or any provision of any state or local
law
with respect to any payment, distribution or allocation to the Company or the
Members shall be treated as amounts distributed to the Members pursuant to
this
Article V for all purposes of this Agreement. The Manager are authorized to
withhold from distributions or, with respect to allocations, to the Members
and
to pay over to any federal, state or local government any amounts required
to be
so withheld pursuant to the Code or any provision of any other federal, state
or
local law and shall allocate such amounts to those Members with respect to
which
such amounts were withheld.
ARTICLE
VI
MANAGEMENT
6.1 Management
of Company.
(a) Prior
to a Noble Withdrawal. Prior
to
a Noble Withdrawal, the business and affairs of the Company shall be managed
by
both of the Initial Members, acting by mutual agreement and under their joint
direction and control. Without limiting the generality of the foregoing, prior
to a Noble Withdrawal, without the prior written consent and approval of both
of
the Initial Members, the Company shall not take any of the following actions,
or
commit or undertake any of the following:
10
(i) except
for the Note, borrowing money from any Person or guaranteeing any debts or
obligations of any Person; or
(ii) except
for the Pledge Agreement, pledging or hypothecating any Members Interests or
any
of the assets or securities of the Company; or
(iii) amending
this Agreement, the Note or the Pledge Agreement; or
(iv) admitting
any new Members or selling any Members Interests in the Company; or
(iv) effecting
any sale, transfer, pledge, hypothecation or other disposition of any of the
ASSAC Shares; or any of the Warrants or Warrant Shares; or
(v) causing
the Company to engage in any business activities, other than the ownership,
management and disposition of the ASSAC Shares, Warrants and/or Warrant
Shares.
Notwithstanding
the above, Noble shall have and retain the unilateral right to take any and
all
action to enforce its rights and remedies, as a lender, under the Note and/or
Pledge Agreement if an event of default thereunder shall occur and shall be
continuing.
(b) After
a Noble Withdrawal Following
a Noble Withdrawal, the business and affairs of the Company shall be managed
by
the Manager, and in such connection, the Manager shall have all power and
authority to manage and direct the management of, the business and affairs
of,
and to make all decisions to be made by or on behalf of the Company, including,
without limitation, the hiring and firing of the Officers. Following a Noble
Withdrawal, approval by, consent of or action taken by the Manager in accordance
with this Agreement shall constitute approval or action by the Company, shall
be
binding on the then Members, and any Person dealing with the Company shall
be
entitled to rely on a certificate or any writing signed by the Manager as the
duly authorized action of the Members on behalf of the Company. The signature
of
any one or more Officers duly authorized to act by the Manager shall be
sufficient to bind the Company.
(c) Authorized
Representatives. Either
or
both of the Initial Members may authorize any one or more Person to act has
his,
her or their authorized representative(s) and proxy with full power and
authority (including the right of substitution) to act for and on behalf of
all
Initial Members, in connection with all matters requiring the vote, consent
or
mutual approval of the Initial Members, including consenting to or withholding
consent to, any matters involving the Company, the ASSAC Shares, the Warrants,
the Warrant Shares or the management of the Company
11
6.2 Written
Consent.
Any
action requiring the vote, consent, approval or action of or an election by
the
Members or required to be taken at a meeting of the Members may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall
be
signed by both of the Initial Members, and following Noble Withdrawal, by
Members holding at least the percentage of the Percentage Interests required
for
such approval, consent or action.
6.3 Manager.
(a) During
the duration of this Agreement, the Members hereby designate ▇▇▇▇▇▇ ▇▇ as the
Manager. Should such Person be unable or refuse to serve as such, the successor
Manager will be elected, prior to a Noble Withdrawal by both of the Initial
Members and after Noble Withdrawal, by Members holding a majority of the
Percentage Interests. Prior to a Noble Withdrawal, both Initial Members, and
after Noble Withdrawal, those Members holding a majority of the Percentage
Interests, may replace or remove the designated Manager at any time, with or
without cause. Upon the resignation of any Manager, or their ceasing to act
as
such for any reason, a successor Manager(s) will be elected by both Initial
Members prior to a Noble Withdrawal and by Members holding a majority of the
Percentage Interests after Noble Withdrawal. The Manager shall be appointed,
to
take only such actions as specified in this Agreement to be taken by the Manager
or to take such other action or actions as shall be approved by the Members
in
accordance with the terms of this Agreement and (i) prior to a Noble Withdrawal,
specified in a writing signed by both Initial Members, and (ii) after Noble
Withdrawal, specified in a writing signed by the Members holding a majority
of
the Percentage Interests voting in favor of such action or actions.
(b) The
Manager shall be reimbursed by the Company for her reasonable out-of-pocket
expenses incurred on behalf of the Company in connection with the business
and
affairs of the Company, including all legal, accounting, travel and other
similar expenses reasonably incurred by the Manager in connection with the
operation of Company business.
(c) For
purposes of making filings required under the Code and the Regulations
promulgated thereunder, ▇▇▇▇▇▇ ▇▇ shall be the “Tax Matters Partner(s)” of the
Company.
(d) The
Manager shall be liable to the Company, the Members or any other Person that
is
a party to or otherwise bound by this Agreement only for any action or inaction
in connection with the business of the Company which is found to constitute
a
violation of the express provisions of this Agreement or the implied contractual
covenant of good faith and fair dealing. It shall be conclusively presumed
and
established that the Manager acted in good faith if any action is taken, or
not
taken, by it on the advice of legal counsel or other independent outside
consultants.
6.4 Officers. The
Company may (but shall not be required to) have as its senior executive officers
a Chairman and Chief Executive Officer, a President, such number of Vice
Presidents as shall be designated by the Manager, a Treasurer or Chief Financial
Officer and a Secretary (collectively, the “Officers”).
Prior
to a Noble Withdrawal, the Officers shall be appointed by both Initial Members
and shall serve at their pleasure. After Noble Withdrawal, the Officers shall
be
appointed by the Manager and shall serve at the pleasure of the Manager of
the
Company. The Officers shall have such duties and authority as shall be generally
granted to officers of a Delaware corporation or as may otherwise be delegated
to them.
12
6.5 No
Personal Liability.
To the
fullest extent permitted under the DLLCA or any other applicable law as
currently or hereafter in effect, no Member shall have any personal liability,
whether to the Company or to the creditors of the Company for the debts,
obligations, expenses or liabilities of the Company or any of its losses, beyond
the Members’ Capital Contribution.
6.6 Indemnification.
The
Company shall indemnify and hold harmless the Members, the Manager, the Officers
and each of their respective Affiliates (the “Parties”), to the fullest extent
permitted under the DLLCA or any other applicable law as currently or hereafter
in effect, from and against any loss, expense, damage or injury suffered or
sustained by the Parties (or any of them) by reason of any acts, omissions
or
alleged acts or omissions arising out of its or their activities on behalf
of
the Company or in furtherance of the interests of the Company, including but
not
limited to, any judgment, award, settlement, reasonable attorney’s fees and
other costs or expenses incurred in connection with the defense of any actual
or
threatened action, proceeding or claim unless the party against whom the claim
is made or legal proceeding is directed is guilty of a bad faith violation
of
the implied contractual covenant of good faith and fair dealing as determined
by
a final non-appealable court of competent jurisdiction. Such indemnification
shall be made only to the extent of the assets of the Company.
ARTICLE
VII
MEETINGS
7.1 Annual
Meeting.
A joint
annual meeting of the Members shall be held no later than 120 days after the
close of the fiscal year of the Company, for the transaction of such business
as
may come before the meeting. If the day fixed for the annual meeting shall
be a
legal holiday, such meeting shall be held on the next succeeding business
day.
7.2 Special
Meetings.
Special
meetings of the Members, for any purposes described in the meeting notice,
may
be called by the Members holding at least 20% of the Percentage Interests.
7.3 Notice
of Meeting.
Written
or telephonic notice stating the place, day and hour of the meeting of the
Members and, in case of a special meeting, the purposes for which the meeting
is
called, shall be delivered not less than five (5) days before the date of the
meeting, either personally, by mail, or by facsimile transmission, to each
Member of record. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the Members at her, his or
their address as it appears on the books of the Company, with postage thereon
prepaid. When all the Members of the Company are present at any meeting, or
if
those not present sign in writing a waiver of notice of such meeting, or
subsequently ratify all the proceedings thereof, the transactions of such
meeting are as valid as if a meeting were formally called and notice had been
given.
13
7.4 Proxies.
At all
meetings of Members, Members may vote by proxy executed in writing by the
Members or by his duly authorized attorney-in-fact. Such proxy shall be filed
with the Company before or at the time of the meeting. No proxy shall be valid
after three months from date of execution, unless otherwise provided in the
proxy.
7.5 Quorum.
Prior
to a Noble Withdrawal, both Initial Members, represented in person or by proxy,
shall constitute a quorum at a meeting of Members. After Noble Withdrawal,
Members holding at least 51% of the Percentage Interests, represented in person
or by proxy, shall constitute a quorum at a meeting of Members.
7.6 Order
of Business.
The
order of business at all meetings of the Members shall be as
follows:
(i) Roll
Call;
(ii) Proof
of
notice of meeting or waiver of notice;
(iii) Reading
of minutes of preceding meeting;
(iv) Unfinished
business;
(v) New
business.
7.7 Telephonic
Meetings.
Members
of the Company may participate in any meeting of the Members or any meeting
of
the Manager by means of conference telephone or similar communications equipment
if all Persons participating in such meeting can hear one another for the entire
discussion of the matter(s) to be voted upon. Participation in a meeting
pursuant to this Section 7.7 shall constitute presence in person at such
meeting.
ARTICLE
VIII
BOOKS
AND RECORDS
8.1 Books
and Records.
The
Manager shall keep proper and usual books and records pertaining to the business
of the Company. The books and records of the Company shall be kept at the
principal office of the Company or at such other places, as the Initial Members
shall from time to time determine.
8.2 Tax
Returns.
Federal, state and local tax returns of the Company shall be prepared and timely
filed at the direction of the Manager and at the expense of the Company. The
Manager shall consult with the Members in connection with the manner in which
any tax controversy is to be conducted.
8.3 Right
of Inspection.
Any
Members of record shall have the right to examine, at any reasonable time or
times for all purposes, the books and records of account, minutes and records
of
all Members or Manager meetings and to make copies thereof. Any agent or
attorney of the Members may make such inspections. Upon the written request
of
any Member, the Company shall cause to be mailed to such Member its most recent
financial statements, showing in reasonable detail its assets and liabilities
and the results of its operations, and a copy of its federal, state and local
income tax returns.
14
8.4 Financial
Records.
All
financial records shall be maintained and reported in accordance with GAAP
and
AICPA standards.
ARTICLE
IX
FISCAL
MATTERS
9.1 Fiscal
Year.
The
fiscal year of the Company shall begin on the first day of January and end
on
the last day of December each year, unless otherwise determined by the
Manager.
9.2 Deposits.
All
funds of the Company shall be deposited in an account or accounts in such banks,
trust companies or other depositories as the Initial Members may select, and
after Noble Withdrawal, as the Manager may select.
9.3 Agreements,
consents, checks, etc.
All
agreements, consents, checks, drafts or other orders for the payment of money,
and all notices or other evidences of indebtedness issued in the name of the
Company shall be signed, prior to a Noble Withdrawal by a representative of
each
of the Initial Members, and after Noble Withdrawal, by an Officer of the Company
designated by the Manager or those Persons authorized from time to time by
the
Manager.
9.4 Accountant.
An
accountant(s) may be selected from time to time by the Manager to perform such
tax and accounting services as may from time to time be required. The accountant
may be removed by the Manager without assigning any cause.
9.5 Legal
Counsel.
One or
more attorney(s) at law may be selected from time to time by the Members to
review the legal affairs of the Company and to perform such other services
as
may be required. Any such counsel may be removed by the Members without
assigning any cause.
ARTICLE
X
TRANSFER
OR ASSIGNMENT OF INTERESTS; NOBLE WITHDRAWAL
10.1 Restriction
on Transfer.
(a) Prior
to
the Warrant Distribution, No Member may Transfer all or any portion of his,
her
or its rights hereunder, Members Interests or Percentage Interest in the
Company, or withdraw or retire from the Company without the prior written
consent of both of the Initial Members.
(b) Following
the Warrant Distribution, any Member may Transfer his, her or its beneficial
interest in the ASSAC Shares, to any Affiliate or third Persons.
15
(c) Prior
to
payment in full of the Note, as reduced following a Warrant Distribution: (i)
▇▇▇▇▇▇ ▇▇ shall not Transfer on any one or more occasions to any Persons (other
than an Affiliate) Percentage Interests representing more than 49% of all
Members Interests in the Company; and (ii) legal and beneficial ownership of
the
Warrants and Warrant Shares then owned of record by the Company shall not be
Transferred by the Company to any Persons, including any Member or any Affiliate
of any Member; and (iii) such Warrants and Warrant Shares shall be subject
at
all times the provisions of Section
3.4
of this
Agreement.
(c) Following
payment in full of the Note and the occurrence of a Noble Withdrawal, the
remaining Initial Member or any other Member in the Company may Transfer his,
her or its Percentage Interests as Members in the Company or the legal ownership
of any remaining Warrants or Warrant Shares then owned of record by the Company
to any one or more third Persons.
10.2 Noble
Withdrawal.
(a) Following
the Warrant Distribution, Noble shall have the right for any reason (including
any dispute or disagreement among the Initial Members that cannot be resolved
by
mutual agreement of such Initial Members) or no reason, to effect a Noble
Withdrawal by giving ten (10) days prior written notice to the Manager and
the
Company (a “Noble
Withdrawal Notice”).
(b) Following
the Warrant Distribution, the Manager shall have the right for any reason
(including any dispute or disagreement among the Initial Members that cannot
be
resolved by mutual agreement of such Initial Members) or no reason, to effect
a
Noble Withdrawal by giving ten (10) days prior written notice to the Noble
and
the Company (a “Manager
Withdrawal Notice”).
(c) Not
later
than ten (10) days following delivery of a Noble Withdrawal Notice or a Manager
Withdrawal Notice (as the case may be), the Company shall cause the transfer
agent of ASSAC to distribute and deliver to Noble or its Affiliates or
designated assigns one or more stock certificates evidencing legal title to
and
ownership of the 437,500 Ordinary Shares beneficially owned by Noble in
accordance with Exhibit
A
hereto,
together with any and all dividends and other rights and benefits that may
have
accrued with respect to such 437,500 Ordinary Shares.
10.3 Permitted
Transfers.
Following the Warrant Distribution, but subject at all times to the provisions
of this Article X, a Member may Transfer his, her or its Percentage Interest
in
the Company to (a) an Affiliate, or (b) a trust for the benefit of his spouse
or
one or more of his lineal descendants, brothers, sisters or ancestors, or to
a
partnership or other entity benefiting such Persons provided the Transferor
Members retains sole voting control of the Transferee (a “Permitted
Transfer”).
The
Transferee, pursuant to a Permitted Transfer shall be entitled to become a
Member of the Company with respect to the Percentage Interest transferred (i)
if
the Transfer will not result in a termination of the Company under the Code,
and
(ii) upon (A) delivering to the Members a written instrument evidencing such
Transfer; (B) executing a copy of this Agreement accepting and agreeing to
all
of the terms, conditions and provisions of this Agreement; and (C) paying to
the
Company its reasonable out-of-pocket costs and expenses incurred in connection
with such Transfer and the admission of the Transferee as a Member.
16
10.3 Death
or Disability of a Member. In
the
event of the death or Disability of a Member, his or her Members Interests
shall
pass to the estate of such decedent. If the Manager is ▇▇▇▇▇▇ ▇▇, and such
Person shall die or become Disabled, [▇▇▇▇▇ ▇▇▇▇▇] shall become the Manager
in
her place and stead.
ARTICLE
XI
DISSOLUTION
AND WINDING UP
11.1 Certain
Definitions.
For
purposes of this Article XI, the events hereinbelow referred to shall have
the
following respective meaning:
“Bankruptcy
or Insolvency” shall be deemed to have occurred with respect to any Member or
other Person if such Member or other Person shall file in any court pursuant
to
any statute of the United States or of any state a petition in bankruptcy or
insolvency, or shall file for reorganization or for the appointment of a
receiver or a trustee of all or a material portion of such Member’s or other
Person’s property, or if any such Member or other Person shall make an
assignment for the benefit of creditors, admit in writing its inability to
pay
its debts as they fall due or seek, consent to or acquiesce in the appointment
of a trustee, receiver or liquidator of any material portion of its property.
If
there shall be filed against any Member or other Person in any court, pursuant
to any statute of the United States or of any state, a petition in bankruptcy
or
insolvency, or for reorganization, or for the appointment of a receiver or
trustee of all or a substantial portion of such Member’s or other Person’s
property, and within ninety (90) days after the commencement of any such
proceeding, such petition shall not have been dismissed, then such Member or
other Person against whom such petition has been filed shall be considered
Bankrupt or Insolvent for purposes of this Agreement. In addition, if the whole
or any portion of the Interest of any Member in the Company is subject to levy
or attachment, and such levy or attachment is not released or discharged within
ninety (90) days, such Member or other Person shall be deemed Bankrupt or
Insolvent for purposes of this Agreement.
11.2 Liquidating
Events.
The
Company shall dissolve and commence winding up and liquidating only upon the
first to occur of any of the following (“Liquidating
Events”):
(a) The
sale
of all or substantially all of the assets of the Company;
(b) The
unanimous agreement of all remaining Member(s);
|
(c)
|
The
happening of any other event that makes it unlawful, impossible or
impractical to carry on the business of the Company;
or
|
(f)
The
date
set forth for dissolution in the Certificate.
The
Members hereby agree that, notwithstanding any provision of the DLLCA, the
Company shall not dissolve prior to the occurrence of a Liquidating Event.
Furthermore, if an event specified in Section 11.2 (d) or (e) hereof occurs
and
there is at least one (1) remaining Member, the remaining Member(s) may, within
ninety (90) days of the date such event occurs, elect to continue the business
of the Company, in which case the Company shall not dissolve and the occurrence
of the event under Section 11.2(d) or (e) shall not be deemed a Liquidating
Event. The Members further agree that in the event the Company is dissolved
prior to a Liquidating Event, the Company may be continued upon the election
of
the existing Members at such time to so continue the Company; provided such
election occurs within thirty (30) days of the event triggering such
dissolution. An election under this Section 11.2 shall be effected when the
remaining holding at least a majority of the remaining Percentage Interests
so
elect in writing or at a meeting of the Members.
17
11.3 Winding
Up.
Upon
the occurrence of a Liquidating Event, the Company shall continue solely for
the
purpose of winding up its affairs in an orderly manner, liquidating its assets
and satisfying the claims of its creditors and Members. No Members shall take
any action that is inconsistent with or not necessary to or appropriate for,
the
winding up of the Company’s business and affairs. Prior to a Noble Withdrawal,
both Initial Members shall be responsible, and following a Noble Withdrawal,
the
Manager shall be responsible for overseeing the winding up and dissolution
of
the Company and shall take full account of the Company’s liabilities and the
property of the Company shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom, to the extent
sufficient, shall be applied and distributed, subject to any reasonable reserves
maintained for contingent or other obligations of the Company, in the following
order:
(a) First,
to
the payment and discharge of all of the Company’s debts and liabilities to
creditors other than Members;
(b) Second,
to the payment and discharge of all of the Company’s debts and liabilities to
Members, including the payments then due under the Note; and
(c) The
balance, if any, to the Members accordance with the provisions of Section 5.1
of
this Agreement.
ARTICLE
XII
AMENDMENTS
TO OPERATING AGREEMENT
12
.1 Amendments.
This
Agreement may be altered, amended or repealed, or a new Agreement may be adopted
only upon the prior unanimous written consent of all of the
Members.
ARTICLE
XIII
MISCELLANEOUS
13.1 Notices.
Any
notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been duly given on the date of service
if
served personally; three (3) business days after the date of mailing, if mailed,
by first class mail, registered or certified, postage prepaid; one (1) business
day after delivery to a reputable overnight courier if sent by overnight courier
guaranteeing next day delivery, delivery charge prepaid, and in each case,
addressed to such Member(s) required to be notified at the address set forth
on
Exhibit
A
or such
other address as such party may notify the other. All communications among
Members in the normal course of the business of the Company shall be deemed
sufficiently given if sent by regular mail, postage prepaid.
18
13.2 Binding
Effect.
Except
as otherwise provided in this Agreement, every covenant, term and provision
of
this Agreement shall be binding upon and inure to the benefit of the Members
and
their respective heirs, legatees, legal representatives, successors, transferees
and assigns.
13.3 Creditors.
None of
the provisions of this Agreement shall be for the benefit of or enforced by
any
creditor of the Company or any Member.
13.4 Remedies
Cumulative.
No
remedy herein conferred upon any party is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at
law or in equity or by statute or otherwise. No single or partial exercise
by
any party of any right, power or remedy hereunder shall preclude any other
or
further exercise thereof.
13.5 Construction.
Every
covenant, term and provision of this Agreement shall be construed simply
according to its fair meaning and not strictly for or against any member. For
the purpose of this Agreement, any definition incorporating, by reference to
the
Code or the Regulations, the term “partner” or “Partnership” shall mean
“Members” or “Company”, respectively.
13.6 Headings.
Section
and other headings contained in this Agreement are for reference purposes only
and are not intended to describe, interpret, define or limit the scope, extent
or intent of this Agreement or any provision hereof.
13.7 Severability.
Every
provision of this Agreement is intended to be severable. If any term or
provision hereof is illegal or invalid for any reason whatsoever such illegality
or invalidity shall not affect the validity or legality of the remainder of
this
Agreement.
13.8 Incorporation
by Reference.
Every
exhibit, schedule and other appendix attached to this Agreement and referred
to
herein is hereby incorporated in this Agreement by reference.
13.9 Further
Action.
Each
Members agrees to perform all further acts and execute, acknowledge and deliver
any documents which may be reasonably necessary, appropriate or desirable to
carry out the provisions of this Agreement.
13.10 Variation
of Pronouns.
All
pronouns and any variations thereof shall be deemed to refer to masculine,
feminine or neuter, singular or plural, as the identity of the Person or Persons
may require.
19
13.11 Governing
Law.
The
laws of the State of Delaware shall govern the validity of this Agreement,
the
construction of its terms and the interpretation of the rights and duties of
the
Members and Manager without regard to the principles of conflicts of
laws.
13.12 Waiver
of Action for Partition.
Each of
the Members irrevocably waives any right that it may have to maintain any action
for partition with respect to any of the property of the Company.
13.13 Counterpart
Execution.
This
Agreement may be executed in any number of counterparts (including by facsimile)
with the same effect as if all of the Members had signed the same document.
All
counterparts shall be construed together and shall constitute one
agreement.
[SIGNATURE
PAGE FOLLOWS]
20
IN
WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the
day first above set forth.
|
▇▇▇▇▇▇
▇▇
|
|||
| NOBLE INVESTMENT FUND LIMITED | |||
|
By:
|
Pure
Glow Finance Limited
|
||
|
(investment
advisor
|
|||
|
By:
|
|||
|
▇▇▇▇
▇▇▇ ▇▇▇▇, Manager
|
|||
| HO CAPITAL MANAGEMENT LLC | |||
|
By:
|
|||
|
▇▇▇▇▇▇,
Sole Manager
|
|||
21
EXHIBIT
A
PERCENTAGE
INTERESTS IN THE COMPANY:
|
Name
and Addresses
|
Amount of Contribution
|
Percentage Interest
|
|||||
|
1. ▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
$
|
8,7501
|
66.7
|
%
|
|||
|
2.
Noble
Investment Fund Limited
World Trade Centre, ▇▇▇ ▇▇▇▇▇▇
▇▇,▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ |
$
|
4,3751
|
33.3
|
%
|
|||
|
Total
|
$
|
13,125.00
|
100.00
|
%
|
|||
Beneficial
Interest in ASSAC Shares:
|
Name
and Addresses
|
Number of ASSAC Shares
|
Percentage Interest
|
|||||
|
1.
▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
875,000
|
66.7
|
%
|
||||
|
2.
Noble
Investment Fund Limited
World
Trade Centre, Via Lugano
11,6982 Lugano-Agno, Switzerland |
437,500
|
33.3
|
%
|
||||
|
Total
|
1,312,500
Shares
|
100.00
|
%
|
||||
Beneficial
Interests in the Warrants and Warrant Shares:
|
Name
and Addresses
|
Amount of Contribution
|
Percentage Interest
|
|||||
|
1.
▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
-0-
|
50.0
|
%
|
||||
|
2.
Noble
Investment Fund Limited
World
Trade Centre, ▇▇▇ ▇▇▇▇▇▇
▇▇,▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ |
$
|
5,725,0002
|
50.0
|
%
|
|||
|
Total
|
$
|
5,725,000.00
|
100.00
|
%
|
|||
1
Includes 1,312,500 Ordinary Shares of ASSAC at a purchase price equal
to
$.01 per share, of which 66.7% is beneficially owned by ▇▇▇▇▇▇ ▇▇ and 33.3%
is
beneficially owned by Noble Investment Fund Limited.
2
Represents a $5,725,000 loan to the Company evidenced by a 5% note
due
________ 2012.
22