FIRST AMENDED AND RESTATED
COMPANY AGREEMENT
OF
HPG ACQUISITION, LLC
TABLE OF CONTENTS
ARTICLE I THE COMPANY GENERALLY..................................................................................1
Section 1.1 Formation........................................................................................1
Section 1.2 Name.............................................................................................1
Section 1.3 Duration.........................................................................................1
Section 1.4 Purpose..........................................................................................1
Section 1.5 Principal Place of Business......................................................................1
Section 1.6 Registered Office and Registered Agent...........................................................2
Section 1.7 Company Property.................................................................................2
Section 1.8 Merger and Conversion............................................................................2
Section 1.9 Definitions and Construction.....................................................................2
ARTICLE II MEMBERS AND INTERESTS.................................................................................4
Section 2.1 Initial Members..................................................................................4
Section 2.2 New Members .....................................................................................4
Section 2.3 Admission of Additional Members..................................................................4
ARTICLE III FINANCE, ALLOCATIONS AND DISTRIBUTIONS...............................................................4
Section 3.1 Capital Accounts ................................................................................4
Section 3.2 Interest.........................................................................................5
Section 3.3 No Withdrawal....................................................................................5
Section 3.4 Loans from Members...............................................................................5
Section 3.5 Member Negative Capital Account Balances.........................................................5
Section 3.6 Allocations of Net Income or Net Loss for Capital Account Purposes...............................5
Section 3.7 Allocations for Tax Purposes.....................................................................7
Section 3.8 Distributions....................................................................................8
Section 3.9 Capital Contributions............................................................................8
Section 3.10 Additional Capital Contributions.................................................................8
Section 3.11 Tax Matters......................................................................................9
ARTICLE IV CONDUCT OF COMPANY AFFAIRS............................................................................9
Section 4.1 Managing Member..................................................................................9
Section 4.2 Members Generally................................................................................11
Section 4.3 Compensation of Members and Affiliates...........................................................11
Section 4.4 Good Faith Actions...............................................................................11
Section 4.5 Indemnification..................................................................................12
Section 4.6 Meetings of Members..............................................................................12
Section 4.7 Limitations......................................................................................14
Section 4.8 Officers.........................................................................................14
ARTICLE V BOOKS AND RECORDS......................................................................................16
Section 5.1 Books and Records................................................................................16
Section 5.2 Access by Members................................................................................16
ARTICLE VI TRANSFERS OF INTERESTS................................................................................16
Section 6.1 Permitted Transfers of Company Interest..........................................................16
Section 6.2 Option to Purchase Company Interest..............................................................16
Section 6.3 Other Disposition................................................................................17
Section 6.4 Drag-Along Rights................................................................................18
Section 6.5 Bankruptcy of Member.............................................................................19
Section 6.6 Void Assignments.................................................................................19
ARTICLE VII WINDING UP...........................................................................................19
Section 7.1 Events Requiring Winding Up......................................................................19
Section 7.2 Winding Up Affairs and Distribution of Assets....................................................19
Section 7.3 Termination......................................................................................20
ARTICLE VIII MISCELLANEOUS.......................................................................................20
Section 8.1 Notices..........................................................................................20
Section 8.2 Entire Agreement.................................................................................20
Section 8.3 Amendments.......................................................................................20
Section 8.4 Waivers..........................................................................................20
Section 8.5 Severability.....................................................................................20
Section 8.6 Further Assurances...............................................................................21
Section 8.7 Governing Law....................................................................................21
Section 8.8 Power of Attorney................................................................................21
Section 8.9 Successors and Assigns...........................................................................21
Section 8.10 Counterparts.....................................................................................21
EXHIBITS A and A-1 PERCENTAGES AND CAPITAL CONTRIBUTIONS OF MEMBERS
EXHIBIT B DESCRIPTION OF CONTRIBUTED ASSETS
FIRST AMENDED AND RESTATED
COMPANY AGREEMENT
OF
HPG ACQUISITION, LLC
THESE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE IN RELIANCE UPON AN EXEMPTION THEREFROM. THESE
SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES REGULATORY AUTHORITY OF ANY
STATE. THE SALE OR OTHER DISPOSTION OF THE MEMBERSHIP INTERESTS IS RESTRICTED,
AS SET FORTH IN THIS COMPANY AGREEMENT, AND THE EFFECTIVENESS OF ANY SUCH SALE
OR OTHER DISPOSITION MAY BE CONDITIONED UPON RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE OR
OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND OTHER APPLICABLE STATE STATUTES. BY ACQUIRING THE
MEMBERSHIP INTERESTS REPRESENTED BY THIS COMPANY AGREEMENT, THE MEMBERS
REPRESENT THAT, EXCEPT AS PROVIDED IN THIS COMPANY AGREEMENT, THEY WILL NOT SELL
OR OTHERWISE DISPOSE OF THE MEMBERSHIP INTERESTS WITHOUT REGISTRATION OR OTHER
COMPLIANCE WITH THE AFORESAID STATUTES AND THE RULES AND REGULATIONS THEREUNDER.
This FIRST AMENDED AND RESTATED COMPANY AGREEMENT (this "Agreement," as it
may be amended from time to time as provided below) is made and entered into as
of March __, 2007, but effective for all purposes as of March 1, 2007, by and
among the Initial Members and the New Members (as defined below).
ARTICLE I
THE COMPANY GENERALLY
Section 1.1 Formation. HPG Acquisition, LLC was formed as a limited
liability company (the "Company") under and pursuant to the TLLCL and other
relevant laws of the State of Texas by the filing of a certificate of formation
(the "Certificate of Formation") with the State of Texas on March 9, 2007. The
Company merged with Hampshire Plaza Garage, LLC, which was formed as a limited
liability company under and pursuant to the New Hampshire Limited Liability Code
by filing a certificate of formation on November 19, 2003. The Company was the
surviving entity following the merger.
Section 1.2 Name. The name of the Company is HPG Acquisition, LLC. The
Company shall conduct business under that name or such other names complying
with applicable law as the Managing Member may determine from time to time.
Section 1.3 Duration. The Company commenced on the first proper filing of
the Certificate of Formation for the Company and shall continue until its
business and affairs are would up as provided in Article VII.
Section 1.4 Purpose. The purpose of the Company shall be to manage and
operate real property interests in Midland, Texas, and to engage in any other
lawful business or activity necessary or convenient in pursuit of the foregoing
purposes.
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Section 1.5 Principal Place of Business. The Company's principal place of
business shall be at such place or places as the Managing Member may determine
from time to time.
Section 1.6 Registered Office and Registered Agent. The registered office
of the Company in the State of Texas shall be ▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, and the name of the Company's registered agent at that address
shall be ▇▇▇ ▇. ▇▇▇▇▇▇. The Managing Member may change the registered office and
the registered agent of the Company from time to time. The Managing Member may
cause the Company to qualify to do business as a limited liability company (or
other entity in which the Members have limited liability) in any other
jurisdiction and to designate any registered office or registered agent in any
such jurisdiction.
Section 1.7 Company Property. All real and personal property owned by the
Company shall be deemed owned by the Company as an entity and held in its name.
No Member shall have any ownership interest in any such property.
Section 1.8 Merger and Conversion. The Company may merge with, or convert
into, another entity only in accordance with a plan of merger or conversion
approved by the Required Members.
Section 1.9 Definitions and Construction.
(a) As used in this Agreement, the following terms have the following
meanings:
"Additional Contributions" has the meaning specified in Section 3.2.
"Agreement" has the meaning specified in the introduction to this
Agreement.
"Book-Tax Disparities" means the disparities between the financial records
prepared in accordance with generally accepted accounting principles and the
financial records prepared in accordance with federal income tax requirements.
"Capital Account" has the meaning specified in Section 3.3.
"Certificate of Formation" has the meaning specified in Section 1.1.
"Claim" has the meaning specified in Section 4.5.
"Company" has the meaning specified in Section 1.1.
"Covered Person" has the meaning specified in Section 4.5.
"Deceased Member" has the meaning specified in Section 6.4(a).
"Dispose" has the meaning specified in Section 6.3(a).
"Divorced Member" has the meaning specified in Section 6.4(a).
"Electing Members" has the meaning specified in Section 6.5(b).
"Election Notice" has the meaning specified in Section 6.5(b).
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"Election Period" has the meaning specified in Section 6.5(c).
"Initial Member" has the meaning specified in Section 2.1.
"Interest" means, with respect to any Member at any time, that Member's
entire beneficial ownership interest in the Company at such time, including that
Member's Capital Account, voting rights, and right to share in profits, losses,
cash distributions and all other benefits of the Company as specified in this
Agreement, together with that Member's obligations to comply with all of the
terms of this Agreement.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Liquidating Agent" has the meaning specified in Section 7.2(a).
"Managing Member" means ▇▇▇ ▇▇▇▇▇▇ or such other Member appointed as
Managing Member as provided in this Agreement, but excludes any such Person that
has ceased to be the Managing Member or a Member as provided in this Agreement.
"Member" means any Person admitted to the Company as a member as provided
in this Agreement but excludes any such Person that has ceased to be a member as
provided in this Agreement.
"New Members" has the meaning specified in Section 2.2.
"Net Loss" has the meaning specified in Section 3.6.
"Net Income" has the meaning specified in Section 3.6.
"Offer" has the meaning specified in Section 6.5(a).
"Offered Membership Interest" has the meaning specified in Section 6.3(a).
"Percentage" for any Member means the Percentage established for that
Member in accordance with this Agreement.
"Person" means any individual, corporation, partnership, limited liability
company, business trust or other entity, government or governmental agency or
instrumentality.
"Purchase Event" has the meaning specified in Section 6.4(a).
"Receiving Members" has the meaning specified in Section 6.5(a).
"Rejecting Member" has the meaning specified in Section 6.5(c).
"Required Members" means Members owning at least fifty-one percent of the
Percentages of all Members.
"TLLCL" means the Texas Limited Liability Company Law, part of the Texas
Business Organizations Code.
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"Transferring Member" has the meaning specified in Section 6.3(a).
"Voluntary Transfer Notice" has the meaning specified in Section 6.3(a).
(b) In this Agreement:
(i) Terms defined in the singular have the corresponding meaning in
the plural and vice versa.
(ii) Reference to one gender includes the others.
(iii) The word "include" and its derivatives means "include without
limitation."
(iv) References to Articles, Sections and Exhibits are to the
specified Articles and Sections of, and Exhibits to, this
Agreement unless the context otherwise requires. Each Exhibit to
this Agreement is made a part of this Agreement for all purposes.
(v) References to statutes or regulations are to those statutes or
regulations as currently amended and to the corresponding
provisions as they may be amended or superseded in the future.
ARTICLE II
MEMBERS AND INTERESTS
Section 2.1 Initial Members. At the time of the formation of the Company,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Universal Guaranty Life Insurance Company were the only
Members of the Company (each an "Initial Member" and collectively "Initial
Members"). At the time of the formation, the Initial Members' Percentages were
as follows: (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ - 33.3333%, and d (ii) Universal Guaranty Life
Insurance Company - 66.6667%. The Initial Members' Percentages following the
admission of the New Members is set forth on Exhibit A.
Section 2.2 New Members. Effective as of March 1, 2007, the following
persons were admitted as additional Members of the Company: AMEN PROPERTIES,
INC., a Delaware corporation, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ BROTHERS
INVESTMENTS, a Texas general partnership, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, ▇▇▇▇ ▇. ▇▇▇▇ PENSION PLAN and S.E.S. INVESTMENTS,
LTD., a Texas limited partnership (collectively the "New Members"). The New
Members' Percentages following their admission is set forth on Exhibit A.
Section 2.3 Admission of Additional Members. Upon prior approval by the
Required Members, the Managing Member may cause the Company to issue additional
Interests and may admit additional Persons to the Company as members on such
terms as the Required Members shall determine, if but only if each such new
Member agrees in writing to be bound by the provisions of this Agreement as a
Member and notifies the other Members of its address for notices under this
Agreement. In the event the Company issues additional Interests or admits
additional Persons to the Company as members, the Percentages of the Members
shall be adjusted as appropriate to account for the additional Interests issued
or members admitted.
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ARTICLE III
FINANCE, ALLOCATIONS AND DISTRIBUTIONS
Section 3.1 Capital Accounts.
(a) The Company shall establish and maintain for each Member a separate
Capital Account. Such Capital Account shall be increased by (i) the cash amount
or Net Agreed Value of all Capital Contributions made by such Member and (ii)
all items of Net Income and other items of income and gain (including income and
gain exempt from tax) computed as provided herein and allocated to such Member
pursuant to Section 3.6 hereof. Such Capital Account shall be decreased by (x)
the cash amount or Net Agreed Value of all distributions of cash or property
made to such Member pursuant to this Agreement and (y) all items of Net Loss and
other items of loss and deduction computed as provided herein and allocated to
such Member pursuant to Section 3.6 hereof. For purposes of computing the amount
of any item of income, gain, deduction or loss to be reflected in the Members'
Capital Accounts, the determination, recognition and classification of any such
item shall be the same as its determination, recognition and classification for
federal income tax purposes (including any method of depreciation, cost recovery
or amortization used for this purpose) subject to such adjustments or other
methodologies as may be permitted or required by the Allocation Regulations. The
Capital Accounts of the Members shall be maintained and adjusted in accordance
with and as provided in the Allocation Regulations as interpreted and applied in
the discretion of the Managing Member.
(b) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on
an issuance of additional Company Interests, the Capital Accounts of all
existing Members and the Carrying Value of each Company property immediately
prior to such issuance shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Company property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual sale of
each such property immediately prior to such issuance and had been allocated to
the Members at such time pursuant to Section 3.6.
Section 3.2 Interest. No interest shall be paid by the Company on Capital
Contributions or on balances in Capital Accounts.
Section 3.3 No Withdrawal. No Member shall be entitled to withdraw any part
of his Capital Contribution or his Capital Account or to receive any
distribution from the Company, except as specifically provided in Section 3.8
hereof.
Section 3.4 Loans from Members. Loans from a Member to the Company shall
not be considered Capital Contributions. The Managing Member may make advances
to provide working capital to the Company as the Managing Member shall deem
necessary for the operation of the Company's business. The Managing Member shall
not be obligated, however, to make any such advances. Such advances shall be
considered loans to the Company and shall bear interest at market rates as
determined in the sole discretion of the Managing Member.
Section 3.5 Member Negative Capital Account Balances. A negative Capital
Account balance of a Member shall not be considered an asset of the Company at
any time, and no Member having a negative Capital Account balance shall be
obligated to restore such negative Capital Account balance.
5
Section 3.6 Allocation of Net Income or Net Loss for Capital Account
Purposes. For purposes of maintaining the Capital Accounts and in determining
the rights of the Members among themselves, Net Income or Net Loss, and all
other items of income, gain, loss and deduction, for any taxable year (or
portion thereof) shall be allocated among the Members as follows:
(a) General Rule. For purposes of maintaining the Capital Accounts and in
determining the rights of the Members among themselves, except as provided in
Section 3.6(b), Net Income or Net Loss for any taxable year (or portion thereof)
shall be allocated among the Members as follows:
(i) Net Income.
(A) Net Income shall first be allocated to the Members, in the same
proportions and in reverse order, until the aggregate amount of Net
Income allocated to the Members pursuant to this Section 3.6(a)(i)(A)
for the current taxable year and all previous taxable years is equal
to the aggregate amount of Net Loss allocated to the Members pursuant
to Section 3.6 (a)(ii)(B), Section 3.6(a)(ii)(C), and Section
3.6(a)(ii)(D) hereof;
(B) then, all remaining Net Income, or, if there are no allocations
pursuant to Section 3.6(a)(i)(A) hereof, all Net Income shall be
allocated to the Members in accordance with their respective
Percentage Interests.
(ii) Net Loss.
(A) Net Loss shall first be allocated to the Members, in the same
proportions and in reverse order, until the aggregate amount ofNet
Loss allocated to the Members pursuant to this Section 3.6(a)(ii)(A)
for the current taxable year and all previous taxable years is equal
to the aggregate amount of Net Income allocated to the Members
pursuant to Section 3.6(a)(i)(B) hereof for all previous taxable
years; provided that Net Loss shall not be allocated pursuant to this
Section 3.6(a)(ii)(A) to the extent that such allocation would cause
any Member to have (or to increase) an Adjusted Capital Account
Deficit;
(B) then, Net Loss shall be allocated to the Members in the ratio that
the Members' aggregate Capital Contributions bear to each other, until
the total amount of Net Loss allocated to each Member pursuant to this
Section 3.6(a)(ii)(B) for the current taxable year and all previous
taxable years is equal to, but not in excess of, the aggregate Capital
Contributions of such Member; provided that Net Loss shall not be
allocated pursuant to this Section 3.6(a)(ii)(B) to the extent that
such allocation would cause any Member to have (or to increase) an
Adjusted Capital Account Deficit;
(C) then, Net Loss shall be allocated to the Members in accordance
with their respective Percentage Interests; provided that Net Loss
shall not be allocated pursuant to this Section 3.6(a)(ii)(C) to the
extent that such allocation would cause any Member to have (or to
increase) an Adjusted Capital Account Deficit; and
6
(D) then, all remaining Net Loss shall be allocated to the Managing
Member.
(b) Mandatory Allocations. Prior to making any allocations provided above,
the following mandatory allocations shall be made:
(i) Qualified Income Offset. Except as provided in Section 3.6(b)(ii)
hereof, in the event any Member unexpectedly receives any adjustments,
allocations or distributions described in Treas. Reg.
ss.ss.1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.7041(b)(2)(ii)(d)(6) which cause or increase an Adjusted Capital Account
Deficit, items of Company income and gain shall be specially allocated to
such Member in an amount and manner sufficient to eliminate, to the extent
required by the Allocation Regulations, the Adjusted Capital Account
Deficit created or increased by such adjustments, allocations or
distributions as quickly as possible.
(ii) Nonrecourse Debt Allocations. Notwithstanding any other provision of
this Section 3.6, each Member shall be allocated items of Company income
and gain in each taxable year as necessary, in the Managing Member's
discretion, to comply with the Allocation Regulations relating to Company
nonrecourse debt and Member nonrecourse debt.
(iii) Gross Income Allocations. In the event any Member has an Adjusted
Capital Account Deficit, such Member shall be specially allocated items of
Company gross income and gain in the amount of such excess as quickly as
possible.
(iv) Curative Allocations. The special allocations set forth in Section
3.6(b)(i), (ii) and (iii) (the "Regulatory Allocations") are intended to
comply with the Allocation Regulations. Notwithstanding any other
provisions of this Section 3.6, the Regulatory Allocations shall be taken
into account in allocating Net Income, Net Loss and other items of income,
gain, loss and deduction among the Members such that, to the extent
possible, the net amount of such allocations of Net Income, Net 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 Member if the
Regulatory Allocations had not occurred.
(v) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to the Allocation Regulations, to
be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which
their Capital Accounts are required to be adjusted pursuant to the
Allocation Regulations.
Section 3.7 Allocations for Tax Purposes.
(a) For federal income tax purposes, except as otherwise provided in this
Section 3.7, each item of income, gain, loss, deduction and credit of the
Company shall be allocated among the Members in the same manner as its
corresponding item of "book" income, gain, loss or deduction has been allocated
pursuant to Section 3.6 hereof.
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(b) In an attempt to eliminate Book-Tax Disparities attributable to any
Adjusted Property or Contributed Property, items of income, gain, loss,
depreciation and cost recovery deductions, attributable to an Adjusted Property
or a Contributed Property (and not having a corresponding "book" item) shall be
allocated among the Members in a manner consistent with the principles of
Section 704(c) of the Code (using the traditional method under Reg. 1.704-3(b))
to eliminate the Book-Tax Disparities attributable to such property. Any items
of Residual Gain or Residual Loss attributable to an Adjusted Property or a
Contributed Property shall be allocated among the Members in the same manner as
their corresponding "book" items have been allocated under Section 3.6.
(c) All items of income, gain, loss, deduction, credit and basis allocation
recognized by the Company for federal income tax purposes and allocated to the
Members in accordance with the provisions hereof shall be determined without
regard to any election under Section 754 of the Code which may be made by the
Company; provided, however, such allocations, once made, shall be adjusted as
necessary to take into account those adjustments permitted by Sections 734 and
743 of the Code.
(d) Any Recapture Income resulting from the sale or other taxable
disposition of any Company assets shall be allocated, to the extent possible,
after taking into account other required allocations of gain pursuant to this
Section 3.7, among the Members (or their successors in interest) in the same
proportions and to the extent such Members have been allocated or have claimed
any deductions directly or indirectly giving rise to the treatment of such gain
as Recapture Income.
(e) Each item of Company income, gain, loss, deduction and credit
attributable to a transferred Company Interest shall be allocated between the
transferor and the transferee in such manner as the Managing Member, in its sole
discretion, determines may be required or permitted by Section 706 of the Code.
Section 3.8 Distributions.
(a) Except as described in Section 3.8(b) and Section 3.8(c), the Company
shall make distributions of cash and other property to Members only at such time
and in such amount as the Managing Member may determine in its sole discretion.
Unless otherwise provided by Section 3.8(b) or 3.8(c) of this Section, all
distributions shall be in accordance with the Members' Percentage Interests.
(b) Subject to Section 3.8(c) and Article VII, to the extent that the
Company has Available Cash, the Company shall make distributions to the Members
within 90 days of the end of each taxable year in an amount equal to the Tax
Liability Deficiency of each Member. Such distributions shall be made to the
Members pro rata in accordance with their relative Tax Liability Deficiencies,
if any, with respect to the Company Interest held by such Member until each
Member has received distributions pursuant to this Section 3.8(b) equal to such
Member's Tax Liability Deficiency.
(c) Upon the dissolution and winding up of the Company, after making all
allocations under this Article III, all assets and proceeds shall be distributed
to the Members as provided in Section 7.2.
Section 3.9 Capital Contributions.
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(a) On the commencement of the Company, each Initial Member made capital
contributions to the Company, and the Percentages of the New Members are set
forth on Exhibit A. Upon the execution of this Agreement, each New Member shall
make a contribution to the Company in the amount set forth next to its name on
Exhibit A.
(b) Except as provided in Section 3.9 or 3.10(a), no Member shall have any
obligations to make any contribution to the Company.
Section 3.10 Additional Capital Contributions. If the Managing Member
determines that additional amounts over and above the required capital
contributions provided for in Section 3.9 are necessary to enable the Company to
satisfy its obligations, the Managing Member may request that the Members
contribute such additional amounts to the capital of the Company as necessary.
If the Members so agree, such amounts (the "Additional Contributions") shall be
contributed at the times and in the amounts specified by the Managing Member. In
no event shall the Managing Member be obligated to call for such Additional
Contributions, and in no event shall any Member be obligated to make any such
Additional Contributions if requested by the Managing Member. If any Member
declines to make an Additional Contribution as requested by the Managing Member,
the Managing Member may contribute, or allow any other Member to contribute,
cash to the Company as an Additional Contribution in an amount up to the
difference between the total Additional Contributions requested from the Members
under this Section 3.10 and the amount of Additional Contributions actually
contributed by the Members. In such case, the Percentages of the Members shall
be redetermined and adjusted on a proportionate basis, taking into account the
amount of such Additional Contributions and the value of all Company assets
immediately prior to such Additional Contributions. Each Member understands that
any Member who declines to make an Additional Contribution requested by the
Managing Member will have his Interest diluted.
Section 3.11 Tax Matters.
(a) The Members intend that the Company be treated as a partnership for
federal income tax purposes and any similar provisions of state or local law.
(b) The Managing Member shall be the "tax matters partner" for purposes of
IRC ss.6231(a)(7). The tax matters partner shall cause to be prepared and shall
sign all returns of the Company, make any election which is available to the
Company, and monitor any governmental tax authority in any audit that the
authority may conduct of the Company's books and records or other documents.
Each Member shall take all actions required to cause the Managing Member to be
(and continue as) the tax matters partner and, if requested by the tax matters
partner, to otherwise authorize and appoint the tax matters partner as that
party with the sole authority to handle all tax matters of the Company. Each
Member agrees to execute, certify, deliver, file and record at appropriate
public offices or deliver to the tax matters partner such documents as may be
requested by the tax matters partner to facilitate the handling of any tax
matter as the tax matters partner deems necessary.
(c) After the end of each fiscal year of the Company, the Managing Member
shall cause to be prepared and transmitted to each Member, as promptly as
possible, and in any event by the end of the seventy-fifth (75th) day following
the close of the fiscal year, a federal income tax Form K-1 and any required
similar state and local income tax form for each Member.
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ARTICLE IV
CONDUCT OF COMPANY AFFAIRS
Section 4.1 Managing Member.
(a) Subject to the other provisions of this Agreement, the Managing Member
shall have the right to, and shall be fully responsible for, the management and
control over the business and internal affairs of the Company. The Managing
Member shall make all decisions affecting the business of the Company, except to
the extent that this Agreement requires the consent or approval of some or all
other Members. The Members by vote of the Required Members may from time to time
direct the Managing Member to undertake or terminate specified management
activities as set forth in such directive. The Managing Member shall have all
rights, powers and authority generally conferred by the laws of the state of New
Hampshire on a manager of a limited liability company managed by a manager or as
otherwise provided by law or necessary, advisable or consistent with
accomplishing the purposes of the Company.
(b) Without limiting the other provisions of Section 4.1, the Managing
Member shall have the power:
(i) to acquire, hold and dispose of property or any interest in it in
the ordinary course of business of the Company;
(ii) to protect and preserve the title to and the interest of the
Company in all of its property and assets, real, personal and
mixed;
(iii) to employ from time to time, at the expense of the Company,
consultants, accountants and attorneys;
(iv) to pay all expenses incurred in the operation of the Company and
all taxes, assessments, rents and other impositions applicable to
the Company or any part thereof;
(v) to sign deeds, notes, contracts and other instruments in the name
and on behalf of the Company after approval by the Required
Members;
(vi) to make all filings with governmental authorities, including tax
returns before the applicable due date and without interest or
penalty; and
(vii) to assume any and all overall duties imposed on a member of a
limited liability company managed by its members by the laws of
the state of New Hampshire.
(c) Notwithstanding any other provision of this Agreement to the contrary,
the Managing Member may do any of the following only with the prior written
consent of all other Members or such other number of Members as may be
specified:
(i) do any act in contravention of this Agreement;
(ii) to cause this Company to enter into partnerships or become a
member of other limited liability companies and to exercise the
authority and to perform the duties required of the Company as
such a partner or member;
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(iii) to borrow money on behalf of the Company and to encumber the
Company assets or place title in the name of a nominee for
purposes of obtaining financing;
(iv) do any act that would make it impossible to carry on the ordinary
business of the Company, except as otherwise provided in this
Agreement;
(v) knowingly do any act that would subject any Member to liability
for the obligations of the Company in any jurisdiction;
(vi) knowingly do any act that would cause the Company to be treated
as an association taxable as, or otherwise taxed as, a
corporation for federal income tax purposes unless at the time it
already is so taxed;
(vii) wind up the Company or authorize or agree to do so, other than
in accordance with Article VII;
(viii) consolidate or merge the Company with, or convert the Company
into, another entity, other than in accordance with Section 1.8;
(ix) sell, lease or otherwise dispose of all or substantially all of
the assets of the Company, unless the Required Members consent in
writing;
(x) amend this Agreement, other than in accordance with Section 8.3;
or
(xi) admit an Additional Member except pursuant to Section 2.3 or
Section 6.1.
(d) In all matters relating to the business and internal affairs of the
Company, the Managing Member shall act in a manner that the Managing Member
reasonably believes to be in the best interest of the Company and its Members.
(e) The Managing Member may resign as Managing Member with thirty (30) days
written notice to the Required Members. Members owning in the aggregate at least
fifty-one percent (51%) of the Percentages by notice to the Managing Member, may
remove the Managing Member as Managing Member if, but only if, in the notice the
signing Members appoint a successor Managing Member in accordance with Section
4.1(e). The Managing Member shall continue as a Member following resignation or
removal with the same Percentage as before resignation or removal. The Managing
Member shall be entitled to vote his Interest on removal of the Managing Member
even though the Managing Member may have a conflict of interest in casting such
vote.
(f) If at any time the Managing Member ceases to be a Member, or in
connection with the resignation or removal of the Managing Member as provided in
Section 4.1(d), the Required Members, by notice to the other Members, may
appoint a new Managing Member provided that new Managing Member agrees in
writing to be bound by the provisions of this Agreement as the Managing Member
and, if not already a Member, agrees in writing to be bound by the provisions of
this Agreement as a Member and notifies the other Members of its address for
notices under this Agreement. If the Person so appointed is not already a
Member, it shall be admitted to the Company as a Member effective on the
appointment and shall make such contribution to the Company and receive an
Interest with such Percentage as the Members making the appointment may specify.
Section 4.2 Members Generally. The Members (other than the Managing Member)
shall have no authority to take part in the control, conduct or operation of the
Company and shall have no right or authority to act for or bind the Company,
including during the winding up of the Company. Other than as specifically
provided in this Agreement, no Member (other than the Managing Member) shall
have the right to vote upon any matter concerning the business and affairs of
the Company.
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Section 4.3 Compensation of Members and Affiliates. No Member shall receive
any compensation for its services to the Company, except (a) reimbursement to
the Managing Member for costs and expenses reasonably incurred by it on behalf
of the Company, and (b) compensation paid to Members and Affiliates of Members
that are engaged on behalf of the Company to provide services or materials that
are, in the reasonable judgment of the Managing Member, necessary or desirable
for the Company. All payments to Members and Affiliates of any Member (including
the Managing Member) engaged on behalf of the Company shall be on no better
terms, compensation or remuneration to such Member or Affiliate than is common
in the industry when negotiating at arms length with third parties for similar
services to be rendered for the Company.
Section 4.4 Good Faith Actions. No Member, or any of its officers,
directors, shareholders, constituent partners, managers, members, trustees,
representatives, agents or employees, shall be liable to the Company or to any
of the other Members for any action taken (or any failure to act) by it in good
faith on behalf of the Company and reasonably believed by it to be authorized or
within the scope of its authority, unless that action (or the failure to act)
constitutes fraud, gross negligence, bad faith or willful misconduct, and then
only to the extent otherwise provided by law.
Section 4.5 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless each Member, and its respective
officers, directors, shareholders, managers, members, employees, agents,
subsidiaries and assigns (each, a "Covered Person") from and against any and all
losses, claims, demands, liabilities, expenses, judgments, fines, settlements
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative (each a "Claim"),
in which the Covered Person may be involved, or threatened to be involved, as a
party or otherwise, which relates to or arises out of the Company or its
property, business or affairs; provided, however, that a Covered Person shall
not be entitled to indemnification under this Section 4.5 with respect to (a)
any Claim with respect to which the Covered Person has engaged in fraud, willful
misconduct, bad faith or gross negligence or (b) any Claim initiated by a
Covered Person unless that Claim (or part thereof) was brought to enforce that
Covered Person's rights to indemnification under this Section 4.5. The Company
shall pay in advance of the final disposition of any such Claim expenses
incurred by a Covered Person in defending that Claim if, but only if, that
Covered Person so requests and delivers to the Company of an undertaking by or
on behalf of that Covered Person to repay amounts so advanced if it ultimately
is determined that the Covered Person is not entitled indemnification under this
Section 4.5.
Section 4.6 Meetings of Members.
(a) The Managing Member may call meetings of Members at such times and
places as the Managing Member may determine in its sole discretion. Special
meetings of Members may also be called by the Managing Member upon the written
request of the holders of at least ten percent (10%) of the Interests entitled
to be voted at such meeting. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on.
(b) Written or printed notice stating the place, day and hour of any such
meeting, and in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10), nor more than
sixty (60), days before the date of such meeting as provided in Section 8.1, by
or at the direction of the Managing Member, to each Member entitled to vote at
the meeting, provided that such notice may be waived as provided in this
Agreement.
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(c) All meetings of the Members shall be held at such time and place,
within or without the State of Texas, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof. Members may participate
in such meetings by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting as provided herein 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
on the ground that the meeting is not lawfully called or convened.
(d) The officer or agent having charge of the records reflecting the
Interest of each Member of each class, if more than one class, shall make, at
least ten (10) days before each meeting of Members, a complete list of the
Members entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order with the address of and Percentage of Interest of each Member
of each class, if more than one class, which list, for a period of ten (10) days
prior to such meeting, shall be kept on file at the registered office of the
Company and shall be subject to inspection by any Member at any time during
usual business hours. Such list shall also be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of any Member
during the whole time of the meeting. The original records reflecting the
Interest of each Member of each class, if more than one class, shall be
prima-facie evidence as to the Members entitled to examine such list or records
or to vote at any meeting of Members. Failure to comply with the requirements of
this paragraph shall not affect the validity of any action taken at such
meeting.
(e) Unless otherwise provided in the Certificate of Formation, the holders
of a majority of the Interests entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of Members.
(f) The vote of the holders of a majority of the Interests entitled to vote
at a meeting at which a quorum is present shall be the act of the Members'
meeting, unless the vote of a greater number is required by law, the Certificate
of Formation or this Agreement. The Members present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Members to leave less than a quorum.
(g) Each outstanding Interest shall be entitled to one vote on each matter
submitted to a vote at a meeting of Members, except to the extent that the
voting rights of the Interest of any class or classes are limited or denied by
the Certificate of Formation or by law.
(h) A Member may vote either in person or by proxy executed in writing by
the Member or by his duly authorized attorney in fact. No proxy shall be valid
after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. Each proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest.
(i) For the purpose of determining Members entitled to notice of or to vote
at any meeting of Members or any adjournment thereof, or entitled to
distribution or in order to make a determination of Members for any other proper
purpose, the Managing Member may provide that the record books shall be closed
for a stated period not exceeding sixty (60) days. If the record books shall be
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closed for the purpose of determining Members entitled to notice of or to vote
at a meeting of Members, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the record books, the
Managing Member may fix in advance a date as the record date for any such
determination of Members, such date in any case to be not more than sixty (60)
days and in the case of a meeting of Members, not less than ten (10) days prior
to the date on which the particular action requiring such determination of
Members is to be taken. If the record books are not closed and no record date is
fixed for the determination of Members entitled to notice of or to vote at a
meeting of Members, or Members entitled to receive distribution, the date on
which notice of the meeting is mailed or the date on which the resolution of the
Managing Member declaring such distribution is adopted, as the case may be,
shall be the record date for such determination of Members. When a determination
of Members entitled to vote at any meeting of Members has been made as provided
in this section, such determination shall apply to any adjournment thereof,
except where the determination has been made through the closing of record books
and the stated period of closing has expired.
(j) Any action required by the laws of the State of New Hampshire to be
taken at a meeting of the Members, or any action which may be taken at a meeting
of the Members, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall have been signed by the holder or holders of all the Interests for
each class, if more than one class, entitled to vote with respect to the action
that is the subject matter of the consent, and such consent shall have the same
force and effect as a unanimous vote of the Members. Every written consent
pursuant to this Section shall be signed, dated and delivered in the manner
required by, and shall become effective at the time and remain effective for the
period specified by the laws of the State of New Hampshire. A telegram, telex,
cablegram, or similar transmission by a Member, or a photographic, photostatic,
facsimile or similar reproduction of a writing signed by a Member, shall be
regarded as signed by the Member for purposes of this paragraph.
Section 4.7 Limitations. No Member shall have the right or power to:
(a) withdraw from the Company or withdraw any part of its contributions to
the Company or its Capital Account except as a result of the winding up of the
Company as provided in Article VII or as otherwise provided by nonwaivable
provisions of law;
(b) bring an action for partition of Company property;
(c) cause the winding up of the Company, except as set forth in this
Agreement;
(d) demand or receive (i) interest on its contributions to the Company or
its Capital Account or (ii) any property from the Company other than cash except
as provided in Section 3.8; or
(e) have priority over any other Member either as to the return of
contributions to the Company or as to items of Company income, gain, loss,
deduction and credit, or distributions.
Section 4.8 Officers.
(a) The officers of the Company shall be a President, one or more Vice
Presidents as may be determined from time to time by the Managing Member (and in
case of each such Vice President, with such descriptive title, if any, as the
Managing Member shall deem appropriate), a Treasurer, and a Secretary. None of
14
the officers need be a Member of the Company. Any two (2) or more offices may be
held by the same person. Any or all offices of the Company may be left vacant.
(b) The Managing Member shall appoint the officers of the Company to their
positions at such time or times as it may deem appropriate, and each officer
shall hold office at the pleasure of the Managing Member without the necessity
of periodic reappointment. Any officer or agent may be removed at any time by
the Managing Member with or without cause. The compensation, if any, of all
officers of the Company shall be determined from time to time by the Managing
Member.
(c) The President shall be the chief executive officer of the Company and,
subject to the provisions of this Agreement, shall have general supervision of
the affairs of the Company and shall have general and active control of all of
its business. The President shall preside when present at meetings of the
Members. He shall have general authority to execute bonds, deeds and contracts
in the name of the Company; to cause the employment or appointment of such
employees and agents of the Company as the proper conduct of operations may
require and to fix their compensation, subject to the provisions of this
Agreement; to remove or suspend any employee or agent who shall have been
employed or appointed under his authority or under authority of an officer
subordinate to him; to suspend for cause, pending final action by the authority
which shall have elected or appointed him, any officer subordinate to the
President; and in general to exercise all the powers usually appertaining to the
office of president of a company, except as otherwise provided by statute, the
Certificate of Formation or this Agreement. In the event of the absence or
disability of the President, his duties shall be performed and his powers may be
exercise by the Vice Presidents in the order of their seniority, unless
otherwise determined by the President or the Managing Member.
(d) Each Vice President shall generally assist the President and shall have
such powers and perform such duties and services as shall from time to time be
prescribed or delegated to him by the President.
(e) The Secretary shall see that notice is given of all meetings of the
Members and shall keep and attest true records of all proceedings at all
meetings thereof. He shall have authority to attest any and all instruments or
writings executed by the Company. He shall keep and account for all books,
documents, papers and records of the Company except those for which some other
officer or agent is properly accountable. He shall generally perform all duties
usually appertaining to the office of secretary of a company. In the event of
the absence or disability of the Secretary, his duties shall be performed and
his powers may be exercised as determined by the Secretary, the President or the
Managing Member.
(f) The Treasurer shall be the chief accounting and financial officer of
the Company and shall have active control of and shall be responsible for all
matters pertaining to the accounts and finances of the Company. He shall
receive, audit and consolidate all operating and financial statements of the
Company and its various departments; shall have supervision of the books of
account of the Company, their arrangement and classification; shall supervise
the accounting and auditing practices of the Company and shall have charge of
all matters relating to taxation. The Treasurer shall have the care and custody
of all monies, funds and securities of the Company; shall deposit or cause to be
deposited all such funds in and with such depositories as the Managing Member
shall from time to time direct or as shall be selected in accordance with
procedures established by the Managing Member; shall advise upon all terms of
credit granted by the Company; shall be responsible for the collection of all
15
its accounts and shall cause to be kept full and accurate accounts of all
receipts and disbursements of the Company. He shall have the power to endorse
for deposit or collection or otherwise all checks, drafts, notes, bills of
exchange and other commercial paper payable to the Company and to give proper
receipts or discharges for all payments to the Company. The Treasurer shall
generally perform all duties usually appertaining to the office of treasurer of
a company. In the event of the absence or disability of the Treasurer, his
duties shall be performed and his powers may be exercised as determined by the
Treasurer, the President or the Managing Member.
(g) In addition to the foregoing especially enumerated duties, services and
powers, the officers of the Company shall perform such other duties and services
and exercise such further powers as may be provided by statute, the Certificate
of Formation or this Agreement, or as the Managing Member may from time to time
determine or as may be assigned to them by any competent superior officer. The
Managing Member also may revoke or modify the powers and duties of the officers,
and may delegate authority to other Persons and revoke that delegation as it may
deem appropriate.
(h) The Managing Member also may appoint such other officers and assistant
officers and agents as it shall from time to time deem necessary, who shall
exercise such powers and perform such duties as shall be set forth in this
Agreement or determined from time to time by the Managing Member.
(i) Any officer may resign at any time. Such resignation shall be made in
writing and shall take effect at the time specified therein, or, if no time be
specified then at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
ARTICLE V
BOOKS AND RECORDS
Section 5.1 Books and Records. The Managing Member shall keep complete and
appropriate records and books of account of all transactions and other matters
related to the Company's business. Except as otherwise expressly provided by
this Agreement, such books and records shall be maintained in accordance with
generally accepted accounting principles, consistently applied, and shall
reflect the allocations provided in Section 3.6.
Section 5.2 Access by Members. Subject to Section 5.3, all books and
records of the Company shall be made available at the principal office of the
Company and shall be open to the reasonable inspection and examination of the
Members or their duly authorized representatives during normal business hours,
and each Member has the right to inspect, and copy during normal business hours,
those records, and to obtain from the Managing Member, promptly after becoming
available, a copy of the Company's federal, state and local income tax or
information returns for each year.
ARTICLE VI
TRANSFERS OF INTERESTS
Section 6.1 Permitted Transfers of Company Interest. A Member may sell,
transfer, gift, assign, pledge or convey all or any part of its Interest at any
time and from time to time during its life or upon its death without giving the
other Members an option to purchase such Interest only if the transfer is to any
Related Party (all of the foregoing being referred to herein as "Permitted
16
Transferees"), provided that the Permitted Transferees assume all of the
obligations of the transferring Member under this Agreement. For purposes of
this Article VI, the Initial Members shall be deemed to be Related Parties.
Section 6.2 Option to Purchase Company Interest. Except as provided in
Section 6.1 above, a Member (the "Offering Member") may not sell all or part of
its Interest (the "Offered Interest") without giving the Company and then the
other Members the following option to purchase:
(a) The Offering Member shall give the Company written notice of its intent
to sell the Offered Interest. Such notice must be accompanied by a written
agreement between the Offering Member and the party offering to purchase
the Offered Interest which contains a description of the portion of the
total Interest that the Offering Member intends to sell, the proposed sales
price, and the proposed sales terms. The Company shall have the option to
purchase all or any portion of the Offered Interest upon the same terms and
conditions by giving the Offering Member written notice within thirty (30)
calendar days after receipt of the notice referred to in this paragraph.
(b) If the Company does not elect to exercise its option to purchase the
Offered Interest pursuant to paragraph (a) above, the Offering Member must
give all other Members written notice of its intent to transfer the Offered
Interest. Such notice must be accompanied by a written agreement between
the Offering Member and the party offering to purchase the Offered Interest
which contains a description of the portion of the total Interest that the
Offering Member intends to sell, the proposed sales price, and the proposed
sales terms.
(c) On the receipt of the Offering Member's notice, each other Member may
buy a proportionate share of the Offered Interest based on such Member's
Percentage. Each Member may exercise this option to purchase by giving the
Offering Member written notice within thirty (30) calendar days after
receipt of the notice referred to in the preceding paragraph.
(d) If one or more of the other Members declines to buy its proportionate
share of the Offered Interest, then that portion of the Offered Interest as
to which no Member has exercised its option under the preceding paragraph
will be offered wholly to each Member who exercised its option under the
preceding paragraph. Each such Member may exercise its secondary option as
to all or part of the remaining Offered Interest, by giving the offering
Member written notice within thirty (30) calendar days after the expiration
of the first thirty (30) day period. The Offering Member must honor all
such notices pursuant to this paragraph (d) in full in the order received.
(e) If the Company and/or the other Members do not agree to buy the entire
Offered Interest, the Offering Member may complete the intended sale and
neither the Company nor any other Member may purchase any of the Offered
Interest. If the sale is completed, the transferee shall be an assignee of
the Offering Member's interest upon the payment of a reasonable fee to the
Company to cover costs of preparing, executing and recording all pertinent
documents. A transferee who has become an assignee shall have the right to
become a substitute Member only upon the consent of the Required Members.
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Section 6.3 Other Disposition. Any Member (the "offering Member") who
desires to sell, assign, transfer or otherwise dispose of all or any part of his
Membership Interests, other than in accordance with Sections 6.1 and 6.2 of this
Agreement, may offer to sell all (but not less than all) of his Interest, to the
other Members (the "non-offering Members") at any time during the term of this
Agreement. The offer to sell shall be in writing and at such price and on such
terms as the offering Member desires, provided that such price shall be set
forth as a price per Unit. The non-offering Members shall have 30 days from the
receipt of the offering Member's offer to sell (the "Offer") to either (i)
accept the Offer or (ii) reject the Offer and elect to require the offering
Member to purchase all (but not less than all) of the non-offering Members'
Interest the same price and upon the same terms as set forth in the Offer. If
the non-offering Members accept the Offer, the non-offering Members shall
purchase all (but not less than all) of the offering Member's Interest upon the
terms set forth in the Offer within 30 days after the offering Member receives
written acceptance of the Offer from the non-offering Members, in proportion to
their respective ownership interests. If the non-offering Members rejects the
Offer and elects to require the offering Member to purchase the non-offering
Member's Interest, the offering Member shall purchase all (but not less than
all) of the non-offering Members' Interest at the same proportionate price per
Unit and upon the same terms set forth in the Offer within 30 days after the
offering Member receives written rejection of the Offer and notice of the
non-offering Member's election to require the offering Member to purchase the
non-offering Member's Interest. Failure of the non-offering Members to respond
to the Offer within the period provided for above shall be deemed to be an
acceptance of the Offer. Rejection of the Offer shall be deemed to be an
election by the non-offering Members to require the offering Member to purchase
the non-offering Members' Interest as herein above provided.
Section 6.4 Drag-Along Rights.
(a) If at any time the holders of more than fifty percent (50%) of the
Interests (the "Receiving Members") have received a bona fide written cash offer
from an unaffiliated purchaser or group of unaffiliated purchasers (the "Offer")
(x) to purchase all of the Interests or (y) to purchase all or substantially all
of the Company's assets (other than by way of any merger, consolidation or
similar transaction), the Receiving Members shall have the right to (i) in the
case of a transaction described in the immediately preceding clause (x), require
each holder of Interests to make an election to either sell all of its Interests
to such unaffiliated purchaser or group of purchasers on the same terms and
conditions applicable to, and for the same purchase price payable to, the
Receiving Members, or reject the proposal, and (ii) in the case of a transaction
described in the immediately preceding clause (y), require each holder of
Interests to make an election to either approve and cause the Company to
consummate such transaction or reject the proposal.
(b) If the Receiving Members desire to enter into any transaction, or
series of related transactions, involving the sale of all or substantially all
of the Company's assets or the sale of all Interests in a transaction described
in paragraph (a) of this Section 6.4, then the Receiving Members may, but shall
not be obligated to, give to all other Members (the "Electing Members") a notice
describing in detail all of the terms and conditions of the Offer (including a
copy of the Offer) and stating that such notice is being delivered pursuant to
this Section 6.4 (the "Election Notice").
(c) Within thirty (30) days after the last date on which each Electing
Member has received an Election Notice (the "Election Period"), each Electing
Member shall deliver to the Receiving Members its written election to either
accept the Offer or reject the Offer. Failure to deliver an election within the
18
Election Period shall be deemed to be a rejection of the Offer. If an Electing
Member rejects the offer (a "Rejecting Member"), such Rejecting Member shall
then be obligated to purchase (upon the equivalent terms and conditions as set
forth in the Offer) the Interests of the Receiving Members and any Electing
Member who has elected to accept the Offer for cash at a purchase price equal to
one hundred percent (100%) of the cash purchase price stated in the Offer,
multiplied by the Percentage of each such Receiving Member and Electing Member
that has accepted the Offer. If there shall be more than one Rejecting Member,
the obligation to purchase the Interests of the Receiving Member and the
Electing Members who have accepted the Offer shall be borne pro rata among the
Rejecting Members.
(d) If one or more Rejecting Members are required to purchase Interests
pursuant to this Section 6.4, then the closing shall be held on the date
established by the Receiving Members, which closing date shall be within sixty
(60) days but not less than twenty (20) days after the end of the Election
Period.
Section 6.5 Bankruptcy of Member. If a Member files a petition in
bankruptcy, the Company, and if it declines, the other Members, shall have the
option to purchase the bankrupt Member's Interest. The purchase price, terms and
methodology of such purchase shall be determined in the same manner as described
in Section 6.4 for the purchase of an Interest upon the death of a Member.
Section 6.6 Void Assignments. Any purported sale, transfer, assignment,
hypothecation, pledge or other disposition or encumbrance by a Member of all or
any part of any Interest not made strictly in accordance with the provisions of
this Article VI or otherwise permitted by this Agreement shall be entirely null
and void, and of no force or effect.
ARTICLE VII
WINDING UP
Section 7.1 Events Requiring Winding Up. The Company shall be wound up only
on the first to occur of any one or more of the following:
(a) written consent of the Required Members;
(b) at such time as there is no Member remaining;
(c) entry of a judicial order to wind up the Company; or
(d) on notice from any Member to the other Members on or after the 90th day
following the Managing Member's ceasing to be a Member, unless a new Managing
Member has been appointed as provided in Section 4.1(e).
Section 7.2 Winding Up Affairs and Distribution of Assets.
(a) If an event requiring the winding up of the Company occurs, the
Managing Member or, if there is no Managing Member, a Person designated for this
purpose by written consent of Members owning more than 50% of the outstanding
Percentages owned by Members (the Managing Member, or the Person so designated
being called the "Liquidating Agent"), as soon as practicable shall wind up the
affairs of the Company and sell and/or distribute the assets of the Company. The
Liquidating Agent shall have all of the rights and powers with respect to the
19
assets and liabilities of the Company in connection with the liquidation and
termination of the Company that the Managing Member would have with respect to
the assets and liabilities of the Company during the term of the Company, and
the Liquidating Agent is expressly authorized and empowered to execute any and
all documents necessary or desirable to effectuate the liquidation and
termination of the Company and the transfer of any assets. The Liquidating Agent
shall apply and distribute the proceeds of the sale or liquidation of the assets
and property of the Company in the following order of priority, unless otherwise
required by nonwaivable provisions of applicable law:
(i) to pay (or to make provision for the payment of) all creditors of
the Company (including Members who are creditors of the Company),
in the order of priority provided by law or otherwise, in
satisfaction of all debts, liabilities or obligations of the
Company due its creditors;
(ii) after the payment (or the provision for payment) of all debts,
liabilities and obligations of the Company in accordance with
clause (i) above, any balance remaining shall be distributed to
the Members having positive Capital Accounts in relative
proportion to those Capital Accounts.
(b) The Liquidating Agent shall have sole discretion to determine whether
to liquidate all or any portion of the assets and property of the Company and
the consideration to be received for that property.
(c) Except as required by nonwaivable provisions of the laws of the State
of New Hampshire, no Member shall have any obligation at any time to contribute
any funds to replenish any negative balance in its Capital Account.
Section 7.3 Termination. On compliance with the distribution plan described
in Section 7.2(a), the Liquidating Agent shall execute, acknowledge and cause to
be filed a certificate of termination, at which time the Company shall cease to
exist as a limited liability company.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. Any notice to be given under this Agreement must be in
writing and delivered personally (including by courier), electronically, by
facsimile transmission, or by express, certified or registered mail (a) if to
the Company, to the Managing Member, and (b) if to a Member, at its address set
forth on Exhibit A or, in the case of a Member subsequently admitted, in the
instrument in which it agreed to be bound by this Agreement, or in either case
at such other address as that Member may designate by notice to the other
Members. A notice is deemed given on receipt at the address so provided.
Whenever by statute or the Certificate of Formation or this Agreement, notice is
required to be given to any Member, a waiver thereof in writing signed by the
person or person entitled to such notice, whether before or after the time
stated in such notice, shall be equivalent to the giving of such notice.
Section 8.2 Entire Agreement. This Agreement supersedes all prior
agreements and understandings among the Members with respect to the Company.
20
Section 8.3 Amendments. This Agreement may be modified only on the written
consent of the Required Members; provided, however, that an amendment adversely
affecting a Member's distributions, allocations, obligation to make
contributions to the Company or rights to consent or approve is effective
against that Member only if that Member agrees in writing.
Section 8.4 Waivers. A waiver of any breach of any of the terms of this
Agreement shall be effective only if in writing and signed by the Member against
whom such waiver or breach is claimed. No waiver of any breach shall be deemed a
waiver of any other subsequent breach.
Section 8.5 Severability. If any provision of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions shall not in any way be affected or
impaired, unless that provision was fundamental to the objectives of this
Agreement.
Section 8.6 Further Assurances. Each Member shall execute such deeds,
assignments, endorsements and other instruments and documents and shall give
such further assurance as shall be reasonably necessary to perform its
obligations under this Agreement.
Section 8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 8.8 Power of Attorney. Each Member constitutes and appoints the
Managing Member its true and lawful attorney with full power of substitution to
make, execute, sign, acknowledge and file all certificates and instruments
necessary to form or qualify, or continue the existence or qualification of, the
Company in any jurisdiction or before any governmental authority. This grant of
a power of attorney is coupled with an interest and shall survive a Member's
disability, incompetence, death or assignment by such Member of its Interest
pursuant to this Agreement.
Section 8.9 Successors and Assigns. Except as expressly provided to the
contrary in this Agreement, this Agreement shall be binding on and inure to the
benefit of the Members and their respective successors and permitted assigns.
Section 8.10 Counterparts. This Agreement may be executed in any number of
counterparts or with counterpart signature pages, each of which shall be deemed
an original, but all of which shall constitute one and the same instrument.
Executed as of the ___ day of March, 2007.
Address Member Name
------- -----------
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
21
P.O. Box 5562
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
P.O. Box 7515 McGraw Brothers Investments
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇,
Managing General Partner
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Amen Properties, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇ ▇▇▇▇▇▇, President
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇ ▇▇▇▇▇▇
P.O. Box 10886 S.E.S. Investments, Ltd.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By: S.E.S. Management, LLC
By: /s/ ▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇ ▇▇▇▇▇, President
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
▇▇▇▇ ▇. ▇▇▇▇ Pension Plan
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇, Trustee
22
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Life
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Insurance Company
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇, Assistant V.P.
23
EXHIBIT "A"
NAMES, PERCENTAGES AND CAPITAL
CONTRIBUTIONS OF INITIAL MEMBERS and NEW MEMBERS
Name Percentage Capital Contribution
==========================================================================================
▇▇▇▇ ▇. ▇▇▇▇▇ 1.0281% See Exhibit A-1
------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ 1.0281% See Exhibit A-1
------------------------------------------------------------------------------------------
McGraw Brothers Investments 2.0562% See Exhibit A-1
------------------------------------------------------------------------------------------
Amen Properties, Inc. 17.8045% See Exhibit A-1
------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1.9828% See Exhibit A-1
------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇ 0.9572% See Exhibit A-1
------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ 0.9572% See Exhibit A-1
------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III 0.0354% See Exhibit A-1
------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇ Pension Plan 0.0354% See Exhibit A-1
------------------------------------------------------------------------------------------
S.E.S. Investments, Ltd 9.8820% See Exhibit A-1
------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 21.4110% See Exhibit A-1
------------------------------------------------------------------------------------------
Universal Guaranty Life 42.8220% See Exhibit A-1
Insurance Company
==========================================================================================
Total 100.0000 % See Exhibit A-1
------------------------------------------------------------------------------------------
EXHIBIT "A-1"
CAPITAL
CONTRIBUTIONS OF MEMBERS
Name Property Contributed New Cash Contributed Total Agreed Value
====================================================================================================
NEW MEMBERS
====================================================================================================
▇▇▇▇ ▇. ▇▇▇▇▇ Undivided 1.0404% in
properties described on
Exhibit B $ 27,629 $ 152,477
----------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ Undivided 1.0404% in
properties described on
Exhibit B $ 27,629 $ 152,477
----------------------------------------------------------------------------------------------------
McGraw Brothers Undivided 2.0808% in
Investments properties described on
Exhibit B $ 55,258 $ 304,954
----------------------------------------------------------------------------------------------------
Amen Properties, Inc. Undivided 18.0172% in
properties described on
Exhibit B $ 478,461 $ 2,640,513
----------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Undivided 2.0065% in
properties described on
Exhibit B $ 53,285 $ 294,065
----------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇ Undivided 0.4074% in
properties described on
Exhibit B
Undivided 47% Interest in
Metro Building $ 10,819 $ 141,957
----------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ Undivided 0.4074% in
properties described on
Exhibit B
Undivided 47% interest in
Metro Building $ 10,819 $ 141,957
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III Undivided 3% interest in
Metro Building $ 0 $ 5,250
----------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇ Undivided 3% in Metro
Pension Plan Building $ 0 $ 5,250
----------------------------------------------------------------------------------------------------
S.E.S. Investments, Ltd Undivided 10.0000% in
properties described on
Exhibit B 10.0000% $ 265,560 $ 1,465,560
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
INITIAL MEMBERS
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Cash and existing
properties $ 0 $ 3,175,379
----------------------------------------------------------------------------------------------------
Universal Guaranty Life Cash and existing
Insurance Company properties $ 0 $ 6,350,758
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Total $ 929,459 $ 14,830,596
----------------------------------------------------------------------------------------------------
Exhibit "B"
The following described property, including all related personal property,
leases, accounts, and deposits:
(a) The Bank of America Building, located at ▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇;
(b) The Century Plaza Building, located at ▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇; and
(c) The Bank of America Parking Lot, located at ▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇.