CANOPY, LLC
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of July 1, 2000
between
PRIMESOURCE CORPORATION
and
XEIKON AMERICA, INC.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; INTERPRETATION...............................1
1.1 Definitions.................................................1
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1.2 Interpretation..............................................1
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ARTICLE II ORGANIZATION..............................................2
2.1 Formation...................................................2
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2.2 Name........................................................2
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2.3 Limited Purpose.............................................2
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2.4 Duration....................................................2
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2.5 Registered Office and Agent; Principal Office...............2
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2.6 Qualification in Other Jurisdictions........................3
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2.7 Partnership.................................................3
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2.8 No Implied Duties...........................................3
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ARTICLE III MEMBERS...................................................3
3.1 Initial Members.............................................3
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3.2 Admission of Additional Members.............................3
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3.3 Authority; Liability to Third Parties.......................4
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ARTICLE IV CAPITAL CONTRIBUTIONS; INITIAL MEMBERSHIP INTERESTS AND
TRANSFER OF MEMBERSHIP INTEREST; CAPITAL ACCOUNTS.........4
4.1 Initial Capital Contributions...............................4
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4.2 Initial Percentage Interests................................5
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4.3 Additional Capital Contributions............................5
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4.4 Failure of Member to Contribute Additional Capital
Contributions...............................................6
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4.5 Capital Accounts............................................6
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4.6 Return of Capital Contributions.............................7
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4.7 Interest....................................................7
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4.8 Loans From Members..........................................7
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ARTICLE V ALLOCATIONS AND DISTRIBUTIONS.............................7
5.1 Allocations of Profit and Loss..............................7
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5.2 Distributions of Distributable Funds........................8
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5.3 Member Minimum Gain.........................................9
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5.4 Minimum Gain Chargeback.....................................9
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5.5 Qualified Income Offset.....................................9
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5.6 Limitations on Loss Allocation..............................9
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5.7 Book/Tax Disparities; Section 754 Elections; Etc............9
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5.8 Allocation of Member Nonrecourse Deductions................10
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5.9 Allocation of Nonrecourse Deductions.......................10
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5.10 Curative Allocations.......................................10
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5.11 Interest in the Company Profits............................10
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5.12 Distributions in Kind......................................10
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5.13 Allocations and Distributions to Transferred Interests.....11
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5.14 Special Allocations........................................11
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ARTICLE VI DIRECT AND INDIRECT TRANSFER RESTRICTIONS AND RIGHTS OF
FIRST OFFER..............................................11
6.1 Restrictions on Direct and Indirect Transfer of Membership
Interests..................................................11
6.2 Rights of First Refusal....................................12
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6.3 Exceptions.................................................13
6.4 Admission of Transferee as Member..........................13
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6.5 Resignation of a Member....................................14
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ARTICLE VII MEETINGS OF MEMBERS......................................14
7.1 Place of Meetings..........................................14
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7.2 Meetings...................................................14
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7.3 Notice.....................................................14
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7.4 Waiver of Notice...........................................14
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7.5 Voting.....................................................15
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7.6 Action by Written Consent..................................15
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7.7 Proxies....................................................15
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7.8 Conference Telephone Meetings..............................15
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ARTICLE VIII MANAGEMENT OF THE COMPANY................................16
8.1 Management of the Company and the Business.................16
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8.2 Board of Directors; Number and Election of Directors;
Additional Committees......................................16
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8.3 General Powers of Board of Directors.......................16
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8.4 Limitations on Powers of Board of Directors................16
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8.5 Place of Meetings..........................................18
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8.6 Regular Meetings...........................................18
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8.7 Special Meetings...........................................18
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8.8 Conference Telephone Meetings..............................18
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8.9 Quorum of and Action by Board of Directors.................19
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8.10 Compensation...............................................19
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8.11 Resignation and Removal....................................19
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8.12 Vacancies..................................................19
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8.13 Action by Written Consent..................................19
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8.14 Standard of Care; Liability................................19
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8.15 Company Minutes............................................19
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ARTICLE IX OFFICERS; TRANSACTIONS BETWEEN MEMBERS AND THE COMPANY..20
9.1 Appointment of Officers....................................20
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9.2 Resignation; Removal; Vacancies............................20
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9.3 Delegation of Authority....................................20
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9.4 Authority and Duties.......................................22
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9.5 Limits on Power of Officers, Employees and Agents
of the Company.............................................22
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9.6 Litigation and Claims Involving Members; Determinations
Regarding Ancillary Agreements.............................24
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9.7 Transactions with Affiliates...............................25
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9.8 Outside Businesses.........................................25
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9.9 Ancillary Agreements.......................................26
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ARTICLE X FISCAL MATTERS; BOOKS AND RECORDS; OWNERSHIP OF
COMPANY PROPERTY; CONFIDENTIALITY PROVISIONS.............26
10.1 Company Bank Accounts; Investments.........................26
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10.2 Records Required by Act; Right of Inspection...............26
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10.3 Company Books and Records..................................27
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10.4 Access to Information......................................27
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10.5 Fiscal Year................................................28
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10.6 Tax Elections..............................................28
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10.7 Preparation of Tax Returns.................................29
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10.8 Tax Matters Partner........................................29
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10.9 Ownership and Title; No Partition..........................30
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10.10 Confidentiality Provisions.................................30
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ARTICLE XI DISSOLUTION AND WINDING UP...............................34
11.1 Events Causing Dissolution.................................34
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11.2 Winding Up.................................................34
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11.3 Compensation of Liquidator.................................35
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11.4 Distribution of Company Property and
Proceeds of Sale Thereof...................................35
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11.5 Final Audit................................................36
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11.6 Deficit Capital Accounts...................................36
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ARTICLE XII DISPUTE RESOLUTION.......................................36
12.1 Hierarchy of Dispute Resolution Procedures.................36
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12.2 Arbitration................................................37
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12.3 Judicial Procedure.........................................39
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12.4 Obligation to Continue Performance Pending
Resolution of a Dispute....................................39
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12.5 No Conflict................................................39
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ARTICLE XIII INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS; INSURANCE....................................39
13.1 Right to Indemnification...................................39
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13.2 Right to Advancement of Expenses...........................40
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13.3 Non-Exclusivity of Rights..................................40
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13.4 Insurance..................................................40
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13.5 Indemnification of Employees and Agents of the Company.....40
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ARTICLE XIV MISCELLANEOUS PROVISIONS.................................40
14.1 Counterparts...............................................40
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14.2 Entire Agreement...........................................40
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14.3 Partial Invalidity.........................................41
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14.4 Amendment..................................................41
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14.5 Investment Representations.................................41
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14.6 Binding Effect.............................................42
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14.7 No Third Party Beneficiaries...............................42
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14.8 Governing Law..............................................42
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14.9 Waiver.....................................................42
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14.10 Notices....................................................42
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Exhibits
Exhibit A: Definitions
Exhibit B: Value Adding Distributor Agreement
Exhibit C: Payroll Services Agreement with Xeikon
Exhibit D: Administrative Services Agreement with PrimeSource
Exhibit E: Employee Transition Agreement with AGFA
Schedules
Schedule I: Members, Initial Capital Contributions, Units and Initial
Percentage Interests
Canopy, LLC
(a Delaware Limited Liability Company)
LIMITED LIABILITY COMPANY AGREEMENT
LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement" or "Operating
Agreement") made and entered into as of July 1, 2000 (the "Effective Date") by
and among PrimeSource Corporation, a Pennsylvania corporation ("PS"), Xeikon
America, Inc., a Delaware corporation ("Xeikon"), and any other Person who shall
hereafter execute this Agreement as a Member of Canopy, LLC (the "Company") (PS,
Xeikon and any such other Person being herein referred to individually as a
"Member" and collectively as the "Members").
BACKGROUND
WHEREAS, there has heretofore been filed a Certificate of Formation
with the Secretary of State of the State of Delaware to organize the Company
under and pursuant to the Act;
WHEREAS, upon the terms and subject to the conditions set forth herein,
each of PS and Xeikon will make its Initial Capital Contribution and acquire
certain Membership Interests in the Company; and
WHEREAS, in accordance with the Act, each of the Company and the
Members desire to enter into this Agreement to set forth the respective rights,
powers and interests of the Members with respect to the Company and their
respective Membership Interests therein, and to provide for the management of
the business and operations of the Company;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
TERMS
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1 ______ Definitions. In this Agreement, unless otherwise
specifically stated, the capitalized terms used herein shall have the respective
meanings specified or referred to in Exhibit A to this Agreement, which is
incorporated by reference herein. Each agreement referred to in such Exhibit A
shall mean such Agreement as amended, supplemented and modified from time to
time to the extent permitted by the applicable provisions thereof and hereof.
1.2 ______ Interpretation. Each definition used in this Agreement
includes the singular and the plural, and reference to the neuter gender
includes the masculine and feminine where appropriate. Reference to any
Requirements of Law means such Requirements of Law as amended as of the time of
determination. The headings to the Articles and Sections are for convenience of
reference and shall not affect the meaning or interpretation of this Agreement.
Except as otherwise stated, reference to Articles, Sections, Exhibits and
Schedules means the Articles, Sections, Exhibits and Schedules of this
Agreement. The Exhibits and Schedules referred to throughout this Agreement are
hereby incorporated by reference into, and shall be deemed a part of, this
Agreement, provided that no Exhibit that consists of a form of agreement or
instrument shall be deemed to become effective until executed and delivered by
the applicable parties. Unless the context clearly indicates otherwise, the word
"including" when used in this Agreement means "including but not limited to,"
the word "include" means "include, without limitation," and the words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. This Agreement shall not be construed or interpreted against any
Person who might be deemed to have drafted it (directly or through its counsel).
ARTICLE II
ORGANIZATION
2.1 ______ Formation. The Company has been organized as a Delaware
limited liability company under and pursuant to the Act by the filing of a
Certificate of Formation with the Office of the Secretary of State of Delaware
as required by the Act. The parties hereto agree that the rights, duties and
liabilities of the Members and any additional or substitute Member admitted in
accordance with the terms hereof shall be as provided in the Act, except as
otherwise provided herein.
2.2 ______ Name. The name of the Company is Canopy, LLC. To the extent
permitted by the Act, the Company may conduct its business under one or more
assumed names deemed advisable by the Managing Board.
2.3 ______ Limited Purpose. The purpose of the Company is to engage in
the servicing, sale and support of digital printers in the Territory and to
engage in any activity and/or business related thereto for which limited
liability companies may be formed under the Act (including the performance of
the Ancillary Agreements). Subject to the limitations set forth in this
Agreement, the Company shall have all necessary powers, including those granted
by the Act, to effect any of the purposes for which it is formed, as set forth
in the previous sentence.
2.4 ______ Duration. The Company shall continue in existence until
midnight June 30, 2008 or until the Company shall be sooner dissolved and its
affairs wound up in accordance with the Act or this Agreement.
2.5 Registered Office and Agent; Principal Office.
(a) ______ The registered office of the Company required by the Act to
be maintained in the State of Delaware shall be the initial registered office
named in the Certificate of Formation or such other office (which need not be a
place of business of the Company) as the Managing Board may designate from time
to time in the manner provided by the Act.
(b) ______ The registered agent of the Company in the State of Delaware
shall be the initial registered agent named in the Certificate of Formation or
such other Person or Persons as the Managing Board may designate in the manner
provided by the Act.
(c) ______ The principal office of the Company shall be at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as the Managing Board
may designate from time to time, which need not be in the State of Delaware, and
the Company shall maintain records there for inspection as required by the Act.
The Company may have such other offices as the Managing Board may designate from
time to time.
2.6 Qualification in Other Jurisdictions. The Managing
Board shall have authority to cause the Company to do business in
jurisdictions other than the State of Delaware.
2.7 ______ Partnership. It is the intent of the Members that the
Company shall be operated in a manner consistent with its treatment as a
"partnership" for federal and state income tax purposes, and no Member shall
take any action inconsistent with such intent. In this regard, the Members shall
make a good faith effort to exercise all measures reasonably necessary to ensure
that the Company is characterized as a partnership for federal and state income
tax purposes, either by means of an affirmative election, or as a result of the
applicable default provisions pursuant to the regulations under Sections
301.7701-1, -2 and -3 of the Treasury Regulations relating to entity
classifications (the "check-the-box" ___ regulations). No provisions of this
Agreement (including the provisions of Article VIII) shall be deemed or
construed to constitute the Company a partnership (including a limited
partnership) or joint venture, or any Member or Director or Affiliate of a
Member or Director a partner or joint venturer of or with any other Member or
Director or Affiliate of a Member or Director, for any purposes other than
federal and state income tax purposes.
2.8 ______ No Implied Duties. Except as specifically set forth in this
Agreement, any Member may take any vote pursuant to the terms of this Agreement,
or refrain from voting for or against any action of the Company, in its sole and
absolute discretion, considering such factors as it desires, including its own
interest and the interest of or factors affecting the Company.
ARTICLE III
MEMBERS
3.1 Initial Members. The initial Members of the Company
are PS and Xeikon (the "Initial Members").
3.2 Admission of Additional Members.
Additional Members of the Company may only be added if the proposed
additional Member is either (x) a transferee of an existing Member (a
"Transferee Member") and the admission of such Transferee Member was either
expressly permitted by the provisions of Sections 6.1(a) or 6.3, or (y) a new
Member making a Capital Contribution to the Company in connection with its
admission to the Company (an "Additional Equity Member") whose admission was
unanimously approved by all Directors prior to admission; provided, that such
proposed additional Member, in the form of either a Transferee Member or an
Additional Equity Member, shall, as a condition precedent to its admission, have
executed a counterpart of, or an agreement adopting, this Agreement and such
Ancillary Agreements or other related agreements as may be reasonably specified
by the Company in a form reasonably satisfactory to the Company.
3.3 ______ Authority; ___ Liability ___ to Third ___ Parties. ___
Except as ___ otherwise ___ provided ___ herein, ___ and notwithstanding Section
18-402 of the Act, no Member has the authority or power to act for or on behalf
of the Company, to do any act that would be binding on the Company, or to incur
any liability or make any expenditures on behalf of the Company. Unless
otherwise agreed to by a Member in accordance with the provisions of Section
18-303(b) of the Act, no Member shall be liable for the debts, obligations or
liabilities of the Company, including under a judgment, decree or order of a
court.
ARTICLE IV
CAPITAL CONTRIBUTIONS; INITIAL MEMBERSHIP INTERESTS
AND TRANSFER OF MEMBERSHIP INTEREST; CAPITAL ACCOUNTS
4.1 Initial Capital Contributions.
(a) ______ Xeikon shall be obligated to contribute to the initial
capital of the Company the property set forth as Xeikon's Initial Capital
Contribution on Schedule I. Such Initial Capital Contribution shall be in the
form of cash and Contributed Property, as specified on Schedule I, which Initial
Capital Contribution shall be made on July 1, 2000, or within fifteen business
days thereafter. The Agreed Value of any Contributed Property to be contributed
by Xeikon as its Initial Capital Contribution is set forth on Schedule I.
(b) ______ PS shall be obligated to contribute to the initial capital
of the Company as PS's Initial Capital Contribution the cash and Contributed
Property as specified on Schedule I, $1,000 of which Initial Capital
Contribution shall be made on July 1, 2000, as set forth on Schedule I, and the
remainder of which shall be made on or before September 30, 2000. The Agreed
Value of any Contributed Property to be contributed by PS as its Initial Capital
Contribution is set forth on Schedule I.
4.2 Initial Percentage Interests.
(a) ______ Upon making the full Initial Capital Contribution described
in Section 4.1(a), Xeikon shall receive the Units and Percentage Interest set
forth opposite Xeikon's name on Schedule I.
(b) ______ Upon making any portion of the Initial Capital Contribution
described in Section 4.1(b), PS shall receive the Units and Percentage Interest
set forth opposite PS's name on Schedule I.
4.3 Additional Capital Contributions.
(a) ______ With the prior consent of each of PS and Xeikon, so long as
they both are Members, or in the event that both are not members, with the vote
of a Majority of the then Members, the Company may from time to time make a
written request (a "Capital Notice") of each Member to make Additional Capital
Contributions. The Capital Notice shall specify the amount of funds or capital
needed and the date on or before which the Additional Capital Contribution must
be made to the Company, which date shall, unless otherwise agree by all Members,
be at least thirty (30) days after the date of the Capital Notice. Each of the
Members shall be requested to contribute cash (except as provided in the next
sentence) to the Company in an amount equal to the Additional Capital
Contribution multiplied by such Member's Percentage Interest at the time of such
request. If any Member does not make its required Additional Capital
Contribution within the required period, such Member shall be deemed to have
declined the request to make such Additional Capital Contribution.
(b) ______ Failure of any Member to make a requested Additional Capital
Contribution shall not be deemed to be a breach of, or default under, this
Agreement unless the Member has previously agreed in writing to make such
Additional Capital Contribution.
(c) ______ Units shall be reserved for grants of stock options to
Officers and employees of the Company from time to time by the Managing Board.
The Managing Board by unanimous vote shall establish a maximum, aggregate number
of such Units to be made available for such option grants. The terms and
conditions pertaining to these options shall be set by the Managing Board and no
option shall be exercisable into Units without the unanimous approval of all
Directors.
4.4 Failure of Member to Contribute Additional Capital Contributions.
(a) ______ If one or more Members ("Non-Contributing Members") fail to
contribute capital when requested as set forth in Section 4.3, then each of the
other Members (the "Contributing Members") shall have the right, but not the
obligation, to contribute to the Company its requested Additional Capital
Contribution and, if such Member so elects, its proportionate share of the
capital which the Non-Contributing Members failed to contribute based on such
Contributing Member's respective Percentage Interest held prior thereto in
relation to the Percentage Interests held by all Contributing Members who so
elect (any contribution made by the Contributing Members in respect of the
contribution the Non-Contributing Members failed to make shall be treated as an
Additional Capital Contribution made by such Contributing Members), and the
Percentage Interests of the Members shall be adjusted in accordance with Section
4.4(b).
(b) ______ In the event there are one or more Non-Contributing Members,
the Percentage Interests and Units of each Member thereafter shall be adjusted
so that each Member holds a Percentage Interest in proportion to the aggregate
amount of all Initial Capital Contributions and all Additional Capital
Contributions (including contributions made pursuant to Section 4.4(a)) made by
such Member, as appropriately adjusted upwards or downwards for write-ups or
write-downs of the Gross Asset Value of assets in connection with the admission
of Additional Equity Members.
(c) ______ The remedies provided for in Section 4.4(a) and (b) shall be
the sole and exclusive remedy available to the Members in the event of any
failure by another Member to contribute its Additional Capital Contribution.
4.5 Capital Accounts.
(a) ______ A Capital Account shall be established and maintained for
each Member. Each Member's Capital Account shall reflect each Member's Capital
Contributions to the Company and the allocations and distributions made pursuant
to Article V and shall be adjusted as provided herein and pursuant to the
definition of "Capital Accounts" in Exhibit A. This Section 4.5 is intended to
comply with Section 1.704-1(b)(2)(iv) of the Treasury Regulations as of the date
hereof and shall be interpreted and applied in a manner consistent with such
Treasury Regulations. If the Members, by Majority Vote, shall determine that it
is prudent to modify the manner in which the Capital Accounts are computed in
order to comply with Section 1.704-1(b)(2)(iv) of the Treasury Regulations, the
Members, by Majority Vote, may make such modification, provided that such
modification is not likely to have a material effect on the amounts
distributable to any Member or the allocations of Profit or Loss to any Member
pursuant to Article V.
(b) ______ Upon the Sale of Units on or after the date of this
Agreement, the Capital Account of the selling Member that is attributable to the
transferred interest will be carried over to the Transferee Member upon written
notice to the Company from the selling Member. The Company shall make a Section
754 election with respect to the sale of the transferred Units, and Capital
Accounts will be adjusted to reflect any adjustment required as a result thereof
by the Treasury Regulations promulgated pursuant to Section 704(b) of the Code.
4.6 Return of Capital Contributions. Except as provided in
Article XI, no Member shall have the right to withdraw, or receive any return
of, all or any portion of such Member's Capital Contributions.
4.7 Interest. No interest shall be paid by the Company on
Capital Contributions or on balances in Members' Capital Accounts.
4.8 Loans From Members.
(a) Upon not less than ten (10) Business Days advance notice to the
other Members and subject to the approval by a Majority Vote of the Directors,
any Member may make unsecured loans to the Company to the extent required to
fund operations in excess of Capital Contributions made to the Company pursuant
to this Article IV, provided, however, that all such loans must be made at
commercially reasonable interest rates.
(b) ______ If any Member shall make loans or otherwise advance funds to
the Company in excess of the amounts required hereunder to be contributed by
such Member to the capital of the Company, the making of such advances shall not
result in any increase in the amount of the Capital Account of such Member. The
amounts of any such advances shall be a debt of the Company to such Member and
shall be payable or collectible only out of the Company assets in accordance
with the terms and conditions upon which such advances are made. The repayment
of loans from a Member to the Company upon liquidation shall be subject to the
order of priority set forth in Section 11.4.
(c) ______ Participation by the Company with a Member in a joint loan
agreement with a commercial lender will not violate the provisions of this
Section 4.8 or Section 9.7 so long as any fees and costs are equitably prorated
between the borrowers.
(d) ______ Until September 30, 2000, PS shall make available to the
Company in the form of loans, sufficient cash to conduct its operations.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations of Profit and Loss.
(a) _____ Except as otherwise provided in Section 5.14, Profit for
each Fiscal Year (or portion thereof, in connection with the allocation of
Profits from the write-up of the Gross Asset Value of assets associated with the
admission of Additional Equity Members, as provided in Section 5.7(d)) shall be
allocated to the Members as follows:
(i) ______ first, any gain or profit on any sales (or deemed
sales) pursuant to Article XI shall be allocated to the Members in an amount
sufficient such that the Capital Account balances of the Members are in
proportion to their respective Percentage Interests (including any allocation
pursuant to Section 5.12); and
(ii) second, to the Members in accordance with their
respective Percentage Interests.
(b) ______ Except as otherwise provided in Section 5.14, Loss for each
Fiscal Year (or portion thereof, in connection with the allocation of Losses
from the write-down of the Gross Asset Value of assets associated with the
admission of Additional Equity Members, as provided in Section 5.7(d)) shall be
allocated to the Members as follows:
(i) ______ first, any loss or deduction on any sales (or
deemed sales) pursuant to Article XI shall be allocated to the Members in an
amount sufficient such that the Capital Account balances of the Members are in
proportion to their respective Membership Interests; and
(ii) second, to the Members in accordance with their
respective Percentage Interests.
5.2 Distributions of Distributable Funds.
(a) ______ The Company shall distribute annually to the Members, in
accordance with their Percentage Interests, an amount equal to the Members'
aggregate income tax liability arising from ownership of the Percentage
Interests; provided, that such distributions will be made only if the Company's
aggregate net income and gains since the beginning of its existence exceed its
aggregate losses and deductions and only with respect to such excess. Such
distribution shall be made on the assumption that each Member is liable for
income taxes at a 36% rate. Regardless of the actual tax liabilities of the
Members, all distributions made under this Section 5.2(a) shall be made to the
Members in accordance with their Percentage Interests.
(b) ______ In addition to the distribution contemplated by Section
5.2(a), provided the Company is generating positive cash flow, and except as
provided in Section 11.4 relating to distributions upon the dissolution and
liquidation of the Company, additional distributions of the Distributable Funds
may be distributed to the Members from time to time in accordance with their
respective Percentage Interests and at the direction of the Managing Board. In
addition, the Managing Board by unanimous approval may approve the distribution
of Company Property to the Members in accordance with their respective
Percentage Interests, subject to the restrictions of Section 5.12. By action
unanimously approved by the Members, the Members may veto any distribution of
Distributable Funds or Company Property otherwise contemplated by the Managing
Board. In no event shall the Company make any distribution that would violate
the provisions of any instrument evidencing loans to the Company made by
financial institutions. The Company shall not make any distribution to the
Members in violation of Section 18-607 of the Act or other applicable provisions
of law or if, immediately after giving effect to the distribution, all
liabilities of the Company, other than liabilities to Members with respect to
their Membership Interests and liabilities for which the recourse of creditors
is limited to specified property of the Company, exceed the fair value of
Company Property, except that the fair value of Company Property that is subject
to a liability for which recourse of creditors is limited shall be included in
the Company assets only to the extent that the fair value of that Company
Property exceeds that liability.
5.3 Member Minimum Gain. Section 5.3 through Section 5.10 and
Section 5.13 will be applied in the order and priority listed below.
If during a Fiscal Year of the Company there is a net decrease in
Member Nonrecourse Debt Minimum Gain, any Member with a share of that Member
Nonrecourse Debt Minimum Gain (determined under Section 1.704-2(i)(5) of the
Treasury Regulations) as of the beginning of the year must be allocated items of
income and gain for the year (and, if necessary, for succeeding years) equal to
that Member's share of such net decrease in accordance with Section 1.704-2(i)
of the Treasury Regulations.
5.4 Minimum Gain Chargeback. If there is a net decrease in
Minimum Gain of the Company during a Fiscal Year of the Company, the minimum
gain chargeback described in Sections 1.704-2(f) and (g) of the Treasury
Regulations shall apply.
5.5 ______ Qualified Income Offset. If a Member unexpectedly receives
any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, or any other
event creates a deficit in the Member's Adjusted Capital Account, items of the
Company income and gain shall be specially allocated to such Member in an amount
and manner sufficient to eliminate such deficit balance as quickly as possible.
5.6 ______ Limitations on Loss Allocation. Notwithstanding any other
provision of this Agreement to the contrary, no Loss or item of loss or
deduction of the Company shall be allocated to a Member if such allocation would
result in a negative balance in such Member's Adjusted Capital Account. Such
Loss or item of loss or deduction shall be allocated first among the Members
with positive balances in their Capital Accounts in proportion to (and to the
extent of) such positive balances and thereafter in accordance with their
respective Percentage Interests. Any allocations shall be offset as quickly as
possible by subsequent allocations of Profit or items of income or gain in the
reverse order.
5.7 Book/Tax Disparities; Section 754 Elections; Etc.
(a) ______ In the case of Contributed Property and Adjusted Property,
items of income, gain, loss, deduction and credit, as determined for federal
income tax purposes shall be allocated in a manner consistent with the
requirements of Section 704(c) of the Code by using the traditional method of
Treasury Regulation ss. 1.704-3(b). The Members agree to be bound by the use of
such method and agree to report the resulting allocations of items of income,
gain, loss, deduction and credit, accordingly.
(b) ______ Whenever the income, gain and loss of the Company allocable
hereunder consists of items of different character for tax purposes (e.g.,
ordinary income, long-term capital gain, interest expense, etc.), the income,
gain and loss for tax purposes allocable to each Member shall be deemed to
include its pro rata share of each such item except as otherwise required by the
Code and the Treasury Regulations or to the extent the corresponding item of
income, gain or loss, as computed for book purposes, is allocated non-pro rata.
Notwithstanding the foregoing, if the Company realizes depreciation recapture
income pursuant to Section 1245 or Section 1250 (or other comparable provision)
of the Code as the result of the sale or other disposition of any asset, the
allocations to each Member hereunder shall be deemed to include the same
proportion of such depreciation recapture as the total amount of deductions for
tax depreciation of such asset previously allocated to such Member bears to the
total amount of deductions for tax depreciation of such asset previously
allocated to all Members. This Section 5.7(b) shall be construed to affect only
the character, rather than the amount, of any items of income, gain and loss.
(c) ______ Allocations pursuant to this Section 5.7 are solely for
purposes of federal, state and local taxes. As such, they shall not affect or in
any way be taken into account in computing a Member's Capital Account or share
of Profits, Losses or other items or distributions pursuant to this Agreement.
(d) ______ Profits or Losses arising as the result of the write-up or
write-down of the assets of the Company in connection with the admission of
Additional Equity Members shall be allocated solely to the Members other than
such Additional Equity Member.
5.8 ______ Allocation of Member Nonrecourse Deductions. Items of loss,
deduction or Section 705(a)(2)(B) expenditures attributable, under Section
1.704-2(i) of the Treasury Regulations, to Member Nonrecourse Debt for any
Fiscal Year or other period shall be specifically allocated, as provided in
Section 1.704-2(i) of the Treasury Regulations, to the Members in accordance
with the ratios in which they bear the economic risk of loss for such debt for
purposes of Section 1.752-2 of the Treasury Regulations.
5.9 ______ Allocation of Nonrecourse ___ Deductions. ___ Items of loss,
deduction or Section 705(a)(2)(B) expenditures attributable, under Section
1.704-2(c) of the Treasury Regulations, to increases in the Company's Minimum
Gain for any Fiscal Year or other period shall be ___ specifically ___
allocated, ___ as provided in Section 1.704-2(e) of the Treasury Regulations, to
the Members in accordance with their Percentage Interests.
5.10 _____ Curative Allocations. The Regulatory Allocations shall be
taken into account in allocating other Profit, Loss and items of income, gain,
loss and deduction among the Members so that, to the extent possible, the net
amount of such allocations of other Profit, Loss and other items and the
Regulatory Allocations to each Member shall be equal to the net amount that
would have been allocated to each such Member if the Regulatory Allocations had
not occurred.
5.11 _____ Interest in the Company ___ Profits. ___ Pursuant to ___
Section 1.752-3(a)(3) ___ of the ___ Treasury Regulations, the Members'
interests in the Company profits for purposes of determining the Members'
proportionate shares of the excess nonrecourse liabilities (as defined in
Section 1.752-3(a)(3) of the Treasury Regulations) of the Company shall be
determined in accordance with their respective Percentage Interests.
5.12 _____ Distributions in Kind. If any assets of the Company are
distributed in kind pursuant to Sections 5.2(b) or 11.4, such assets shall be
distributed to the Members entitled thereto in the same proportions as if the
distribution were in cash, and the types and forms of such consideration shall
be allocated in an equitable manner among the Members entitled thereto, such
that each Member shall, except for immaterial variances, receive the same type
or form of consideration. Such assets shall be valued at their fair market value
at that time. The difference between such fair market value and the adjusted tax
basis of any such asset shall, to the extent not otherwise recognized by the
Company or taken into account under Section 5.7(a), be taken into account in
computing Profit or Loss of the Company for purposes of allocation of Profit or
Loss under Section 5.1 and Section 5.13(a) and distributions of proceeds to the
Members under Sections 5.2 and 11.4. If the assets of the Company are sold in a
transaction in which, by reason of the provisions of Section 453 of the Code or
any successor thereto, gain is realized but not recognized, such gain shall be
taken into account in computing Profit or Loss of the Company for purposes of
allocations and distributions to the Members pursuant to this Article V. No
further adjustments shall be made to the Capital Accounts when such gain is
realized for tax purposes to the extent such gain has previously been reflected
in the Capital Accounts.
5.13 Allocations and Distributions to Transferee Members.
(a) ______ If any interest in the Company is transferred, increased or
decreased during the year, all Profit and Loss and other items of income, gain,
loss, deduction and credit recognized by the Company for such year shall be
allocated among the Members to take into account their varying interests during
the year based on an interim closing of the books.
(b) ______ Distributions under Sections 5.2 and 11.4 shall be made only
to Members who, according to the books and records of the Company, are Members
or assignees (pursuant to and as provided in Article VI) on the actual date of
distribution. Neither the Company nor any Member shall incur any liability for
making distributions in accordance with this Section 5.13(b).
5.14 _____ Special Allocations. In the event that the Internal Revenue
Service determines either (i) that any Member's or an Affiliate's income or
expense attributable to any transaction between the Company and any Member or
its Affiliate (other than, with respect to a Member, in its capacity as a
Member) (a "Member Transaction") is greater than or less than the amount paid,
received or accrued by the Company, as applicable, with respect to such Member
Transaction or (ii) the Company's income or expense with respect to any such
Member Transaction is greater than or less than the amount paid, received or
accrued by the Company, as applicable, with respect to such Member Transaction,
the Company shall specially allocate any resulting deduction or gain, as the
case may be, attributable to such excess to the Member who (or whose Affiliate)
entered into the Member Transaction.
ARTICLE VI
DIRECT AND INDIRECT TRANSFER
RESTRICTIONS AND RIGHTS OF FIRST REFUSAL
6.1 Restrictions on Direct and Indirect Transfer of Membership
Interests.
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(a) ______ No Member shall effect in whole or in part any Transfer of
any Units to any Person except for: (i) Transfers permitted by Section 6.3, and
(ii) Sales made at any time after the Effective Date in compliance with the
rights of first refusal provisions of Section 6.2, or (iii) transfers in
connection with the combination of a Member with another company, whether by
merger, acquisition of voting control of the Member, purchase of substantially
all the assets of the Member, or other corporate combination.
(b) ______ Any purported Transfer of any Units in violation of the
provisions of this Agreement shall be wholly void and shall not effectuate the
Transfer contemplated thereby. Notwithstanding anything contained herein to the
contrary, (i) no Person may Transfer any Units in violation of any provision of
this Agreement or in violation of the Securities Act and any applicable state
securities laws, (ii) no Sale of any such Units may be effected to any purchaser
(including any Affiliate of the seller) unless such purchaser has executed and
delivered to the Company and each of the parties to this Agreement a copy of, or
an agreement adopting, this Agreement and has agreed to be bound by all of the
applicable terms and provisions hereof, (iii) no Sale of any Units (or economic
rights associated therewith) may be effected if such Sale would cause a
dissolution of the Company under the Act.
(c) ______ Until the transferee is admitted as a Member pursuant to
Section 6.4, the transferor Member shall continue to be a Member and to be
entitled to exercise any rights or powers of a Member with respect to the Units
transferred.
6.2 Rights of First Refusal.
(a) _______ Subject to Section 6.1, and except as provided in Section
6.3, no Member shall effect in whole or in part any Sale of any Units to any
Person unless such Member first complies with the first refusal procedures
described in Section 6.2(b) below (the "Member Right of First Refusal").
(b) ______ (i) ______ If any Member desires to effect a Sale of all or
any portion of its Units that is subject to the Member Right of First Refusal,
such Member shall first give a notice, which shall contain the price and other
material terms of the proposed Sale, including the name and address of the
proposed purchaser (a "Member Offer Notice"), to the other Members (the "Member
Offerees"), offering to Sell such Units (the "Member Offered Interest") to the
Member Offerees at the price and on the other terms and conditions set forth in
such Member Offer Notice. All of the consideration offered in the Member Offer
Notice shall be payable in immediately available funds. The Member Offerees
shall have the right, for a period of thirty (30) days after receipt of such
Member Offer Notice (the "Member Offer Period"), to elect to purchase from such
Member all (and not less than all) of the Member Offered Interest at the
purchase price and on the other terms and conditions specified in the Member
Offer Notice by giving such Member notice of such Election (a "Member Exercise
Notice"). If more than one Member Offeree makes such election, the percentage of
such Member Offered Interest that each electing Member Offeree (the "Electing
Member Offerees") shall be entitled to purchase shall be determined on a pro
rata basis in proportion to their respective Percentage Interests. Such Member
Exercise Notice may be given separately or jointly by more than one Electing
Member Offerees. In any such Member Exercise Notice, the Electing Member Offeree
may specify that the Member Offered Interest will be purchased by such Electing
Member Offeree and/or one or more of its respective Affiliates. Upon the giving
of a valid Member Exercise Notice, the parties shall cause the Member Offered
Interest to be sold to the Electing Member Offerees in accordance with the terms
and conditions specified in the applicable Member Offer Notice and the sales
procedures described in Section 6.2(c).
(ii) _____ If none of the Member Offerees give such Member a
Member Exercise Notice within the Member Offer Period, then at any time within
one hundred and fifty (150) days commencing upon the expiration of such Member
Offer Period, such Member may enter into a binding agreement to Sell all but not
less than all of the Member Offered Interest to the Person specified in the
Member Offer Notice, subject to the transfer restrictions set forth in Section
6.1 (to the extent applicable). If consummation of such Sale is not precluded
pursuant to such transfer restrictions, such Member may proceed to close such
Sale, which closing shall (i) occur no later than sixty (60) days after the
expiration of such one hundred and fifty (150) day period, (ii) be at a price
not less than the price set forth in the Member Offer Notice, and (iii) be on
terms and conditions substantially the same as those specified in the Member
Offer Notice. The time periods specified in this Section 6.2(b) shall be
extended to the extent necessary to accommodate any required Governmental Body
filings or approvals, each of which filings and approvals such Member agrees to
use its best efforts to make or obtain as quickly as reasonably practicable. If
such Member fails to agree to and close a permitted Sale within the above
specified periods, then all of the restrictions stated in this Section 6.2 shall
apply again as though no Member Offer Notice had been given hereunder.
(c) ______ The closing of any purchase by a Member (or its Affiliate)
of a Member Offered Interest hereunder shall take place at a time and place
reasonably acceptable to the participating parties, provided, that such closing
shall occur not more than thirty (30) days after (x) receipt of the applicable
Member Exercise Notice or (y) if later, receipt of any required approvals from
any Governmental Body. The parties participating in such purchase shall use
their best efforts to obtain such approvals as soon as practicable. Prior to any
such closing, the parties shall take all other actions required to permit such
closing to take place, including the making of any required filings under the
HSR Act and the rules and regulations promulgated thereunder and obtaining any
required contractual consents. At such closing, the transferor of any Units
shall deliver to the applicable purchaser(s) such documentation as the
purchaser(s) may reasonably request to evidence the Sale of such interest
against payment of the purchase price therefor.
6.3 ______ Exceptions. The transfer restriction set forth in Section
6.1(a) and right of first refusal procedures set forth in Section 6.2 shall not
apply to (1) any Sale from a Member to its Substantially-Owned Affiliate, (2) a
pledge of, or other security interest in Units granted with the unanimous
approval of all Directors for purposes of providing financing to the Company (an
"Approved Pledge"), or (3) upon foreclosure, Transfer in good faith replacement
of foreclosure, or upon similar events pursuant to the exercise of remedies in
respect of an Approved Pledge.
6.4 ______ Admission of Transferee as Member. A transferee of Units
including, an Affiliate of a Member desiring to be admitted as a Member, must
execute a counterpart of, or an agreement adopting, this Agreement and relevant
Ancillary Agreements or other related agreements as the Company may reasonably
require. Subject to compliance with the applicable provisions of this Agreement,
a transferee of Units shall be admitted as a Member. Upon the admission of the
transferee as a Member, the transferee shall have, to the extent of the Units
transferred, the rights and powers and shall be subject to the restrictions and
liabilities of a Member under this Agreement, the Certificate of Formation and
the Act. The transferee shall also be liable, to the extent of the Units
transferred, for the unfulfilled obligations, if any, of the transferor Member
to make Capital Contributions, but shall not be obligated for liabilities
unknown to the transferee at the time such transferee was admitted as a Member
and that could not be ascertained from this Agreement.
6.5 ______ Resignation of a Member. No Member shall resign, withdraw,
retire or otherwise take action to effect any of the foregoing. Prior to June
30, 2008, no Member shall seek a decree of judicial dissolution with respect to
the Company, notwithstanding Section 18-802 of the Act.
ARTICLE VII
MEETINGS OF MEMBERS
7.1 Place of Meetings. All meetings of Members shall be held at
such place as may be designated by the Managing Board or by the Member(s)
calling the meeting.
7.2 ______ Meetings and Quorum. Meetings of Members for any proper
purpose or purposes may be called at any time by any Member or by at least two
Directors then serving on the Managing Board. The Managing Board shall ensure
that at least one meeting of the Members is held each year, whether in person,
by conference telephone or by unanimous written consent. The presence, in person
or by proxy, of Members representing 80% of the Units of the Company shall be
requisite and shall constitute a quorum at all meetings of the Members for the
transaction of business, except as otherwise provided by applicable statute or
by the Certificate of Formation.
7.3 ______ Notice. A Notification of all meetings, stating the place,
day and hour of the meeting and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given not less than ten (10)
days before the meeting to each Member entitled to vote. Business transacted at
all special meetings of Members shall be limited to the purposes stated in the
Notification.
7.4 ______ Waiver of Notice. ___ Attendance of a Member at a meeting
shall constitute a waiver of Notification of the meeting, except where such
Member attends for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
Notification of a meeting may also be waived in writing. Attendance at a meeting
is not a waiver of any right to object to the consideration of matters required
to be included in the Notification of the meeting but not so included, if the
objection is expressly made at the meeting.
7.5 Voting.
(a) ______ Except as otherwise provided herein, all Members shall be
entitled to vote on any matter submitted to a vote of the Members. Each Member
shall be entitled to one vote for each full Unit held by such Member.
(b) ______ The affirmative vote of a Majority Vote shall be the act of
the Members, except for those actions which require the unanimous approval of
the Members, or as otherwise expressly provided herein.
(c) ______ No provision of this Agreement requiring that any action be
taken only upon approval of a Majority Vote or unanimous approval of the
Members, respectively, may be modified, amended or repealed unless such
modification, amendment or repeal is approved, respectively, by a Majority Vote,
or by unanimous approval of the Members, as the case may be.
7.6 ______ Action by Written Consent. Any action that may be taken at a
meeting of the Members may be taken without a meeting if a consent in writing,
setting forth the action to be taken, shall be signed and dated by all of the
Members. Such consent shall have the same force and effect as a vote of the
signing Members at a meeting duly called and held pursuant to this Article VII.
7.7 ______ Proxies. A Member may vote either in person or by proxy
executed in writing by the Member. A facsimile, e-mail, telegram, telex,
cablegram or similar transmission by the Member or a photographic, photostatic,
facsimile or similar reproduction of a writing executed by the Member shall be
treated as an execution in writing for purposes of this Section 7.7. Proxies for
use at any meeting of Members or in connection with the taking of any action by
written consent shall be filed with the Company before or at the time of the
meeting or execution of the written consent, as the case may be. All proxies
shall be received and taken charge of and all ballots shall be received and
canvassed by the Managing Board who shall decide all questions touching upon the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless an inspector or inspectors shall have been appointed
by the chairperson of the meeting, in which event such inspector or inspectors
shall decide all such questions. No proxy shall be valid after eleven (11)
months from the date of its execution unless otherwise provided in the proxy. A
proxy shall be revocable unless the proxy form conspicuously states that the
proxy is irrevocable and the proxy is coupled with an interest. Should a proxy
designate two or more Persons to act as proxies, unless such instrument shall
provide to the contrary, a majority of such Persons present at any meeting at
which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or if only one be
present, then such powers may be exercised by that one; or, if an even number
attend and a majority do not agree on any particular issue, the Company shall
not be required to recognize such proxy with respect to such issue if such proxy
does not specify how the Units that are the subject of such proxy are to be
voted with respect to such issue.
7.8 ______ Conference Telephone Meetings. Meetings of the Members may
be held by means of conference telephone or similar communications equipment so
long as all Persons participating in the meeting can hear each other.
Participation in a meeting by means of conference telephone shall constitute
presence in person at such meeting, except where a Person participates in the
meeting for the express purpose of objecting to the transaction of any business
thereat on the ground that the meeting is not lawfully called or convened.
ARTICLE VIII
MANAGEMENT OF THE COMPANY
8.1 ______ Management of the Company and the Business. Except as
otherwise expressly provided in 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 under the direction of, a Managing Board (the "Managing
Board") as described herein.
8.2 ______ Managing Board; Number and Election of Directors; Additional
Committees. The Managing Board shall consist of five Directors, being three
Directors designated in writing by PS and two Directors designated in writing by
Xeikon. Each Director so designated shall serve until he is replaced by the
Member who designated him or until he reaches the mandatory retirement age of
70. Unless otherwise agreed by a Majority Vote of the Managing Board, Directors
shall be directors, officers or employees of a Member or any Affiliate of a
Member. A Director designated by PS shall serve as the Chairman of the Managing
Board so long as PS owns a majority of the outstanding Units.
The Xeikon Directors shall initially be Alfons Buts and ▇▇▇▇▇▇ ▇▇▇▇▇. The PS
Directors shall initially be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇.
8.3 General Powers of Managing Board.
Except as may otherwise be expressly provided in this Agreement and
subject to Section 8.4, and subject to the express rights of the Members to
remove the Directors as provided in Section 8.11, the Managing Board shall have
complete and exclusive discretion and authority in the management and control of
the business and affairs of the Company, including the right to make and control
all ordinary and usual decisions concerning the business and affairs of the
Company and the actions set forth in Section 9.5. The Managing Board shall,
subject to Section 8.4, possess all power, on behalf of the Company, to do or
authorize the Company or to direct the Officers, employees and agents of the
Company, on behalf of the Company, to do all things necessary or convenient to
carry out the business and affairs of the Company.
8.4 ______ Limitations on Powers of Managing Board. The enumeration of
powers in this Agreement shall not limit the general or implied powers of the
Managing Board or any additional powers provided by law. Notwithstanding the
foregoing Section 8.3, or any other provision contained in this Agreement to the
contrary, no act shall be taken, sum expended, decision made, obligation
incurred or power exercised by the Company, or the Managing Board or the
officers, employees or agents of the Company on behalf of the Company with
respect to any of the following except in each case:
(a) with the unanimous approval of the Directors
(by vote or written consent):
(i) the undertaking of any substantial business
outside the scope of the purpose of the Company as set forth in Section 2.3
(ii) any voluntary liquidation, dissolution, or winding
up of the Company;
(iii) ____ any transfer or domestication of the Company
outside the United States pursuant to Section 18-313 of the Act or conversion of
the Company into another entity pursuant to Section 18-216 of the Act;
(iv) _____ the purchase, lease, or other acquisition of
significant assets of any other Person other than in the ordinary course of
business or pursuant to an approved budget;
(v) any request for Additional Capital Contributions to
Section 4.4;
(vi) change in the number of Directors;
(vii) adoption of the annual operating and capital budgets;
(viii) ___ change in the Percentage Interests or Units of the
Members, other than a permitted sale of Units under Article VI;
(ix) any merger, consolidation or other business
combination of the Company, or any direct or indirect sale or other disposition
of all or substantially all of the Company's assets;
(x) any other matters which this Agreement requires be
approved by a unanimous approval of Members;
(xi) any transaction between the Company and any
Member, except as otherwise provided herein;.
(b) with the Majority Vote of the Directors eligible to vote
(by vote or written consent):
(i) any amendment or restatement of the Certificate of
Formation of the Company, subject to the limitations of Section 14.4 and the
Requirements of Law;
(ii) any loans from Members (see Section 4.8) or third
parties to the Company;
(iii) ____ commence any proceeding or file any petition
seeking relief under any Bankruptcy Law, or consent to the institution of, or
fail to contest in a timely and appropriate manner, any such proceeding or
filing; apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official; make a general
assignment for the benefit of creditors; admit in writing its inability to pay
its debts as they become due; or take any action for the purpose of effecting
any of the foregoing;
(iv) any other matters which this Agreement requires
be approved by a Majority Vote of Members;
(v) ______ the designation or removal of each of the
President/Chief Executive Officer and Chief Financial Officer of the Company or
persons performing similar functions; provided, however, that no director of the
Company will be eligible to vote on his/her own designation or removal from such
offices.
8.5 ______ Place of Meetings. Meetings of the Managing Board may be
held at whatever place that is specified in the call of the meeting. In the
absence of specific designation, the meetings shall be held at the principal
office of the Company as provided in Section 2.5. The Directors serving on the
Managing Board may appoint from among themselves a chairperson to preside at
meetings of the Managing Board. The initial Chairman of the Managing Board will
be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Any Director shall be permitted to attend any meeting of the
Managing Board in person, by proxy, or by conference call pursuant to Section
8.8.
8.6 ______ Regular Meetings. The Managing Board of the Company shall
meet at least quarterly. No notice need be given to Directors of regular
meetings for which the Directors previously have designated a time and place and
included such designation in minutes of a meeting of the Directors or other
Notification that was distributed to all Members.
8.7 ______ Special Meetings. Special meetings of the Managing Board may
be held at any time upon the request of any two Directors. A Notification of any
special meeting shall be sent to the last known address of each Director to
ensure receipt of such notice at least five days before the meeting. The parties
involved shall cooperate and use their reasonable best efforts to schedule
meetings at times and places which will maximize attendance. Notification of the
time, place and purpose of such meeting may be waived in writing before or after
such meeting, and shall be equivalent to the giving of a Notification.
Attendance of a Director at such meeting shall also constitute a waiver of
Notification thereof, except where such Director attends for the express purpose
of objecting to the transaction of any business on the ground that the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Managing Board need be
specified in the notice or waiver of notice of such meeting.
8.8 ______ Conference Telephone Meetings. Meetings of the Managing
Board may be held by means of conference telephone or similar communications
equipment so long as all Persons participating in the meeting can hear each
other. ___ Any ___ Director may ___ participate ___ in any meeting by ___
conference ___ telephone or similar telecommunications equipment, in the
aforesaid manner, on advance request to the Managing Board, which shall not
unreasonably refuse such request. Participation in a meeting by means of
conference telephone shall constitute presence in person at such meeting, except
where a Director participates in the meeting for the express purpose of
objecting to the transaction of any business thereat on the ground that the
meeting is not lawfully called or convened.
8.9 ______ Quorum of and Action by Managing Board. The presence of four
(4) Directors appointed by Member(s) shall constitute a quorum for the
transaction of business at any meeting of the Managing Board. Subject to the
restrictions on voting at Sections 7.5(a), each Director will be entitled to one
vote. A Director may also vote for an absent Director if he or she has a written
proxy from such absent Director for such purpose. Except as otherwise expressly
set forth in this Agreement, any action to be taken or approved by the Managing
Board hereunder must be taken or approved by a Majority Vote of the Managing
Board, and any action so taken or approved shall constitute the act of the
Managing Board.
8.10 _____ Compensation. Directors who are employees of the Company or
employees of Members shall serve without compensation. The Managing Board shall
set the compensation for any other Directors. Directors shall be entitled to
reimbursement from the Company for their reasonable out-of-pocket expenses
incurred in attending any meeting.
8.11 _____ Resignation, Removal and Retirement. Any Director may resign
at any time by giving notice to the Company and the Member that designated such
Director. Such resignation shall be made in writing and shall take effect
immediately upon notice to the Company or as otherwise agreed upon by the
Director and the Company. Any Director serving on the Managing Board by
designation of a Member may be removed, either with or without cause, only upon
the written request of such Member. Any such removal shall be effective upon the
delivery of such a written request to the Company and to such Director. The term
of office of each Director of the Company shall automatically expire as of the
end of the calendar year in which the Director reaches the age of 70, regardless
of whether the term of office designated for said Director was for a longer
period.
8.12 _____ Vacancies. Any vacancy occurring with respect to a Director
serving on the Managing Board by designation of a Member shall be filled by
designation of the Member that designated such Director pursuant to the
procedures set forth in Section 8.2.
8.13 _____ Action by Written Consent. Any action that may be taken at a
meeting of the Managing Board may be taken without a meeting if a consent in
writing, setting forth the action to be taken, shall be signed by all of members
of the Managing Board.
8.14 _____ Standard of Care; Liability. No Director or Member shall be
liable for monetary damages or otherwise for any acts performed, or for any
failure to act; provided, however, that this provision shall not eliminate or
limit the liability of a Director or Member (i) for any breach of any duty owed
by a Director or Member duty to the Company, (ii) for acts or omissions which
involve intentional misconduct or a knowing violation of law, or (iii) for any
transaction from which the Director received any improper personal benefit.
8.15 _____ Company Minutes. The decisions and resolutions of the
Managing Board and the Members shall be reported in minutes which shall record
the date, time and place of the meeting (or the effective date of the result of
such voting) or written consent in lieu of a meeting, those present and the
minutes shall be kept in the Company's minute books with copies provided to each
Member. Such minutes shall be subject to the confidentiality restrictions
contained in this Agreement.
ARTICLE IX
OFFICERS; TRANSACTIONS BETWEEN
MEMBERS AND THE COMPANY
9.1 ______ Appointment of Officers. The Managing Board may, by Majority
Vote of the directors eligible to vote, appoint a President/Chief Executive
Officer and a Chief Financial Officer, provided, however, no director of the
Company will be eligible to vote on his/her own appointment to such offices. The
President/Chief Executive Officer may appoint and hire such other officers as he
or she may from time to time approve, subject to the prior approval of the
Managing Board. ▇▇▇▇ ▇▇▇▇▇▇▇ is hereby appointed as the initial President/Chief
Executive Officer of the Company. The compensation of all Officers of the
Company shall be fixed by the Managing Board. Unless otherwise specified by the
Managing Board at the time of appointment, each Officer of the Company shall
hold office until his or her death, resignation or removal. An Officer of the
Company shall not be considered to be an employee of the Company solely by
reason of holding such office.
9.2 ______ Resignation; Removal; Vacancies. Any Officer may resign at
any time by giving written notice to the Managing Board and the Chief Executive
Officer. Unless otherwise stated in a notice of resignation, it shall take
effect when received by the Managing Board or Chief Executive Officer, without
any need for its acceptance. The Managing Board acting pursuant to Sections 8
and 9 of this Agreement, shall have the right to remove the President/Chief
Executive Officer of the Company for or without cause at any time; provided,
however, that nothing contained herein shall limit any rights of any Officer
under any employment agreement which such Officer may have entered into with the
Company. In the event of vacancies occurring in the offices of the Chief
Executive Officer or the Chief Financial Officer, such vacancies shall be filled
by the Managing Board as provided in Section 9.1. Any other vacancy occurring in
any other Officer position shall be filled by the Chief Executive Officer,
subject to the prior approval of the Managing Board.
9.3 ______ Delegation of Authority. Pursuant to the provisions of
Section 18-407 of the Act, the Members and the Managing Board may delegate to
the Officers the authority, right and power to manage the Company's day-to-day
business and to do any and all acts and things necessary, proper, convenient or
advisable to effectuate the purposes of this Agreement, including the following
(but subject in all cases to the limitations set forth below in this Section 9.3
or otherwise set forth in this Agreement):
(a) to conduct the Company's day-to-day business;
(b) ______ to acquire, hold, sell, transfer, assign, exchange, pledge,
dispose of and otherwise deal with all or any part of Company Property not in
excess of $100,000 for any single or related group of such transactions, and
incident thereto, to liquidate Company Property at any time and to reinvest the
proceeds thereof; provided, however, this $100,000 limitation shall not apply to
the purchase and sale of products being distributed by the Company in its
ordinary course of business;
(c) ______ to amend, renew, extend or otherwise modify any financing or
refinancing arrangements relating to the business of the Company in principal
amounts not in excess of $100,000 for any single or related group of such
arrangements, and, incident thereto, to pledge or otherwise encumber Company
Property as margin or other collateral for such financing and refinancing
arrangements;
(d) ______ to do such other acts as the Officers may deem necessary or
advisable, or as may be incidental to or necessary for the conduct of the
business of the Company, including, subject to the provisions of Section 9.7, to
enter into, make and perform agreements, undertakings and transactions with any
Officer, any Member or any shareholder, direct or indirect partner, member,
Affiliate or employee of any Officer or Member, or with any other Person having
any business, financial or other relationship with any Officer, any Member or
any direct or indirect partner, member, Affiliate or employee of any Officer or
Member;
(e) ______ to engage experts (other than the Accountants) selected by
the Officers on behalf of the Company as the Officers may deem necessary or
advisable and for such compensation as the Officers may determine;
(f) ______ to exercise all rights, powers, privileges and other
incidents of ownership or possession with respect to any Company Property,
including the voting of securities, participation in arrangements with
creditors, the institution and settlement or compromise of suits and
administrative proceedings and other similar matters;
(g) to maintain bank accounts and draw checks or other
orders for the payment of money and to maintain brokerage, mutual funds and
similar accounts;
(h) ______ to employ and dismiss consultants, ___ attorneys, ___ and
such other agents (other than the Accountants) and employees of the Company as
the Officers may deem necessary or advisable, and authorize any such agent or
employee to act for and on behalf of the Company;
(i) to pay, compromise, or otherwise adjust claims or demands
of or against the Company less than or equal to $100,000 in the aggregate in any
Fiscal Year;
(j) to deposit, withdraw, invest, pay, retain and distribute
the Company's funds in a manner consistent with the provisions of this
Agreement;
(k) ______ to take all action which may be necessary or appropriate for
the continuation of the Company's valid existence as a limited liability company
under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Members or
to enable the Company to conduct the business in which it is engaged;
(l) to invest temporarily Company Property in Cash Equivalents;
(m) ______ to purchase from other Persons, at the expense of the
Company, contracts of liability, casualty and other insurance that the Officers
deem advisable, appropriate or convenient for the protection of Company Property
or for any purpose convenient or beneficial to the Company;
(n) to execute and deliver any and all agreements, instruments
or other documents as are necessary or desirable to carry out the intentions
and purposes of the above duties and powers,
provided, however, that notwithstanding any other provision of this
Section 9.3, the Officers shall not have the authority, right or power to take
any action described in Section 8.4(a) unless such action is unanimously
approved by the Directors or described in Section 8.4(b) unless such action is
approved by a Majority Vote of the Directors or any action described in Section
9.5 unless such action is approved by the Managing Board, or to take any other
action that by the terms of this Agreement requires the approval of a specified
Percentage Interest unless such action is approved by the requisite Percentage
Interest and provided further that the delegation of authority in this Section
9.3 may be revoked in whole or in part at any time or from time to time by the
Members, acting by Majority Vote of the Members, or by the Managing Board (but
no such revocation shall affect the rights of a third party under a contract
entered into by the Company pursuant to such delegated authority prior to the
revocation thereof).
9.4 ______ Authority and Duties. The Chief Executive Officer of the
Company shall have the authority and responsibility to manage and oversee the
day to day business of the Company, subject to the limitations on such authority
in Sections 9.3 and 9.5 hereof, and as otherwise set out herein or in the
certificate of formation. Such powers and responsibilities shall be subject to
modification or limitation from time to time by the Managing Board. The duties
and authority of the other Officers of the Company shall be as determined from
time to time by the Chief Executive Officer, subject to modification by the
Managing Board.
9.5 ______ Limits on Power of Officers, Employees and Agents of the
Company. Notwithstanding anything in this Agreement to the contrary, no Officer,
employee or agent of the Company shall, unless specifically approved by the
Managing Board subsequent to the date of this Agreement, cause or permit the
Company to take any of the following actions except in each case:
(a) with the Majority Vote of the Directors:
(i) ______ make any expenditure for any item or activity in
any Fiscal Year exceeding $100,000 unless such item or activity is included in
the annual operating or capital budget of the Company then in effect;
(ii) _____ enter into or terminate any Material Contract;
provided, however, that notwithstanding any other provision of this Agreement,
any determination of the Company to terminate, amend or make any material
election, decision or determination, or grant any material waiver or consent
under any Ancillary Agreement shall be made by the Company in accordance with
Section 9.6;
(iii) ____ upon receipt of a legal opinion or memorandum by
Company counsel in support thereof, terminate or amend any material Governmental
Approval, authorization, license or permit necessary for the orderly and
profitable operation of the Company's business;
(iv) compromise or settle any material litigation or
arbitration proceeding, or settle any insurance claim for an amount in excess
of $100,000, except as set forth in Section 9.6;
(v) sell, assign, pledge, transfer or otherwise
dispose of any Company contract involving obligations in excess of $100,000 or
any interest therein;
(vi) _____ sell, lease, assign, pledge, transfer or otherwise
dispose of any asset or group of assets (other than Company products) in one
transaction or a series of related transactions, for consideration in excess of
$100,000 in the aggregate in any Fiscal Year;
(vii) create, incur, or assume any new indebtedness of the
Company for borrowed money;
(viii) ___ mortgage, encumber or create or incur any
Encumbrance on its assets, except as may be imposed by operation of law or in
connection with a financing permitted under other provisions of this Section
9.5;
(ix) _____ subject to Section 9.5(a)(i), make any investment
in any Person other than the Company and its Subsidiaries, except for (A)
commission, travel and similar advances to Officers and employees made in the
ordinary course of business, (B) other loans, advances and guarantees made to or
on behalf of Officers and employees in accordance with one or more business
policies approved by the Managing Board and (C) investments which are Cash
Equivalents;
(x) ______ subject to Section 9.5(a)(i), adopt, enter into or
become bound by any employee retirement, pension, compensation, benefit, bonus
or incentive plan, program or arrangement or any collective bargaining
agreement, or amend, modify or terminate (partially or completely) any employee
retirement, pension, compensation, benefit, bonus or incentive plan, program or
arrangement or any collective bargaining agreement, except as required by law;
(xi) _____ subject to Section 9.5(a)(i), enter into, amend,
modify or waive any provision of any employment or severance contract with any
Officer, increase the total annual compensation of any Officer, or pay any
annual bonus to any Officer;
(xii) ____ appoint or change the Accountants, or make any
material change of accounting or tax policies or elections. In that connection,
the initial Accountants for the Company shall be selected by the Managing Board.
Notwithstanding the foregoing restrictions on actions to be taken by the
Officers, in the event that the Accountants resign or the position otherwise
becomes vacant, and no new accounting firm has been approved by the Managing
Board within a period of sixty (60) days following the date of such resignation
or the initial date of such vacancy, then a new accounting firm shall be chosen
by the Chief Executive Officer, excluding the accounting firm which resigned
from such position as the Accountants;
(xiii) ___ subject to Section 9.5(a)(i), purchase, acquire or
obtain all or substantially all of the business or assets of another Person in
an amount in excess of $100,000 in the aggregate in any Fiscal Year of the
Company or other than in the ordinary course of business or purchase, acquire or
obtain any other assets in an amount in excess of $100,000 in the aggregate in
any Fiscal Year of the Company or other than in the ordinary course of business;
(xiv) enter into any joint ventures or partnerships or
establish any Subsidiaries;
(xv) subject to subsection (i) above, consolidate or
merge into or with any other Person, or enter into any similar business
combination transaction;
(xvi) ____ take any action that would cause the Company or any
of its Subsidiaries to become subject to the registration or reporting
requirements of the Securities Act, the Securities Exchange Act or any similar
securities laws of any other jurisdiction; grant any registration rights to any
Person; or list any securities on any securities exchange or over-the-counter
trading system;
(xvii) ___ become a party to any agreement which by its terms
restricts or prevents the Company's performance of the business contemplated by
Section 2.3, such as a non-compete or an exclusivity agreement;
(xviii) sell, transfer, assign, pledge, license or otherwise
dispose of any its material Software, Trademarks, Trade Secrets or other
intellectual property interests, or terminate or waive any confidentiality
agreement or restriction applicable or relating to such intellectual property
interests, other than to the Members and their Affiliates in accordance with
Article XI hereof;
(xix) ____ establish any reserves from Company funds,
including reserves with respect to Company operations and reserves for the
payment of Company obligations; or
(xx) enter into any contract or agreement to take any of
the foregoing actions.
9.6 ______ Litigation and Claims Involving Members; ___ Determinations
___ Regarding Ancillary Agreements. Notwithstanding any other provision of this
Agreement, in the event that (x) there is any action, suit, proceeding,
litigation or arbitration between the Company, on the one hand, and any Member
(or an Affiliate of a Member), on the other hand, or (y) there is any disputed
claim or demand (including any claim or demand relating to enforcing any remedy
under any Ancillary Agreement) by the Company against any Member (or an
Affiliate of a Member), or by any Member (or an Affiliate of a Member) against
the Company (the Member described in clause (x) or (y) being referred to herein
as the "Interested Member"), all determinations of the Company relating to such
action, suit, proceeding, litigation, arbitration, claim, demand (including all
determinations by the Company whether to institute, compromise or settle any
such action, suit, proceeding, litigation, arbitration, claim or demand and all
determinations by the Company relating to the prosecution or defense thereof)
shall be made by the Company in accordance with the directions of the Members
who are not the Interested Members. In the event there shall be more than two
Members who are not Interested Members, such directions shall be given by the
non-Interested Members who hold at least a majority of the total Percentage
Interests held by such non-Interested Members.
9.7 Transactions with Affiliates.
(a) ______ The Company shall not enter into, amend, modify or subject
to waiver any transaction or contract, or series of related transactions and
contracts with any Member or any Affiliate of any Member, unless (x) the
transaction, contract, amendment, modification or waiver, judged according to
the circumstances at the time of commitment, is fair to the Company, (y) the
transaction, contract, amendment, modification or waiver is approved by the
unanimous vote of all disinterested Members, or (z) the transaction, contract,
amendment, modification or waiver is approved by the unanimous vote of all
Directors not appointed by the Interested Member. A Member shall not be entitled
to challenge a transaction or contract, or an amendment, modification or waiver
in respect of the same, pursuant to the foregoing provisions unless within sixty
(60) days of such Member becoming aware of all material relevant facts regarding
the transaction, contract, amendment, modification or waiver and the
circumstances bearing upon the fairness thereof, such Member gives written
notice of its objection to the Company and the other Members.
(b) ______ The provisions of Section 9.7(a) shall not apply to the
entry of the Company into, or execution by the Company of, the Ancillary
Agreements, or to the transactions, agreements and instruments contemplated
thereby, or to loans permitted by Section 4.8.
(c) ______ Subject to the foregoing provisions of Section 9.7, any
Member or any Affiliate of a Member may be employed or retained by the Company
or any Affiliate of the Company in any capacity. The validity of any
transaction, agreement or payment involving the Company and the Members or any
of their respective Affiliates otherwise permitted by this Agreement shall not
be affected by reason of the relationship between the Members and such Affiliate
or the approval of such transaction, agreement or payment by the Members.
(d) ______ Until September 30, 2000, purchases of pre-press digital
products, equipment and systems, as well as finishing equipment and systems
integral to providing complete digital printing solutions to customers may be
made by the Company from Members so long as such items are purchased from the
Members at-cost (including any freight or taxes); provided, however, that this
provision shall only apply to purchases pursuant to this provision of this
Agreement, and not to any purchases pursuant to any of the Ancillary Agreements,
including but not limited to the Value Adding Distributor Agreement.
9.8 ______ Outside Businesses. Any Member or Affiliate thereof may
engage in or possess an interest in other business ventures of a nature or
description, independently or with others, similar or dissimilar to the business
of the Company, whether currently existing or hereafter created, and the Company
and the Members shall have no rights by virtue of this Agreement in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture shall not be deemed wrongful or improper. The Company and
each Member acknowledges that Xeikon is and will continue to be engaged in the
business of manufacturing, selling, servicing and supporting digital printing
systems within and outside the Territory. Except as otherwise provided
hereunder, no Member or Affiliate thereof shall be obligated to present any
particular opportunity to the Company even if such opportunity is of a character
that, if presented to the Company, could be taken by the Company, and, except as
otherwise provided hereunder, any Member of Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.
9.9 ______ Ancillary Agreements. Attached hereto as Exhibit B is a
Value Adding Distributor Agreement pertaining to the marketing of certain Xeikon
products and service contracts by Canopy. Attached hereto as Exhibit C is a
Payroll Services Agreement with Xeikon pertaining to the provision of payroll
services for certain employees being transferred from Xeikon to Canopy on July
1, 2000. Also attached as Exhibit D and made a part hereof is an Administrative
Services Agreement with PrimeSource covering provision of similar payroll
services, as well as the provision of offices and accounting and other
management services. Attached hereto as Exhibit E is an Employee Transition
Agreement with Agfa pertaining to the provision of payroll services for certain
employees being transferred from Agfa to Canopy on July 1, 2000.
ARTICLE X
FISCAL MATTERS; BOOKS AND RECORDS; OWNERSHIP OF COMPANY PROPERTY;
CONFIDENTIALITY PROVISIONS
10.1 _____ Company Bank Accounts; Investments. Capital Contributions,
revenues and any other Company funds shall be deposited by the Company in one or
more bank accounts established in the name of the Company at such financial
institution(s) as may be approved by the Managing Board, or shall be invested by
the Company, in accordance with parameters established by the Managing Board, in
furtherance of the purposes of the Company. Except as may otherwise be provided
in any other Ancillary Agreement or approved by the Managing Board: (i) No other
funds shall be deposited into Company bank accounts or commingled with Company
Property and (ii) funds deposited in the Company's bank accounts may be
withdrawn only to be invested in furtherance of the Company's purposes, to pay
Company debts or obligations or to be distributed to the Members pursuant to
this Agreement.
10.2 Records Required by Act; Right of Inspection.
(a) ______ During the term of the Company's existence, there shall be
maintained all records required to be kept pursuant to the Act, including a
current list of the names, addresses and Units held by each of the Members
(including the dates on which each of the Members became a Member), copies of
federal, state and local information or income tax returns for each of the
Company's tax years, copies of this Agreement and the Certificate of Formation,
including all amendments or restatements, correct and complete books and records
of account of the Company and the minute book of the Company.
(b) ______ An authorized representative of a Member may examine and
copy in person, at any reasonable time, all of the Company's books, records and
assets. Upon written or oral request by any Member made to the Company, the
Company shall provide to the Member without charge true copies of (i) this
Agreement and the Certificate of Formation and all amendments or restatements,
and (ii) any of the tax returns of the Company described above.
(c) ______ The parties agree that the internal and external auditors of
the Members and their relevant Affiliates shall have access to all financial and
accounting records of the Company. However, fees of third party audits shall not
be reimbursed by the Company, although the Company shall pay its own expenses
relating to such audits. The parties hereby further agree to the disclosure of
any financial information required to be disclosed by any Member in order to
comply with applicable Requirements of Law, including applicable regulations of
the Securities and Exchange Commission or any other regulatory authority. The
Company shall give notice to each Member, as promptly as practicable after
receiving any request for information or access to the records of the Company
from any third party, of the substance of such request and shall take all
actions reasonably requested by any Member lawfully to prevent the disclosure
of, or otherwise to safeguard, any information that such Member reasonably
believes to be confidential or sensitive.
(d) ______ Each Member agrees that the Company shall be subject to
inspection, examination or audit by any regulatory authority to the degree
necessary for the Company, each Member and its Affiliates to remain in
compliance with all laws, rules, regulations or interpretations thereof
applicable to it and that the Company and each Member will cooperate fully with
any such examination, inspection or audit.
10.3 _____ Company Books and Records. The Company shall keep proper and
complete records and books of account in which shall be entered fully and
accurately all transactions and other matters relative to the Company's business
as are usually entered into records and books of account maintained by Persons
engaged in businesses of a like character, including the Capital Account
established for each Member. The books and records shall at all times be
maintained at the principal office of the Company, or at such other place(s) as
may be approved by the Managing Board, and shall be open to the inspection and
examination of the Members or their duly authorized representatives for any
purpose during reasonable business hours and at the sole cost and expense of the
inspecting or examining Member. The Company shall maintain at its principal
office and make available to any Member or any designated representative of any
Member a list of names and addresses of, and Units owned by the Members.
10.4 Access to Information.
(a) ______ The Company shall send the following information to each
Person who was a Member at any time during such Fiscal Year:
(i) ______ As soon as available and in any event no later than
ninety (90) days after the end of each Fiscal Year, financial statements (which
shall be prepared in accordance with generally accepted accounting principles
but need not be audited), including a balance sheet and statements of income and
cash flows showing the cash distributed in such Fiscal Year and the balance of
such Member's Capital Account at the end of such Fiscal Year and the manner of
its calculation.
(ii) _____ As soon as available and in any event no later than
thirty (30) days after the end of each Fiscal Quarter, unaudited financial
statements (which need not be prepared in accordance with generally accepted
accounting principles or audited but shall be prepared in accordance with the
internal management accounting systems used by the Company in the ordinary
course of its business), including an income statement and balance sheet showing
the balance of such Member's Capital Account at the end of such Fiscal Quarter
and the manner of its calculation.
(iii) ____ As soon as available and in any event no later than
thirty (30) days after the end of each month, unaudited financial statements
(which need not be prepared in accordance with generally accepted accounting
principles or audited but shall be prepared in accordance with the internal
management accounting systems used by the Company in the ordinary course of its
business), including an income statement and balance sheet showing the balance
of such Member's Capital Account at the end of such month and the manner of its
calculation.
(iv) _____ As soon as available and in no event later than
thirty (30) days after the end of each month, such operating information
(including updated financial forecasts if and when prepared by the Company)
regarding the Company as may reasonably be requested by any Member.
(b) ______ Each Member and each member of the Managing Board shall be
entitled to full access, upon reasonable prior notice and during normal business
hours, to all Officers, employees, agents and accountants of the Company and to
all of their assets, properties, books and records, which the Members may
inspect and copy. The Company shall furnish each Member and each Director on the
Managing Board with all such information and data concerning the Business and
the Company as such Member or Director on the Managing Board reasonably may
request in connection with such investigation.
10.5 Fiscal Year. Unless otherwise established by the Members
by a Majority Vote, the Company's Fiscal Year shall be the calendar year
(the "Fiscal Year").
10.6 Tax Elections.
The Company shall make the following elections on the appropriate tax
returns:
(i) to adopt a year ending as contemplated by Section
10.5, if permitted by the Code;
(ii) to adopt the accrual method of accounting, if
permitted by the Code, and to keep the Company's books and records on such
method;
(iii) ____ to elect to amortize the organizational expenses of
the Company ratably over a period of sixty (60) months as permitted by Section
709(b) of the Code;
(iv) to elect under Section 195 of the Code to amortize
the startup expenses of the Company over a period of sixty (60) months; and
(v) ______ any other tax election not made with the filing of
any tax return of the Company (all other tax elections made on any tax return of
the Company shall be governed by Section 10.7) the Managing Board may deem
appropriate and in the best interests of the Members.
Neither the Company, the Managing Board nor any Member or Director may
make an election for the Company to be excluded from the application of the
provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar
provisions of applicable state law.
10.7 _____ Preparation of Tax Returns. The Accountants or such other
party designated by the Managing Board shall prepare all income tax returns
required to be prepared by the Company or with respect to its activities,
operations or properties and in doing so shall use its reasonable judgment with
respect to the timing and manner of preparing the same. Each Member shall be
provided a draft of such income tax return as soon as available and in no event
later than two hundred forty (240) days after the end of each Fiscal Year, which
Member may respond to the Accountants with comments within fifteen (15) days of
receipt thereof. The Accountants shall communicate such comments to the other
Members and shall in good faith consult with, and consider the views of, each
Member regarding preparation of such tax returns, reports and similar statements
and any tax elections made thereon and shall make a good faith attempt to reach
a consensus on all issues. In the event that a consensus cannot be reached on
any material issue relating to any substantive position to be taken on such tax
returns, such issue shall be submitted to a mutually acceptable independent
accounting firm of national reputation for a binding resolution of such issue,
provided, however, that in all events positions taken on the Company's tax
returns shall be consistent with the form of the transactions contemplated by
and reflected in this Agreement and the Ancillary Agreements.
10.8 _____ Tax Matters Partner. PS shall be the "Tax Matters Partner"
of the Company pursuant to Section 6231(a)(7) of the Code unless replaced by the
Managing Board. The Company shall reimburse the Tax Matters Partner for its
direct costs in carrying out its obligations as Tax Matters Partner pursuant to
this Section 10.8. The Tax Matters Partner shall take such action as may be
necessary to cause each other Member to become a "notice partner" within the
meaning of Section 6231(a)(8) of the Code. The Tax Matters Partner shall inform
each other Member of all significant matters that may come to its attention in
its capacity as Tax Matters Partner by giving notice thereof on or before the
fifth Business Day after becoming aware thereof and, within that time, shall
forward to each other Member copies of all significant written communications it
may receive in that capacity. The Tax Matters Partner may not take any action
contemplated by Sections 6222 through 6231 of the Code without the consent of
the Members, acting by a Majority Vote, but this sentence shall not limit the
right of the Tax Matters Partner, acting in its individual capacity, to take any
action left to the determination of an individual Member under Sections 6222
through 6231 of the Code. The Tax Matters Partner shall keep all Members fully
informed of the progress of any such examination, audit or other proceeding, and
any Member with a Percentage Interest of at least 10% (and any person that was a
Member with a Percentage Interest of at least 10% in the year to which such
examination, audit or other proceeding relates) shall have the right to
participate in such examination, audit or other proceeding.
10.9 Ownership and Title; No Partition.
(a) ______ Except as specifically provided in Article XI or in any
Ancillary Agreement, Company Property shall be deemed to be owned by the Company
as an entity, and no Member or Director, individually or collectively, shall
have any ownership interest in such Company Property or any portion thereof.
Title to any or all Company Property may be held in the name of the Company or
one or more nominees, as the Managing Board may determine. All Company Property
shall be recorded as the property of the Company on its books and records,
irrespective of the name in which legal title to such Company Property is held.
(b) ______ Each Member waives, until termination and winding up of the
Company pursuant to Article XI, any and all rights that it may have to maintain
an action for partition of Company Property.
10.10 Confidentiality Provisions.
(a) Definition of Proprietary Information. For the purpose
of this Agreement, "Proprietary Information" shall mean (as applicable) any
and all of the following:
(i) information relating to the Company or to any
Member or any of their Affiliates (as applicable) (each, along with the
Company, a "Protected Party");
(ii) _____ any data or information that is a trade secret or
competitively sensitive and not generally known to the public, including product
information, historical and projected financial information, operating data and
organizational and cost structures, customer information and customer lists,
contracts, marketing strategies, business plans and internal performance or
evaluation results relating to or arising from past, present or future business
activities of a Protected Party;
(iii) ____ any scientific or technical information, ___
design, process, ___ procedure, ___ formula, invention, discovery, system or
improvement that is commercially valuable and secret in the sense that its
confidentiality affords or may afford a Protected Party a competitive advantage;
(iv) _____ all confidential or proprietary concepts,
copyrightable subject matter, documentation, reports, data (no matter how
stored), data formats, specifications, computer software, source code, object
code, user manuals, financial models, screen displays and formats, software
performance results, flow charts, databases, inventions, know-how, show-how and
Trade Secrets, whether or not patentable or copyrightable; and
(v) ______ all memoranda, analyses, compilations, studies,
notes, records, drawings, manuals or other documents or materials, whether
prepared by a Protected Party or by others, which contain or otherwise reflect
any of the foregoing information.
(b) ______ Confidentiality Obligations and Use. Each Member agrees to
maintain and to cause each of its Affiliates to maintain, and agrees that the
Company will also be obligated to maintain and to cause each of its Affiliates
to maintain, in strict confidence, any Proprietary Information of a Protected
Party, including any Proprietary Information disclosed to such Person, pursuant
to this Agreement or any Ancillary Agreement or otherwise in connection with the
Company, for a period of two (2) years after such Member's or Affiliate's or the
Company's receipt of such Proprietary Information. Without limiting the
generality of the foregoing, each Member, the Company and their respective
Affiliates:
(i) ______ shall not disclose or permit any other Person
access to the Proprietary Information of a Protected Party, except that
disclosure and access shall be permitted to an employee, officer, director,
agent, lawyer (including external counsel), representative, external or internal
auditors, independent contractor or regulatory authority of a party or its
Affiliates requiring access to the same (i) in connection with the performance
by Member, the Company or any of their respective Affiliates of any of their
obligations under this Agreement or any Ancillary Agreement, or (ii) as
otherwise permitted in this Section 10.10;
(ii) _____ with regard to the Company or any of its
Affiliates, shall not use any Proprietary Information of a Protected Party for
any purpose other than the performance of this Agreement, any Ancillary
Agreement, the Exhibit C distributor agreement or as otherwise is necessary in
carrying on the business contemplated by Section 2.3, and not permit any other
Person to which it discloses any such Proprietary Information to use any such
Proprietary Information other than for such a permitted purpose, subject to an
appropriate confidentiality agreement;
(iii) ____ with regard to Member or any of its Affiliates,
shall not use any Proprietary Information of any other Member or any of its
Affiliates for any purpose other than the performance of this Agreement or any
Ancillary Agreement;
(iv) _____ may use any Proprietary Information of the Company
for any lawful purpose, so long as not to the detriment of the Company, and
provided that any disclosure of such Proprietary Information to any other Person
shall be subject to an appropriate confidentiality agreement;
(v) ______ shall ensure that its employees, ___ officers,
directors, agents, ___ representatives, external or internal auditors and
independent contractors are advised of the confidential nature of the
Proprietary Information of the other parties, provided that in any event each
Member, the Company and their respective Affiliates shall each be liable for any
breach of this Section 10.10 by their respective employees, officers, directors,
agents, representatives, external or internal auditors and independent
contractors, and provided, further, that any third party service provider shall
execute an appropriate confidentiality agreement;
(vi) _____ shall not alter or remove any identification,
copyright or proprietary rights notice which indicates the ownership of any part
of the Proprietary Information of the other parties; or
(vii) ____ upon obtaining any knowledge of any possession or
use of the Proprietary Information of any other party by any Person not
authorized to receive or use such Proprietary Information hereunder, shall
notify such other party promptly and in writing of the circumstances known to it
surrounding such possession or use.
(c) ______ Return or Destruction of Proprietary Information. Unless
otherwise provided in this Agreement or any Ancillary Agreement, each Member and
its Affiliates shall return to the applicable other Member or its Affiliates or
destroy, upon the dissolution of the Company, all or any requested portion of
the Proprietary Information of any such other Member and its Affiliates
disclosed to the Member or any of its Affiliates. The Company shall return to
the applicable Member or its Affiliates or destroy upon dissolution of the
Company, all or any requested portion of the Proprietary Information of such
Member and its Affiliates disclosed to the Company or any Affiliate thereof
(excluding any Proprietary Information the rights to which have been transferred
or licensed by such Member or any of its Affiliates to the Company pursuant to
any Ancillary Agreement, the Company's rights to which solely being as set forth
in such Ancillary Agreements). Rights to Proprietary Information of the Company
shall, upon dissolution of the Company continue to benefit from the protections
of this Section 10.10, which protection shall be enforceable by the recipients
of the rights to Proprietary Information.
(d) ______ Confidentiality of Agreements. Except as expressly
authorized in this Agreement or any Ancillary Agreement or as otherwise required
by law or stock exchange requirement, each Member shall keep confidential and
not disclose, and shall cause their respective Affiliates and directors,
officers and employees of such Member and its Affiliates to (and shall instruct
any of its other agents, advisors, consultants, other than counsel or auditors
who are bound by an ethical obligation of confidentiality, and independent
contractors to whom disclosure may be made in connection with the negotiation
and performance of this Agreement or any Ancillary Agreement to) keep
confidential and not disclose, and agrees that the Company shall keep
confidential and not disclose any of the terms and conditions of this Agreement
or any Ancillary Agreement to any third party without the unanimous approval of
the Members, provided that a Member, the Company and their Affiliates may
disclose the contents of any such agreement to (i) any potential Transferee
Member or Additional Equity Member, any potential acquirer of assets from the
Company, or any other party with whom the Company may enter into a business
combination, and (ii) investment or commercial bankers, and other financial
institutions or lenders, and their counsel (persons receiving information under
items (i) and (ii) shall receive and treat such information as the confidential
information of such Member, the Company and/or their Affiliates, as applicable)
in connection with performance of customary due diligence by such parties.
(e) ______ Exclusions. Nothing in this Section 10.10 shall restrict any
party in any way with respect to, or require the return or destruction of, any
Proprietary Information or information or data identical or similar to such
Proprietary Information but which:
(i) ______ the first party rightfully possessed (including
information which any Member or any of their respective Affiliates receives or
creates in its own capacity and not on behalf of or from the Company) before it
received the information from the other party;
(ii) subsequently becomes publicly available through no
fault of the first party;
(iii) ____ is subsequently furnished rightfully to the first
party by a third party (no Affiliate of any Member or the Company shall be
considered to be a third party) not known to be under restrictions on use or
disclosure;
(iv) is independently developed by an employee, agent
or contractor of the first party, as proven by its contemporaneous written
records;
(v) ______ is required to be disclosed by law, rules,
regulation or Court Order to any internal or external auditor, compliance
officer, governmental entity or other party, provided that the party subject to
such requirements notifies the party who disclosed such Proprietary Information
of such law, rule, regulation or Court Order prior to disclosure and complies
with reasonable instructions (so long as provided in a timely manner) from the
disclosing party designed to obtain confidential treatment for such materials;
(vi) _____ is disclosed in any proceeding to enforce a party's
rights under this Agreement or any Ancillary Agreement provided that all
reasonable measures to preserve the confidentiality of such information in any
such proceeding are taken by such party; or
(vii) ____ constitutes "residuals" resulting from access to or
work with such Proprietary Information. For the purpose of this Section
10.10(e)(vii), the term "residuals" shall mean information in non-tangible form
which is retained in the unaided memories of natural persons who have had access
to Proprietary Information, including ideas, concepts, know-how or techniques
contained therein. No Person shall have any obligation to limit or restrict the
assignment of such persons or to pay royalties for any use of residuals;
provided, however, that this Section 10.10(e)(vii) shall not be deemed to grant
any party a license under another party's Copyrights or patents.
(f) ______ Remedy. In the event of any breach of this Section 10.10 or
any provision of any Ancillary Agreement incorporating the provisions of this
Section by reference, the parties agree that the non-breaching party will suffer
irreparable harm and the total amount of monetary damages for any injury to the
non-breaching parties from any violation of this Section will be impossible to
calculate and will therefore be an inadequate remedy. Accordingly, the parties
agree that the non-breaching parties shall be entitled to temporary and
permanent injunctive relief against the breaching party, its Affiliates,
employees, officers, directors, agents, representatives or independent
contractors, and the other rights and remedies to which the non-breaching
parties may be entitled to at law, in equity and under this Agreement or any
such Ancillary Agreement for any violation of this Section. Except as otherwise
specifically provided herein, this Section 10.10 shall survive the expiration or
termination of the Ancillary Agreements and, in accordance with the provisions
of Section 10.10(c), dissolution and liquidation of the Company.
(g) ______ Construction. In the event of a conflict between the terms
of this Section 10.10 and any confidentiality or nondisclosure agreement entered
into in connection with any of the Ancillary Agreements, the prevailing terms
shall be those that provide the greatest degree of protection to the disclosing
party's Proprietary Information.
ARTICLE XI
DISSOLUTION AND WINDING UP
11.1 Events Causing Dissolution. The Company shall be
dissolved upon the first of the following events to occur:
(a) June 30, 2008; or
(b) the unanimous written consent of Members at any time to
dissolve and wind up the affairs of the Company; or
(c) ______ the Bankruptcy or dissolution of a Member, unless there is
at least one remaining Member and the business of the Company is continued by
the Majority Vote of the remaining Members within ninety (90) days following the
occurrence of any such event; or
(d) the loss of the distributor agreement (Exhibit B) by Canopy.
11.2 Winding Up. If the Company is dissolved pursuant to Section
11.1, the Company's affairs shall be wound up as soon as reasonably
practicable in the manner set forth below.
(a) ______ The winding up of the Company's ___ affairs ___ shall be ___
supervised by a liquidator ___ (the "Liquidator"). The Liquidator shall be the
Managing Board or, if the Members prefer (as evidenced by action by Members by a
Majority Vote), a liquidating committee selected by a Majority Vote of Members
so long as such committee includes at least one representative from each Member.
(b) ______ In winding up the affairs of the Company, the Liquidator
shall have full right and unlimited discretion, in the name of and for and on
behalf of the Company to:
(i) prosecute and defend civil, criminal or
administrative suits;
(ii) collect Company assets, including obligations owed
to the Company;
(iii) settle and close the Company's business;
(iv) _____ dispose of and convey all Company Property for
cash, and in connection therewith to determine the identity of the purchaser
(which may be a Member) and the time, manner and terms of any sale or sales of
Company Property, having due regard for the activity and condition of the
relevant market and general financial and economic conditions;
(v) pay all reasonable selling costs and other
expenses incurred in connection with the winding up out of the proceeds of the
disposition of Company Property;
(vi) _____ discharge the Company's known liabilities,
including payment of debts due Members and their Affiliates without priority or
preference among them in proportion to the respective amounts due and, if
necessary, to set up, for a period not to exceed five (5) years after the date
of dissolution, or as otherwise agreed upon by the parties, such cash reserves
as the Liquidator may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company;
(vii) make the distributions required by Section 11.4;
------------
(viii) ___ prepare, execute, acknowledge and file articles of
dissolution under the Act and any other certificates, tax returns or instruments
necessary or advisable under any applicable law to effect the winding up and
termination of the Company; and
(ix) _____ exercise, without further authorization or consent
of any of the parties hereto or their legal representatives or successors in
interest, all of the powers conferred upon the Managing Board under the terms of
this Agreement to the extent necessary or desirable in the good faith judgment
of the Liquidator to perform its duties and functions. The Liquidator (if not a
Director or the Managing Board) shall not be liable as a Director to the Members
and shall, while acting in such capacity on behalf of the Company, be entitled
to the indemnification rights set forth in Article XIII.
11.3 _____ Compensation of Liquidator. The Liquidator (other than the
Managing Board) appointed as provided herein shall be entitled to receive such
reasonable compensation for its services as shall be agreed upon by the
Liquidator and approved by the Members by a Majority Vote.
11.4 Distribution of Company Property and Proceeds of Sale Thereof.
-------------------------------------------------------------
(a) ______ Upon completion of all desired sales of Company Property,
and after payment of all selling costs and expenses, the Liquidator shall
distribute the proceeds of such sales, and any Company Property that is to be
distributed in kind, to the following groups in the following order of priority:
(i) ______ to satisfy the Company's liabilities to creditors,
including Members and Directors who are creditors, to the extent otherwise
permitted by law (other than for past due Company distributions), whether by
payment or establishment of reserves;
(ii) to satisfy the Company's obligations to Members
and former Members to pay past due Company distributions;
(iii) ____ to the Members, in accordance with the positive
balances in their respective Capital Accounts (determined after allocating all
items for all periods prior to and including the date of distribution, including
items relating to sales and distributions pursuant to this Article XI); and
(iv) any remaining amounts shall be allocated to the Members
in accordance with their respective Percentage Interests.
(b) ______ All distributions required under this Section 11.4 shall be
made to the Members by the end of the taxable year in which the liquidation
occurs or, if later, within ninety (90) days after the date of such liquidation.
(c) ______ The claims of each priority group specified above shall be
satisfied in full before satisfying any claims of a lower priority group. If the
assets available for disposition are insufficient to dispose of all of the
claims of a priority group, the available assets shall be distributed in
proportion to the amounts owed to each creditor or the respective Membership
Interests of each Member in such group.
11.5 _____ Final Audit. Within a reasonable time following the
completion of the liquidation, the Liquidator shall supply to each of the
Members a statement that shall set forth the assets and the liabilities of the
Company as of the date of complete liquidation and each Member's distributions
pursuant to Section 11.4.
11.6 _____ Deficit Capital Accounts. ___ Notwithstanding ___ anything
to the contrary ___ contained in this Agreement, and notwithstanding any custom
or rule of law to the contrary, to the extent that the deficit, if any, in the
Capital Account of any Member results from or is attributable to deductions and
losses of the Company (including non-cash items such as depreciation), or
distributions of money pursuant to this Agreement to all Members in proportion
to their respective Percentage Interests, upon dissolution of the Company such
deficit shall not be an asset of the Company and such Members shall not be
obligated to contribute such amount to the Company to bring the balance of such
Member's Capital Account to zero.
ARTICLE XII
DISPUTE RESOLUTION
12.1 _____ Hierarchy of Dispute Resolution Procedures. Except as
otherwise expressly set forth herein or in any Ancillary Agreement and except as
required by the Act, any dispute, controversy or claim (a "Dispute"), whether
based on contract, tort, statute, fraud, misrepresentation or any other legal
theory (i) between a Member and/or any Affiliate thereof, on the one hand, and
any other Member and/or any Affiliate thereof on the other hand (a "Direct
Dispute"), or (ii) between a Member and/or any Affiliate thereof, on the one
hand, and the Company on the other hand (an "Indirect Dispute"), that arises out
of or relates to this Agreement or any Ancillary Agreement or any obligations or
related services to be provided hereunder or thereunder, other than any dispute
as to valuation of an asset that is subject to an appraisal procedure hereunder
or thereunder, shall be resolved in accordance with the procedures described in
this Article XII. In the case of any Indirect Dispute, including any
determination on behalf of the Company as to whether the Company has any
potential claim against a Member or a related Affiliate, the parties hereby
acknowledge that the Members (and related Affiliates) other than the Member (and
related Affiliates) directly involved in such Indirect Dispute should be deemed
to be the real party in interest with respect to the Company's side of such
Indirect Dispute and accordingly agree that in such Indirect Dispute, the
non-interested Members, if any, shall have the authority to represent the
interests of the Company in such Indirect Dispute, acting by majority vote based
on the Percentage Interests held by such non-interested Members. In such a case,
the Company shall reimburse the parties representing its interests for any
reasonable attorneys' fees or other expenses reasonably incurred by such parties
in their representation of the Company's interests. In the case of either a
Direct Dispute or Indirect Dispute, the parties agree to establish an internal
hierarchy to facilitate resolution of any such Dispute as set forth below:
(a) ______ Upon written request of any Member, each Member shall
appoint a designated representative whose task it will be to meet for the
purpose of endeavoring to resolve such Dispute. The designated representatives
shall meet as often as the parties reasonably deem necessary to discuss the
problem in an effort to resolve the Dispute without the necessity of any formal
proceeding.
(b) ______ In the event that such representatives are unable to resolve
the Dispute within thirty (30) days after the Dispute is submitted to them, or
if after ten (10) days either party determines in good faith prior to the
expiration of such period that such representatives are unlikely to be able to
resolve such matter, the Dispute shall be immediately referred by written notice
to a Senior Officer of such Members for consideration. In the event that such
Senior Officers are unable to resolve such Dispute within ten (10) days after
the Dispute is submitted to them, then the Dispute shall be submitted to
arbitration in accordance with Section 12.2. Notwithstanding the ten (10) and
thirty (30) day periods specified above for attempts to resolve a Dispute by the
applicable representatives or officers of the parties at a particular level, if
one party at any time wishes to accelerate the interparty dispute resolution
process by referring the Dispute to a higher level prior to the end of such
stated time period, the other party shall endeavor to accommodate such request
so long as its interests are not materially prejudiced by such acceleration.
12.2 Arbitration.
(a) ______ If the parties are unable to resolve any Dispute as
contemplated by Section 12.1, such Dispute shall be submitted to mandatory and
binding arbitration at the election of such Member, for itself or its related
Affiliate (the "Disputing Party"). Except as otherwise provided in this Section
12.2, the arbitration shall be pursuant to the CPR Rules. The arbitration will
be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the Arbitrator may be entered by any court
having jurisdiction thereof.
(b) ______ To initiate the arbitration, the Disputing Party shall
notify the other party(ies) in writing (the "Arbitration Demand"), which shall
(i) describe in reasonable detail the nature of the Dispute, (ii) state the
amount of the claim, and (iii) specify the requested relief. Within fifteen (15)
days after the other party's receipt of the Arbitration Demand, such other party
shall file, and serve on the Disputing Party, a written statement (i) answering
the Claims set forth in the Arbitration Demand and including any affirmative
defenses of such party, and (ii) asserting any counterclaim, which shall (A)
describe in reasonable detail the nature of the Dispute relating to the
counterclaim, (B) state the amount of the counterclaim, and (C) specify the
requested relief. Within fifteen (15) days after the Disputing Party's receipt
of the other party's written statement, the Disputing Party shall file, and
serve on the other party, a written statement responding to the other party's
responses and affirmative defenses, if any. The arbitration will be heard by a
sole arbitrator chosen pursuant to the CPR Rules (the "Arbitrator"). The powers
of the Arbitrator shall in all cases be limited to the specific powers conferred
under the arbitration law of Illinois and accordingly, but not by way of
limitation, the Arbitrator may not award damages not provided for therein. The
law applicable to the validity of this arbitration clause, the conduct of the
arbitration, including any resort to a court for provisional remedies, the
enforcement of any award and any other question of arbitration law or procedure,
shall be the CPR Rules. The parties to this Agreement consent and submit to the
jurisdiction of the state and federal courts located in Chicago, Illinois for
any arbitration, and agree that such courts shall be an appropriate forum with
respect to any arbitration.
(c) ______ The arbitration hearing shall be held in the Chicago,
Illinois area, or such other neutral location as the parties may mutually agree
upon. The Arbitrator is specifically authorized to render partial or full
summary judgment as provided for in the Federal Rules of Civil Procedure. In the
event summary judgment or partial summary judgment is granted, the
non-prevailing party may not raise as a basis for a motion to vacate an award
that the Arbitrator failed or refused to consider evidence bearing on the
dismissed claim(s) or issue(s). The Federal Rules of Evidence shall apply to the
arbitration hearing. The party bringing a particular claim or asserting an
affirmative defense will have the burden of proof with respect thereto. The
arbitration proceedings and all testimony, filings, documents and information
relating to or presented during the arbitration proceedings shall be deemed to
be information subject to the confidentiality provisions of this Agreement. The
Arbitrator will have no power or authority, under the CPR Rules or otherwise, to
relieve the parties from their agreement hereunder to arbitrate or otherwise to
amend or disregard any provision of this Agreement, including the provisions of
this Article XII.
(d) ______ At the time of granting or denying a motion for summary
judgment as provided for in Section 12.2(c) or any other final judgment and
within fifteen (15) days after the closing of the arbitration hearing, the
Arbitrator shall prepare and distribute to the parties a writing setting forth
the Arbitrator's finding of facts and conclusions of law relating to the
Dispute, including the reasons for the giving or denial of any award. The
findings and conclusions and the award, if any, shall be deemed to be
information subject to the confidentiality provisions of this Agreement.
(e) ______ The Arbitrator is instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case management
initiative and control to effect an efficient and expeditious resolution of the
Dispute. The Arbitrator is authorized to issue monetary sanctions against either
party if, upon a showing of good cause, such party is unreasonably delaying the
proceeding.
(f) ______ Any award rendered by the Arbitrator will be final,
conclusive and binding upon the parties and any judgment hereon may be entered
and enforced in any court of competent jurisdiction.
(g) ______ In connection with any arbitration pursuant to this
Agreement or to confirm, vacate or enforce any award rendered by the Arbitrator,
the prevailing party in such a proceeding will be entitled to recover reasonable
attorneys' fees and expenses incurred in connection with such proceeding in such
amount as the Arbitrator deems equitable, in addition to any other relief to
which it may be entitled.
12.3 _____ Judicial Procedure. Nothing in Section 12.1 or 12.2 shall be
construed to prevent any party from seeking from a court a temporary restraining
order or other temporary or preliminary injunctive or other relief pending final
resolution of a Dispute pursuant to such Sections. In addition, nothing in this
Article shall be construed to prevent a party from instituting judicial
proceedings at any time to avoid the expiration of any applicable limitations
period or to preserve a superior position with respect to other creditors.
12.4 _____ Obligation to Continue Performance Pending Resolution of a
Dispute. Notwithstanding the foregoing provisions of this Article, the Members
agree to continue performing, and to cause their respective Affiliates to
continue performing, their respective obligations under this Agreement and the
Ancillary Agreements pending the resolution of any Dispute that is being
resolved hereunder unless and until such obligations are terminated or expire in
accordance with the provisions of this Agreement or such Ancillary Agreements,
unless such continued performance shall be forbidden or restricted by a court,
arbitrator or other tribunal.
12.5 _____ No Conflict. The Members agree that a law firm or attorney
that represents the Company may simultaneously represent a Member in a matter
adverse to another Member, and each Member consents to any such representation
and waives all objections to such representation on the basis of conflict of
interest.
ARTICLE XIII
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS; INSURANCE
13.1 _____ Right to Indemnification. Each individual who was or is made
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he or she or a Person
of whom he or she is the legal representative is or was a Director, an Officer
or is or was serving at the request of the Company as a former Director,
Officer, Director, employee or agent of the Company (hereinafter an
"Indemnitee"), whether the basis of such Proceeding is an alleged action in an
official capacity as a Director, Officer, manager, employee or agent or in any
other capacity while serving as a Director, Officer, manager, employee or agent,
shall be indemnified and held harmless by the Company against all Damages and
Expenses reasonably incurred by such Indemnitee in connection therewith, except
to the extent such Damages and Expenses are caused by, arise out of, or relate
to any receipt of a financial benefit to which such Indemnitee was not entitled
or any knowing violation of any Requirements of Law; provided, however, that the
Company shall indemnify any such Indemnitee seeking indemnification in
connection with a Proceeding (or part thereof) initiated by such Indemnitee only
if such Proceeding (or part thereof) was authorized by the Managing Board.
13.2 _____ Right to Advancement of Expenses. The right to
indemnification conferred in Section 13.1 shall include the right to be paid by
the Company the expenses (including reasonable attorneys' fees and
disbursements) incurred in defending any such proceeding in advance of its final
disposition; provided, however, that an advancement of expenses incurred by an
Indemnitee shall be made only upon delivery to the Company of an undertaking, by
or on behalf of such Indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such Indemnitee is not entitled to be indemnified
for such expenses under this Section 13.2 or otherwise.
13.3 _____ Non-Exclusivity of Rights. The right to indemnification and
the advancement of expenses conferred in this Article XIII shall not be
exclusive of any other right which any Person may have or hereafter acquire
under any statute, provision of this Agreement or any other agreement or
otherwise.
13.4 _____ Insurance. The Company may maintain insurance, at its
expense, to protect itself and any Director, Officer, employee or agent of the
Company against any expense, liability or loss, whether or not the Company would
have the power to indemnify such Person against such expense, liability or loss
under the Act.
13.5 _____ Indemnification of Employees and Agents of the Company. The
Company may, to the extent authorized from time to time by its Managing Board,
grant rights to indemnification, and rights to the advancement of expenses, to
any employee or agent of the Company to the fullest extent of the provisions of
this Article with respect to the indemnification and advancement of expenses of
Directors and Officers.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 _____ Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
14.2 _____ Entire Agreement. This Agreement, the Certificate of
Formation, and the Ancillary Agreements and the Exhibits and Schedules hereto
and thereto constitute the entire agreement among the parties hereto and their
respective Affiliates and contain all of the agreements among such parties with
respect to the subject matter hereof and thereof. This Agreement, the
Certificate of Formation and the Ancillary Agreements and the Exhibits and
Schedules hereto and thereto supersede any and all other agreements, either oral
or written, between such parties with respect to the subject matter hereof and
thereof.
14.3 _____ Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
14.4 _____ Amendment. This Agreement and the Certificate of Formation
may be amended only by a written agreement signed by all Members, provided,
however, that there shall be no amendment to this Agreement or the Certificate
of Formation which would have a Material Adverse Effect upon a Member unless the
amendment: (i) is consented to by such Member or (ii) by its terms applies to
all Members and could have a disproportionately adverse effect upon such Member
only due to some attribute of the Member itself (other than the Member's status
as such), unless such attribute is specifically referred to in the amendment.
Except with regard to an amendment that mandates the return of previously
distributed amounts, there shall be no amendment that (x) increases a Member's
obligation to make capital contributions to the Company or (y) imposes personal
liability upon a Member for any debts or obligations of the Company unless, in
each case, the amendment is consented to by such Member.
14.5 _____ Investment Representations. Each of the undersigned Members
understands (a) that the Units issued pursuant to this Agreement have not been
registered under the Securities Act or any state securities laws (the
"Securities Acts") because the Company is issuing these Units in reliance upon
the exemptions from the registration requirements of the Securities Acts and,
therefore, cannot be sold, transferred or otherwise disposed of unless
registered under the Securities Acts or an exemption therefrom is available (b)
that the Company has relied upon the fact that the Units are to be held by each
Member for investment, and (c) that exemption from registrations would not be
available if the Units were acquired by a Member with a view to distribution.
Accordingly, each Member hereby confirms to the Company that such
Member is acquiring its Units for such own Member's account, for investment and
not with a view to the resale or distribution thereof without complying with an
exemption registration under the Securities Acts. Each Member agrees not to
transfer, sell or offer for sale any portion of the Units unless there is an
effective registration or other qualification relating thereto under the
Securities Acts or unless the holder of the Units delivers to the Company an
opinion of counsel, satisfactory to the Company, that such registration or other
qualification under such Securities Acts is not required in connection with such
transfer, offer or sale. Each Member understands that the Company is under no
obligation to register the Units or to assist such Member in complying with any
exemption from registration under the Securities Acts if such Member should at a
later date wish to dispose of the Units. Furthermore, each Member realizes that
the Units are unlikely to qualify for disposition under Rule 144 of the
Securities and Exchange Commission.
Prior to acquiring Units, each Member has made an investigation of the
Company and its business and the Company has made available to each such Member
all information with respect thereto which such Member needed to make an
informed decision to acquire the Units. Each Member considers itself to possess
experience and sophistication as an investor which are adequate for the
evaluation of the merits and risks of such Member's investment in Units.
14.6 Binding Effect. Subject to the provisions of this Agreement
relating to transferability, this Agreement will be binding upon and shall
inure to the benefit of the parties, and their respective successors and
assigns.
14.7 _____ No Third Party Beneficiaries. Except as otherwise provided
herein, no person other than a party hereto shall have any rights or remedies
under this Agreement. Without limiting the foregoing, any obligations of the
Members to satisfy their respective obligations to make Capital Contribution
under this Agreement is an agreement only among the Members and, except as
expressly provided in the Formation Agreement, no other Person shall have any
rights to enforce such obligations.
14.8 _____ Governing Law. This Agreement shall be governed by and
construed by and construed in accordance with the internal laws of the State of
Delaware without regard to its conflict of laws doctrine. In particular, this
Agreement is intended to comply with the requirements of the Act and the
Certificate of Formation in the event of a direct conflict between the
provisions of this Agreement and the mandatory provisions of the Act or any
provision of the Certificate of Formation, the Act and the Certificate of
Formation, in that order of priority, will control.
14.9 _____ Waiver. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
14.10 ____ Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally, by courier or confirmed facsimile transmission or
mailed (first-class postage prepaid) to the parties at the addresses or
facsimile numbers set forth below:
If to PS, to:
PrimeSource Corporation
Fairway Corporate Center
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with a copy to:
PrimeSource Corporation
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If to Xeikon, to:
Xeikon America, Inc.
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Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone Number:(▇▇▇)▇▇▇-▇▇▇▇
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and with copies to:
Xeikon N.V.
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Attention: Mr. Alfons Buts
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Telecopy Number: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
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Attention: ▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to Transferee Members or Additional Equity Members shall be
given in accordance with the notice instructions provided by such Members to the
Company and other Members at the time of their admission to the Company.
All such notices and other communications will (x) if delivered
personally or by courier to the address provided in this Section, be deemed
given upon delivery, (y) if delivered by facsimile transmission to the facsimile
number provided in this Section, be deemed given when receipt of transmission
has been orally confirmed by the sending party, and (z) if delivered by first
class or registered mail in the manner described above to the address as
provided in this Section, be deemed given five (5) Business Days after deposit
in the United States mail (in each case regardless of whether such notice,
request or other communication is received by any other Person to whom a copy of
such notice is to be delivered pursuant to this Section). Any party from time to
time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other relevant parties.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the dates set forth
below opposite their names, to be effective on the date first above written.
MEMBERS:
PRIMESOURCE CORPORATION
By
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Date: July 1, 2000
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title President
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XEIKON AMERICA, INC.
By
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Date: July 1, 2000
Name ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title President & CEO
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EXHIBIT A
DEFINITIONS
"Accountants" means such firm of independent public accountants as
shall be engaged by the Company to, among other things, review or audit the
Company's annual financial statements.
"Act" means the Delaware Limited Liability Company Act as it may be
amended from time to time, and any successor to such Act.
"Additional Capital Contribution" means all Capital Contributions, in
whatever form, made to and accepted by the Company as permitted in the Operating
Agreement, other than the Initial Capital Contributions. Such capital
contributions include contributions made by Additional Equity Members in
connection with their admission.
"Additional Equity Member" means an additional Member admitted to the
Company in accordance with the terms of this Agreement and who makes a Capital
Contribution to the Company in connection with its admission to the Company.
"Adjusted Capital Account" means, with respect to any Member of the
Company, the balance, if any, in such Member's Capital Account as of the end of
the relevant taxable year, after: (i) crediting to such Capital Account any
amounts that such Member is obligated to restore pursuant to Section
1.704-1(b)(2)(ii)(c) of the Treasury Regulations (or is deemed to be obligated
to restore) pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Treasury Regulations) and (ii) debiting to such Capital
Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of
the Treasury Regulations.
"Adjusted Property" means any property the Gross Asset Value of which
has been adjusted.
"Affiliate" means, when used with reference to a specific Person, any
Person that, directly or indirectly, or through one or more intermediaries, Owns
or Controls, is Owned or Controlled by, or is under common ownership or common
control with, such specific Person.
"Agreed Value" means the fair market value of property that, in the
case of property contributed at the Effective Date to the Company, is agreed
upon by both PS and Xeikon, and in the case of property contributed after the
Effective Date, is as determined by the Managing Board and agreed to by the
contributing Member using any reasonable method of valuation.
"Ancillary Agreements" means the agreements with PS and Xeikon
regarding facilities, employees or services.
"Approved Pledge" has the meaning specified at Section 6.3 of the
Operating Agreement.
"Arbitration Demand" has the meaning specified in Section 12.2(b) of
the Operating Agreement.
"Arbitrator" has the meaning specified in Section 12.2(b) of the
Operating Agreement.
"Bankruptcy Code" means Title 11 of the United States Code, as now in
effect or as hereafter amended.
"Bankruptcy Law" means, with respect to any Person, (i) the Bankruptcy
Code and the rules and regulations promulgated thereunder or (ii) any other law
in any jurisdiction applicable to such Person relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement or winding-up,
or composition or readjustment of debts of such Person.
"Bankruptcy" means, with respect to any Person, the happening of any
one or more of the following events: (a) a Person (or, in the case of any Person
which is a partnership, any general partner thereof): (i) makes an assignment
for the benefit of creditors; (ii) files a voluntary petition in bankruptcy;
(iii) is adjudged a bankrupt or insolvent, or there has been entered against
such Person (or general partner) an order for relief, in any bankruptcy or
insolvency proceeding; (iv) files a petition or answer seeking in respect of
such Person (or general partner) any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation; (v) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against such Person (or
such general partner) in any proceeding of a nature described above; or (vi)
seeks, consents or acquiesces in the appointment of a trustee, receiver,
conservator or liquidator of such Person (or such general partner) or of all or
any substantial part of such Person's (or such general partner's) properties; or
(b) 120 days after the commencement of any proceeding against any Person (or
such general partner) seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, if such proceeding has not been dismissed, or within 90 days
after the appointment without such Person's (or such general partner's) consent
or acquiescence of a trustee, receiver or liquidator of the Person (or such
general partner) or of all or any substantial part of such Person's (or such
general partner's) properties, if such appointment is not vacated or stayed, or
within 90 days after the expiration of any such stay, if such appointment is not
vacated.
"Business Day" means any day other than a Saturday or Sunday, the
period from December 24 through January 1, or a day on which the FedWire System
operated by the Federal Reserve Bank of New York is closed.
"Capital Account" means, with respect to any Member, the capital
account maintained for such Member in accordance with the following provisions:
(a) ______ To each Member's Capital Account there shall be credited
such Member's Capital Contributions, and such Member's distributive share of
Profits and any items in the nature of income which are specifically allocated
pursuant to Article V of the Operating Agreement and, without duplication, the
amount of any liabilities of the Company assumed by such Member or which are
secured by any property distributed by the Company to such Member.
(b) ______ To each Member's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Property distributed to such
Member pursuant to any provision of this Agreement, such Member's distributive
share of Losses and any items in the nature of losses, deductions or credits
which are specially allocated pursuant to Article V of the Operating Agreement
and, without duplication, 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.
"Capital Contribution" means, from time to time, the total amount of
cash and the Agreed Value of other property, if any, including Initial Capital
Contributions and Additional Capital Contributions, contributed to the Company
by all the Members or any one Member of the Company, as the case may be.
"Capital Notice" has the meaning specified in Section 4.3 of the
Operating Agreement.
"Capitalized Lease Obligations" of any Person means, as of any date as
of which the amount thereof is to be determined, the amount of liability
capitalized or disclosed (or which should be capitalized or disclosed) in
accordance with generally accepted accounting principles consistently applied in
a balance sheet of such Person in respect of any lease or any property (whether
real, personal or mixed) by that Person as lessee which would, in conformity
with generally accepted accounting principles consistently applied, be required
to be accounted for as a capital lease on such Person's balance sheet.
"Cash Equivalents" means cash, accounts with banks, securities
brokerage companies, or other financial institution, certificates of deposit,
and other items that would be treated as cash or cash equivalents under GAAP.
"Certificate of Formation" means the Certificate of Formation of the
Company described in Section 2.1 of the Operating Agreement.
"Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.
"Company" means Canopy, LLC, the Delaware limited liability company
formed by the filing of the Certificate of Formation, as constituted from time
to time.
"Company Property" means all interests, properties, whether real or
personal, and rights of any type owned or held by the Company, whether owned or
held by the Company at the date of its formation or thereafter acquired.
"Consequential Damages" means any liability, loss, expense or punitive
damage, whether in an action arising out of breach of warranty, breach of
contract, delay, negligence, strict tort liability or otherwise, for indirect,
special, reliance, incidental or consequential damages or commercial loss,
injury or damage, including loss of revenues, profits or use of capital or
production.
"Contributed Property" means property (including tangible assets,
licenses, or other property rights) or other consideration (other than cash)
contributed by a Member to the Company as a Capital Contribution.
"Contributing Member" has the meaning specified in Section 4.5(a) of
the Operating Agreement.
"Control" means the power to direct the management or affairs of a
Person, but only for so long as such power continues.
"Copyrights" means United States and foreign copyrights, whether
registered or unregistered, and pending applications to register the same.
"Costs" means all direct costs, expenses or charges plus all indirect
costs, expenses or charges, including allocations of overhead, that are
reasonably allocable.
"Court Order" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal or other Governmental
Body and any award in any arbitration proceeding.
"CPR Rules" means the CPR Non-Administered Arbitration Rules as in
effect from time to time, promulgated by the CPR Institute for Dispute
Resolution or successor organization.
"Damages" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, deficiencies
or other charges.
"Direct Dispute" has the meaning specified in Section 12.1 of the
Operating Agreement.
"Directors" means at any time the Persons designated and elected in
accordance with Section 8.2 of the Operating Agreement to serve on the Managing
Board.
"Dispute" has the meaning specified in Section 12.1 of the Operating
Agreement.
"Disputing Party" has the meaning specified in Section 12.2 of the
Operating Agreement.
"Distributable Funds" means all funds received (or released from
reserves) by the Company (including all interest income from temporary
investments made by the Company pending distribution of the foregoing proceeds)
that are, at the discretion of the Managing Board, available for distribution to
the Members; provided, however, that Distributable Funds do not include
Additional Capital Contributions, the proceeds of any other equity financing, or
the proceeds of any debt financing or refinancing.
"Effective Date" means July 1, 2000.
"Electing Member Offerees" has the meaning specified in Section 6.2(b)
of the Operating Agreement.
"Employment Related Claim," as used with respect to any Member, means:
(a) any claim, whether groundless or otherwise, arising out of, incident to or
in connection with, in whole or in part, (i) the death or bodily injury of any
agent, servant, employee of such party to the extent caused or contributed to by
such party, its agents, servants, employees or (ii) the damage, loss or
destruction of any real or personal property owned or leased by the other party
caused or contributed to by such first party, its agents, servants, employees;
and (b) any claim, whether groundless or otherwise, arising out of, incident to
or in connection with, in whole or in part, such first party's employment of or
contracting with its agents, servants and employees, including any claims for
employment payments, employment-related benefits or termination benefits to such
party's agents, servants and employees and any discrimination, contract or tort
claims concerning or involving such party's agents, servants and employees.
"Encumbrance" means any lien (including any tax lien), claim, charge,
security interest, mortgage, pledge, easement, conditional sale or title
retention agreement, defect in title, covenant or other restriction of any kind.
"Expenses" means any and all reasonable expenses incurred in connection
with investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified under the applicable agreement (including
court filing fees, court costs, arbitration fees or costs, witness fees and
reasonable fees and expenses of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
"Fiscal Year" has the meaning specified in Section 10.5 of the
Operating Agreement.
"Governmental Approval" means any consent, approval or authorization
of, or declaration, filing or registration with, or notice to, or order or
action of, any court, administrative agency or other Governmental Body.
"Governmental Body" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"Gross Asset Value" means, with respect to any asset, the adjusted
basis of the asset for federal income tax purposes, adjusted as follows:
(a) ______ The initial Gross Asset Value of any asset
contributed (or deemed contributed under Regulations ss. 1.708-1(b)(1)(iv)) by a
Member of the Company to the Company will be the Agreed Value of the asset on
the date of the contribution.
(b) ______ The Gross Asset Values of all Company Property will
be adjusted to equal the respective fair market values:
(i) if the Members of the Company by Majority
Vote determine an adjustment is
necessary or appropriate to reflect the relative economic interests of the
Members in the Company, as of (1) the acquisition of an additional Membership
Interest in the Company by any new or existing Member of the Company in exchange
for more than a de minimis capital contribution; or (2) the distribution by the
Company to a Member of the Company of more than a de minimis amount of Company
Property as consideration for a Membership Interest in the Company; and
(ii) as of the liquidation of the
Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Treasury Regulations or the incorporation of the Company.
(c) ______ The Gross Asset Value of any Company Property
distributed to any Member of the Company will be the fair market value of the
property on the date of distribution.
(d) ______ The Gross Asset Values of Company Property will be
increased or decreased to reflect any adjustment to the adjusted basis of the
assets under Code Section 734(b) or 743(b), but only to the extent that the
adjustment is taken into account in determining Capital Accounts under Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations, provided that Gross Asset
Values will not be adjusted under this paragraph (d) to the extent that the
Members of the Company by Majority Vote determine that an adjustment under
paragraph (b) is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment under this paragraph (d).
(e) ______ After the Gross Asset Value of any asset has been
determined or adjusted under paragraphs (a), (b) or (d), Gross Asset Value will
be adjusted by subsequent depreciation taken into account with respect to the
asset for purposes of computing Profit or Loss.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indemnitee" has the meaning specified at Section 13.1 of the Operating
Agreement.
"Indirect Dispute" has the meaning specified in Section 12.1 of the
Operating Agreement.
"Initial Capital Contribution" means the Capital Contributions to be
made by PS and Xeikon pursuant to Section 4.1 of the Operating Agreement.
"Initial Members" of the Company means PS and Xeikon.
"Interested Member" has the meaning specified in Section 9.6 of the
Operating Agreement.
"Liquidator" has the meaning specified in Section 11.2(a) of the
Operating Agreement.
"Majority Vote" means (a) with respect to actions to be taken by the
Members of the Company, the affirmative vote or consent of Members of the
Company holding at least a majority of the Units then outstanding, and (b) with
respect to the actions to be taken by the Managing Board of the Company, the
affirmative vote or consent of a majority of the Directors.
"Manager" has the meaning attributed to that term in the Act.
"Managing Board" has the meaning specified in Section 8.1 of the
Operating Agreement.
"Material Adverse Effect" means a material adverse effect on (i) the
business of the Company or (ii) the ability of any Member or any Affiliate
thereof to perform their respective obligations under this Agreement or any of
the Ancillary Agreements.
"Material Contract" means (a) any material license agreement to which
the Company or any of its Affiliates is a party either as licensee or as
licensor, (b) any of the Ancillary Agreements, (c) any contract which involves
payments either to or by the Company or any of its Affiliates in excess of
$100,000 in any Fiscal Year, other than normal distributor agreements with
vendors, (d) any contract to which the Company or one of its Affiliates is a
party with a term of more than one year, (e) any contract that includes an
exclusivity or non-compete provision that would restrict any material activities
of the Company and (f) any insurance contract of the Company or any of its
Affiliates in excess of $1,000,000.
"Member Exercise Notice" has the meaning specified in Section 6.2(b) of
the Operating Agreement.
"Member Nonrecourse Debt" means any liability (or portion thereof) of
the Company that constitutes debt which, by its terms, is nonrecourse to the
Company and the Members of the Company for purposes of Section 1.1001-2 of the
Treasury Regulations, but for which a Member of the Company bears the economic
risk of loss, as determined under Section 1.704-2(b)(4) of the Treasury
Regulations.
"Member Offer Notice" has the meaning specified in Section 6.2(b) of
the Operating Agreement.
"Member Offer Period" has the meaning specified in Section 6.2(b) of
the Operating Agreement.
"Member Offered Interest" has the meaning specified in Section 6.2(b)
of the Operating Agreement.
"Member Offerees" has the meaning specified in Section 6.2(b) of the
Operating Agreement.
"Member Right of First Refusal" has the meaning specified in Section
6.2(a) of the Operating Agreement.
"Member Transaction" has the meaning specified in Section 5.14 of the
Operating Agreement.
"Members" means at any time the Persons who own Membership Interests in
the Company.
"Minimum Gain" means the amount determined by computing with respect to
each Nonrecourse Liability of the Company the amount of gain, if any, that would
be realized by the Company if it disposed of the property securing such
liability in full satisfaction thereof, and by then aggregating the amounts so
computed.
"Non-Contributing Member" has the meaning specified in Section 4.5(a)
of the Operating Agreement.
"Nonrecourse Liability" means a liability (or that portion of a
liability) with respect to which no Member of the Company bears the economic
risk of loss as determined under Section 1.704-2(b)(3) of the Treasury
Regulations.
"Notification" means a notice in writing that, where applicable,
complies with the notification procedures of Section 14.10 of the Operating
Agreement.
"Officer" means any officer of the Company appointed directly by the
Managing Board of the Company or whose appointment is approved by the Managing
Board.
"Operating Agreement" means the Canopy, LLC, Limited Liability Company
Agreement among initially PS and Xeikon, to which agreement these definitions
are attached, as amended from time to time in accordance with the terms thereof.
"Own" or "Ownership" means to own, or the possession of beneficial
ownership of, more than fifty percent (50%) of the equity securities or interest
of the Person, but only so long as such ownership continues.
"Percentage Interest" means, with respect to any Member as of any date,
the ratio (expressed as a percentage) of the numbers of Units held by such
Member on such date to the aggregate Units held by all Members as such date. The
Percentage Interest of each Member immediately after the Effective Date is set
forth on Schedule I. Schedule I shall be amended from time to time to reflect
the adjustments to the Percentage Interests.
"Permitted Encumbrances" means (a) Encumbrances for taxes and other
governmental charges and assessments which are not yet due and payable, (b)
Encumbrances of landlords and Encumbrances of carriers, warehousemen, mechanics
and materialmen and other liens arising in the ordinary course of business for
sums not yet due and payable and (c) other Encumbrances on property which are
not material in amount or do not materially detract from the value of or
materially impair the existing use of property affected by such Encumbrance.
"Person" means any general partnership, limited partnership,
corporation, limited liability company, joint venture, trust, business trust,
governmental agency, cooperative, association, individual or other entity, and
the heirs, executors, administrators, legal representatives, successors and
assigns of such Person as the context may require.
"Proceeding" has the meaning specified in Section 13.1 of the Operating
Agreement.
"Profit" or "Loss" means, for each Fiscal Year or other period, an
amount equal to the Company's net taxable income or loss for such year or
period, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(a) _____ Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing Profit or
Loss shall be added to such taxable income or loss;
(b) ______ Any Section 705(a)(2)(B) expenditures not otherwise
taken into account in computing Profit or Loss, shall be subtracted from such
taxable income or loss;
(c) ______ In the event the Gross Asset Value of any Company
Property is adjusted pursuant to Section 1.704-1(b)(2)(iv)(f) of the Treasury
Regulations or other pertinent sections of such Treasury Regulations or this
Agreement, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such property for purposes of computing Profit and
Loss;
(d) ______ 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 with reference to the Gross
Asset Value of Company Property (if different from its adjusted tax basis)
pursuant to Section 1.704-1(b)(2)(iv)(g) for such Fiscal Year or other period;
(e) ______ Gain or loss resulting from any disposition of
Adjusted Property shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property may differ from its Gross Asset Value; and
(f) ______ Notwithstanding any other provisions, any items
which are specially allocated pursuant to Sections 5.3, 5.4, 5.5, 5.8, and 5.9
of the Operating Agreement shall not be taken into account in computing Profit
or Loss.
"Proprietary Information" has the meaning specified in Section 10.10 of
the Operating Agreement.
"Protected Party" has the meaning specified in Section 10.10 of the
Operating Agreement.
"Public Offering" means a registered offering of securities to the
public under the Securities Act.
"Regulatory Allocations" mean, with respect to any Fiscal Year, any
allocations made pursuant to the provisions of Sections 5.3, 5.4, 5.5, 5.8, and
5.9 of the Operating Agreement.
"Requirements of Law" means any foreign, federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any court or Governmental Body or common law or any consent
decree or settlement agreement entered into with any Governmental Body.
"Sale" means any change in the record ownership of Units including any
transfer that would result in any Member ceasing to own its Units, whether made
voluntarily or involuntarily by operation of law.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Sell" means the undertaking of a Sale.
"Senior Officer" means a senior officer of a Member who is not a member
of the Managing Board of the Company.
"Software" means any computer software programs, in object code or
source code, and includes all manuals and documentation related thereto.
"Subsidiary" of any Person means any Person in which such first Person
owns a majority of the equity and voting interests, either directly or through
one or more Subsidiaries.
"Substantially-Owned Affiliate" means, when used with reference to a
specific Person, any Person that, directly or indirectly, or through one or more
intermediaries, owns and controls, is owned and controlled by, or is under
common ownership and common control with, such specific Person. As used in this
definition, "control" means the ability to elect a majority of directors of a
Person or control of a similar type for a non-corporate entity and "ownership"
means the beneficial ownership of more than eighty percent (80%) of the equity
securities or interest of the Person, in each case, only so long as such
ownership or control continues.
"Tax Matters Partner" has the meaning specified in Section 10.8 of the
Operating Agreement.
"Territory" means the United States of America and Canada.
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"Trade Secrets" means information, including a formula, pattern,
compilation, program, device, method, technique or process, that: (i) derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use, and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain secrecy.
"Trademarks" means United States, state and foreign trademarks, service
marks, logos, trade dress and trade names, whether registered or unregistered,
and pending applications to register the foregoing.
"Transfer" means any direct or indirect Sale, assignment, pledge,
encumbrance or other transfer of any Units or rights in associated therewith
(including Voting Interests associated therewith), whether made voluntarily or
by operation of law. "Transfer" shall include any transfer of voting rights
through voting agreements, proxies (other than proxies granted to an employee or
agent acting on behalf of the Member granting such proxy), voting trusts or
otherwise.
"Transferred Membership Interest" has the meaning specified at Section
4.3 of the Operating Agreement.
"Transferee Member" means an additional Member admitted to the Company
in accordance with the terms of this Agreement upon transfer of an existing
Member's Units.
"Treasury Regulations" means the regulations promulgated by the U.S.
Treasury Department pursuant to the Code.
"Units or Unit" means an ownership interest in the Company represented
by a Capital Contribution of $1,000.
Capitalized terms not set forth above but otherwise defined in an
Ancillary Agreement shall have the meaning set forth in such Ancillary
Agreement.
EXHIBIT B
Value Adding Distributor
AGREEMENT
Between XEIKON AMERICA, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
hereinafter referred to as
"XEIKON"
and Canopy,LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇.▇.
hereinafter referred to as
"DISTRIBUTOR"
P. 2 of 17
Contents
1 . Definitions .............................................................4
2. Subject matter ...........................................................5
3. Marketing of the Contractual Products.....................................5
4. Changes to the Contractual Products ......................................7
5. Forecasting, Ordering and Delivery Periods. ..............................7
6. Prices and Terms of Payment ..............................................8
7. Licensed Software ........................................................8
8. Warranty ................................................................10
9. Technical documentation .................................................10
10. Trademark ..............................................................10
11. Intellectual Property Rights and Copyright License .....................11
12. Proprietary and Confidential Business Information ......................12
13. Force Majeure ..........................................................13
14. Term and Termination ...................................................13
15. Provisions surviving the Termination of the Agreement ..................15
16. Governing Law and Jurisdiction .........................................15
17. Miscellaneous ..........................................................15
P. 3 of 17
Exhibit I List of Contractual Products and Prices
Exhibit If Specifications
Exhibit III Order, Forecast and Delivery Procedures
Exhibit IV: Service Contract Type A and Type B
Exhibit V: Return of crates
Exhibit VI Return of Defective Parts
Exhibit VII Spare Part List
P. 4 of 17
Whereas,
(1) _______ XEIKON has developed a digital colour printing system and is
willing to make available to DISTRIBUTOR such system and the
associated Consurnables, Usage Parts, Accessories and Options.
(2) DISTRIBUTOR is active as a systems integrator in the graphic arts
industry, providing turnkey solutions and network and pre-press
support to end users;
now therefore, it Is hereby agreed by and between the parties hereto as follows:
1. Definitions
1. 1. "Agreement" shall mean this Value Adding Distributor Agreement
between Xeikon and DISTRIBUTOR.
1.2. "Contractual Products" shall mean the Products supplied by XEIKON
identified in Exhibit I hereunto attached as
a) Configured Systems
b) Options and Accessories
c) Consurnables
d) Usage Parts
Modifications and/or additions to Exhibit I will be issued from time
to time.
1.3. ______ "Specifications" shall mean the technical specifications of
the Contractual Products as set forth in Exhibit 11 hereunto attached
and/or in such Exhibits as may be issued and agreed upon from time to
time pursuant to the provisions of article 4 hereof.
1.4. ______ "Term of the Agreement" shall mean the period of time
commencing on the "Effective Date" and ending upon termination of
this Agreement under article 14, or as otherwise provided herein.
1.5. "Effective Date" shall be July 1, 2000.
1.6. ______ The term "Ex Works" shall be interpreted in accordance with
the "Inco Terms" as most recently published by the International
Chamber of Commerce, Paris.
1.7. ______ "Service Contract" shall mean the agreement between XEIKON and
the end user of a Configured System whereby XEIKON agrees to maintain
and service the Configured System according the terms and conditions
set forth in Exhibit V hereunto attached.
1.8. _______ "Licensed Program" shall mean any XEIKON supplied software
included in the Contractual Products as per Exhibit 1, including
basic and related materials pertinent to said Licensed Program and
any updated program or program portion furnished to DISTRIBUTOR by
XEIKON in connection with a Licensed Program.
1.9. _______ "Use of a Licensed Program" shall mean installing 1 (one)
copy of a Licensed Program or a portion thereof on a single
Configured System or other computer as necessary for the operation of
the Contractual Products.
P. 5 of 17
1.10. "Spare Parts" shall mean all the spare parts of the Configured
Systems, as defined in Exhibit VII.
2. Subject matter
Subject matter of this Agreement is the sale by XEIKON to DISTRIBUTOR
and, correlafively, the purchase by the latter from the former of
Contractual Products in accordance with the terms and conditions
herein set forth.
3. Marketing of the Contractual Products
3.1. Subject to the provisions set forth in Articles 11 and 12 of this
Agreement, DISTRIBUTOR shall have the right to use, sell, lease or
otherwise, in the normal course of its business activities, dispose
of the Contractual Products in its own name and for its own account;
this right will be limited to the following geographical area: U.S.A.
and Canada.
3.2. _______ Nothing in this agreement shall preclude XEIKON from itself
marketing and selling the Contractual Products. Furthermore, nothing
in this Agreement shall preclude XEIKON from appointing at any time
one or more additional distributors within the geographical area
referred to in Article 3.1. For the avoidance of doubt, DISTRIBUTOR
shall not have any right to commission on any sales of the
Contractual Products by XEIKON or by another distributor.
3.3. For every calendar year a target for the number of Configured Systems
purchased by and shipped to DISTRIBUTOR will be established after
consultation in good faith between both parties. For every calendar
year a target for the number of Configured Systems purchased by and
shipped to DISTRIBUTOR will be established after consultation in good
faith between both parties. The annual and quarterly targets will be
established as part of the process of establishing the annual
operafing budget of DISTRIBUTOR and YAII require approval of the
Managing Board of DISTRIBUTOR by the unanimous vote of all its
Directors.
3.4. ______ DISTRIBUTOR shall only sell and supply to its clients the
Options and Accessories, Consurnables and Usage Parts procured from
XEIKON as defined in Exhibit I to be used with the Configured Systems.
3.5. ______ DISTRIBUTOR shall consult with XEIKON as to the competitive
nature of any products prior to entering into any agreement with the
supplier of a possibly competitive product.
3.6. In case DISTRIBUTOR violates the provisions oi Article 3.4 XEIKON may
terminate the Agreement as per Article 14.3.
3.7. ______ It is assumed for the implementabon of the Agreement that
DISTRIBUTOR has developed the technical capability to (i) be
thoroughly familiar with Contractual Products, and (ii) provide a
systems integration and network and pre-press support service. As a
consequence thereof, DISTRIBUTOR will require of XEIKON only minimal
technical, administrative and/or marketing support for the systems
integration and network pre-press support. DISTRIBUTOR will remain
responsible for the systems integration networking and pre-press
support at all times.
P. 6 of 17
3.8 ________ Without the prior written consent of XEIKON, DISTRIBUTOR
shall not be entitled to appoint any other sub-distributor or
commercial agents for the sale of the Contractual Products in the
geographical area defined in Article 3. 1.
3.9 ________ DISTRIBUTOR shall enter into commercial sales agreements for
the Contractual Products solely for its own account. Except as
otherwise provided for concerning the Service Contracts in Article
3.13 hereof, (i) nothing in this Agreement shall be construed as
creating between XEIKON and DISTRIBUTOR any agency, employee or
similar relationship or any joint venture or common enterprise and
(ii) DISTRIBUTOR shall not have the right to engage XEIKON vis-A-vis
any third parties and shall not make any commitments or
representations on behalf of XEIKON except with the prior written
consent of XEIKON.
All expenses relating to the marketing of the Contractual Products
and the Service Contracts in the geographical area defined in Article
3.1, will be borne solely by DISTRIBUTOR.
3.10 _______ DISTRIBUTOR, when marketing the Contractual Products, shall
not make any claim with respect to the Contractual Products that is
not previously approved by XEIKON in writing or that is contrary to
this Agreement.
3.11 _______ DISTRIBUTOR shall ensure that, besides an adequate central
management and marketing staff to ensure adequate coverage throughout
the USA, at least 9 of its sufficiently qualified market development
managers will be dedicated to the Contractual Products on a full-time
basis. Moreover, DISTRIBUTOR's general sales force will benefit from
a rewarding commission plan for the sales of the Contractual
Products.
DISTRIBUTOR shall devote considerable and sustained efforts to the
marketing of the Contractual Products in accordance with a marketing
and promotional plan mutually agreed to and revised from time to time
by XEIKON and DISTRIBUTOR.
3.12. _____ Xeikon grants DISTRIBUTOR the right to market, in the name and
for the account of XEIKON, the Service Contracts to purchasers and
end users of the Configured Systems within the geographical area
referred to in Article 3.1. For every Service Contract marketed by
DISTRIBUTOR and concluded between XEIKON and purchasers/ end users,
DISTRIBUTOR shall be entitled to a commission of 10% on the annual
fee payments made by the purchaser/end user regarding the Service
Contract.
Nothing in this Agreement shall preclude XEIKON from marketing and
selling the Service Contracts or from appointing at any time one or
more additional agents for the marketing and sale of the Service
Contracts within the geographical area referred to in the preceding
paragraph.
3.13. ____ Each year DISTRIBUTOR shall transmit to XEIKON a copy of its
audited annual accounts forthwith after the approval thereof by the
annual-shareholders meeting.
3.14 ____________________________ DISTRIBUTOR will provide a copy of every
completed end user sales contract no later than 15 days after the
date of such contfact and in any case before the installation site
survey by Xeikon.
P. 7 of 17
4. Changes to the Contractual Products
4.1. XEIKON shall have the liberty from time to time to adapt the
Contractual Products to technological progress and changing market
requirements.
4.2. _______ During the Term of the Agreement DISTRIBUTOR may from time to
time request in writing to modify the design and/or specifications of
the Contractual Product where in its opinion, based on its experience
with Contractual Products in the field, such modifications could
possibly enhance the performance of the Contractual Products. On a
case by case basis XEIKON will examine such requests without however
being under any obligation to implement these modifications.
4.3. DISTRIBUTOR shall not modify any Contractual Product without the
prior agreement in writing from XEIKON. Any such agreement shall
include provisions to the effect that DISTRIBUTOR shall not acquire
any right, licence or interest in the adaptabons/modifications to be
made to the Contractual Products, nor in the Contractual Products as
modified/adapted, and that XEIKON shall retain or acquire, as the
case may be, and without any compensation being due to DISTRIBUTOR or
others, any and all rights and interests (including but not limited
to trademarks, patents and know-how) in the modifications/adaptations
and in the Contractual Products as modifiedJadapted.
4.4 ________ Nothing in this Agreement shall preclude XEIKON from
discontinuing the production of one or more of the Contractual
Products, and XEIKON shall not have any liability to DISTRIBUTOR for
any such disconfinuation.
5. Forecasting, Ordering and Delivery Periods
5.1. The forecasting, ordering and delivery procedures are attached in
Exhibit Ill.
5.2. For all purchase orders submitted by DISTRIBUTOR, the following shall
apply:
(1) All terms and conditions contained in such purchase orders which
are inconsistent with or in contradiction with the terms and
conditions defined in the Agreement are superseded by the terms of the
Agreement.
(2) XEIKON shall have no obligation to accept any purchase order
containing any term or condition contradictory to the Agreement or its
Exhibits.
(3) XEIKON shall have no obligation to accept any purchase order for
any product not listed in Exhibit 1.
(4) XEIKON shall not be deemed to have accepted any of the terms and
conditions of any contract between DISTRIBUTOR and any third ▇▇▇▇▇,
even in the case reference is made to such contract in the purchase
order to XEIKON.
5.3. _______ Upon receipt of a purchase order submitted in accordance with
the terms and conditions of the Agreement, XEIKON shall give
DISTRIBUTOR within seven working days, notice of acceptance of such
order (which notice shall also include the approximate time of
delivery), or of disagreement with any of the terms contained in the
order.
If XEIKON fails to give such written notice of acceptance in due time,
the order shall be deemed to be accepted by XEIKON.
P. 8 of 17
6. Prices and Terms of Payment
6.1. _______ The prices for the Contractual Products are stated in Exhibit
I to this Agreement in U.S. Dollars, and do not include any taxes or
duties, which shall be bome entirely by DISTRIBUTOR. The packaging of
the Configured Systems remains the sole property of XEIKON, and shall
be returned forthwith according to the procedure as defined in
Exhibit VI hereto.
6.2. _______ The prices contained in Exhibit I shall remain valid until 30
days after receipt by DISTRIBUTOR of a new price list, which will be
sent by XEIKON to DISTRIBUTOR by registered mail or express courier
or by telefax: (receipt of which is to be confirmed).
6.3. _______ DISTRIBUTOR shall pay all invoices of XEIKON in full within
thirty days after the invoice date. Payments of invoices shall be
handled in such a manner by DISTRIBUTOR that the amounts, (net of any
bank or other payment related charges), are received in the currency
specified on the invoice at the bank account specified by XEIKON.
Unpaid invoices shall, without any notice from XEIKON being due, carry
an interest of 2% over the base bank rate in Belgium, and calculated
on an annual basis, which starts to run on the date that payment
should have been made.
6.4. Unless otherwise agreed upon in writing the Contractual Products will
be delivered Ex Works, Chicago.
XEIKON shall retain tifle over the Contractual Products until payment
has been received in full. Thereupon title shall pass to DISTRIBUTOR.
XEIKON shall assume all risk of loss of, or damage to the Contractual
Products until the delivery Ex Works. The risk of loss and accordingly
all damages after the delivery shall be the responsibility of
DISTRIBUTOR.
6.5. ______ Xeikon may at any time decide and notify by registered letter,
that from then on all payments have to be made by letter of credit,
acceptable to Xeikon.
6.6. ______ The commission as defined in article 3.13 of the present
agreement shall be paid to DISTRIBUTOR in the following way for every
annual fee payment XEIKON receives from the end customer regarding a
Service Contract marketed by DISTRIBUTOR, XEIKON shall pay 10% thereof
to DISTRIBUTOR within 30 days.
7. Licensed Software
7.1. XEIKON hereby grants to DISTRIBUTOR a non-exclusive Ucense solely for
purpose of (i) distribution, (ii) use and (ii)i sublicense for use of
any Licensed Program, on the Configured Systems in machine readable
form, in accordance with the terms and conditions of this Article 7.
No other license (such as a manufacturing license) is granted or shall
be deemed to be granted with respect to the Contractual Products. Such
license shall be granted solely for the geographical area identified
in Article 3. 1.
All software provided hereunder is licensed to DISTRIBUTOR by XEIKON,
pursuant to the terms of Section 7. Use of any Licensed Program in any
other way than described in the XEIKON supplied documentation of the
Contractual Products may be subject to additional terms and conditions
that are not part of this Agreement.
P. 9 of 17
7.2. Neither title nor ownership of the Licensed Program or any of its
parts, nor in any applicable rights therein such as patents,
copyrights and trade secrets is transferred to DISTRIBUTOR.
DISTRIBUTOR recognises that the Licensed Program may be
copyrighted. Neither this license nor the use by DISTRIBUTOR of the
Licensed Program shall cause or be construed as causing the Licensed
Program to be in the public domain. Except as specifically set forth
herein, or as may be permitted in writing by XEIKON, DISTRIBUTOR
shall not (i) provide, transmit or otherwise make available the
Licensed Program or any part or copies thereof to any third party or
(ii) reverse engineer, reverse compile or reverse assemble the
Licensed Program. XEIKON may supply, as part of the Contractual
Products and in association with a Licensed Program, one or more Copy
Protection Hardware Devices of which typically 1 (one) piece is
installed in order to enable the operation of a specific copy of a
Licensed Program or part thereof. Except as specifically set forth
herein, or as may be permitted in writing by XEIKON, DISTRIBUTOR
shall not duplicate or reverse engineer a Copy Protection Hardware
Device or simulate its operation by means of another device and/or
software program.
DISTRIBUTOR may make a number of copies of a Licensed Program to any
form of electronic media for the purpose of backup only. DISTRIBUTOR
may also transfer a copy of any Licensed Program to another
Contractual Product or computer provided that the Licensed Program is
removed from the Contractual Product or computer from which it its
transferred.
7.3. Terms and Conditions of sub licensing ("Sub Licensing")
1. _______ Subject to the terms and conditions as set forth
herein, DISTRIBUTOR may Sub License the Licensed Program
to (and only to) its customers ("Sub Licensees") to whom
DISTRIBUTOR sells or leases Configured Systems. The Sub
Ucense agreement DISTRIBUTOR executes with its Sub
Licensees shall be in writing, (a copy of which will be
supplied to XEIKON) and shall at a minimum, give effect to
the following principles :
a. limitation of use of the Licensed Program to the
Configured System sold or leased by DISTRIBUTOR to the
Sub Licensee
b. incorporation of the terms and conditions of
Article 7.2 with regard to use and protection of the
Licensed Program.
c. inclusion of a disclaimer as to the implied
warranties and to any and all consequential
damages as included in Exhibit IV.
2. DISTRIBUTOR agrees that it shall register all Sub Licences
with appropriate government agencies, if such registration
is required in order for such Sub Licence to be valid
and/or enforceable. -,
3. A Sub License shall only be available to parties who have
purchased or leased the Contractual Products directly from
DISTRIBUTOR. However DISTRIBUTOR commits to XEIKON that in
case any Sub Licensee would sell or lease a contractual
product (or part thereof) to a third party, such transfer
will be notified immediately to XEIKON accompanied by a
written request to transfer the Sub Licence from Sub
Licensee to such third party. XEIKON shall not unreasonably
withhold its consent to the requested transfer.
P. 10 of 17
4. DISTRIBUTOR, at its sole expense, agrees to (i) act against
any Sub Licensee who has breached the terms of the Sub
License agreement and (ii) to any extent permitted by law,
co-operate with XEIKON in any proceeding against Sub
Licensee for breach or violation of any terms of such Sub
License agreement.
8. Warranty
8.1. _______ Xeikon will provide Warranty directly to the purchaser/ end
customer with whom a Service Contract is concluded, and subject to
the terms and conditions set forth therein.
8.2 This Warranty is granted and applicable between XEIKON and the end
customer.
To the extent that they are covered by the Warranty and are made
within the applicable time limit, XEIKON agrees to take direct
remedial action with respect to warranty claims of end users of the
Contractual Products.
DISTRIBUTOR shall, with regard to the Contractual Products, refrain
from any representations or commitments which are not covered by the
Warranty.
DISTRIBUTOR shall indemnify XEIKON for any claims or liabilities
resulting from any representation or commitment made by DISTRIBUTOR
with regard to the Contractual Products if such claims or liabilities
are the result of a representation or commitment which does not fall
within the scope of the Warranty as set forth in the Service
Contracts.
8.3. Warranty procedure
Return of defective SPARE PARTS and the related documentation has to
comply with the procedure "Retum of Defective Parts" as defined in
EXHIBIT IV.
8.4. The provisions of article 8 shall continue to apply after termination
of the Agreement.
9. Technical documentation
DISTRIBUTOR will receive from XEIKON the necessary technical
documentation with respect to the Contractual Products to be able to
perform as a system integration and network and pre-press support
provider.
10. Trademark
10.1. _____ DISTRIBUTOR shall market the Contractual Products purchased
under this Agreement only under XEIKON's name(s), trademark(s) and/or
logo(s).
10.2. _____ XEIKON shall, at its own expense, defend any suit instituted
against DISTRIBUTOR or his customer(s), alleging an infringement of
any trademark right and/or any intellectual property right with
respect to names, colors and/or logos arising out the sale of the
Contractual Products under XEIKON's name(s), trademark(s), color(s),
and shall indemnify DISTRIBUTOR or its customers against any award of
damage and costs and expenses incurred in connection therewith
(including reasonable attomey's fees) made against DISTRIBUTOR or his
customers(s) involving a claim that any of the Contractual
P. 11 of 17
Products constitutes an infringement of any such trademark right,
provided that DISTRIBUTOR gives XEIKON prompt notice in writing of
any notice or claims of infringement and permits XEIKON trough
XEIKON's counsel to defend the same and gives XEIKON all available
information, assistance and authority to enable XEIKON to assume such
defence.
10.3. XEIKON shall have control of the defence of any such suit, including
appeals from any judgement therein and any negotiations for the
settlement or compromise thereof VAth full authority to enter
into a binding settlement or compromise. In the event that any
Contractual Product is held to constitute infringement and its
use is enjoined, XEIKON shall at its option and expense (i)
procure for DISTRIBUTOR the right to continue using such
Contractual Product (ii) provide the necessary parts and
documentation to replace or modify such Contractual Product so
that it no longer infdnges, or (iii)grant DISTRIBUTOR a credit
for such Contractual Product upon its return to XEIKON less
reasonable depreciation for use, damage and obsolescence.
10.4. Except for Article 11 hereof, Articles 10.2 and 10.3 above state the
entire liability of XEIKON for or resulting from infringement of any
trademark right and/or any intellectual property right with respect
to names, colors and/or logos or claim thereof with respect to
Contractual Products sold under this Agreement. DISTRIBUTOR shall
promptly inform XEIKON in writing of any infringement of XEIKON's
trademark right and/or any intellectual property right with respect
to names, colors and/or logos by a third party that DISTRIBUTOR has
become aware of. XEIKON shall have the sole right to decide whether
of not proceedings shall be brought against such third parties and
DISTRIBUTOR itself is not entitled to start such proceedings. In the
event that XEIKON decides to take action against such third parties,
DISTRIBUTOR agrees to co-operate fully with XEIKON, with the
understanding that all expenses shall be bome by XEIKON and any and
all damages which may be recovered shall be solely for the account
and benefit of XEIKON.
10.5. _____ XEIKON will provide DISTRIBUTOR with a specificabon for the use
of the XEIKON logo. DISTRIBUTOR may use the XEIKON logo and color in
promotional material, events and such related circumstances. XEIKON's
logo or color must not be modified or deviate in any way from such
specification.
10.6. _____ Any rights of DISTRIBUTOR under this Article 10 to use the
trademarks, names, colors and/or logos from XEIKON are valid for the
Term of the Agreement only, and upon termination of this Agreement
DISTRIBUTOR shall cease forthwith to use in any way XEIKON's
names(s), trademark(s) and/or logo(s).
11. Intellectual Property Rights and Copyright License
11.1 _______ DISTRIBUTOR is entitled to use XEIKON's technical
documentation to prepare DISTRIBUTOR's own technical documentation
covering the Contractual Products.
11.2. _____ XEIKON shall, at its own expense, defend any suit instituted
against DISTRIBUTOR or his customer(s), which is based on an
allegation that any of the Contractual Products sold by DISTRIBUTOR
constitutes an infringement of any industrial property right(s) and
shall indemnify DISTRIBUTOR or its customer(s) against any award of
damage and costs made against DISTRIBUTOR or his customer(s) by a
final judgement of a court of last resort if it is determined therein
that any of the Contractual Products constitutes an infringement of
any such industrial property dghts, to the extent that the claim
relates to parts of the Contractual Products that have been supplied
by XEIKON, provided that
P. 12 of 17
DISTRIBUTOR gives XEIKON prompt notice in writing of any notice or
claims of infringement and permits XEIKON through XEIKON's counsel to
defend the same and gives XEIKON all available information, assistance
and authority to enable XEIKON to assume such defence.
11.3. XEIKON shall have control of the defence of any such suit, including
appeals from any judgement therein and any negotiations for the
settlement or compromise thereof with full authority to enter
into a binding settlement or compromise. In the event that any
Contractual Product is held to constitute infringement and its
use is enjoined, XEIKON shall at its option and expense (i)
procure for DISTRIBUTOR the right to continue using such Contractual
Product, (ii) provide the necessary parts and documentation to
replace or modify such Contractual Product so that it no longer
infringes, or (iii)grant DISTRIBUTOR a credit for such
Contractual Product upon its return to XEIKON less reasonable
depreciation for use, damage and obsolescence.
11.4. ____ XEIKON, however, shall not have any liability whatsoever to
DISTRIBUTOR if any such infringement of industrial property rights or
claim thereof is caused by (i) the use of any Contractual Product in
combination with an apparatus or device not manufactured or supplied
by XEIKON and such combination causes the infringement, (ii) the use
of any Contractual Product in a manner for which it was neither
designed nor contemplated, or (iii) any modification of any
Contractual Product by DISTRIBUTOR, or by XEIKON on DISTRIBUTOR's
request, or by any third party, which causes the Contractual Product
to become infringing.
11.5. ______ Except for article 10.2 and 10.3 hereof, Articles 11.2, 11.3
and 11.4 above state the entire liability of XEIKON for or resulting
from infringement of industrial property rights or claim thereof with
respect to Contractual Products sold under this Agreement.
DISTRIBUTOR shall promptly inform XEIKON in writing of any
infringement of XEIKON's industrial property rights by a third party
that DISTRIBUTOR has become aware of. XEIKON shall have the sole right
to decide whether or not proceedings shall be brought against such
third parties and DISTRIBUTOR itself is not entitled to start such
proceedings. In the event that XEIKON decides to take action against
such third parties, DISTRIBUTOR agrees to co-operate fully with
XEIKON, with the understanding that all expenses shall be bome by
XEIKON and any and all damages which may be recovered shall be solely
for the account and benefit of XEIKON.
12. Proprietary and Confidential Business Information
12.1. ____ DISTRIBUTOR acknowledges that the Contractual Products sold
hereunder comprise hardware or other physical embodiments of XEIKON's
design, inventions, software programs and know how which, to the
extent that they are not generally known or available to the trade or
public by lawful means, are and shall remain the exclusive property of
XEIKON, whether or not such designs, inventions, software programs and
know how are covered by patents or copyrights and whether or not they
are patentable or copyrightable. DISTRIBUTOR shall not sell, use or
disclose any of XEIKON's said property without written consent of
XEIKON.
12.2. ____ DISTRIBUTOR acknowledges that by virtue of this Agreement, it may
acquire from XEIKON certain confidential business and marketing
information, which is and shall remain the sole and exclusive property
of XEIKON. DISTRIBUTOR shall not divulge such information to any third
party.
P. 13 of 17
12.3. With respect to XEIKON's proprietary designs, inventions, software
programs, know-how and business and marketing information identified
in articles 12.1. and 12.2. above, DISTRIBUTOR agrees as follows:
a) that it will maintain the same confidentiality using the
same degree of care as it applies for its own proprietary
information of comparable importance and make no use or
disclosure thereof except those uses and limited
disclosures which are consistent with the objects and
spirit of this Agreement.
b) that it will control the reproduction and distribution of
any and all documents, prints, drawings and writings
containing said proprietary information, limit access
thereto to those agents and employees of DISTRIBUTOR who
have a need therefore and take all reasonable precautions
to protect and safeguard the same from unauthorised use or
disclosure.
c) that it will co-operate fully with XEIKON in any and all
legal actions taken by XEIKON to protect its rights in
such property, but DISTRIBUTOR shall not be required to
share any of the costs of such legal actions.
12.4. Both parties agree to keep the terms of this Agreement and of all
Exhibits hereto confidential.
12.5. The covenants of this Article 14 shall survive the termination of this
Agreement by five years.
13. Force Majeure
Neither party to this Agreement shall be held responsible for the
non-fulfilment of any obligabons under this Agreement provided such
fulfilment is hindered or prevented by any circumstance of Force
Majeure, such as, but not limited to, war, dot, strike, lock out,
flood or other such natural catastrophe, or national or local
government prescription, or any other circumstances beyond his
control, and provided the party frustrated by a circumstance of Force
Majeure notifies the beginning and end of any such circumstance to the
other, and shall use all its efforts to minimise the hindrance or
prevention of such fulfilment. Upon the ending of such circumstance
the frustrated party shall without undue delay resume the fulfilment
of its obligations.
If, however, a circumstance of Force Majeure continues over
uninterrupted period of more than two months, then the party against
which Force Majeure has been invoked has the right - if no other
understanding is reached before the end of the two month period - to
forthwith terminate this Agreement by registeredJetter without further
formality.
14. Term and Termination
14.1. ____ This Agreement is entered into for an initial period of 108
months starting on the Effective Date and thereafter will
automatically renew for consecutive periods of three years, unless
written notice is received by either party at the latest 12 months
before the end of such term.
14.2. Without prejudice to any right or remedy a party may have against the
other party for breach or
non-performance of this Agreement, this Agreement shall automatically
P. 14 of 17
terminate upon the occurrence of either one of the following events
without any intervention of a court being required :
(1) If the other party commits a material breach of this
Agreement, other than an occurrence as defined in the following
paragraphs (ii) to (vii) of this article, provided however,
that the other party has been advised in writing by registered
mail of such material breach and has not rectified it within
twenty-one days from receipt of such advise;
(ii) If the other party becomes insolvent, or in the case of a
petition or proceeding, voluntary or involuntary, ___ for
relief under ___ bankruptcy, ___ insolvency, ___
reorganisation, ___ dissolution, winding-up, receivership,
liquidation or similar law is filed or commenced by or against
the other party, or if a trustee, custodian, receiver or
similar officer is appointed to take charge of all or part of
the other parties business, or if the other party ceases to do
business at any time for thirty consecutive days (other than
for annual holidays), or if the other party is the subject of
an attachment(or similar proceeding or event), for a
substantial amount and effected by a creditor of such party,
except if such attachment is subsequently held to be without
grounds or withdrawn;
(iii) If the other party for any reason of whatsoever nature is
substantially prevented from performing, or becomes unable to
perform, its obligations hereunder;
(iv) If DISTRIBUTOR fails to achieve a target set pursuant to
Article 3.3, unless such failure was entirely due to a default
of XEIKON or by reason of Force Majeure (as defined in Article
13);
(v) If DISTRIBUTOR assigns or attempts to assign this
Agreement without the prior written consent of XEIKON;
(vi) If the control of the DISTRIBUTOR shall pass, directly or
indirectly, from the present shareholders or owners or
controllers to other persons whom XEIKON shall in its
discretion regard as unsuitable; or if all or substantially all
of DISTRIBUTORS assets shall be transferred to such other
persons; DISTRIBUTOR shall notify XEIKON without delay of the
occurrence of any of the aforementioned events.
(vii) If DISTRIBUTOR fails to effect timely payment of any
amounts owed to XEIKON under this Agreement.
14.3. _____ Without prejudice to any right or remedy XEIKON may have against
DISTRIBUTOR in case of violation of Article 3.4, 3.5 and 3.11, XEIKON
is entitled to forthwith terminate this Agreement without any notice
being due.
14.4. _____ In case of terminabon DISTRIBUTOR shall immediately cease to
represent to any third party that it has any rights to market the
Contractual Products or the Service Contracts other than Contractual
Products already in DISTRIBUTOR's inventory.
In case of termination of this Agreement for any reason DISTRIBUTOR
sha4I return to XEIKON without delay all technical sales and
promotional materials with respect to the Contractual Products and
Service Contracts as well as a list of all customers and end users.
P. 15 of 17
15. Provisions surviving the Termination of the Agreement
15.1. _____ After termination of this Agreement and according to the terms
thereof, XEIKON shall, within reasonable limits, continue to supply
to DISTRIBUTOR Contractual Products which DISTRIBUTOR needs in order
to fulfil bona fide contractual delivery obligations entered into on
the basis of quotations issued prior to the termination of this
Agreement.
15.2. _____ Before the termination of this Agreement both parties will
discuss in good faith how the customers of DISTRIBUTOR, having
received delivery of a Configured System, will be able to procure
Consumables and Usage Parts after termination of this Agreement.
16. Governing Law and Jurisdiction
16.1. _____ Any differences or disputes on this Agreement or on any
agreements regarding the implementation of this Agreement shall be
settled by an amicable effort of both parties. An attempt to arrive
at a settlement shall be deemed to have failed as soon as one of the
parties so notifies the other party.
16.2. _____ This Agreement shall be governed by the Laws of the State of
New York. The courts of the State of New York will have sole
jurisdiction over any litigation concerning this Agreement.
17. Miscellaneous
17.1. All changes and amendments to this Agreement must be in writing to be
valid. This requirement of
written form can only be waived in writing.
Notices and communications between XEIKON and DISTRIBUTOR shall be
given in writing (by registered mail) or by telefax (receipt of which
must be confirmed in wrliting by the addressee) to the following
address of the parties or to such other address as the party concerned
may subsequently notify in writing to the other party:
(i) If to XEIKON to:
XEIKON N.V. to the attention of the legal department.
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Belgium
(ii) If to Canopy, LLC to:
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., President and Chief Executive
Officer ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇.
17.3. Assignment
No right or interest in this Agreement shall be assigned by
DISTRIBUTOR without the written consent first obtained from XEIKON.
P. 16 of 17
17.4. _____ Should individual provisions of this Agreement be legally
ineffective or be unfeasible for legal reasons then, unless the basic
intentions of the parties under this Agreement are substantially
jeopardised, the validity of the remaining provisions of this
Agreement shall not be affected thereby. In such a case the parties
shall come to an agreement approaching as closely as possible the
arrangements originally stipulated in this Agreement.
17.5. _____ This Agreement replaces the Value Adding Distributor Agreement
between Xeikon and PrimeSource Corporation which was effective on
September 20, 1999.
17.6. The following Exhibits attached to this Agreement form an integral
part hereof.
Exhibit I List of Contractual Products and Pdces
Exhibit 11 Specifications
Exhibit III Order, Forecast and Delivery Procedures
Exhibit IV: Service Contract Type A and Type B
Exhibit V: Retum of crates
Exhibit VI : Retum of Defective Parts
Exhibit V111 : Spare Part List
17.7. _____ This Agreement constitutes the enbre agreement among the parties
hereto with respect to the transactions contemplated herein and it
supersedes the prior VAD Agreement, all provisions of which are hereby
declared null and void.
Date: June 2000 Date: June 30, 2000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer President and Chief Executive Officer
Xeikon America, Inc. CanopDy,LLC
P. 17 of 17
Exhibit III : Order, Forecast and Delivery Procedures
1. ________ Midway through each quarter, DISTRIBUTOR shall submit a
preliminary order projection, being the minimum order for the
succeeding quarter, pursuant to Article 3.3 of this Agreement. This
order shall be confirmed by DISTRIBUTOR prior to the beginning of the
succeeding quarter. DISTRIBUTOR has the right at that time to increase
the order compared to the order projection.
2. ________ DISTRIBUTOR shall in the months of March, June, September and
December also provide XEIKON in writing with a non-binding forecast
for Configured Systems for the 3 (three) quarters following the 3
(three) months included in this above mentioned forecast and with a
non-binding forecast for Consurnables and Usage Parts for the first 2
(two) quarters.
3. DISTRIBUTOR shall purchase Contractual Products pursuant to firm
purchase orders using the attached form.
Note (8/23/01) The only exhibit provided by Xeikon America, Inc was
Exhibit III.
Exhibit C
PAYROLL SERVICES AGREEMENT
AGREEMENT made this 1st day of July, 2000, between Xeikon America, Inc., herein
referred to as "Xeikon", and Canopy, LLC, herein referred to as "Canopy".
WHEREAS, certain employees of Xeikon are being transferred to Canopy (a joint
venture between PrimeSource Corporation and Xeikon) and Canopy does not have a
payroll service or employee benefit program established,
NOW, THEREFORE, the parties agree as follows:
1. Services. For the period July 1, 2000 through September 30, 2000 Xeikon will
retain on its payroll the current Xeikon employees listed on Exhibit A (the
"Employees") attached hereto and incorporated herein by this reference. This
payroll service, including the provision of Xeikon employee benefits these
Employees would normally continue to receive as employees of Xeikon, is referred
to herein as "Services." The Services thus includes all employee benefits the
Employees now receive other than the provision of automobiles and/or offices;
provided, however, these benefits may be changed during this service period by
Xeikon for the Employees if Xeikon changes its benefit program for other
employees of Xeikon during this time.
For all substantive purposes, the Employees shall be employees of Canopy from
July 1, 2000 forward, and Canopy shall be solely responsible for supervision and
discipline of the Employee after June 30, 2000, including the unrestricted right
to terminate the employment of any Employee at any time, with or without reason.
Any liability for such termination (including payment of any severance pay
required by Xeikon policies or agreement, or ordered by any court or
governmental entity) shall be solely Canopy's responsibility. Any retention
bonuses shall be paid by Agfa Corporation and Xeikon in accordance with the
agreements between those companies.
2. Reimbursement for Cost. Canopy shall reimburse Xeikon for all costs
associated with the provision of the Services within three days of receipt of
invoices for same from Xeikon.
3. Expenses. All expenses incurred by the Employees on and after July 1, 2000
shall be for the account of Canopy, and Canopy will directly reimburse the
Employee for such approved expenses in a timely manner.
4. Laws and Regulations. Xeikon reasonably believes that it is in compliance
with all laws, ordinances, rules, and regulations for the provision of the
Services.
5. Indemnity. Canopy agrees to defend, indemnify, and hold Xeikon harmless
against all expenses, liabilities, losses, damages, injunctions, suits, actions,
fines, penalties, claims, and demands of every kind or nature, whether or not
groundless or fraudulent, including without limitation, the reasonable fees and
disbursements of attorneys and other professionals, which may be imposed on,
incurred by, or asserted against Xeikon arising out of or in any way connected
with the provision of the Services by Xeikon, including all claims by Employees
relating to events or activities occurring after June 30, 2000.
If a claim is asserted by an Employee against either party hereto, the party
served with such claim, demand or documents shall provide a copy to the other
party hereto within five days of receipt of such claim or documents.
6. Insurance. ____ Canopy agrees to carry Comprehensive Automobile Liability
Insurance and Comprehensive General Liability Insurance in commercially
reasonable amounts and such insurance policies shall name Xeikon as an
additional insured and shall waive all rights of subrogation in favor of Xeikon.
Xeikon agree to maintain coverage for Worker's Compensation covering the
Employees engaged in Services performed hereunder, if required by the state
having jurisdiction over each such person. Xeikon agrees that such coverage will
be primary and waives all rights of subrogation against Canopy for claims
arising from injuries to Employees that would normally be covered by workers
compensation laws.
7. Independent Contractor. Xeikon shall be an independent contractor with
respect to the provision and performance of all Services hereunder.
8. Right to Audit. Each party shall maintain records pertaining to the Services
to be performed hereunder which shall be subject to inspection by
representatives of the other party during normal business hours after prior
written notice.
9. Assignment. Neither party may assign this Agreement without the prior
written consent of the other party.
10. Other Agreements. No contract, agreement, papers, document, and/or any form
used by a party in connection with the Services rendered pursuant hereto shall
in any way modify, alter, amend, or change any of the terms or conditions set
out herein unless it is signed by persons of equal position and authority within
their respective companies to those signing this Agreement. No changes to this
Agreement are valid or binding unless first reduced to writing and signed by
both Canopy and Xeikon. This Agreement constitutes the entire Agreement between
the parties with respect to the Services.
12. Force Majeure. Xeikon shall be absolved from its obligations hereunder when
and to the extent that performance is delayed or prevented by reason of acts of
God, or of force majeure, fire, riot, explosion, war, computer failure, strikes,
labor disputes, or governmental laws, orders, or regulations.
13. Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be effective upon receipt. Both parties shall
acknowledge in writing the receipt of any notice delivered in person.
14. Severability and Governing Law. In case any provision of this Agreement
shall be invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. The laws of the state where the Services are performed will
control as to all aspects of this Agreement and its interpretation.
15. Waiver. No waiver of the provisions of this Agreement shall be binding and
effective unless the same shall be in writing and be signed by the party against
whom the waiver is sought. A waiver of any breach of a provision of this
Agreement shall be for that one time only and not for any subsequent breach.
16. Survival of Obligations. Unperformed obligations of the parties under this
Agreement shall survive any termination or suspension of the Services or the
expiration or termination of this Agreement and shall also survive final
payment.
17. Enforcement. In any action to enforce any of the provisions of this
Agreement, the party which substantially prevails in such action shall be
entitled to, in addition to other relief granted, its reasonable costs and
expenses, including, but not limited to, experts' fees, attorneys' fees,
arbitration costs, and court costs, consistent with section 5 herein.
XEIKON AMERICA, INC. CANOPY, LLC
By ____________________________ By_______________________________
President President
Exhibit D
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this 30th day of June, 2000, between PrimeSource Corporation,
herein referred to as "PrimeSource", and Canopy, LLC, herein referred to as
"Canopy".
WHEREAS, certain employees of PrimeSource are being transferred to Canopy and
Canopy does not have a payroll service or employee benefit program established,
and
WHEREAS, Canopy does not presently have an administrative staff to provide
administrative services to it,
NOW, THEREFORE, the parties agree as follows:
1. Payroll Services. For the period July 1, 2000 through December 31, 2000 (or
such other mutually agree upon date) PrimeSource will retain on its payroll the
current PrimeSource employees listed on Exhibit A (the "Employees") attached
hereto and incorporated herein by this reference. This payroll service,
including the provision of PrimeSource employee benefits these Employees would
normally continue to receive as employees of PrimeSource, is referred to herein
as "Payroll Services." The Payroll Services thus includes all employee benefits
the Employees now receive; provided, however, these benefits may be changed
during the period of this Agreement by PrimeSource for the Employees if
PrimeSource changes its benefit program for other employees of PrimeSource
during this time.
For all substantive purposes, the Employees shall be employees of Canopy from
July 1, 2000 forward, and Canopy shall be solely responsible for supervision and
discipline of the Employee after June 30, 2000, including the unrestricted right
to terminate the employment of any Employee at any time, with or without reason.
Any liability for such termination (including payment of any severance pay
required by PrimeSource policies or agreement, or ordered by any court or
governmental entity) shall be solely Canopy's responsibility.
2. Administrative Services. During the period of this Agreement, PrimeSource
will provide the following services to Canopy at its actual cost and without
markup for profit, all of which is referred to herein as the "Administrative
Services" and which collectively with the Payroll Services are referred to below
as "Services":
a) some accounting and tax functions, including but not limited to
preparation of financial statements and local, state and federal tax
returns; b) use of PrimeSource's business system for the accounting
functions above and for order entry and email; c) management services
including insurance, treasury, legal, tax, and human resources; and d)
provision of offices and automobile reimbursement programs as required
for Employees.
Canopy may take over any of the Administrative Services or Payroll Services from
PrimeSource at any time.
3. Reimbursement for Cost. Canopy shall reimburse PrimeSource for all costs
associated with the provision of the Services within ten days of receipt of
invoices for same from PrimeSource. The methodology for PrimeSource's allocation
of overhead in connection with the Services shall be subject to the review and
approval of Canopy's Managing Board at its first Board Meeting.
4. Expenses. All expenses incurred by the Employees on and after July 1, 2000
shall be for the account of Canopy, and Canopy will directly reimburse the
Employee for such approved expenses in a timely manner.
5. Laws and Regulations. PrimeSource reasonably believes that it is in
compliance with all laws, ordinances, rules, and regulations for the provision
of the Services.
6. Indemnity. Canopy agrees to defend, indemnify, and hold PrimeSource harmless
against all expenses, liabilities, losses, damages, injunctions, suits, actions,
fines, penalties, claims, and demands of every kind or nature, whether or not
groundless or fraudulent, including without limitation, the reasonable fees and
disbursements of attorneys and other professionals, which may be imposed on,
incurred by, or asserted against PrimeSource arising out of or in any way
connected with the provision of the Services by PrimeSource, including all
claims by Employees relating to events or activities after June 30, 2000.
If a claim is asserted by an Employee against either party hereto, the party
served with such claim, demand or documents shall provide a copy to the other
party hereto within five days of receipt of such claim or documents.
7. Insurance. ____ Canopy agrees to carry Comprehensive Automobile Liability
Insurance and Comprehensive General Liability Insurance in commercially
reasonable amounts and such insurance policies shall name PrimeSource as an
additional insured and shall waive all rights of subrogation in favor of
PrimeSource.
PrimeSource agrees to maintain coverage for Worker's Compensation covering the
Employees engaged in Services performed hereunder, if required by the state
having jurisdiction over each such person. PrimeSource agrees that such coverage
will be primary and waives all rights of subrogation against Canopy for claims
arising from injuries to Employees that would normally be covered by workers'
compensation laws.
8. Independent Contractor. PrimeSource shall be an independent contractor with
respect to the provision and performance of all Services hereunder.
9. Right to Audit. Each party shall maintain records pertaining to the Services
to be performed hereunder which shall be subject to inspection by
representatives of the other party during normal business hours after prior
written notice.
10. Assignment. Neither party may assign this Agreement without the prior
written consent of the other party.
11. Other Agreements. No contract, agreement, papers, document, and/or any form
used by a party in connection with the Services rendered pursuant hereto shall
in any way modify, alter, amend, or change any of the terms or conditions set
out herein unless it is signed by persons of equal position and authority within
their respective companies to those signing this Agreement. No changes to this
Agreement are valid or binding unless first reduced to writing and signed by
both Canopy and PrimeSource. This Agreement constitutes the entire Agreement
between the parties with respect to the Services.
12. Force Majeure. PrimeSource shall be absolved from its obligations hereunder
when and to the extent that performance is delayed or prevented by reason of
acts of God, or of force majeure, fire, riot, explosion, war, computer failure,
strikes, labor disputes, or governmental laws, orders, or regulations.
13. Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be effective upon receipt. Both parties shall
acknowledge in writing the receipt of any notice delivered in person.
14. Severability and Governing Law. In case any provision of this Agreement
shall be invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. The laws of the state where the Services are performed will
control as to all aspects of this Agreement and its interpretation.
15. Waiver. No waiver of the provisions of this Agreement shall be binding and
effective unless the same shall be in writing and be signed by the party against
whom the waiver is sought. A waiver of any breach of a provision of this
Agreement shall be for that one time only and not for any subsequent breach.
16. Survival of Obligations. Unperformed obligations of the parties under this
Agreement shall survive any termination or suspension of the Services or the
expiration or termination of this Agreement and shall also
survive final payment.
17. Enforcement. In any action to enforce any of the provisions of this
Agreement, the party which substantially prevails in such action shall be
entitled to, in addition to other relief granted, its reasonable costs and
expenses, including, but not limited to, experts' fees, attorneys' fees,
arbitration costs, and court costs, consistent with section 6 herein.
PRIMESOURCE CORPORATION CANOPY, LLC
By ____________________________ By_______________________________
Vice President & General Counsel President/CEO
Exhibit E
EMPLOYEE TRANSITION AGREEMENT
This Agreement is made as of the 1st day of July, 2000
Between
AGFA Corporation, a company incorporated under the laws of the State of
Delaware with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (hereinafter "AGFA")
and
Canopy, LLC, a Delaware limited liability company, with its principal
place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
"Canopy").
WHEREAS, Xeikon America, Inc. ("Xeikon") and AGFA have entered into an
agreement for the acquisition by Xeikon of AGFA's Chromapress business
activities, pursuant to which Xeikon will offer employment to certain employees
of AGFA identified in Schedule A ("Transferred Employees");
WHEREAS, Xeikon has contributed the AGFA Chromapress business so
acquired to Canopy.
WHEREAS, Canopy and AGFA have agreed that AGFA will retain for a
limited period the Transferred Employees and make their services available to
Canopy to assist in carrying out Canopy's business following the closing date of
the aforementioned transaction and before they become a formal employee of
Canopy.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, Canopy and AGFA agree as follows:
1. Personnel Provided
For the term of this Agreement but only so long as they remain
active employees of AGFA, AGFA agrees to make available to Canopy on a
full-time basis the Transferred Employees. For all substantive
purposes, the Transferred Employees will be employees of Canopy, and
Canopy shall be solely responsible for supervision and discipline of
Transferred Employees after June 30, 2000, including the unrestricted
right to terminate the employment of any Transferred Employee at any
time for any cause, or no cause at all. Any liability for such
termination (including payment of any severance required by AGFA
policies, practices or agreement) shall be solely Canopy's
responsibility. AGFA agrees that its workers' compensation coverage is
primary and waives all rights of subrogation against Canopy for claims
arising from injuries to Transferred Employees that are covered by
Workers' Compensation.
2. Employee Status
Each Transferred Employee shall remain an at-will employee of
AGFA during the term of this Agreement, and AGFA shall be responsible
for providing its then current salary and benefits for them. AGFA shall
maintain all workers' compensation, unemployment and disability
insurance and shall make all withholdings from earnings required by
local, state and national laws and regulations. The Employees shall
become employed by Canopy upon termination or expiration of this
Agreement, whichever shall first occur.
3. At-Will Employee
This Agreement is not a guarantee of continuing employment for
any of the Transferred Employees for a specific term. Each Transferred
Employee's employment with AGFA is and will continue to be at-will
meaning either AGFA or the Transferred Employee may terminate the
Transferred Employee's employment at any time for any reason.
4. Cost
Unless otherwise agreed in writing between Canopy and AGFA, in
consideration of AGFA providing Canopy with personnel and other
services under this Agreement, Canopy shall remit to AGFA at the end of
each month the cost with respect to the previous month for each
Transferred Employee an amount equal to the full salary and/or wages
for such Transferred Employee, plus an administrative fee of
twenty-eight percent (28%) of Transferred Employees' salary and/or
wages to cover benefits and other costs. For Transferred Employees who
become eligible for severance pay and benefits under AGFA's Severance
Pay Plan, Canopy shall pay to AGFA in a lump sum an amount equal to the
full severance salary and/or wages for such Transferred Employee, plus
an administrative fee of twenty-eight percent (28%) of the Transferred
Employee's salary and/or wages to cover benefits and other severance
costs.
5. Separation Pay
Canopy does not currently anticipate terminating without cause the
employment of any Transferred Employee or implementing and
reductions-in-force ("RIF"). Upon expiration or termination of this
Agreement and until December 31, 2001, Canopy agrees that if it
terminates without cause any Transferred Employee, or implements a RIF
affecting a Transferred Employee(s),then Canopy shall pay to each such
Transferred Employee (s) separation pay in an amount not less than
two(2) weeks of the Transferred Employee's then current salary and/or
wages for every year of service with Canopy and AGFA. For avoidance of
doubt and by way of an example only, if a Transferred Employee has four
(4) years of service with AGFA and less than one (1) year with Canopy,
Canopy shall provide separation pay equal of no less than ten (10)
weeks. Canopy's separation pay obligation will not apply to termination
of a Transferred Employee's employment for cause.
6. Expenses
All expenses incurred by the Transferred Employees on and
after July 1, 2000 shall be for the account of Canopy, and Canopy will
directly reimburse the Transferred Employee for such approved expenses
in a timely manner.
7. Additional Compliance Obligations of Canopy
Except as specifically listed in this Agreement or otherwise
agreed in writing, Canopy warrants and agrees to comply with all
applicable federal, state and local laws, regulations and employer
responsibilities relating to the Transferred Employees. Such laws,
regulations and responsibilities, include but are not limited to those
(i) relating to employment discrimination, including sexual or other
harassment; (ii) relating to leaves of absence; (iii) relating to the
quality, adequacy and safety of all goods produced or services
performed by the Transferred Employees; (iv) relating to the provision
of all facilities, equipment and job training needed to perform
services, including those necessary to comply with federal and state
safety and health standards; and (v) relating to the verification that
Transferred Employees have any necessary professional licenses or
permits as may be required by law. Canopy shall be solely responsible
for any acts or failures to act related to the Transferred Employees by
it or its agents unless otherwise specifically authorized by AGFA in
writing.
8. Indemnification
AGFA or each of its subsidiaries and their respective
directors, officers, agents and employees, in their individual and
official capacities, (each an "AGFA Indemnified Person") shall not, in
any manner, be responsible for any liability, claim, obligation, damage
or loss which in any way arises out of, concerns or relates to Canopy's
or their agents' treatment, acts or failures to act with respect to the
Transferred Employees. Canopy agrees to indemnify, release and hold
each AGFA Indemnified Person harmless from and against any claims,
damages, losses, obligations and liabilities (whether joint or
exclusive), costs and expenses (including without limitation,
reasonable attorneys fees), judgments and settlements (individually,
"Liability" and collectively "Liabilities") arising out of, concerning
or relating to any Transferred Employee during the term of this
Agreement, including without limitation, (i) Canopy's treatment, acts,
or failures to act with respect to any Transferred Employee; (ii) any
claims brought against any AGFA Indemnified Person by or on behalf of
any Transferred Employee; (iii) any services rendered or to be rendered
pursuant to this Agreement; or (iv) damages to the business of AGFA,
injury to or death of any person, damages to property or any economic
loss that may be incurred or awarded arising out of or in any way
connected with the Transferred Employees; provided that the obligation
to indemnify AGFA Indemnified Parties extends only to those liabilities
that arise out of activities or omissions occurring after June 30, 2000
except for activities or omissions in connection with Canopy's offers
of employment to Transferred Employees.
9. Assignment
This Agreement may not be assigned by any Party without the
prior written consent of the other Parties.
10. Termination
This Agreement shall terminate and/or expire upon the earlier
to occur of (i) 30 days following written notice from Canopy or (ii)
September 30, 2000; provided that ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ will remain an AGFA
employee under the terms and conditions of this Agreement until June
30, 2001.
11. Entirety
This Agreement constitutes the entire agreement by and between
the parties with respect to the services of the Employees. This
Agreement is not intended to and shall not operate or be construed to
supersede the Asset Purchase Agreement.
12. Amendment
This Agreement may not be waived, changed, amended, modified,
altered or rescinded, except upon the express written consent of both
AGFA and Canopy. Any waiver of any provision of this Agreement shall
not constitute a waiver of any other provision of this Agreement.
13. Independent Contractor
AGFA is an independent contractor with respect to the
provision and performance of its services hereunder.
14. Force Majeure
AGFA shall be absolved from its obligations hereunder when and
to the extent that performance is delayed or prevented by reason of
acts of God, or of force majeure, fire, riot, explosion, war, computer
failure, strikes, labor disputes, or government laws, orders or
regulations.
15. Notices
Any notice required or permitted to be given under this
Agreement shall be in writing and shall be effective upon receipt. Both
parties shall acknowledge in writing the receipt of any notice
delivered in person.
16. Enforcement
In any action to enforce any of the provisions of this
Agreement, the prevailing party in such action shall be entitled to, in
addition to other relief granted, its reasonable costs and expenses,
including, but not limited to, experts' fees, attorneys' fees,
arbitration costs, and court costs, consistent with Section 8 herein.
17. Choice of Law
This Agreement shall in all respects be interpreted, enforced
and governed under the laws of the State of Delaware without giving
effect to the principles of conflicts of laws thereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date indicated above.
CANOPY, LLC AGFA CORPORATION
By: By:
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Title: Title:
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Date: Date:
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SCHEDULE A
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Schedule I
MEMBERS, INITIAL CAPITAL CONTRIBUTIONS AND
INITIAL MEMBERSHIP INTERESTS
Initial Capital Initial Percentage
Member Contributions Units Interests
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Xeikon America, Inc. $ 3,900,000(1) 3,900 26%
PrimeSource Corp. $ 11,100,000(2) 11,100 74%
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(1) Xeikon's Initial Capital Contribution shall be in the form of cash or
Contributed Property, consisting of the Agfa DPS business with a net present
value of $3.4 million and $500,000 cash.
(2) PS's Initial Capital Contribution shall be in the form of cash or
Contributed Property, consisting of the following:
a) New Xeikon branded inventory with the agreed value of $10,895,857.
b) Fixed assets with the agreed value of $203,143 as set out on Schedule I-c.
c) Cash in the amount of $1,000, which has been delivered to Canopy on July 1,
2000.
The above balances for fixed assets may change slightly to reflect activity by
PrimeSource through the date of contribution, with the result that the amount
for the inventory would also correspondingly change so the total of all three
items is $11,100,000.
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1 Xeikon's Initial Capital Contribution shall be
in the form of cash or Contributed Property,
consisting of the Agfa DPS business with a net
present value of $3.4 million and $500,000 cash.
------------------------------------------------
2 PS's Initial Capital Contribution shall be in
the form of cash or Contributed Property,
consisting of the following:
------------------------------------------------
a) New Xeikon branded inventory with the agreed
value of $10,895,857.
b) Fixed assets with the agreed value of
$203,143 as set out on Schedule I-c.
c) Cash in the amount of $1,000, which has been
delivered to Canopy on July 1, 2000 .
The above balances for fixed assets may change
slightly to reflect activity by PrimeSource
through the date of contribution, with the
result that the amount for the inventory would
also correspondingly change so the total of all
three items is $11,100,000.