OPERATING AGREEMENT
OF
NWS-ILLINOIS, LLC
THIS OPERATING AGREEMENT of NWS-ILLINOIS, LLC, an Illinois limited
liability company (the "Company"), is made and entered into as of December 31,
1998, by and among NWS, INC., an Illinois corporation ("NWS"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇ ("▇▇▇▇"), as the Initial Members, and any other Persons executing or
otherwise bound by this Agreement pursuant to the terms hereof. Certain
capitalized terms used in this Agreement are defined in Sections 14.19 and 13.1
hereof. In consideration of the mutual covenants and agreements contained in
this Agreement, the Members agree as follows:
ARTICLE I
Organization
Section 1.1. Formation. The Members hereby authorize and ratify the
formation of the Company as a limited liability company pursuant to the
provisions of the Act effective on the later of (i) the date of the filing of
the Articles of Organization of the Company with the Illinois Secretary of State
pursuant to the Act, or (ii) the date of organization, if any, specified in the
Articles (the "Organization Date").
Section 1.2. Name. The name of the Company shall be "NWS-Illinois, LLC," or
such other name as the Members may from time to time determine. The Managers
shall cause to be filed on behalf of the Company such assumed or fictitious name
certificate or certificates as may, from time to time, be required by law.
Section 1.3. Purposes and Powers. The purposes for which the Company is
organized are as set forth in the Articles. Except as otherwise provided in the
Articles, the Company shall have all powers permissible under the Act to carry
out its business and affairs.
Section 1.4. Effective Date. This Agreement shall be effective on the
Organization Date of the Company (the "Effective Date").
Section 1.5. Term. The term of duration of the Company shall be as set
forth in the Articles, unless the Company is earlier dissolved and terminated in
accordance with this Agreement or the Act.
Section 1.6. Registered Office and Registered Agent. The street address of
the Company's initial registered office in Illinois and the name of the
Company's initial registered agent at such registered office are as set forth in
the Articles. The registered office and registered agent of the Company may be
changed from time to time by complying with the procedures set forth in the Act.
Section 1.7. Principal Place of Business. The principal place of business
of the Company within the State of Illinois shall be located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other address, within or outside of the
State of Illinois, as the Managers shall from time to time establish as a
location of the Company's principal executive offices.
ARTICLE II
Members, Capital Contributions, and Capital Accounts
Section 2.1. Names and Addresses of Members. The names, addresses, and
taxpayer identification numbers of the Members of the Company, and their
respective Capital Contributions, Percentages, Interests, and number of Units
are set forth in Schedule A attached hereto. The Company shall have Class A
Members, Class B Members, and Class C Members. The Class B Members and the Class
C Members shall have no voting rights. The Members shall update Schedule A from
time to time as necessary to accurately reflect the information therein in
accordance with this Agreement.
Section 2.2. Initial Capital Contributions. Each Initial Member shall make
the initial Capital Contribution in such amount and form as specified for such
Member in Schedule A attached hereto. Each Initial Member shall make such
required initial Capital Contribution at such time and upon such terms as are
specified in Schedule A attached hereto, or if not so specified, such initial
Capital Contributions shall be made at the time of such Initial Member's
execution of this Agreement.
Section 2.3. Additional Capital Contributions. No Member shall be required
to make any additional Capital Contributions. However, if the Managers shall at
any time determine that additional Capital Contributions are necessary or
advisable, then, for a period of thirty (30) days after the Managers notify the
Members of such need for additional Capital Contributions, the Class A Members
and the Class B Members shall have the right, but not the obligation, to make
such additional Capital Contributions at the same price and upon the same terms
and conditions on a pro rata basis in accordance with their respective
Percentages. If any Class A Member or Class B Member does not agree to make such
additional Capital Contributions within such thirty (30)-day period, then such
additional Capital Contributions shall be made by participating Class A Members
and Class B Members only in exchange for Class C Interests. Notwithstanding the
foregoing, nothing in this Section shall preclude the Company from obtaining
additional Capital Contributions from, and issuing Interests (whether Class A,
Class B, Class C or other Interests) to, any Person other than NWS, the LaCrosse
Family Group, the ▇▇▇▇▇▇▇▇ Family Group, the Bart Family Group, or any of their
Affiliates, as deemed advisable by the Managers and approved by a Majority in
Interest of the Class A Members and a Majority in Interest of the Class B
Members pursuant to Section 11.1.
Section 2.4. Member Loans. Any Member may loan such funds to the Company
upon such terms and conditions as shall be approved by a Majority in Interest of
the Members. Any such Member loan shall not be considered a Capital
Contribution, except as otherwise agreed to in writing by the loaning Member and
a Majority in Interest of the Members.
Section 2.5. Capital Accounts.
Subsection 2.5.1. Maintenance of Capital Accounts. A separate Capital
Account shall be established and maintained for each Interest Holder in the
manner provided by Section 1.704-1(b)(2)(iv) of the Regulations. Capital
Accounts shall be maintained separately for Class A Interests, Class B
Interests, and Class C Interests for each Member, but the combined Capital
Accounts of any Member shall constitute such Member's single Capital
Account maintained as required by the Regulations. The Capital Account of
each Interest Holder shall consist of the amount of cash and the fair
market value of property (net of any liability secured by such property
that the Company is considered to assume or take subject to under Section
752 of the Internal Revenue Code) that the Interest Holder has contributed,
or is deemed herein to have contributed, to the Company as Capital
Contributions, adjusted as follows:
(a) The Capital Account of an Interest Holder shall be increased
by (i) all Profits allocated to such Interest Holder, (ii) any items
in the nature of income or gains specially allocated to the Interest
Holder pursuant to Section 3.3, and (iii) the amount of any Company
liabilities assumed by the Interest Holder (or which are secured by
Company property distributed to the Interest Holder).
(b) The Capital Account of an Interest Holder shall be decreased
by (i) all Losses allocated to the Interest Holder, (ii) any items in
the nature of expenses or losses specially allocated to the Interest
Holder pursuant to Section 3.3, and (iii) the amount of cash and the
fair market value of any Company property distributed to the Interest
Holder (net of any liability securing such distributed property that
the Interest Holder is considered to assume or take subject to under
Section 752 of the Internal Revenue Code).
(c) If the book value of the Company property is adjusted
pursuant to Section 3.4, the Capital Account of each Interest Holder
shall be adjusted to reflect the aggregate adjustment in the same
manner as if the Company had recognized gain or loss equal to the
amount of such aggregate adjustment.
(d) It is intended that the Capital Accounts of all Interest
Holders shall be maintained in compliance with the provisions of
Section 1.704-1(b) of the Regulations, and all provisions of this
Agreement relating to the maintenance of Capital Accounts shall be
interpreted and applied in a manner consistent with such Regulations.
The Capital Account of the Interest Holders shall be adjusted in any
other manner required by such Regulations or otherwise in order to be
deemed properly maintained for federal income tax purposes.
Subsection 2.5.2. Transferee's Capital Account. If any Interest is
transferred in compliance with this Agreement, the Capital Account of the
Transferor shall become the Capital Account of the Transferee to the extent
it relates to the transferred Interest in accordance with Section
1.704-1(b)(2)(iv)of the Regulations.
Subsection 2.5.3. No Obligation to Restore Negative Capital Account.
No Interest Holder shall have any liability or obligation to restore a
negative or deficit balance in such Interest Holder's Capital Account.
Section 2.6. Return and Withdrawal of Capital Contributions. No interest
shall accrue or be payable on any Capital Contribution or Capital Account. No
Interest Holder shall have the right to withdraw his Capital Contribution or to
demand and receive property of the Company or any distribution in return for his
Capital Contribution, except as expressly provided in the Put Option Agreement,
this Agreement, or as required by law. To the extent that an Interest Holder has
a right to demand a return of all or any portion of his Capital Contribution,
the Interest Holder shall not have a right to demand and receive a return of his
Capital Contribution in a form other than cash, irrespective of the nature of
his Capital Contribution.
ARTICLE III
Distributions and Allocations
Section 3.1. Distributions.
Subsection 3.1.1. Distributions of Net Cash Flow. If and to the extent
not prohibited by the Act, and subject to restrictions contained in any
Bank Agreements, the Net Cash Flow of the Company for each taxable year of
the Company shall be distributed to and among the Interest Holders, at such
times as shall be determined by the Managers (but, in the case of Tax
Distributions pursuant to Subsection 3.1.1(a), by no later than April 15
following such taxable year), as follows:
(a) First, to the Class A and Class B Interest Holders, an amount
equal to the Applicable Tax Rate multiplied by the earnings of the
Company taxable to such Interest Holders arising from the Company's
tax status as a partnership (the "Tax Distributions");
(b) Second, to the Class C Interest Holders, pro rata in
proportion to their respective Percentages, an amount equal to the
Class C Interest Holders' Priority Return for that taxable year;
(c) Third, to the Class C Interest Holders, pro rata in
proportion to their respective Percentages, until the Class C Interest
Holders have received an amount equal to the Class C Interest Holders'
Unpaid Priority Return;
(d) Fourth, to the Class C Interest Holders, pro rata in
proportion to their respective Percentages, until the Class C Interest
Holders have received an amount equal to the unpaid balance of the
Preference Amount (i.e., by redemption of the outstanding Class C
Units in accordance with and subject to the limitations set forth in
Section 8.2); and
(e) Fifth, to the Class A and Class B Interest Holders, pro rata
in proportion to their respective Percentages.
Notwithstanding the foregoing in this Subsection 3.1.1, any distributions
in anticipation of the dissolution of the Company or subsequent to the
occurrence of the dissolution of the Company shall be made as provided in
Section 12.4.
Subsection 3.1.2. Record Date for Distributions. Tax Distributions
shall be made to the Persons shown on the records of the Company to have
been Interest Holders of the Company in proportion to the length of time
that such Persons were Interest Holders of the Company for the applicable
taxable year. Any other distributions of Net Cash Flow or other assets of
the Company in respect of an Interest shall be made to the Persons shown on
the records of the Company to have been Interest Holders as of the date of
such distributions. Neither the Company nor any Manager or Member shall
incur any liability for making distributions in accordance with this
Subsection whether or not the Company or the Manager or Member has
knowledge or notice of any transfer or purported transfer of an Interest.
Section 3.2. Allocation of Profits and Losses. Except as may be required by
Section 704(c) of the Internal Revenue Code and after giving effect to the
special allocations set forth in Sections 3.3 and 3.4, Profits, Losses and other
items of income, gain, loss, deduction and credit for each taxable year of the
Company shall be allocated among the Interest Holders as follows:
Subsection 3.2.1. Losses. Losses for such taxable year shall be
allocated:
(a) First, solely to the Class C Interest Holders, pro rata in
proportion to their respective Percentages, until the Capital Accounts
of the Class C Interest Holders are reduced to zero; and
(b) Second, to the Class A and Class B Interest Holders, pro rata
in proportion to their respective Percentages.
Subsection 3.2.2. Profits. Profits for such taxable year shall be
allocated:
(a) First, to the Class C Interest Holders, pro rata, in an
amount equal to the cumulative Losses allocated to such Interest
Holders pursuant to Section 3.2.1 (a) for all prior taxable years,
less the cumulative Profits allocated to such Interest Holders
pursuant to this Section 3.2.2(a);
(b) Second, to the Class A and Class B Interest Holders, pro
rata, in an amount equal to the cumulative Losses allocated to such
Interest Holders pursuant to Section 3.2.1 (b) for all prior taxable
years, less the cumulative Profits allocated to such Interest Holders
pursuant to this Section 3.2.2(b) for all prior taxable years;
(c) Third, to the Class C Interest Holders, pro rata, in an
amount equal to their Priority Return for the current and all prior
taxable years, less the amount allocated to the Class C Interest
Holders in prior taxable years pursuant to this Section 3.2.2(c);
(d) Fourth, to the Class C Interest Holders, pro rata, in an
amount equal to the difference between the unpaid balance of their
Preference Amount and their Initial Capital Contributions, less any
amounts allocated pursuant to this Section 3.2.2(d) for all prior
taxable years; and
(e) Fifth, the remainder of the Profits to the Class A and Class
B Interest Holders, pro rata in proportion to their respective
Percentages.
Section 3.3. Special Allocations.
Subsection 3.3.1. Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(f) of the Regulations, if, during any taxable
year, there is a net decrease in Minimum Gain, notwithstanding any other
allocation pursuant to this Article III, each Interest Holder shall be
specially allocated items of income and gain for such taxable year (and, if
necessary, subsequent taxable years) in an amount equal to that Interest
Holder's share of the net decrease in Minimum Gain, determined in
accordance with Section 1.704- 2(g) of the Regulations. Such allocations
shall be made in proportion to the respective amounts required to be
allocated to each Interest Holder pursuant to such Regulations. Allocations
of income and gain pursuant to this Subsection shall be made first from
gain recognized from the disposition of Company assets subject to
nonrecourse liabilities (within the meaning of the Regulations promulgated
under Section 752 of the Internal Revenue Code), to the extent of the
Minimum Gain attributable to those assets, and thereafter, from a pro rata
portion of the Company's other items of income and gain for the taxable
year. This Subsection is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Regulations and shall
be interpreted consistently therewith.
Subsection 3.3.2. Member Minimum Gain. Except as otherwise provided in
Section 1.704-1(i)(4) of the Regulations, if there is a net decrease in
Member Minimum Gain during any taxable year, notwithstanding any other
allocation pursuant to this Article III, each Interest Holder who has a
share of the Member Minimum Gain, determined in accordance with Section
1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Company income and gain for such taxable year (and, if necessary,
subsequent taxable years) in an amount equal to such Person's share of the
net decrease in Member Minimum Gain, determined in accordance with Section
1.704-2(i)(4) of the Regulations. Such allocations shall be made in
proportion to the respective amounts required to be allocated to each
Interest Holder pursuant to such Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and
1.704-2(j)(2) of the Regulations. This Subsection is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of
the Regulations and shall be interpreted consistently therewith.
Subsection 3.3.3. Qualified Income Offset. No Interest Holder shall be
allocated Losses or deductions if the allocation causes an Interest Holder
to have an Adjusted Capital Account Deficit. If an Interest Holder receives
(i) an allocation of Loss or deduction (or item thereof), or (ii) any
distribution which causes the Interest Holder to have an Adjusted Capital
Account Deficit at the end of any taxable year, then all items of income
and gain of the Company (consisting of a pro rata portion of each item of
Company income, including gross income and gain) for that taxable year
shall be allocated to that Interest Holder, before any other allocation is
made of Company items for that taxable year, in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit of such
Interest Holder as quickly as possible and to the extent required by
Section 1.704-1(b)(2)(ii)(d) of the Regulations. This Subsection is
intended to comply with, and shall be interpreted consistently with, the
"qualified income offset" provisions of the Regulations promulgated under
Section 104(b) of the Internal Revenue Code.
Subsection 3.3.4. Nonrecourse Deductions. Nonrecourse Deductions for a
taxable year or other period shall be specially allocated among the Class A
and Class B Interest Holders, pro rata in proportion to their respective
Percentages.
Subsection 3.3.5. Member Loan Nonrecourse Deductions. Any Member Loan
Nonrecourse Deduction for any taxable year or other period shall be
specially allocated to the Interest Holder who bears the risk of loss with
respect to the loan to which the Member Loan Nonrecourse Deduction is
attributable in accordance with Section 1.704-2(i)(1) of the Regulations.
Subsection 3.3.6. Section 754 Adjustments. To the extent an adjustment
to the tax basis of any Company asset pursuant to Section 734(b) or Section
743(b) of the Internal Revenue Code is required, pursuant to Section
1.704-1(b)(2)(iv)(m) of the Regulations, to be taken into account in
determining Capital Accounts, the amount of the adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases basis), and
the gain or loss shall be specially allocated to the Interest Holders in a
manner consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such Regulations.
Subsection 3.3.7. Distribution of Assets. If the Company at any time
distributes any of its assets in kind to any Interest Holder, the Capital
Account of each Interest Holder shall be adjusted to account for that
Interest Holder's allocable share (as determined pursuant to Section 3.2)
of the Profits or Losses that would have been realized by the Company had
it sold the assets that were distributed at their respective fair market
values immediately prior to their distribution.
Subsection 3.3.8. Guaranteed Payments. To the extent any compensation
paid to any Member by the Company is determined by the Internal Revenue
Service not to be a guaranteed payment under Section 707(c) of the Internal
Revenue Code or is not paid to the Member other than in the Person's
capacity as a Member within the meaning of Section 707(a) of the Internal
Revenue Code, the Member shall be specially allocated gross income of the
Company in an amount equal to the amount of that compensation, and the
Member's Capital Account shall be adjusted to reflect the payment of that
compensation.
Subsection 3.3.9. Unrealized Receivables. If an Interest Holder's
Interest is reduced (provided the reduction does not result in a complete
termination of the Interest Holder's Interest), the Interest Holder's share
of the Company's "unrealized receivables" and "substantially appreciated
inventory" (within the meaning of Section 751 of the Internal Revenue Code)
shall not be reduced, so that, notwithstanding any other provision of this
Agreement to the contrary, that portion of the Profits otherwise allocable
upon a liquidation or dissolution of the Company which is taxable as
ordinary income (recaptured) for federal income tax purposes shall, to the
extent possible without increasing the total gain to the Company or to any
Interest Holder, be specially allocated among the Interest Holders in
proportion to the deductions (or basis reductions treated as deductions)
giving rise to such recapture. Any questions as to the aforesaid allocation
of ordinary income (recapture), to the extent such questions cannot be
resolved in the manner specified above, shall be resolved by the Managers.
Subsection 3.3.10. Withholding. All amounts required to be withheld
pursuant to Section 1446 of the Internal Revenue Code or any other
provision of federal, state, or local tax law shall be treated as amounts
actually distributed to the affected Interest Holders for all purposes
under this Agreement.
Subsection 3.3.11. Curative Allocations. The allocations set forth in
Subsections 3.3.1 through 3.3.6 (the "Regulatory Allocations") are intended
to comply with certain requirements of the Regulations. It is the intent of
the Members that, to the extent possible, all Regulatory Allocations shall
be offset either with other Regulatory Allocations or with special
allocations of the items of Company income, gain, loss, deduction, or
credit pursuant to this Subsection. Therefore, notwithstanding any other
provisions of this Article III (other than the Regulatory Allocations), the
Managers shall make such offsetting special allocations of income, gain,
loss, or deduction in whatever manner they determine appropriate so that,
after such offsetting allocations are made, the Capital Account balance of
each Interest Holder is, to the extent possible, equal to the Capital
Account balance which such Interest Holder would have had if the Regulatory
Allocations were not part of the Agreement. In exercising their discretion
under this Subsection, the Managers shall take into account future
Regulatory Allocations under Subsections 3.3.1 and 3.3.2 that, although not
yet made, are likely to offset other Regulatory Allocations previously made
under Subsections 3.3.4 and 3.3.5.
Section 3.4. Contributed Property and Book-Ups. In accordance with Section
704(c) of the Internal Revenue Code and the Regulations thereunder, as well as
Section 1.704(1)(b)(2)(iv)(d)(3) of the Regulations, income, gain, loss, and
deduction with respect to any property contributed (or deemed contributed) to
the Company shall, solely for tax purposes. be allocated among the Interest
Holders so as to take account of any variation between the adjusted basis of the
property to the Company for federal income tax purposes and its fair market
value of the date of contribution (or deemed contribution). If the adjusted book
value of any Company asset is adjusted as provided herein, subsequent
allocations of income, gain, loss, and deduction with respect to the asset shall
take account of any variation between the adjusted basis of the asset for
federal income tax purposes and its adjusted book value in the manner required
under Section 704(c) of the Internal Revenue Code and the Regulations
thereunder.
Section 3.5. Partial Year Allocations. If any Interest is transferred, or
if the number of Units outstanding is increased or decreased by reason of the
admission of an Additional Member or otherwise, during any fiscal year of the
Company, the Profits, Losses, and other items of income, gain, loss, deduction
and credit of the Company for such fiscal year shall be (i) assigned pro rata to
each day of such fiscal year during which such item is accrued or otherwise
incurred, and the amount of each item so assigned to any such day shall be
allocated to Interest Holders based upon their respective Percentages at the
close of each such day, or (ii) allocated among the Interest Holders in
accordance with Section 706 of the Internal Revenue Code and the Regulations
promulgated thereunder, using any conventions permitted by law.
ARTICLE IV
Management; Rights and Duties of Managers
Section 4.1. Management of Company's Business and Affairs. Except as
expressly provided otherwise in this Agreement or any mandatory provision of the
Act, the management, control, and operation of the business and affairs of the
Company shall be exclusively vested in the Managers. Except as expressly
provided otherwise in this Agreement or any mandatory provision of the Act, the
affirmative vote, approval, or consent of a majority in number of the Managers
shall be required to decide any matter that requires the approval of the
Managers.
Section 4.2. Number, Term and Qualifications. The Company shall initially
have three (3) Managers, and the initial Managers shall be ▇▇▇▇▇ ▇. LaCrosse,
▇▇▇▇▇▇▇▇ ▇. LaCrosse, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. The number of Managers may be
changed and fixed from time to time by the affirmative vote of a Majority in
Interest of the Members, but in no event shall there be less than one (1)
Manager. Each Manager shall serve until the first annual meeting of the Members
and until his successor is duly elected and qualified. At the first annual
meeting of the Members, and at each annual meeting of the Members thereafter,
the Managers shall be elected by a Majority in Interest of the Members, and each
Manager so elected shall serve for a term expiring at the next annual meeting of
the Members following his election and until his successor is duly elected and
qualified, or until his earlier death, resignation, or removal. Managers need
not be Members or natural persons.
Section 4.3. Powers of Managers. Except and subject to the rights and
authority reserved to the Members pursuant to Section 5.1 and elsewhere in this
Agreement, the Managers may generally exercise all powers of the Company and do
all lawful acts necessary, advisable, or convenient to carry out the business
and affairs of the Company, including, without limitation, the right, power, and
authority, on behalf of the Company, to:
(a) purchase, sell, lease, exchange, and otherwise deal with the
properties and assets of the Company at such price, rental, or amount, and
upon such terms and conditions, as the Managers shall deem advisable;
(b) borrow money and issue notes, bonds, and other debt obligations;
mortgage, grant a security interest in, or subject to any other lien, any
or all of the property of the Company; repay, refinance, modify, or extend
any loan and any mortgage or other security instrument or lien; and
guarantee any indebtedness of National Wine & Spirits Corporation, NWS, NWS
Michigan, Inc., or any other Affiliate of the Company that is engaged in
the business of selling, marketing or distributing alcoholic beverage
products, bottled water or other beverage products, or other similar
products;
(c) open, maintain and close accounts in the name of the Company in
banks, savings and loan associations, brokerage firms, and other financial
institutions; deposit funds into and withdraw funds from such accounts; and
draw checks and other orders for the payment of money by the Company;
(d) employ, retain, and discharge such employees, agents, managers,
architects, contractors, subcontractors, accountants, attorneys,
consultants and other Persons, including any other Member or Affiliate of
any Member, necessary or appropriate to carry out the business and affairs
of the Company, and to pay such fees, expenses, salaries, wages and other
compensation to such Persons as the Managers shall determine to be
reasonable;
(e) commence, defend, and settle, on behalf of the Company, any and
all actions and proceedings at law or equity before any court or
governmental, administrative, or other regulatory agency, body, or
commission;
(f) enter into, execute, and perform such contracts, agreements and
other undertakings to which the Company may be a party, including
agreements, undertakings and transactions with any Member or Manager, or
any of their Affiliates (subject to Section 14.3);
(g) incur and pay all expenses and obligations incident to the
management, control, and operation of the Company;
(h) make reasonable and necessary capital expenditures for the repair
and improvement of real estate held by the Company and take all actions
reasonably necessary for the maintenance, operation, and management
thereof;
(i) obtain and maintain, at the expense of the Company, public
liability, property, casualty, and other insurance coverage necessary or
desirable for the protection or conservation of the Company and its assets;
(j) invest funds of the Company temporarily in savings accounts in
federally insured financial institutions, certificates of deposits issued
by federally insured financial institutions, short-term interest-bearing
obligations of publicly-held corporations, state and local governments, and
the United States, and money market funds;
(k) prepare and cause to be prepared reports, statements and other
relevant information for distribution to Members as may be required or
determined to be appropriate by the Members from time to time;
(l) prepare and file all necessary returns and statements and pay all
taxes, assessments and other impositions applicable to the assets of the
Company; and
(m) execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Company in all matters
necessary or desirable or incidental to the foregoing.
Section 4.4. Reliance by Third Parties. Each Manager shall be an agent of
the Company for the purpose of its business, and any act of a Manager, including
the signing of an instrument in the Company's name, for apparently carrying on,
in the ordinary course, the Company's business or business of the kind carried
on by the Company shall bind the Company, unless (i) the Manager had no
authority to act for the Company in a particular matter, and (ii) the person
with whom the Manager was dealing knew or had notice that the Manager lacked
authority. Any act of a Manager which is not apparently for carrying on, in the
ordinary course, the Company's business or business of the kind carried on by
the Company shall bind the Company only if the act was authorized pursuant to
Section 5.1. Notwithstanding the foregoing, except as expressly provided
otherwise in the Articles, any Manager may sign and deliver any instrument
transferring or affecting the Company's interest in real property, and the
instrument shall be conclusive in favor of a person who gives value without
knowledge of the lack of the authority of the person signing and delivering the
instrument.
Section 4.5. Liability of Managers. The Managers shall not be liable for
damages to the Company or to the Members or any Transferees for any action taken
or failure to act on behalf of the Company, unless the act or omission
constitutes grossly negligent or reckless conduct, intentional misconduct, a
knowing violation of law, or a material breach of this Agreement. A Manager
shall not be liable when relying in good faith upon the records of the Company
and on the information, opinions, reports, or statements presented to the
Company by the Company's other Managers, Members, agents, or employees, or by
any other Person concerning matters which the Manager reasonable believes are
within such other Person's professional or expert competence, and who has been
selected with reasonable care by or on behalf of the Company, including
information, opinions, reports, or statements concerning the value and amount of
the assets, liabilities, profits, or losses of the Company or other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid.
Section 4.6. Compensation. The Company may pay to the Managers such
compensation for services rendered to the Company as shall be determined from
time to time by the Members. Such compensation shall be treated as expenses of
the Company and shall not be deemed to constitute distributions to the recipient
of any Profits, Losses, or capital of the Company.
Section 4.7. Reimbursement of Expenses. Each Manager shall be entitled to
reimbursement by the Company of expenses reasonably incurred and paid by such
Manager on behalf of or for the benefit of the Company. Any question as to
whether a Manager is entitled to reimbursement of expenses under this Section
shall be determined by a Majority in Interest of the Members.
Section 4.8. Resignation. A Manager may resign as a Manager of the Company
at any time by giving written notice thereof to the Company, which resignation
shall be effective when such notice is given to the Company, unless such notice
specifies a later effective date. The resignation of a Manager who is also a
Member shall not affect the Manager's rights as Member and shall not constitute
a withdrawal of the Member.
Section 4.9. Removal. Any Manager may be removed, with or without cause, by
the affirmative vote of a Majority in Interest of the Members. Such removal
shall be effective when written notice thereof, signed by a Majority in Interest
of the Members is received by the Manager, unless such notice specifies a later
effective date. The removal of a Manager who is also a Member shall not affect
the Manager's rights as a Member and shall not constitute a withdrawal of the
Member.
Section 4.10. Vacancies. Any vacancy occurring among the Managers caused by
an increase in the number of Managers shall be filled by the affirmative vote of
a Majority in Interest of the Members. Any vacancy occurring among the Managers,
whether caused by the death, resignation, or removal of a Manager, or for any
other reason (other than an increase in the number of Managers), may be filled
by the affirmative vote of a majority in number of the remaining Managers then
in office; provided, however, that if there are no remaining Managers, the
vacancy or vacancies shall be filled by the affirmative vote of a Majority in
Interest of the Members.
Section 4.11. Power of Attorney. Each Member constitutes and appoints each
and every Manager as the Member's true and lawful attorney-in-fact (the
"Attorney in Fact"), in the Member's name, place and stead, to make, execute,
sign, acknowledge and file:
(a) The Articles, and all amendments thereto made in accordance with
this Agreement;
(b) Any and all certificates, instruments or other documents required
to be filed by the Company under the laws of the State of Illinois or of
any other state or jurisdiction, including, without limitation, any
certificate or other instruments necessary in order for the Company to
continue to qualify as a limited liability company under the laws of the
State of Illinois;
(c) One or more fictitious, assumed name, or trade name certificates;
(d) Any and all certificates, instruments and other documents which
may be required to dissolve and terminate the Company; and
(e) All other certificates, instruments and documents that may be
required or permitted by law to be filed on behalf of the Company that are
not inconsistent with the provisions of this Agreement.
This power of attorney granted herein is irrevocable and shall be deemed to be
coupled with an interest, and, to the extent permitted by applicable law, shall
survive the death or disability of a Member. This power of attorney shall also
survive any Transfer of any Interest, except that if the Transferee is admitted
as a Substitute Member, this power of attorney shall survive the delivery of the
assignment for the sole purpose of enabling the Attorney in Fact to execute,
acknowledge and file any documents necessary to effectuate the admission of the
Transferee as a Substitute Member. Each Member shall be bound by any
representations made by the Attorney in Fact acting in good faith pursuant to
this power of attorney, and each Member hereby waives any and all defenses which
may be available to contest, negate, or disaffirm the action of the Attorney in
Fact taken in good faith under this power of attorney.
ARTICLE V
Rights and Duties of Members
Section 5.1. Management Rights of Members. Except as expressly provided
otherwise in the Articles or this Agreement or by any mandatory provision of the
Act, no Member, except a Member who is also a Manager (and then only in his
capacity as a Manager within the scope of his authority hereunder), shall
participate in the management of the business or affairs of the Company, said
powers being vested solely and exclusively in the Managers. Notwithstanding the
preceding sentence, the Members shall have the right to approve the following
matters (which are the only matters of the Company's business requiring the
consent of the Members):
(a) the election and removal of a Manager or Managers, in accordance
with Article IV;
(b) the amendment of the Articles, in accordance with the Act;
(c) the amendment of this Agreement, in accordance with Section 14.4;
(d) the approval of the admission of an Additional Member, in
accordance with Section 11.1;
(e) the dissolution of the Company, in accordance with Section 12.1;
(f) the continuation of the business of the Company after dissolution
of the Company, in accordance with Section 12.2;
(g) any of the following actions which shall require the consent of a
Majority in Interest of the Class A Members and a Majority in Interest of
the Class B Members: (i) the sale of all or substantially all of the
Company's assets or any material asset to an Affiliate of the Company, any
Member, or any Affiliate of any Member; (ii) the merger of the Company with
or into an Affiliate of the Company, any Member that is an Entity, or any
Affiliate of any Member: (iii) a material change in the Company's business
outside of the beverage industry: and (iv) a material employment contract
or consulting agreement with a Member, an Affiliate of the Member, or an
Affiliate of the Company, unless such agreement is substantially similar in
all material respects to agreements negotiated at arm's length with third
parties; and
(h) any other matters for which the consent or approval of the Members
is expressly required pursuant to this Agreement, the Articles, or any
mandatory provision of the Act.
Section 5.2. Approval of Matters by Members. Except as expressly provided
otherwise in the Articles or this Agreement or by any mandatory provision of the
Act, each matter required or permitted to be approved by the Members shall be
considered approved or consented to upon the affirmative vote, approval, or
consent, either in writing or at a meeting of the Members, of a Majority in
Interest of the Class A Members.
Section 5.3. Meetings of Members.
Subsection 5.3.1. Annual Meetings. The annual meeting of the Members
shall be held on the first Thursday of April of each year at 10:00 a.m., if
such day is not a legal holiday, and if such day is a legal holiday, then
on the next following business day that is not a legal holiday, or at such
time and on such date as shall otherwise be fixed by the Managers and
specified in the notice of such meeting. The failure to hold the annual
meeting of the Members at the designated time shall not affect the validity
of any Company action.
Subsection 5.3.2. Special Meetings. Special meetings of the Members
shall be held if called by those Members holding at least twenty-five
percent (25 %) of the Percentages then held by the Members entitled to vote
on any matter and describing the purposes of the meeting.
Subsection 5.3.3. Place of Meetings. 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 Illinois, as may be specified in the
notice of the meeting, or waiver of notice thereof.
Subsection 5.3.4. Notice of Meetings. Notice of the date, time and
place of each annual and special meeting of the Members, and a description
of the purpose or purposes of such meeting if it is a special meeting,
shall be given by the Managers or by the Members who called the meeting to
each Member of record entitled to vote at such meeting no fewer than ten
(10) nor more than sixty (60) days before the date of the meeting, in the
manner specified in Section 14.12.
Subsection 5.3.5. Waiver of Notice. Notice of any such meeting may be
waived by any Member before or after the date and time stated in the notice
by delivering a written waiver of notice to the Company for inclusion in
the minutes or filing with the Company records. A Member's attendance at a
meeting, either in person or by duly authorized proxy: (i) waives objection
to lack of notice or defective notice of the meeting, unless the Member at
the beginning of the meeting objects to holding the meeting or transacting
business at the meeting; and (ii) waives objection to consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the Member objects to considering
the matter when it is presented.
Subsection 5.3.6. Record Date. For the purpose of determining the
Members entitled to notice of a Members' meeting, to demand a special
meeting, to vote, or to take any other action, the record date for
determining Members entitled to notice of and to vote at an annual or
special Members' meeting shall be the close of business on the day before
the notice is first mailed, sent, or delivered to the Members.
Subsection 5.3.7. Voting at Meetings.
(a) Voting Rights. The Class B Members and the Class C Members
shall have no voting rights. Except as expressly provided otherwise in
the Articles or by any mandatory provision of the Act, each Member
entitled to vote shall be entitled to one (1) vote for each Unit owned
by such Member, or such fraction of one (1) vote for each fractional
Unit owned by such Member, on each matter voted on at a meeting of the
Members.
(b) Voting of Units Owned by Other Corporations. Any Units
standing in the name of another corporation may be voted by such
officer, agent or proxy as the Board of Directors of such other
corporation may appoint, or as the By-Laws of such other corporation
may prescribe, and in the absence of such designation, by such Person
as may be nominated in a proxy duly executed for the purpose by the
President or a Vice President, and a Secretary or an Assistant
Secretary, of such other corporation.
(c) Voting of Units Owned by Fiduciaries. Units held by
fiduciaries may be voted by the fiduciaries in such manner as the
instrument or order, appointing such fiduciaries, may direct. In the
absence of such direction, or the inability of the fiduciaries to act
in accordance therewith, the following provisions shall apply:
(i) Where Units are held jointly by three or more fiduciaries,
such Units shall be voted in accordance with the will of the
majority in number of such fiduciaries.
(ii) Where the fiduciaries, or a majority of them, cannot agree,
or where they are equally divided, upon the question of
voting such Units, any court of general equity jurisdiction
may, upon petition filed by any of such fiduciaries, or by
any party in interest, direct the voting of such Units as it
may deem for the best interests of the beneficiaries, and
such Units shall be voted in accordance with such
direction..
(iii)The general proxy of a fiduciary shall be given the same
weight and effect as the general proxy of an individual or
corporation.
(d) Voting of Pledged Units. Units that are pledged may, unless
otherwise provided in the agreement of pledge, be voted by the Member
pledging the same until the Units shall have been transferred to the
pledgee on the books of the Company and the pledgee shall have been
admitted as a Substitute Member, and thereafter they may be voted by
the pledgee.
(e) Proxies. A Member may vote such Member's Units in person or
by proxy appointed by a written appointment form signed by such Member
or by such Member's attorney-in-fact. An appointment of a proxy is
effective when received by the Secretary or other officer or agent of
the Company authorized to tabulate votes. An appointment of a proxy is
valid for eleven (11) months unless a shorter or longer period is
expressly provided in the appointment form.
Subsection 5.3.8. Conduct of Meetings. At any meeting of the Members,
any Manager or other Person selected by a majority in number of all of the
Managers shall preside as chairman at any meeting of the Members. The
chairman of any meeting of the Members shall appoint a Person to act as
secretary of the meeting, and the secretary of the meeting shall prepare
minutes of the meeting which shall be placed in the minute books of the
Company. The order of business at each Members' meeting shall be as
determined by the chairman of the meeting , except that the order of
business at any meeting may be changed by the vote of the Members present
in person or by proxy and entitled to vote as such meeting.
Subsection 5.3.9. Action by Unanimous Written Consent. Any action
required or permitted to be taken at a Members' meeting may be taken
without a meeting if the action is approved by all of the Members entitled
to vote on the action, evidenced by one or more written consents describing
the action taken, signed by all of the Members entitled to vote on the
action, and delivered to the Company for inclusion in the minutes or filing
with the Company records. Unless the record date has been determined
pursuant to Subsection 5.3.6, the record date. for determining Members
entitled to take action without a meeting shall be the earliest date on
which any Member signs a consent. Such action by the Members by unanimous
written consent shall be effective when the last Member signs a consent,
unless the consent specifies a different prior or subsequent effective
date.
Subsection 5.3.10. Participation in Meetings by Conference
Telecommunication. Any or all Members may participate in a Members' meeting
by or through the use of any means of communication by which all Members
participating may simultaneously hear each other during the meeting. A
Member participating in a meeting by this means shall be deemed to be
present in person at the meeting.
Section 5.4. No Authority to Bind Company. A Member acting solely in such
Member's capacity as a Member (rather than as a Manager) shall not be an agent
of the Company and shall not have any right, power, or authority to transact any
business in the name of the Company or to act for or on behalf of, or to bind,
the Company.
Section 5.5. No Duties. No Member shall have any duties to the Company or
to the other Members solely by reason of being a Member or acting in the
capacity as a Member of the Company, except as provided otherwise in this
Agreement or the Articles.
Section 5.6. Compensation. No Member shall be entitled to any compensation
for services performed for the Company in such Member's capacity as a Member,
except as approved by the Managers, and except for reasonable compensation for
services rendered in winding up the business of the Company. Any such
compensation so approved by the Members shall be treated as expenses of the
Company and shall not be deemed to constitute distributions of Profits or
capital of the Company.
Section 5.7. Reimbursement of Expenses. Each Member shall be entitled to
reimbursement by the Company of expenses reasonably incurred and paid by such
Member on behalf of or for the benefit of the Company. Any question as to
whether a Member is entitled to reimbursement of expenses under this Section
shall be determined by the Managers.
Section 5.8. Further Assurances. Each Member agrees to execute and deliver
to the Company, within five (5) days after receipt of a written request
therefor, all estoppel certificates, other certificates, designations, powers of
attorney, and other instruments and documents, including, without limitation,
all amendments to this Agreement adopted in accordance with this Agreement, tax
statements, and tax returns, and to take such other actions, as the Company
shall deem necessary or advisable to comply with any laws, rules or regulations
applicable to the Company or to enable the Company to carry on its business or
otherwise effectuate the purposes of this Agreement.
Section 5.9. Waiver of Partition. Each Member, on behalf of such Member and
such Member's successors and assigns, hereby waives any rights to have any
property of the Company partitioned. No Member shall make any application to any
court or other authority, or otherwise commence or prosecute any action or
proceeding, for partition or sale of the Company property. Upon any breach of
this Section, the Company and each non-breaching Member shall be entitled to a
decree or other order restraining and enjoining any such application, action or
proceeding.
ARTICLE VI
Officers
Section 6.1. Election, Qualification and Term of Officers. The officers of
the Company shall consist of a President, a Secretary, a Treasurer, and such
other officers as the Managers may from time to time deem advisable, including,
without limitation, a Chairman of the Managers, one or more Vice Presidents, an
Assistant Secretary, or an Assistant Treasurer. The same individual may
simultaneously hold more than one office in the Company. The initial officers of
the Company shall be elected at the first meeting of the Managers. Thereafter,
the officers of the Company shall be chosen annually at the annual meeting of
the Managers, and each officer shall hold office until his successor is chosen
and qualified, or until his death, resignation, or removal. The election or
appointment of an officer does not itself create contract rights.
Section 6.2. Resignation. Any officer may resign at any time by delivering
notice to the Managers, or the President or Secretary of the Company, which
resignation shall be effective when the notice is delivered unless the notice
specifies a later effective date. The resignation of an officer does not affect
the Company's contract rights, if any, with the officer.
Section 6.3. Removal. Any officer may be removed at any time, with or
without cause, by the Managers; provided, however, that the removal of an
officer does not affect such officer's contract rights, if any, with the
Company.
Section 6.4. Vacancies. Any vacancy in any office because of the death,
resignation, removal, increase in the number of offices of the Company, or
otherwise, shall be filled by the Managers, and the officer so elected shall
hold office until his successor is chosen and qualified, or until his death,
resignation or removal.
Section 6.5. Chairman of the Managers. The Chairman of the Managers (if
any) shall be chosen from among the Managers. The Chairman of the Managers shall
preside at all meetings of the Managers at which he is present, and shall
generally perform all duties incident to the office of Chairman of the Managers
and such other duties as, from time to time, may be assigned to him by the
Managers.
Section 6.6. President. If and while there is no incumbent in the office of
Chairman of the Managers, and during the absence or disability of the Chairman
of the Managers, the President shall have the duties and authority of the
Chairman of the Managers. Subject to the control of the Managers and unless as
otherwise determined by the Managers, the President shall be the chief executive
and operating officer of the Company, shall direct and manage the business and
affairs of the Company, and shall coordinate and supervise the work of its other
officers. The President shall preside at all meetings of the Members at which he
is present. Either personally or through other officers or employees of the
Company, the President shall employ, direct, fix the compensation of,
discipline, and discharge its personnel; employ agents, professional advisers
and consultants; and perform all functions of a general manager of the Company's
business. The President shall have authority to sign (either manually or in
facsimile), with the Secretary or an Assistant Secretary, certificates
representing Units or Interests of the Company. The President shall also have
authority to execute and deliver on behalf of the Company, singly and without
any additional signature or attestation, all deeds, mortgages, assignments,
contracts and other instruments when required or deemed necessary or advisable
by him in the ordinary conduct of the Company's normal business, except where
such documents are expressly required by this Agreement, by resolution of the
Managers, or by law to be executed by some other or an additional officer or
agent of the Company. The President shall, in general, have all authority
incident to the office of the President and shall have such other powers and
duties as may, from time to time, be conferred upon or assigned to him by the
Managers.
Section 6.7. Vice Presidents. The Vice Presidents (if any) shall perform
such duties as may be assigned to them, individually or collectively, by the
Managers or by the President. In the absence or disability of the President, one
or more of the Vice Presidents may perform such duties of the President as the
President or the Managers may designate.
Section 6.8. Secretary. The Secretary shall: (i) prepare or cause to be
prepared the minutes of the meetings of the Members and the Managers in books
provided for such purpose and authenticate records of the Company; (ii) attend
to the giving of all notices in accordance with the provisions of this Agreement
and as required by law; (iii) have the authority (when required) to sign with
the President or a Vice President in the name of the Company, and/or attest the
signature of either to, all contracts, conveyances, transfers. assignments,
encumbrances, authorizations and all other instruments, documents and papers, of
any and every description whatsoever, of or executed for or on behalf of the
Company; (iv) be the custodian of the records and the seal (if any) of the
Company and attend to the affixing of the seal (if any) to all documents, the
execution of which on behalf of the Company under its seal is duly authorized in
accordance with the provisions of this Agreement; (v) have authority to sign
(either manually or in facsimile), with the President or a Vice President, any
and all certificates representing Units or Interests of the Company; (vi) have
charge of and maintain and keep, or supervise and control the maintenance and
keeping of, the Unit certificate books and transfer books (if any), and such
other books and papers as the Managers may authorize, direct or provide for;
(vii) perform generally all the duties incident to the office of Secretary; and
(viii) have such other powers and duties as may, from time to time, be conferred
upon or assigned to him by the Managers.
Section 6.9. Treasurer. Unless otherwise determined by the Managers or the
President, the Treasurer shall be the financial officer of the Company. The
Treasurer shall: (i) have charge and custody of, and be responsible for, all
funds and securities of the Company which come into his hands; (ii) have
authority to endorse on behalf of the Company, for collection, checks, notes and
other obligations, and deposit the same to the credit of the Company in such
banks or other depositories as shall be selected by the Managers; (iii) receive,
and give receipts and vouchers for, payments made to the Company from any source
whatsoever; (iv) enter or cause to be entered, punctually and regularly, on the
books of the Company, to be kept by him or under his supervision or direction
for that purpose, full and accurate accounts of all monies received and paid out
by, for or on account of, the Company; (v) render to the President and the
Managers, whenever required by them, an account of all of his transactions as
Treasurer of the Company and of the financial condition of the Company; (vi)
perform generally all the duties incident to the office of Treasurer; and (vii)
have such other powers and duties as may, from time to time, be conferred upon
or assigned to him by the Managers or by the President. If required by the
Managers, the Treasurer shall give such bond for the faithful performance of his
duties in such amount and with such sureties as the Managers shall determine.
Section 6.10. Assistant Secretaries. The Assistant Secretaries (if any)
shall perform such duties as from time to time may be assigned to them,
individually or collectively, by the Managers, by the President, any Vice
President, or by the Secretary. In the absence or disability of the Secretary,
one or more of the Assistant Secretaries may perform such duties of the
Secretary as the Secretary, the President, or the Managers may designate.
Section 6.11. Assistant Treasurers. The Assistant Treasurers (if any) shall
perform such duties as from time to time may be assigned to them, individually
or collectively, by the Managers, by the President, by any Vice President, or by
the Treasurer. In the absence or disability of the Treasurer, one or more of the
Assistant Treasurers may perform such duties of the Treasurer as the Treasurer,
the President, or the Managers may designate.
Section 6.12. Delegation of Authority. In the case of the absence of any
officer of the Company, or for any other reason that the Managers may deem
sufficient, the Managers may delegate powers or duties of such officer to any
other officer or officers for such length of time as they may determine.
Section 6.13. Compensation. Each officer of the Company shall receive such
compensation, if any, for his service in such office as may be fixed from time
to time by action of the Managers.
ARTICLE VII
Accounting and Records
Section 7.1. Fiscal Year. The fiscal year of the Company for financial
reporting shall commence on the first day of April in each year and end on the
last day of March in each year.
Section 7.2. Books and Records. The Managers shall keep or cause to be kept
complete and accurate books and records of the Company and supporting
documentation of transactions with respect to the conduct of the Company's
business. The books and records shall be maintained in accordance with sound
accounting practices and shall be appropriate and adequate for the Company's
business.
Section 7.3. Records and Information at Principal Place of Business. The
Company shall keep at its principal place of business all records required to be
kept by Section 1-40 of the Act, including the following records and
information:
(a) A list of the full name and last known address of each Member
setting forth the amount of cash each Member has contributed, a description
and statement of the agreed value of the other property or services each
Member has contributed or has agreed to contribute in the future, and the
date on which each became a Member;
(b) A copy of the Articles, together with executed copies of any
powers of attorney under which any Articles, application, or certificate
has been executed;
(c) Copies of the Company's federal, state, and local income tax
returns and reports, if any, for the three (3) most recent years; and
(d) Copies of the then effective Agreement and all amendments thereto
and all financial statements of the Company for the three (3) most recent
fiscal years.
Section 7.4. Access to Records. Any Member, legal representative of a
deceased Member, or Member under legal disability may, at his request and
expense, inspect and copy the records described in Section 7.3. The Company
shall provide Members and their agents and attorneys access to its records
(including the records required to be kept under Section 7.3) at the Company's
principal place of business at all reasonable times. The Company shall provide
former Members and their agents and attorneys access for proper purposes to such
records pertaining to the period during which they were Members at the Company's
principal place of business. Such right of access shall include the right to
inspect and copy records during ordinary business hours. The Company may impose
a reasonable charge, limited to the costs of labor and material, for copies of
records furnished. Each Member has the right upon written demand given to the
Company to obtain a copy of the Agreement at the Company's expense.
Section 7.5. Tax Returns and Information. The Managers shall cause to be
prepared and timely filed all tax returns required to be filed by the Company
pursuant to the Internal Revenue Code and the laws of each state in which the
Company does business. The Managers shall use their best efforts to cause the
Company to deliver, within ninety (90) days after the end of each taxable year
of the Company, to each Person who was an Interest Holder at any time during
such taxable year all tax information concerning the Company which is necessary
for the preparation of the Interest Holder's federal and state income tax
returns for such taxable year, as required by the Internal Revenue Code, the
Regulations, and the laws of any state.
Section 7.6. Tax Elections. The Managers may make any and all tax elections
permitted to be made by the Company pursuant to the Internal Revenue Code or the
tax laws of any state or other jurisdiction having taxing jurisdiction over the
Company; provided, however, that the Managers shall make any tax election
requested by a Majority in Interest of the Members.
Section 7.7. Tax Matters Partner. NWS, or such other Member as shall from
time to time be designated by a Majority in Interest of the Members. shall be
the "tax matters partner" of the Company pursuant to Section 6231 (a)(7) of the
Internal Revenue Code. The tax matters partner shall have all powers and
responsibilities provided in the Internal Revenue Code. The tax matters partner
shall keep all Members informed of all notices from government taxing
authorities which may come to the attention of the tax matters partner. The tax
matters partner shall incur no liability to any Member with respect to any
action undertaken in good faith in connection with such responsibilities. The
Company shall pay and be responsible for all reasonable third party costs and
expenses incurred by the tax matters partner in performing such
responsibilities. Each Member shall be responsible for any costs incurred by the
Member with respect to any tax audit or tax-related administrative or judicial
proceeding against the Member, even though it relates to the Company. The tax
matters partner shall not compromise any dispute with the Internal Revenue
Service without the approval of a Majority in Interest of the Members.
Section 7.8. Bank Accounts. All funds of the Company shall be deposited in
a bank account or accounts in the Company's name. The Managers shall determine
the institution or institutions at which the accounts will be opened and
maintained, the types of accounts, and the Persons who will have authority with
respect to the accounts and the funds therein.
ARTICLE VIII
Provisions Affecting Class C Membership Interests
Section 8.1. Liquidation Preference. In the event of the liquidation,
dissolution or winding up of the affairs of the Company, voluntary or
involuntary, the Class C Interest Holders shall be entitled to be paid out of
the assets of the Company available for distribution to the Interest Holders an
amount equal to the sum of: (i) the unpaid Preference Amount with respect to
such Class C Interests, plus (ii) the amount of the Unpaid Priority Return with
respect to such Class C Interests (the "Liquidation Preference Amount"), in
preference to and before any amount shall be distributed or paid to the Class A
Interest Holders and Class B Interest Holders. Except for the payment of such
Liquidation Preference Amount, the Class C Interest Holders shall not be
entitled to any further distributions upon the liquidation, dissolution or
winding up of the Company.
Section 8.2. Redemption of Class C Membership Interests. Subject to any
restrictions and covenants contained in any Bank Agreements, the Company shall
have the right from time to time to purchase and redeem, any or all of the
outstanding Class C Units, in such manner and amounts as the Managers may
determine, by paying in cash therefor an amount equal to the Preference Amount
per Unit multiplied by the number of Class C Units so purchased and redeemed,
together with all Unpaid Priority Returns with respect to such redeemed Class C
Units to the date fixed for redemption (the "Redemption Price"); provided,
however, that (except in the event of the liquidation or dissolution of the
Company, the sale of substantially all of the assets of the Company, or the
purchase of all Class C Interests owned by an Interest Holder pursuant to this
Agreement) the maximum number of Class C Units subject to redemption in any
calendar year shall not exceed two hundred (200) Class C Units. In the event
that less than all of the issued and outstanding Class C Units are purchased and
redeemed by the Company, the Managers shall have full power and sole discretion
to determine the Class C Units to be purchased and redeemed, or may purchase and
redeem Class C Units from all Class C Interest Holders on a pro rata basis. Less
than all of the Class C Units at any time outstanding may not be redeemed until
all Unpaid Priority Returns shall have been paid for all past years and until
full Priority Returns for the then current year on all Class C Units then
outstanding (other than Class C Units to be purchased and redeemed) shall have
been paid. The Company shall give written notice of the redemption of any Class
C Units not less than ten (10) days prior to the date designated in such notice
as a day for such redemption to the holders of the Class C Units to be redeemed.
ARTICLE IX
Provisions Affecting Class B Membership Interests
Section 9.1. LaCrosse Family Group's Option to Purchase Class B Units. At
any time on or after 12:01 a.m. (Chicago, Illinois, time) on the fifteenth
(15th) anniversary of the Effective Date of this Agreement (the "LaCrosse Option
Date"), the LaCrosse Family Group or any members thereof shall have the option
to purchase no less than all of the Class B Units owned by the Bart Family Group
(the "Option"). The LaCrosse Family Group may at any time assign its Option
rights hereunder to the Company or NWS, or any of their respective Affiliates.
The Option shall be subject to the following terms and conditions:
(a) The exercise of the Option shall be in writing and shall set out,
in reasonable detail, the terms and conditions of the proposed purchase,
including the number of Class B Units being offered (which must be all),
the price per Class B Unit, the total option price (the "Exercise Price"),
a statement of the manner in which the Exercise Price may be paid as set
out in paragraph (b) of this Section 9.1, the date of the closing (the
"Closing"), which shall not be less than sixty (60) days nor more than
ninety (90) days from the date of the exercise of the Option, and which
Closing shall be during regular business hours, and the place of such
Closing shall be within the City of Chicago, Illinois. The date that the
LaCrosse Family Group gives notice of the exercise of the Option shall be
referred to in this Agreement as the "Option Exercise Date." The Exercise
Price shall be equal to the sum of (i) the purchase price for the Class B
Units as determined in accordance with Section 9.3. plus (ii) if the Option
Exercise Date occurs during the 10 year period commencing on the LaCrosse
Option Date, a premium amount, depending on the calendar year during which
the Option Exercise Date occurs, starting at twenty percent (20%) of such
purchase price, if the Option Exercise Date occurs during the calendar year
commencing on the LaCrosse Option Date, and reducing by two percent (2%)
each calendar year thereafter so that after the end of such 10 year period
the premium amount shall be zero. All Members agree that, upon the Closing,
each Purchaser of Class B Units pursuant to the Option shall be admitted as
a Substitute Member of the Company.
(b) The Purchaser(s) of the Class B Units in accordance with the terms
of this Section 9.1 may, at their option, pay no less than twenty percent
(20%) of the Exercise Price in cash at the Closing with the remainder to be
paid in four (4) consecutive equal annual installments commencing after the
Closing date. Interest at the Applicable Interest Rate shall be payable on
the unpaid principal balance at the same time that principal installments
are due and payable. The unpaid balance shall be evidenced by a series of
four (4) promissory notes to each selling Class B Interest Holder made by
the Purchaser(s) in such form as is reasonably acceptable to both Family
Groups. Each note may be prepaid in whole or in part at any time without
premium or penalty; provided that any prepayment shall be applied against
the installments thereafter falling due in the inverse order of their
maturities.
(c) Each Purchaser of Class B Units pursuant to this Section
9.1 shall assign to and grant a security interest in the Class B Units
purchased by the Purchaser (the "Collateral") to the Bart Family Group, as
collateral security for the payment of all notes by such Purchaser made in
accordance with paragraph (b) of this Section 9.1. All Class B Units held
as collateral security shall be unencumbered as a requirement for the
exercise of the deferred payment option under paragraph (b) of this Section
9.1. The Collateral shall be so held until all of the notes payable by the
Purchaser shall have been paid. Upon default in the payment of any one (1)
note, the Bart Family Group may sell the Collateral at public or private
sale held in accordance with the provisions of the Uniform Commercial Code
as enacted in the State of Illinois. All parties agree that thirty (30)
days' written notice of the public or private sale to the defaulting
Purchasers shall be reasonable notification of such matters. The Bart
Family Group and any of its members shall have the right to bid at any such
sale. The proceeds of any such sale shall be applied first to the expenses
thereof, and next to the payment of the then unpaid balance due and owing
the Bart Family Group from such Purchaser. The excess of such proceeds, if
any, shall be paid to such Purchaser. If the proceeds are insufficient to
satisfy the unpaid balance, the Purchaser shall be liable for any
deficiency. During the time the Collateral is held in accordance herewith,
so long as the Purchaser is not in default, the Purchaser shall be entitled
to all Membership Interests with respect to the Class B Interests purchased
by the Purchaser, including any distributions with respect thereto.
Section 9.2. Right of First Refusal to Purchase Class B Units.
(a) In the event that on or after the LaCrosse Option Date, any member
of the Bart Family Group shall receive a bona fide written offer (the
"Original Offer") for the purchase for cash of all or part of his Class B
Units or Interests, he shall notify the LaCrosse Family Group and the
Company that such offer has been made. Such notice shall be in writing and
shall have attached thereto a copy of the Original Offer.
(b) If the Bart Family Group intends to accept the Original Offer,
they shall give written notice to the LaCrosse Family Group, NWS, and the
Company that they intend to accept such offer. Such notice shall be deemed
to be an offer to sell all of the Class B Units referred to in the Original
Offer to the LaCrosse Family Group (or any member thereof). NWS, and/or the
Company for the same consideration and on the same terms and conditions as
forth in the Original Offer (other than the Closing Date).
(c) Thereafter, for a period of ninety (90) days after the date of
such notice, the LaCrosse Family Group, NWS, and the Company shall have
exclusive right to purchase all, but not less than all, of the Class B
Units referred to in the Original Offer. As, among the LaCrosse Family
Group, NWS, and the Company, the LaCrosse Family Group shall have the first
right, NWS shall have the second right, and the Company shall have the
third right, to purchase the Class B Units referred to in the Original
Offer.
(d) The closing of any such sale of the Class B Units shall take place
upon such date at such time and place as shall be agreed to by the Bart
Family Group and the Purchasers of the Class B Units, but in no event later
than ninety (90) days after notice of the Original Offer to the LaCrosse
Family Group, NWS, and the Company. Upon the payment to the Bart Family
Group of the price set forth in the Original Offer, the Bart Family Group
shall assign to the Purchaser(s) all Membership Interests with respect to
the Units purchased by the Purchasers, free and clear of any liens,
encumbrances, restrictions and other claims (except for transfer
restrictions imposed by this Agreement). The Members agree that, upon the
Closing, the Purchaser(s) of the Class B Units shall be admitted as
Substitute Member(s) of the Company.
(e) In the event that the LaCrosse Family Group, NWS, and/or the
Company elect not to exercise such right of first refusal, the Bart Family
Group shall then have the right to convey to and only to the party making
the Original Offer the number of Class B Units referred to, and strictly in
accordance with the terms and conditions stated in, the Original Offer,
provided, however, if the Bart Family Group does not complete the transfer
of such offered Class B Units to the party specified in the Original Offer
within ninety (90) days after the LaCrosse Family Group, NWS, and the
Company fail to exercise their right of first refusal to purchase such
offered Class B Units pursuant to this Section 9.2, then the authority of
the Bart Family Group to transfer such Class B Units shall terminate, and
all Class B Units shall again be subject to all of the terms, conditions
and restrictions of this Agreement. Such Class B Units, whether purchased
by the third party or by the LaCrosse Family Group, NWS, or the Company
shall continue to be subject to the terms, covenants and conditions of this
Agreement.
Section 9.3. Purchase Price.
Subsection 9.3.1. Purchase Price for Class B Units. The purchase price
for each Class B Unit purchased and sold pursuant to Section 9.1 of this
Agreement shall be equal to (plus any premium amount required by Section
9.1):
(a) A total of:
(i) The Adjusted Net Book Value of the Company (as
determined in accordance with Subsection 9.3.2) as of
the last day of the month immediately preceding the
month during which the Option Exercise Date occurred
(the "Valuation Date"),
(ii) plus the pre-tax earnings, or minus the pre-tax losses,
of the Company for the fiscal year of the Company
immediately preceding the fiscal year during which the
Option Exercise Date occurred, based upon the financial
statements of the Company for such preceding fiscal
year,
(iii)minus the total Redemption Price for all outstanding
Class C Units as of the Closing Date, if any;
(b) divided by the total number of Class A Units and Class B
Units outstanding as of the Closing Date.
Subsection 9.3.2. Determination of Adjusted Net Book Value. The
Adjusted Net Book Value of the Company shall be the net book value of the
Company determined from the Company's regularly maintained books of account
in accordance with past accounting practices consistently applied, subject,
however, to the following adjustments:
(a) The Adjusted Net Book Value shall not include any value for
any goodwill, deferred pension cost, unamortized organization and
start up expenses, or unamortized loan fees, other than any tax
benefits resulting from any income tax deductions which may be
lawfully taken with respect to such items subsequent to the Valuation
Date, determined by multiplying the amount of any such deductions by
the Tax Rate on the Valuation Date.
(b) All real estate and the improvements thereon (the "Real
Estate") shall be valued at the fair market value thereof on the
Valuation Date, reduced by an amount equal to (i) the difference
between the fair market value of the Real Estate on the Valuation Date
and the Company's income tax basis of the Real Estate (ii) multiplied
by the Applicable Tax Rate in effect on the Valuation Date. Promptly
following the occurrence of the Option Exercise Date, the Transferors
and Purchasers of Units shall each select an independent real estate
appraiser who is a member of the American Institute of Real Estate
Appraisers and possesses an MAI designation and shall notify the other
party of their selection. The appraiser selected by the Purchasers
shall complete his appraisal of the Real Estate within forty-five (45)
days after the occurrence of the Option Exercise Date. If the
appraised value of the Real Estate as determined by such appraiser
selected by the Purchasers is acceptable to the Transferors, then such
appraised value shall constitute the fair market value of the Real
Estate hereunder. If the appraised value of the Real Estate as
determined by the appraiser selected by the Purchasers is not
acceptable to the Transferors, then the appraiser selected by the
Transferors shall complete his appraisal of the Real Estate within
seventy-five (75) days after the occurrence of the Option Exercise
Date. If the appraised value of the Real Estate as determined by the
appraiser selected by the Transferors is acceptable to the Purchasers,
then such appraised value shall constitute the fair market value of
the Real Estate hereunder. If the appraised value of the Real Estate
as determined by the appraiser selected by the Transferors is not
acceptable to the Purchasers, then for the purposes of this Agreement,
the fair market value of the Real Estate shall be equal to the average
of the two appraisals. The Purchasers and Transferors shall share
equally the costs of all appraisals.
(c) The Adjusted Net Book Value shall be increased by the amount
of the current LIFO reserves on the Valuation Date, reduced by an
amount equal to the Applicable Tax Rate in effect on the Valuation
Date multiplied by the amount of such LIFO reserves.
Subsection 9.3.3. Determination of Purchase Price. The total purchase
price payable by any Purchaser of Class B Units pursuant to Section 9.1
shall be equal to the purchase price per Class B Unit determined in
accordance with this Section 9.3 multiplied by the number of Class B Units
purchased by the Purchaser. If the Purchasers and the Transferors are
unable to agree upon the Purchase Price within ninety (90) days after the
Option Exercise Date, the Purchase Price for the Class B Units shall be
determined by the Company's Accountants pursuant to and in accordance with
this Agreement, which determination shall be conclusive and binding upon
all parties to this Agreement.
ARTICLE X
Transfer of Interests
Section 10.1. Permitted Transfers. Subject to the satisfaction of the
conditions set forth in Section 10.2, the following Transfers of Interests shall
be permitted (the "Permitted Transfers"): (i) the Class A Interest Holders may
at any time sell, assign, gift or otherwise Transfer all or any part of its or
his Interests to any Affiliate of NWS or to any member or members of the
LaCrosse Family Group or ▇▇▇▇▇▇▇▇ Family Group; (ii) the Class B Interest
Holders may at any time sell, assign, gift or otherwise Transfer all or any part
of his Interests to any member or members of the Bart Family Group; (iii) the
Class C Interest Holders may at any time sell, assign, gift or otherwise
Transfer all or any part of his Interests to any Affiliate of NWS or to any
member or members of the LaCrosse Family Group or ▇▇▇▇▇▇▇▇ Family Group; (iv)
any Transfers of Class B Interests to, the LaCrosse Family Group, NWS or the
Company pursuant to Sections 9.1 or 9.2; (v) any redemption of Class C Interests
pursuant to Section 8.2; (vi) any Transfers of Class B Interests pursuant to the
Put Option Agreement; and (vii) any Transfers of Interests made with the prior
written consent of a Majority in Interest of the Class A Members and a Majority
in Interest of the Class B Members. All Interests Transferred pursuant to this
Section 10.1 shall remain subject to the terms and conditions of this Agreement.
Section 10.2. Conditions of Transfer. No Member or Transferee (the
"Transferor") shall sell, assign, exchange, gift or otherwise Transfer all or
any part of the Transferor's Interests (or Membership Interests), unless and
until all of the following requirements are satisfied:
(a) The Transferor and transferee shall execute and deliver to the
Company such instruments of transfer, assignment, and assumption and other
certificates, instruments, and documents, and shall perform such other
acts, as the Managers may deem necessary or advisable to fully effectuate
such Transfer;
(b) The transferee shall execute a written instrument, in form
reasonably satisfactory to the Company, agreeing to be bound by all
provisions of this Agreement; and
(c) The transferee shall furnish to the Company the transferee's
taxpayer identification number, sufficient information to determine the
transferee's initial tax basis in the Interests transferred, any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns, and other legally required information
statements and returns.
Any Transfer of an Interest made in compliance with the provisions of this
Section 10.2 shall be deemed effective as of the first day of the first month
following the satisfaction of all of the requirements contained in this
Subsection, and thereupon, the transferee shall be deemed a Transferee. Any
attempted Transfer of an Interest or any part thereof not in compliance with the
requirements of this Subsection shall be null and void ab initio. Each
Transferor shall indemnify the Company and the other Members from and against
any and all loss, damage, and expense, including, without limitation, tax
liabilities and loss of tax benefits, arising directly or indirectly as a result
of any Transfer or purported Transfer in violation of the provisions of this
Section.
Section 10.3. Admission of Transferee as Substitute Member. A Transferee of
Interests received in a Permitted Transfer made in compliance with Section 10.2
shall be admitted as a Substitute Member unless otherwise directed by the
Transferor. Any Transferee of Interests not received in a Permitted Transfer
shall have the right to become a Substitute Member with respect to such
Interests if and when: (i) the admission of such Transferee as a Substitute
Member is approved by a Majority in Interest of the Class A Members and a
Majority in Interest of the Class B Members; (ii) all of the requirements
contained in Section 10.2 shall have been satisfied; and (iii) the Transferor
and/or Transferee shall pay any and all expenses incurred by the Company in
connection with the admission of the Transferee as a Substitute Member,
including, without limitation, all reasonable attorneys' fees and expenses of
preparing any amendments to this Agreement.
Section 10.4. Rights of Transferee. Unless and until a Transferee is
admitted as a Substitute Member, a Transferee shall not be entitled to
participate in the management or conduct of the Company's business, require
access to information concerning the Company's transactions, or inspect or copy
any of the Company's records. A Transferee who is not admitted as a Substitute
Member shall only be entitled to: (i) receive distributions to which the
Transferor would otherwise be entitled with respect to the transferred
Interests, and (ii) upon dissolution and winding up of the Company's business,
receive the net amount otherwise distributable to the Transferor with respect to
the transferred Interests and receive a statement of account only from the date
of the latest statement of account agreed to by all of the Members.
Section 10.5. Rights of Transferring Member. If a Member assigns all or any
portion of his Interests in the Company to a Transferee in accordance with this
Agreement, then unless and until such Member ceases to be a Member pursuant to
this Agreement and the Act or unless and until such Transferee is admitted as a
Substitute Member, such transferring Member shall be entitled to the Membership
Interests (other than the Interests) incident to such assigned Interests.
Section 10.6. Restrictions on Transfers. Except for the Permitted
Transfers, no Member or Transferee shall be permitted to sell, assign, exchange,
gift, pledge, hypothecate, encumber, or otherwise Transfer all or any part of
his or its Interests or Membership Interests. Each Member hereby acknowledges
the reasonableness of this prohibition in view of the purposes of the Company
and the relationship with the Members. Any attempted Transfer of any Interests
or Membership Interests, or any part thereof, shall be null and void ab initio,
and the proposed transferee shall acquire no rights incident to such Interests.
ARTICLE XI
Changes in Members
Section 11.1. Additional Members. Subject to the provisions of Section 2.3,
the Members may at any time admit any Person as an Additional Member of the
Company and grant to such Person such Interests, and such Person shall make such
Capital Contributions to the Company, as shall be determined by a Majority in
Interest of the Class A Members and a Majority in Interest of the Class B
Members. Such Person shall be admitted as an Additional Member as of the first
day of the first month following the satisfaction of all of the following
requirements: (i) the admission of such Person as an Additional Member is
approved by a Majority in Interest of the Class A Members and a Majority in
Interest of the Class B Members; (ii) such Person pays or otherwise makes all
required Capital Contributions; and (iii) such Person executes this Agreement,
or a counterpart signature page hereof, agreeing to be bound by the provisions
of this Agreement, and such other documents and instruments as shall be
reasonably required by the Managers to effectuate the admission of such Person
as an Additional Member.
Section 11.2. Events of Dissociation. A Person shall cease to be a Member
(the "Dissociated Member") of the Company upon the occurrence of any of the
following events:
(a) The Company's having received notice of the Member's express will
to voluntarily withdraw upon the date of notice or on a later date
specified by the Member; provided that such withdrawal shall be deemed to
be a wrongful dissociation under Section 35-50 of the Act unless the Member
has obtained the prior written consent of all other Members to such
Member's withdrawal, or unless such withdrawal is done pursuant to the
exercise of rights under the Put Option Agreement;
(b) The Transfer of all of a Member's Interest, other than a Transfer
for security purposes or a court order charging the Member's interests that
have not been foreclosed;
(c) The Member's expulsion by the unanimous vote of all of the other
Members if: (i) it is unlawful to carry on the Company's business with the
Member; (ii) there has been a transfer of substantially all of the Member's
Interests, other than a Transfer for security purposes or a court order
charging the Member's Interests that have not been foreclosed; (iii) within
ninety (90) days after the Company notifies a corporate Member that it will
be expelled because it has filed a certificate of dissolution or the
equivalent, its charter has been revoked, or its right to conduct business
has been suspended by the jurisdiction of its incorporation, the Member
fails to obtain a revocation of the certificate of dissolution or a
reinstatement of its charter or its right to conduct business; or (iv) a
partnership or a limited liability company that is a Member has been
dissolved and its business is being wound up;
(d) On application by the Company or another Member, the Member is
expelled by judicial determination because the Member: (i) engaged in
wrongful conduct that adversely and materially affected the Company's
business; (ii) willfully or persistently committed a material breach of
this Agreement or of a duty owed to the Company or the Members under
Section 15-3 of the Act; or (iii) engaged in conduct relating to the
Company's business that makes it not reasonably practicable to carry on the
business with the Member;
(e) The Member: (i) becomes a Debtor in Bankruptcy, (ii) executes an
assignment for the benefit of creditors; (iii) seeks, consents to, or
acquiesces in the appointment of a trustee, receiver, or liquidator of the
Member or of all or substantially all of the Member's property; or (iv)
fails, within ninety (90) days after the appointment, to have vacated or
stayed the appointment of a trustee, receiver, or liquidator of the Member
or of all or substantially all of the Member's property obtained without
the Member's consent of acquiescence, or fails within ninety (90) days
after the expiration of a stay to have the appointment vacated;
(f) In the case of a Member who is an individual: (i) the death of the
Member; (ii) the appointment of a guardian or general conservator for the
Member; or (iii) a judicial determination that the Member has otherwise
become incapable of performing the Member's duties under the Agreement;
(g) In the case of a Member that is a trust or is acting as a Member
by virtue of being, a trustee of a trust, the distribution of the trust's
entire rights to receive distributions from the Company, but not merely by
reason of the substitution of a successor trustee;
(h) In the case of a Member that is an estate or is acting as a Member
by virtue of being a personal representative of an estate, the distribution
of the estate's entire rights to receive distributions from the Company,
but not merely the substitution of a successor personal representative; or
(i) The termination of the existence of a Member, if the Member is not
an individual, estate, or trust other than a business trust.
Section 11.3. Effects of Dissociation.
Subsection 11.3.1. Wrongful Dissociation. A Member's dissociation from
the Company shall be wrongful only if it is in breach of an express
provision of this Agreement or if it is deemed to be wrongful under this
Agreement. A Member who wrongfully dissociates from the Company shall be
liable to the Company and to the other Members for any damages caused by
the dissociation, in addition to any other obligations of the Member to the
Company or to the other Members under this Agreement or by law. If the
Company does not dissolve and wind up its business as a result of the
Member's wrongful dissociation, any damages sustained by the Company for
the wrongful dissociation (which shall be monetary damages only and not
specific performance) shall be offset against any distributions otherwise
due the Member (or his Transferees) after the dissociation.
Subsection 11.3.2. Rightful or Wrongful Dissociation. Upon a Member's
dissociation from the Company, whether such dissociation is rightful or
wrongful, the Member shall cease to be a Member and shall be treated the
same as a Transferee, and the Member's right to participate in the
management and conduct of the Company's business shall terminate, except
that a Member who has not wrongfully dissociated from the Company may
participate in winding up of the Company's business. Upon a Member's
dissociation from the Company, except as expressly provided otherwise in
this Agreement or the Put Option Agreement, the Company shall not be
required to purchase the Dissociated Member's Interests pursuant to
Section35-60 of the Act, and thereafter, the Dissociated Member, or his
successors or assigns, shall have the rights as a Transferee in the Company
and shall be entitled to receive only those distributions to which such
Dissociated Member would have been entitled had such Dissociated Member
remained a Member (and only at such times as such distributions would have
been made had such Dissociated Member remained a Member). Each Member, on
behalf of such Member and such Member's successors and assigns, hereby
waives any and all rights under Sections 35-60 and 35-65 of the Act to
receive the fair value of such Member's Interests in the Company upon such
Member's dissociation from the Company.
ARTICLE XII
Dissolution and Winding Up
Section 12.1. Dissolution Events. The Company shall be dissolved, and,
unless continued pursuant to Section 12.2, its business shall be wound up, upon
the occurrence of any of the following, events:
(a) The occurrence of an event that makes it unlawful for all or
substantially all of the business of the Company to be continued, unless
such illegality is cured within ninety (90) days after notice to the
Company of the event, which cure shall be effective retroactively to the
date of the event for the purpose of this Section 12.1;
(b) Upon the entry of a judicial decree on the application by any
Member or a Dissociated Member that: (i) the economic purpose of the
Company is likely to be unreasonably frustrated; (ii) another Member has
engaged in conduct relating to the %Company's business that makes it not
reasonably practicable to carry on the Company's business with that Member;
(iii) it is not otherwise reasonably practicable to carry on the Company's
business in conformity with the Articles and this Agreement; or (iv) the
Managers or Members in control of the Company have acted, are acting, or
will act in a manner that is illegal, oppressive, or fraudulent with
respect to the petitioner;
(c) The administrative dissolution of the Company under Section 35-25
of the Act, unless the Company is reinstated within ninety (90) days after
it receives notice of such administrative dissolution; or
(d) The written consent or agreement of a Majority in Interest of the
Class A Members and a Majority in Interest of the Class B Members.
Notwithstanding any provision in this Agreement to the contrary, no Transferee
of an Interest shall have the right to institute a proceeding to obtain a
judicial determination that it is equitable to wind up the Company's business.
Section 12.2. Continuation of Company After Dissolution. Notwithstanding
the dissolution of the Company, the business of the Company shall be continued
if, at any time within ninety (90) days after the dissolution of the Company and
before the winding up of its business is completed, a Majority in Interest of
the Class A Members and a Majority in Interest of the Class B Members (excluding
a Dissociated Member whose dissociation caused the dissolution) waive the right
to have the Company's business wound up and the Company terminated. In such
event, the Company shall resume carrying on its business as if dissolution had
never occurred and any liability incurred by the Company or a Member after the
dissolution and before the waiver is determined as if the dissolution had never
occurred, and the rights of a third party accruing under Section 35-7(a) of the
Act or arising out of conduct in reliance on the dissolution before the third
party knew or received a notification of the waiver shall not be adversely
affected.
Section 12.3. Winding Up Company's Business. After the dissolution of the
Company, unless and until the business of the Company is continued in accordance
with Section 12.2, the Managers shall wind up the Company's business and affairs
in accordance with the Act. A Dissociated Member who has wrongfully dissociated
may not participate in the winding up of the Company's business and affairs.
Section 12.4. Distribution of Assets. Upon the winding up of the Company,
the assets of the Company shall be distributed as follows:
(a) First, to the creditors of the Company (including Members and
Managers who are creditors to the extent permitted by law) to satisfy the
liabilities of the Company, whether by payment or by the establishment of
adequate reserves;
(b) Second, to the Class C Interest Holders, the Liquidation
Preference Amount in accordance with the provisions of Section 8.1 (but
only to the extent of the positive balances in the Capital Accounts of the
Class C Interest Holders), after taking into account any allocations of
Profits or Losses, any distributions. and all other Capital Account
adjustments for the Company's taxable year in which the liquidation occurs;
and
(c) Third, to the Interest Holders in accordance with the positive
balances in their respective Capital Accounts, after taking into account
any allocations of Profits or Losses, any distributions, and all other
Capital Account adjustments for the Company's taxable year in which the
liquidation occurs.
Distributions to Interest Holders shall be in cash or property (which need not
be distributed proportionately), or partly in both, as determined by the
Managers. Liquidation proceeds shall be paid within sixty (60) days after the
end of the Company's taxable year during which liquidation occurs, or, if later,
within ninety (90) days after the date of liquidation.
Section 12.5. Articles of Dissolution. When all debts, liabilities and
obligations of the Company have been paid and discharged or adequate provisions
have been made therefor and all of the remaining property and assets of the
Company have been distributed, Articles of Dissolution as required by the Act
shall be executed in duplicate and filed with the Illinois Secretary of State.
Upon the filing of the Articles of Dissolution with the Illinois Secretary of
State, the existence of the Company shall terminate, except for the purpose of
suits, other proceedings, and appropriate action as provided in the Act.
ARTICLE XIII
Indemnification
Section 13.1. Definitions. As used in this Article XIII:
(a) "Claim" means any threatened, pending, or completed claim, action,
suit or proceeding, whether civil, criminal, administrative, or
investigative, and whether formal or informal, and all appeals thereof, in
which an Eligible Person was, is, or is threatened to be, made a named
defendant or respondent, or is otherwise involved because he or she is or
was an Eligible Person.
(b) "Eligible Person" means and includes: (i) any Person who is or was
a Member, Manager or Organizer; (ii) any responsible officer, partner,
shareholder, director. or manager of any such Member, Manager, or Organizer
which is an Entity; and (iii) if approved by a Majority in Interest of the
Members, any Person who is or was a Transferee, officer, employee, or agent
of the Company.
(c) "Expenses" means and includes all direct and indirect costs
(including without limitation, counsel fees, retainer fees, court costs,
transcript expenses, fees of experts, witness fees, travel expenses,
duplication costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or out-of-pocket
expenses) actually incurred in connection with the investigation, defense,
settlement, or appeal of a Claim or in establishing or enforcing a right to
indemnification under this Article, applicable law, or otherwise.
(d) "Liability" means the obligation to pay any judgment, settlement,
penalty, fine, excise tax (including excise taxes assessed with respect to
an employee benefit plan), or reasonable Expenses incurred with respect to
a Claim.
(e) "Wholly Successful" means, with respect to a Claim: (i) the
termination of the Claim against the Eligible Person without any finding of
liability or guilt against him; (ii) the approval by a court or agency,
with knowledge of the indemnity provided herein, of a settlement of the
Claim; or (iii) the expiration of a reasonable period of time after the
threatened making of a Claim without commencement of an action, suit or
proceeding and without any payment or promise made to induce a settlement.
Section 13.2. Indemnification Rights. To the greatest extent not
inconsistent with the laws of the State of Illinois, the Company shall indemnify
as a matter of right any Eligible Person against all Liability (including
Expenses) incurred by such Eligible Person in connection with any Claim, if:
(i) Such Eligible Person is Wholly Successful with respect to
the Claim; or
(ii) It shall be determined in the specific case that
indemnification of such Eligible Person is permissible in
the circumstances because the Eligible Person has met the
standard of conduct for indemnification set forth in Section
13.3. For the purpose of this clause (ii), such
determination shall be made by either: (y) a Majority in
Interest of the Members who are not at the time parties to
the Claim; or (z) special legal counsel or other third party
selected by a Majority in Interest of the Members.
Section 13.3. Standard of Conduct. The Company shall indemnify an Eligible
Person (other than an Eligible Person who has been Wholly Successful with
respect to a Claim) under this Article only if it is determined in accordance
with the provisions of Section 13.2 that: (i) such Eligible Person's conduct or
failure to act was in good faith and did not constitute grossly negligent or
reckless conduct, intentional misconduct, a knowing violation of law, or a
material breach of this Agreement; and (ii) such Eligible Person reasonably
believed that his or her conduct was in the best interests of the Company or at
least not opposed to its best interests; and (iii) with respect to any criminal
Claim, such Eligible Person had reasonable cause to believe that his or her
conduct was lawful or had no reasonable cause to believe that his or her conduct
was unlawful. The termination of any Claim by judgment, order, settlement (with
or without court approval), or conviction, or upon a plea of guilty or nolo
contendere or its equivalent, shall not, of itself, be determinative that the
Eligible Person did not meet the standard of conduct set forth in this Section.
An Eligible Person's conduct with respect to an employee benefit plan which the
Person reasonably believed to be in the best interests of the participants in,
or beneficiaries of, the plan shall be deemed to be conduct that satisfies the
requirements of clause (ii) above of this Section.
Section 13.4. Reliance on Information. For the purposes of any
determination under Section 13.2, an Eligible Person shall be deemed to have
acted in good faith and to have otherwise met the applicable standard of conduct
set forth in Section 13.3 if the action is based on information, opinions,
reports, or statements, including financial statements and other financial data,
prepared or presented by: (i) one or more Members or employees of the Company or
another enterprise whom the Eligible Person reasonably believes to be reliable
and competent in the matters presented; (ii) legal counsel, appraisers or other
Persons as to matters reasonably believed to be within such Person's
professional or expert confidence, unless the Eligible Person seeking
indemnification knew or should have known that the report, opinion or statement
was based upon information that was materially misleading or the professional
issuing the report, opinion, or statement did not have knowledge of the material
facts necessary for the report, opinion or statement to be accurate; or (iii)
the Board of Directors or other governing body of another enterprise. The term
"another enterprise" as used in this Section shall mean any other corporation or
any partnership, limited liability company, joint venture, trust, employee
benefit plan or other enterprise of which such Eligible Person is or was serving
at the request of the Company as a director, officer, partner, member, trustee,
employee or agent. The provisions of this Section 13.4 shall not be deem to be
exclusive or to limit in any way the circumstances in which an Eligible Person
may be deemed to have met the applicable standard of conduct set forth in
Section 13.3.
Section 13.5. Advance of Expenses. The Company may pay for or reimburse the
reasonable Expenses incurred by an Eligible Person in connection with any Claim
in advance of final disposition thereof, or, where appropriate, assume the
defense of such Eligible Person against such Claim at the Company's expense, if:
(i) the Eligible Person furnishes to the Company a written affirmation of the
Eligible Person's good faith belief that he or she has met the standard of
conduct for indemnification described in Section 13.3; (ii) the Eligible Person
furnishes to the Company a written undertaking, approved in form and substance
by the Company, by or on behalf of such Eligible Person to repay all such
advanced Expenses if it is ultimately determined that he or she is not entitled
to indemnification: and (iii) a determination is made in accordance with Section
13.2 that, based upon facts then known to those making the determination,
indemnification would not be precluded under this Article XIII. The undertaking
described in clause (ii) above must be a general obligation of the Eligible
Person, subject to such reasonable limitations as the Company may permit, but
need not be secured and may be accepted without reference to financial ability
to make repayment.
Section 13.6. Indemnification Not Exclusive. The rights of indemnification
and advance of Expenses provided for in this Article XIII shall be in addition
to, and shall not exclude, limit or preclude, any other rights to which any
Eligible Person or other Person seeking indemnification or advance of Expenses
may be entitled to under the Act, any agreement or contract, any other
applicable law, or otherwise.
Section 13.7. Insurance. The Company may purchase and maintain insurance on
behalf of any Eligible Person against any liability asserted against or incurred
by such Eligible Person in any capacity or arising out of his or her status as
such, whether or not the Company has the obligation or power to indemnify such
Eligible Person against such liability under the provisions of this Article
XIII, the Act, the Articles, any applicable law, or otherwise.
Section 13.8. Effective Date; Continuation of Indemnity. The provisions of
this Article0 XIII shall be applicable to Claims made or commenced after the
adoption hereof, whether arising from acts or omissions to act occurring before
or after adoption hereof. The right of any Eligible Person to indemnification
under this Article shall vest at the time of occurrence or performance of any
event, act or omission giving rise to any Claim, and, once vested, shall not
later be impaired as a result of any amendment, repeal, alteration or other
modification of any or all of the provisions in this Article. The provisions of
this Article XIII shall continue to apply to Claims made or commenced against
any Person who has ceased to be an Eligible Person and shall inure to the
benefit of the estate, heirs and personal representatives of such Person.
ARTICLE XIV
Miscellaneous Provisions
Section 14.1. No Liability for Company Debts. The debts, obligations, and
liabilities of the Company, whether arising in contract, tort, or otherwise, are
and shall be solely the debts, obligations, and liabilities of the Company. A
Member or Manager shall not be personally liable for any debt, obligation, or
liability of the Company solely by reason of being or acting as a Member or
Manager. The failure of the Company to observe the usual Company formalities or
requirements relating to the exercise of its Company powers or management of its
business shall not be a ground for imposing personal liability on the Members or
Managers for the liabilities of the Company.
Section 14.2. Confidentiality. Each Member acknowledges that, as a result
of his relationship with the Company, he may acquire, or has acquired, access to
or knowledge of certain (i) trade secrets of the Company ("Trade Secrets"), and
(ii) information relating to the Company or its business and affairs (whether or
not constituting Trade Secrets), including, without limitation, the names,
addresses and other information and records relating to the Company's past,
present, and potential customers, clients and suppliers, technologies, formulas,
know-how, sales, marketing and distribution methods and strategies, new products
and services, project proposals and work in process, business plans, financial
results and financial conditions, computer programs and software (including flow
charts, logic diagrams, object codes and source codes), and all notes,
memoranda, correspondence, records and other written documents relating to such
information, whether or not marked "Confidential " (the information described in
clauses (i) and (ii) of this Section is collectively referred to herein as the
"Confidential Information"). Each Member further acknowledges that all such
Confidential Information is the property of the Company and that any disclosure
of such Confidential Information in violation of this Agreement will
substantially and adversely affect the business of the Company. Each Member
therefore agrees that he shall forever keep confidential all such Confidential
Information and shall not, directly or indirectly, disclose to anyone (except in
furtherance of the Company's or any Affiliate's business), or use for such
Member's benefit or to the detriment of the Company or any Affiliate of the
Company, any such Confidential Information or authorize, cause, or induce others
to do so. Notwithstanding the foregoing, the confidentiality covenants contained
herein shall not apply to any information that is or becomes generally available
to the public other than as a result of a disclosure by the Member or that is
required to be disclosed to the Company's Banks, other lenders, or other Persons
providing capital to the Company, NWS, or National Wine or in any judicial or
Administrative proceeding. This Section supplements and does not supersede the
Member's obligations under all statutes and common laws intended to protect the
Company's Trade Secrets.
Section 14.3. Conflict Transactions. Any contract or other transaction
between the Company and any Member or Manager, or any Affiliate of the Member or
Manager, including any contract or other transaction that may violate a
fiduciary duty or standard of care required under the Act (a "Conflict
Transaction"), shall be valid for all purposes if: (i) the material facts of the
transaction and the Member's, Manager's, or Affiliate's interest were disclosed
or known to the Managers, and the transaction is approved or ratified by a
majority in number of the Managers who have no interest in the Conflict
Transaction, notwithstanding the fact that such majority may not constitute a
majority of the total number of Managers; or (ii) the material facts of the
transaction and the Member's, Manager's, or Affiliate's interest were disclosed
or known to the Members, and the transaction was approved or ratified by a
Majority in Interest of the Members; or (iii) the transaction was fair to the
Company. This Section shall not be construed to require authorization,
ratification, or approval by the Members of any Conflict Transaction or
invalidate any Conflict Transaction that would otherwise be valid under common
and statutory law applicable thereto.
Section 14.4. Amendments. This Agreement may be amended or modified from
time to time only by a written instrument approved by a Majority in Interest of
the Members, except that any amendment that would (i) impose additional
liability on any Member, (ii) increase the amount of Capital Contributions
required of a Member (other than additional Capital Contributions approved
pursuant to Section 2.3) or accelerate the dates of payment of any required
Capital Contributions, (iii) alter the rights of a Member in distributions,
Profits or Losses or the rights of a Member to approve or otherwise consent to
certain actions as provided in this Agreement, or (iv) modify the provisions of
this Section shall require the approval of all Members. All amendments to this
Agreement must be in writing.
Section 14.5. Waivers. No provision of this Agreement shall be deemed to
have been waived unless such waiver is executed in writing by the party waiving
such provision. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision of this Agreement. No waiver of any breach or
violation of any provision of this Agreement shall constitute a waiver of any
subsequent breach of such provision.
Section 14.6. Title to Company Property. Legal title to all property of the
Company shall be held and conveyed in the name of the Company.
Section 14.7. Organization Expenses. The Company shall pay all expenses
incurred in connection with the organization of the Company.
Section 14.8. No Partnership Intended for Non-Tax Purposes. The Members
have formed the Company under the Act and expressly do not intend hereby to form
a partnership or limited partnership. The Members do not intend to be partners
to one another or partners as to any third party.
Section 14.9. Rights of Creditors and Third Parties Under this Agreement.
This Agreement is entered into among the Members for the exclusive benefit of
the Company and the Members, and their successors and assigns (subject to the
provisions hereof restricting transfer of Interests), and is expressly not
intended for the benefit of any creditor of the Company or any other Person.
Except and only to the extent provided by applicable statute, no such creditor
or third Person shall have any rights or remedies under this Agreement or any
agreement between the Company and any Member with respect to any Capital
Contribution or otherwise.
Section 14.10. Representations and Warranties. Each Member hereby
represents and warrants to the Company and each other Member that:
(a) The Member is acquiring his Interests in the Company based upon
his own investigation, and the exercise by such Member of his rights and
the performance of his obligations under this Agreement, will be based upon
his own investigation, analysis and expertise. Prior to such Member's
execution of this Agreement, such Member: (i) has been given the
opportunity to ask questions concerning the Company and the terms and
conditions of the offering of the Interests, all of which have been
answered to his full satisfaction; (ii) has been given the opportunity to
obtain any additional information material to the Company and the Interests
which he has requested; and (iii) has either had access to all of the
material facts with respect to the Interests by reason of his active
involvement in the organization and/or management of the Company or has
otherwise received all of the material facts with respect to the Company
and the Interests.
(b) The Member is acquiring the Interests for his own investment and
for his own account and has no present intention to sell, distribute, or
otherwise transfer the Interests, directly or indirectly, to any other
Person.
(c) The Member understands and acknowledges that: (i) the Interests
have not been registered under the Securities Act of 1933, as amended, or
any applicable state securities laws, in reliance upon certain exemptions
from such registration requirements, (ii) the Company has no present
intention to register the Interests; and (iii) the Interests may not be
sold or otherwise transferred unless and until the Interests are registered
under the applicable state and federal securities laws or unless exemptions
from such registration requirements are available.
(d) The Member has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
investing in the Interests. The Member has adequate means of providing for
his current and anticipated financial needs, and is able to bear the
economic risk of an investment in the Interests for an indefinite period of
time, including the possibility of a total loss thereof.
(e) The Member acknowledges that he is aware of all restrictions
imposed upon the transferability and resale of the Interests pursuant to
this Agreement and otherwise.
Section 14.11. Reliance on Authority of Person Signing Agreement. If a
Member is an Entity, neither the Company nor any Member or Manager shall be
required to: (i) determine the authority of the individual signing this
Agreement to make any commitment or undertaking on behalf of such Entity or to
determine any fact or circumstance bearing upon the existence of the authority
of such individual; or (ii) see to the application of distributions paid or
credited to such individual signing this Agreement on behalf of such Entity.
Section 14.12. Notices. Except as expressly provided otherwise in this
Agreement, any notice or other communication required to be given pursuant to
this Agreement shall be in writing and shall be either: (i) delivered personally
to the party to be notified, (ii) sent by United States mail, first class
postage prepaid, to the party to be notified, (iii) delivered by an overnight
delivery courier service to the party to be notified, or (iv) transmitted by
facsimile to the party to be notified at such party's facsimile number provided
from time to time by such party to the Company. Any notice to the Company or any
Manager who is not a Member shall be addressed to the Company's principal place
of business, and any notice to any Interest Holder (including a Member in his
capacity as a Schedule A attached hereto. Any such notice shall be deemed to
have been given as of the earlier of: (a) the date of actual receipt of such
notice, or (b) the third business day following the date on which the mail
containing such notice is posted if sent by United States mail, or (c) the first
business day after such notice is delivered to an overnight delivery courier
service for delivery to the party to be notified, or (d) the date of the
confirmed transmission of any notice by facsimile. Any party to this Agreement
may designate a different address or facsimile number to which notices are to be
sent to such party by notifying all other parties to this Agreement as to such
different address or facsimile number in the manner set forth above in this
Section.
Section 14.13. Unit Certificates. The Company's Units may, at the sole
discretion of the Managers, be represented by written certificates. In the event
that certificates representing Units are issued, such certificates shall bear a
legend indicating the restrictions on transferability set forth in this
Agreement.
Section 14.14. Specific Performance. The parties recognize that irreparable
injury will result from any breach of any provision of this Agreement and that
money damages will be inadequate to fully remedy the injury. Accordingly, in the
event of any breach or threatened breach of any provision of this Agreement, the
Company and any Member or Members who may be injured shall be entitled, in
addition to any other remedies which may be available, to one or more
preliminary or permanent orders: (i) restraining and enjoining any act or
omission which would constitute a breach of this Agreement; or (ii) compelling
the performance of any obligation which, if not performed, would constitute a
breach.
Section 14.15. Severability. If any provision of this Agreement is held to
be unenforceable, invalid or void, such provision shall be deemed to be
severable from the remaining provisions of this Agreement, and such holding
shall in no way impair or affect the validity or enforceability of the remaining
provisions of this Agreement, which shall then be construed as if such invalid
or unenforceable provision were omitted.
Section 14.16. Entire Agreement. This Agreement constitutes the entire
agreement among the Members and the Company with respect to the subject matter
of this Agreement and supersedes all prior and contemporaneous agreements,
representations, understandings, conditions, and warranties, written or oral,
not contained in this Agreement or the Articles.
Section 14.17. Controlling Law. This Agreement and the rights of the
parties hereunder shall be governed by, interpreted, and enforced in accordance
with the laws of the State of Illinois. Each Member and Transferee hereto
submits and consents to the jurisdiction of any state or federal court of
competent jurisdiction located in ▇▇▇▇ County, Illinois, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of such action or proceeding may be heard and determined by
any such court.
Section 14.18. Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns, subject to the provisions hereof restricting the
transfer of Interests and the rights of Transferees.
Section 14.19. Defined Terms. Unless the context of their use requires a
different interpretation or unless expressly provided otherwise in this
Agreement, capitalized terms used in this Agreement shall have the meanings
assigned to such terms in this Section 14.19 or the meanings assigned to such
terms by parenthetic reference throughout this Agreement. Any term used but not
defined in this Agreement shall have the meaning set forth in the Act. When used
in this Agreement. the following terms shall have the meanings set forth below:
"Act" means the Illinois Limited Liability Company Act (ILCS 180/1-1 ,et
seq.), as amended from time to time.
"Additional Member" means any Person admitted as a Member pursuant to
Section 11.1.
"Adjusted Capital Account Deficit" means, with respect to any Interest
Holder, the deficit balance, if any, in the Interest Holder's Capital Account as
of the end of the relevant taxable year, after giving effect to the following
adjustments: (i) the deficit shall be decreased by the amounts which the
Interest Holder is obligated to restore pursuant to this Agreement (if any) or
is deemed obligated to restore pursuant to Sections 1.704-2(g)(1) and (i)(5) of
the Regulations (i.e., the Interest Holder's share of Minimum Gain and Member
Minimum Gain); and (ii) the deficit shall be increased by the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations (i.e., certain
expected year-end adjustments required for "qualified income offset"
provisions).
"Affiliate" of a Person shall mean (i) any Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person, (ii) for each Person who is an individual, such individual's spouse, any
other individual related to such Person or spouse by consanguinity within the
third degree or in a step or adoptive relationship within such third degree or
related by affinity with such Person or spouse or any such individual, in each
case whether the degree of such relationship is determined under common law or
civil law, (iii) any Person which owns beneficially or of record 5 % or more of
any class of capital stock, partnership interests or any other equity interests
of such Person or an Affiliate of such Person or of which 5 % or more of any
class of capital. stock (or in the case of a Person that is not a corporation, 5
% or more of the partnership interest or other equity interest) is owned
beneficially or of record by such Person or an Affiliate of such Person, and
(iv) any Person directly or indirectly controlling or controlled by any of the
foregoing. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" means this Operating Agreement and Schedule A, as amended from
time to time.
"Applicable Interest Rate" means the per annum interest rate charged from
time to time by the Company's Banks on National Wine's revolving line of credit
financing, or if National Wine has no revolving line of credit financing, the
prime rate of interest published in the "Money Rates" section of The Wall Street
Journal (Midwest Edition). The Applicable Interest Rate shall change effective
on the same day of each change in the applicable interest rate specified above.
"Applicable Tax Rate" means, at any given time, the combined sum of the
highest marginal federal, state and local income tax rates then in effect for
any Member or Interest Holder.
"Articles" means the Articles of Organization of the Company filed with the
Illinois Secretary of State, as amended or restated from time to time.
"Bank Agreements" means any and all credit agreements, loan agreements,
reimbursement agreements, indentures, and other agreements with respect to
borrowed monies to which the Company, National Wine, or NWS is a party or
otherwise bound.
"Bart Family Group" means Bart and his estate and personal and legal
representatives, his spouse, his children and their spouses, Bart's direct
descendants and ancestors (whether natural or adopted), and any trust formed and
maintained solely for the benefit of the Bart Family Group or any member
thereof. All decisions by the Bart Family Group under this Agreement shall be
made by the Family Group Representative of the Bart Family Group, and the
decision of the Family Group Representative shall be conclusive and binding on
all members of the Bart Family Group.
"Capital Account" means the account established and maintained for each
Interest Holder pursuant to Section 2.5.
"Capital Contribution" means the total amount of cash, property (net of
liabilities assumed by the Company or to which the property is subject),
services rendered, and promissory notes and other binding obligations to
contribute cash or property or to perform services, contributed (or deemed
contributed under Section 1.704 1 (b)(2)(iv)(d) of the Regulations) to the
Company by a Member. Any reference in this Agreement to the Capital Contribution
of a Member or Transferee shall include all Capital Contributions previously
made by any predecessor owner of the Interest of such Member or Transferee and
shall be reduced by any distributions to such Member, Transferee, or predecessor
owner in return of his or its Capital Contributions as contemplated by this
Agreement.
"Company's Accountants" means, at any given time, the firm of certified
public accountants then providing accounting and auditing services to the
Company.
"Company's Banks" means, at any given time, the banks then providing the
primary revolving line of credit financing to National Wine, NWS, and the
Company.
"Entity" means any association, corporation, general partnership, limited
partnership, limited liability company, limited liability partnership, joint
stock association, joint venture, firm, trust, business trust, cooperative,
foreign association of like structure, or any other Person other than an
individual.
"Exercise Price" shall have the meaning ascribed to such term in Section
9.1.
"Family Group Representative" means, with respect to each Family Group,
that Person designated from time to time by a Family Group as its Family Group
Representative by notice thereof to the other Family Groups. If a Family Group
is unable to agree on a Family Group Representative, or has otherwise failed to
designate a Family Group Representative, the Family Group Representative shall
be a member of the Family Group who owns more Interests than any other member of
the Family Group.
"Family Group" means the LaCrosse Family Group, the Bart Family Group, or
the ▇▇▇▇▇▇▇▇ Family Group, as the case may be.
"Initial Members" means those Members who make the initial Capital
Contributions to the Company pursuant to Section 2.2.
"Interest" means the economic rights of a Member or Transferee in the
Company, including a Member's or Transferee's right to receive distributions
from the Company and share of the Profits and Losses of the Company, as provided
in this Agreement and the Act, but shall not include any right to vote on,
consent to or otherwise participate in any decision of the Members (unless the
holder of the Interest is a Member). The Interests shall consist of "Class A
Interests," "Class B Interests," and "Class C Interests."
"Interest Holders" means any Person who holds an Interest in the Company,
including any Member who has not assigned his entire Interest in the Company and
any Transferee who has acquired an Interest in accordance with this Agreement
and the Act (whether or not the Transferee has been admitted as a Substitute
Member). A "Class A Interest Holder" means the holder of a Class A Interest, a
"Class B Interest Holder" means the holder of a Class B Interest, and a "Class C
Interest Holder" means the holder of a Class C Interest.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"▇▇▇▇▇▇▇▇ Family Group" means and includes ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇")
and her estate and personal and legal representatives, her spouse, ▇▇▇▇▇▇▇▇'▇
direct descendants and ancestors (whether natural or adopted) and their spouses,
and any trust established and maintained for the benefit of the ▇▇▇▇▇▇▇▇ Family
Group or any member thereof. All decisions by the ▇▇▇▇▇▇▇▇ Family Group under
this Agreement, including the exercise of all put option rights, shall be made
by the Family Group Representative of the ▇▇▇▇▇▇▇▇ Family Group, and the
decision of the Family Group Representative shall be conclusive and binding on
all members of the ▇▇▇▇▇▇▇▇ Family Group.
"LaCrosse Family Group" means ▇▇▇▇▇ ▇. LaCrosse ("LaCrosse") and his estate
and personal and legal representatives, his spouse, LaCrosse's direct
descendants and ancestors (whether natural or adopted) and their spouses, and
any trust established and maintained for the benefit of the LaCrosse Family
Group or any member thereof. All decisions by the LaCrosse Family Group under
this Agreement, including the exercise of the LaCrosse Family Group's options to
purchase Shares pursuant to this Agreement, the members of the LaCrosse Family
Group entitled to purchase Shares, and the number and classes of Shares to be
purchased by such members, shall be made by the Family Group Representative of
the LaCrosse Family Group, and the decision of the Family Group Representative
shall be conclusive and binding on all members of the LaCrosse Family Group.
"Majority in Interest" means, at any given time, those Members that own in
the aggregate more than fifty percent (50%) of a then outstanding specified
Class of Units.
"Majority in Interest of the Members" means, at any given time, those
Members that own in the aggregate more than fifty percent (50%) of the then
outstanding Class A Units.
"Manager" means any Person designated by the Members as a Manager in
accordance with Article IV.
"Member" means any Person who becomes a Member of the Company upon
formation of the Company or in the manner and at the time provided in this
Agreement, or if this Agreement does not so provide, in the manner and at the
time provided in the Act, including any Initial Member, Additional Member, or
Substitute Member who is not a Dissociated Member. "Class A Member" means the
owner of a Class A Membership Interest, "Class B Member" means the owner of a
Class B Membership Interest, and "Class C Member" means the owner of a Class C
Membership Interest.
"Member Loan Nonrecourse Deductions" means any Company deductions that
would be Nonrecourse Deductions if they were not attributable to a loan made or
guaranteed by a Member within the meaning of Section 1.704-2(i) of the
Regulations.
"Member Minimum Gain" has the meaning set forth in Section 1.704-2(i) of
the Regulations for "partner nonrecourse debt minimum gain."
"Membership Interests" means all of the rights of a Class A Member, Class B
Member, or Class C Member, as the case may be, in the Company as provided in
this Agreement, including a Member's (i) Interests (including the right to
receive distributions); (ii) right to inspect the Company's books and records;
and (iii) right to vote on, consent to, or otherwise participate in, any
decision or action of or by the Members granted pursuant to this Agreement or
the Act. "Class A Membership Interests" means the Membership Interests of the
Class A Members; "Class B Membership Interests" means the Membership Interests
of the Class B Members; and "Class C Membership Interests" means the Membership
Interests of the Class C Members.
"Minimum Gain" has the meaning set forth in Sections 1.704-2(b)(2) and
1.704-2(d) of the Regulations. Minimum Gain shall be computed separately for
each Interest Holder in a manner consistent with the Regulations under Section
704(b) of the Internal Revenue Code.
"Net Cash Flow" means, for any applicable period, all cash funds received
by the Company (other than from Capital Contributions and loans to the Company),
less: (i) all amounts paid, or set aside for payment of, operating expenses of
the Company, debt payments (including principal and interest), and capital
improvements and replacements, and (ii) any amounts determined by the Managers
as necessary as a reasonable allowance for reserves, contingencies, and
anticipated obligations of the Company.
"Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1)
of the Regulations. The amount of Nonrecourse Deductions for a taxable year of
the Company equals the net increase, if any, in the amount of Minimum Gain
during that taxable year, determined according to the provisions of Section
1.704-2(c) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in Section 1.704-2(b)(3)
of the Regulations.
"Option" shall have the meaning ascribed to such term in Section 9.1.
"Organizer" means a signer of the original Articles.
"Original Offer" shall have the meaning ascribed to such term in Section
9.2.
"Percentage" means: (i) with respect to any Class A Interest Holder or
Class B Interest Holder at any time, the percentage computed by dividing the
total number of Class A Units or Class B Units held by such Interest Holder at
such time by the total number of Class A Units and Class B Units then held by
all Class A Interest Holders and Class B Interest Holders, and (ii) with respect
to any Class C Interest Holder at any time, the percentage computed by dividing
the total number of Class C Units held by such Interest Holder at such time by
the total number of Class C Units then held by all Class C Interest Holders. The
Percentage of each Interest Holder shall be reflected on Schedule A attached
hereto, as changed from time to time pursuant to this Agreement.
"Person" (whether or not capitalized) means and includes any individual,
partnership, domestic or foreign limited partnership, limited liability company
or foreign limited liability company, trust, estate, association, corporation,
governmental body, or other judicial being.
"Preference Amount" means the sum of $24,668,267.
"Preference Amount per Unit" means the Preference Amount divided by the
total number of outstanding Class C Units.
"Priority Return" means an amount equal to ten percent (10%) per annum of
the unpaid balance of the Preference Amount outstanding from time to time,
calculated annually on a cumulative basis.
"Profits" and "Losses" means, for each taxable year of the Company (or
other period for which Profits or Losses must be computed), the Company's
taxable income or loss as determined for federal income tax purposes, adjusted
as follows:
(a) All items of income, gain, loss, deduction, or credit required to
be stated separately pursuant to Section 703(a)(1) of the Code shall be
included in computing taxable income or loss; and
(b) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses, shall
be added to such taxable income or loss; and
(c) Any expenditures of the Company described in Section 705(a)(2)(B)
of the Internal Revenue Code or treated as such pursuant to Section
1.7041(b)(2)(iv)(i) of the Regulations and not otherwise taken into account
in computing Profits or Losses, shall be subtracted from such taxable
income or loss; and
(d) In lieu of the depreciation, amortization, or cost recovery
deductions allowable in computing taxable income or loss, there shall be
taken into account the depreciation computed based upon the adjusted book
value of the asset; and
(e) Gain or loss resulting from any taxable disposition of Company
property shall be computed by reference to the adjusted book value of the
property disposed of, notwithstanding the fact that the adjusted book value
differs from the adjusted basis of the property for federal income tax
purposes; and
(f) Notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Section 3.3 shall not be taken
into account in computing Profits or Losses.
"Purchaser" means any member or members of the LaCrosse Family Group, NWS,
and/or the Company who purchases any Class B Units from the Bart Family Group
pursuant to Article IX.
"Put Option Agreement" means that certain Put Option Agreement, dated as of
the same date as this Agreement, between the Company and Bart, as amended from
time to time.
"Regulations" means the proposed, temporary and final tax regulations of
the Department of Treasury promulgated under the Internal Revenue Code, as such
regulations may be changed from time to time.
"Substitute Member" means any Transferee admitted as a Member pursuant to
Sections 10.3.
"Transfer" (whether used as a noun or a verb) means any sale, assignment,
exchange, gift, pledge, hypothecation, or other disposition of Units or
Interests, whether voluntary or involuntary.
"Transferee" means a transferee of an Interest who has not been admitted as
a Substitute Member.
"Transferor" means, as the case may be, any Member, Interest Holder, or
other Person who (i) makes or proposes to make a Transfer of any Units or
Interests, or (ii) offers, or is deemed to have offered, to sell any Units or
Interests upon the occurrence of the Option Exercise Date pursuant to Section
9.1 or upon the receipt of an Original Offer pursuant to Section 9.2.
"Unit" means a unit of measurement of an Interest of an Interest Holder in
the Profits, Losses, capital, and distributions of the Company as determined in
accordance with the Articles and this Agreement, including "Class A Units"
representing the Class A Interests, "Class B Units" representing Class B
Interests, and the "Class C Units" representing the Class C Interests. The
number and class of Units to be issued to each Initial Member in exchange for
his initial Capital Contribution is set forth on Schedule A attached hereto.
"Unpaid Priority Return" means, at any given time, the excess, if any, of
the aggregate Priority Return over all amounts previously paid with respect to
the Priority Return.
"Valuation Date" shall have the meaning ascribed to such term in Section
9.3.
Section 14.20. Conflicts and Inconsistencies with the Act. This Agreement
is an operating agreement within the meaning of, and is subject to and governed
by, the Act and the Articles. In the event that any provision of this Agreement
is prohibited by any provision of the Act or is in direct conflict with any
provision of the Articles, such provision of the Act or the Articles, as the
case may be, shall be controlling. If any provision of this Agreement is
inconsistent with, or different than, any non-mandatory provision of the Act,
the provision of this Agreement shall be controlling. To the extent that any
provision of this Agreement is prohibited by the Act, this Agreement shall be
considered amended to the smallest extent possible in order to make such
provision of this Agreement effective under the Act. In the event the Act is
subsequently amended or interpreted in such a way to make valid any such
provision of the Agreement that was formerly invalid, such provision shall be
considered to be valid from the effective date of such amendment or
interpretation.
Section 14.21. Rules of Construction. The headings of Articles, Sections,
Subsections and paragraphs in this Agreement are for descriptive purposes only
and shall not control, alter, or otherwise affect the meaning, scope or intent
of any provisions of this Agreement. Except as expressly provided otherwise in
this Agreement, any reference to an Article, Section, Subsection, Exhibit or
Schedule shall mean and refer to an Article, Section, Subsection, Exhibit or
Schedule of this Agreement. Except where the context of their use clearly
requires a different interpretation, singular terms shall include the plural,
and masculine terms shall include the feminine or neuter, and vice versa, to the
extent necessary to give the defined terms or other terms used in this Agreement
their proper meanings. The locative adverbs, "herein," "hereof," "hereunder,"
"hereto," "hereinafter," "hereinbefore," and similar words, wherever they appear
in this Agreement, shall mean and refer to this Agreement in its entirety and
not to any specific Article, Section, Subsection or paragraph of this Agreement,
unless the context of their use clearly requires a different interpretation. Any
reference to any statute or other provision of the Act, the Internal Revenue
Code, the Regulations, or other statute shall include all amendments thereto and
any and all corresponding sections or provisions of any successor statute.
Section 14.22. Incorporation by Reference. Schedule A and all other
Schedules and Exhibits identified herein are hereby incorporated herein by this
reference.
Section 14.23. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed an original, but all of such
counterparts together shall constitute but one and the same instrument.
Section 14.24. Legal Representation. Each Member, for himself and on behalf
of his heirs, successors and assigns, understands and acknowledges that ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ has acted, and will continue to act, as legal counsel
solely for NWS, and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ has acted, and will continue to act, as
legal counsel solely for Bart, in connection with the organization and operation
of the Company, including, without limitation, the negotiation of the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, the Members have executed this Agreement, or multiple
counterparts thereof as of the date first above written.
NWS, INC.
By: /s/ ▇▇▇▇▇ ▇. LaCrosse
--------------------------------
▇▇▇▇▇ ▇. LaCrosse, President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Acceptance by Company
The undersigned Company agrees to obey, abide by, and be bound by all of
the covenants, obligations, terms and conditions of the foregoing Operating
Agreement imposed on the Company, and as the Agreement may be amended from time
to time.
NWS-ILLINOIS, LLC
Date: December 31, 1998 By:/s/ ▇▇▇▇▇ ▇. LaCrosse
------------------------------
▇▇▇▇▇ ▇. LaCrosse, a Manager
SCHEDULE A
(To NWS-Illinois, LLC Operating Agreement)
Dated: December 31, 1998
Interest Holder (A) Capital Contribution No. of Units Percentage
--------------- -------------------- ------------ ----------
Class A Interest Holders
------------------------
NWS, Inc. Assets of NWS, less 750 75%
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ NWS liabilities assumed
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ by the Company, having
Taxpayer I.D. No. - ▇▇-▇▇▇▇▇▇▇ a net agreed value of
$147,000
Class B Interest Holders
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ $49,000 250 25%
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Taxpayer I.D. No. - ###-##-####
Class C Interest Holders
------------------------
NWS, Inc. Assets of NWS, less 1,000 100%
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ NWS liabilities assumed
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ by the Company, having
Taxpayer I.D. No. - ▇▇-▇▇▇▇▇▇▇ a net agreed value of
$2,694,000
(A) All Interest Holders are Members unless specified otherwise.