Exhibit 4.4
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CELLNET FUNDING, LLC
DATED AS OF APRIL __, 1998
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF CELLNET FUNDING, LLC
This Amended and Restated Limited Liability Company Agreement of CellNet
Funding, LLC (the "Company") is made as of April __, 1998, among CellNet Data
Systems, Inc. ("CellNet") and Xxx X. Xxxx ("Xxxx"), as current Members (as
defined below) of the Company and the Persons (as defined below) who become
Members of the Company in accordance with the provisions hereof.
WHEREAS, CellNet and Lyon have heretofore formed a limited liability
company pursuant to the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101, et seq., as amended from time to time, by filing a
Certificate of Formation of the Company with the office of the Secretary of
State of the State of Delaware on April 21, 1998, and entering into a Limited
Liability Company Agreement of the Company dated as of April 21, 1998 (the
"Original Limited Liability Company Agreement");
WHEREAS, the Members desire to continue the Company as a limited liability
company under the Delaware Act and to amend and restate the Original Limited
Liability Company Agreement in its entirety;
WHEREAS, it is a condition to closing under the Underwriter Agreement,
dated ______, among CellNet and certain other parties to so amend and restate
the Original Limited Liability Company Agreement in its entirety; and
WHEREAS, Lyon desires to resign as the provisional Member of the Company.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby amend and
restate the Original Limited Liability Company Agreement, as amended, in its
entirety and agree as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1 DEFINITIONS. The terms defined in this Article I shall, for
the purposes of this Agreement, have the meanings herein specified.
"Adjusted Capital Account" means the Capital Account established for a
Member, as the same is specially computed to reflect the adjustments required or
permitted by the Treasury Regulations under Section 704(b) of the Code to be
taken into account in applying the second sentence of section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations.
"Affiliate" means with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
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"Agreement" means this Amended and Restated Limited Liability Company
Agreement of the Company, as amended, modified, supplemented or restated from
time to time.
"Capital Account" shall have the meaning set forth in Section 4.5 of this
Agreement.
"CellNet" means CellNet Data Systems, Inc., a Delaware corporation.
"CellNet Common Stock" means the Common Stock, $.001 par value per share,
of CellNet.
"CellNet Preferred Stock" means the Preferred Stock Redeemable 2010, par
value $.001 per share, of CellNet.
"Certificate" means the Certificate of Formation referred to in the first
recital of this Agreement and any and all amendments thereto and restatements
thereof filed on behalf of the Company with the office of the Secretary of State
of the State of Delaware pursuant to the Delaware Act.
"Closing Date" shall have the meaning set forth in Article III of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section (Section) of the Code refers not
only to such specific section but also to any corresponding provision of any
federal tax statute enacted after the date of this Agreement, as such specific
section or corresponding provision is in effect on the date of application of
the provisions of this Agreement containing such reference.
"Common Member" means a Member that holds one or more Common Securities.
"Common Securities" means the Interests in the Company which represent
common limited liability company interests in the Company and are described as
such in this Agreement.
"Company" means CellNet Funding, LLC, a Delaware limited liability company.
"Company Dividend Junior Securities" shall have the meaning set forth in
Section 9.3 of this Agreement.
"Company Dividend Parity Securities" shall have the meaning set forth in
Section 9.3 of this Agreement.
"Company Liquidation Parity Securities" shall have the meaning set forth in
Section 15.5 of this Agreement.
"Covered Person" means the Manager, any Affiliate of the Manager or any
officers, directors, managers, shareholders, partners, members, employees,
representatives or agents of the Manager, or any employee or agent of the
Company or its Affiliates.
"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101, et seq., as amended from time to time.
"Dividend Payment Date" shall have the meaning set forth in Section 9.1(c)
of this Agreement.
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"Escrow Account" shall have the meaning set forth in Section 4.4 of this
Agreement.
"Escrow Agent" shall have the meaning set forth in Section 4.4 of this
Agreement.
"Escrow Agreement" shall have the meaning set forth in Section 4.4 of this
Agreement.
"Exchange Agent" means CellNet Data Systems, Inc.
"Fiscal Period" means a calendar month.
"Funding Date" shall have the meaning set forth in Article III of this
Agreement.
"Guarantee" means the Guarantee Agreement to be entered into between
CellNet and the Company for the benefit of the Preferred Members, as amended
from time to time.
"Indemnified Person" means the Common Member, any Affiliate of the Common
Member or any officers, directors, managers, shareholders, partners, members,
employees, representatives or agents of the Common Member, or any employee or
agent of the Company or its Affiliates.
"Interest" means a limited liability company interest in the Company,
together with the right of the holder thereof to any and all benefits to which
such holder as a Member may be entitled as provided in this Agreement, together
with the obligations of such holder as a Member to comply with all of the terms
and provisions of this Agreement.
"Liquidation Distribution" shall have the meaning set forth in Section 15.5
of this Agreement.
"Majority in Liquidation Preference" means Preferred Members who are the
record owners of Preferred Securities whose aggregate liquidation preferences
represent more than 50% of the aggregate liquidation preference of all Preferred
Securities of any particular series or all series, as the context requires, then
outstanding.
"Manager" means CellNet, in its capacity as the manager of the Company and
as the Member that holds Common Securities.
"Member" means any Person that holds an Interest in the Company and is
admitted as a member of the Company pursuant to the provisions of this
Agreement, in its capacity as a member of the Company. For purposes of the
Delaware Act, the Common Member and the Preferred Members shall constitute
separate classes or groups of Members.
"Net Income" and "Net Loss", respectively, for any Fiscal Period means the
income and loss, respectively, of the Company for such Fiscal Period as
determined in accordance with the method of accounting followed by the Company
for federal income tax purposes, including, for all purposes, any tax-exempt
income and any expenditures of the Company which are described in Section
705(a)(2)(B) of the Code (or treated as so described under Section
1.704-1(b)(2)(iv)(i) of the Treasury Regulations); provided,
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however, that any item allocated under Section 4.7 shall be excluded from the
computation of Net Income and Net Loss.
"Notice of Exchange" means a notice to the Exchange Agent given by a
Preferred Member of such Member's desire to exercise its exchange right under
the Preferred Securities Designation.
"Offering" shall have the meaning set forth in Article III.
"Person" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company,
or other legal entity or organization.
"Preferred Certificate" means a certificate evidencing the Preferred
Securities held by a Preferred Member.
"Preferred Member" means a Member that holds one or more Preferred
Securities.
"Preferred Securities" means the Interests which represent preferred
limited liability company interests in the Company and are described as such in
this Agreement.
"Preferred Securities Designation" means any written action of the Manager
pursuant to Section 7.1(b) of this Agreement providing for the issue of a series
of Preferred Securities.
"Successor Securities" shall have the meaning set forth in Section 2.8 of
this Agreement.
"Tax Matters Partner" means the Manager designated as such in Section
11.1(b) of this Agreement.
"Treasury Regulation" means a regulation issued by the United States
Department of the Treasury and relating to a matter arising under the Code.
"U.S. Government Securities" mean instruments which evidence any security
issued or guaranteed as to principal or interest by the United States, or by a
person controlled or supervised by and acting as an instrumentality of the
government of the United States pursuant to authority granted by the Congress of
the United States, or any certificate of deposit for any of the foregoing.
SECTION 1.2 HEADINGS. The headings and subheadings in this Agreement are
included for convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
ARTICLE II
CONTINUATION AND TERM; ADMISSION OF MEMBERS
SECTION 2.1 CONTINUATION; WITHDRAWAL OF MEMBER.
(a) The Members hereby agree to continue the Company as a limited
liability company under and pursuant to the provisions of the Delaware Act and
agree that the rights, duties and liabilities of the Members shall be as
provided in the Delaware Act, except as otherwise provided herein.
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(b) Upon the execution of this Agreement, CellNet shall continue to be a
Member and shall be designated as the Common Member and shall be the holder of
all of the Common Securities and Lyon shall resign and withdraw as a provisional
Member of the Company upon the admission of any other Member in the Company and,
at such time, all of Lyon's interest in the Company shall be cancelled. Lyon
shall not be entitled to any distribution upon his withdrawal and resignation.
(c) The Manager, as an authorized person within the meaning of the
Delaware Act, shall execute, deliver and file any and all amendments to and
restatements of the Certificate.
SECTION 2.2 NAME. The name of the Company heretofore formed and
continued hereby is CellNet Funding, LLC. The business of the Company may be
conducted upon compliance with all applicable laws under any other name
designated by the Manager.
SECTION 2.3 TERM. The term of the Company commenced on the date the
Certificate was filed in the office of the Secretary of State of the State of
Delaware and the Original Limited Liability Company Agreement was entered into,
and shall continue until December 31, 2050, unless the Company is dissolved
before such date in accordance with the provisions of this Agreement.
SECTION 2.4 REGISTERED AGENT AND OFFICE. The Company's registered
agent and office in Delaware shall be The Corporation Trust Company, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000. At any time, the Manager may designate
another registered agent and/or registered office.
SECTION 2.5 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be at 000 Xxxxxxxx Xxxx, Xxx Xxxxxx, Xxxxxxxxxx 00000. The
Manager may change the location of the Company's principal place of business.
SECTION 2.6 QUALIFICATION IN OTHER JURISDICTIONS. The Manager shall
cause the Company to be qualified, formed or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company conducts business and in which such qualification, formation or
registration is required by law or deemed advisable by the Manager. The Manager,
as an authorized person within the meaning of the Delaware Act, shall execute,
deliver and file any certificates (and any amendments and/or restatements
thereof) necessary for the Company to qualify to do business in a jurisdiction
in which the Company may wish to conduct business.
SECTION 2.7 ADMISSION OF MEMBERS.
(a) A Person shall be admitted as a Member and shall become bound by the
terms of this Agreement, without execution of this Agreement, if such Person (or
a representative authorized by such Person orally, in writing or by other action
such as payment for an Interest) complies with the conditions for becoming a
Member as set forth in Section 2.7(b) and requests (which request shall be
deemed to have been made upon acquisition of an Interest directly from the
Company or upon an assignment of an Interest from another Person) that the
records of the Company reflect such admission. The Company shall be promptly
notified of any assignment of an Interest.
The Company will reflect the admission of a Member in the records of the
Company as soon as is reasonably practicable after either of the following
events: (i) in the case of a Person acquiring an Interest directly from the
Company, at the time of payment therefor, and (ii) in the case of an assignment,
upon
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notification thereof (the Company being entitled to assume, in the absence of
knowledge to the contrary, that proper payment has been made by the assignee).
(b) Subject to the restrictions on transfer of Common Securities set forth
in Sections 7.1(e) and 14.1 of this Agreement, whether acquiring an Interest
directly from the Company or by assignment, a Person shall be admitted as a
Member upon the acquisition or assignment, as the case may be, of such Interest
and the reflection of such Person's admission as a Member on the registration
books maintained by or on behalf of the Company. The consent of any other Member
or the Manager shall not be required for the admission of a Member.
SECTION 2.8 MERGER, CONSOLIDATION, ETC. OF THE COMPANY. The Company may
not consolidate with, merge with or into, or be replaced by, or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to any Person, except with the prior approval of Preferred Members
holding not less than a Majority in Liquidation Preference of the outstanding
Preferred Securities of each series or except as set forth in this Section 2.8.
The Company may, without the consent of Preferred Members, consolidate with,
merge with or into, or be replaced by, or convey, transfer or lease its assets
as an entirety or substantially as an entirety to, a limited liability company,
limited partnership or trust organized as such under the laws of any state of
the United States of America or the District of Columbia, provided that (i) such
successor entity either (x) expressly assumes all of the obligations of the
Company under the Preferred Securities or (y) substitutes for the Preferred
Securities of each series other securities having substantially the same terms
as such Preferred Securities of each series (the "Successor Securities") so long
as the Successor Securities rank, with respect to participation in the profits
or assets of the successor entity, at least as high as the Preferred Securities
of the related series rank with respect to payment of dividends and distribution
of assets upon the liquidation, dissolution or winding-up of the Company, (ii)
CellNet expressly acknowledges such successor entity as the holder of the
CellNet Preferred Stock relating to such Preferred Securities and its
obligations under the Guarantee with respect to the Successor Securities, (iii)
such merger, consolidation, replacement, conveyance, transfer or lease does not
cause the Preferred Securities or the Successor Securities, if any, to be
delisted (or, in the case of any Successor Securities, to fail to be listed) by
any national securities exchange or other organization on which such Preferred
Securities are then listed, (iv) such merger, consolidation, replacement,
conveyance, transfer or lease does not cause the Preferred Securities or
Successor Securities, if any, to be downgraded (or put on a "watch list" for
possible downgrading) by any "nationally recognized statistical rating
organization," as that term is defined by the Securities and Exchange Commission
for purposes of Rule 436(g)(2) under the Securities Act of 1933, as amended, (v)
such merger, consolidation, replacement, conveyance, transfer or lease does not
adversely affect the powers, preferences and other special rights of Preferred
Members or the holders of the Successor Securities, if any, in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity) and (vi) prior to such merger, consolidation, replacement,
conveyance, transfer or lease, CellNet has received an opinion of nationally
recognized independent legal counsel to the Company experienced in such matters
to the effect that (x) such successor entity will be treated as a partnership or
as a grantor trust, as appropriate, for federal income tax purposes, (y)
following such merger, consolidation, replacement, conveyance, transfer or
lease, CellNet and such successor entity will be in compliance with the
Investment Company Act of 1940, as amended, without registering thereunder as an
investment company and (z) such merger, consolidation, replacement, conveyance,
transfer or lease will not adversely affect the limited liability of the
Preferred Members or the holders of the Successor Securities, if any, or result
in federal income tax liability to such Preferred Members or holders other than
with respect to any fractional share interests converted into cash.
ARTICLE III
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PURPOSE AND POWERS OF THE COMPANY
The purposes of the Company are (a) to issue Interests and to use at least
85% all of the proceeds from the issuance thereof (the "Offering") and the
related capital contributions to purchase shares of CellNet Preferred Stock from
CellNet, (b) to invest up to 15% of such proceeds in Treasury strips and other
U.S. Government Securities and (c) except as otherwise limited herein, to enter
into, make and perform all contracts and other undertakings, and to take any and
all actions necessary, appropriate, proper, advisable, incidental or convenient
to or for the furtherance of the purposes of the Company as set forth herein.
On the closing date of the issuance of the Preferred Securities (the "Closing
Date"), the Manager, on behalf of the Company shall purchase, and place in
escrow, Treasury strips in an amount sufficient to fund the cash payment of the
first 13 dividends on the Preferred Securities. From the Closing Date to a date
selected by the Manager, on behalf of the Company (the "Funding Date") that is
no more than six months after the Closing Date, the entire proceeds of the
Offering, less the amount used to purchase Treasury strips, shall be invested by
the Manager, on behalf of the Company, in U.S. Government Securities. On the
Funding Date, the Manager, on behalf of the Company shall use the earnings and
principal of such U.S. Government Securities to pay $___ million to CellNet as
consideration for CellNet Preferred Stock. In the event such earnings and
principal do not equal $___ million, CellNet will make a contribution of cash or
other property to the Company in an amount sufficient to eliminate such cash
shortfall. Dividends on the CellNet Preferred Stock will, at the option of
CellNet, be payable either in cash or in shares of CellNet Common Stock. Such
shares of CellNet Common Stock may, at the option of the Manager, on behalf of
the Company, be used to pay dividends on the Preferred Securities or sold to
raise funds to pay cash dividends on the Preferred Securities. The Company may
not conduct any other business or operations or voluntarily incur any
obligations except as contemplated by this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
SECTION 4.1 FORM OF CONTRIBUTION. The contribution of a Member to the
Company may, as determined by the Manager in its discretion, be in cash, a
promissory note or other legal consideration.
SECTION 4.2 CONTRIBUTION BY THE COMMON MEMBER. The Common Member shall
make an initial contribution to the Company in connection with the purchase of
one Common Security equal to $10,000.00. The Common Member may make additional
contributions to the Company of cash or stock of the Common Member at such times
and in such amounts as it may determine in its sole discretion.
SECTION 4.3 CONTRIBUTIONS BY THE PREFERRED MEMBERS. The Preferred
Members shall make contributions to the Company in accordance with the
applicable terms of Section 7.1 of this Agreement. Preferred Members, in their
capacity as Members of the Company, shall not be required to make any additional
contributions to the Company and shall have no additional liability solely by
reason of being Preferred Members (subject to their obligation to return
distributions wrongfully distributed to them as required by applicable law).
SECTION 4.4 INVESTMENT OF CAPITAL CONTRIBUTIONS. On the Closing Date,
the Manager shall establish an escrow account (the "Escrow Account") with The
Bank of New York, as escrow agent (the "Escrow Agent"), pursuant to the terms of
an escrow agreement (the "Escrow Agreement"), dated the Closing Date, between
the Company and the Escrow Agent. The Manager shall deposit with the Escrow
Agent, in accordance with the Escrow Agreement, the Treasury strips purchased
pursuant to Article III and the
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Manager on behalf of the Company shall pledge the Treasury strips to the
Escrow Agent for the benefit of the Preferred Members pursuant to the terms
of the Escrow Agreement.
SECTION 4.5 CAPITAL ACCOUNTS. An individual capital account (a "Capital
Account") shall be established and maintained on the books of the Company for
each Member in compliance with Treasury Regulation Sections 1.704-1(b)(2)(iv)
and 1.704-2, as amended. Subject to the preceding sentence, each Capital
Account will be increased by the amount of the capital contributions made by,
and the Net Income allocated to, such Member and reduced by the amount of
distributions made by the Company and Net Losses allocated to the Member. In
addition, a Member's Capital Account shall be increased or decreased, as the
case may be, for any items specially allocated to such Member under Section 4.7
of this Agreement.
SECTION 4.6 GENERAL ALLOCATIONS. After giving effect to the special
allocations set forth in Section 4.7 of this Agreement:
(a) Except as provided in Sections 4.6(d), the Company's Net Income for
each Fiscal Period shall be allocated, as of the close of business on the last
day of such Fiscal Period, as follows:
(i) First, to the Preferred Members, in proportion to the
number of Preferred Securities held by each such Member, in an amount equal
to the excess of (x) the aggregate amount of all dividends accrued on each
such Preferred Member's Preferred Securities from the issuance of such
Preferred Securities through the close of business on the last day of such
Fiscal Period (whether or not paid), over (y) the amount of Net Income
allocated to such Preferred Members (and their predecessors in interest) in
respect of such Preferred Securities pursuant to this Section 4.6(a)(i) for
all prior Fiscal Periods.
(ii) Second, to each Preferred Member, in an amount equal to
the excess of (x) the amount of all Net Losses allocated to such Preferred
Member from the date of issuance of such Preferred Member's Preferred
Securities through the close of business for such Fiscal Period pursuant to
Section 4.6(b)(ii) over (y) the amount of Net Income allocated to such
Preferred Member (and his predecessors in interest) in respect of such
Preferred Securities pursuant to this Section 4.6(a)(ii) for all prior Fiscal
Periods.
(iii) Third, to the Common Member, in an amount equal to the
excess of (x) the aggregate amount of all dividends accrued on the Common
Member's Common Securities from the issuance of such Common Securities
through the close of business on the last day of such Fiscal Period (whether
or not paid), over (y) the amount of Net Income allocated to such Common
Member in respect of such Common Security pursuant to this Section
4.6(a)(iii) for all prior Fiscal Periods.
(iv) Any remaining Net Income shall be allocated to the Common
Member.
(b) Except as provided in Section 4.6(d), the Company's Net Loss for each
Fiscal Period shall be allocated, as of the close of business on the last day of
such Fiscal Period, as follows:
(i) First, to the Common Member until the balance of the Common
Member's Adjusted Capital Account is reduced to zero.
(ii) Second, to the Preferred Members (in proportion to their
respective aggregate Adjusted Capital Account balances) until their Adjusted
Capital Account balances are reduced to zero.
(iii) Any remaining Net Loss shall be allocated to the Common
Member.
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(c) [This section intentionally left blank.]
(d) The Manager may make such changes to the allocations in Sections
4.6(a) and 4.6(b) as it deems reasonably necessary so that, immediately prior to
the Company's liquidation (or the exchange of Preferred Securities for shares of
CellNet Common Stock), the positive balances in the Capital Accounts of the
Preferred Members shall, to the maximum extent possible, equal their respective
Liquidation Distributions; PROVIDED, HOWEVER, that no allocation pursuant to
this Section 4.6(d) may result in the Manager being required to make a capital
contribution pursuant to this Agreement or otherwise, other than that set forth
in Section 4.2.
(e) Notwithstanding any other provision of this Agreement to the contrary,
the allocation of Net Losses to any Preferred Member shall not reduce the
Liquidation Distribution of the Preferred Securities held by such Preferred
Member.
SECTION 4.7 SPECIAL ALLOCATIONS.
(a) If a Preferred Member delivers a Notice of Exchange to the Exchange
Agent pursuant to the appropriate Preferred Securities Designation, which
instructs the Exchange Agent to exchange Preferred Securities for shares of
CellNet Common Stock, such Preferred Member shall be allocated its pro rata
share of any dividend income accruing on a daily basis on the CellNet Preferred
Stock pursuant to Section 305(c) of the Code or original issue discount accruing
on a daily basis until the date of such exchange, but only to the extent such
income was not previously allocated to the Members under Section 4.6 of this
Agreement or this Section 4.7.
(b) If the Exchange Agent exchanges all of the Preferred Securities of a
particular series for shares of CellNet Common Stock, pursuant to the
appropriate Preferred Securities Designation, the Preferred Members of such
series shall be allocated (in proportion to the liquidation preferences of such
Preferred Securities held by each such Preferred Member) any dividend income
accruing on a daily basis on the CellNet Preferred Stock pursuant to Section
305(c) of the Code or original issue discount accruing on a daily basis so
exchanged until the date of such exchange, but only to the extent such income
was not previously allocated to the Members under Section 4.6 of this Agreement
or this Section 4.7.
(c) If the Company is deemed to receive a dividend under Section 305 of
the Code with respect to any series of CellNet Preferred Stock or original issue
discount with respect to debt obligations it is holding, the Preferred Members
holding Preferred Securities of the related series shall be allocated (in
proportion to the liquidation preferences of such Preferred Securities held by
each such Preferred Member) such income.
(d) All items of loss and deduction in respect of expenses incurred by or
on behalf of the Company and paid by the Common Member (or out of the Common
Member's share of distributions) shall be allocated entirely to the Common
Member.
(e) Net Income, Net Loss and any such other items shall be determined on a
daily, monthly or other basis, as determined by the Manager using any method
that is permissible under Section 706 of the Code and the Treasury Regulations
promulgated thereunder.
(f) [This section intentionally left blank.]
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(g) Notwithstanding any other provision of this Agreement to the contrary,
the allocation of Net Losses to any Preferred Member shall not reduce the
Liquidation Distribution of the Preferred Securities held by such Preferred
Member.
SECTION 4.8 ALLOCATIONS FOR INCOME TAX PURPOSES. Subject to the
requirements of Code Section 704(b), the income, gains, losses, deductions and
credits of the Company shall be allocated in the same manner as the items
entering into the computation of Net Income and Net Loss are allocated under
Section 4.6 of this Agreement or as such items are otherwise allocated under
Section 4.7 of this Agreement; PROVIDED, HOWEVER, that solely for federal, state
and local income and franchise tax purposes, but not for book or Capital Account
purposes, income, gain, loss and deductions with respect to any property
properly carried on the Company's books at a value other than the tax basis of
such property shall be allocated in a manner determined in the Manager's
discretion, so as to take into account (consistently with the principles of
Section 704(c) of the Code) the difference between such property's book value
and its tax basis.
SECTION 4.9 WITHHOLDING. The Manager, on behalf of the Company, shall
comply with withholding requirements under federal, state and local law and
shall remit amounts withheld to and file required forms with applicable
jurisdictions. To the extent that the Company is required to withhold and pay
over any amounts to any authority with respect to distributions or allocations
to any Member, the amount withheld shall be deemed to be a distribution in the
amount of the withholding to the Member. In the event of any claimed
over-withholding, Members shall be limited to an action against the applicable
jurisdiction. If the amount withheld was not withheld from actual distributions,
the Manager, on behalf of the Company, may reduce subsequent distributions by
the amount of such withholding. Each Member agrees to furnish the Company with
such representations and forms as shall reasonably be requested by the Company
to assist it in determining the extent of, and in fulfilling, its withholding
obligations.
SECTION 4.10 ALLOCATION OF DISTRIBUTIONS. The distributions of the
Company shall, subject to the applicable terms of Sections 7.1, 9.1, 9.2, 9.3,
15.4 and 15.5 of this Agreement and of any series of Preferred Securities
(including the preferential allocation of distributions, if any), be allocated
entirely to the Common Member.
SECTION 4.11 INTERESTS AS PERSONAL PROPERTY. Each Member hereby agrees
that its Interest shall for all purposes be personal property. A Member has no
interest in specific Company property.
ARTICLE V
MEMBERS
SECTION 5.1 POWERS OF MEMBERS. The Members shall have the power to
exercise any and all rights or powers granted to the Members pursuant to the
express terms of this Agreement and the terms of the interests held by such
Members.
SECTION 5.2 PARTITION. Each Member waives any and all rights that it may
have to maintain an action for partition of the Company's property.
SECTION 5.3 RESIGNATION. The Common Member shall have no right to
withdraw from the Company. Any other Member may withdraw from the Company prior
to the liquidation, dissolution or winding up of the Company only upon the
assignment of its Interest (including any redemption, repurchase, exchange or
other acquisition by the Company of such Interest) in accordance with the
provisions of this Agreement. A
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withdrawing Member shall not be entitled to receive any distribution and
shall not otherwise be entitled to receive the fair value of its Interest
except as otherwise expressly provided for in this Agreement.
ARTICLE VI
MANAGEMENT
SECTION 6.1 MANAGEMENT OF THE COMPANY. Except as otherwise provided
herein, the business and affairs of the Company shall be managed, and all
actions required under this Agreement shall be determined, solely and
exclusively by the Manager, which shall have all rights and powers on behalf and
in the name of the Company to perform all acts necessary and desirable to the
objects and purposes of the Company (subject to Article III). Without limiting
the generality of the foregoing, the Manager shall have (subject to Article III)
the power on behalf of the Company to:
(a) authorize and engage in transactions and dealings on behalf of the
Company, including transactions and dealings with any Member (including the
Common Member) or any Affiliate of any Member;
(b) call meetings of Members or any class or series thereof;
(c) issue Interests, including Common Securities, Preferred Securities and
classes and series thereof, in accordance with this Agreement;
(d) pay all expenses incurred in forming the Company;
(e) lend money, with or without security, to CellNet or any Affiliate
thereof;
(f) determine and make distributions (sometimes referred to herein as
"dividends"), in cash or otherwise, on Interests, in accordance with the
provisions of this Agreement, the Delaware Act and, if applicable, each
Preferred Securities Designation;
(g) establish a record date with respect to all actions to be taken
hereunder that require a record date to be established, including with respect
to allocations, dividends and voting rights;
(h) redeem, repurchase or exchange, on behalf of the Company, Interests
which may be so redeemed, repurchased or exchanged;
(i) appoint (and dismiss from appointment) attorneys and agents on behalf
of the Company, and employ (and dismiss from employment) any and all persons
providing legal, accounting or financial services to the Company, or such other
employees or agents as the Manager deems necessary or desirable for the
management and operation of the Company, including, without limitation, any
Member (including the Common Member) or any Affiliate of any Member;
(j) open accounts and deposit, maintain and withdraw funds in the name of
the Company in banks, savings and loan associations, brokerage firms or other
financial institutions;
(k) effect a dissolution of the Company and act as liquidating trustee or
the Person winding up the Company's affairs, all in accordance with the
provisions of this Agreement, the Delaware Act and, if applicable, each
Preferred Securities Designation;
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(l) bring and defend on behalf of the Company actions and proceedings at
law or equity before any court or governmental, administrative or other
regulatory agency, body or commission or otherwise;
(m) prepare and cause to be prepared reports, statements and other
relevant information for distribution to Members as may be required or
determined to be necessary or desirable by the Manager from time to time;
(n) prepare and file all necessary returns and statements and pay all
taxes, assessments and other impositions applicable to the assets of the
Company; and
(o) execute all other documents or instruments, perform all duties and
powers and do all things for and on behalf of the Company in all matters
necessary or desirable or incidental to the foregoing.
The Manager is authorized and directed to conduct its affairs and to
operate the Company in such a way that the Company will not be deemed to be an
"investment company" required to be registered under the Investment Company Act
of 1940, as amended. In this connection, the Manager is authorized to take any
action not inconsistent with applicable law, this Agreement and the applicable
Preferred Securities Designation and that the Manager determines in its
discretion to be necessary or desirable for such purposes.
The expression of any power or authority of the Manager in this Agreement
shall not in any way limit or exclude any other power or authority of the
Manager which is not specifically or expressly set forth in this Agreement.
The duties and authority of Company officers, if any, shall be determined
by the Manager in its sole discretion. Xxxx X. Xxxxx initially shall be the
chief executive officer of the Company, and Xxxx X. Xxxxx initially shall be the
chief financial officer of the Company. Such persons may be removed or replaced
as Company officers by the Manager at any time in its sole discretion.
SECTION 6.2 RELIANCE BY THIRD PARTIES. Persons dealing with the Company
are entitled to rely conclusively upon the power and authority of the Manager
herein set forth.
SECTION 6.3 NO MANAGEMENT BY ANY PREFERRED MEMBERS OR CELLNET. Except as
otherwise expressly provided herein, no Preferred Member shall take part in the
day-to-day management, operation or control of the business and affairs of the
Company. Neither the Preferred Members, in their capacity as Preferred Members
of the Company, nor CellNet, in its capacity as the Common Member, shall be
agents of the Company or have any right, power or authority to transact any
business in the name of the Company or to act for or on behalf of or to bind the
Company.
SECTION 6.4 BUSINESS TRANSACTIONS OF THE MANAGER WITH THE COMPANY. The
Manager or its Affiliates may lend money to, act as surety, guarantor or
endorser for, guarantee or assume one or more obligations of, provide collateral
for, and transact other business with, the Company and, subject to applicable
law, shall have the same rights and obligations with respect to any such matter
as a Person who is not the Manager or an Affiliate thereof.
SECTION 6.5 OUTSIDE BUSINESSES. Any Member and/or the Manager in its
capacity as same may possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Company, 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,
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and the pursuit of any such venture, even if competitive with the business of
the Company, shall not be deemed wrongful or improper. No Member or Affiliate
thereof shall be obligated to present any particular investment 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 any Member or 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.
ARTICLE VII
COMMON SECURITIES AND PREFERRED SECURITIES
SECTION 7.1 COMMON SECURITIES AND PREFERRED SECURITIES.
(a) The Interests in the Company shall initially be divided into two
classes, Common Securities and Preferred Securities.
(b) The Preferred Securities may be issued from time to time in one or
more series with such relative rights, powers, preferences, limitations and
restrictions as may from time to time be established in a written action or
actions of the Manager providing for the issue of such series of Preferred
Securities as hereinafter provided. Authority is hereby expressly granted to
the Manager, subject to the provisions of this Agreement, to authorize the issue
of one or more series of Preferred Securities and to establish each such series
by a written action or actions (including without limitation an amendment of
this Agreement) providing for the issue of such series:
(i) the number of Preferred Securities to constitute such
series and the distinctive designation thereof;
(ii) whether the Preferred Securities of such series shall
have voting rights in addition to those set forth in this Agreement or
required by law and, if so, the terms of such voting rights;
(iii) the annual dividend rate (or method of calculation
thereof), if any, on the Preferred Securities of such series, the conditions
and dates upon which such dividends shall be payable and the ability of the
Company, if any, to defer the dividend payment period for the Preferred
Securities of such series, the dates from which such dividends shall accrue,
the preference or relation, if other than pari passu, which such dividends
have with respect to dividends payable on any other class or classes of
Interests or on any other series of Preferred Securities, and whether such
dividends shall be cumulative or noncumulative;
(iv) whether the Preferred Securities of such series shall be
subject to redemption by the Company, and, if made subject to redemption, the
times and other terms and conditions of such redemption (including the
mandatory or optional nature of such redemption, whether such redemption
shall be in whole and/or in part, and the amount and kind of consideration to
be received upon such redemption);
(v) the amount or amounts which shall be paid out of the
assets of the Company to Preferred Members holding the Preferred Securities
of such series upon voluntary or involuntary liquidation, dissolution or
winding up of the Company, and any rights in addition to those set forth in
this Agreement of the Preferred Members that hold Preferred Securities of
such series upon the liquidation, dissolution or winding up of the Company;
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(vi) whether or not the Preferred Securities of such series
shall be subject to the operation of a retirement or sinking fund, and, if
so, the extent to and manner in which any such retirement or sinking fund
shall be applied to the purchase or redemption of the Preferred Securities of
such series for retirement and the terms and provisions relative to the
operation thereof;
(vii) whether or not the Preferred Securities of such series
shall be convertible into, or exchangeable for, Interests of any other class
or classes, or of any other series of Preferred Securities, or securities of
any other kind, including those issued by CellNet or any of its Affiliates,
and if so convertible or exchangeable, the terms and conditions of such
conversion or exchange, including the price or prices or the rate or rates of
conversion or exchange; the method, if any, of adjusting the same and the
terms of any right to terminate such conversion or exchange privilege;
(viii) any limitations and restrictions in addition to those
set forth in this Agreement to be effective while any Preferred Securities of
such series are outstanding upon the payment of dividends or other
distributions on, and upon the purchase, redemption or other acquisition by
the Company of, Common Securities or any other series of Preferred Securities;
(ix) any conditions or restrictions in addition to those set
forth in this Agreement upon the issue of any additional Interests (including
additional Preferred Securities of such series or Interests of any other
series ranking pari passu with or senior to the Preferred Securities of such
series as to the payment of dividends or distribution of assets on
dissolution);
(x) the times, prices and other terms and conditions for the
offering of the Preferred Securities of such series; and
(xi) any other relative rights, powers, preferences,
limitations and restrictions as shall not be inconsistent with this Section 7.1.
In connection with the foregoing and without limiting the generality
thereof, the Manager is hereby expressly authorized, without the vote or
approval of any other Member, to take any action to create under the provisions
of this Agreement a series of Preferred Securities that was not previously
outstanding. Without the vote or approval of any other Member, the Manager may
execute, swear to, acknowledge, deliver, file and record whatever documents may
be required in connection with the issue from time to time of Preferred
Securities in one or more series as shall be necessary, convenient or desirable
to reflect the issue of such series. The Manager shall do all things it deems to
be appropriate or necessary to comply with the Delaware Act and is authorized
and directed to do all things it may deem to be necessary or permissible in
connection with any future issuance, including compliance with any statute,
rule, regulation or guideline of any federal, state or other governmental agency
or any securities exchange.
Any action or actions taken by the Manager pursuant to the provisions of
this paragraph (b) shall be deemed an amendment and supplement to and part of
this Agreement.
(c) All Preferred Securities shall rank senior to the Common Securities in
respect of the right to receive dividends and the right to receive payments out
of the assets of the Company upon voluntary or involuntary liquidation,
dissolution or winding up of the Company. All Preferred Securities redeemed,
purchased or otherwise acquired by the Company (including Preferred Securities
surrendered for conversion or exchange) shall be cancelled and thereupon
restored to the status of authorized but unissued Preferred Securities
undesignated as to series.
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(d) No Member shall be entitled as a matter of right to subscribe for or
purchase, or have any preemptive right with respect to, any part of any new or
additional issue of Common Securities or Preferred Securities of any series
whatsoever, or of securities convertible into any Common Securities or Preferred
Securities of any series whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of dividend.
(e) Common Securities shall not be evidenced by any certificate or other
written instrument, but shall only be evidenced by this Agreement. Common
Securities shall be non-assignable and non-transferable, and may only be issued
to and held by CellNet (or a successor of CellNet in accordance with the
provisions of the Guarantee). Any transfer or purported transfer of any Common
Security shall be null and void. Preferred Securities shall be freely assignable
and transferable.
(f) Any Person purchasing Preferred Securities (whether from the Company
or upon assignment) shall be admitted to the Company as a Preferred Member upon
compliance with Section 2.7 of this Agreement.
SECTION 7.2 PERSONS DEEMED PREFERRED MEMBERS. The Company may treat the
Person in whose name any Preferred Certificate shall be registered on the books
and records of the Company as a Preferred Member and the sole holder of such
Preferred Certificate for purposes of receiving dividends and for all other
purposes whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claims to or interest in such Preferred Certificate on the
part of any other Person, whether or not the Company shall have actual or other
notice thereof.
ARTICLE VIII
VOTING AND MEETINGS
SECTION 8.1 VOTING RIGHTS OF HOLDERS OF PREFERRED SECURITIES.
(a) Except as shall be otherwise provided in this Agreement, including
without limitation, Section 16.1 of this Agreement, or in the Preferred
Securities Designation for any series of Preferred Securities and except as
otherwise required by the Delaware Act, the Preferred Members holding Preferred
Securities shall have, with respect to such Preferred Securities, no right or
power to vote on any question or matter or in any proceeding or to be
represented at, or to receive notice of, any meeting of Members.
(b) If any proposed amendment to this Agreement or the Preferred
Securities Designation for any series of Preferred Securities provides for, or
the Manager otherwise proposes to effect:
(i) any action that would have a material adverse effect on the
powers, preferences or special rights of the Preferred Securities of such
series, whether by way of amendment of this Agreement, such Preferred Securities
Designation or otherwise (including, without limitation, the authorization or
issuance of any Interests in the Company purporting to rank, as to payment of
dividends or distribution of assets upon liquidation, dissolution or winding up
of the Company, senior to the Preferred Securities of such series), or
(ii) the liquidation, dissolution or winding up of the Company
(in any case other than in connection with the exchange of Preferred Securities
of such series for other securities pursuant to the terms of such series of
Preferred Securities),
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then the Preferred Members holding outstanding Preferred Securities of such
series, together with, if any such amendment or action described in clause (i)
above would materially adversely affect the powers, preferences or special
rights of any Company Dividend Parity Securities or any Company Liquidation
Parity Securities, the holders of such Company Dividend Parity Securities or
such Company Liquidation Parity Securities, as the case may be, or, with respect
to any such amendment or action described in clause (ii) above, the holders of
all Company Liquidation Parity Securities, will be entitled to vote together as
a class on such resolution or action of the Manager (but not any other
resolution or action) and such amendment or action shall not be effective except
with the approval of the Preferred Members holding at least a Majority in
Liquidation Preference of such outstanding securities including, if applicable,
the holders of either or both of the Company Dividend Parity Securities and the
Company Liquidation Party Securities, as the case may be; provided, however,
that no such approval shall be required if (1) the liquidation, dissolution or
winding-up of the Company is proposed or initiated upon the occurrence of any of
the events specified in Section 15.2 (except Section 15.2(c)) or (2) this
Agreement is amended pursuant to Section 16.1.
The Manager shall not, without the approval of the holders of at least a
Majority in Liquidation Preference of the Preferred Securities, vote such
CellNet Preferred Stock with respect to proposed actions that would have an
adverse effect on the specific rights, preferences, privileges or voting rights
of the Company with respect to the CellNet Preferred Stock, or cause the
dissolution, winding-up or termination of the Company. Notwithstanding any
other provision of this Agreement to the contrary, the Preferred Members shall
be entitled to vote in connection with any solicitation by the Manager for the
consent of the Preferred Members to the voting by the Manager of the Company's
CellNet Preferred Stock. The powers, preferences or special rights of the
Preferred Securities of any series will be deemed not to be adversely affected
by the creation or issuance of, and no vote will be required for the creation or
issuance of, any further Interests in the Company ranking junior to or pari
passu with the Preferred Securities of such series with respect to voting rights
or rights to payment of dividends or distributions of assets upon liquidation,
dissolution or winding-up of the Company.
(c) Notwithstanding any provision to the contrary herein, the first
sentence of Section 14.1 of this Agreement may only be amended with the consent
of each Preferred Member; provided that, to the fullest extent permitted by
applicable law, any such amendment shall not permit the Preferred Members to
approve any transferee of Common Securities.
(d) Notwithstanding that Preferred Members holding Preferred Securities of
any series are entitled to vote or consent under any of the circumstances
described in this Agreement, any of the Preferred Securities of any series that
are owned by CellNet or by any entity more than 50% of which is owned by
CellNet, either directly or indirectly, shall not be entitled to vote or consent
and shall, for the purposes of such vote or consent, be treated as if they were
not outstanding.
SECTION 8.2 VOTING RIGHTS OF HOLDER OF COMMON SECURITIES. Except as
otherwise provided herein or in the Preferred Securities Designation for any
series of Preferred Securities and except as otherwise required by the Delaware
Act, all voting rights of the Company shall be vested exclusively in the Common
Member. The Common Securities shall entitle the Common Member to vote upon all
matters upon which the Common Member has the right to vote. The Common Member
shall have the right to vote separately as a class on any matter on which the
Common Member has the right to vote regardless of the voting rights of any other
Member.
SECTION 8.3 MEETINGS OF THE MEMBERS.
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(a) Meetings of the Members of any class or series or of all classes or
series of Interests may be called at any time by the Manager or as provided by
any applicable Preferred Securities Designation. Except to the extent otherwise
provided, the following provisions shall apply to meetings of Members.
(b) Members may vote in person or by proxy at such meeting. Whenever a
vote, consent or approval of Members is permitted or required under this
Agreement or any applicable Preferred Securities Designation, such vote, consent
or approval may be given at a meeting of Members or by written consent.
(c) Each Member may authorize any Person to act for it by proxy on all
matters in which a Member is entitled to vote, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be signed by
the Member or its attorney-in-fact and shall be revocable at the pleasure of the
Member executing it at any time before it is voted.
(d) Each meeting of Members shall be conducted by the Manager or by such
other Person that the Manager may designate.
(e) Any required approval of Preferred Members holding Preferred
Securities of a series may be given at a separate meeting of such Preferred
Members convened for such purpose or at a meeting of Members of the Company or
pursuant to written consents. The Manager will cause a notice of any meeting at
which Preferred Members holding Preferred Securities of a series are entitled to
vote, or of any matter upon which action by written consent of such Preferred
Members is to be taken, to be mailed to each Preferred Member holding Preferred
Securities of such series. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such action is to be
taken, (ii) a description of any matter on which such Preferred Members are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
(f) Subject to Section 8.3(e) and the applicable Preferred Securities
Designation, the Manager, in its sole discretion, shall establish all other
provisions relating to meetings of Members, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any Members,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements (but in no event higher than
a Majority in Liquidation Preference of the Preferred Securities of any series),
voting in person or by proxy or any other matter with respect to the exercise of
any such right to vote.
ARTICLE IX
DIVIDENDS
SECTION 9.1 DIVIDENDS.
(a) Preferred Members shall receive periodic dividends, if any, in
accordance with the Preferred Securities Designation for the Preferred
Securities of any particular series, as and when declared by the Manager, and
the Common Member shall receive periodic and cumulative dividends of $500 per
annum, subject to Section 9.3 of this Agreement, the applicable terms of any
series of Preferred Securities and the provisions of the Delaware Act, as and
when declared by the Manager, in its discretion out of funds of the Company
legally available therefor.
(b) Dividends on the Preferred Securities shall be declared by the Manager
to the extent that the Manager reasonably anticipates that at the time of
payment the Company will have, and must be paid by the
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Company to the extent that at the time of proposed payment it has, funds
legally available for the payment of such dividends.
(c) A Preferred Member shall not be entitled to receive any dividend with
respect to the Preferred Securities of any series, irrespective of whether such
dividend has been declared by the Manager, prior to the date on which such
dividend is payable as set forth in the Preferred Securities Designation (the
"Dividend Payment Date") and until such time as the Company has received the
dividend payment on the CellNet Preferred Stock of the related series for the
dividend payment date corresponding to such Divided Payment Date and such monies
or other property are available for distribution to the Preferred Member
pursuant to the terms of this Agreement and the Delaware Act.
SECTION 9.2 LIMITATIONS ON DISTRIBUTIONS. Notwithstanding any provision
to the contrary contained in this Agreement, the Company shall not make a
distribution (including a dividend) to any Member on account of its Interest if
such distribution would violate Sections 18-607 or 18-804 of the Delaware Act or
other applicable law.
SECTION 9.3 CERTAIN RESTRICTIONS ON THE PAYMENT OF DIVIDENDS. If
accumulated dividends have not been paid in full on the Preferred Securities of
any series then outstanding, the Company shall not:
(i) pay, or declare and set aside for payment, any dividends on
the Preferred Securities of any other series or any other Interests in the
Company ranking pari passu with the Preferred Securities of such series as to
the payment of dividends ("Company Dividend Parity Securities"), unless the
amount of any dividends declared on such Company Dividend Parity Securities is
paid on such Company Dividend Parity Securities and the Preferred Securities of
such series on a pro rata basis on the date such dividends are paid on such
Company Dividend Parity Securities, so that the ratio of
(x) (A) the aggregate amount paid as dividends on the
Preferred Securities of such series to (B) the aggregate amount paid as
dividends on the Company Dividend Parity Securities is the same as the ratio of
(y) (A) the aggregate amount of all accumulated arrears of
unpaid dividends on the Preferred Securities of such series to (B) the aggregate
amount of all accumulated arrears of unpaid dividends on the Company Dividend
Parity Securities;
(ii) pay, or declare and set aside for payment, any dividends on
any Interests in the Company ranking junior to the Preferred Securities of such
series as to the payment of dividends ("Company Dividend Junior Securities"); or
(iii) redeem, purchase or otherwise acquire any Company
Dividend Parity Securities or Company Dividend Junior Securities (other than
purchases or acquisitions resulting from the reclassification of such
Securities or the exchange or conversion of any Company Dividend Parity
Security or Company Dividend Junior Security pursuant to the terms thereof or
the purchase of fractional interests therein upon such conversion or
exchange); until, in each case, such time as all accumulated and unpaid
dividends on all of the Preferred Securities of such series shall have been
paid in full or have been irrevocably set aside for payment in full for all
dividend periods terminating on or prior to, in the case of clauses (i) and
(ii), the date of such payment, and in the case of clause (iii), the date of
such redemption, purchase or other acquisition.
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ARTICLE X
BOOKS AND RECORDS
SECTION 10.1 BOOKS AND RECORDS; ACCOUNTING. The Manager shall keep or
cause to be kept at the address of the Manager (or at such other place as the
Manager shall advise the other Members in writing) true and full books and
records regarding the status of the business and financial condition of the
Company.
SECTION 10.2 FISCAL YEAR. The fiscal year of the Company for federal
income tax and accounting purposes shall, except as otherwise required in
accordance with the Code, end on December 31 of each year.
SECTION 10.3 LIMITATION ON ACCESS TO RECORDS. Notwithstanding any
provision of this Agreement, the Manager may, to the maximum extent permitted by
law, keep confidential from the Preferred Members any information the disclosure
of which the Manager reasonably believes is not in the best interest of the
Company or could damage the Company or its business or which the Company or the
Manager is required by law or by an agreement with any Person to keep
confidential.
ARTICLE XI
TAX MATTERS
SECTION 11.1 COMPANY TAX RETURNS.
(a) The Manager shall cause to be prepared and timely filed all tax
returns required to be filed for the Company. The Manager may, in its
discretion, make or refrain from making any federal, state or local income or
other tax elections for the Company that it deems necessary or advisable,
including, without limitation, any election under Section 754 of the Code or any
successor provision.
(b) The Manager is hereby designated as the Company's "Tax Matters
Partner" under Code Section 6231(a)(7) and shall have all the powers and
responsibilities of such position as provided in the Code. The Manager is
specifically directed and authorized to take whatever steps the Manager, in its
discretion, deems necessary or desirable to perfect such designation, including
filing any forms or documents with the Internal Revenue Service and taking such
other action as may from time to time be required under the regulations issued
under the Code. Expenses incurred by the Tax Matters Partner, in its capacity as
such, will be borne by the Company.
SECTION 11.2 TAX REPORTS. The Manager shall, as promptly as practicable
and in any event within 90 days after the end of each fiscal year, cause to be
prepared and mailed to each Preferred Member of record federal income tax form
K-1 and any other forms which are necessary or advisable.
SECTION 11.3 TAXATION AS PARTNERSHIP. The Members recognize that the
Company will be treated as a partnership for U.S. federal income tax purposes.
The Manager shall operate the Company in such a manner and shall take all
necessary action as will establish and preserve the Company's treatment as a
partnership for U.S. federal income tax purposes. The Company shall not make
any election to be treated as other than a partnership for U.S. federal income
tax purposes.
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SECTION 11.4 INVESTMENT PARTNERSHIP. The Manager shall cause the Company
not to "engage in a trade or business" or make any investments or take any
action that would cause the Company to fail to qualify as an "investment
partnership" as such term is defined in Section 731(c)(3)(C) of the Code.
ARTICLE XII
EXPENSES
Except as otherwise provided in this Agreement, the Company shall be
responsible for and shall pay all expenses out of funds of the Company
determined by the Manager to be available for such purpose, provided that such
expenses or obligations are those of the Company or are otherwise incurred by
the Manager in connection with this Agreement, including, without limitation:
(a) all costs and expenses related to the business of the Company and all
routine administrative expenses of the Company, including the maintenance of
books and records of the Company, the preparation and dispatch to the Members of
checks, financial reports, tax returns and notices required pursuant to this
Agreement and the holding of any meetings of the Members;
(b) all expenses incurred in connection with any litigation involving the
Company (including the cost of any investigation and preparation) and the amount
of any judgment or settlement paid in connection therewith (other than expenses
incurred by the Manager in connection with any litigation brought by or on
behalf of any Member against the Manager);
(c) all expenses for indemnity or contribution payable by the Company to
any Person;
(d) all expenses incurred in connection with the collection of amounts due
to the Company from any Person;
(e) all expenses incurred in connection with the preparation of amendments
to this Agreement; and
(f) all expenses incurred in connection with the liquidation, dissolution
or winding-up of the Company.
ARTICLE XIII
LIABILITY
SECTION 13.1 LIABILITY OF COMMON MEMBER. Except as otherwise specifically
required by the Delaware Act, (i) the debts, obligations and liabilities of the
Company, whether arising by contract, tort, statute, operation of law or
otherwise, shall be solely the debts, obligations and liabilities of the Company
and (ii) the Common Member shall not be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being the Common
Member of the Company.
SECTION 13.2 LIABILITY OF PREFERRED MEMBERS. Except as otherwise
specifically required by the Delaware Act, (i) the debts, obligations and
liabilities of the Company, whether arising by contract, tort, statute,
operation of law or otherwise, shall be solely the debts, obligations and
liabilities of the Company and (ii) no Preferred Member shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Preferred Member of the Company.
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ARTICLE XIV
ASSIGNMENT OF INTERESTS
SECTION 14.1 ASSIGNMENT OF INTERESTS. Notwithstanding anything to the
contrary in this Agreement, after the date hereof Common Securities shall be
non-assignable and non-transferable (other than pursuant to a merger or
consolidation of the Common Member), and may only be issued to and held by
CellNet or its successor. Preferred Securities shall be freely assignable and
transferable, subject to the provisions of Section 2.7 of this Agreement.
SECTION 14.2 RIGHT OF ASSIGNEE TO BECOME A MEMBER. An assignee of a
Preferred Security shall become a Preferred Member upon compliance with the
provisions of Section 2.7 of this Agreement.
SECTION 14.3 EVENTS OF CESSATION OF MEMBERSHIP. A Person shall cease to
be a Member upon (i) the assignment of its Interests in accordance with this
Agreement, such assignment to be effective immediately after the admission of
its transferee; (ii) any redemption, exchange or other repurchase by the Company
or the Common Member; or (iii) as otherwise provided herein.
ARTICLE XV
DISSOLUTION, LIQUIDATION AND TERMINATION
SECTION 15.1 NO DISSOLUTION. The Company shall not be dissolved by the
admission of Members in accordance with the terms of this Agreement. Except as
provided in Sections 15.2(b) of this Agreement, the death, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member, or the occurrence
of any other event which terminates the continued membership of a Member in the
Company, shall not cause the Company to be dissolved and its affairs wound up so
long as the Company at all times has at least two Members. Upon the occurrence
of any such event, the business of the Company shall be continued without
dissolution.
SECTION 15.2 EVENTS CAUSING DISSOLUTION. The Company shall be dissolved
and its affairs shall be wound up upon the earliest to occur of any of the
following events:
(a) the expiration of the term of the Company, as provided in Section 2.3
of this Agreement;
(b) the dissolution, winding-up or liquidation of the Common Member or the
occurrence of any other event that terminates the continued membership of the
Common Member under the Delaware Act;
(c) the decision made by the Manager (subject to the voting rights of
Preferred Members set forth in Section 8.1 of this Agreement) to dissolve the
Company;
(d) the entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Delaware Act;
(e) the election of the Manager, in connection with the exchange of all
series of Preferred Securities outstanding (in accordance with the Preferred
Securities Designation for each such series of Preferred Securities) for the
CellNet Common Stock or the redemption of all series of Preferred Securities
outstanding (in accordance with the Preferred Securities Designation for each
such series of Preferred Securities); or
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(f) the written consent of all Members.
SECTION 15.3 NOTICE OF DISSOLUTION. Upon the dissolution of the Company,
the Manager shall promptly notify the Members of such dissolution.
SECTION 15.4 LIQUIDATION. Upon dissolution of the Company, the Manager
or, in the event that the dissolution is caused by an event described in Section
15.2(b) and there is no Manager, a Person or Persons who may be approved by the
Preferred Members holding a Majority in Liquidation Preference of the Preferred
Securities, as liquidating trustees, shall immediately commence to wind-up the
Company's affairs; provided, however, that a reasonable time shall be allowed
for the orderly liquidation of the assets of the Company and the satisfaction of
liabilities to creditors so as to enable the Members to minimize the normal
losses attendant upon a liquidation. The proceeds of liquidation shall be
distributed, after satisfaction of prior claims of creditors, as follows: (i)
first, subject to Section 15.5, to the Preferred Members in an amount equal to
the aggregate Liquidation Dsitribution amounts for each series of Preferred
Securities, and (ii) next, to the Common Member.
SECTION 15.5 CERTAIN RESTRICTIONS ON LIQUIDATION PAYMENTS. In the event
of any voluntary or involuntary liquidation, dissolution or winding-up of the
Company other than in connection with the exchange of all series of Preferred
Securities outstanding (in accordance with the Preferred Securities Designation
for each such series of Preferred Securities) for the CellNet Common Stock,
Preferred Members holding Preferred Securities of each series at the time
outstanding will be entitled to receive out of the assets of the Company legally
available for distribution to Members, before any distribution of assets is made
to the Common Member or Members holding any other class of Interests in the
Company ranking junior to the Preferred Securities of such series as to the
distribution of assets upon liquidation, dissolution or winding-up of the
Company, but together with Preferred Members holding Preferred Securities of any
other series or any other Interests in the Company then outstanding ranking pari
passu with the Preferred Securities of such series as to the distribution of
assets upon liquidation, dissolution or winding-up of the Company ("Company
Liquidation Parity Securities"), an amount equal to the aggregate liquidation
preference for Preferred Securities of such series as set forth in the
applicable Preferred Securities Designation plus all accumulated and unpaid
dividends (whether or not earned or declared), to the date of payment (the
"Liquidation Distribution"). If, upon any such liquidation, dissolution or
winding-up, the Liquidation Distributions can be paid only in part because the
Company has insufficient assets available to pay in full the aggregate
Liquidation Distributions and the aggregate maximum liquidation distributions on
the Company Liquidation Parity Securities, then the amounts payable by the
Company on the Preferred Securities of such series and on such Company
Liquidation Parity Securities shall be paid on a pro rata basis, so that the
ratio of
(i) (x) the aggregate amount paid as Liquidation Distributions
on the Preferred Securities of such series to (y) the aggregate amount paid as
Liquidation Distributions on the Company Liquidation Parity Securities, is the
same as the ratio of
(ii) (x) the aggregate Liquidation Distributions on the
Preferred Securities of such series to (y) the aggregate Liquidation
Distributions on the Company Liquidation Parity Securities.
SECTION 15.6 TERMINATION. The Company shall terminate when all of the
assets of the Company have been distributed in the manner provided for in this
Article XV, and the Certificate shall have been cancelled in the manner required
by the Delaware Act.
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ARTICLE XVI
MISCELLANEOUS
SECTION 16.1 AMENDMENTS. Except as otherwise provided in this Agreement,
this Agreement may be amended by a written instrument executed by the Common
Member if, in the opinion of independent counsel, such amendment does not
materially adversely affect the rights, powers and preferences of the Preferred
Members; if, however, in the opinion of such counsel, such amendment would
materially adversely affect the rights, powers and preferences of the Preferred
Members, such amendment shall require the consent of the Majority in Liquidation
Preference of such Preferred Members.
SECTION 16.2 SUCCESSORS; COUNTERPARTS. This Agreement (a) shall be
binding as to the executors, administrators, estates, heirs and legal
successors, or nominees or representatives, of the Members and (b) may be
executed in several counterparts with the same effect as if the parties
executing the several counterparts had all executed one counterpart. No person
other than the Members and their respective executors, administrators, estates,
heirs and legal successors, or their nominees or representatives, shall obtain
any rights by virtue of this Agreement.
SECTION 16.3 GOVERNING LAW; SEVERABILITY. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to agreements solely between residents of the State of Delaware. In
particular, this Agreement shall be construed to the maximum extent possible to
comply with all of the terms and conditions of the Delaware Act. If,
nevertheless, it shall be determined by a court of competent jurisdiction that
any provisions or wording of this Agreement shall be invalid or unenforceable
under the Delaware Act or other applicable law, such invalidity or
unenforceability shall not invalidate the entire Agreement. In that case, this
Agreement shall be construed so as to limit any term or provision so as to make
it enforceable or valid within the requirements of applicable law, and, in the
event such term or provisions cannot be so limited, this Agreement shall be
construed to omit such invalid or unenforceable provisions. If it shall be
determined by a court of competent jurisdiction that any provision relating to
the distributions and allocations of the Company or to any fee payable by the
Company is invalid or unenforceable, this Agreement shall be construed or
interpreted so as (a) to make it enforceable or valid and (b) to make the
distributions and allocations as closely equivalent to those set forth in this
Agreement as is permissible under applicable law.
SECTION 16.4 FILINGS. Following the execution and delivery of this
Agreement, the Manager shall promptly prepare any documents required to be filed
and recorded under the Delaware Act, and the Manager shall promptly cause each
such document to be filed and recorded in accordance with the Delaware Act and,
to the extent required by local law, to be filed and recorded or notice thereof
to be published in the appropriate place in each jurisdiction in which the
Company may hereafter establish a place of business. The Manager shall also
promptly cause to be filed, recorded and published such statements or other
instruments required by any provision of any applicable law of the United States
or any state or other jurisdiction which governs the conduct of its business
from time to time.
SECTION 16.5 POWER OF ATTORNEY. Each Preferred Member does hereby
constitute and appoint the Manager as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign, deliver
and file (a) any amendment of the Certificate required because of an amendment
to this Agreement or in order to effectuate any change in the membership of the
Company, (b) any amendment to this Agreement made in accordance with the terms
hereof and (c) all such other instruments, documents and certificates which may
from time to time be required by the laws of the United States of America, the
State of Delaware or any other jurisdiction, or any political subdivision of
agency thereof, to effectuate, implement and
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continue the valid and subsisting existence of the Company or to dissolve the
Company or for any other purpose consistent with this Agreement and the
transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest and shall
(a) survive and not be affected by the subsequent death, incapacity, disability,
dissolution, termination or bankruptcy of the Preferred Member granting the same
or the transfer of all or any portion of such Preferred Member's Interest and
(b) extend to such Preferred Member's successors, assigns and legal
representatives.
SECTION 16.6 EXCULPATION.
(a) No Covered Person shall be liable to the Company or any Member for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Covered Person in good faith on behalf of the Company and in a
manner reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement.
(b) A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid.
SECTION 16.7 INDEMNIFICATION. To the fullest extent permitted by
applicable law, an Indemnified Person shall be entitled to indemnification from
the Company for any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Agreement; provided, however, that any indemnity under this Section 16.7 shall
be provided out of and to the extent of Company assets only, and no Member shall
have any personal liability on account thereof. The right of indemnification
pursuant to this Section 16.7 shall include the right to be paid, in advance, or
reimbursed by the Company for the reasonable expenses incurred by an Indemnified
Person who was, or is, threatened to be made a named defendant or respondent in
a proceeding.
SECTION 16.8 ADDITIONAL DOCUMENTS. Each Preferred Member, upon the
request of the Manager, agrees to perform all further acts and execute,
acknowledge and deliver any documents that may be reasonably necessary to carry
out the provisions of this Agreement.
SECTION 16.9 NOTICES. All notices provided for in this Agreement shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(i) If given to the Company, in care of Manager at the Company's
mailing address set forth below:
c/o CellNet Data Systems, Inc.
000 Xxxxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
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Facsimile No.: (650) _________
Attention: Vice President and General Counsel
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
(ii) If given to any Member, at the address set forth on the
registration books maintained by or on behalf of the Company.
Each such notice, request or other communication shall be effective (a) if given
by telecopier, when transmitted to the number specified in such registration
books and the appropriate confirmation is received, (b) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (c) if given by any other means,
when delivered at the address specified in such registration books.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above stated.
COMMON MEMBER AND MANAGER:
CELLNET DATA SYSTEMS, INC.
By:
------------------------------------
[name]
[title]
WITHDRAWING PROVISIONAL MEMBER:
------------------------------------
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