EXHIBIT 10.19
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OPERATING AGREEMENT
OF
BWP GAS, LLC
DATED JULY 21, 2003
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OPERATING AGREEMENT
OF
BWP GAS, LLC
THIS OPERATING AGREEMENT (this "Agreement"), dated July 21, 2003,
effective May 22, 2003, is entered into by and between Oklahoma Hills Gas, LLC,
a Delaware limited liability company, as a Member and Manager, and HBA Gas,
Inc., a Delaware corporation, as a Member.
RECITALS
WHEREAS, the Company was formed as a limited liability company under
the Act for the principal purpose of acquiring, exploring, drilling and
developing domestic natural gas and oil properties; and
WHEREAS, the initial Members wish to provide for the administration of
the business and affairs of the Company and the rights and obligations of the
Members with respect thereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, mutually agree as follows:
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
definitions ascribed to them herein:
"ACT" shall mean the Delaware Limited Liability Company Act, Ch. 18, Tit. 6,
Sec. 18-101, et seq. (the "Act") and any successor statutes, as amended.
"ADDITIONAL MEMBER" shall have the meaning ascribed to such term in Section 2.3.
"CAPITAL ACCOUNT" shall mean the dollar amount of the Member's claim on the
capital of the Company (or, if the Member has a negative Capital Account, of the
Company's claim on the capital of the Member).
"CAPITAL CONTRIBUTIONS" shall mean any contributions of cash, non-cash property
and services and the promises of cash, non-cash property and services, made to
the Company by a Member.
"CERTIFICATE" shall have the meaning ascribed to such term in Section 1.2.
"CLASS A MEMBER" shall have the meaning ascribed to such term in Section 2.2.
"CLASS A PERCENTAGE INTEREST" shall mean the fraction (expressed as a
percentage), the numerator of which is the Percentage Interest of the applicable
Class A Member and the denominator of which is the aggregate Percentage Interest
of all Class A Members on the date of computation as set forth on EXHIBIT A
attached hereto and as amended from time to time.
"CLASS B MEMBER" shall have the meaning ascribed to such term in Section 2.2.
"CLASS B PERCENTAGE INTEREST" shall mean the fraction (expressed as a
percentage), the numerator of which is the Percentage Interest of the applicable
Class B Member and the denominator of which is the aggregate Percentage Interest
of all Class B Members on the date of computation as set forth on EXHIBIT A
attached hereto and as amended from time to time.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" shall mean the terms of this Agreement, information
that the Company maintains in confidence, information that the Manager knows to
be proprietary to the Company, financial information relating to the Company and
to the Managers, information relating to Company marketing and business plans
and strategies, information concerning the design and manufacture of Company
products and concerning methods of providing Company services, information in
Company personnel files and similar files relating to Company Managers and
employees, information entrusted to the Company in confidence by third parties,
and information reasonably designated by the Managers as Confidential
Information
"DISSOLUTION" shall mean the cessation of the Company's normal business
activities and the beginning of the process of winding up its business and
internal affairs and of liquidating it.
"DISTRIBUTION" shall mean a transfer of the Profits or other assets of the
Company to a Member in the Member's capacity as a member in cash, by check or
otherwise. Payments specifically identified in this Agreement as compensation to
the Members for services to or on behalf of the Company shall not be deemed to
be Distributions within the meaning of this Agreement.
"EFFECTIVE DATE" shall have the meaning ascribed to such term in Section 1.1.
"INCAPACITY" means (i) with respect to a natural Person, the bankruptcy, death,
disability or incompetency of such Person, and (b) with respect to any other
Person, the bankruptcy, liquidation, dissolution or termination of such Person.
"MANAGEMENT RIGHTS" shall mean all rights of a Member as a member except the
Member's right to receive allocations of Company Profits and Losses and
Distributions of Company assets.
"MANAGER" or MANAGERS" means any Person or Persons elected by the Members as a
manager of the Company as provided in this Agreement, but does not include any
Person who has ceased to be a manager of the Company.
"MEMBER" means any Person executing this Agreement as of the date of this
Agreement as a member or hereafter admitted to the Company as a member as
provided in this Agreement, but does not include any Person who has ceased to be
a member in the Company.
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"MEMBERSHIP INTEREST" shall mean a Member's share of the Company's Profits and
Losses, and the Member's right to receive Distributions of the Company's assets.
"MEMBERSHIP RIGHTS" shall have the meaning ascribed to such term in Section 2.5.
"PERCENTAGE INTEREST" means, with respect to any Member, the Percentage Interest
set forth opposite such Member's name on SCHEDULE A attached hereto.
"PERSON" means a natural person, partnership (whether general or limited),
limited liability company, trust, estate, association, corporation, custodian,
nominee, or any other individual or entity in its own or any representative
capacity.
"PROCEEDING" shall have the meaning ascribed to such term in Section 9.2.
"PROFITS" and "LOSSES" shall mean the taxable income and losses, respectively,
of the Company as determined for Federal income tax purposes in accordance with
the accounting method followed by the Company for such purposes, adjusted as
follows: (i) any expenditures of the Company described in Section 705(a)(2)(B)
of the Code, or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation Section 1.704(b)(2)(iv)(i), shall be subtracted from such
taxable income or losses, and (ii) if property is reflected on the books of the
Company at a book value that differs from the adjusted tax basis of such
property, depreciation, amortization and gain or loss with respect to such
property shall be determined by reference to such book value.
"SUBSTITUTED MEMBER" shall mean a transferee of any economic and non-economic
rights of an existing Member.
"UNLAWFUL DISTRIBUTION" shall have the meaning ascribed to such term in Section
4.5.
SECTION 1
PRELIMINARY PROVISIONS
1.1 BINDING EFFECT OF AGREEMENT; EFFECTIVE DATE
This Agreement shall bind the initial Members when all of them have
signed it. The effective date of the Agreement (the "Effective Date") shall be
May 22, 2003.
1.2 ACCEPTANCE OF CERTIFICATE OF FORMATION
Each initial Member hereby acknowledges that the initial Member has
carefully reviewed the Certificate of Formation of the Company (the
"Certificate") and that each of its provisions is acceptable to the initial
Member.
1.3 AMENDMENT OF AGREEMENT AND CERTIFICATE
Except as otherwise expressly provided in this Agreement, no amendment
of the Agreement or of the Certificate shall be valid unless it is in writing
and signed by all of the Members.
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1.4 FORMATION
On or promptly after the Effective Date, the initial Members shall
cause the Certificate to be filed with the Secretary of State of the State of
Delaware.
1.5 ENTITY STATUS
Upon its formation, the Company shall be a legal entity separate and
distinct from its Members.
1.6 NAME
The name of the Company shall be "BWP Gas, LLC."
1.7 PRINCIPAL OFFICE
The principal office of the Company shall be ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such place or places
as the Managers may designate from time to time. The Company may have such other
offices and places of business as the Managers may designate from time to time.
1.8 REGISTERED OFFICE; REGISTERED AGENT
The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the initial
registered agent named in the Certificate or such other office (which need not
be a place of business of the Company) as the Managers may designate from time
to time in the manner provided by law. The registered agent of the Company in
the State of Delaware shall be the initial registered agent named in the
Certificate or such other Person or Persons as the Managers may designate from
time to time in the manner provided by law.
1.9 PURPOSE
The Company's principal purpose shall be to acquire, explore, drill and
develop domestic natural gas and oil properties, and to engage in any other
business activity that now or hereafter may be necessary, appropriate,
desirable, incidental, advisable or convenient to accomplish the foregoing
purpose (including obtaining financing therefor), and that is not forbidden by
the Act or the law of the jurisdiction in which the Company engages in business.
1.10 POWERS
In pursuing its lawful purposes, the Company shall be empowered to do
all things that limited liability companies are permitted to do under the Act.
1.11 FOREIGN QUALIFICATIONS.
Prior to the Company conducting business in any jurisdiction other than
Delaware, the Managers shall cause the Company to comply, to the extent
procedures are available and those matters are reasonably within the control of
the Managers, with all requirements necessary to qualify the Company as a
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foreign limited liability company in that jurisdiction. At the request of the
Managers, each Member shall execute, acknowledge, swear to, and deliver all
certificates and other instruments conforming with this Agreement that are
necessary or appropriate to qualify, continue, and terminate the Company as a
foreign limited liability company in all such jurisdictions in which the Company
may conduct business
1.12 MANAGEMENT STRUCTURE
The management of the business and internal affairs of the Company
shall be reserved to one or more Managers. Except as otherwise provided in this
Agreement, only the Managers may bind the Company and decide matters relating to
the Company's business and internal affairs, provided that the Members shall
have voting rights, information rights and dispute resolution rights provided in
this Agreement. The Members may change the number of the Company's Managers at
any time upon the affirmative vote of Members holding a majority of Member
votes.
1.13 LIMITED LIABILITY OF MEMBERS AND MANAGER
No Member or Manager shall be personally obligated to any third party
for any debt, obligation or liability of the Company solely by reason of being a
Member or Manager. Members and Managers shall be liable for their personal
conduct as provided by law.
1.14 BUSINESS ACTIVITIES AND VENTURES OF MEMBERS AND MANAGERS
Each Member, Manager and officer of the Company at any time and from
time to time may engage in and possess interests in other business activities
and ventures of any and every type and description, independently or with
others, including ones in competition with the Company, with no obligation to
offer to the Company or any other Member, Managers or officers the right to
participate therein, and neither the Company nor the other Members, Manager or
officers shall have any rights in such other business activities and ventures.
The Company may transact business with any Manager, Member, officer or affiliate
thereof, provided the terms of those transactions are no less favorable than
those the Company could obtain from unrelated third parties.
1.15 ANNUAL ACCOUNTING PERIOD
The Company's fiscal year for financial and tax purposes shall be the
calendar year.
1.16 METHOD OF ACCOUNTING
The Company shall use the accrual method of accounting to compute its
taxable income.
1.17 BUSINESS ASSET PROTECTION
The Members intend that to the maximum extent permitted by the Act and
by other applicable law, the assets of the Company shall be unavailable to
satisfy obligations incurred by the Members in their personal capacity.
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SECTION 2
MEMBERSHIP IN THE COMPANY;
TRANSFERS AND PLEDGES OF MEMBERSHIP RIGHTS;
MEMBERS' VOTING RIGHTS
2.1 IDENTITY OF INITIAL MEMBERS
On the Effective Date, the initial Members shall be as set forth on
SCHEDULE A attached hereto.
2.2 CLASSES OF MEMBERS
The Company shall have two classes of Members: Class A Members ("Class
A Members") and Class B Members ("Class B Members"). The initial Class A Member
shall be Oklahoma Hills Gas, LLC, a Delaware limited liability company. The
initial Class B Member shall be HBA Gas, Inc., a Delaware corporation. Except as
otherwise expressly provided in this Agreement, each Member shall have the same
rights, duties, privileges, authority and liabilities as each other Member.
2.3 ADMISSION OF ADDITIONAL MEMBERS
The Members shall admit no Person as an additional Member of the
Company after the Company's formation (an "Additional Member") except upon the
affirmative vote of Members holding a majority of Member votes.
2.4 EXECUTION OF THIS AGREEMENT BY SUBSTITUTED MEMBER
No Person shall be admitted as an Additional or Substituted Member of
the Company until the Additional or Substituted Member signs this Agreement (as
it may be amended from time to time before the admission of the Additional or
Substituted Member).
2.5 MEMBERSHIP RIGHTS
For purposes of this Agreement, the membership rights of a Member (the
"Membership Rights") shall mean the totality of a Member's rights as a member
under the Agreement and the Act, including both economic and non-economic
rights.
2.6 LACK OF AUTHORITY.
No Member shall have any power or authority, in his or her capacity as
a Member, to represent, act for, sign for, or bind the Managers or the Company,
or to do any act that would be binding on the Company, or to incur any
expenditures or obligations on behalf of the Company. Except when acting as a
Manager or an officer of the Company, or pursuant to separate service agreements
or other agreements or contracts between the Company and a Member, or as
otherwise specifically provided herein, the Members shall not participate in the
management or control of the Company business, nor shall the Members transact
any business for the Company. The Members hereby consent to the exercise by the
Managers of the powers conferred on the Managers by law and by this Agreement.
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2.7 FORUM; REMEDIES
Subject to any contrary provisions in Section 14, any claim against a
Member in the Member's capacity as a member shall be decided in arbitration
under Section 14, and in any such arbitration, the arbitrator may impose any
legal or equitable remedy that the arbitrator determines to be reasonable in the
circumstances.
2.8 TRANSFERS OR PLEDGES OF MEMBERSHIP RIGHTS TO SUBSTITUTED
MEMBERS
Except with the consent of Managers holding a majority of Manager
votes, no Member shall transfer all or any part of the Member's rights as a
member (whether these rights are economic or non-economic) to any Substituted
Member, including another Member, nor shall any Member pledge all or any part of
such Member's rights to any Person. In the event that any Membership Interests
are transferred in accordance with the provisions of this Agreement, the
transferees of such Membership Interests shall succeed to the Percentage
Interest of its transferor to the extent that it relates to the transferred
Membership Interest.
2.9 TRANSFERS AND PLEDGES IN BREACH OF THIS AGREEMENT
Transfers and pledges of Membership Rights in breach of the terms of
this Agreement shall be void and of no effect.
2.10 RIGHT OF FIRST REFUSAL
Except as otherwise provided in this Agreement, the Company may require
a Member to promptly sell all or any part of the Member's Membership Interest to
the Company or to the other Members for its then fair value and upon other
reasonable purchase terms if the Member is dissociated from the Company under
Section 11, or an arbitrator orders such a sale under Section 14 on the ground
that it is fair and reasonable in the circumstances.
2.11 ELECTION UNDER CODE SECTION 754
Before any Member transfers any of the Member's rights as a Member to
any Person, the Members shall negotiate in good faith and shall agree whether to
file an election under Code Section 754 to adjust the basis of Company property
in connection with that transfer.
2.12 MEMBERS' VOTING RIGHTS
Except as otherwise expressly provided in this Agreement, the Class B
Members shall have the exclusive right to vote on all matters pertaining to the
Company, and each Class B Member shall be entitled to cast that number of votes
as shall equal the product of the Class B Percentage Interest of such Member
multiplied by one hundred (100). Each matter voted on by the Class B Members
shall be decided by the affirmative vote of Class B Members holding a majority
of Class B Member votes. Except as otherwise expressly provided in this
Agreement, the Class A Members shall not be entitled to any voting rights on any
matters pertaining to the Company.
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2.13 PROCEDURES FOR MEMBER VOTING
Members may vote on matters in person, by phone, by fax, by e-mail or
by any other reasonable means. Each Member shall have a reasonable opportunity
to be heard on each matter on which the Members vote. The Managers shall appoint
a manager who shall use the his or her best efforts to record each Member vote
accurately and to circulate this record among the Members promptly after the
vote, provided that the failure of the manager to circulate this record with
respect to any vote shall not be evidence of the invalidity of the vote.
2.14 APPOINTMENT OF INITIAL MANAGER
The following Person is hereby appointed and elected by the Members as
the initial Manager of the Company, to serve in accordance with this Agreement,
until successors or additional Managers are appointed by the Members:
Oklahoma Hills Gas, LLC
Effective May ___, 2003, the initial Manager is hereby removed as the Manager of
the Company, and the following Person is hereby appointed and elected by the
Members as the successor Manager of the Company, to serve in accordance with
this Agreement, until successors or additional Managers are appointed by the
Members:
Continental Southern Resources, LLC
2.15 MEETINGS.
(a) A quorum shall be present at a meeting of Members if the
holders of a majority of Member votes are represented at the meeting in person
or by proxy. With respect to any matter, other than a matter for which the
affirmative vote of the holders of a specified portion of the Membership
Interests of all Members entitled to vote is required by the Act, the
affirmative vote of a majority of Member votes at a meeting of Members at which
a quorum is present shall be the act of the Members.
(b) All meetings of the Members shall be held at the principal
place of business of the Company or at such other place within or without the
State of Pennsylvania as shall be specified or fixed in the notices or waivers
of notice thereof, provided that any or all Members may participate in any such
meeting by means of conference telephone or similar communications equipment by
means of which all Persons participating in the meeting can hear each other.
(c) Notwithstanding the other provisions of the Certificate or
this Agreement, the chairman of the meeting or the holders of a majority of
Member votes shall have the power to adjourn such meeting from time to time,
without any notice other than announcement at the meeting of the time and place
of the holding of the adjourned meeting. If such meeting is adjourned by the
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Members, such time and place shall be determined by a vote of the holders of a
majority of the Member votes. Upon the resumption of such adjourned meeting, any
business may be transacted that might have been transacted at the meeting as
originally called.
(d) An annual meeting of the Members, for the election of the
Managers and for the transaction of such other business as may properly come
before the meeting, shall be held at such place, within or without the State of
Delaware, on such date and at such time as the Managers shall fix and set forth
in the notice of the meeting, which date shall be within thirteen (13) months
subsequent to the date of organization of the Company or the last annual meeting
of Members, whichever most recently occurred.
(e) Special meetings of the Members for any proper purpose or
purposes may be called at any time by the Managers or the holders of at least
ten percent (10%) of Member votes. If not otherwise stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members entitled to call a special meeting is the date any Member first signs
the notice of that meeting. Only business within the purpose or purposes
described in the notice (or waiver thereof) required by this Agreement may be
conducted at a special meeting of the Members.
(f) Written or printed notice stating the place, day and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than ten (10) nor
more than sixty (60) days before the date of the meeting, either personally or
by mail, by or at the direction of the Managers or Person calling the meeting,
to each Member. If mailed, any such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the Member, with postage
thereon prepaid.
(g) The date on which notice of a meeting of the Members is
mailed or the date on which the resolution of the Managers declaring a
Distribution is adopted, as the case may be, shall be the record date for the
determination of the Members entitled to notice of or to vote at such meeting,
including any adjournment thereof, or the Members entitled to receive such
Distribution.
(h) The right of Members to cumulative voting in the election
of Managers is expressly prohibited.
2.16 VOTING LIST.
The Managers shall make, at least ten (10) days before each meeting of
the Members, a complete list of the Members entitled to vote at such meeting or
any adjournment thereof, arranged in alphabetical order, with the address of and
the Membership Interests held by each, which list shall be kept on file at the
registered office or principal place of business of the Company and shall be
subject to inspection by any Member at any time during usual business hours.
Such list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any Member during the whole
time of the meeting. The original membership records shall be prima-facie
evidence as to the identity of the Members entitled to examine such list or
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transfer records or to vote at any meeting of Members. Failure to comply with
the requirements of this Section shall not affect the validity of any action
taken at the meeting.
2.17 PROXIES.
A Member may vote either in person or by proxy executed in writing by
the Member. A telegram, telex, cablegram or similar transmission by the Member,
or a photographic, photostatic, facsimile or similar reproduction of a writing
executed by the Member, shall be treated as an execution in writing for purposes
of this Section. Proxies for use at any meeting of Members or in connection with
the taking of any action by written consent shall be filed with the Managers,
before or at the time of the meeting or execution of the written consent, as the
case may be. All proxies shall be received and taken charge of and all ballots
shall be received and canvassed by the Managers, who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and the
acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions. No proxy shall be valid after twelve
(12) months from the date of its execution unless otherwise provided in the
proxy. A proxy shall be revocable unless the proxy form conspicuously states
that the proxy is irrevocable and the proxy is coupled with an interest. Should
a proxy designate two or more Persons to act as proxies, unless that instrument
shall provide to the contrary, a majority of such Persons present at any meeting
at which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or if only one be
present, then such powers may be exercised by that one; or, if an even number
attend and a majority do not agree on a particular issue, the Company shall not
be required to recognize such proxy with respect to such issue if such proxy
does not specify how the Membership Interests that are the subject of such proxy
are to be voted with respect to such issue.
2.18 CONDUCT OF MEETINGS.
All meetings of the Members shall be presided over by the chairman of
the meeting, who shall be a Manager (or representative thereof) designated by a
majority of the Managers. The chairman of any meeting of Members shall determine
the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to him
in order.
2.19 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE.
(a) Any action required or permitted to be taken at any annual
or special meeting of Members may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holder or holders of not less than
the minimum number of Class B Member votes that would be necessary to take such
action at a meeting at which the holders of all Class B Member votes entitled to
vote on the action were present and voted. Every written consent shall bear the
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date of signature of each Member who signs the consent. No written consent shall
be effective to take the action that is the subject to the consent unless,
within sixty (60) days after the date of the earliest dated consent delivered to
the Company in the manner required by this Section, a consent or consents signed
by the holder or holders of not less than the minimum Class B Member votes that
would be necessary to take the action that is the subject of the consent are
delivered to the Company by delivery to its registered office, its principal
place of business, or the Managers. Delivery shall be by hand or certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Managers. A telegram, telex,
cablegram or similar transmission by a Member, or a photographic, photostatic,
facsimile or similar reproduction of a writing signed by a Member, shall be
regarded as signed by the Member for purposes of this Section. Prompt notice of
the taking of any action by Members without a meeting by less than unanimous
written consent shall be given to those Members who did not consent in writing
to the action.
(b) The record date for determining Members entitled to
consent to action in writing without a meeting shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Company by delivery to its registered office, its principal
place of business, or the Managers. Delivery shall be by hand or by certified or
registered mail, return receipt requested. Delivery to the Company's principal
place of business shall be addressed to the Managers.
(c) If any action by Members is taken by written consent, any
articles or documents filed with the Secretary of State of the State of Delaware
as a result of the taking of the action shall state, in lieu of any statement
required by the Act concerning any vote of Members, that written consent has
been given in accordance with the provisions of the Act and that any written
notice required by the Act has been given.
(d) Members may participate in and hold a meeting by means of
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
SECTION 3
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 INITIAL CAPITAL CONTRIBUTIONS
Promptly after the Effective Date, the initial Members shall make the
initial Capital Contributions to the Company set forth on SCHEDULE A attached
hereto in exchange for their respective Membership Interests.
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3.2 ESTABLISHMENT OF CAPITAL ACCOUNTS.
An individual Capital Account shall be established for each Member. The
Capital Account of each Member shall consist of its initial Capital Contribution
and shall be increased by: (i) any additional Capital Contributions by such
Member; (ii) such Member's share of any income or gains, including the Profits
allocated to such Member pursuant to this Agreement; and (iii) such Member's
share of any income or gain exempt from federal income tax (determined in the
same manner as Profits are allocated to such Members), and shall be decreased
by: (i) such Member's share of Losses allocated to such Member pursuant to this
Agreement; (ii) any Distribution to such Member of cash or the fair market value
of any other property (net of liabilities assumed by such Member and liabilities
to which such property is subject); and (iii) such Member's share of
expenditures of the Company described in Code Section 705(a)(2)(B) (determined
in the same manner as Losses are allocated to such Members).
3.3 DETERMINATION OF CAPITAL ACCOUNTS.
The Company shall compute the Capital Account of each Member on a
reasonably current basis. Except as otherwise provided herein, the Capital
Account of a Member shall be determined in all events solely in accordance with
the rules set forth in Treasury Regulation Section 1.704-1(b)(2)(iv) and other
applicable Treasury Regulations as the same may be amended or revised hereafter.
To the extent that any provision of this Agreement is inconsistent with the
requirements of Treasury Regulation Section 1.704(b)(2)(iv) as to the
calculation of a Member's Capital Account, such Treasury Regulation shall
control. Any references in this Agreement to the Capital Account of a Member
shall be deemed to refer to such Capital Account as the same may be credited or
debited from time to time as set forth above.
3.4 ADDITIONAL CONTRIBUTIONS
No Member shall have an obligation to make an additional Capital
Contribution or loan to the Company. If additional funds are advanced to the
Company by the Members, such funds shall be additional Capital Contributions.
3.5 CONTRIBUTIONS AND COMPROMISES BY INCAPACITATED MEMBERS
Each Member and such Member's representative or successor (as the case
may be) shall be obligated to perform any promise by the Member to make a
Capital Contribution to the Company even if the Member is prevented from doing
so because of any Incapacity.
3.6 PROMISES TO MAKE CAPITAL CONTRIBUTIONS
No promise by a Member to make a Capital Contribution to the Company
shall be enforceable unless set forth in this Agreement or in another writing
signed by the Member. No promise by a Member to make a Capital Contribution to
the Company shall be compromised except by the affirmative vote of all of the
other Members.
3.7 NO INTEREST ON CONTRIBUTIONS
The Members shall earn no interest on their Capital Contributions.
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3.8 ADEQUACY OF THE COMPANY'S CAPITAL
Each Member hereby acknowledges and agrees that in the Member's
considered opinion, the contributions, loans and guarantees provided for in this
Section 3 are reasonably sufficient to meet the initial capital needs of the
Company.
3.9 NEGATIVE CAPITAL ACCOUNTS.
No Member shall be required to pay to any other Member any deficit or
negative balance which may exist from time to time in such Member's Capital
Account. No Member shall be liable to the Company or any other Member or any
creditor of the Company solely because of the existence of a negative balance in
such Member's Capital Account.
3.10 REIMBURSEMENT OF EXPENSES
If any Member or Manager incurs a reasonable expense on behalf of the
Company and reasonably documents this expense to the Company, the Company shall
reimburse the Member or Manager for this expense as promptly as reasonably
possible after receiving this documentation.
3.11 MEMBERS' REPRESENTATIONS AND WARRANTIES
Each Member hereby represents and warrants to and acknowledges to the
Company that: (a) such Member has sufficient knowledge and experience in
financial and business matters and is capable of evaluating the merits and risks
of an investment in the Company and making an informed investment decision with
respect thereto; (b) such Member is able to bear the economic and financial risk
of an investment in the Company for an indefinite period of time; (c) such
Member is acquiring Membership Interests in the Company for investment purposes
only and not with a view to, or for resale in connection with, any distribution
to the public or public offering thereof; (d) the Membership Interests have not
been registered under the securities laws of any jurisdiction and cannot be
disposed of unless they are subsequently registered and/or qualified under
applicable securities laws or are exempt from any such registration or
qualification requirement and the provisions of this Agreement have been
complied with; and (e) the execution, delivery and performance of this Agreement
do not require such Member to obtain any consent or approval that has not been
obtained and do not contravene or result in a default under any provision of any
existing law or regulation applicable to such Member or other governing
documents or any agreement or instrument to which such Member is a party or by
which such Member is bound.
SECTION 4
ALLOCATIONS AND DISTRIBUTIONS
4.1 GENERALLY
Subject to Section 10.7, the Managers shall have sole discretion as to
the amounts and timing of Distributions to Members, subject to the retention of,
or payment to, third parties of such funds as it shall deem necessary with
respect to the reasonable business needs of the Company, which shall include the
payment or the making of provision for the payment when due of Company
obligations, including the payment of any management or administrative fees and
expenses or any other obligations.
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4.2 DISTRIBUTIONS
Except as otherwise provided in this Agreement, Distributions may
be made to Members from time to time in the discretion of the Managers.
(a) Until the return to the Class B Members of one hundred percent
(100%) of their Capital Contributions, Distributions to the Members shall be
made in proportion to each Member's respective Percentage Interest as set forth
on EXHIBIT A attached hereto.
(b) After the return to the Class B Member of one hundred percent
(100%) of their Capital Contributions, Distributions to the Members shall be
made in the following proportion: (i) twenty-five percent (25%) to the Class A
Members, and (ii) seventy-five percent (75%) to the Class B Members.
(c) Distributions made to Class A Members shall be allocated among
the Class A Members in proportion to each Class A Member's respective Class A
Percentage Interest, and Distributions made to Class B Members shall be
allocated among the Class B Members in proportion to each Class B Member's
respective Class B Percentage Interest.
4.3 ALLOCATIONS OF PROFITS AND LOSSES.
Profits and Losses and all items of Company income, gain or loss
for any fiscal year shall be allocated among the Members in the same manner as
Distributions are allocated among the Members under Section 4.2, provided that:
(a) if a Member makes a Capital Contribution of non-cash property
to the Company, the Company shall allocate its income, gains, deductions, losses
and other tax items to the Member in respect of this Capital Contribution in
accordance with Code Section 704 (c) (1) (A) and the regulations thereunder; and
(b) if the Company allocates any of its Profits and Losses to a
Member in a manner that is disproportionate to the Member's respective
Percentage Interest in the Company, the Company shall make this allocation in
compliance with the requirements of Code Section 704(b) and the regulations
thereunder.
For purposes of this Agreement: (i) an allocation of Company Profits to a Member
shall mean an apportionment of those Profits on the books of the Company for
Distribution to the Member upon the satisfaction of the conditions for
Distributions set forth in this Agreement, and (ii) Capital Contributions shall
(except as otherwise expressly provided in this Agreement) include only the
value of Capital Contributions that the Company has actually received from the
Members and has not returned.
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4.4 DISTRIBUTIONS IN KIND
If this Agreement or applicable law requires the Company to make a
Distribution to any Member, the Member may not require the Company to make this
Distribution except in the form of cash, and the Company may not compel a Member
to accept a Distribution except in the form of cash.
4.5 UNLAWFUL DISTRIBUTIONS
The Company shall not make any Unlawful Distributions of its assets to
any Member. Except as otherwise provided under the Act, a Distribution shall be
an "Unlawful Distribution" within the meaning of this Agreement if, immediately
after the Distribution, the aggregate value of the Company's liabilities would
exceed the aggregate value of its assets, or if, as a result of the
Distribution, the Company would be unable to pay its reasonably foreseeable
obligations as they become due.
4.6 LIABILITY FOR UNLAWFUL DISTRIBUTIONS
Members and Managers who vote to authorize Unlawful Distributions and
Members that receive these Distributions shall be liable as provided in the Act.
4.7 MEMBERS AS CREDITORS OF THE COMPANY
With respect to Profits allocated to a Member under this Agreement, the
Member shall have the status of a creditor.
SECTION 5
MANAGEMENT OF THE COMPANY
5.1 QUALIFICATIONS
The Managers shall be Members of the Company. Managers need not be
residents of the State of Delaware. The Managers shall have such other
qualifications as are determined from time to time by the affirmative vote of
Members holding a majority of Member votes.
5.2 TITLES
In performing management functions for the Company, Managers may use
the title "Manager" or such other title or titles as the Members may determine
from time to time by affirmative vote of Members holding a majority of Member
votes.
5.3 VOTING
Except as otherwise expressly provided herein, the Managers shall have
the right to vote on all matters pertaining to the business and internal affairs
of the Company. Each Manager shall have one vote on each matter, and each matter
shall be decided by the affirmative vote of the Managers holding a majority of
the votes. Each Manager shall have a reasonable opportunity to be heard on each
matter on which the Managers vote. Managers may vote in person, by telephone, by
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e-mail, by fax or by any other reasonable means. The Managers shall appoint a
manager to make a written record of each Manager vote and to circulate the
record among the Managers promptly after the vote, provided that the failure of
the manager to make or circulate such a record shall not affect the validity of
any Manager vote.
5.4 TIME DEVOTED BY MANAGERS.
Each Manager shall devote to the Company such time and effort as may be
necessary for the proper performance of his, her or its duties hereunder.
5.5 GENERAL RESPONSIBILITIES
Except for situations in which the approval of the Members is required
by this Agreement or by nonwaivable provisions of applicable law: (i) the powers
of the Company shall be exercised by or under the authority of, and the business
and affairs of the Company shall be managed under the direction of, the
Managers; and (ii) the Managers shall make all decisions and take all actions
regarding the business of the Company. If the Managers consist of more than one
Manager, the prior consent or approval of a majority of all of the Managers
shall be required for any action taken by any one or more Managers on behalf of,
or with respect to, the Company or its business or affairs.
5.6 AUTHORITY
Without limiting the generality of Section 5.5 above, the Managers are
hereby authorized to:
(a) execute any and all agreements, contracts, documents,
certifications and instruments necessary or convenient in connection with the
management of the Company;
(b) engage in any kind of activity and perform and carry out
contracts of any kind necessary to, in connection with or incidental to the
accomplishment of the purposes of the Company as may be lawfully carried on or
performed by a limited liability company under the laws of the State of Delaware
or of any other jurisdiction in which the Company conducts business;
(c) acquire by purchase, lease, option, capital contribution
or otherwise, any real, personal or mixed property or any interest therein,
which may be necessary, convenient, or incidental to the accomplishment of the
purposes of the Company;
(d) sell, assign, exchange or otherwise transfer all or part
of the Company property;
(e) issue or sell to Members, affiliates of Members, or
Persons other than Members or affiliates of any Member: (i) additional
Membership Interests (including other classes or series of Membership Interests
having different rights); (ii) obligations, evidences of indebtedness or other
securities convertible or exchangeable into Membership Interests; and (iii)
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warrants, options or other rights to purchase or otherwise acquire Membership
Interests, and no Member shall have any preemptive rights in any of the
foregoing.
(f) borrow money required for the business and affairs of the
Company, and issue evidences of indebtedness necessary, convenient, or
incidental to the accomplishment of the purposes of the Company, and to secure
the repayment of such borrowings by executing mortgages or deeds of trust, and
to pledge or otherwise encumber or subject to security interests, all or any
part of the Company's property, and in connection with any such borrowing to
confess judgment, or authorize the confession of judgment, against the Company;
(g) lend the Company's funds or make guarantees of obligations
of others upon such terms as the Managers shall determine;
(h) invest the Capital Contributions of the Members and
reinvest the proceeds from the sale of any Company property in such investments
and upon such terms as the Managers shall determine;
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(i) dissolve the Company;
(j) prepay in whole or in part, refinance, increase, modify or
extend any indebtedness or mortgage affecting the Company's property, and in
connection therewith to execute any extension or renewal of any indebtedness or
mortgage on any Company property;
(k) place record title to, or the right to use, Company
property in the name or names of a nominee or nominees for any purpose
convenient or beneficial to the Company;
(l) purchase contracts of liability, casualty, and other
insurance deemed necessary, appropriate, or convenient for the protection of the
property or affairs of the Company or for any purpose convenient or beneficial
to the Company;
(m) employ, engage and enter into contracts and agreements
with Persons, firms or companies, including entities in which any Member has an
interest, in the development, operation, and management of the Company's
property and business on such terms and for such compensation as the Managers
may determine;
(n) retain counsel, accountants, financial advisors and other
professional personnel;
(o) enter into, make and perform such contracts, agreements
and other undertakings, and do such other acts as the Managers may deem
necessary or advisable, or as may be incidental to or necessary for the conduct
of the business of the Company;
(p) file Federal, state and local tax returns on behalf of the
Company and make such elections as are required or permitted under Federal,
state, or local tax laws;
(q) designate the depository or depositories in which all bank
accounts of the Company shall be kept and the person or persons upon whose
signature or signatures withdrawals therefrom shall be made;
(r) prosecute, defend, settle, compromise or submit to
arbitration, any suits, actions, or claims at law or in equity to which the
Company is a party or by which the Company is affected, and satisfy out of
Company funds any judgment, decree, or decision of any court, board, agency, or
authority having jurisdiction, or any settlement of any suit, action, or claim;
and
(s) engage in such other activities and incur such other
expenses as may in the Managers' judgment be necessary or appropriate for the
furtherance of the Company's purposes, and to execute, acknowledge and deliver
any and all instruments necessary to the foregoing.
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5.7 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND DUTIES.
(a) In managing the business and affairs of the Company and
exercising its powers, the Managers shall act: (i) collectively through meetings
and written consents pursuant to this Section 5; (ii) through committees
pursuant to Section 5.7(b); and (iii) through Managers to whom authority and
duties have been delegated pursuant to Section 5.7(c).
(b) The Managers may, from time to time, designate one or more
committees, each of which shall be comprised of one or more Managers. Any such
committee, to the extent provided in such resolution, in the Certificate or this
Agreement, shall have and may exercise all of the authority of the Managers. At
every meeting of such committee, the presence of a majority of all the Managers
that are Members thereof shall constitute a quorum, and the affirmative vote of
a majority of the Managers present shall be necessary for the adoption of any
resolution. The Managers may dissolve any committee at any time, unless
otherwise provided in the Certificate or this Agreement.
(c) The Managers may, from time to time, delegate to one or
more Managers such authority and duties as the Managers may deem advisable. In
addition, the Managers may assign titles (including, without limitation,
president, vice president, secretary, assistant secretary, treasurer and
assistant treasurer) to any such Managers and delegate to such Managers certain
authority and duties. Any number of titles may be held by the same Manager. Any
delegation may be revoked at any time by the Managers, and no delegation shall
relieve the Managers of their management responsibility under Section 5 of this
Agreement, and any persons to whom the Managers delegate duties shall perform
them at the direction of the Managers.
5.8 TAX IDENTIFICATION NUMBER, INSURANCE, BANK ACCOUNTS
Before or promptly after the Company begins its business activities,
the Managers shall (i) obtain for the Company a federal tax identification
number and any necessary state tax identification numbers, (ii) open any
necessary bank accounts for the Company, (iii) obtain on commercially reasonable
terms insurance policies covering all reasonably foreseeable Company business
risks, and (iv) do all other things necessary or useful in connection with the
commencement of the Company's business.
5.9 NUMBER AND TERM OF OFFICE.
The number of Managers of the Company shall be determined from time to
time by resolution of Members holding a majority of votes. If the Members make
no such determination, the number of Managers shall be the number of Managers
constituting the initial Managers. Each Manager shall hold office for the term
for which he is elected and thereafter until his successor shall have been
elected and qualified, or until his earlier death, resignation or removal.
5.10 VACANCIES; REMOVAL; RESIGNATION.
(a) Any Manager position to be filled by reason of an increase
in the number of Managers or by other reason may be filled by election at an
annual or special meeting of the Members called for that purpose, or by the
affirmative vote of a majority of the remaining Managers though less than a
quorum of the Managers. A Manager elected to fill a vacancy occurring other than
19
by reason of an increase in the number of Managers shall be elected for the
unexpired term of his predecessor in office.
(b) The Members may, without liability, remove a Manager at
any time with or without cause by affirmative vote of Members holding a majority
of Member votes.
(c) A Manager may resign as a manager upon giving thirty (30)
days' written notice to each Member. Except as otherwise provided in this
Agreement, the Manager shall have no liability to the Company or to the other
Members for any such resignation, provided, however, that the resignation shall
not absolve the Manager from any liabilities arising on or before effective date
of the resignation. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the resignation.
5.11 MEETINGS.
(a) A majority of the total number of Managers fixed by or as
provided in this Agreement shall constitute a quorum for the transaction of
business of the Managers, and the act of a majority of the Managers present at a
meeting at which a quorum is present shall be the act of the Managers. A Manager
who is present at a meeting of the Managers at which action on any Company
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the Person acting as a secretary of the
meeting before the adjournment thereof or shall deliver such dissent to the
Company immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Manager who voted in favor of such action.
(b) Meetings of the Managers may be held at such place or
places as shall be determined from time to time by resolution of the Managers.
At all meetings of the Managers, business shall be transacted in such order as
shall from time to time be determined by resolution of the Managers. Attendance
of a Manager at a meeting shall constitute a waiver of notice of such meeting,
except where a Manager attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.
(c) In connection with any annual meeting of Members at which
Managers were elected, the Managers may, if a quorum is present, hold its first
meeting for the transaction of business immediately after and at the same place
as such annual meeting of the Members. Notice of such meeting at such time and
place shall not be required.
(d) Regular meetings of the Managers shall be held at such
times and places as shall be designated from time to time by resolution of the
Managers. Notice of such meetings shall not be required.
(e) Special meetings of the Managers may be called by any
Manager on at least 24 hours' notice to each other Manager. Such notice need not
state the purpose or purposes of, nor the business to be transacted at, such
meeting, except as may otherwise be required by law or provided for in this
Agreement.
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5.12 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS.
The Managers in their discretion may submit any act or contract for
approval or ratification at any annual meeting of the Members, or at any special
meeting of the Members called for the purpose of considering any such act or
contract, and any act or contract that shall be approved or be ratified by
Members holding a majority of votes shall be as valid and as binding upon the
Company and upon all the Members as if it shall have been approved or ratified
by every Member of the Company.
5.13 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE.
Any action permitted or required by the Act, the Certificate or this
Agreement to be taken at a meeting of the Managers or any committee designated
by the Managers may be taken without a meeting if a consent in writing, setting
forth the action to be taken, is signed by a majority of the Managers or members
of such committee, as the case may be. Such consent shall have the same force
and effect as a unanimous vote at a meeting and may be stated as such in any
document or instrument filed with the Secretary of State of the State of
Delaware, and the execution of such consent shall constitute attendance or
presence in person at a meeting of the Managers or any such committee, as the
case may be. Subject to the requirements of the Act, the Certificate or this
Agreement for notice of meetings, unless otherwise restricted by the
Certificate, Managers or members of any committee designated by the Managers may
participate in and hold a meeting of the Managers or any committee of Managers,
as the case may be, by means of a conference telephone or similar communications
equipment by means of which all Persons participating in the meeting can hear
each other, and participation in such meeting shall constitute attendance and
presence in person at such meeting, except where a Person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
5.14 COMPENSATION AND EXPENSES.
The Managers shall receive such compensation, if any, for their
services as may be designated from time to time by the Members. In addition, the
Managers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder, including the portion of
their overhead reasonably allocable to Company activities.
5.15 OFFICERS.
(a) The Managers may, from time to time, designate one or more
Persons to be officers of the Company. No officer need be a resident of the
State of Delaware, a Member or a Manager. Any officers so designated shall have
such authority and perform such ministerial duties as the Managers may, from
time to time, delegate to them, subject to the authority of the Managers
provided in Section 5.7. The Managers may assign titles to particular officers.
Each officer shall hold office until his successor shall be duly designated and
shall qualify or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided. Any number of offices may be held by
the same person. The salaries or other compensation, if any, of the officers and
agents of the Company shall be fixed from time to time by the Managers.
(b) Any officer may resign as such at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the Managers.
The acceptance of a resignation shall not be necessary to make it effective,
unless expressly so provided in the resignation. Any officer may be removed as
such, either with or without cause, by the Managers whenever in their judgment
21
the best interests of the Company will be served thereby; provided, however,
that such removal shall be without prejudice to the contract rights, if any, of
the Person so removed. Designation of an officer shall not of itself create
contract rights. Any vacancy occurring in any office of the Company may be
filled by the Managers.
5.16 COMPLIANCE WITH LAWS AND REGULATIONS
Before the Company conducts business in this State or in any other
state and at all times while it is conducting this business, the Managers shall
ensure that the Company is in compliance with all applicable federal, state and
local laws, regulations and ordinances, including federal and state tax and
securities laws, laws governing the registration and taxation of foreign
Companies, and regulations governing specific professions, trades and
businesses. For purposes of this Agreement, "state" shall include the District
of Columbia.
5.17 VALUATION OF CAPITAL CONTRIBUTIONS
Whenever the Company admits a Person as a Member of the Company, the
Managers shall promptly determine in dollars a value for the Capital
Contribution of that Person in exchange for the Person's Membership Interest or
that there was no Capital Contribution, shall record this determination in the
records of the Company, and shall promptly notify all Members concerning the
determination. Thereafter, in the absence of fraud, the determination shall be
conclusive as to the value of the Capital Contribution or as to whether there
was a Capital Contribution.
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5.18 THIRD PARTY CLAIMS AGAINST THE COMPANY
No Manager in the Manager's capacity as a manager shall have personal
liability for any claim against the Company by any third party. Managers shall
be personally liable for their personal misconduct as provided by this Agreement
and by applicable law.
5.19 EXCLUSIVE RIGHT TO BIND THE COMPANY
Only the Managers shall have the following rights:
(a) Each Manager shall have the right to bind the Company in
dealings with third parties.
(b) The Managers shall have the exclusive right to decide all
Company matters relating to the business of the Company except those that this
Agreement expressly reserves to the Members.
(c) The Managers shall have the right to conduct the business
and internal affairs of the Company.
5.20 RELIANCE ON COMPANY INFORMATION AND OTHER COMPANY MANAGERS
No Manager as a manager shall be personally liable to the Company or to
the Members if, to the extent that, with respect to the matter in question, the
Manager acted in reasonable reliance on Company records, other Company Managers,
employees or officers of the Company, other Persons whom, at the time of the
action, the Manager reasonably believed to be competent in the matter in
question, or any provision of this Agreement.
5.21 NO MANAGER LIABILITY FOR ACTIONS TAKEN IN GOOD FAITH
No Manager shall be personally liable to the Company or to the Members
if, with respect to the matter in question, the Manager acted in good faith, in
the reasonable belief that the action was in the best interest of the Company,
and with reasonable diligence.
5.22 LIABILITY INSURANCE FOR MANAGERS
The Company shall maintain an insurance policy to cover liabilities of
a Manager arising from a claim against the Manager under or relating to this
Agreement (to the extent permitted by the Act and applicable law) if Members
holding a majority of Member votes agree to do so.
5.23 ADVANCEMENT OF ARBITRATION AND LITIGATION EXPENSES TO MANAGERS
The Company shall advance arbitration and litigation expenses to a
Manager for the defense of claims against a Manager under or relating to this
Agreement if Members holding a majority of Member votes agree to do so, and the
Manager promises to return all such advances to the Company if the court,
arbitrator or other relevant tribunal determines that the claim is valid.
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5.24 EXECUTION OF THIS AGREEMENT
As a condition to becoming Managers, the initial Managers and all
subsequent Managers shall sign this Agreement in their capacity as managers and
shall be bound by all provisions of the Agreement relating to managers.
SECTION 6
MANAGERS' REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS BY ALL MANAGERS
Each Manager warrants in the Manager's capacity as a manager as
follows:
(a) The Manager is legally free to enter into this Agreement
and to perform the Manager's obligations under this Agreement in accordance with
its terms and is not prevented from doing so by order of any court or other
governmental authority, by any agreement with a third party (including an
employment agreement, non-competition agreement or nondisclosure agreement) or
by any other cause.
(b) In negotiating and entering into this Agreement, the
Manager has acted fairly and in good faith.
(c) Before accepting the terms of this Agreement, the Manager
has had every reasonable opportunity to consider these terms and to review them
with the Manager's personal attorney.
(d) The Manager has accepted the terms of this Agreement
knowingly and freely.
6.2 REPRESENTATIONS BY CORPORATE MANAGER
If the Manager is an entity, the Manager represents and warrants, in
addition to its representations and warranties under Section 6.1, that it is
duly formed, organized and existing under its state of incorporation, and has
full corporate authority and all necessary authorization to enter into this
Agreement and to perform its duties hereunder in accordance with the terms of
this Agreement.
SECTION 7
CONFIDENTIALITY OF COMPANY INFORMATION
7.1 CONFIDENTIALITY OF COMPANY INFORMATION
The Managers shall use every reasonable means to maintain the
confidentiality of Confidential Information. Except as required in conducting
the business and internal affairs of the Company or by federal or state law, the
Managers shall not disclose Confidential Information to any third party.
Promptly after ceasing to be managers, the managers shall return to the Company
all documents and other media in their possession or control that contain
Confidential Information.
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7.2 EXCEPTIONS TO DUTY OF CONFIDENTIALITY
Section 7.1 shall not apply to the following types of information:
(a) Information already lawfully possessed by a Manager before
its disclosure to the Manager lawfully obtained from another source after
receiving it from the Company.
(b) Information that is already in the public domain at the
time of its disclosure to the Manager or that thereafter enters the public
domain through no fault of the Manager.
(c) Information whose disclosure is permitted or required by
final order of a court of competent jurisdiction.
(d) Information whose disclosure is made on a confidential
basis to an arbitrator in an arbitration under Section 14; and
(e) Information the Company discloses without restriction to
any Person other than the Manager.
7.3 BINDING EFFECT; TERMINATION
This Section 7 shall bind each recipient even after the recipient
ceases to be a Manager, and shall terminate upon the termination of the legal
existence of the Company.
SECTION 8
COMPANY RECORDS, ETC.
8.1 INFORMATION AND RECORDS MAINTAINED BY THE COMPANY
The Company shall maintain at its principal place of business the
following types of records and information:
(a) True and full information regarding the status of the
business and financial condition of the Company;
(b) Promptly after they become available, copies of its
federal, state and local income tax returns for each year;
(c) A current list of the name and last known business,
residence or mailing address of each Member of the Company;
(d) A copy of its Certificate and this Agreement and of all
amendments thereto, together with executed copies of any written powers of
attorney pursuant to which the Certificate and this Agreement and all amendments
thereto have been executed;
(e) True and full information regarding the amount of cash and
a description and statement of the agreed value of any other property or
services contributed by each Member to the Company and which each Member has
25
agreed to contribute in the future, and the date on which each Member became a
member of the Company; and
(f) Other information regarding the affairs of the Company
that is just and reasonable.
8.2 BOOKS OF ACCOUNT
The Company shall maintain books of account concerning the business and
affairs of the Company that are accurate, reasonably current, and in compliance
with financial and other standards normally applicable to the records of
business organizations generally similar to the Company in size and business
activities.
8.3 INSPECTION OF RECORDS.
During normal business hours and after reasonable notice, each Member
shall be entitled, for any purpose reasonably related to the Member's membership
in the Company, to inspect and, at the Member's expense, to copy any documents
and other media in the Company's possession or control, including the documents
identified in Section 8.1, provided that all information available to the Member
under this Section 8 shall be subject to the provisions of Section 7, and all
applicable federal and state laws and regulations, including laws concerning the
privacy of employee medical information.
SECTION 9
EXCULPATION AND INDEMNIFICATION
9.1 EXCULPATION.
No Manager shall be liable to any other Manager, any Member or the
Company for any loss suffered by the Company unless such loss is caused by the
Manager's gross negligence, willful misconduct, violation of law or material
breach of this Agreement. The Manager shall not be liable for errors in judgment
or for any acts or omissions that do not constitute gross negligence, willful
misconduct, violation of law or material breach of this Agreement. The Manager
may consult with counsel and accountants in respect of Company affairs and,
provided the Manager acts in good faith reliance upon the advice or opinion of
such counsel or accountants, the Manager shall not be liable for any loss
suffered by the Company in reliance thereon.
9.2 INDEMNIFICATION.
Subject to the limitations and conditions as provided in this Section
9, each Person who was or is made a party to or is threatened to be made a party
to, or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative (hereinafter a
"Proceeding"), or any appeal in such a Proceeding or any inquiry or
investigation that could lead to such a Proceeding, by reason of the fact that
he, she or it, or a Person of whom he, she or it is the legal representative, is
or was a Manager or officer of the Company or while a Manager or officer of the
26
Company is or was serving at the request of the Company as a Manager, director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise shall be indemnified by the Company to the
fullest extent permitted by the Act, as the same exist or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said law permitted the Company to provide prior to such amendment) against
judgments, penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable expenses (including, without limitation,
attorneys' fees) actually incurred by such Person in connection with such
Proceeding, and indemnification under this Section 9 shall continue as to a
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity hereunder. The rights granted pursuant to this Section 9
shall be deemed contract rights, and no amendment, modification or repeal of
this Section 9 shall have the effect of limiting or denying any such rights with
respect to actions taken or Proceedings arising prior to any amendment,
modification or repeal. It is expressly acknowledged that the indemnification
provided in this Section 9 could involve indemnification for negligence or under
theories of strict liability.
9.3 ADVANCE PAYMENT.
The right to indemnification conferred in this Section 9 shall include
the right to be paid or reimbursed by the Company for the reasonable expenses
incurred by a Person of the type entitled to be indemnified under Section 9.2
who was or is, or is threatened to be made, a named defendant or respondent in a
Proceeding in advance of the final disposition of the Proceeding and without any
determination as to the Person's ultimate entitlement to indemnification;
provided, however, that the payment of such expenses incurred by any such Person
in advance of the final disposition of a Proceeding shall be made only upon
delivery to the Company of a written affirmation by such Manager of his, her or
its good faith belief that he, she or it has met the standard of conduct
necessary for indemnification under this Section 9 and a written undertaking, by
or on behalf of such Person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified Person is not entitled to be
indemnified under this Section 9 or otherwise.
9.4 APPEARANCE AS A WITNESS.
Notwithstanding any other provision of this Section 9, the Company may
pay or reimburse expenses incurred by a Manager or officer in connection with
his appearance as a witness or other participation in a Proceeding at a time
when the Manager or officer is not a named defendant or respondent in the
Proceeding.
9.5 INSURANCE.
The Company may purchase and maintain insurance, at its expense, to
protect itself and any Person who is or was serving as a Manager, officer, or
agent of the Company or is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise against any expense, liability or
loss, whether or not the Company would have the power to indemnify such Person
against such expense, liability or loss under this Section 9.
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9.6 NONEXCLUSIVITY OF RIGHTS.
The right to indemnification and the advancement and payment of
expenses conferred in this Section 9 shall not be exclusive of any other right
which a Manager or other Person indemnified pursuant to this Section 9 may have
or hereafter acquire under any law (common or statutory), provision of the
Certificate or this Agreement, agreement, vote of Members or Managers, or
otherwise.
9.7 SAVINGS CLAUSE.
If this Section 9 or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify and hold harmless each Manager or any other Person
indemnified pursuant to this Section 9 as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative to the full extent permitted by any applicable
portion of this Section 9 that shall not have been invalidated and to the
fullest extent permitted by applicable law.
SECTION 10
TAX PLANNING AND COMPLIANCE
10.1 TAXATION OF THE COMPANY AND MEMBERS
Under federal tax law and to the maximum extent possible under the tax
laws of each state and the District of Columbia, the Company and its Members
shall be taxable as a partnership and as partners. The provisions of this
Agreement shall be construed and applied in such a manner as to ensure full
compliance with the provisions of the Code applicable to partnerships and
partners and with the regulations thereunder.
10.2 TAX MANAGEMENT AND COMPLIANCE
The parties acknowledge the importance to the Company and the Members
of competent tax planning for the Company and for the Members as members, and
full compliance by the Company and by the Members with federal and state tax
requirements applicable to the Company and the Members in their capacity as
such.
10.3 APPOINTMENT AND REPLACEMENT OF COMPANY TAX ADVISER
In connection with its formation and on a continuing basis thereafter,
the Members may appoint a tax adviser. This individual or firm shall have
expertise in all areas of tax practice relevant to the needs of the Company and
its Members in their capacities as such and in particular in the field of
federal partnership taxation. The Members may replace the Company's tax adviser
from time to time upon the affirmative vote of Members holding a majority of
Member votes.
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10.4 COOPERATION WITH TAX ADVISER
The parties shall cooperate with the Company's tax adviser to the
maximum extent reasonable to ensure adequate Company tax planning and
compliance.
10.5 TAX MATTERS PARTNER
The Members by affirmative vote of Members holding a majority of Member
votes may appoint a Manager to serve as the Company's tax matters partner for
purposes of unified administrative and judicial federal tax proceedings under
Code Section 6231 (a) (1).
10.6 PLANNING OF INDIVIDUAL TRANSACTIONS
Before undertaking any major transaction involving the Company or any
Member in the Member's capacity as a member, the Company and each affected
Member shall consult with one or more partnership tax experts concerning the tax
implications of the transaction, and the Company and affected Members shall make
any tax elections and shall take any other actions necessary or appropriate in
the circumstances to ensure tax compliance and maximum lawful tax avoidance. The
issue of the fairness of the transaction to the Company and to the Members shall
be subject to arbitration under Section 14.
10.7 TAX DISTRIBUTIONS
If any Member requires a Distribution of all or any portion of the
Member's share of Company Profits in order to pay the Member's federal or other
taxes on the Member's share of these Profits for any taxable year, the Company
shall, to the extent that its financial condition reasonably permits, make this
Distribution to the Member on a timely basis, provided that as a condition for
the Distribution, the Company may, under reasonable conditions of
confidentiality, require the Member to disclose to the Company's tax adviser
relevant information concerning the Member's tax and financial affairs.
10.8 TAX RETURNS
The Company shall accurately complete and file its federal tax return
and all applicable state returns on a timely basis each year.
10.9 PROVISION OF TAX INFORMATION TO MEMBERS
As soon as reasonably possible after the close of each of its taxable
years, the Company shall provide each Member with completed federal and state
tax forms and with all other documents and information relevant to the federal
and state tax liabilities of the Member as a member of the Company, provided
that each Member shall have sole responsibility for preparing and timely filing
the Member's federal and state tax returns and for paying the Member's taxes,
and the Company shall have no responsibility or liability with respect to these
matters.
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10.10 COMPUTATION AND RECORDING OF MEMBERS' CONTRIBUTIONS
The Company shall maintain current and accurate records concerning each
Member's Capital Contributions and adjusted tax basis in the Member's Membership
Interest in accordance with applicable U.S. Treasury Department regulations and,
promptly after the request of any Member, shall make these records available to
the Member.
SECTION 11
MEMBER DISSOCIATIONS
11.1 EVENTS OF DISSOCIATION
A Member shall be dissociated only if the Member dies (or, if the
Member is an entity, it incurs a dissolution or equivalent event), the Member
resigns in accordance with Section 11.4, or the Member sells or otherwise
transfers all of the Member's Management Rights.
11.2 CERTAIN CONSEQUENCES OF DISSOCIATION
Except as otherwise expressly provided in this Agreement, a Member who
is dissociated from the Company shall immediately lose all of the Member's
Management Rights.
11.3 NO DISTRIBUTIONS TO DISSOCIATED MEMBERS
Except as otherwise provided in this Agreement, a Member's dissociation
shall not entitle the Member to receive any Distribution of Company Profits or
other assets or to receive any payment for the Member's Membership Interest.
11.4 RIGHT OF MEMBERS TO RESIGN FROM COMPANY; NOTICE OF RESIGNATION
A Member may without liability resign as a member of the Company by
giving written notice of resignation to the other Members. The resignation shall
be effective sixty (60) days after all of the other Members have received the
notice.
11.5 EFFECTIVE DATE OF RESIGNATION
A Member shall be deemed to have resigned from the Company within the
meaning of this Section 11 on the effective date of the notice of resignation
described in Section 11.4. For purposes of this Section 11, the resignation of a
Member means the Member's voluntary renunciation of the Member's right to
participate in the business and internal affairs of the Company.
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SECTION 12
DISSOLUTION; MERGERS, CONVERSIONS AND SALES OF ASSETS
12.1 DISSOLUTION
The Company shall be dissolved upon the affirmative vote of Members
holding a majority of Member votes, upon the expiration of the period fixed for
the duration of the Company set forth in the Certificate, upon the issuance of
an order of dissolution by a court or by the Secretary of State of the State of
Delaware, or upon the issuance of an order of dissolution by an arbitrator under
Section 14.
12.2 LIQUIDATION AND TERMINATION.
On dissolution of the Company, the Managers shall act as liquidator. The
Managers shall proceed diligently to wind up the affairs of the Company and make
final Distributions as provided herein and in the Act. The costs of liquidation
shall be borne as a Company expense. Until final Distribution, the Managers
shall continue to operate the Company properties with all of the power and
authority of the Managers. The steps to be accomplished by the Managers are as
follows:
(a) as promptly as possible after dissolution and again after
final liquidation, the Managers shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities, and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;
(b) the Managers shall cause the notice described in Section
18-203 of the Act to be mailed to each known creditor of and claimant against
the Company in the manner described in such section;
(c) the Managers shall pay, satisfy or discharge from Company
funds all of the debts, liabilities and obligations of the Company (including,
without limitation, all expenses incurred in liquidation) or otherwise make
adequate provision for payment and discharge thereof (including, without
limitation, the establishment of a cash escrow fund for contingent liabilities
in such amount and for such term as the Managers may reasonably determine); and
(d) all remaining assets of the Company shall be distributed
to the Members as follows:
(i) the Managers may sell any or all Company
property, including to Members, and any resulting gain or loss
from each sale shall be computed and allocated to the Capital
Accounts of the Members;
(ii) with respect to all Company property that has
not been sold, the fair market value of that property shall be
determined and the Capital Accounts of the Members shall be
31
adjusted to reflect the manner in which the unrealized income,
gain, loss, and deduction inherent in property that has not
been reflected in the Capital Accounts previously would be
allocated among the Members if there were a taxable
disposition of that property for the fair market value of that
property on the date of Distribution; and
(iii) Company property shall be distributed among the
Members in accordance with the positive Capital Account
balances of the Members, as determined after taking into
account all Capital Account adjustments for the taxable year
of the Company during which the liquidation of the Company
occurs (other than those made by reason of this clause (iii));
and those Distributions shall be made by the end of the
taxable year of the Company during which the liquidation of
the Company occurs (or, if later, ninety (90) days after the
date of the liquidation).
All Distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.2. The Distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.2 constitutes a complete
return to the Member of its Capital Contributions and a complete Distribution to
the Member of its interest in the Company and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.
12.3 EFFECTIVE DATE OF DISSOLUTION
The dissolution of an Company by vote of the Members shall be effective
on the date specified in that vote or, if the Members do not specify a date,
then on the date of completion of the vote.
12.4 CESSATION OF COMPANY'S LEGAL EXISTENCE
Unless a court or administrative authority duly and finally determines
otherwise, on completion of the Distribution of Company assets as provided
herein, the Company is terminated, and the Managers (or such other Person or
Persons as the Act may require or permit) shall file a certificate of
cancellation with the Secretary of State of the State of Delaware, cancel any
other filings made pursuant to this Agreement, and take such other actions as
may be necessary to terminate the Company.
12.5 DISSOLUTION BY ARBITRATOR
Upon petition by any Member, an arbitrator under Section 14 may issue
an order dissolving the Company on one or more of the following grounds:
32
(a) the Company obtained its Certificate through fraud;
(b) the Company exceeded or abused the authority conferred
upon it by law;
(c) the Company conducted its business in a persistently
fraudulent or illegal manner;
(d) the Company abused its power contrary to the public policy
of this State;
(e) A deadlock exists on a matter involving Company management
which the Members are unable to resolve and which is causing or which threatens
to cause irreparable injury to the Company or which prevents it from conducting
its business or affairs to its advantage;
(f) The dissolution of the Company is reasonable and fair in
the circumstances.
12.6 EXCLUSION OF CERTAIN MANAGERS FROM PARTICIPATION IN WIND-UP
PROCESS
Any Member may petition an arbitrator under Section 14 to exclude one
or more Managers from participating in the process of winding up and liquidating
the Company on the ground that, because of past wrongful conduct by the Manager
or Managers in question, their participation would be likely to affect that
process adversely.
12.7 WINDING-UP OF THE COMPANY
After the Company is dissolved, the Managers responsible for winding up
the Company shall as expeditiously as reasonably possible wind up its business
and internal affairs, and cause its liquidation. During the wind-up period, the
Company shall accept no new business except to the extent necessary to dispose
of existing inventory.
12.8 LIQUIDATING DISTRIBUTIONS BY THE COMPANY
The Company shall make Distributions of its assets in connection with
its liquidation in accordance with the provisions of Section 4, provided that
the Company shall make no Distribution to Members or others in connection with
its liquidation until it has complied with all applicable laws and regulations
of this State (including tax laws and regulations) relating to its dissolution
and liquidation.
12.9 DEFICIT CAPITAL ACCOUNTS.
Notwithstanding anything to the contrary contained in this Agreement,
and notwithstanding any custom or rule of law to the contrary, to the extent
that the deficit, if any, in the Capital Account of any Member results from or
is attributable to deductions and losses of the Company (including non-cash
items such as depreciation), or Distributions of money pursuant to this
Agreement to all Members in proportion to their respective Membership Interests,
upon dissolution of the Company such deficit shall not be an asset of the
Company and such Members shall not be obligated to contribute such amount to the
Company to bring the balance of such Member's Capital Account to zero.
33
12.10 DISPOSITION OF KNOWN AND UNKNOWN CLAIMS AGAINST COMPANY
Promptly after the dissolution of the Company, the Company shall take
all reasonable measures under the laws of this State to dispose of (and, to the
extent reasonable, to bar) known and unknown claims against the Company.
12.11 DUTY TO CONSULT TAX ADVISER IN CONNECTION WITH COMPANY
DISSOLUTION
Before the Members begin the wind-up and liquidation of the Company,
the Company and the Members shall consult with their respective tax advisers and
shall structure and implement the liquidation in a manner that is as fair as
possible to each Member from a tax viewpoint.
12.12 MERGERS, CONVERSIONS AND SALES OF ASSETS
The Company shall not participate in a merger, change its business
organization form, or sell all or substantially all of its assets outside the
ordinary course of business except with the consent of Members holding a
majority of membership votes.
SECTION 13
TERM AND TERMINATION OF AGREEMENT
13.1 TERM AND TERMINATION
Subject to the provision of Sections 13.2 and 13.3, the term of this
Agreement shall begin on the Effective Date and, unless earlier terminated by
the parties, shall terminate as follows:
(a) If the Company is terminated by vote of the Members, it
shall terminate on the effective date of the certificate of cancellation of the
Company's Certificate.
(b) If the Company is terminated by decree of a duly
authorized judicial or administrative authority or by an arbitrator, it shall
terminate on the date of termination of the Company's existence as determined by
that authority or arbitrator.
(c) If no clear date is established under Sections 13.1 (a) or
(b) and if the Members cannot agree on such a date, it shall terminate upon the
determination of an arbitrator under Section 14.
13.2 SURVIVAL OF ACCRUED RIGHTS
Rights, duties and liabilities accrued by the parties under this
Agreement before its termination shall continue in full force and effect after
its termination.
34
13.3 ARBITRATION OF MATTERS RELATING TO COMPANY'S WINDING-UP, ETC.
Notwithstanding the termination of this Agreement, any party may, after
that termination, initiate an arbitration under Section 14 to determine and
enforce rights and duties of the party relating to matters arising before and
during the Company's winding-up, the Company's liquidation, and matters arising
after the cancellation of the Company's Certificate.
SECTION 14
ARBITRATION OF COMPANY DISPUTES
14.1 MANDATORY ARBITRATION OF CERTAIN DISPUTED MATTERS
Except as provided herein, any dispute between or among the parties
relating to arbitrable matters shall be exclusively and finally resolved in
arbitration by a single arbitrator without recourse to any court.
14.2 MATTERS NOT SUBJECT TO ARBITRATION
Arbitration shall not be used to resolve routine business matters of
the Company, matters requiring urgent judicial relief, or matters involving the
enforcement of orders under this Section 14.
14.3 RULES GOVERNING ARBITRATION
Except as otherwise provided in this Section, any arbitration under
this section shall be governed by the Rules of Commercial Arbitration of the
American Arbitration Association ("AAA") as in effect at the time of the
arbitration.
14.4 NOTICE OF ARBITRATION
Any Member may initiate an arbitration of any matter not subject to
arbitration under Section 14.2 above. The initiating Member shall do so by
providing written notice of the arbitration to the other Members. The notice
shall bear a current date, shall state the name of the initiating Member and
shall briefly state the matter to be arbitrated.
14.5 SELECTION OF ARBITRATOR
If, within fifteen (15) business days after all the parties entitled to
notice of an arbitration have received that notice, the Members have not agreed
among themselves as to the identity of the arbitrator or the site of the
arbitration, the Company shall immediately refer these matters for resolution by
the AAA office located in the city of Philadelphia. That office may resolve
these matters without liability and in its sole discretion.
14.6 NO APPEAL
No Member shall appeal to any court an order of an arbitrator under
this Section 14. The Company or any Member may enter any such order in any court
of competent jurisdiction.
35
14.7 ALLOCATIONS OF COSTS AND FEES
The arbitrator may allocate among the Members the costs, fees and other
expenses relating to an arbitration in any manner that the arbitrator shall
determine to be appropriate in his or her absolute discretion, provided that if
the arbitrator determines that a party has initiated an arbitration without a
reasonable basis for doing so, the arbitrator shall assess against that party
the costs of the other parties relating to the arbitration, including the
reasonable attorneys' fees.
SECTION 15
GENERAL PROVISIONS
15.1 ENTIRE AGREEMENT
This Agreement contains the entire agreement among the parties
concerning its subject matter and replaces all other agreements among them,
whether written or oral, concerning this subject matter.
15.2 CONFLICTS BETWEEN AGREEMENT AND CERTIFICATE
If there is any conflict between the provisions of this Agreement and
those of the Certificate, then, in any dispute among the Members, the provisions
of this Agreement shall prevail.
15.3 EFFECT OF ACT
Except as otherwise provided in this Agreement or by law, the business
and internal affairs of the Company shall be governed by the Act as in effect on
the Effective Date.
15.4 CHANGES OF LAW
If mandatory rules of the Act or other applicable law change in a
manner that provides material advantages or disadvantages to any Member not
contemplated by this Agreement, the Members shall equitably amend the Agreement
to minimize or eliminate these advantages and disadvantages.
15.5 INCORPORATION OF SCHEDULES
All schesdules identified in the Agreement as schedules to the
Agreement are hereby incorporated into the Agreement and made integral parts of
it.
15.6 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of Delaware without giving effect to any
choice-of-law or conflict-of-law provision or rule (whether of the State of
Delaware or of any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
36
15.7 FORUM FOR LITIGATION; ACCEPTANCE OF PERSONAL JURISDICTION
If any party sues another party in a suit under or relating to this
Agreement, the party bringing the suit shall do so in the courts of the State of
Delaware. The parties hereby irrevocably accept the personal jurisdiction of
those courts in any such suit.
15.8 ASSIGNMENTS AND DELEGATIONS
Except as otherwise provided in this Agreement, no party shall assign
any of its rights or delegate any of its duties under this Agreement to any
third party except with the consent of the other parties to the Agreement, which
consent these other parties shall not unreasonably withhold.
15.9 CAPTIONS
All captions in this Agreement are for convenience only and shall be
deemed irrelevant in construing any provision of the Agreement.
15.10 NOTICES
Except as expressly set forth to the contrary in this Agreement, all
notices, requests, or consents provided for or permitted to be given under this
Agreement must be in writing and must be given either by depositing the writing
in the United States mail, addressed to the recipient, postage paid, and
registered or certified with return receipt requested or by delivering that
writing to the recipient in person, by courier, or by facsimile transmission;
and a notice, request, or consent given under this Agreement is effective on
receipt by the Person to receive it. All notices, requests, and consents to be
sent to a Manager, a Member or the Company must be given to the Managers at the
following address:
BWP Gas, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Whenever any notice is required to be given by law, the Certificate or this
Agreement, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
15.11 CERTAIN MEANINGS AND CONSTRUCTIONS
The terms "include" and similar terms as used in this Agreement shall
denote partial definitions. As the context shall require, the use of the
singular in this Agreement shall denote the plural and vice versa, and the use
of a particular gender shall denote another gender.
15.12 WAIVERS
No delay of or omission by a party in the exercise of any right, power
or remedy accruing to the party as a result of any breach or default by another
party under this Agreement shall impair any such right, power or remedy accruing
37
to the party, or shall be construed as a waiver of or acquiescence by the party
in any such breach or default or of any similar breach or default occurring
later. No waiver by a party of any single breach or default under this Agreement
shall be construed as a waiver by the party of any other breach or default
occurring before or after that waiver.
15.13 SEPARABILITY OF PROVISIONS
Each provision of this Agreement shall be deemed separable. If any
provision or the application of any provision to any Person or circumstance
shall be held invalid or unenforceable in any jurisdiction, the provision shall
be ineffective only in that jurisdiction and only to the extent that it has been
expressly held to be invalid or unenforceable in that jurisdiction, without
invalidating any other provision of this Agreement or the application of the
provision itself to Persons or circumstances other than those to which it was
held invalid or unenforceable in the jurisdiction in question.
15.14 COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
different parties to this Agreement in separate counterparts. Each of these
counterparts when so executed shall be deemed to be an original and all such
counterparts taken together shall constitute one and the same agreement.
15.15 FURTHER ACTIONS BY THE PARTIES
Each party, upon reasonable request by another party, shall furnish to
the other party any information reasonably requested by the other party, and
sign any documents and do any other things that the other party reasonably
requests for the purpose of carrying out the intent of this Agreement.
15.16 ADEQUACY OF CONSIDERATION
Each party acknowledges and agrees that upon the effectiveness of this
Agreement, the party will be in receipt of valid and adequate consideration for
its undertakings under this Agreement.
15.17 NOTICE OF PROVISIONS OF THIS AGREEMENT AND CERTIFICATE
By executing this Agreement, each Member acknowledges that it has
actual notice of all of the provisions of this Agreement, including, without
limitation (i) the restrictions on transfer of the Membership Interests set
forth in Section 3.11, and (ii) all of the provisions of the Certificate.
[Remainder of page intentionally left blank]
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IN WITNESS WHREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CLASS A MEMBER:
OKLAHOMA HILLS GAS, LLC
By: HBA GAS, INC., its Managing Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
CLASS B MEMBER:
HBA GAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
CONTINENTAL SOUTHERN RESOURCES,
INC., as Substituted Member for HBA Gas,
Inc., effective May 27, 2003.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President
39
SCHEDULE A
The Membership Interests of the initial Members are as follows:
NAME OF MEMBER PERCENTAGE INTEREST
INITIAL CLASS A MEMBER
Oklahoma Hills Gas, LLC 1%
INITIAL CLASS B MEMBER
HBA Gas, Inc. 99%
Effective May 27, 2003, the Membership Interests of the Members are as follows:
NAME OF MEMBER PERCENTAGE INTEREST
CLASS A MEMBER
Oklahoma Hills Gas, LLC 1%
CLASS B MEMBER
Continental Southern 99%
Resources, Inc.