EXHIBIT 10.101.4
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT OF
UNITED APPAREL VENTURES, LLC
EFFECTIVE AS OF OCTOBER 1, 2002
TABLE OF CONTENTS
ARTICLE I - - DEFINITIONS OF TERMS.......................................... 1
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ARTICLE II - - INTRODUCTORY MATTERS......................................... 5
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2.1 Business of LLC............................................... 5
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2.2 Laws Governing the Agreement.................................. 6
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2.3 Term.......................................................... 6
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2.4 Principal Place of Business................................... 6
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2.5 Agent for Service of Process.................................. 6
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2.6 Required Maintenance of Records in California................. 6
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2.7 Records Subject to Inspection................................. 7
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2.8 Foreign Qualification......................................... 7
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2.9 Commencement of Operations.................................... 7
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ARTICLE III - - MEMBERS, CAPITAL CONTRIBUTIONS, ALLOCATIONS................. 7
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3.1 Initial Capital Contributions to the LLC...................... 7
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3.2 Use of Proceeds............................................... 7
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3.3 Interests..................................................... 8
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3.4 Status of Capital Contributions............................... 8
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3.5 Financing and Additional Capital.............................. 8
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3.6 Capital Accounts.............................................. 9
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3.7 Return of Capital Contributions............................... 10
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3.8 No Management................................................. 10
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ARTICLE IV - - REPRESENTATIONS AND WARRANTIES............................... 10
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4.1 Representations and Warranties of TAG MEX..................... 10
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4.2 Representations and Warranties of Azteca...................... 12
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ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS................................... 14
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5.1 Allocations of Profits and Losses............................. 14
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5.2 Time of Allocation............................................ 14
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5.3 Distributions of Distributable Cash........................... 14
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5.4 Limitations on Distributions.................................. 15
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5.5 Amounts Withheld.............................................. 15
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5.6 Tax Allocations; Section 704(c) of the Code................... 15
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ARTICLE VI - - MANAGEMENT OF THE LLC, CONTROL OF THE BUSINESS, OFFICERS..... 16
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6.1 Management of the LLC and Election of the Managers............ 16
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6.2 Powers of the Managers........................................ 16
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6.3 Managers as Agents of the LLC................................. 17
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6.4 Acts of the Managers as Conclusive Evidence of Authority...... 17
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6.5 Officers...................................................... 17
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6.6 Limitations on Liability of the Managers and Officers......... 19
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6.7 Other Activities of the Members and Managers Permitted........ 19
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6.8 Transactions Between the LLC and the Managers and Members..... 19
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6.9 Devotion of Time.............................................. 20
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6.10 Increase in Number of Authorized Managers; Election........... 20
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ARTICLE VII - - MEETINGS.................................................... 20
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7.1 Meetings of the Members....................................... 20
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7.2 Meetings of the Managers...................................... 21
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ARTICLE VIII - - TRANSFER AND ASSIGNMENT OF MEMBERSHIP INTERESTS,
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ECONOMIC INTERESTS AND RIGHTS............................................... 21
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8.1 Transfer and Assignment of Membership Interests or Economic
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Interests..................................................... 21
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8.2 Further Restrictions on Transfer of Membership Interests...... 21
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8.3 Substitution of Members After Transfer of Membership Interest. 21
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8.4 Effective Date of Permitted Transfers......................... 22
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8.5 Effect of Transfers of Economic Interest...................... 22
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8.6 Consequences of Pledge or Grant of Security Interest.......... 22
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ARTICLE IX - - ADDITIONAL AGREEMENTS........................................ 22
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9.1 Noncompetition................................................ 22
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9.2 Management Fee................................................ 23
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9.3 Replacement of Credit Facility................................ 23
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9.4 Sourcing Production Allocation................................ 23
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ARTICLE X - - DISSOLUTION AND WINDING UP.................................... 23
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10.1 Conditions of Dissolution..................................... 23
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10.2 Order of Payment of Liabilities Upon Dissolution.............. 24
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10.3 Limitations on Payments Made on Dissolution................... 24
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10.4 Liquidation................................................... 24
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10.5 Termination of Covenants...................................... 24
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ARTICLE XI - - BOOKS AND RECORDS, FISCAL YEAR, ACCOUNTING; BANKING; REPORTS. 24
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11.1 Books, Records and Financial Statements....................... 24
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11.2 Fiscal Year................................................... 25
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11.3 Accounting; Accounting Method................................. 25
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11.4 Management Reports............................................ 25
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11.5 Financial Statements and Tax Information...................... 25
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ARTICLE XII - - TAX MATTERS................................................. 26
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ARTICLE XIII - - INDEMNIFICATION............................................ 26
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13.1 Liability of Members.......................................... 26
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13.2 Liability of Managers......................................... 26
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13.3 Exculpation................................................... 26
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13.4 Fiduciary Duty................................................ 27
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13.5 Indemnification by the LLC.................................... 27
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13.6 Indemnification Procedure..................................... 27
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13.7 Expenses...................................................... 28
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ARTICLE XIV - - REQUIRED ARBITRATION OF DISPUTES............................ 28
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ARTICLE XV - - MISCELLANEOUS................................................ 28
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15.1 Law Governing................................................. 28
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15.2 Complete Agreement............................................ 28
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15.3 Binding Effect................................................ 29
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15.4 No Third Party Beneficiary.................................... 29
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15.5 Gender and Number in Nouns and Pronouns....................... 29
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15.6 Headings...................................................... 29
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15.7 References in This Agreement.................................. 29
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15.8 Exhibits...................................................... 29
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15.9 Severability.................................................. 29
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15.10 Additional Documents and Acts................................. 30
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15.11 Notices....................................................... 30
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15.12 Amendments.................................................... 30
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15.13 Multiple Counterparts......................................... 30
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
UNITED APPAREL VENTURES, LLC
This Agreement, effective as of July 1, 2001 and amended as of October
1, 2002, governs the relationship between the undersigned Members of United
Apparel Ventures, LLC, a California limited liability company (the "LLC"), and
between the LLC and the undersigned Members, pursuant to the Xxxxxxx-Xxxxxx
Limited Liability Act as amended from time to time (the "ACT"), and the Articles
of Organization for the LLC. In consideration of their mutual promises,
covenants, and agreements, the parties hereto do hereby promise, covenant, and
agree as set forth herein.
ARTICLE I - - DEFINITIONS OF TERMS
When used in this Agreement, the following terms shall have the
meanings set forth below:
1.1 "AFFILIATE" means, with respect to any Member, any Person,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Member. The term "control,"
as used in the immediately preceding sentence, means, with respect to a
corporation the right to exercise directly or indirectly, 50% or more of the
voting rights attributable to the controlled corporation, and, with respect to
any partnership, trust, other entity or association, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled entity.
1.2 "AGREEMENT" means this Operating Agreement among the Members
regulating the affairs of the LLC and the conduct of its business, as originally
executed and as amended from time to time, and shall refer to this Agreement as
a whole, unless the context otherwise requires.
1.3 "ARTICLES" means the Articles of Organization for the LLC
which were filed with the Secretary of State of California on June 8, 2001, as
File No. 20011510065, together with all amendments thereto or restatements
thereof and shall mean the Articles as a whole unless the context otherwise
requires.
1.4 "ASSUMPTION AGREEMENT" means that certain Assumption
Agreement, dated November 2001, made by the LLC in favor GMAC Commercial Finance
LLC with respect to the Credit Facility.
1.5 "AZTECA" means Azteca Production International, Inc., a
California corporation.
1.6 "AUDITOR" means such firm of independent certified public
accountants as may be engaged by the LLC from time to time to audit the
financial statement of the LLC. Ernst & Young LLP shall be the initial Auditor.
1.7 "BANKRUPTCY" means the occurrence of any of the events
specified below with respect to a Member: (i) an assignment for the benefit of
creditors; (ii) the application for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property; (iii) the
commencement of a voluntary case under federal bankruptcy laws, any state
insolvency law or similar laws of any country; (iv) the adjudication as a
bankrupt or insolvent; (v) the filing of an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding, or the taking of any action for the purpose of effecting
any of the foregoing or its insolvency; or (vi) the petition of bankruptcy filed
against it which is not dismissed within 90 days of filing.
1.8 "CAPITAL ACCOUNT" means, with respect to any Member, the
account maintained for such Member in accordance with the provisions of Section
3.6 hereof.
1.9 "CAPITAL CONTRIBUTION" means, with respect to any Member, the
aggregate amount of money and the fair market value (as determined in good faith
by a majority of the authorized number of Managers) of any property, tangible or
intangible (other than money) contributed to the LLC pursuant to Article III
hereof with respect to the Membership Interest of such Member.
1.10 "CODE" means the Internal Revenue Code of 1986, as amended
from time to time, the Treasury Regulations promulgated thereunder, or any
corresponding provisions of any succeeding federal statute.
1.11 "COVERED PERSON" means any Member, any Manager, any partners,
employees, representatives or agents of any Member or Manager, and any officer,
employee, partner, representative or agent of the LLC.
1.12 "CREDIT FACILITY" means the Revolving Credit, Factoring and
Security Agreement, dated as of January 21, 2000, by and among Tarrant, TAG MEX,
Fashion Resource (TCL), Inc., the LLC and GMAC Commercial Finance LLC, as
successor by merger with GMAC Commercial Credit LLC, as agent (as a lender and
as successor in interest to Finova Capital Corporation and Sanwa Bank
California), and the lenders from time to time parties thereto, as amended,
restated, renewed, replaced, substituted, supplemented, extended, or otherwise
modified.
1.13 "DISTRIBUTABLE CASH" means, at any specified time, all cash
and cash equivalents on hand or in bank accounts of the LLC, less amounts set
aside for current liabilities, obligations, improvements, and operating expenses
of the LLC, after taking into account the existence or availability of current
assets, other assets, financing commitments, and other available capital or
sources of cash to meet such obligations.
1.14 "ECONOMIC INTEREST" means the right to share in the Profits,
Losses and other tax items and to receive distributions from the LLC, but
excludes Voting Rights and Information Rights except as provided in Section
17106 of the Act.
1.15 "EXPRESS" means the Express division of Limited Brands, Inc.,
and for purposes of this Agreement, means the division of Limited Brands, Inc.
that markets and sells apparel bearing the Express, Limited, Limited Too and
Structure trademarks.
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1.16 "INFORMATION RIGHTS" means the rights to inspect, copy or
obtain information and documents concerning the affairs of the LLC as provided
in Section 2.7 hereof.
1.17 "LEVI" means Levi Xxxxxxx & Co., and any Affiliate thereof.
1.18 "LLC" means United Apparel Ventures, LLC.
1.19 "LLC PROPERTY" means property of the LLC, including, without
limitation, all real, personal, tangible or intangible property or any interests
in such property.
1.20 "MAJOR EVENT" means any of a Change of Control, Insolvency
Event, or Foreclosure Event, where:
(a) A "CHANGE IN CONTROL" means the occurrence of one or
more of the following events (whether or not approved by the Board of
Directors of Tarrant): (i) if any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934), other than Xxxxxx Xxxx, Xxxx Xxx, Xxxxx Xxxxx Xxxxx, or any of
such Person's respective Affiliates, is or becomes the "beneficial
owner" (as such term is used in Rules 13d-3 and Rule 13d-5 promulgated
by the Securities and Exchange Commission under the Securities Exchange
Act of 1934), directly or indirectly, of more than fifty percent (50%)
of the total voting power of the voting stock of Tarrant; (ii) Tarrant
consolidates with or merges with or into another Person or any Person
consolidates with, or merges with or into, Tarrant, in any such event
pursuant to a transaction in which immediately after the consummation
thereof the shareholders of Tarrant immediately prior to the
consummation of the transaction shall cease to have the power, directly
or indirectly to vote or direct the voting of securities having in the
aggregate at least a majority of the ordinary voting power for the
election of the directors of the surviving entity in such transaction;
(iii) the transfer by Tarrant, in one or more transactions, of more
than fifty percent (50%) of the total voting power of the voting stock
of TAG MEX to a Person other than an Affiliate of Tarrant; or (iv) any
distribution pursuant to a plan of liquidation or dissolution of
Tarrant.
(b) "INSOLVENCY EVENT" means any of the following: (i) a
court or governmental agency having jurisdiction shall have entered a
decree or order for relief in respect of Tarrant in an involuntary case
under any applicable bankruptcy, insolvency, liquidation,
reorganization or other similar law now or hereafter in effect, or
shall have appointed a receiver, liquidator, trustee (or similar
official) for Tarrant or for any substantial part of its or their
property, or ordered the winding up or liquidation of its or their
affairs or there shall have been commenced against Tarrant an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, trustee (or
similar official) for Tarrant or for any substantial part of its
property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed or undischarged for a period of sixty (60) consecutive
calendar days, or (ii) Tarrant shall have commenced a voluntary case
under any applicable bankruptcy, insolvency, liquidation,
reorganization or other similar law now or hereafter in effect, or
consented to the entry of an order for
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relief in an involuntary case under any such law, or consented to the
appointment or taking possession by a receiver, liquidator, trustee (or
similar official) for Tarrant or for any substantial part of its
property or makes any general assignment for the benefit of creditors.
(c) "FORECLOSURE EVENT" means the seizure of LLC Property
by GMAC Commercial Finance LLC under the Credit Facility, or by any
other financial institution that is a lender of Tarrant.
1.21 "MANAGER" means each Person elected to manage the LLC pursuant
to Article VI hereof.
1.22 "MEMBER" means each Person who has been admitted to the LLC as
a Member in accordance with the Articles and this Agreement (other than any
Person who has transferred its entire Membership Interest in accordance with
this Agreement).
1.23 "MEMBER LOAN" has the meaning set forth in Section 3.5.3
hereof.
1.24 "MEMBERSHIP INTEREST" means the entire ownership interest of a
Member in the LLC at any particular time, including, collectively, his Economic
Interest, Voting Rights and Information Rights as provided in this Agreement,
together with the obligation of such Member to comply with all terms and
provisions of this Agreement. A Membership Interest constitutes personal
property. A Member or assignee of any Economic Interest or Membership Interest
has no interest in specific property of the LLC.
1.25 "PERSON" means an individual, general partnership, limited
partnership, other limited liability company, corporation, trust, estate, real
estate investment trust and any other entity.
1.26 "PRIME RATE" means the rate of interest then most recently announced by
Chase Manhattan Bank (or any successor thereto) as its prime or similar rate.
1.27 "PROFITS AND LOSSES" means the profits and losses of the LLC
as determined by the certified public accountants then engaged by the LLC, in
accordance with the accounting method followed by the LLC for federal income tax
purposes, including, without limitation, each item of LLC income, gain, loss,
deduction, tax preference and credit, all as such terms or words are used in the
Code.
1.28 "TAG MEX" means TAG MEX, Inc., a California corporation.
1.29 "TARRANT" means Tarrant Apparel Group, a California
corporation, and the sole shareholder of TAG MEX.
1.30 "XXXXX XXXXXXXX" means Xxxxx Xxxxxxxx U.S.A., Inc., a Delaware
corporation, and any Affiliate thereof.
1.31 "VOTING RIGHTS" means those rights of a Member described in
Article VI of this Agreement as they may be limited by the Articles or the Act,
or of an assignee of a Membership
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Interest if the assignment thereof and such assignee becoming a substituted
Member has been approved in accordance with Article VIII of this Agreement.
1.32 Other terms are defined elsewhere in this Agreement as
follows:
(a) "ACT" - Preamble;
(b) "ADDITIONAL CONTRIBUTION" - Section 3.5.2;
(c) "ADDITIONAL MANAGERS" - Section 6.10;
(d) "CALL NOTICE" - Section 3.5.2;
(e) "CALL PERIOD" - Section 3.5.2;
(f) "CONFIDENTIAL INFORMATION" - Section 9.2;
(g) "CONTROL ELECTION" - Section 6.10;
(h) "DISPUTE NOTICE" - Article XIV;
(i) "FAILING MEMBER" - Section 3.5.3;
(j) "MEMBER LOAN" - Section 3.5.3;
(k) "NON-FAILING MEMBER" - Section 3.5.3;
(l) "NOTICE" - Section 15.11;
(m) "TAX MATTERS PARTNER" - Article XII; and
(n) "TRANSFER" - Section 8.1.
ARTICLE II - - INTRODUCTORY MATTERS
2.1 BUSINESS OF LLC.
The LLC shall be authorized to engage in any lawful act or activity for
which a limited liability company may be organized under the Act.
Notwithstanding the foregoing, the purpose of the LLC shall be limited to
designing, merchandising, contracting for the manufacture of, manufacturing
directly and selling apparel and apparel accessories to Xxxxx, Levi and Express,
and such other activities as may be reasonably necessary or advisable, as
determined by a majority of the authorized number of Managers, to accomplish the
foregoing purposes, and the parties hereto agree to be bound by such terms.
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2.2 LAWS GOVERNING THE AGREEMENT.
This Agreement is subject to, and governed by, the mandatory provisions
of the Act and the Articles. In the event of a direct conflict between the
provisions of this Agreement and the mandatory provisions of the Act or the
provisions of the Articles, such provisions of the Act or the Articles, as the
case may be, shall be controlling.
2.3 TERM.
The term of the LLC began upon the due filing of the Articles and shall
continue until such date as the LLC is terminated as provided herein.
2.4 PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the LLC shall be at 0000 Xxxx
Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other place as a
majority of the authorized number of Managers shall from time to time determine.
2.5 AGENT FOR SERVICE OF PROCESS.
The agent for service of process for the LLC in California shall be
Xxxxxxx Xxxx, having a business address of 0000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, or such other person as a majority of the authorized
number of Managers shall from time to time determine.
2.6 REQUIRED MAINTENANCE OF RECORDS IN CALIFORNIA.
The LLC shall continuously maintain an office in the State of
California which may, but need not be, its principal executive office, and at
which it shall keep:
(a) A current list in alphabetical order of the full name
and last known business address of each Member, and each holder of an
Economic Interest, together with their respective Capital Contribution
and Percentage Interest;
(b) A copy of the filed Articles, together with any
powers of attorney pursuant to which the Articles or any amendments
thereto were executed;
(c) Copies of the LLC's federal, state and local income
tax returns or information returns and reports, if any, for the six
most recent taxable years;
(d) A copy of this Agreement, together with any powers of
attorney pursuant to which this Agreement or any amendments thereto
were executed;
(e) Copies of financial statements of the LLC for the six
most recent taxable years; and
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(f) The books and records of the LLC as they relate to
its internal affairs as more particularly described in Section 11.1
herein for at least the current and past four taxable years.
2.7 RECORDS SUBJECT TO INSPECTION.
Records kept pursuant to Section 2.6 are subject to inspection at the
reasonable request of any Member (but not any assignee thereof who does not
become a substitute Member, except such an assignee that has been approved by
the Members) and its duly authorized representative during normal business
hours. Copies of the records referenced in Section 2.6 shall also be provided at
the reasonable request and expense of any Member (but not any assignee thereof
who does not become a substitute Member, except such an assignee that has been
approved by the Members).
2.8 FOREIGN QUALIFICATION.
The Managers shall cause the LLC to be qualified or registered under
assumed or fictitious name statutes or similar laws in any other jurisdiction in
which such qualification or registration is necessary or required to conduct the
LLC's business, except where the failure to do so would not have a material
adverse effect on the LLC. Any Manager or other authorized representative shall
execute, deliver and file any certificates (and any amendments and/or
restatements thereof) necessary for the LLC to qualify to do business in a
jurisdiction in which the LLC may wish to conduct business, except where the
failure to do so would not have a material adverse effect on the LLC.
2.9 COMMENCEMENT OF OPERATIONS.
The operations of the LLC commenced as of July 1, 2001 with respect to
servicing business for Xxxxx, October 1, 2002 with respect to servicing business
for Express, and March 31, 2003 with respect to servicing business for Levi.
ARTICLE III - - MEMBERS, CAPITAL CONTRIBUTIONS, ALLOCATIONS
3.1 INITIAL CAPITAL CONTRIBUTIONS TO THE LLC.
Each of TAG MEX and Azteca have made a total initial Capital
Contribution to the LLC of $100,000.00, as set forth in Exhibit A hereto, in
exchange for a Membership Interest of 50.1% and 49.9% respectively. TAG MEX and
Azteca shall each bear their own legal and other costs incurred in connection
with the formation of the LLC or this Agreement.
3.2 USE OF PROCEEDS.
The proceeds of the Capital Contributions shall be used for working
capital and otherwise for the operation of the LLC's business.
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3.3 INTERESTS.
In the event of dissolution of the LLC, no Member shall have an
interest in specific LLC Property. Except as set forth in this Agreement, no
additional Membership Interest or other ownership interest of any kind or nature
in the LLC (including any interest convertible into a Membership Interest) may
be issued or transferred without the unanimous consent of the Members.
3.4 STATUS OF CAPITAL CONTRIBUTIONS.
3.4.1 Except as otherwise provided in this Agreement, a
Member's Capital Contributions may be returned, in whole or in part, at
any time, only with the approval of all of the authorized number of
Managers.
3.4.2 Notwithstanding the foregoing, no return of a
Member's Capital Contribution shall be made hereunder if such
distribution would violate applicable law.
3.4.3 No Member shall receive any interest, salary or
drawing with respect to its Capital Contribution or its Capital Account
or for services rendered to or on behalf of the LLC or otherwise in its
capacity as a Member or otherwise, except as otherwise specifically
provided in this Agreement.
3.4.4 Except as otherwise provided by applicable law and
subject to Section 3.5 hereof, the Members shall be liable only to make
those Capital Contributions as set forth in Section 3.1 hereof. After
such Capital Contributions have been fully made pursuant to Sections
3.1 and 3.5 hereof, no Member shall be required to make any additional
capital contributions at any time to the LLC.
3.5 FINANCING AND ADDITIONAL CAPITAL.
3.5.1 The Managers shall in good faith endeavor to secure
financing for the LLC in such amounts and under such terms and
conditions as the Managers deem in the best interest of the LLC.
3.5.2 Each Member may be required to contribute additional
capital to the LLC in accordance with this Section 3.5.2 ("ADDITIONAL
CONTRIBUTIONS"). In the event that a majority of the authorized number
of Managers determines that additional capital is required or advisable
for the operation of the LLC, the Managers may give written notice (the
"CALL NOTICE") to each Member stating the aggregate amount of the
Additional Contribution and each Member's share of the Additional
Contribution based on its respective Membership Interest; provided that
Additional Contributions in excess of $1,000,000 in the aggregate
during the term of this Agreement shall require the consent of all of
the authorized number of Managers. Each Member shall within fifteen
(15) days from the date of delivery of the Call Notice (the "CALL
PERIOD") contribute to the LLC, in immediately available funds to an
account designated in the Call Notice, its ratable share of the
Additional Contribution.
3.5.3 If a Member fails to contribute an amount equal to
its ratable share of the Additional Contribution within the Call Period
(the "FAILING MEMBER"), and if the other Member
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(the "NON-FAILING MEMBER") has made its entire required contribution,
then the Non-Failing Member may, but need not, (a) withdraw from the
LLC its most recent ratable contribution made pursuant to this Section
3.5, in which case the LLC shall promptly repay the amount of such
withdrawn contribution to the Non-Failing Member, and/or (b) make a
loan to the LLC (a "MEMBER Loan") in an amount equal to (i) some or all
of the contribution which the Failing Member failed to make pursuant to
this Section 3.5 and/or (ii) the contribution made by the Non-Failing
Member, in which the case the contribution theretofore made by the
Non-Failing Member shall be deemed instead to be part of the funds
advanced in connection with making such Member Loan. If made, a Member
Loan shall be due on demand, and shall bear interest at the rate of the
lower of five (5) percentage points above the Prime Rate compounded
annually or the highest lawful rate, with interest payable on the first
day of each and every month following the making of the Member Loan.
3.5.4 Until such time as the Member Loan is repaid in full,
distributions to which the Failing Member would otherwise be entitled
shall be paid to the Non-Failing Member and shall be deducted from the
balance owing on the Member Loan. Until the Member Loan has been fully
repaid, the Non-Failing Member which made such Member Loan shall have a
lien on the Failing Member's Membership Interest as collateral for such
repayment.
3.5.5 Except as otherwise provided herein, no Member shall
make any capital contribution to the LLC, and the LLC shall not accept
any capital contribution nor shall it issue any additional Membership
Interests.
3.6 CAPITAL ACCOUNTS.
3.6.1 An individual Capital Account shall be established
and maintained for each Member. The original Capital Account
established for any Member who acquires a Membership Interest by virtue
of an assignment or transfer in accordance with the terms of this
Agreement shall be a pro-rata part of the Capital Account of the
assignor represented by such percentage of the Membership Interest as
is assigned to such assignee, and, for purposes of this Agreement, such
Member shall be deemed to have made a proportionate amount of the
Capital Contributions made by the assignor of such Membership Interest
(or made by any of such assignor's predecessors in interest).
3.6.2 The Capital Account of each Member shall be
maintained in accordance with the following provisions:
(a) to such Member's Capital Account, there
shall be credited the amount of any cash, and the fair market
value (as determined in good faith by a majority of the
authorized number of Managers) of any other property
contributed by such Member to the capital of the LLC, such
Member's distributive share of Profits and the amount of any
LLC liabilities that are expressly assumed by such Member or
that are secured by any LLC Property distributed to such
Member;
(b) to such Member's Capital Account, there
shall be debited the amount of cash and the fair market value
(as determined in good faith by a majority of the authorized
number of Managers) of any LLC Property distributed to such
Member
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pursuant to any provision of this Agreement, such Member's
distributive share of Losses and the amount of any liabilities
of such Member that are assumed by the LLC or that are secured
by any property contributed by such Member to the LLC;
(c) from time to time as they deem appropriate,
a majority of the authorized number of Managers may make such
modification to the manner in which the Capital Accounts are
computed to comply with Treasury Regulation Section 1.704-1(b)
provided that such modification is not likely to have a
material effect on the amounts distributable to any Member
pursuant to this Agreement; and
(d) the foregoing provisions and the other
provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Treasury
Regulation Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulation.
3.7 RETURN OF CAPITAL CONTRIBUTIONS.
The Managers and Members shall not be personally liable for the return
of the Capital Contributions of any Member, or any portion thereof, it being
expressly understood that any such return shall be made solely from LLC
Property, nor shall the Managers or Members be required to pay to the LLC or any
Member any deficit in any Member's Capital Account upon dissolution or
otherwise; provided, however, that any Member Loans made pursuant to Section 3.5
hereof shall be recourse obligations of the Failing Member upon dissolution of
the LLC or otherwise.
3.8 NO MANAGEMENT.
A Member shall not be an agent of the LLC, nor can a Member bind, nor
execute any instrument on behalf of, the LLC. A Member shall not participate in
the management of the business or affairs of the LLC and, except as provided in
this Agreement, shall not have any voting, consent or approval rights.
ARTICLE IV - - REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF TAG MEX.
TAG MEX hereby represents and warrants to Azteca and the LLC as
follows:
(a) Corporate Organization and Good Standing. TAG MEX is
a corporation duly organized, validly existing and in good standing
under the laws of the State of California. TAG MEX has the corporate
power to own its properties and to conduct its business as now
conducted and has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
(b) Authority. The execution and delivery by TAG MEX of
this Agreement and the performance of the transactions contemplated
hereby have been duly authorized by the Board of Directors of TAG MEX,
and no further corporate action is necessary to authorize the execution
and delivery of this Agreement and the performance
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of such transactions. This Agreement has been duly executed and
delivered by TAG MEX and it constitutes a valid and binding agreement
of TAG MEX enforceable in accordance with its respective terms, except
as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
(c) No Conflict. Neither the execution and delivery of
this Agreement nor the performance by TAG MEX of its obligations
hereunder will (i) violate or conflict with any of the provisions of
the Articles of Incorporation or By-Laws of TAG MEX, (ii) with or
without the giving of notice or the lapse of time or both, violate or
constitute a default under any mortgage, indenture, deed of trust,
lease, contract, agreement, license or other instrument or any
provision of law, order, judgment or ruling of any governmental
authority to which it is a party or by which its property is bound, or
(iii) result in the creation of any mortgage, pledge, lien, charge or
encumbrance upon any of its assets or the loss of any license or other
contractual right with respect thereto; except for such violations,
defaults or encumbrances under clauses (ii) or (iii) that would not
individually or in the aggregate constitute an adverse material effect
on the business, financial condition or assets of TAG MEX and its
Affiliates as a whole.
(d) Approvals. The consummation of the transactions
contemplated by this Agreement do not require the consent, approval or
authorization of any governmental or regulatory authority or any other
person under any permit, license, agreement, indenture or other
instrument to which TAG MEX is a party or which any of its properties
is subject, and no declaration, filing or registration with any
governmental or regulatory authority is required in connection with
such transactions.
(e) Principal Place of Business. TAG MEX's principal
place of business is in the State of California, and it has no present
intention of moving its principal place of business to any other state
or jurisdiction.
(f) Knowledge of LLC's Business. In deciding to acquire a
Membership Interest, TAG MEX has relied on its own knowledge of the
proposed business of the LLC. All documents, records and books
pertaining to this investment have been made available to TAG MEX for
inspection.
(g) Investment Risk. TAG MEX acknowledges that an
investment in the LLC involves a high degree of risk due to numerous
factors and that TAG MEX is capable of bearing such risk. TAG MEX
acknowledges that there is no market for the Membership Interests, that
such a market is unlikely to develop and that TAG MEX may not be able
to liquidate the investment. TAG MEX acknowledges that the LLC is under
no obligation to register the Membership Interest issued to TAG MEX or
to assist TAG MEX in complying with an exemption from the registration
requirements of federal or state securities laws.
(h) Tax Risk. TAG MEX acknowledges that the LLC is a
"pass through" entity and as such, TAG MEX will be directly taxed on
TAG MEX's allocable share of the LLC's profits regardless of whether
distributions are made to TAG MEX.
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(i) Investment Intention. TAG MEX has acquired the
Membership Interest issued to TAG MEX solely for TAG MEX's own account
for investment and not with a view to or for distribution thereof, and
TAG MEX shall not transfer the Membership Interest without registration
under the Securities Act of 1933, as amended, and applicable state
securities laws, or an exemption therefrom.
(j) Experience. TAG MEX either (i) has a pre-existing
personal or business relationship with the LLC or any of its Managers
or controlling persons, which relationship consists of personal or
business contacts of a nature and duration such as would enable a
reasonably prudent investor to be aware of the character, business
acumen and general business and financial circumstances of the person
with whom such relationship exists; or (ii) has such business or
financial experience such that TAG MEX can be reasonably assumed to
have the capacity to protect TAG MEX's own interests in connection with
the purchase of the Membership Interest issued to it.
4.2 REPRESENTATIONS AND WARRANTIES OF AZTECA.
Azteca hereby represents and warrants to TAG MEX and the LLC as
follows:
(a) Corporate Organization and Good Standing. Azteca is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California. Azteca has the corporate power to
own its properties and to conduct its business as now conducted and has
all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder.
(b) Authority. The execution and delivery by Azteca of
this Agreement and the performance of the transactions contemplated
hereby have been duly authorized by the Board of Directors of Azteca,
and no further corporate action is necessary to authorize the execution
and delivery of this Agreement and the performance of such
transactions. This Agreement has been duly executed and delivered by
Azteca and it constitutes a valid and binding agreement of Azteca
enforceable in accordance with its respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability.
(c) No Conflict. Neither the execution and delivery of
this Agreement nor the performance by Azteca of its obligations
hereunder will (i) violate or conflict with any of the provisions of
the Articles of Incorporation or By-Laws of Azteca, (ii) with or
without the giving of notice or the lapse of time or both, violate or
constitute a default under any mortgage, indenture, deed of trust,
lease, contract, agreement, license or other instrument or any
provision of law, order, judgment or ruling of any governmental
authority to which it is a party or by which its property is bound, or
(iii) result in the creation of any mortgage, pledge, lien, charge or
encumbrance upon any of its assets or the loss of any license or other
contractual right with respect thereto; except for such violations,
defaults or encumbrances under clauses (ii) or (iii) that would not
individually or in the aggregate constitute an adverse material effect
on the business, financial condition or assets of Azteca and its
Affiliates as a whole.
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(d) Approvals. The consummation of the transactions
contemplated by this Agreement do not require the consent, approval or
authorization of any governmental or regulatory authority or any other
person under any permit, license, agreement, indenture or other
instrument to which Azteca is a party or which any of its properties is
subject, and no declaration, filing or registration with any
governmental or regulatory authority is required in connection with
such transactions.
(e) Principal Place of Business. Azteca's principal place
of business is in the State of California, and it has no present
intention of moving its principal place of business to any other state
or jurisdiction.
(f) Knowledge of LLC's Business. In deciding to acquire a
Membership Interest, Azteca has relied on its own knowledge of the
proposed business of the LLC. All documents, records and books
pertaining to this investment have been made available to Azteca for
inspection.
(g) Investment Risk. Azteca acknowledges that an
investment in the LLC involves a high degree of risk due to numerous
factors and that Azteca is capable of bearing such risk. Azteca
acknowledges that there is no market for the Membership Interests, that
such a market is unlikely to develop and that Azteca may not be able to
liquidate the investment. Azteca acknowledges that the LLC is under no
obligation to register the Membership Interest issued to Azteca or to
assist Azteca in complying with an exemption from the registration
requirements of federal or state securities laws.
(h) Tax Risk. Azteca acknowledges that the LLC is a "pass
through" entity and as such, Azteca will be directly taxed on Azteca's
allocable share of the LLC's profits regardless of whether
distributions are made to Azteca.
(i) Investment Intention. Azteca has acquired the
Membership Interest issued to Azteca solely for Azteca's own account
for investment and not with a view to or for distribution thereof, and
Azteca shall not transfer the Membership Interest without registration
under the Securities Act of 1933, as amended, and applicable state
securities laws, or an exemption therefrom.
(j) Experience. Azteca either (i) has a pre-existing
personal or business relationship with the LLC or any of its Managers
or controlling persons, which relationship consists of personal or
business contacts of a nature and duration such as would enable a
reasonably prudent investor to be aware of the character, business
acumen and general business and financial circumstances of the person
with whom such relationship exists; or (ii) has such business or
financial experience such that Azteca can be reasonable assumed to have
the capacity to protect Azteca's own interests in connection with the
purchase of the Membership Interest issued to it.
(k) Formation of LLC; No Liabilities. The LLC is a
limited liability company duly organized, validly existing, and in good
standing under the laws of the State of California. Except for
obligations or liabilities incurred in connection with its
organization, the LLC has not incurred, directly or indirectly, any
obligations or liabilities
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or engaged in any business activities of any type or kind whatsoever or
entered into any agreements or arrangements with any Person. The LLC
has not heretofore issued any Membership Interests or rights thereto.
ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS OF PROFITS AND LOSSES.
The Profits and Losses shall be allocated for each fiscal year to the
Members in accordance with their Membership Interests as set forth on Exhibit A.
5.2 TIME OF ALLOCATION.
All allocations of Profits and Losses made pursuant to Section 5.1
shall be made as of the last day of each fiscal year of the LLC; provided,
however, that if during any fiscal year of the LLC or any portion thereof there
is for any reason a change in any Member's Membership Interest in the LLC, the
Profits and Losses for such year shall be allocated among the Members based upon
the number of days during such period that such Member was the owner of such
interest or in such other manner as a majority of the authorized number of
Managers deem appropriate in accordance with the requirements of the Code and of
Treasury Regulations issued pursuant thereto.
5.3 DISTRIBUTIONS OF DISTRIBUTABLE CASH.
Distributions of Distributable Cash shall be made in the following
order:
5.3.1 First, to the extent of Distributable Cash,
distributions shall be made to enable the Members to make timely
quarterly payments of estimated tax and payments of the balance of
federal, state and local income taxes, as the case may be, on or before
the original due date of the corporate income tax returns, on the
passed-through income of each fiscal year, based on the aggregate of
the highest marginal corporate federal, state and local income tax
rates, as the case may be, applicable to such fiscal year, provided
that all such distributions shall be in accordance with their
respective allocations made theretofore pursuant to Section 5.1 hereof.
5.3.2 Second, after distributions are made pursuant to
Section 5.3.1 hereof, subject to the terms of the LLC's credit
facilities and other contractual restrictions, within forty-five (45)
days after the end of each calendar quarter commencing with the
calendar quarter ending March 31, 2003, the LLC shall distribute in
cash all Distributable Cash to the Members in accordance with their
respective Membership Interests.
5.3.3 Notwithstanding Section 5.3.2, in the event a Member
Loan is outstanding at the time a distribution pursuant to Section
5.3.2 is made, the distribution to which the Failing Member would
otherwise be entitled shall be paid to the Non-Failing Member and shall
be deducted from the balance owing on the Member Loan.
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5.4 LIMITATIONS ON DISTRIBUTIONS.
Anything contained herein to the contrary notwithstanding, the LLC
shall not make a distribution to any Member on account of its Membership
Interest if such distribution would violate the Act or other applicable law or
any restrictions in any of the LLC's loan agreements.
5.5 AMOUNTS WITHHELD.
All amounts of federal, state and local income taxes, personal property
taxes, unincorporated business taxes or other taxes withheld from, or required
to be paid with respect to, any distribution or amount distributable to a
Member, because of that Member's status or otherwise, shall be treated as
amounts distributed to such Member for all purposes under this Agreement.
5.6 TAX ALLOCATIONS; SECTION 704(C) OF THE CODE.
5.6.1 The income, gains, losses, deductions and expenses of
the LLC shall be allocated, for federal, state and local income tax
purposes, among the Members in accordance with the allocation of such
income, gains, losses, deductions and expenses among the Members for
computing their Capital Accounts, except that if any such allocation is
not permitted by the Code or other applicable law, the LLC's subsequent
income, gains, losses, deductions and expenses shall be allocated among
the Members so as to reflect as nearly as possible the allocation set
forth herein in computing their Capital Accounts.
5.6.2 In accordance with Section 704(c) of the Code and the
Treasury Regulations thereunder, income, gain, loss, deduction and
expense with respect to any property contributed to the capital of the
LLC shall, solely for income tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted
basis of such property to the LLC for federal income tax purposes and
its fair market value at the time of contribution.
5.6.3 Any elections or other decisions relating to such
allocations shall be made by a majority of the authorized number of
Managers in any manner that reasonably reflects the purpose and intent
of this Agreement.
5.6.4 A majority of the authorized number of Managers may
elect to adjust the basis of LLC Property for federal income tax
purposes in accordance with Section 744 of the Code, in the event of a
distribution of LLC Property as described in Section 734 of the Code or
a transfer of a Membership Interest described in Section 743 of the
Code. In the event that any Member requests to make any such election,
a majority of the authorized number of Managers may require the Member
so benefited thereby to pay the additional annual accounting costs
incurred as a result of making such election.
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ARTICLE VI - - MANAGEMENT OF THE LLC, CONTROL OF THE BUSINESS, OFFICERS
6.1 MANAGEMENT OF THE LLC AND ELECTION OF THE MANAGERS.
6.1.1 Management of the LLC by the Managers. As provided in
the Articles, all powers of the LLC shall be exercised by or under the
authority of, and the business and affairs of the LLC shall be managed
by or under the direction of, the Managers, unless otherwise provided
in the Act, the Articles, or this Agreement. Except as provided in
Section 6.10 below, management of the LLC shall be vested in three
Managers. TAG MEX shall have the right to elect two Managers and Azteca
shall have the right to elect one Manager. A Member shall not
participate in the day-to-day operation of the business affairs of the
LLC. A Manager need not be a Member. The Managers shall exercise their
power and authority in accordance with Sections 6.2.2 and 6.2.3.
6.1.2 Election of the Managers by the Members. TAG MEX
hereby elects Xxxxxx Xxxx and Xxxxxxx Xxxx as Managers, and Azteca
hereby elects Xxxxxx Xxxx as a Manager, each to serve as Managers until
the earliest of (i) the election of different Manager(s) by the
electing Member, or (ii) the date upon which such Manager resigns or
becomes disabled and unable to serve, whereupon the Member that has
appointed such Manager shall be entitled to elect a successor. A
Manager may resign at any time upon written notice to the LLC.
6.2 POWERS OF THE MANAGERS.
6.2.1 Powers of the Managers. The Managers shall have all
necessary powers to carry out the purposes, business, and objectives of
the LLC, including, but not limited to, the right to enter into and
carry out contracts of all kinds; to employ employees, agents,
consultants and advisors on behalf of the LLC; to lend or borrow money
and to issue evidences of indebtedness; to bring and defend actions in
law or at equity; and to buy, own, manage, sell, lease, mortgage,
pledge or otherwise acquire or dispose of the LLC property. The
Managers may, on behalf of the LLC, enter into contracts with
Affiliates; provided, however, such contracts are on the same terms and
conditions that would be available from an independent responsible
third party that is willing to perform the requested service. Without
limiting the generality of this Section 6.2.1, the Managers and each of
them shall have power and authority to act on behalf of the LLC subject
to the limitations of the Act and the limitations set forth herein.
6.2.2 Powers Requiring Majority Consent. Except as provided
in Section 6.2.3, the exercise of all power and authority by the
Managers shall require the consent of a majority of the authorized
number of Managers, and notwithstanding anything in this Agreement to
the contrary, no individual Manager shall have the authority to cause
or authorize the LLC to take or fail to take any action without the
consent of a majority of the authorized number of Managers.
6.2.3 Powers Requiring Unanimous Consent. The following
shall require the consent of all of the authorized number of Managers:
(a) sale, exchange or other disposition of all,
or substantially all, of the LLC's assets occurring as part of
a single transaction or plan; the merger of the LLC with any
Person; or the issuance of additional membership interests;
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(b) the guaranty of any obligations of a third
party in excess of $10,000;
(c) the payment of compensation bonuses to
officers and employees of the LLC which exceed in the
aggregate 5% of the LLC's pre-tax earnings for the immediately
preceding full fiscal year;
(d) any other transaction described in this
Agreement or the Act as requiring the consent of all of the
Members or all the Managers; or
(e) an agreement to do any of the foregoing.
6.3 MANAGERS AS AGENTS OF THE LLC.
The Managers are agents of the LLC for the purpose of its business and
for the purpose of the execution in the name of the LLC of any instrument for
apparently carrying on in the usual way the day-to-day business of the LLC and
such execution binds the LLC, unless such act is in contravention of the
Articles or this Agreement or unless the Manager so acting otherwise lacks the
authority to act for the LLC and the person with whom the Manager is dealing has
knowledge of the fact that the Manager has no such authority.
6.4 ACTS OF THE MANAGERS AS CONCLUSIVE EVIDENCE OF AUTHORITY.
Every contract, deed, mortgage, lease and other instrument executed by
a duly elected Manager shall be conclusive evidence in favor of every person
relying thereon or claiming thereunder that at the time of the delivery thereof
(a) the LLC was in existence, (b) neither this Agreement nor the Articles had
been amended in any manner so as to restrict the delegation of authority among
Members or the Managers, and (c) the execution and delivery of such instrument
was duly authorized by Members and/or the Managers as required by this
Agreement.
6.5 OFFICERS.
6.5.1 Election of Officers. The LLC may have officers. The
officers of the LLC, if deemed necessary by a majority of the
authorized number of Managers, shall be the chief executive officer,
president, vice president, secretary, and chief financial officer, and
such other officers as may be deemed appropriate by a majority of the
authorized number of Managers. Any individual may hold any number of
offices. No officer need be a resident of the State of California or
citizen of the United States. The officers shall exercise such powers
and perform such duties as specified in this Agreement and as shall be
determined from time to time by a majority of the authorized number of
Managers.
6.5.2 Term, Removal and Filling of Vacancy of Officers. The
officers shall be elected by a majority of the authorized number of
Managers. The officers of the LLC shall hold office until their
successors are chosen and qualified. Any officer may be removed at any
time by a majority of the authorized number of Managers. Any vacancy
occurring in any office of the LLC shall be filled as provided by a
majority of the authorized number of Managers.
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6.5.3 Salaries of Officers. The salaries of all officers
and agents of the LLC shall be fixed by a majority of the authorized
number of Managers.
6.5.4 Duties and Powers of Chief Executive Officer and
President. Either the president or the chief executive officer of the
LLC shall preside at all meetings of the Members, shall have general
and active management of the business of the LLC and shall see that all
orders and resolutions of the Members and the Managers are carried into
effect. The president shall have an affirmative duty to adequately
protect the LLC from any and all liability, including, but not limited
to, acquiring appropriate insurance coverage. Xxxxxx Xxxx is hereby
elected to serve as president and chief executive officer of the LLC
until removed or replaced in accordance with this Agreement.
6.5.5 Duties and Powers of Vice-President. The
vice-president, or if there shall be more than one, the vice
presidents, in the order determined by a majority of the authorized
number of Managers, shall, in the absence or disability of the
president, perform the duties and exercise the powers of the president
and shall perform such other duties and have such other powers as may
be prescribed by a majority of the authorized number of Managers.
6.5.6 Duties and Powers of Secretary. The secretary shall
attend all meetings of the Managers and all meetings of the Members,
and shall record all the proceedings of such meetings in a book to be
kept for that purpose. The secretary shall give, or cause to be given,
if required, notice of the meetings of the Managers and the meetings of
the Members, and shall perform such other duties as may be prescribed
by a majority of the authorized number of Managers or the president,
under whose supervision the secretary shall be. The secretary shall
have custody of the seal and the secretary shall have authority to
affix the same to any instrument requiring it, and when so affixed, it
may be attested by his signature. A majority of the authorized number
of Managers may give general authority to any other officer to affix
the seal of the LLC and to attest the affixing by his signature. Xxxx
Xxxxxx is hereby elected to serve as secretary of the LLC until removed
or replaced in accordance with this Agreement.
6.5.7 Duties and Powers of Chief Financial Officer. The
chief financial officer shall have the custody of the funds and
securities of the LLC, and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the LLC, and shall
deposit all moneys and other valuable effects in the name and to the
credit of the LLC in such depositories as may be designated by a
majority of the authorized number of Managers. Xxxxxxx Xxxx is hereby
elected to serve as chief financial officer of the LLC until removed or
replaced in accordance with this Agreement.
The chief financial officer shall disburse the funds of the
LLC as may be ordered by a majority of the authorized number of
Managers, taking proper vouchers for such disbursements, and shall
render to the president and any Manager, when requested, an account of
all his transactions as chief financial officer and of the financial
condition of the LLC.
6.5.8 Compensation for Executive Officers of Members. No
executive officer of a Member or any Affiliate of a Member (other than
the LLC) performing services for or on behalf of the LLC, as a Manager,
officer, employee, or otherwise, shall receive any salary or
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other compensation from the LLC, except with the consent of all of the
authorized number of Managers.
6.6 LIMITATIONS ON LIABILITY OF THE MANAGERS AND OFFICERS.
The Managers and officers shall not be liable to the LLC or Members for
any loss or damage resulting from any mistake of fact or judgment or any act or
failure to act unless the mistake, act or failure to act results directly from
fraud, willful misconduct or gross negligence. The Managers and officers shall
be indemnified pursuant to Article XIII hereof.
6.7 OTHER ACTIVITIES OF THE MEMBERS AND MANAGERS PERMITTED.
The Members and the Managers and their respective Affiliates may engage
or invest, independently or with others, in any business activity of any type or
description, including without limitation those that might be the same as or
similar to the LLC's business and that might be in direct or indirect
competition with the LLC. Neither the Members nor the Managers shall be
obligated to present any investment opportunity or prospective economic
advantage to the LLC, even if the opportunity is of a character that, if
presented to the LLC, could be taken by the LLC. The Members and the Managers
shall have the right to hold any investment opportunity or prospective economic
advantage for their own account or to recommend such opportunity to Persons
other than the LLC. Neither the LLC nor any other Member or Manager, as the case
may be, shall have any right in or to such other venture or activities or
opportunities or to the income or proceeds derived therefrom. Each Member and
Manager acknowledges that the other Members and Mangers and their respective
Affiliates own and/or manage other businesses, including businesses that may
compete with the LLC and for the Members' and/or the Managers' time. Each Member
and each Manager hereby waives any and all rights and claims which he may
otherwise have against the other Members and/or Managers, as the case may be,
and their respective Affiliates as a result of any of such activities.
Notwithstanding anything in this Section 6.7 to the contrary, in no event shall
any Member or any Affiliate thereof (other than the LLC) compete with the LLC in
any manner proscribed by Section 9.1.
6.8 TRANSACTIONS BETWEEN THE LLC AND THE MANAGERS AND MEMBERS.
No contract or other transaction between the LLC and one or more of its
Managers or Members (or any affiliate of a Manager or Member), or between the
LLC and any entity in which one or more of its Managers or Members (or any
affiliate of a Manager or Member) has a material financial interest (for this
purpose, compensation as a Manager, officer, employee or agent of the LLC or
acting as a director, general partner or Manager of an entity is treated as a
material financial interest), is either void or voidable because such Manager,
Member or affiliate or such entity is a party or because the interested Manager
is present and votes at the meeting of the Managers which authorizes, approves
or ratifies the contract or transaction, if:
(a) Such contract or transaction is authorized, approved
or ratified in good faith by all of the Managers other than the
interested Manager, and the material facts as to the transaction and as
to the interest of such Manager, Member or affiliate are fully
disclosed or known to the Managers who so approved, authorized or
ratified the contract or transaction; or
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(b) Such contract or transaction is authorized, approved
or ratified in good faith by a majority of the authorized number of
Managers (it being agreed that the vote of the interested Manager shall
be counted) and the material facts as to the transaction and as to the
interest of such Manager, Member or affiliate are fully disclosed or
known to the Managers who approve, authorize or ratify the contract or
transaction, and the contract or transaction is just and reasonable as
to the LLC at the time it is authorized, approved or ratified.
For purposes of this Section, an "interested Manager" is a Manager who
has, or whose affiliate has, a material financial interest in the contract or
transaction being approved.
6.9 DEVOTION OF TIME.
The Managers are not obligated to devote all of their time or business
efforts to the affairs of the LLC. The Managers shall devote whatever time,
effort, and skill as they deem appropriate for the operation of the LLC.
6.10 INCREASE IN NUMBER OF AUTHORIZED MANAGERS; ELECTION.
Within ninety (90) days following the occurrence of Major Event, at the
written election of Azteca (the "CONTROL ELECTION"), the authorized number of
Managers shall be increased from three to five Managers (the additional two
Managers are referred to herein as the "ADDITIONAL MANAGERS"), and following the
Control Election and continuing for the remaining term of this Agreement, the
management of the LLC shall be vested in five Managers. TAG MEX shall retain the
right to elect two Managers, and Azteca shall have the right to elect three
Managers. Upon the Control Election, the then-existing Managers shall remain as
Managers, and Azteca shall appoint two Persons to serve as the Additional
Managers.
ARTICLE VII - - MEETINGS
7.1 MEETINGS OF THE MEMBERS.
7.1.1 The Members are not required to hold meetings.
Decisions may be reached through one or more informal consultations
followed by agreement among the Members, provided that both Members are
consulted (although both Members need not be present during a
particular consultation), or by a written consent signed by the
Members. In the event that the Members desire to hold a meeting, formal
notice of the meeting shall not be required.
7.1.2 Members may participate in the meeting through the
use of a conference telephone or similar communications equipment,
provided that all Members participating in the meeting can hear one
another.
7.1.3 The Members shall keep or cause to be kept with the
books and records of the LLC full and accurate minutes of all meetings,
notices of meetings, when given, and all written consent in lieu of
meetings.
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7.2 MEETINGS OF THE MANAGERS.
7.2.1 The Managers are not required to hold meetings.
Decisions may be reached through one or more informal consultations
followed by agreement among the Managers, provided that all Managers
are consulted (although all Managers need not be present during a
particular consultation), or by a written consent signed by the minimum
number of Managers needed to approve the decision. In the event that
the Managers desire to hold a meeting, formal notice of the meeting
shall not be required. Managers may participate in the meeting through
the use of a conference telephone or similar communications equipment,
provided that all Managers participating in the meeting can hear one
another.
7.2.2 The Managers shall keep or cause to be kept with the
books and records of the LLC full and accurate minutes of all meetings,
notices of meetings, when given, and all written consent in lieu of
meetings.
ARTICLE VIII - - TRANSFER AND ASSIGNMENT OF MEMBERSHIP INTERESTS,
ECONOMIC INTERESTS AND RIGHTS
8.1 TRANSFER AND ASSIGNMENT OF MEMBERSHIP INTERESTS OR ECONOMIC
INTERESTS.
No Member shall be entitled to assign, convey, sell, encumber or in any
way alienate ("TRANSFER") all or any part of its Membership Interest or Economic
Interest in the LLC or withdraw as a Member except with the prior written
consent of the other Member, which consent may be given or withheld, conditioned
or delayed, in its sole discretion. Transfers in violation of this Section 8.1
shall not be effective.
8.2 FURTHER RESTRICTIONS ON TRANSFER OF MEMBERSHIP INTERESTS.
In addition to other restrictions found in this Agreement, no Member
shall assign, convey, sell, encumber or in any way alienate all or any part of
its Membership Interest, (a) without registration under applicable federal and
state securities laws, unless its delivers an opinion of counsel satisfactory to
the LLC (or otherwise reasonably satisfies the LLC) that registration under such
laws is not required, or (b) if the Membership Interest to be sold or exchanged
when added to the total of all other Membership Interests sold or exchanged
during the preceding 12 consecutive months, would result in the termination of
the LLC under Section 708 of the Code or any similar provision of the Code,
except to the extent that this limitation is waived by the other Member. Any
permitted transferee of a Membership Interest in the LLC shall take such
Membership Interest subject to the restrictions on transfer imposed by this
Agreement.
8.3 SUBSTITUTION OF MEMBERS AFTER TRANSFER OF MEMBERSHIP INTEREST.
A transferee of a Membership Interest shall have the right to become a
substitute Member only if (a) the written consent of the Members has been
obtained (which consent may be given or withheld, conditioned or delayed, in
their sole discretion) for such substitution and the securities and tax
requirements hereof are met, (b) the transferee executes an instrument
satisfactory to all Members accepting and adopting the terms and provisions of
this Agreement, and (c) the
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transferee pays all expenses in connection with his admission as a new Member. A
transferee who becomes a substituted Member has, to the extent assigned, the
rights and powers of a Member under the Articles, this Agreement and the Act. A
transferee who becomes a substituted member is also liable for Capital
Contribution obligations and to return any unlawful distributions made to the
transferor.
8.4 EFFECTIVE DATE OF PERMITTED TRANSFERS.
Any permitted transfer of all or any portion of a Membership Interest
in the LLC will, except as otherwise determined by all of the Members, take
effect on the first day of the month following receipt by the Members of written
notice of transfer.
8.5 EFFECT OF TRANSFERS OF ECONOMIC INTEREST.
Upon any transfer of an Economic Interest in the LLC to a transferee
who does not become a substitute Member, the transferee shall have no right to
participate in the management of the business and affairs of the LLC or to
become a Member, but such transferee shall only be entitled to receive the share
of Profits, Losses and distributions to which the transferor of such Economic
Interest in the LLC would otherwise be entitled. Unless and until the transferee
of an Economic Interest in the LLC becomes a Member, the transferor shall
continue to be a Member and to have the power to exercise any rights and powers
of a Member, including the right to vote, with respect to the transferred
Economic Interest. Such transfer of an Economic Interest in the LLC is subject
to the consent required in Section 8.1 above.
8.6 CONSEQUENCES OF PLEDGE OR GRANT OF SECURITY INTEREST.
The pledge or granting of a security interest, lien or other
encumbrance in or against any or all of a Membership Interest or an Economic
Interest is subject to the consent required in Section 8.1 above and shall not
cause the Member to cease to be a Member or to grant anyone else the power to
exercise any rights or powers of a Member.
ARTICLE IX - - ADDITIONAL AGREEMENTS
9.1 NONCOMPETITION.
Each Member agrees with the LLC and the other Member that, so long as
such Person is a Member of the LLC and the LLC has not ceased operations, the
Member shall not, directly or indirectly through any Affiliate or otherwise,
solicit or accept any business from Xxxxx, Express or Levi, or any other
customer of the LLC agreed to in writing by all of the Members (which agreement
shall be evidenced by an amendment to this Agreement to identify such additional
customer in Section 2.1 hereof), anywhere in the World. Each Member acknowledges
that a breach of this Section 9.1 will result in irreparable harm to the LLC and
the other Member for which money damages would not adequately compensate the
incurred parties. If a Member breaches the provisions of this Section 9.1, in
addition to all other remedies to which the LLC and other Member may be
entitled, and notwithstanding ARTICLE XIV, the LLC and the aggrieved Member
shall be entitled to an injunction to enforce the provisions of this ARTICLE IX,
to be issued by any court of competent jurisdiction, to enjoin and restrain the
Member and
22
any Affiliate of the Member from continuance of such breach. The Members
expressly waive any claim or defense that an adequate remedy at law might exists
for any such breach.
9.2 MANAGEMENT FEE.
Notwithstanding Section 3.4.3 to the contrary, within thirty days (30)
days following the end of each calendar month during the term of this Agreement,
the LLC shall pay to each Member a management fee equal to two and one-half
percent (2.5%) of net sales recognized by the LLC during such calendar month,
which management fee shall compensate each Member for costs of indirect labor,
and expenses of indirect labor, incurred in providing services to the LLC.
9.3 REPLACEMENT OF CREDIT FACILITY.
Tarrant agrees with the LLC and the other Member to use its
commercially reasonable efforts to obtain from GMAC Commercial Finance LLC a
release of the LLC from its obligations under, and a termination of, the
Assumption Agreement. If Tarrant is unable to obtain such release on or before
March 31, 2004, then the other Member shall have the right to present to
Tarrant, and Tarrant shall be obligated to accept, a financing agreement with a
third party lender or syndicate of lenders that (i) does not require the LLC to
guaranty Tarrant's obligations under such financing agreement, and (ii) contains
commercial terms more favorable to Tarrant (as determined by Tarrant in its
reasonable discretion) than the commercial terms then existing under the Credit
Facility.
9.4 SOURCING PRODUCTION ALLOCATION.
Each of the Members and the LLC agree that the LLC shall use its
commercial reasonable efforts to allocate over a twelve month period, orders for
the manufacture of apparel products between each of the Members and their
respective Affiliates in such a manner as to provide, as near as practicable,
for the equal manufacture of apparel products (or equal partial manufacture, in
the case of facilities dedicated to a certain step in the manufacture process,
such as sewing, washing, packing, etc.) between the Mexican manufacturing
facilities of Tarrant, on the one hand, and the Mexican manufacturing facilities
of Azteca, on the other hand.
ARTICLE X - - DISSOLUTION AND WINDING UP
10.1 CONDITIONS OF DISSOLUTION.
The LLC shall be dissolved, its assets shall be disposed of, and its
affairs wound up on the first to occur of the following:
(a) a unanimous determination by the Members that the LLC
shall be dissolved and wound up;
(b) as provided in Section 15.12;
(c) the sale of all or substantially all of the assets of
the LLC;
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(d) the entry of a decree of judicial dissolution by a
court of competent jurisdiction providing for the dissolution of the
LLC; or
(e) the occurrence of any other event which causes the
dissolution of the LLC by operation of law.
10.2 ORDER OF PAYMENT OF LIABILITIES UPON DISSOLUTION.
Upon dissolution, the LLC's liabilities shall be settled in the
following order, as required by the Act:
(a) to creditors other than Members, in the order of
priority as provided by law;
(b) to creditors who are Members; and
(c) to Members in accordance with their respective
positive adjusted Capital Account balances.
10.3 LIMITATIONS ON PAYMENTS MADE ON DISSOLUTION.
Except as otherwise specifically provided in this Agreement, each
Member shall be entitled to look solely at the assets of the LLC for the return
of his positive adjusted Capital Account balance.
10.4 LIQUIDATION.
Upon the dissolution of the LLC, the assets of the LLC shall be
liquidated as promptly as shall be practicable. A Member shall be permitted to
purchase any or all of the assets of the LLC based on the fair market value
thereof (as determined in good faith by a majority of the authorized number of
Managers).
10.5 TERMINATION OF COVENANTS.
Upon dissolution and winding up of the LLC, this Agreement, including,
without limitation, all covenants of the parties hereto contained herein, shall
terminate.
ARTICLE XI - - BOOKS AND RECORDS, FISCAL YEAR,
ACCOUNTING; BANKING; REPORTS
11.1 BOOKS, RECORDS AND FINANCIAL STATEMENTS.
At all times during the continuance of the LLC, the LLC shall maintain,
at its principal place of business, separate books of account for the LLC that
shall show a true and accurate record of all costs and expenses incurred, all
charges made, all credits made and received and all income derived in connection
with the operation of the LLC's business. Such books of account shall be open to
inspection and examination during regular business hours by each Member and its
duly authorized representative for any purpose. Any such inspection and
examination shall be
24
conducted in a manner that does not unreasonably interfere with the other
business activities being conducted at the offices of the LLC.
11.2 FISCAL YEAR.
The fiscal year of the LLC shall commence January 1 and terminate on
December 31 of the same calendar year.
11.3 ACCOUNTING; ACCOUNTING METHOD.
For tax reporting purposes of determining Profits and Losses, the books
and records of the LLC shall be kept on the accrual method of accounting in
accordance with generally accepted accounting principles consistently applied.
The books of account and records of the LLC shall be prepared by the LLC and
audited by the Auditor. All LLC accounting policy issues shall be subject to
final approval by TAG MEX.
11.4 MANAGEMENT REPORTS.
As soon as practicable, after the end of each fiscal quarter (except
for the fourth quarter), but not later than thirty (30) days after the end of
each such fiscal quarter, the LLC shall cause to be prepared and shall provide
to the Managers and each of the Members quarterly statements, including
statements of Profits and Losses, Distributable Cash and balance sheets.
Additionally, the LLC shall provide the aforementioned reports to the Managers
and each of the Members within forty-five (45) days after the end of the fourth
quarter.
11.5 FINANCIAL STATEMENTS AND TAX INFORMATION.
As soon as practicable after the end of each fiscal year, but not later
than sixty (60) days after such end:
(a) The financial statements of the LLC shall be prepared
by the LLC and audited by the Auditor, and such financial statements
shall be accompanied by a report of the Auditor, containing its opinion
that such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied. The
costs of preparation of such statements shall be an expense of the LLC.
A copy of the financial statements and the report of the Auditor shall
be furnished to each Member within ten (10) business days after their
receipt by the Managers.
(b) The information necessary for the preparation by each
Member of its federal, state and other income tax returns shall be
prepared by the accountants for the LLC and delivered to each Member.
ARTICLE XII - - TAX MATTERS
TAG MEX is hereby designated as the "Tax Matters Partner" (as such term
is defined in the Code and the Treasury Regulations promulgated thereunder) for
purposes of federal and state income tax matters. In the event of TAG MEX's
failure to act as Tax Matters Partner, Azteca,
25
without further action, shall become the Tax Matters Partner. The Tax Matters
Partner shall cause the preparation and timely filing of all tax returns
required to be filed by the LLC pursuant to the Code and all other tax returns
deemed by it to be necessary and required in each jurisdiction in which the LLC
does business.
ARTICLE XIII - - INDEMNIFICATION
13.1 LIABILITY OF MEMBERS.
13.1.1 Except as otherwise provided by the Act, the debts,
obligations and liabilities of the LLC, whether arising in contract,
tort or otherwise, shall be the debts, obligations and liabilities
solely of the LLC, and no Covered Person shall be obligated personally
for any such debt, obligation, or liability of the LLC solely by reason
of being a Covered Person.
13.1.2 Except as otherwise expressly required by law, a
Member, in its capacity as such, shall have no liability in excess of
(a) the amount of its required Capital Contribution, (b) its share of
any assets and undistributed Profits of the LLC, (c) its obligation to
make other payments expressly provided for in this Agreement, if any,
and (d) the amount of any distributions wrongfully made to it.
13.2 LIABILITY OF MANAGERS.
The Managers shall not be liable, in damages or otherwise, to the LLC
or any Member for any act or failure to act by the Managers which act was within
the scope of the authority conferred on the Managers by this Agreement, unless
such act or omission constituted fraud, willful misconduct or gross negligence.
The Managers shall be indemnified by the LLC against liability for any claim,
demand, tax penalty, loss, damage, liability or expense (including, without
limitation, amounts paid in settlement, reasonable costs of investigation and
reasonable legal fees and expenses) resulting from any threatened, pending or
completed action, suit or proceeding naming as a defendant any Manager by reason
of acts of omissions by him within the scope of his authority as set forth in
this Agreement, provided his actions did not constitute fraud, willful
misconduct or gross negligence.
13.3 EXCULPATION.
13.3.1 No Covered Person shall be liable to the LLC or any
other Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Covered Person on
behalf of the LLC and in a manner reasonably within the scope of
authority conferred on such Covered Person by this Agreement or
otherwise, except that a Covered Person shall be liable for any such
loss, damage or claim incurred by reason of such Covered Person' fraud,
willful misconduct or gross negligence.
13.3.2 A Covered Person shall be fully protected in relying
in good faith upon the records maintained by the LLC and upon such
information, opinions, reports or statements presented to the LLC by
any Person as to matters reasonably within such other Person's
professional or expert competence, including information, opinions,
reports or statements as to the value and amount of the assets,
liabilities, Profits, Losses or distributions or any other facts
26
pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
13.4 FIDUCIARY DUTY.
13.4.1 To the extent that, at law or in equity, a Covered
Person has duties (including fiduciary duties) and liabilities relating
thereto to the LLC or to any other Covered Person, a Covered Person
acting under this Agreement shall not be liable to the LLC or to any
other covered Person for its good faith reliance on the provisions of
this Agreement.
13.4.2 Unless otherwise expressly provided herein, whenever
a conflict of interest exists or arises between Covered Persons, the
Covered Person shall resolve such conflict of interest in good faith,
considering in each case (a) the relative interests of each party
(including its own interests) in such conflict, agreement, transaction
or situation, (b) the benefits and burdens relating to such interests,
(c) any customary or accepted industry practices, (d) any applicable
generally accepted accounting practices or principles, and (e) in the
case of any transaction, the terms of similar transactions among
unrelated third parties. In the absence of bad faith by the Covered
Person, the resolution, action or terms so made, taken or provided by
the Covered Person shall not constitute a breach of this Agreement or
any other agreement contemplated herein or of any duty or obligation of
the Covered Person at law or in equity or otherwise.
13.5 INDEMNIFICATION BY THE LLC.
To the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the LLC for any loss, damage or claim
(including reasonable legal fees) incurred by such Covered Person by reason of
any act or omission performed or omitted by such Covered Person in good faith on
behalf of the LLC and in a manner reasonably within the scope of authority
conferred on such Covered Person by this Agreement and otherwise, except that no
Covered Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Covered Person (a) by reason of fraud or
willful misconduct with respect to such acts or omissions or (b) in breach of
the Agreement; provided, however, that any indemnity under this Section 13.5
hereof shall be provided out of and to the extent of LLC assets only, and no
Covered Person shall have any personal liability on account thereof.
13.6 INDEMNIFICATION PROCEDURE.
Any person asserting a right to indemnification under Section 13.5
hereof shall so notify the Managers, in writing pursuant to the notice
requirements of Section 15.11 hereof. With respect to those claims governed by
Section 13.5 hereof, the Managers shall be entitled to control the defense or
prosecution of such claim or demand in the name of the indemnified person. The
parties hereto shall cooperate in the prosecution or defense against any claims
and shall furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals as may
reasonably be requested in connection therewith.
27
13.7 EXPENSES.
To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by a Covered Person in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the LLC prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by the LLC of an undertaking by or on behalf of the Covered Person to repay such
amount if it shall be determined that the Covered Person is not entitled to be
indemnified as authorized in Section 13.5 hereof.
ARTICLE XIV - - REQUIRED ARBITRATION OF DISPUTES
Except for a petition to consolidate arbitration proceedings allowed by
California Code of Civil Procedure Section 1281.3, no party to this Agreement
shall initiate any legal action in the courts with respect to any disputes that
relate to this Agreement, including, but not limited to the acts or omissions of
any Member or the LLC relating to the performance of this Agreement, the rights,
duties, and liabilities under this Agreement of any Member with respect to any
other Member or the LLC, or any claims or controversies that relate in any way
to this Agreement, unless and until the party (or the LLC) provides written
notification of the dispute (a "Dispute Notice") to all Members and the LLC, and
submits the dispute to the arbitrators to render a decision in accordance with
this Article. Any such action to enforce or interpret this Agreement or to
resolve disputes between the Members or by or against any Member shall be
settled by arbitration in accordance with the rules of the American Arbitration
Association. The Dispute Notice shall include the nature of the matter to be
resolved by arbitration. Arbitration shall be conducted in Los Angeles County,
California. The substantive law of the State of California shall be applied by
the arbitrator to the resolution of the dispute. The parties shall share equally
all costs of arbitration. The prevailing party shall be entitled to
reimbursement of reasonable attorneys' fees, costs, and expenses incurred in
connection with the arbitration. All decisions of the arbitrator shall be final,
binding, and conclusive on all parties. Judgment may be entered upon any such
decision in accordance with applicable law in any court having jurisdiction
thereof.
ARTICLE XV - - MISCELLANEOUS
15.1 LAW GOVERNING.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California applicable to contracts made and to be
performed entirely therein.
15.2 COMPLETE AGREEMENT.
This Agreement and the Articles constitute the complete and exclusive
statement of agreement among Members relating to the LLC. This Agreement and the
Articles supersede all prior written and oral statements and agreements by and
among Members and no representation, statement, or condition or warranty not
contained in this Agreement or the Articles will be binding on the Members or
have any force or effect whatsoever.
28
15.3 BINDING EFFECT.
Subject to the provisions of this Agreement and the Act relating to
transferability, this Agreement shall be binding and inure to the benefit of
Members, and their respective executors, administrators, heirs, successors and
permitted assigns.
15.4 NO THIRD PARTY BENEFICIARY.
This Agreement is made solely and specifically among and for the
benefit for the LLC and the parties hereto, and their respective successors and
permitted assigns subject to the express provisions hereof relating to
successors and permitted assigns, and no other Person will have any rights,
interest, or claims hereunder or be entitled to any benefits under or on account
of this Agreement as a third party beneficiary or otherwise. This Agreement is
not intended for the benefit of a creditor who is not a Member and does not
grant any rights to or confer any benefits on any Person who is not a Member,
Manager, officer, or agent of the LLC.
15.5 GENDER AND NUMBER IN NOUNS AND PRONOUNS.
Common nouns and pronouns will be deemed to refer to the masculine,
feminine, neuter, singular and plural, as the identity of the person or persons,
firm or corporation may in the context require. The singular shall include the
plural and the masculine gender shall include the feminine and neuter, and vice
versa, as the context requires. Any reference to the Code, the Act, or statutes
or laws will include all amendments, modifications, or replacements of the
specific sections and provisions concerned.
15.6 HEADINGS.
All headings herein are inserted only for convenience and ease of
reference and are not to be considered in the construction or interpretation of
any provision of this Agreement.
15.7 REFERENCES IN THIS AGREEMENT.
Numbered or lettered articles, sections and subsections herein
contained refer to articles, sections and subsections of this Agreement unless
otherwise expressly stated.
15.8 EXHIBITS.
All Exhibits attached to this Agreement are incorporated and shall be
treated as if set forth herein.
15.9 SEVERABILITY.
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under the present or future laws effective during the term of this
Agreement, such provision will be fully severable. This Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part of this Agreement; and the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid, or unenforceable provision or by its severance from this
Agreement.
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Furthermore, in lieu of such illegal, invalid, or unenforceable provision, there
will be added automatically as a part of this Agreement a provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be possible
and be legal, valid, and enforceable.
15.10 ADDITIONAL DOCUMENTS AND ACTS.
Each Member agrees to execute and deliver such additional documents and
instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions,
and conditions of this Agreement and the transactions contemplated hereby.
15.11 NOTICES.
In order to be effective all notices, consents, approvals, disapprovals
and other communications ("Notices") required or permitted by this Agreement
must be in writing and either (a) sent by telegram or telecopy (or similar
facsimile), or (b) placed in the United States mail, certified with return
receipt requested, properly addressed and with the full postage prepaid, or (c)
personally delivered, and in all cases other than telegram or telecopy (or
similar facsimile), signed. Notice shall be deemed received and effective on the
earliest of (x) the date actually received, or (y) two business days after being
mailed as aforesaid, or (z) 24 hours after being sent by telegram or telecopy
(or similar facsimile). Each Member's address, telephone number and facsimile
number for the purpose of receiving Notice is set forth on Exhibit A hereto. Any
Member may change its address, telephone number or facsimile number for Notice
purposes by giving Notice in the manner described in this Section 15.11,
provided that such change of address shall not be effective until 10 days after
notice of the change.
15.12 AMENDMENTS.
All amendments to this Agreement shall be in writing and shall require
the affirmative vote of all the Members. Anything to the contrary
notwithstanding, in the event that either Member notifies the other Member that
terms of this Agreement violate the terms of any credit facility or other
borrowing arrangement to which such Member or any Affiliate of such Member is a
party, or that terms of this Agreement preclude the consolidation under
generally accepted accounting principles or the rules and regulations of the
Securities and Exchange Commission of the LLC's financial statements with those
of Tarrant Apparel Group, a California corporation, the Members shall negotiate
in good faith to amend the provisions of, or add provisions to, this Agreement
to eliminate such violation or to permit such consolidation, as the case may be;
provided that if the parties are unable to reach an agreement on such amendment
within thirty days of the notice, such Member shall have the right to cause the
LLC to be immediately dissolved and wound up.
15.13 MULTIPLE COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
will be deemed an original but all of which will constitute one and the same
instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of October 1, 2002.
AZTECA PRODUCTION INTERNATIONAL, INC., a
California corporation
By: /s/ Xxxxxx Xxxx
-------------------------------------
Xxxxxx Xxxx, CEO and President
TAG MEX, INC., a California corporation
By: /s/ Xxxxxx Xxxx
-------------------------------------
Xxxxxx Xxxx, President
31
EXHIBIT A
UNITED APPAREL VENTURES, LLC
CAPITAL CONTRIBUTION AND PERCENTAGE INTERESTS
OF MEMBERS
============== ============================= ================ ===================
MEMBER'S NAME MEMBER'S ADDRESS MEMBER'S CAPITAL MEMBER'S PERCENTAGE
CONTRIBUTION INTEREST
============== ============================= ================ ===================
TAG MEX 0000 X. Xxxxxxxxxx Xxxx. $ 50,100.00 50.1%
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Chief Financial Officer
-------------- ----------------------------- ---------------- -------------------
AZTECA 0000 X. Xxxxxxx Xxx. $ 49,900.00 49.9%
Xxxxxxxx, XX 00000
Facsimile: ( ) -
Attn: Chief Executive Officer
-------------- ----------------------------- ---------------- -------------------
TOTAL $100,000.00 100.0%
---------------- -------------------
