ACJ ACQUISITION LLC
Operating Agreement
This Operating Agreement of ACJ Acquisition LLC (the "Company") is made
as of November 16, 1999, by and between the persons identified as the Managers
and the Sole Member on Schedule A attached hereto (such persons and their
respective successors in office or in interest being hereinafter referred to
individually as a "Manager" or "Member" or collectively as the "Managers" or
"Members").
WHEREAS, the Company was formed as a limited liability company under
the Massachusetts Limited Liability Company Act (as amended from time to time,
the "Act") on November 3, 1999; and
WHEREAS, the Managers and the Sole Member wish to set out fully their
respective rights, obligations and duties regarding the Company and its assets
and liabilities.
NOW, THEREFORE in consideration of the mutual covenants expressed
herein, the parties hereby agree as follows:
ARTICLE 1 - Organization and Powers
1.1 Organization. The Company has been formed by the filing of its
Certificate of Organization with the Massachusetts Secretary of State pursuant
to the Act. The Certificate of Organization may be restated by the Managers as
provided in the Act or amended by the Managers to change the address of the
office of the Company in Massachusetts and the name and address of its resident
agent in Massachusetts or to make corrections required by the Act. Other
additions to or amendments of the Certificate of Organization shall be
authorized by the Members as provided in Section 2.5. The Certificate of
Organization, as so amended from time to time, is referred to herein as the
"Certificate." The Managers shall deliver a copy of the Certificate and any
amendment thereto to any Member who so requests.
1.2 Purposes and Powers. The principal business activity and purpose of the
Company shall initially be to engage in financial advisory, financial
intermediary, merchant banking, and leasing and mortgage banking and mortgage
brokerage activities and to engage in any business related thereto or useful in
connection therewith. However, the business and purposes of the Company shall
not be limited to its initial principal business activity and, unless the
Members otherwise determine, the Company shall have authority to engage in any
other lawful business, trade, purpose or activity permitted by the Act, and it
shall possess and may exercise all of the powers and privileges granted by the
Act and any powers incidental thereto, so far as such powers and privileges are
necessary or convenient to the conduct,
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promotion or attainment of the business, purposes or activities of the Company,
including without limitation the following powers:
(1) to conduct its business and operations in any state, territory or
possession of the United States or in any foreign country or jurisdiction;
(2) to purchase, receive, take, lease or otherwise acquire, own, hold,
improve, maintain, use or otherwise deal in and with, sell, convey, lease,
exchange, transfer or otherwise dispose of, mortgage, pledge, encumber or create
a security interest in all or any of its real or personal property, or any
interest therein, wherever situated;
(3) to borrow or lend money or obtain or extend credit and other
financial accommodations, to invest and invest its funds in any type of security
or obligation of or interest in any public, private of governmental entity, and
to give and receive interests in real and personal property as security for the
payment of funds so borrowed, loaned or invested;
(4) to make contracts, including contracts of insurance, incur
liabilities and give guaranties, whether or not such guaranties are in
furtherance of the business and purposes of the Company, including without
limitation guaranties of obligations of other persons who are interested in the
Company or in whom the Company has an interest;
(5) to appoint one or more Managers of the Company, to employ of
officers, employees, agents and other persons, to fix the compensation and
define the duties and obligations of such personnel, to establish and carry out
retirement, incentive and benefit plans for such personnel and to indemnify such
personnel to the extent permitted by this Agreement and the Act;
(6) to make donations irrespective of benefit to the Company for the
public welfare or for community, charitable, religious, educational, scientific,
civic or similar purposes; and
(7) to institute, prosecute and defend any legal action or arbitration
proceeding involving the Company, and to pay, adjust, compromise, settle or
refer to arbitration any claim by or against the Company or any of its assets.
1.3 Principal Place of Business. The principal office and place of business
of the Company shall initially be c/o CT Corporation System, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. After giving notice to the Members, the Managers
may change the principal office or place of business of the Company at any time
and may cause the Company to establish other offices or places of business.
1.4 Fiscal Year. The fiscal year of the Company shall end on December 31 in
each year.
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1.5 Qualification in other Jurisdictions. The Managers shall cause the
Company to be qualified or registered under applicable laws of any jurisdiction
in which the Company transacts business and shall be authorized to execute,
deliver and file any certificates and documents necessary to effect such
qualification or registration, including without limitation the appointment of
agents for service of process in such jurisdictions.
ARTICLE 2 - Members
2.1 Members. The initial Member of the Company and its address shall be
listed on Schedule A and such Schedule shall be amended from time to time by the
Managers to reflect the withdrawal of the initial Member or the admission of new
or additional Members pursuant to this Agreement. Schedule A shall set forth the
percentage interest which each Member holds in the profits and losses of the
Company (the "Membership Interests"). The Members shall constitute a single
class or group of Members of the Company for all purposes of the Act, unless
otherwise explicitly provided herein. The Managers shall notify the Members of
changes in Schedule A, which shall constitute the record list of the Members for
all purposes of this Agreement.
2.2 Admission of New Members. Additional persons may be admitted to the
Company as Members and may participate in the profits, losses, distributions,
allocations and capital contributions of the Company upon such terms as are
established by the Managers, which may include the establishment of classes or
groups of one or more Members having different relative rights, powers and
duties, or the right to vote as a separate class or group on specified matters,
by amendment of this Agreement under Section 10.4. Existing Members shall have
no preemptive or similar right to subscribe to the purchase of new membership
interests in the Company.
2.3 Meetings of Members.
(1) Meetings of Members may be called for any proper purpose at any
time by the Managers or the holders of a majority of the Membership Interests.
The Managers or the Members calling the meeting shall determine the date, time
and place of each meeting of Members, and written notice thereof shall be given
by the Managers to each Member not less than seven days or more than 60 days
prior to the date of the meeting. Notice shall be sent to Members of record on
the date when the meeting is called. The business of each meeting of Members
shall be limited to the purposes described in the notice. A written waiver of
notice, executed before or after a meeting by a Member or its authorized
attorney and delivered to the Managers, shall be deemed equivalent to notice of
the meeting.
(2) Persons holding a majority of the Membership Interests shall
constitute a quorum for the transaction of any business at a meeting of Members.
Members may attend a
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meeting in person or by proxy. Members may also participate in a meeting by
means of conference telephone or similar communications equipment that permits
all Members present to hear each other. If less than a quorum of the Members is
present, the meeting may be adjourned by the chairman to a later date, time and
place, and the meeting may be held as adjourned without further notice. When an
adjourned meeting is reconvened, any business may be transacted that might have
been transacted at the original meeting.
(3) A chairman selected by the Managers shall preside at all meetings
of the Members unless the Members elect from the Membership a chairman of the
meeting. The chairman shall determine the order of business and the procedures
to be followed at each meeting of Members.
2.4 Action Without a Meeting. There is no requirement that the Members hold
a meeting in order to take action on any matter. Any action required or
permitted to be taken by the Members may be taken without a meeting if one or
more written consents to such action shall be signed by Members who hold the
Membership Interests or other interest in the Company required to approve the
action being taken. Such written consents shall be delivered to the Managers at
the principal office of the Company and unless otherwise specified shall be
effective on the date when the first consent is so delivered. The Managers shall
give prompt notice to all Members who did not consent to any action taken by
written consent of Members without a meeting.
2.5 Voting Rights. Unless otherwise required by the Act or this Agreement,
all actions, approvals and consents to be taken or given by the Members under
the Act, this Agreement or otherwise shall require the affirmative vote or
written consent of Members holding a majority of the Membership Interests.
2.6 Limitation of Liability of Members. Except as otherwise provided
in the Act, no Member of the Company shall be obligated personally for any debt,
obligation or liability of the Company or of any other Member, whether arising
in contract, tort or otherwise, solely by reason of being a Member of the
Company. Except as otherwise provided in the Act, by law or expressly in this
Agreement, no Member shall have any fiduciary or other duty to another Member
with respect to the business and affairs of the Company, and no Member shall be
liable to the Company or any other Member for acting in good faith reliance upon
the provisions of this Agreement. Subject to Section 7.2, no Member shall have
any responsibility to restore any negative balance in its Capital Account (as
defined in Section 6.1) or to contribute to or in respect of the liabilities or
obligations of the Company or return distributions made by the Company except as
required by the Act or other applicable law; provided, however, that Members are
responsible for their failure to make required Contributions under Section 6.2.
The failure of the Company to observe any formalities or requirements relating
to the exercise of its powers or the management of its business or affairs
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under this Agreement or the Act shall not be grounds for making its Members or
Managers responsible for the liabilities of the Company.
2.7 Authority. Unless specifically authored by the Managers, no Member that
is not a Manager shall be an agent of the Company or have any right, power or
authority to act for or to bind the Company or to undertake or assume any
obligation or responsibility of the Company or of any other Member.
2.8 No Right to Withdraw. No Member shall have any right to resign or
withdraw from the Company without the consent of the other Members or to receive
any distribution or the repayment of its capital contribution except as provided
in Section 7.2 and Article IX upon dissolution and liquidation of the Company.
No Member shall have any right to have the fair value of its Membership Interest
in the Company appraised and paid out upon the resignation or withdrawal of such
Member or any other circumstances.
2.9 Rights to Information. Members shall have the right to receive from the
Managers upon request a copy of the Certificate and of this Agreement, as
amended from time to time, and such other information regarding the Company as
is required by the Act, subject to reasonable conditions and standards
established by the Managers, as permitted by the Act, which may include without
limitation withholding or restricting the use of confidential information.
ARTICLE 3 - Management
3.1 Managers. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be the initial
Managers of the Company. The names and addresses of the Managers shall be listed
on Schedule A and such Schedule shall be amended from time to time by the
Managers to reflect the resignation or removal of Managers or the appointment of
new or additional Managers pursuant to this Agreement.
3.2 Qualification. Each Manager shall devote such time to the business and
affairs of the Company as is reasonably necessary for the performance of such
Manager's duties, but shall not be required to devote full time to the
performance of such duties and may delegate its responsibilities as provided in
Section 3.3. A Manager need not be a Member.
3.3 Powers and Duties of the Managers. The business and affairs of the
Company shall be managed under the direction of the Managers, who shall have and
may exercise on behalf of the Company all of its rights, powers, duties and
responsibilities under Section 1.2 or as provided by law, including without
limitation the right and authority:
(1) to manage the business and affairs of the Company and for this
purpose to employ, retain or appoint any of officers, employees, consultants,
agents, brokers,
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professionals or other persons in any capacity for such compensation and on such
terms as the Managers deem necessary or desirable and to delegate to such
persons such of their duties and responsibilities as the Managers shall
determine;
(2) to enter into, execute, deliver, acknowledge, make, modify,
supplement or amend any documents or instruments in the name of the Company;
(3) to borrow money or otherwise obtain credit and other financial
accommodations on behalf of the Company on a secured or unsecured basis as
provided in Section 1 .2(c), and to perform or cause to be performed all of the
Company's obligations in respect of its indebtedness and any mortgage, lien or
security interest securing such indebtedness; and
(4) to make elections and prepare and file returns regarding any
federal, state or local tax obligations of the Company.
Unless otherwise provided in this Agreement, any action taken by a Manager,
and the signature of a Manager on any agreement, contract, instrument or other
document on behalf of the Company, shall be sufficient to bind the Company and
shall conclusively evidence the authority of that Manager and the Company with
respect thereto.
3.4 Tax Matters Partner. The Member so designated by the Managers from time
to time shall serve as the "Tax Matters Partner" of the Company for purposes of
Section 623l(a)(7) of the Internal Revenge Code of 1986 as amended (the "Code"),
with power to manage and represent the Company in any administrative proceeding
of the Internal Reverie Service. The initial Tax Matters Partner of the Company
shall be KeySpan Corporation.
3.5 Reliance by Third Parties. Any person dealing with the Company, the
Managers or any Member may rely upon a certificate signed by any Manager as to
(i) the identity of any Manager or Member; (ii) any factual matters relevant to
the affairs of the Company, (iii) the persons who are authorized to execute and
deliver any document on behalf of the Company; or (iv) any action taken or
omitted by the Company, the Managers or any Member.
3.6 Resignation and Removal. Any Manager may resign upon at least 60 days'
notice to the Members and the other Managers (unless notice is waived by them).
Any Manager may be removed at any time with or without cause by the Members.
3.7 Meetings and Action of Managers. Unless otherwise determined by the
Members or Managers, all action to be taken by the Managers shall be taken by
majority vote or written consent of a majority of the Managers then in office.
There is no requirement that the Managers hold a meeting in order to take action
on any matter. Meetings of the Managers may be called by any Manager. If action
is to be taken at a meeting of the Managers, notice of
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the time, date and place of the meeting shall be given to each Manager by an
officer or the Manager calling the meeting by personal delivery, telephone or
fax sent to the business or home address of each Manager at least 24 hours in
advance of the meeting, or by written notice mailed to each Manager at either
such address at least 72 hours in advance of the meeting; however, no notice
need be given to a Manager who waives notice before or after the meeting, or who
attends the meeting without protesting at or before its commencement the
inadequacy of notice to him or her. Managers may also attend a meeting in person
or by proxy, and they may also participate in a meeting by means of conference
telephone or similar communications equipment that permits all Managers present
to hear each other. A chairman selected by the Managers shall preside at all
meetings of the Managers. The chairman shall determine the order of business and
the procedures to be followed at each meeting of the Managers.
3.8 Limitation of Liability of Manager. No Manager shall be obligated
personally for any debt, obligation or liability of the Company or of any
Member, whether arising in contract, tort or otherwise, solely by reason of
being or acting as Manager of the Company. No Manager shall be personally liable
to the Company or to its Members for breach of any fiduciary or other duty that
does not involve (i) a breach of the duty of loyalty to the Company or its
Members, (ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or (iii) a transaction from which the
Manager derived an improper personal benefit.
ARTICLE 4 - Indemnification
4.1 Definitions. For purposes of this Article:
"Manager" includes (i) a person serving as a Manager or an officer of the
Company or in a similar executive capacity appointed by the Managers and
exercising rights and duties delegated by the Managers, (ii) a person serving at
the request of the Company as a director, Manager, officer, employee or other
agent of another organization, and (iii) any person who formerly served in any
of the foregoing capacities;
"expenses" means all expenses, including attorneys' fees and disbursements,
actually and reasonably incurred in defense of a proceeding or in seeking
indemnification under this Article, and except for proceedings by or in the
right of the Company or alleging that a Manager received an improper personal
benefit, any judgments, awards, fines, penalties and reasonable amounts paid in
settlement of a proceeding; and
"proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, and any
claim which could be the subject of a proceeding.
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4.2 Right to Indemnification. Except as limited by law and subject to the
provisions of this Article, the Company shall indemnify each of its Managers
against all expenses incurred by them in connection with any proceeding in which
a Manager is involved as a result of serving in such capacity, except that no
indemnification shall be provided for a Manager regarding any matter as to which
it shall be finally determined that such Manager did not act in good faith and
in the reasonable belief that its action was in the best interests of the
Company. Subject to the foregoing limitations, such indemnification may be
provided by the Company with respect to a proceeding in which it is claimed that
a Manager received an improper personal benefit by reason of its position,
regardless of whether the claim arises out of the Manager's service in such
capacity, except for matters as to which it is finally determined that an
improper personal benefit was received by the Manager.
4.3 Award of Indemnification. The determination of whether the Company is
authorized to indemnify a Manager hereunder and any award of indemnification
shall be made in each instance (a) by a majority of the Managers who are not
parties to the proceeding in question, (b) by independent legal counsel
appointed by the Managers or the Members or (c) by the holders of a majority of
the Membership Interests of the Members who are not parties to the proceeding in
question. The Company shall be obliged to pay indemnification applied for by a
Manager unless there is an adverse determination (as provided above) within
forty-five (45) days after the application. If indemnification is denied, the
applicant may seek an independent determination of its right to indemnification
by a court, and in such event, the Company shall have the burden of proving that
the applicant was ineligible for indemnification under this Article.
Notwithstanding the foregoing, in the case of a proceeding by or in the right of
the Company in which a Manager is adjudged liable to the Company,
indemnification hereunder shall be provided to such Manager only upon a
determination by a court having jurisdiction that in view of all the
circumstances of the case, such Manager is fairly and reasonably entitled to
indemnification for such expenses as the court shall deem proper.
4.4 Successful Defense. Notwithstanding any contrary provisions of this
Article, if a Manager has been wholly successful on the merits in the defense of
any proceeding in which it was involved by reason of its position as Manager or
as a result of serving in such capacity (including termination of investigative
or other proceedings without a finding of fault on the part of the Manager), the
Manager shall be indemnified by the Company against all expenses incurred by the
Manager in connection therewith.
4.5 Advance Payments. Except as limited by law, expenses incurred by a
Manager in defending any proceeding, including a proceeding by or in the right
of the Company, shall be paid by the Company to the Manager in advance of final
disposition of the proceeding upon receipt of its written undertaking to repay
such amount if the Manager is determined pursuant to this Article or adjudicated
to be ineligible for indemnification, which undertaking shall be an unlimited
general obligation but need not be secured and may be accepted without regard to
the financial ability of the Manager to make repayment; provided, however, that
no such
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advance payment of expenses shall be made if it is determined pursuant to
Section 4.3 of this Article on the basis of the circumstances known at the time
(without further investigation) that the Manager is ineligible for
indemnification.
4.6 Insurance. The Company shall have power to purchase and maintain
insurance on behalf of any Manager, officer, agent or employee against any
liability or cost incurred by such person in any such capacity or arising out of
its status as such, whether or not the Company would have power to indemnify
against such liability or cost.
4.7 Heirs and Personal Representatives. The indemnification provided by
this Article shall inure to the benefit of the heirs and personal
representatives of each Manager.
4.8 Non-Exclusivity. The provisions of this Article shall not be construed
to limit the power of the Company to indemnify its Managers, Members, officers,
employees or agents to the full extent permitted by law or to enter into
specific agreements, commitments or arrangements for indemnification permitted
by law. The absence of any express provision for indemnification herein shall
not limit any right of indemnification existing independently of this Article.
4.9 Amendment. The provisions of this Article may be amended or repealed in
accordance with Section 10.4; however, no amendment or repeal of such provisions
that adversely affects the rights of a Manager under this Article with respect
to its acts or omissions at any time prior to such amendment or repeal shall
apply to such Manager without its consent.
[ARTICLE I - Conflicts of Interest
4.10 Transactions with Interested Persons. Unless entered into in bad
faith, no contract or transaction between the Company and one or more of its
Managers or Members, or between the Company and any other corporation,
partnership, association or other organization in which one or more of its
Managers or Members have a financial interest or are directors, partners,
Managers or officers, shall be voidable solely for this reason or solely because
such Manager or Member was present or participated in the authorization of such
contract or transaction if:
(1) the material facts as to the relationship or interest of such
Manager or Member and as to the contract or transaction were disclosed or known
to the other Managers
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(if any) or Members and the contract or transaction was authorized by the
disinterested Managers (if any) or Members; or
(2) the contract or transaction was fair to the Company as of the time
it was authorized, approved or ratified by the disinterested Managers (if any)
or Members; and no Manager or Member interested in such contract or transaction,
because of such interest, shall be considered to be in breach of this Agreement
or liable to the Company, any Manager or Member, or any other person or
organization for any loss or expense incurred by reason of such contract or
transaction be accountable for any gain or profit realized from such contract or
transaction.]
ARTICLE 5 - Capital Accounts and Contributions
5.1 Capital Accounts.
(1) There shall be established on the books of the Company a separate
capital account (a "Capital Account") for each Member.
(2) The Capital Account of each Member (regardless of the time or
manner in which such Member's interest was acquired) shall be maintained in
accordance with the rules of Section 704(b) of the Internal Revenue Code of
1986, as amended, from time to time (the "Code"), and Treasury Regulation
Section 1.704-l(b)(2)(iv). Adjustments shall be made to the Capital Accounts for
distributions and allocations as required by the rules of Section 704(b) of the
Code and the Treasury Regulations thereunder.
(3) If there is a transfer of all or a part of an interest in the
Company by a Member, the Capital Account of the transferor that is attributable
to the transferred interest shall carry over to the transferee of such Member.
(4) Subject to Section 7.2, notwithstanding any other provision
contained herein to the contrary, no Member shall be required to restore any
negative balance in its Capital Account.
5.2 Contributions. Each Member shall make the contributions to the capital
of the Company (herein "Contributions") specified on Schedule A. All
Contributions shall be paid in cash unless otherwise specified on Schedule A or
agreed to by the Members. Except as set forth on Schedule A, no Member or
Manager shall be entitled or required to make any contribution to the capital of
the Company; however, the Company may borrow from its Members as well as from
banks or other lending institutions to finance its working capital or the
acquisition of assets upon such terms and conditions as shall be approved by the
Managers, and any such borrowing from Members shall not be considered
Contributions or reflected in their Capital Accounts. The value of all non-cash
Contributions made by Members shall be set
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forth on Schedule A. No Member shall be entitled to any interest or compensation
with respect to its Contribution or any services rendered on behalf of the
Company except as specifically provided in this Agreement or approved by the
Managers. No Member shall have any liability for the repayment of the
Contribution of any other Member and each Member shall look only to the assets
of the Company for return of its Contribution.
ARTICLE 6 - Profits Losses and Distributions
6.1 Profits. Losses and Distributions
(1) All profits and losses arising from the normal course of business
operations or otherwise and all cash available for distribution from whatever
source, commencing with the date of this Agreement, shall be allocated or
distributed to the Members according to their Membership Interests.
(2) All profits and losses allocated to the Members shall be credited
or charged, as the case may be, to their Capital Accounts. The terms "profits"
and "losses" as used in this Agreement shall mean income and losses, and each
item of income, gain, loss, deduction or credit entering into the computation
thereof, as determined in accordance with the accounting methods followed by the
Company and computed in a manner consistent with Treasury Regulation Section
1.704-l(b)(2)(iv). Profits and losses for Federal income tax purposes shall be
allocated in the same manner as profits and losses for purposes of this Article
VII, except as provided in Section 7.3(a).
6.2 Distributions Upon Dissolution.
(1) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Company, the remaining assets of
the Company (or the proceeds of sales or other dispositions in liquidation of
the Company assets, as may be determined by the remaining or surviving
Member(s)) shall be distributed to the Members in accordance with the positive
balances in their Capital Accounts after taking into account all Capital Account
adjustments for the Company taxable year. In the event that a Member has a
negative balance in his Capital Account following the liquidation of the Company
or his interest in the Company after taking into account all Capital Account
adjustments for the Company taxable year in which the liquidation occurs, such
Member shall pay to the Company in cash an amount equal to the deficit balance
in the Capital Account of such Member.
(2) With respect to assets distributed in kind to the Members in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits and
losses realized by the Company immediately prior to the liquidation or other
distribution event; and (ii) such profits and losses shall be allocated to the
Members and credited or charged to their Capital Accounts, and any property so
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distributed shall be treated as a distribution of an amount in cash equal to the
excess of such fair market value over the outstanding principal balance of and
accrued interest on any debt by which the property is encumbered. For the
purposes of this Section 7.2(b), "unrealized appreciation" or "unrealized
depreciation" shall mean the difference between the fair market value of such
assets, taking into account the fair market value of the associated financing
but subject to Section 770l (g) of the Code, and the Company's basis in such
assets as determined under Treasury Regulation Section 1.704-l(b). This Section
7.2(b) is merely intended to provide a rule for allocating unrealized gains and
losses upon liquidation or other distribution event, and nothing contained in
this Section 7.2(b) or elsewhere in this Agreement is intended to treat or cause
such distributions to be treated as sales for value. The fair market value of
such assets shall be determined by an appraiser to be selected by the Manager
with the Consent of the Members.
6.3 Special Provisions.
Notwithstanding the foregoing provisions in this Article VII:
(1) Income, gain, loss and deduction with respect to Company property
which has a variation between its basis computed in accordance with Treasury
Regulation Section 1.704-(b) and its basis computed for Federal income tax
purposes shall be shared among Members so as to take account of the variation in
a manner consistent with the principles of Section 704(c) of the Code and
Treasury Regulation Section 1.704-3.
(2) Section 704 of the Code and the Treasury Regulations issued
thereunder, including but not limited to the provisions of such regulations
addressing qualified income offset provisions, minimum gain charge back
requirements and allocations of deductions attributable to nonrecourse debt and
partner nonrecourse debt, are hereby incorporated by reference into this
Agreement.
6.4 Distribution of Assets in Kind. No Member shall have the right to
require any distribution of any assets of the Company to be made in cash or in
kind. If the Managers determine to distribute assets of the Company in kind,
such assets shall be distributed on the basis of their fair market value as
determined by the Managers. Any Member entitled to any interest in such assets
shall, unless otherwise determined by the Managers, receive separate assets of
the Company, and not an interest as tenant-in-common with other Members so
entitled in each asset being distributed. Distributions in kind need not be made
on a pro-rata basis but may be made on any basis which the Managers determine to
be reasonable under the circumstances.
ARTICLE 7 - Transfers of Interests
7.1 Transfer of a Member's Membership Interest.
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(1) Except as set forth in the first sentence of Section 8.2, no Member may
sell, assign, give, pledge, hypothecate, encumber or otherwise transfer,
including, without limitation, any assignment or transfer by operation of law or
by order of court, such Member's Membership Interest in the Company or any part
thereof, or in all or any part of the assets of the Company, without a prior
written consent of a majority of the Managers and in accordance with the terms
of Section 8. l(b). The granting or denying of such consent shall be in the
Managers' absolute discretion. Any attempted sale, transfer, assignment, pledge
or other disposition in contravention of the provisions of this section shall be
void and ineffectual and shall not bind, or be recognized, by the Company.
(2) After obtaining a prior written consent of a majority of the Managers,
but before any Membership Interest or any part thereof may be sold, assigned,
gifted, pledged, hypothecated, encumbered or otherwise transferred, including
transfer by operation of law or by order of court, the Member holding such
Membership Interest proposing such sale or transfer (the "Transferor") shall
first give written notice thereof to other Members at least sixty (60) days
prior to the proposed date of transfer (the "Transfer Date") stating the
proposed transferee, the Membership Interest proposed to be transferred, the
purchase price, if any, and the terms of the proposed transaction. The Members
receiving such notice (the "Purchasing Members") shall thereupon have the
option, but not the obligation, to acquire all, but not less than all, of the
Membership Interest proposed to be sold or transferred by the Transferor for the
Purchase Price determined pursuant to Section 8.1 (d) (the "Purchase Price").
Within thirty (30) days after the giving of such notice by the Transferor, each
Purchasing Member shall give written notice ("Purchase Notice") to the
Transferor stating whether or not he or she elects to exercise the option to
purchase and a date and time (the "Closing Date") for the consummation of the
purchase not less than sixty (60) or more than ninety (90) days after the giving
of the Purchase Notice. If two (2) or more Purchasing Members desire to purchase
the Membership Interest proposed to be sold or transferred, then, in the absence
of an agreement between or among them, each such Purchasing Member shall
purchase the Membership Interest proposed to be sold or transferred in the
proportion that his or her Membership Interest bears to the total Membership
Interests of all the Purchasing Members who desire to so purchase. Failure by a
Purchasing Member to deliver a Purchase Notice within the time period allowed
shall be deemed an election by such Purchasing Member not to exercise such
option. If the Purchase Price is determined by appraisal as set forth in Section
8.1(d)(ii), a Purchasing Member may rescind his or her election to purchase by
written notice to the Transferor given within ten (10) days after being notified
of the determination of the appraisers.
(3) If the Purchasing Members waive in writing their option to purchase or
fail to exercise their right to purchase within the time period allowed, the
Transferor may transfer such Membership Interest at any time during the 60-day
period after the termination of such time period, but only upon the terms and to
the transferee stated in its notice delivered
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pursuant to subsection (b). After such Membership Interest is so transferred, or
if the transfer is not consummated within such period the Membership Interest
shall again become subject to the terms of this Agreement.
(4) The Purchase Price shall be determined as follows:
(1) In the case of a proposed sale or transfer under paragraph
(b) to a third party in a bona fide transaction for fair
value payable in cash or the equivalent currently or in
future installments, the Purchase Price for such Membership
Interests shall be the value offered by such third party
payable upon the same terms.
(2) In all other cases, including without limitation a proposed
transfer or other disposition not constituting a sale
described in subsection (i), the Purchase Price shall be
the fair market value of the Membership Interest being
purchased as of the last day of the month immediately prior
to the month during which the transferor gave his or her
notice. "Fair market value" as of any date shall mean the
cash price obtainable in an arm's-length sale between an
informed and willing buyer (under no compulsion to
purchase) and an informed and willing seller (under no
compulsion to sell) of the Membership Interest, based upon
the going concern value of the Company, taking into account
any minority or non-control discount. If the parties are
unable to agree upon the fair market value, such fair
market value shall be determined by appraisal as follows:
Either party may require appraisal by giving written notice
to the other party and appointing an independent appraiser.
The other party shall deliver a written notice appointing
an independent appraiser within fifteen (15) days after
receipt of the notice from the other. The two appraisers so
appointed, or if only one appraiser is appointed, that
appraiser, shall promptly seek to determine the fair market
value. If the two appraisers cannot agree within thirty
(30) days of their appointment, a third independent
appraiser shall be chosen within ten (10) days thereafter
by the mutual consent of such first two appraisers or, if
such first two appraisers fail to agree upon the
appointment of a third appraiser, such appointment shall be
made by the Boston office of the American Arbitration
Association, or any organization successor thereto, and
shall be a disinterested person qualified in the valuation
of business enterprises engaged in the same or similar
lines of business as the Company. The three appraisers
shall
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make the determination in accordance with the rules of the
American Arbitration Association or any such successor then
in effect, and such determination shall be binding and
conclusive on the parties. Each party shall pay the costs
of its own appraiser and shall share equally in the costs,
if any, of a third appraiser and any other costs of
arbitration, excluding their own costs.
7.2 Death or Incompetence of a Member. If a Member dies, such Member's
executor, administrator, or trustee, or, if he or she is adjudicated
incompetent, such Member's guardian, or, if it is a corporation, trust, limited
liability company or partnership and is dissolved, the liquidator, shall
automatically become an assignee (the "Assignee") of the Membership Interest of
the deceased, incompetent, or dissolved Member. The Assignee may receive
distributions and shall have all the rights of a Member for the purpose of
settling or managing such deceased or incompetent Member's estate, but shall not
be a Member and shall not have the power to vote such Member's Membership
Interest. The Assignee shall also have such power as the decedent, incompetent
or dissolved entity possessed to: (1) assign all or any part of the Member's
Membership Interest subject to Section 8.1; and (2) to satisfy conditions
precedent to the assignment of the Membership Interest set forth in Section 8.1.
7.3 Admission of Member; Effect of Transfer.
(1) In no event may any person obtaining a Membership Interest in the
Company by assignment, transfer, pledge or other means from an existing Member
be admitted as a successor Member without the affirmative vote or written
consent of Members of the Membership Interests exclusive in each case of the
Member whose Membership Interest is being transferred.
(2) If the transferee is admitted as a Member or is already a Member,
the Member transferring its Membership Interest shall be relieved of liability
with respect to the transferred Membership Interest arising or accruing under
this Agreement on or after the effective date of the transfer, unless the
transferor affirmatively assumes such liability; provided, however, that the
transferor shall not be relieved of any liability for prior distributions and
unpaid contributions unless the transferee affirmatively assumes such
liabilities.
(3) Any person who acquires in any manner a Membership Interest or any
part thereof in the Company, whether or not such person has accepted and assumed
in writing the terms and provisions of this Agreement or been admitted as a
Member, shall be deemed by the acquisition of such Membership Interest to have
agreed to be subject to and bound by all of the provisions of this Agreement
with respect to such Membership Interest, including without limitation, the
provisions hereof with respect to any subsequent transfer of such Membership
Interest.
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ARTICLE 8 - Dissolution Liquidation and Termination
8.1 Dissolution. The Company shall dissolve and its affairs shall be wound
up upon the first -------------------- to occur of the following:
(1) the written consent of the Members;
(2) the entry of a decree of judicial dissolution under Section 44 of
the Act; or
(3) The consolidation or merger of the Company in which it is not the
resulting or surviving entity.
Notwithstanding the provisions of Section 43(4) of the Act, the death,
insanity, retirement, resignation, expulsion, bankruptcy or dissolution of a
Member shall not result in dissolution of the Company.
8.2 Liquidation. Upon dissolution of the Company, the Managers shall act as
its liquidating trustees or the Managers may appoint one or more Managers or
Members as liquidating trustee. The liquidating trustees shall proceed
diligently to liquidate the Company and wind up its affairs and shall dispose of
the assets of the Company as provided in Section 7.2 hereof. Until final
distribution, the liquidating trustees may continue to operate the business and
properties of the Company with all of the power and authority of the Managers.
As promptly as possible after dissolution and again after final liquidation, the
liquidating trustees shall cause an accounting by the accounting firm then
serving the Company of the Company's assets, liabilities, operations and
liquidating distributions to be given to the Members.
8.3 Certificate of Cancellation. Upon completion of the distribution of
Company assets as provided herein, the Company shall be terminated, and the
Managers (or such other person or persons as the Act may require or permit)
shall file a Certificate of Cancellation with the Secretary of State of
Massachusetts under the Act, cancel any other filings made pursuant to Sections
1.1, 1.3 and 1.5 and take such other actions as may be necessary to terminate
the existence of the Company.
ARTICLE 9 - General Provisions
9.1 Offset. Whenever the Company is obligated to make a distribution or
payment to any Member, any amounts that Member owes the Company may be deducted
from said distribution or payment by the Managers.
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9.2 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests, or consents required or permitted to be given
under this Agreement must be in writing and shall be deemed to have been
properly given if sent by registered or certified mail, postage prepaid, by
commercial overnight courier, by facsimile or if delivered in hand to Members at
their addresses on Schedule A, or such other address as a Member may specify by
notice to the Managers and to the Company or the Managers at the address of the
principal office of the Company specified in Section l .3. Whenever any notice
is required to be given by law, the Certificate or this Agreement, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
9.3 Entire Agreement; Binding Effect. This Agreement constitutes the entire
agreement of the Members and the Managers relating to the Company and supersedes
all prior oral or written agreements or understandings with respect to the
Company. This Agreement is binding on and inures to the benefit of the parties
and their respective successors, permitted assigns and legal representatives.
9.4 Amendment or Modification. Except as specifically provided herein, this
Agreement may be amended or modified from time to time only by a written
instrument signed by Members holding a majority of the Membership Interests.
9.5 Governing Law; Severability. This Agreement is governed by and shall be
construed in accordance with the law of The Commonwealth of Massachusetts,
exclusive of its conflict-of-laws principles. In the event of a conflict between
the provisions of this Agreement and any provision of the Certificate or the
Act, the applicable provision of this Agreement shall control, to the extent
permitted by law. If any provision of this Agreement or the application thereof
to any person or circumstance is held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of that provision shall be
enforced to the fullest extent permitted by law.
9.6 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions, as requested by the Managers.
9.7 Waiver of Certain Rights. Each Member irrevocably waives any right it
may have to maintain any action for dissolution of the Company or for partition
of the property of the Company. The failure of any Member to insist upon strict
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such Member's right to demand strict compliance herewith in the future. No
consent or waiver, express or implied, to or of any breach
17
or default in the performance of any obligation hereunder shall constitute a
consent or waiver to or of any other breach or default in the performance of the
same or any other obligation hereunder.
9.8 Third-Party Beneficiaries. The provisions of this Agreement are not
intended to be for the benefit of any creditor or other person to whom any debts
or obligations are owed by, or who may have any claim against, the Company or
any of its Members or Managers, except for Members or Managers in their
capacities as such. Notwithstanding any contrary provision of this Agreement, no
such creditor or person shall obtain any rights under this Agreement or shall,
by reason of this Agreement, be permitted to make any claim against the Company
or any Member or Manager.
9.9 Interpretation. For the purposes of this Agreement, terms not defined
in this Agreement shall be defined as provided in the Act; and all nouns,
pronouns and verbs used in this Agreement shall be construed as masculine,
feminine, neuter, singular, or plural, whichever shall be applicable. Titles or
captions of Articles and Sections contained in this Agreement are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provision hereof.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document, and all counterparts shall be construed together and shall constitute
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date set forth above.
MANAGERS:
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MEMBERS:
KeySpan Corporation
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ACJ Acquisition LLC
Schedule A
MANAGERS
Name and Address
of Manager
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KeySpan Corporation Keyspan Corporation
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MEMBERS
Name and Address
of Member Contribution Membership Interest
KeySpan Corporation $100.00 100%
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