1
EXHIBIT 3.6
LIMITED LIABILITY COMPANY AGREEMENT
OF
GENERAC PORTABLE PRODUCTS, LLC
EFFECTIVE AS OF JUNE 1, 1998
2
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS................................................. 1
ARTICLE II
FORMATION OF THE COMPANY............................................ 8
2.1 Formation.............................................................................. 8
2.2 Name................................................................................... 8
2.3 Place of Business...................................................................... 8
2.4 Registered Office and Registered Agent................................................. 8
2.5 Term................................................................................... 8
2.6 Purpose of the Company................................................................. 8
ARTICLE III
INITIAL MEMBERS............................................... 8
ARTICLE IV
CAPITAL OF THE COMPANY........................................ 9
4.1 Capital Contributions; Member Interests; Capital Percentages........................... 9
4.2 Additional Contributions............................................................... 9
4.3 Record of Contributions................................................................ 10
4.4 Interest............................................................................... 10
4.5 Withdrawal or Reduction of Members' Capital Contributions.............................. 10
4.6 Loans to Company....................................................................... 10
4.7 Borrowing.............................................................................. 10
ARTICLE V
RIGHTS AND OBLIGATIONS OF MEMBERS................................... 10
5.1 Limitation of Members' Responsibility, Liability....................................... 10
5.2 Return of Distributions................................................................ 11
5.3 Priority and Return of Capital......................................................... 11
5.4 Competition............................................................................ 11
5.5 Admission of Additional Members........................................................ 11
5.6 Resignation............................................................................ 11
5.7 Indemnification........................................................................ 11
- i -
3
ARTICLE VI
MEETINGS OF MEMBERS............................................. 12
6.1 Meetings............................................................................... 12
6.2 Place of Meetings...................................................................... 12
6.3 Notice of Meetings..................................................................... 12
6.4 Meeting of All Members................................................................. 12
6.5 Action by Members Without a Meeting.................................................... 12
6.6 Waiver of Notice....................................................................... 12
6.7 Delegation to Board.................................................................... 12
ARTICLE VII
RIGHTS AND DUTIES OF DIRECTORS AND OFFICERS.............................. 13
7.1 Management............................................................................. 13
7.2 Vacancies.............................................................................. 13
7.3 Regular Meetings....................................................................... 13
7.4 Special Meetings....................................................................... 13
7.5 Meetings by Conference Telephone....................................................... 14
7.6 Quorum: Vote Required for Action...................................................... 14
7.7 Organization........................................................................... 14
7.8 Actions of the Board by Consent in Lieu of Meeting..................................... 14
7.9 Committees............................................................................. 14
7.10 Compensation and Reimbursement of Expenses............................................. 15
7.11 Powers of Board of Directors........................................................... 15
7.12 Liability of Directors................................................................. 17
7.13 Officers............................................................................... 17
7.14 Member Contributions................................................................... 20
ARTICLE VIII
INDEMNIFICATION.................................................. 20
8.1 Indemnification........................................................................ 20
8.2 Power to Indemnify in Actions, Suits or Proceedings Other
Than Those by or in the Right of the Company....................................... 21
8.3 Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Company.................................................. 21
8.4 Authorization of Indemnification....................................................... 21
8.5 Good Faith Defined..................................................................... 22
8.6 Indemnification by a Court............................................................. 22
8.7 Advancement or Reimbursement of Expenses............................................... 22
8.8 Nonexclusivity and Survival of Indemnification......................................... 23
8.9 Insurance.............................................................................. 23
- ii -
4
8.10 Terms...................................................................................... 23
ARTICLE IX
ALLOCATIONS......................................................... 24
9.1 Profits.................................................................................... 24
9.2 Losses..................................................................................... 24
ARTICLE X
NET CASH FLOW AND DISTRIBUTIONS........................................ 27
10.1 Free Cash Flow............................................................................. 27
10.2 Distributions of Free Cash Flow............................................................ 27
10.3 Limitation Upon Distributions.............................................................. 28
ARTICLE XI
ACCOUNTING METHOD, PERIOD, RECORDS AND REPORTS.......................... 28
11.1 Accounting Method.......................................................................... 28
11.2 Accounting Period.......................................................................... 28
11.3 Records, Audits and Reports................................................................ 28
11.4 Inspection................................................................................. 28
11.5 Preparation of Financial Statements........................................................ 28
ARTICLE XII
TAX MATTERS............................................................. 29
12.2 Tax Information............................................................................ 29
ARTICLE XIII
RESTRICTIONS ON TRANSFERABILITY......................................... 29
13.1 Transfer Restrictions...................................................................... 29
ARTICLE XIV
DISSOLUTION AND TERMINATION............................................. 29
14.1 Dissolution Events............................................................................ 30
14.2 Winding Up.................................................................................... 31
14.3 Compliance With Certain Requirements of Regulations; Deficit Capital Accounts................. 32
14.4 Deemed Distribution and Recontribution........................................................ 32
14.5 Rights of Members............................................................................. 32
14.6 Notice of Dissolution/Termination............................................................. 33
- iii -
5
14.7 Allocations During Period of Liquidation...................................................... 33
14.8 Character of Liquidating Distributions........................................................ 33
14.9 The Liquidator................................................................................ 33
14.10 Form of Liquidating Distributions............................................................ 34
ARTICLE XV
MISCELLANEOUS PROVISIONS............................................. 34
15.1 Notices.................................................................................... 34
15.2 Application of Delaware Law................................................................ 34
15.3 Waiver of Action for Partition............................................................. 34
15.4 Execution of Additional Instruments........................................................ 35
15.5 Headings................................................................................... 35
15.6 Waivers.................................................................................... 35
15.7 Rights and Remedies Cumulative............................................................. 35
15.8 Severability............................................................................... 35
15.9 Heirs, Successors and Assigns.............................................................. 35
15.10 Beneficiaries.............................................................................. 35
15.11 Counterparts............................................................................... 35
15.12 Amendments................................................................................. 35
15.13 Waiver of Consequential and Punitive Damages............................................... 35
15.14 Other Terms................................................................................ 36
- iv -
6
LIMITED LIABILITY COMPANY AGREEMENT
This Limited Liability Company Agreement (this "Agreement") is
made and entered into as of June 1, 1998, by GPPD, Inc., a Delaware corporation,
and GPPW, Inc., a Wisconsin corporation (the "Initial Members").
WHEREAS, the Initial Members desire to form a limited
liability company named General Portable Products, LLC (the "Company") pursuant
to the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101, et.
seq. as amended (the "Delaware Act"), to engage in any lawful act or activity
for which limited liability companies may be organized under the Delaware Act
(the "Business"); and
WHEREAS, the Initial Members desire to provide for the orderly
management of the affairs of the Company;
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements herein contained, the Initial Members and all
subsequent parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the
following meanings (unless otherwise expressly provided herein):
"Adjusted Capital Account Deficit" shall mean, with respect to
any Member, the deficit balance, if any, in such Member's Capital Account as of
the end of the relevant Allocation Year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amounts which such
Member is deemed to be obligated to restore pursuant to the penultimate
sentences in Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Agreement" shall mean this Agreement as originally executed
and as it may be amended from time to time hereafter.
7
"Allocation Year" shall mean (i) the period commencing on the
Effective Date and ending on December 31, 1998, (ii) any subsequent twelve (12)
month period commencing on January 1 and ending on December 31 or (iii) any
portion of the period described in clauses (i) or (ii) for which the Company is
required to allocate Profits, Losses and other items of Company income, gain,
loss or deduction pursuant to Section 9 hereof.
"Bankruptcy" shall mean, with respect to any Person, a
"Voluntary Bankruptcy" or an "Involuntary Bankruptcy." A "Voluntary Bankruptcy"
means, with respect to any Person (i) the inability of such Person generally to
pay its debts as such debts become due, or an admission in writing by such
Person of its inability to pay its debts generally or a general assignment by
such Person for the benefit of creditors, (ii) the filing of any petition or
answer by such Person seeking to adjudicate itself as bankrupt or insolvent, or
seeking for itself any liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of such Person or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for such Person or for any substantial part of its Property or (iii)
corporate action taken by such Person to authorize any of the actions set forth
above. An "Involuntary Bankruptcy" means, with respect to any Person, without
the consent or acquiescence of such Person, the entering of an order for relief
or approving a petition for relief or reorganization or any other petition
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future bankruptcy,
insolvency or similar statute, law or regulation, or the filing of any such
petition against such Person which petition shall not be dismissed within ninety
(90) days, or without the consent or acquiescence of such Person, the entering
of an order appointing a trustee, custodian, receiver or liquidator of such
Person or of all or any substantial part of the Property of such Person which
order shall not be dismissed within ninety (90) days.
"Board of Directors" shall mean the board of directors of the
Company.
"Business" shall have the meaning specified in the preamble.
"Business Day" shall mean any day except a Saturday, Sunday or
other day on which commercial banking institutions in New York, New York are
authorized by law or executive order to close.
"Capital Account" shall mean, with respect to any Member, the
Capital Account maintained for such Member in accordance with the following
provisions:
(i) To each Member's Capital Account there shall be credited
(A) such Member's Capital Contributions, (B) such Member's distributive share of
Profits and any items in the nature of income or gain which are specially
allocated pursuant to Section 9.3 or Section 9.4 hereof, and (C) the amount of
any Company liabilities assumed by such Member or which are secured by any
Property distributed to such Member. The principal amount of a promissory note
which is not
- 2 -
8
readily traded on an established securities market and which is contributed to
the Company by the maker of the note (or a Member related to the maker of the
note within the meaning of Regulations Section 1.704-1(b)(2)(ii)(c)) shall not
be included in the Capital Account of any Member until the Company makes a
taxable disposition of the note or until (and to the extent) principal payments
are made on the note, all in accordance with Regulations Section
1.704-1(b)(2)(iv)(d)(2);
(ii) To each Member's Capital Account there shall be debited
(A) the amount of money and the Gross Asset Value of any Property distributed to
such Member pursuant to any provision of this Agreement, (B) such Member's
distributive share of Losses and any items in the nature of expenses or losses
which are specially allocated pursuant to Section 9.3 or Section 9.4 hereof, and
(C) the amount of any liabilities of such Member assumed by the Company or which
are secured by any Property contributed by such Member to the Company;
(iii) In the event Member Interests are transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
Member Interests; and
(iv) In determining the amount of any liability for purposes
of subparagraphs (i) and (ii) above there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Section 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such Regulations. In the event the Board of Directors
shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto (including, without limitation,
debits or credits relating to liabilities which are secured by contributed or
distributed property or which are assumed by the Company or any Members, are
computed in order to comply with such Regulations, the Board of Directors may
make such modification, provided that it is not likely to have a material effect
on the amounts distributed to any Person pursuant to Article XIV hereof upon the
dissolution of the Company. The Board of Directors also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Members and the amount of capital reflected on the
Company's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b).
"Capital Contribution" shall mean any contribution to the
capital of the Company in cash or property by a Member whenever made.
"Capital Percentage" shall mean a Member's percentage
ownership interest in the Company, which initially shall be as set forth in
Section 4.1.
- 3 -
9
"Certificate of Formation" shall mean the Certificate of
Formation of the Company filed with the Secretary of State of the State of
Delaware pursuant to the Delaware Act to form the Company, as originally
executed and amended, modified, supplemented or restated from time to time, as
the context requires.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended, from time to time.
"Company Minimum Gain" has the meaning given the term
"partnership minimum gain"in Sections 1.704-2(b)(2) and 1.704-2(d) of the
Regulations.
"Debt" shall mean (i) any indebtedness for borrowed money or
the deferred purchase price of property as evidenced by a note, bonds, or other
instruments, (ii) obligations as lessee under capital leases, (iii) obligations
secured by any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind existing on any asset owned or held by the Company whether or not
the Company has assumed or become liable for the obligations secured thereby,
(iv) any obligation under any interest rate swap agreement, (v) accounts payable
and (vi) obligations under direct or indirect guarantees of (including
obligations (contingent or otherwise) to assure a creditor against loss in
respect of) indebtedness or obligations of the kinds referred to in clauses (i),
(ii), (iii), (iv) and (v) above, provided that Debt shall not include
obligations in respect of any accounts payable that are incurred in the ordinary
course of the Company's business and are not delinquent or are being contested
in good faith by appropriate proceedings.
"Delaware Act" shall have the meaning specified in the
preamble.
"Delaware Law" shall mean the laws of the State of Delaware,
including without limitation, the Delaware Act and the Delaware General
Corporation Law.
"Depreciation" shall mean, for each Allocation Year, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such Allocation Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such Allocation Year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such Allocation Year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset
at the beginning of such Allocation Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Board of Directors.
"Director" shall mean any Person appointed or elected to serve
as a director of the Company under this Agreement. As used herein, the term
"Director" shall mean a "manager" of the Company, as such term is defined in
Section 18-101 of the Delaware Act.
- 4 -
10
"Dissolution Event" has the meaning set forth in Section
14.1(a) of this Agreement.
"Entity" shall mean any foreign or domestic general
partnership, limited partnership, limited liability company, corporation, joint
enterprise, trust, business trust, employee benefit plan, cooperative or
association.
"Fiscal Year" shall mean the Company's fiscal year, which
shall be a calendar year unless otherwise determined by the Board of Directors
in accordance with Section 706(b) of the Code.
"Gross Asset Value" shall mean with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset (other than
cash) contributed by a Member to the Company shall be the gross fair market
value of such asset, as determined by the Board of Directors;
(ii) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values (taking Code Section
7701(g) into account) as determined by the Board of Directors as of the
following times: (A) the acquisition of an additional interest in the Company by
any new or existing Member in exchange for more than a de minimis Capital
Contribution; (B) the distribution by the Company to a Member of more than a de
minimis amount of Company property as consideration for an interest in the
Company; and (C) the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), provided that an adjustment described
in clauses (A) and (B) of this paragraph shall be made only if the Board of
Directors reasonably determines that such adjustment is necessary to reflect the
relative economic interests of the Members in the Company;
(iii) The Gross Asset Value of any item of Company assets
distributed to any Member shall be adjusted to equal the gross fair market value
(taking Code Section 7701(g) into account) of such asset on the date of
distribution as determined by the Board of Directors; and
(iv) The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph
(vi) of the definition of "Profits" and "Losses" or Section 9.3(c) hereof;
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this subparagraph (iv) to the extent that an adjustment pursuant to subparagraph
(ii) is required in connection with a transaction that would otherwise result in
an adjustment pursuant to this subparagraph (iv).
- 5 -
11
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (ii) or (iv), such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset, for purposes
of computing Profits and Losses.
"Initial Capital Contribution" shall mean the initial Capital
Contribution by a Member pursuant to Section 4.1 of this Agreement.
"Issuance Items" has the meaning set forth in Section 9.3(h)
hereof.
"Member" shall mean each Initial Member and each Person who at
any time executes a counterpart of this Agreement as a member of the Company
pursuant to the terms of this Agreement and who has not ceased to be a Member.
"Member Interest" shall mean a Member's ownership interest in
the Company, including such Member's share of the profits and losses of the
Company, such Member's right to receive distributions of the Company's assets
and such Member's other rights as a Member.
"Member Nonrecourse Debt" has the same meaning as the term
"Member nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.
"Member Nonrecourse Debt Minimum Gain" shall mean an amount,
with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain
that would result if such Member Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"Member Nonrecourse Deductions" has the same meaning as the
term "Member nonrecourse deductions" in Sections 1.704-2(i)(1) and 1.704-2(i)(2)
of the Regulations.
"Net Cash Flow" means the gross cash proceeds of the Company
less the portion thereof used to pay or establish reserves for all Company
expenses, debt payments, capital improvements, replacements, and contingencies,
all as determined by the Board of Directors. "Net Cash Flow" shall not be
reduced by depreciation, amortization, cost recovery deductions, or similar
allowances, but shall be increased by any reductions of reserves previously
established pursuant to the first sentence of this definition.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Person" shall mean any individual or Entity, and any heir,
executor, administrator, legal representative, successor or assign thereof where
the context so admits.
- 6 -
12
"Profits" and "Losses" mean, for each Allocation Year, an
amount equal to the Company's taxable income or loss for such Allocation Year,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):
(i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition of "Profits" and "Losses" shall be added to such
taxable income or loss;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this definition of "Profits" and
"Losses" shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Company asset
is adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Gross
Asset Value, the amount of such adjustment shall be treated as an item of gain
(if the adjustment increases the Gross Asset Value of the asset) or an item of
loss (if the adjustment decreases the Gross Asset Value of the asset) from the
disposition of such asset and shall be taken into account for purposes of
computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of Property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Property disposed
of, notwithstanding that the adjusted tax basis of such Property differs from
its Gross Asset Value;
(v) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Allocation Year,
computed in accordance with the definition of Depreciation;
(vi) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) is required, pursuant to
Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member's interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases such basis) from the disposition
of such asset and shall be taken into account for purposes of computing Profits
or Losses; and
(vii) Notwithstanding any other provision of this definition,
any items which are specially allocated pursuant to Section 9.3 or Section 9.4
hereof shall not be taken into account in computing Profits or Losses.
- 7 -
13
The amounts of the items of Company income, gain, loss or
deduction available to be specially allocated pursuant to Sections 9.3 and 9.4
hereof shall be determined by applying rules analogous to those set forth in
subparagraphs (i) through (vi) above.
"Property" shall mean all real and personal property acquired
by the Company, including cash, and any improvements thereto, and shall include
both tangible and intangible property.
"Regulations" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations are
amended from time to time.
"Regulatory Allocations" has the meaning set forth in Section
9.4 hereof.
"Tax Matters Member" has the meaning set forth in Section 12.1
hereof.
In addition to the foregoing defined terms, certain additional
terms are defined in the text hereof.
ARTICLE II
FORMATION OF THE COMPANY
2.1 Formation. The Certificate of Formation of the Company has
been filed or will be filed with the Secretary of State of the State of Delaware
pursuant to the Delaware Act.
2.2 Name. The name of the Company is General Portable
Products, LLC. If the Company shall conduct business in any jurisdiction other
than the State of Delaware, it shall register the Company or its trade name with
the appropriate authorities in such state in order to have the legal existence
of the Company recognized.
2.3 Place of Business. The Company may locate its places of
business and registered office at any place or places as the Board of Directors
of the Company may from time to time deem advisable.
2.4 Registered Office and Registered Agent. The Company's
registered office shall be at the office of its registered agent at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the name of its initial registered agent
at such address shall be Corporation Service Company.
2.5 Term. The term of the Company commenced on the date the
Certificate of Formation was filed with the Secretary of State of the State of
Delaware pursuant to the Delaware Act and the term of the Company and this
Agreement shall not be perpetual, but shall continue until the winding up and
dissolution of the Company and its business is completed following a
dissolution, as provided in Article XIV.
- 8 -
14
2.6 Purpose of the Company. The purpose of the Company shall
be to conduct the Business and to engage in any and all activities related or
incidental to the foregoing. The Company shall have any and all powers necessary
or desirable to carry out such purpose and the Business to the extent the same
may be legally exercised by limited liability companies under the Delaware Act.
The Company shall carry out the foregoing activities pursuant to the Certificate
of Formation and this Agreement.
ARTICLE III
INITIAL MEMBERS
The name and place of business or mailing address of each of
the Initial Members is as follows:
GPPD, Inc.
c/o The Beacon Group
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GPPW, Inc.
c/o The Beacon Group
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ARTICLE IV
CAPITAL OF THE COMPANY
4.1 Capital Contributions; Member Interests; Capital
Percentages. Simultaneously with the execution and delivery of this Agreement,
each Initial Member is acquiring a Member Interest, which interest shall be
expressed as a Capital Percentage, in exchange for a Capital Contribution in
cash as follows:
- 9 -
15
Initial Capital Initial Capital
Member Contribution Percentage
------ ------------ ----------
GPPD, Inc. $95.00 95%
GPPW, Inc. $ 5.00 5%
4.2 Additional Contributions. Except as expressly provided for in
Section 4.1 or the next sentence of this Section 4.2, no Member shall have any
obligation to provide funds to the Company, whether by Capital Contributions,
loans, return of monies received pursuant to the terms of this Agreement or
otherwise. Each Member shall be required to make additional Capital
Contributions at such times and in such amounts as may be approved by the
Members unanimously. The existence of liabilities of the Company in excess of
the amount of assets available to discharge such liabilities shall not, in the
absence of a call by the Members for further contributions, create a liability
on the part of any Member for additional Capital Contributions to meet such
deficit. The obligations of Members to make additional Capital Contributions and
their liability to the Company and other Members with respect thereto shall not
confer any rights on any third parties. Unless otherwise determined by the
Members unanimously, all additional Capital Contributions shall be made in
proportion to the relative Capital Percentages of the Members.
4.3 Record of Contributions. The books and records of the Company
shall reflect the amount of cash, cash equivalents and the fair value of any
other property contributed by each Member to the Company.
4.4 Interest. No interest shall be paid by the Company on Capital
Contributions.
4.5 Withdrawal or Reduction of Members' Capital Contributions.
(a) A Member shall not be entitled to withdraw any part of its
Capital Contribution or to receive any distribution from the Company, except as
otherwise provided in this Agreement.
(b) A Member shall not receive out of the Company's property any
part of its Capital Contributions until all liabilities of the Company, except
liabilities to Members on account of their Capital Contributions, have been paid
or there remains property of the Company sufficient to pay them.
(c) A Member, irrespective of the nature of its Capital
Contribution, shall have no right to receive anything other than cash upon any
return of its Capital Contribution provided for by this Agreement.
- 10 -
16
4.6 Loans to Company. Nothing in this Agreement shall prevent any
Member from making secured or unsecured loans to the Company by agreement with
the Company. Loans by a Member to the Company shall not be considered Capital
Contributions.
4.7 Borrowing. In the event that the Company, in order to
discharge costs, expenses or indebtedness, requires funds in excess of the funds
provided by Capital Contributions of the Members and by revenues, the Board of
Directors shall be authorized, at any time and from time to time, but subject to
the other provisions of this Agreement, to cause the Company to borrow
additional funds, as shall in the judgment of the Board of Directors be
sufficient for such purposes and upon such terms as the Board of Directors may
deem advisable.
ARTICLE V
RIGHTS AND OBLIGATIONS OF MEMBERS
5.1 Limitation of Members' Responsibility, Liability. The Members
shall not perform any act on behalf of the Company, incur any expense,
obligation or indebtedness of any nature on behalf of the Company, or in any
manner participate in the management of the Company, except as specifically
contemplated hereunder. No Member shall be liable under a judgment, decree or
order of a court, or in any other manner, except as agreed to by any such
Member, for the indebtedness or any other obligations or liabilities of the
Company or liable, responsible or accountable in damages to the Company or its
Members for breach of fiduciary duty as a Member, for any acts performed within
the scope of the authority conferred on it by this Agreement, or for its failure
or refusal to perform any acts except those expressly required by or pursuant to
the terms of this Agreement, or for any debt or loss in connection with the
affairs of the Company, except as required by the Delaware Act.
5.2 Return of Distributions. In accordance with Section 18-607 of
the Delaware Act, a Member will be obligated to return any distribution from the
Company only as provided by applicable law.
5.3 Priority and Return of Capital. Except as may be provided in
this Agreement, no Member shall have priority over any other Member, either as
to the return of Capital Contributions or as to profits, losses or
distributions; provided that this Section shall not apply to loans (as
distinguished from Capital Contributions) that a Member has made to the Company.
5.4 Competition. Except as otherwise expressly provided in this
Agreement, each Member may engage in or possess an interest in any other
business venture or ventures, including any activity that is competitive with
the Company without offering any such opportunity to the Company, and neither
the Company nor the other Member shall have any rights in or to such venture or
ventures or activity or the income or profits derived therefrom.
- 11 -
17
5.5 Admission of Additional Members. The Company shall not admit
additional Members without the prior written consent of all of the Members.
5.6 Resignation. Without the prior approval of all other Members,
no Member may resign from the Company.
5.7 Indemnification. To the extent permitted by law, the Company
shall (to the extent of the assets of the Company) indemnify, defend and hold
harmless each Member and each officer, employee and director of such Member from
and against all losses, expenses, claims or liabilities, including reasonable
attorneys' fees and disbursements, arising out of or in connection with the
indebtedness or any other obligation or liabilities of the Company, other than
losses, expenses, claims or liabilities of such indemnified Member which result
from a violation in any material respect of any of the provisions of this
Agreement or fraud, willful misconduct, gross negligence or misappropriation of
funds. The foregoing indemnity expressly includes an indemnity with respect to
the negligence (excluding the gross negligence) of a Member.
ARTICLE VI
MEETINGS OF MEMBERS
6.1 Meetings. Meetings of the Members, for any purpose or
purposes, unless otherwise prescribed by law, may be called by the Chairman of
the Board of Directors or the President of the Company or by any Member. The
chairperson at any meeting shall be designated by the Chairman of the Board of
Directors or the President of the Company.
6.2 Place of Meetings. Meetings of the Members shall be held at
the principal place of business of the Company or at such other place as may be
designated by the Chairman of the Board of Directors or the President of the
Company.
6.3 Notice of Meetings. Except as provided in Section 6.4,
written notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be sent not less than five (5)
days before the date of the meeting, either personally, by facsimile or by mail,
by or at the direction of the person calling the meeting, to each Member.
6.4 Meeting of All Members. If all of the Members shall meet at
any time and place and consent to the holding of a meeting at such time and
place, such meeting shall be valid without call or notice, and at such meeting
any lawful action may be taken.
6.5 Action by Members Without a Meeting. Action required or
permitted to be taken at a meeting of Members may be taken without a meeting if
the action is evidenced by one or more written consents describing the action
taken, signed by all Members and
- 12 -
18
delivered to the Secretary or any Assistant Secretary of the Company for
inclusion in the minutes or for filing with the Company records. Action taken
under this Section is effective when all Members have signed the consent, unless
the consent specifies a different effective date.
6.6 Waiver of Notice. When any notice is required to be given to
any Member, a waiver thereof in writing signed by the Person entitled to such
notice, whether before, at or after the time stated therein, shall be equivalent
to the giving of such notice.
6.7 Delegation to Board. Except as may be otherwise specifically
provided in this Agreement or the Delaware Act, the Members agree that they
shall act solely through the mechanisms provided herein relating to the
appointment and authority of the Board of Directors.
ARTICLE VII
RIGHTS AND DUTIES OF DIRECTORS AND OFFICERS
7.1 Management. Subject to any powers reserved to the Members
under this Agreement, the powers of the Company shall be exercised by or under
the authority of, and the business and affairs of the Company shall be managed
by, a Board of Directors consisting of at least one Director, which shall be
responsible for the management and operations of the Company and shall have all
powers necessary to manage and control the Company, to conduct its business, and
to implement any decision of the Members adopted pursuant to this Agreement. In
managing the business and affairs of the Company and exercising its powers, the
Board of Directors may delegate power and authority to one or more officers of
the Company, who shall exercise such powers and perform such duties as are
specified in Section 7.13. The number of Directors constituting the initial
Board of Directors shall be [___]. The number of Directors constituting the
Board of Directors may be increased or decreased from time to time by resolution
of the Members. Except as provided in Section 7.2 hereof, Directors shall be
elected by the Members holding a plurality of the Member Interests, and each
Director so elected shall hold office for the full term to which he shall have
been elected and until his successor is duly elected and qualified, or until his
earlier death, resignation or removal. Any Director may resign at any time upon
notice to the Company. A Director need not be a Member of the Company or a
resident of the State of Delaware.
7.2 Vacancies. Any newly created directorship or any vacancy
occurring in the Board of Directors for any cause may be filled by an
affirmative vote of a majority of the remaining Directors then in office, though
less than a quorum, or by a sole remaining Director, and each Director so
elected shall hold office for the remainder of the full term in which the new
directorship was created or the vacancy occurred and until such Director's
successor is duly elected and qualified, or until his earlier death, resignation
or removal.
- 13 -
19
7.3 Regular Meetings. Regular meetings of the Board of Directors
may be held at such places within or without the State of Delaware and at such
times as the Board of Directors may from time to time determine, and if so
determined, notices thereof need not be given.
7.4 Special Meetings. Special meetings of the Board of Directors
may be held at any time, whenever called by the Chairman of the Board of
Directors, the President of the Company or a majority of Directors then in
office, at such place or places within or without the State of Delaware as may
be stated in the notice of the meeting. Notice of the time and place of a
special meeting must be given by the person or persons calling such meeting at
least twenty-four (24) hours, before the special meeting. The attendance of a
Director at any meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the sole purpose of objecting to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
7.5 Meetings by Conference Telephone. Unless otherwise restricted
by this Agreement or the Delaware Act, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors or such committee by means of conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 7.5 shall constitute presence in person at such meeting.
7.6 Quorum: Vote Required for Action. Except as may be otherwise
specifically provided by law or this Agreement, at all meetings of the Board of
Directors a majority of the whole Board of Directors shall constitute a quorum
for the transaction of business. The vote of a majority of the Directors present
at any meeting of the Board of Directors at which there is a quorum shall be the
act of the Board of Directors. If a quorum shall not be present at any meeting
of the Board of Directors, the Directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
7.7 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board of Directors, or, in his absence, by
the President of the Company. The Secretary of the Company shall act as
secretary of the meeting, but in his or her absence the chairman of the meeting
may appoint any Person to act as secretary of the meeting.
7.8 Actions of the Board by Consent in Lieu of Meeting. Unless
otherwise restricted by this Agreement or the Delaware Act, any action required
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without
- 14 -
20
a meeting, if all the members of the Board of Directors or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or such committee.
7.9 Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the Directors of the Company. The
Board of Directors may designate one or more Directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a committee,
and in the absence of a designation by the Board of Directors of an alternate
member to replace the absent or disqualified member, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he, she or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any absent or
disqualified member. Any committee, to the extent provided in the resolution of
the Board of Directors establishing such committee, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the Company, and may authorize the seal of the Company
to be affixed to all papers which may require it. Each committee shall keep
regular minutes and report to the Board of Directors when required.
The designation of any such committee and the delegation thereto
of authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed upon it or him by law, nor shall such
committee function where action of the Board of Directors is required under
applicable law. The Board of Directors shall have the power at any time to
change the membership of any such committee and to fill vacancies in it. A
majority of the members of any such committee shall constitute a quorum. Each
such committee may elect a chairman and appoint such subcommittees and
assistants as it may deem necessary. Except as otherwise provided by the Board
of Directors, meetings of any committee shall be conducted in the same manner as
the Board of Directors conducts its business pursuant to this Agreement, as the
same shall from time to time be amended. Any member of any such committee
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever in its judgment the best interests of the Company will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of a member of
a committee shall not of itself create contract rights.
7.10 Compensation and Reimbursement of Expenses. The Directors
shall receive such compensation for their services as shall be determined by the
Board of Directors. The Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors as a stated salary as
Director. No such reimbursement shall preclude any Director from serving the
Company in any other capacity and receiving compensation therefor.
- 15 -
21
Members of special or standing committees may be allowed like reimbursement for
attending committee meetings.
7.11 Powers of Board of Directors. Without limiting the
generality of Section 7.1, the Board of Directors shall have power and authority
to cause the Company to take any of the following actions:
(a) To construct, operate, maintain, improve, expand,
buy, acquire, own, hold, sell, convey, assign, mortgage, finance,
refinance, rent or lease real or personal property, foreign or domestic,
in the name of the Company;
(b) To incur debt or liabilities, secured or unsecured,
on behalf of the Company and to secure the same by mortgaging, assigning
for security purposes, pledging, or otherwise hypothecating, all or any
part of the property and assets of the Company (and in connection
therewith to place record title to any such property or assets in the name
or names of a nominee or nominees);
(c) To purchase liability and other insurance to protect
the Company's property and business;
(d) To invest any Company funds temporarily (by way of
example but not limitation) in time deposits, short-term governmental
obligations, commercial paper or other investments, and to pay and
otherwise perform the Company's debts, liabilities and other obligations;
(e) To sell or otherwise dispose of the assets of the
Company;
(f) To execute on behalf of the Company instruments and
other documents, including, without limitation, checks, drafts, notes and
other negotiable instruments, mortgages or deeds of trust, security
agreements, financing statements, documents providing for the acquisition,
mortgage or disposition of the Company's property, assignments, bills of
sale, leases, partnership agreements, and other instruments or documents
necessary or appropriate to the business of the Company (including any
agreement between the Company and one or more Members and any agreements
between the Company and the Directors or officers including
indemnification agreements providing for the advancement of expenses,
among other things);
(g) To employ accountants, legal counsel, managing
agents or other experts to perform services for the Company;
(h) To execute, deliver, enter into, perform and carry
out any and all other agreements and contracts on behalf of the Company,
with any other Person for any purpose, in such forms as the Board of
Directors may approve;
- 16 -
22
(i) To bring, defend and settle actions and suits at
law, in equity or otherwise and to pursue appeals thereof;
(j) To adopt policies and guidelines for the Company
consistent with this Agreement;
(k) To issue Member Interests or other equity
securities; and
(l) To do and perform all other acts as may be necessary
or appropriate to the conduct of the Company's business.
Unless authorized to do so by this Agreement (reference being made specifically
to the authority conferred upon officers pursuant to Section 7.13) or by the
Board of Directors, no Member, agent or employee of the Company shall have any
power or authority to bind the Company in any way, to pledge its credit or to
render it liable pecuniarily for any purpose.
7.12 Liability of Directors. No Director shall be liable under
any judgment, decree or order of a court, or in any other manner, for any debt,
obligation or liability of the Company by reason of his acting as a Director of
the Company. A Director of the Company shall not be personally liable to the
Company or its Members for monetary damages for breach of fiduciary duty as a
Director, except for (i) liability for any acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or (ii) for a
distribution, redemption or purchase of or with respect to Member Interests in
violation of Delaware Law. If the laws of the State of Delaware are amended
after the date of this Agreement to authorize action further eliminating or
limiting the personal liability of a Director, then the liability of a Director
of the Company, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended laws of
the State of Delaware. Any repeal or modification of this Section 7.12 shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a Director of the Company existing at the time of such repeal or
modification or thereafter arising as a result of acts or omissions prior to the
time of such repeal or modification.
7.13 Officers.
(a) General. The officers of the Company shall be appointed by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
Additionally, the Board of Directors, in its discretion, may appoint a Chairman
of the Board of Directors (who must be a Director), a Chief Executive Officer,
and one or more Vice Presidents (including any Executive Vice President or
Assistant Vice President), Assistant Secretaries, Assistant Treasurers and such
other officers as the Board of Directors may from time to time designate. Any
number of offices may be held by the same person. The salaries of all officers
of the Company shall be fixed by the Board of Directors and may be altered by
the Board of Directors from time to time except as otherwise provided by
contract. All officers shall be
- 17 -
23
entitled to be paid or reimbursed for all costs and expenditures incurred on
behalf of the Company.
(b) Election; Vacancies; Removal. The officers of the Company
shall hold their offices for such terms and shall exercise such powers and
perform such duties as described in this Agreement and as shall be determined
from time to time by the Board of Directors; and all officers of the Company
shall hold office until their successors are chosen and qualified or until their
earlier resignation or removal. Whenever any vacancies shall occur in any office
by death, resignation, removal, increase in the number of officers of the
Company, or otherwise, the same shall be filled by the Board of Directors, and
the officer so appointed shall hold office until his successor is chosen and
qualified. Any officer or agent elected or appointed by the Board of Directors
may be removed by the Board of Directors. Such removal may be with or without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
(c) Chairman of the Board of Directors. The Chairman of the Board
of Directors, if any, shall preside, if present, at all meetings of the Board of
Directors and shall perform such additional functions and duties as the Board of
Directors may prescribe from time to time.
(d) Chief Executive Officer. The Chief Executive Officer, who may
be the Chairman or Vice Chairman of the Board of Directors and/or the President,
shall have general and active management of the business of the Company and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The Chief Executive Officer may sign deeds, mortgages, bonds,
contracts or other instruments, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by this
Agreement to some other officer or agent of the Company, or shall be required by
law to be otherwise signed and executed. The Chief Executive Officer shall also
perform all duties incident to the office of Chief Executive Officer and such
other duties and may exercise such other powers as may be assigned by this
Agreement or prescribed by the Board of Directors from time to time.
(e) President. The President shall, subject to the control of the
Board of Directors and the Chief Executive Officer, in general, supervise and
control all of the business and affairs of the Company. The President shall
preside at all meetings of the Members. The President may sign any deeds,
mortgages, bonds, contracts or other instruments, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by this Agreement to some other officer or agent of the Company, or
shall be required by law to be otherwise signed and executed. The President
shall also perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
- 18 -
24
(f) Vice Presidents. Any Vice President, in the order of
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President. They shall also perform the usual and customary duties
that pertain to such office and generally assist the President by executing
contracts and agreements and exercising such other powers and performing such
other duties as are delegated to them by the President and as the Board of
Directors may further prescribe.
(g) Secretary. The Secretary shall attend, to the extent
possible, all meetings of Members and record all the proceedings thereat in a
book or books to be kept for that purpose. The Secretary shall give, or cause to
be given, notice of all meetings of the Members, and shall perform such other
duties as may be prescribed by the Board of Directors or President, under whose
supervision the Secretary shall be. If the Secretary shall be unable or shall
refuse to cause to be given notice of meetings of the Members, and if there is
no Assistant Secretary, then the Board of Directors or President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Company and the Secretary shall have authority to
affix the same to any instrument requiring it, and when so affixed, it may be
attested by the signature of the Secretary. The Board of Directors or President
may give general authority to any other officer to affix the seal of the Company
and to attest the affixing by his or her signature. The Secretary shall see that
all books, reports, statements, certificates and other documents and records
required by law to be kept or filed are properly kept or filed, as the case may
be. The duties of the Secretary may be performed by any Assistant Secretary.
(h) Treasurer. The Treasurer shall have custody of the funds of
the Company as may be entrusted to his or her keeping and account for the same.
The Treasurer shall be prepared at all times to give information as to the
condition of the Company and shall make an annual report of the entire business
and financial condition of the Company. The Treasurer shall also perform, under
the direction and subject to the control of the Board of Directors, such other
duties as may be assigned to him or her. The duties of the Treasurer may also be
performed by any Assistant Treasurer.
(i) Assistant Vice Presidents. The Assistant Vice President(s)
shall generally assist the President and Vice President(s) and exercise such
other powers and perform such other duties as may be prescribed by the Board of
Directors from time to time.
(j) Assistant Secretaries. Except as may be otherwise provided in
this Agreement, any Assistant Secretary shall perform such duties and have such
powers as from time to time may be assigned to him or her by the Board of
Directors, the President or the Secretary and, in the absence of the Secretary,
or in the event of his or her disability or refusal to act, shall perform the
duties of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
- 19 -
25
(k) Assistant Treasurers. Except as may be otherwise provided in
this Agreement, any Assistant Treasurer shall perform such duties and have such
powers as from time to time may be assigned to him or her by the Board of
Directors, the President or the Treasurer, if there is one, and, in the absence
of the Treasurer or in the event of his or her disability or refusal to act,
shall perform the duties of the Treasurer, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the Treasurer.
(l) Other Officers. Such other officers as the Board of Directors
may appoint shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Company the power to choose such other
officers and to prescribe their respective duties and powers.
(m) Delegation of Authority. In the case of any absence of any
officer of the Company or for any other reason that the Board of Directors may
deem sufficient, the Board of Directors may delegate some or all of the powers
or duties of such officer to any other officer or to any Director, employee,
Member, unitholder or agent for whatever period of time seems desirable.
(n) Voting Securities Owned by the Company. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Company may be executed in the name and on behalf of
the Company by the Chief Executive Officer, the President or any Vice President,
and any such officer may, in the name of and on behalf of the Company, take all
such action as any such officer may deem advisable to vote in person or by proxy
at any meeting of security holders of any entity in which the Company may own
securities and at any such meeting shall possess and may exercise any and all
rights and powers incident to the ownership of such securities and which, as the
owner thereof, the Company might have exercised and possessed if present. The
Board of Directors may confer like powers upon any other person or persons.
7.14 Member Contributions. The directors and officers of the
Company shall not have any personal liability for the repayment of any Capital
Contributions of any Member.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. Each person who at any time shall be, or
shall have been, Director, officer, employee or agent of the Company, or any
person who, while a Director, officer, employee or agent of the Company, is or
was serving at the request of the Company as a director, member, manager,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another Entity, shall be entitled to indemnification as and to
the fullest extent permitted by the provisions of Delaware Law or any successor
statutory
- 20 -
26
provisions, as from time to time amended. The foregoing right of indemnification
shall not be deemed exclusive of any other rights to which one to be indemnified
may be entitled as a matter of law or under this Agreement, any other agreement,
by vote of the Members or determination of the Board of Directors or otherwise,
both as to any action in an official capacity and as to action in another
capacity while holding such office. Any repeal of this Section 8.1 shall be
prospective only, and shall not adversely affect any right of indemnification
existing at the time of such repeal or modification or thereafter arising as a
result of acts or omissions prior to the time of such repeal or modification.
8.2 Power to Indemnify in Actions, Suits or Proceedings Other
Than Those by or in the Right of the Company. Without limiting the provisions of
Section 8.1, subject to Section 8.4 the Company shall indemnify, to the full
extent not prohibited by law, any person who was or is a party or is threatened
to be made a party (including a witness) to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that he is or was a Director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
member, manager, officer, employee or agent of another Entity, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
8.3 Power to Indemnify in Actions, Suits or Proceedings by or in
the Right of the Company. Without limiting the provisions of Section 8.1,
subject to Section 8.4, the Company shall, to the full extent not prohibited by
law, indemnify any person who was or is a party or is threatened to be made a
party (including a witness) to any threatened, pending or completed action, suit
or proceeding by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he is or was a Director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, member, manager, officer, employee or agent of another Entity against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Company unless and only to the extent that the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but
- 21 -
27
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
8.4 Authorization of Indemnification. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the Company as
permitted by Delaware Law or as authorized in the specific case upon a
determination that indemnification is proper in the circumstances because it is
permitted under Delaware Law or the applicable standards of conduct set forth in
Section 8.2 or Section 8.3, as the case may be, have been met. Such
determination shall be made, in the case of any Director or officer, (i) by a
vote of the disinterested Directors, (ii) if a majority of Directors are not
disinterested by independent legal counsel in a written opinion or (iii) by the
Members. Such determination shall be made, in the case of an employee or agent
of the Company who is not a Director or officer of the Company, as specified in
the preceding sentence or by the President or any officer authorized by the
President. To the extent, however, that the Director, officer, employee or agent
of the Company has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in the defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith, without the necessity of authorization in the specific case.
8.5 Good Faith Defined. For purposes of any determination under
this Article VIII, a person shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any of the other Directors, Members,
officers, employees or committees of the Company or by any other person as to
matters the person seeking indemnification reasonably 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 as to the value and amount of assets, liabilities, profits
or losses of the Company or any other facts pertinent to the existence and
amount of assets from which distributions to the Members might properly be paid.
The provisions of this Section 8.5 shall not be deemed to be exclusive or to
limit in any way the circumstances in which a person may be deemed to have met
the applicable standards of conduct set forth in the provisions of Delaware Law,
or in Section 8.2 or Section 8.3, as the case may be.
8.6 Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 8.4, and notwithstanding the
absence of any determination thereunder, any Director, officer, employee or
agent may apply to any court of competent jurisdiction for indemnification to
the extent otherwise permissible under Delaware Law or this Article VIII. The
basis of such indemnification by a court shall be a determination by such court
that indemnification of the Director, officer, employee or agent is proper in
the circumstances because it is permitted under the provisions of the Delaware
Law, or the
- 22 -
28
Director, officer, employee or agent has met the applicable standards of conduct
set forth in Section 8.2 or Section 8.3, as the case may be. Notice of any
application for indemnification pursuant to this Section 8.6 shall be given to
the Company promptly upon the filing of such application.
8.7 Advancement or Reimbursement of Expenses. The Company shall
pay in advance or reimburse expenses actually or reasonably incurred or
anticipated by such Director or officer in connection with his appearance as a
witness or other participation in a proceeding whether or not such Director or
officer is a named defendant or a respondent in the proceeding. To obtain
indemnification or an expense advance, the person requesting indemnification
shall submit to the Company a written request with such information as is
reasonably available to him. If the expense advance is to be paid prior to final
disposition of the proceeding, there shall be included a written statement of
such person's good faith belief that he has met the necessary standard of
conduct under the Delaware Law and an undertaking to repay any amount paid if it
is ultimately determined that those conduct requirements were not met. If,
within sixty days of the Company's receipt of the request, the request for
payment is not acted on or the Company refuses to indemnify or advance expenses
as required by this Article VIII, such person shall have the right to an
adjudication in any court of competent jurisdiction of such person's entitlement
to such indemnification or expense advance.
8.8 Nonexclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by, or granted pursuant to,
the other subsections of this Article VIII shall not be deemed exclusive of any
other rights to which one seeking indemnification and advancement of expenses
may be entitled under this Agreement, any other agreement, by vote of Members or
determination of the Board of Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, it being the policy of the Company that indemnification of any person
specified in this Article VIII shall be made to the fullest extent permitted by
law. The provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in this Article VIII but whom
the Company has the power or obligation to indemnify under the provisions of the
Delaware Act or otherwise.
8.9 Insurance. The Company may purchase and maintain insurance on
behalf of any person who is or was a Member, Director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
member, manager, director, officer, employee or agent of an Entity against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the Company would have the
power or the obligation to indemnify him against such liability under the
provisions of this Article VIII.
8.10 Terms. For purposes of this Article VIII, references to "the
Company" shall include, in addition to the resulting limited liability company,
any constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, which, if
- 23 -
29
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent entity, or
is or was serving at the request of such constituent entity as a director,
officer, employee or agent of another entity, shall stand in the same position
under the provisions of this Article VIII in respect of the resulting or
surviving entity as he would have with respect to such constituent entity if its
separate existence had continued.
ARTICLE IX
ALLOCATIONS
9.1 Profits. For After giving effect to the special allocations
set forth in Sections 9.3 and 9.4, Profits for any Allocation Year shall be
allocated to the Members in proportion to their Capital Percentages.
9.2 Losses. After giving effect to the special allocations set
forth in Sections 9.3 and 9.4 and subject to Section 9.5, Losses for any
Allocation Year shall be allocated to the Members in proportion to their Capital
Percentages.
9.3 Special Allocations. The following special allocations shall
be made in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(f) of the Regulations, notwithstanding any other provision of
this Section 9, if there is a net decrease in Company Minimum Gain during any
Allocation Year, each Member shall be specially allocated items of Company
income and gain for such Allocation Year (and, if necessary, subsequent
Allocation Years) in an amount equal to such Member's share of the net decrease
in Company Minimum Gain, determined in accordance with Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with sections 1.704-2(f)(6) and 1.704-2(j) (2) of the Regulations. This Section
9.3(a) 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.
(b) Member Minimum Gain Chargeback. Except as otherwise provided
in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision
of this Section 9, if there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Allocation Year, each
Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, 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 Allocation Year (and, if necessary,
- 24 -
30
subsequent Allocation Years) in an amount equal to such Member's share of the
net decrease in Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704- 2(i)(4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Member pursuant thereto. 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 Section 9.3(b) 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.
(c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Company income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of the Member
as quickly as possible, provided that an allocation pursuant to this Section
9.3(c) shall be made only if and to the extent that the Member would have an
Adjusted Capital Account Deficit after all other allocations provided for in
this Section 9 have been tentatively made as if this Section 9.3(c) were not in
the Agreement.
(d) Gross Income Allocation. In the event any Member has a
deficit Capital Account at the end of any Allocation Year which is in excess of
the sum of (i) the amount such Member is obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
each such Member shall be specially allocated items of Company income and gain
in the amount of such excess as quickly as possible, provided that an allocation
pursuant to this Section 9.3(d) shall be made only if and to the extent that
such Member would have a deficit Capital Account in excess of such sum after all
other allocations provided for in this Section 9 have been made as if Section
9.3(c) and this Section 9.3(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Allocation Year shall be specially allocated to the Members in proportion to
their respective Capital Percentages.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any Allocation Year shall be specially allocated to the Member
who bears the economic risk of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset, pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in
complete liquidation of such Member's interest in the Company, the amount of
- 25 -
31
such adjustment to 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 such basis) and such gain or loss shall be specially allocated to the
Members in accordance with their interests in the Company in the event
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom
such distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) Allocations Relating to Taxable Issuance of Member Interests.
Any income, gain, loss or deduction realized as a direct or indirect result of
the issuance of Member Interests by the Company to a Member (the "Issuance
Items") shall be allocated among the Members so that, to the extent possible,
the net amount of such Issuance Items, together with all other allocations under
this Agreement to each Member shall be equal to the net amount that would have
been allocated to each such Member if the Issuance Items had not been realized.
9.4 Curative Allocations. The allocations set forth in Sections
9.3(a), 9.3(b), 9.3(c), 9.3(d), 9.3(e), 9.3(f), 9.3(g) and 9.5 (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 other items of Company income, gain, loss or
deduction pursuant to this Section 9.4. Therefore, notwithstanding any other
provision of this Section 9 (other than the Regulatory Allocations), the Board
of Directors shall make such offsetting special allocations of Company income,
gain, loss or deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of the
Agreement and all Company items were allocated pursuant to Sections 9.1, 9.2,
and 9.3(h).
9.5 Loss Limitation. Losses allocated pursuant to Section 9.2
hereof shall not exceed the maximum amount of Losses that can be allocated
without causing any Member to have an Adjusted Capital Account Deficit at the
end of any Allocation Year. In the event some but not all of the Members would
have Adjusted Capital Account Deficits as a consequence of an allocation of
Losses pursuant to Section 9.2 hereof, the limitation set forth in this Section
9.5 shall be applied on a Member by Member basis and Losses not allocable to any
Member as a result of such limitation shall be allocated to the other Members in
accordance with the positive balances in such Member's Capital Accounts so as to
allocate the maximum permissible Losses to each Member under Section
1.704-1(b)(2)(ii)(d) of the Regulations.
9.6 Other Allocation Rules. (a) For purposes of determining the
Profits, Losses, or any other items allocable to any period, Profits, Losses,
and any such other items shall be determined on a daily, monthly, or other
basis, as determined by Board of Directors using any permissible method under
Code Section 706 and the Regulations thereunder.
- 26 -
32
(b) The Members are aware of the income tax consequences of the
allocations made by this Section 9 and hereby agree to be bound by the
provisions of this Section 9 in reporting their shares of Company income and
loss for income tax purposes.
(c) Solely for purposes of determining a Member's proportionate
share of the "excess nonrecourse liabilities" of the Company within the meaning
of Regulations Section 1.752-3(a)(3), the Members' interests in Company profits
are in proportion to their Capital Percentages.
To the extent permitted by Section 1.704-2(h)(3) of the
Regulations, the Board of Directors shall endeavor to treat distributions of Net
Cash Flow as having been made from the proceeds of a Nonrecourse Liability or a
Member Nonrecourse Debt only to the extent that such distributions would cause
or increase an Adjusted Capital Account Deficit for any Member.
9.7 Tax Allocations: Code Section 704(c). In accordance with Code
Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction
with respect to any Property contributed to the capital of the Company shall,
solely for tax purposes, be allocated among the Members so as to take account of
any variation between the adjusted basis of such Property to the Company for
federal income tax purposes and its initial Gross Asset Value (computed in
accordance with the definition of Gross Asset Value).
In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder.
Any elections or other decisions relating to such allocations
shall be made by the Board of Directors in any manner that reasonably reflects
the purpose and intention of this Agreement. Allocations pursuant to this
Section 9.7 are solely for purposes of federal, state, and local taxes and shall
not affect, or in any way be taken into account in computing, any Member's
Capital Account or share of Profits, Losses, other items, or distributions
pursuant to any provision of this Agreement.
ARTICLE X
NET CASH FLOW AND DISTRIBUTIONS
10.1 Free Cash Flow. "Free Cash Flow" shall mean all income and
revenues of the Company less (i) all expenses and costs, (ii) all accrued and
unpaid or unfunded costs and expenses, (iii) all principal and interest paid or
payable on indebtedness and (iv) all
- 27 -
33
reasonable reserves established by the Board of Directors for working capital
requirements, to pay costs or expenses, for debt service or to provide funds for
other contingencies.
10.2 Distributions of Free Cash Flow. The Board of Directors
shall determine the availability of Free Cash Flow for distribution, and shall
distribute such available Free Cash Flow at such reasonable intervals as it may
select. To the extent Free Cash Flow is distributed, such distributions shall be
made to the Members in accordance with their respective Capital Percentages.
10.3 Limitation Upon Distributions. No distribution shall be
declared and paid unless, after the distribution is made, the fair value of the
assets of the Company are in excess of the fair value of all liabilities of the
Company, except liabilities to Members on account of their Capital Contributions
and liabilities for which the recourse of creditors is limited to a specified
property of the Company.
ARTICLE XI
ACCOUNTING METHOD, PERIOD, RECORDS AND REPORTS
11.1 Accounting Method. The books and records of account of the
Company shall be maintained in accordance with the accrual method of accounting.
11.2 Accounting Period. The Company's accounting period shall be
the Fiscal Year.
11.3 Records, Audits and Reports. At the expense of the Company,
the Board of Directors shall maintain books and records of account of all
operations and expenditures of the Company.
11.4 Inspection. The books and records of account of the Company
shall be maintained at the principal place of business of the Company or such
other location as shall be determined by the Board of Directors and shall be
open to inspection by the Members at all reasonable times during any business
day.
11.5 Preparation of Financial Statements. The Board of Directors
shall cause to be prepared from the books of the Company and sent to the Members
quarterly (a) a balance sheet as at the end of such period, (b) statements of
net profit or loss and cash flow of the Company for such period and (c)
statements of the aggregate amounts distributed to the Members pursuant to this
Agreement for such period and the Members' respective shares thereof for such
period.
- 28 -
34
ARTICLE XII
TAX MATTERS
12.1 Tax Elections. The Board of Directors shall, without any
further consent of the Members being required (except as specifically required
herein), make any and all elections for federal, state, local, and foreign tax
purposes including, without limitation, any election, if permitted by applicable
law: (i) to adjust the basis of Property pursuant to Code Sections 754, 734(b)
and 743(b), or comparable provisions of state, local or foreign law, in
connection with transfers of Member Interests and Company distributions; (ii)
with the consent of all of the Members, to extend the statute of limitations for
assessment of tax deficiencies against the Members with respect to adjustments
to the Company's federal, state, local or foreign tax returns; and (iii) to the
extent provided in Code Sections 6221 through 6231 and similar provisions of
federal, state, local, or foreign law, to represent the Company and the Members
before taxing authorities or courts of competent jurisdiction in tax matters
affecting the Company or the Members in their capacities as Members, and to file
any tax returns and execute any agreements or other documents relating to or
affecting such tax matters, including agreements or other documents that bind
the Members with respect to such tax matters or otherwise affect the rights of
the Company and the Members. [___] is specifically authorized to act as the "Tax
Matters Member" under the Code and in any similar capacity under state or local
law.
12.2 Tax Information. Necessary tax information shall be
delivered to each Member as soon as practicable after the end of each Fiscal
Year of the Company but not later than five (5) months after the end of each
Fiscal Year.
ARTICLE XIII
RESTRICTIONS ON TRANSFERABILITY
13.1 Transfer Restrictions. Except as otherwise provided herein,
no Member shall be permitted to sell, assign, transfer or otherwise dispose of,
or mortgage, hypothecate or otherwise encumber, or permit or suffer any
encumbrance of, all or any portion of its Member Interest without the prior
written consent of all other Members (which consent may be withheld in the sole
discretion of such Members).
- 29 -
35
ARTICLE XIV
DISSOLUTION AND TERMINATION
14.1 Dissolution Events.
(a) Dissolution. The Company shall dissolve and shall commence
winding up and liquidating upon the first to occur of any of the following (each
a "Dissolution Event"):
(i) The unanimous vote of the Members to dissolve, wind
up, and liquidate the Company;
(ii) A judicial determination that an event has occurred
that makes it unlawful, impossible or impractical to carry on the Business; or
(iii) The Bankruptcy, dissolution, retirement,
resignation or expulsion of any Member; provided, that any such event will not
be deemed a Dissolution Event in the event that there are at least two remaining
Members and each remaining Member agrees to continue the business of the Company
within ninety (90) days after the occurrence of such an event.
The Members hereby agree that, notwithstanding any provision of the Act, the
Company shall not dissolve prior to the occurrence of a Dissolution Event.
(b) Reconstitution. If it is determined, by a court of competent
jurisdiction, that the Company has dissolved prior to the occurrence of a
Dissolution Event, then within an additional ninety (90) days after such
determination (the "Reconstitution Period"), all of the Members may elect to
reconstitute the Company and continue its business on the same terms and
conditions set forth in this Agreement by forming a new limited liability
company on terms identical to those set forth in this Agreement. Unless such an
election is made within the Reconstitution Period, the Company shall liquidate
and wind up its affairs in accordance with Section 14.2 hereof. If such an
election is made within the Reconstitution Period, then:
(i) The reconstituted limited liability company shall
continue until the occurrence of a Dissolution Event as provided in Section
14.1(a);
(ii) Unless otherwise agreed to by a majority of the
Members, the Certificate of Formation and this Agreement shall automatically
constitute the Certificate of Formation and Agreement of such new Company. All
of the assets and liabilities of the dissolved Company shall be deemed to have
been automatically assigned, assumed, conveyed and transferred to the new
Company. No bond, collateral, assumption or release of any Member's or the
Company's liabilities shall be required;
- 30 -
36
provided that the right of the Members to select successor managers and to
reconstitute and continue the Business shall not exist and may not be exercised
unless the Company has received an opinion of counsel that the exercise of the
right would not result in the loss of limited liability of any Member and
neither the Company nor the reconstituted limited liability company would cease
to be treated as a partnership for federal income tax purposes upon the exercise
of such right to continue.
14.2 Winding Up. Upon the occurrence of (i) a Dissolution Event or (ii)
the determination by a court of competent jurisdiction that the Company has
dissolved prior to the occurrence of a Dissolution Event (unless the Company is
reconstituted pursuant to Section 14.1(b) hereof), the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members,
and no Member shall take any action that is inconsistent with, or not necessary
to or appropriate for, the winding up of the Company's business and affairs,
provided that all covenants contained in this Agreement and obligations provided
for in this Agreement shall continue to be fully binding upon the Members until
such time as the Property has been distributed pursuant to this Section 14.2 and
the Certificate of Formation has been canceled pursuant to the Delaware Act. The
Liquidator shall be responsible for overseeing the winding up and dissolution of
the Company, which winding up and dissolution shall be completed within ninety
(90) days of the occurrence of the Dissolution Event and within ninety (90) days
after the last day on which the Company may be reconstituted pursuant to Section
14.1(b) hereof. The Liquidator shall take full account of the Company's
liabilities and Property and shall cause the Property or the proceeds from the
sale thereof (as determined pursuant to Section 14.10 hereof), to the extent
sufficient therefor, to be applied and distributed, to the maximum extent
permitted by law, in the following order:
(a) First, to creditors (including Members who are creditors, to
the extent otherwise permitted by law) in satisfaction of all of the Company's
Debts and other liabilities (whether by payment or the making of reasonable
provision for payment thereof), other than liabilities for which reasonable
provision for payment has been made and liabilities for distribution to Members
under Section 18-601 or 18-604 of the Delaware Act;
(b) Second, except as provided in this Agreement, to Members and
former Members of the Company in satisfaction of liabilities for distribution
under Sections 18-601 or 18-604 of the Delaware Act; and
(c) The balance, if any, to the Members in accordance with the
positive balance in their Capital Accounts, after giving effect to all
contributions, distributions and allocations for all periods.
No Member shall receive additional compensation for any services performed
pursuant to this Article XIV.
- 31 -
37
14.3 Compliance With Certain Requirements of Regulations; Deficit Capital
Accounts. In the event the Company is "liquidated" within the meaning of
Regulations Section 1.704- 1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article XIV to the Members who have positive Capital Accounts in
compliance with Regulations Section 1.704- 1(b)(2)(ii)(b)(2). If any Member has
a deficit balance in his Capital Account (after giving effect to all
contributions, distributions and allocations for all Allocation Years, including
the Allocation Year during which such liquidation occurs), such Member shall
have no obligation to make any contribution to the capital of the Company with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Company or to any other Person for any purpose whatsoever. In the discretion
of the Liquidator, a pro rata portion of the distributions that would otherwise
be made to the Members pursuant to this Article XIV may be:
(a) Distributed to a trust established for the benefit of the
Members for the purposes of liquidating Company assets, collecting amounts owed
to the Company, and paying any contingent or unforeseen liabilities or
obligations of the Company. The assets of any such trust shall be distributed to
the Members from time to time, in the reasonable discretion of the Liquidator,
in the same proportions as the amount distributed to such trust by the Company
would otherwise have been distributed to the Members pursuant to Section 14.2
hereof; or
(b) Withheld to provide a reasonable reserve for Company
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Company, provided that such withheld
amounts shall be distributed to the Members as soon as practicable.
14.4 Deemed Distribution and Recontribution. Notwithstanding any other
provision of this Article XIV, in the event the Company is liquidated within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event has
occurred, the Property shall not be liquidated, the Company's Debts and other
liabilities shall not be paid or discharged, and the Company's affairs shall not
be wound up. Instead, solely for federal income tax purposes, the Company shall
be deemed to have contributed all of its Property and liabilities to a new
limited liability company in exchange for an interest in such new company and,
immediately thereafter, the Company will be deemed to liquidate by distributing
interests in the new company to the Members.
14.5 Rights of Members. Except as otherwise provided in this Agreement,
each Member shall look solely to the Property of the Company for the return of
its Capital Contribution and has no right or power to demand or receive Property
other than cash from the Company. If the assets of the Company remaining after
payment or discharge of the debts or liabilities of the Company are insufficient
to return such Capital Contribution, the Members shall have no recourse against
the Company or any other Member.
- 32 -
38
14.6 Notice of Dissolution/Termination.
(a) In the event a Dissolution Event occurs or an event occurs
that would, but for provisions of Section 14.1, result in a dissolution of the
Company, the Board of Directors shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Members and to all other parties
with whom the Company regularly conducts business (as determined in the
discretion of the Board of Directors) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Company regularly
conducts business (as determined in the discretion of the Board of Directors).
(b) Upon completion of the distribution of the Company's Property
as provided in this Article XIV, the Company shall be terminated, and the
Liquidator shall cause the filing of the certificate of cancellation pursuant to
Section 18-203 of the Delaware Act and shall take all such other actions as may
be necessary to terminate the Company.
14.7 Allocations During Period of Liquidation. During the period
commencing on the first day of the Fiscal Year during which a Dissolution Event
occurs and ending on the date on which all of the assets of the Company have
been distributed to the Members pursuant to Section 14.2 hereof (the
"Liquidation Period"), the Members shall continue to share Profits, Losses,
gain, loss and other items of Company income, gain, loss or deduction in the
manner provided in Section 9 hereof.
14.8 Character of Liquidating Distributions. All payments made in
liquidation of the interest of a Member in the Company shall be made in exchange
for the interest of such Member in Property pursuant to Section 736(b)(1) of the
Code, including the interest of such Member in Company goodwill.
14.9 The Liquidator.
(a) Definition. The "Liquidator" shall mean a Person appointed by
the Board of Directors to oversee the liquidation of the Company.
(b) Fees. The Company is authorized to pay a reasonable fee to
the Liquidator for its services performed pursuant to this Article XIV and to
reimburse the Liquidator for its reasonable costs and expenses incurred in
performing those services.
(c) Indemnification. The Company shall indemnify, save harmless,
and pay all judgments and claims against such Liquidator or any officers,
directors, agents or employees of the Liquidator relating to any liability or
damage incurred by reason of any act performed or omitted to be performed by the
Liquidator, or any officers, directors, agents or employees of the Liquidator in
connection with the liquidation of the Company, including reasonable attorneys'
fees incurred by the Liquidator, officer, director, agent or employee in
connection with the defense of any action based on any such act or omission,
which attorneys' fees may
- 33 -
39
be paid as incurred, except to the extent such liability or damage is caused by
the fraud or intentional misconduct of, or a knowing violation of the laws by,
the Liquidator which was material to the cause of action.
14.10 Form of Liquidating Distributions. For purposes of making
distributions required by Section 14.2 hereof, the Liquidator may determine
whether to distribute all or any portion of the Property in-kind or to sell all
or any portion of the Property and distribute the proceeds therefrom.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Notices. Any notice, demand or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered in writing
personally to the party or to an executive officer of the party to whom the same
is directed or if sent by recognized overnight courier or registered or
certified mail, postage and charges prepaid, addressed to the Member's and/or
Company's address, as appropriate, which is set forth in this Agreement. If
mailed, any such written notice shall be deemed to be delivered two calendar
days after being deposited in the United States mail with postage thereon
prepaid, addressed and sent as aforesaid. If sent by recognized overnight
courier, any such written notice shall be deemed to be delivered the date such
overnight delivery is delivered or its delivery is attempted.
15.2 Application of Delaware Law. This Agreement, and the
application of interpretation hereof, shall be governed exclusively by its terms
and by the laws of the State of Delaware, and specifically the Delaware Act.
15.3 Waiver of Action for Partition. Each Member hereby
irrevocably waives, during the term of the Company, any right that such Member
may have to maintain any action for partition with respect to the property of
the Company.
15.4 Execution of Additional Instruments. Each Member hereby
agrees to execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
15.5 Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define or
limit the scope, extent or intent of this Agreement or any provision hereof.
15.6 Waivers. No waiver of any right under this Agreement shall
be effective unless evidenced in writing and executed by the Person entitled to
the benefits thereof. The
- 34 -
40
failure of any party to seek redress for violation of or to insist upon the
strict performance of any covenant or condition of this Agreement shall not
prevent another act or omission, which would have originally constituted a
violation, from having the effect of an original violation.
15.7 Rights and Remedies Cumulative. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive the right to use any or all other
rights or remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
15.8 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the application
thereof shall not be affected and shall be enforceable to the fullest extent
permitted by law.
15.9 Heirs, Successors and Assigns. Each and all of the
covenants, terms, provisions and agreements herein contained shall be binding
upon and inure to the benefit of the parties hereto and, to the extent permitted
by this Agreement, their respective heirs, legal representatives, successors and
assigns.
15.10 Beneficiaries. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any Person other than the parties
hereto.
15.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
15.12 Amendments. This Agreement may not be amended except by an
instrument in writing signed by all of the Members.
15.13 Waiver of Consequential and Punitive Damages. No party to
this Agreement shall be liable to any other party for indirect, consequential or
punitive damages resulting from or arising out of this Agreement, including, but
not limited to, loss of use of property, loss of profits, loss of products or
business interruption.
15.14 Other Terms. Unless the context shall require otherwise:
(a) Words importing the singular number or plural number shall
include the plural number and singular number respectively;
(b) Words importing the masculine gender shall include the
feminine and neuter genders and vice versa;
- 35 -
41
(c) Reference to "include," "includes," and "including" shall be
deemed to be followed by the phrase "without limitation;"
(d) Reference in this Agreement to "herein," "hereby" or
"hereunder", or any similar formulation, shall be deemed to refer to this
Agreement as a whole, including the Exhibits; and
(e) Reference to "or" shall be deemed to mean "and/or."
- 36 -
42
EXECUTED as of this ____th day of ______, 1998.
GPPW, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
GPPD, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
SIGNATURE PAGE TO LIMITED LIABILITY COMPANY AGREEMENT
OF GENERAL PORTABLE PRODUCTS, LLC