EXHIBIT 10(a)
LIMITED LIABILITY COMPANY AGREEMENT
OF
ACCORD CONTRACT SERVICES LLC
TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS........................................ 1
ARTICLE II FORMATION; NAME; PLACE OF BUSINESS......................... 1
2.1 Formation of LLC; Certificate of Formation................. 1
2.2 Name of LLC................................................ 2
2.3 Place of Business.......................................... 2
2.4 Registered Office and Registered Agent..................... 3
2.5 Associated Agreements...................................... 3
2.6 Representations and Warranties............................. 3
2.7 Partnership Interest....................................... 4
ARTICLE III PURPOSES AND POWERS OF LLC................................. 5
3.1 Purposes................................................... 5
3.2 Powers..................................................... 5
ARTICLE IV TERM OF LLC................................................ 5
ARTICLE V CAPITAL.................................................... 6
5.1 Initial Capital Contributions of the Members............... 6
5.2 Additional Capital Contributions of the Members............ 6
5.3 Capital Accounts........................................... 6
5.4 No Interest on Capital Contributions or Capital Accounts... 6
5.5 Advances to LLC............................................ 6
5.6 Liability of Members and the Board of Representatives...... 7
5.7 Return of Capital.......................................... 7
5.8 Future Financing........................................... 7
ARTICLE VI ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS; TAXES..... 7
6.1 Allocation of Net Income or Net Loss....................... 7
6.2 Allocation of Income and Loss With Respect to LLC Interests
Transferred............................................... 7
6.3 Distributions and Withholding.............................. 8
6.4 Overriding Allocations of Net Income and Net Loss.......... 8
6.5 Taxes...................................................... 9
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ARTICLE VII MANAGEMENT................................................. 10
7.1 Management of the LLC by the Board of Representatives...... 10
7.2 Officers................................................... 14
7.3 Other Activities of Members or Affiliates; No
Restrictions on Competition............................... 15
7.4 Certain Transactions....................................... 15
7.5 Indemnification and Exculpation of the Members,
Representatives, Officers any Affiliate.................... 15
7.6 Rights and Obligations of Members.......................... 17
7.7 Performance of Duties; Liability of Representatives........ 17
7.8 Limited Liability.......................................... 18
ARTICLE VIII DEADLOCKS.................................................. 18
8.1 Deadlock Resolution........................................ 18
ARTICLE IX BANK ACCOUNTS; BOOKS AND RECORDS; STATEMENTS;
TAXES; FISCAL YEAR........................................ 19
9.1 Bank Accounts.............................................. 19
9.2 Books and Records.......................................... 19
9.3 Financial Statements and Information....................... 19
9.4 Accounting Decisions....................................... 20
9.5 Where Maintained........................................... 20
9.6 Fiscal Year................................................ 20
ARTICLE X TRANSFER AND CONVERSION OF LLC INTERESTS AND THE ADDITION,
SUBSTITUTION AND WITHDRAWAL OF MEMBERS.................... 20
10.1 Transfer of LLC Interests.................................. 20
10.2 Restrictions on Transfers.................................. 21
10.3 No Right to Withdraw....................................... 21
10.4 Removal.................................................... 21
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ARTICLE XI DISSOLUTION AND LIQUIDATION.................................. 22
11.1 Events Causing Dissolution................................... 22
11.2 Cancellation of Certificate.................................. 25
11.3 Distributions Upon Dissolution............................... 25
11.4 Reasonable Time for Winding Up............................... 26
11.5 Distribution in Kind......................................... 26
11.6 Survival of Obligations...................................... 26
11.7 Deficit Capital Accounts..................................... 26
11.8 Transitional Cooperation..................................... 26
ARTICLE XII MISCELLANEOUS PROVISIONS..................................... 27
12.1 Compliance with Delaware LLC Act............................. 27
12.2 Additional Actions and Documents............................. 27
12.3 Notices...................................................... 27
12.4 Severability................................................. 28
12.5 Survival..................................................... 28
12.6 Waivers...................................................... 28
12.7 Exercise of Rights........................................... 28
12.8 Binding Effect............................................... 29
12.9 Limitation on Benefits of this Agreement..................... 29
12.10 Amendment Procedure.......................................... 29
12.11 Entire Agreement............................................. 29
12.12 Pronouns..................................................... 29
12.13 Headings..................................................... 29
12.14 Governing Law................................................ 29
12.15 Execution in Counterparts.................................... 29
12.16 Announcements................................................ 30
12.17 Dispute Resolution........................................... 30
12.18 Nondisclosure of Information................................. 32
12.19 Waiver of Partition and Certain Other Rights................. 34
12.20 Involvement of the LLC in Certain Proceedings................ 34
12.21 Attorney-in-Fact............................................. 34
12.22 Member Systems............................................... 35
Schedules:
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Schedule 2.5
Schedule 5.1
Schedule 12.22
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LIMITED LIABILITY COMPANY AGREEMENT
OF
ACCORD CONTRACT SERVICES LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") is entered into as
of August 8, 1996, by and among Wyle Electronics, a California corporation
("Member A") and Xxxxxxxx Industries, Inc., a California corporation ("Member
B"). Member A and Member B and any other persons or entities who shall in the
future execute and deliver this Agreement pursuant to the provisions hereof
shall hereinafter collectively be referred to as the "Members."
Member A and Member B propose to form a joint venture to provide materials
management services for each of the Members, including, without limitation, the
acquisition of components and products and the provision of kitting, turnkey and
autoreplenishment services to customers and related administrative and other
related services in connection therewith. Member A and Member B further propose
that the joint venture be organized as a limited liability company pursuant to
the Delaware Limited Liability Company Act (the "Delaware LLC Act") under the
name "ACCORD CONTRACT SERVICES LLC" (the "LLC").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Members hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, capitalized terms used
herein shall have the respective meanings assigned thereto in ADDENDUM I,
attached hereto and incorporated herein by reference, for all purposes of this
Agreement (such definitions to be equally applicable to both the singular and
the plural forms of the terms defined). Unless otherwise specified, all
references herein to Articles or Sections are to Articles or Sections of this
Agreement.
ARTICLE II
FORMATION; NAME; PLACE OF BUSINESS
2.1 FORMATION OF LLC; CERTIFICATE OF FORMATION. The Members of the LLC
hereby:
(a) authorize the formation of the LLC by the Members as a limited
liability company pursuant to the Delaware LLC Act, and further authorize the
filing of the Certificate with the Recording Office as required under the
Delaware LLC Act;
(b) confirm and agree to their status as Members of the LLC;
(c) execute this Agreement for the purpose of confirming the existence of
the LLC and establishing the rights, duties and relationship of the Members;
(d) agree that if the laws of any jurisdiction in which the LLC transacts
business so require, the Board of Representatives also shall file, with the
appropriate office in that jurisdiction, any documents necessary for the LLC to
qualify or register to transact business under such laws; and
(e) agree to execute, acknowledge, and cause to be filed, in the place or
places and manner prescribed by law, any amendments to the Certificate as may be
required, either by the Delaware LLC Act, by the laws of any jurisdiction in
which the LLC transacts business or by this Agreement, to reflect changes in the
information contained therein or otherwise to comply with the requirements of
law for the continuation, preservation, and operation of the LLC as a limited
liability company under the Delaware LLC Act.
In the event of any inconsistency between any terms and conditions contained
in this Agreement and any non-mandatory provisions of the Delaware LLC Act, the
terms and conditions contained in this Agreement shall govern.
2.2 NAME OF LLC. The name under which the LLC shall conduct its business
is "ACCORD CONTRACT SERVICES LLC." The business of the LLC may be conducted
under any other name permitted by the Delaware LLC Act that is selected by the
Board of Representatives, in its sole and absolute discretion. The Board of
Representatives promptly shall execute, file and record any assumed or
fictitious name certificates required by the laws of the State of Delaware or
any state in which the LLC conducts business.
2.3 PLACE OF BUSINESS. The location of the principal place of business of
the LLC shall be 000 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000. The Board of
Representatives may change the principal place of business of the LLC to such
other place or places within the United States as the Board of Representatives
may from time to time determine, in its sole and absolute discretion, provided
that the Board of Representatives shall give written notice of the change to the
Members within thirty (30) days after the effective date of the change and, if
necessary, the Board of Representatives shall amend the Certificate in
accordance with the applicable requirements of the Delaware LLC Act. The Board
of Representatives may, in its sole and absolute discretion, establish and
maintain such other offices and additional places
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of business of the LLC, either within or without the State of Delaware, as it
deems appropriate.
2.4 REGISTERED OFFICE AND REGISTERED AGENT. The street address of the initial
registered office of the LLC shall be 00 Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx
00000, and the LLC's registered agent at such address shall be Incorporating
Services, Ltd.
2.5 ASSOCIATED AGREEMENTS. Concurrently with or within ninety (90) days
following the execution of this Agreement (the "Associated Agreement Negotiation
Period"), the LLC, Member A and Member B, as applicable, shall execute and
deliver the Associated Agreements (as defined below). The LLC, Member A and
Member B, as applicable, shall each allocate the necessary resources and meet
together as soon as possible following the execution of this Agreement and as
often as a party reasonably requests thereafter, in order to negotiate in good
faith the Associated Agreements not executed concurrently with this Agreement.
The execution and delivery of, and performance by the LLC of its obligations
under, the Associated Agreements, and any agreements, instruments or other
documents contemplated thereby to be entered into by the LLC in connection
therewith, are hereby authorized (without requirement for further approval under
Article VII hereof), and the LLC General Manager of the LLC acting alone is
authorized to execute and deliver such documents on behalf of the LLC.
"Associated Agreement(s)" as used herein shall mean the following contracts
which shall address, at a minimum, those issues set forth in the outlines
attached hereto as Schedule 2.5 (each as the same may be amended or supplemented
from time to time):
Personnel Secondment Agreement
Supply Agreement
Value Added Services Agreement
[Sub] Lease Agreement
Systems License Agreement
Administrative Services (Transition) Agreement
2.6 REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF MEMBER A. Member A hereby
represents and warrants to Member B as follows (such representations and
warranties on the date of this Agreement being true and correct in all material
respects):
(i) Member A is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and is duly qualified to
do business in each jurisdiction where the nature of its activities requires it
to be so qualified. Member A has the corporate power and authority to own,
lease, and operate its assets, properties, and businesses and to enter into this
Agreement and to carry out its obligations hereunder. The execution, delivery,
and performance of this Agreement by Member A have been duly authorized by all
necessary corporate action on the part of
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Member A, and, this Agreement is legally binding upon Member A in accordance
with its terms.
(ii) The execution, delivery, and performance by Member A of this
Agreement and the transactions contemplated hereby will not (i) violate the
provisions of any order, judgment, or decree of any court or other governmental
agency or any arbitrator applicable to Member A or the Restated Articles of
Incorporation or bylaws of Member A; (ii) result in a material breach of or
constitute (with due notice or lapse of time or both) a material default under
any contract or agreement to which Member A is a party or by which Member A is
bound; or (iii) violate any provision of law of the United States of America or
any state thereof, the violation of which is likely to have a material adverse
effect on the business, operations or condition (financial or otherwise) of
Member A or the LLC.
(b) REPRESENTATIONS AND WARRANTIES OF MEMBER B. Member B hereby
represents and warrants to Member A as follows (such representations and
warranties on the date of this Agreement being true and correct in all material
respects):
(i) Member B is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and is duly qualified to
do business in each jurisdiction where the nature of its activities requires it
to be so qualified. Member B has the corporate power and authority to own, lease
and operate its assets, properties, and business and to enter into this
Agreement and to carry out its obligations hereunder. The execution, delivery,
and performance of this Agreement by Member B have been duly authorized by all
necessary corporate action on the part of Member B, and this Agreement is
legally binding upon Member B in accordance with its terms.
(ii) The execution, delivery, and performance by Member B of this
Agreement and the transactions contemplated hereby will not (i) violate the
provisions of any order, judgment, or decree of any court or other governmental
agency or any arbitrator applicable to Member B or the Articles of Incorporation
or Bylaws of Member B, (ii) result in a material breach of or constitute (with
due notice or lapse of time or both) a material default under any contract or
agreement to which Member B is a party or by which Member B is bound or (iii)
violate any provision of law of the United States of America or any state
thereof, the violation of which is likely to have a material adverse effect on
the business, operations or condition (financial or otherwise) of Member B or
the LLC.
2.7 PARTNERSHIP INTEREST. It is the intent of the Members that the LLC be
operated in a manner consistent with its treatment as a "partnership" for
federal and state income tax purposes. No Member shall take any action
inconsistent with the express intent of the parties hereto as set forth in this
Section. The Members hereby agree and acknowledge that only the Board of
Representatives by unanimous vote may commence a voluntary case on behalf of the
LLC under a chapter of Title 11 U.S.C. by
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the filing of a "petition" (as defined in 11 U.S.C. 101(42)) with the United
States Bankruptcy Court. Any such petition filed by any other Member or agent
of the LLC shall be deemed an unauthorized and bad faith filing and all parties
to this Agreement shall use their best efforts to cause such petition to be
dismissed.
ARTICLE III
PURPOSES AND POWERS OF LLC
3.1 PURPOSES. The purposes of the LLC shall be:
(a) to provide materials management services to the Members, including,
without limitation, the acquisition of components and products and the provision
of kitting, turnkey and autoreplenishment services to customers and related
administrative and other related services in connection therewith, and the
design, construction, operation and financing of material management systems
related thereto;
(b) to engage in any other business activities that have been approved in
writing by the Members from time-to-time;
(c) to acquire, hold, own, operate, manage, finance, encumber, sell, or
otherwise dispose of and otherwise use the LLC Assets pursuant to, and in
accordance with, this Agreement and the Associated Agreements; and
(d) to enter into any lawful transaction and engage in any lawful
activities in furtherance of the foregoing purposes and as may be necessary,
incidental or convenient to carry out the business of the LLC as contemplated by
this Agreement.
3.2 POWERS. The LLC shall have the power to do any and all acts and
things necessary, appropriate, advisable, or convenient for the furtherance and
accomplishment of the purposes of the LLC, including, without limitation, to
engage in any kind of activity and to enter into and perform obligations of any
kind necessary to or in connection with, or incidental to, the accomplishment of
the purposes of the LLC, so long as said activities and obligations may be
lawfully engaged in or performed by a limited liability company under the
Delaware LLC Act.
ARTICLE IV
TERM OF LLC
The LLC commenced on the date upon which the Certificate was duly filed with
the Recording Office and shall continue for thirty (30) years, unless dissolved
and liquidated before the Termination Date in accordance with the provisions of
Article XI.
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ARTICLE V
CAPITAL
5.1 INITIAL CAPITAL CONTRIBUTIONS OF THE MEMBERS. Concurrently with the
execution of this Agreement, Member A and Member B shall contribute to the LLC
the cash, property and services set forth in Schedule 5.1 attached hereto and
incorporated herein by this reference (each such contribution an "Initial
Contribution"). The cash portion of the Initial Capital Contribution of each
Member shall be made by immediately available wire transfer payable to the order
of the LLC or its designated agent. The Members shall not be required to make
any Capital Contributions to the LLC other than as set forth in this Section 5.1
or in Section 5.2.
5.2 ADDITIONAL CAPITAL CONTRIBUTIONS OF THE MEMBERS. Upon the agreement of all
of the Members, a Member shall make an additional Capital Contribution (an
"Additional Capital Contributions"); provided, however, that the contribution
obligation of Members under Section 7.5(h) hereof shall not require unanimous
approval hereunder. The cash portion of any Additional Capital Contributions to
the LLC shall be made by the Members by immediately available wire transfer
payable to the order of the LLC or its designated agent. The Percentage
Interests of the Members shall not be adjusted to reflect any Additional Capital
Contribution without the written consent of all Members.
5.3 CAPITAL ACCOUNTS. A separate capital account (a "Capital Account")
shall be established and maintained for each Member in accordance with the
requirements of Treasury Regulations Sections 1.704-1(b)(2)(iv) and 1.704-2.
Subject to the preceding sentence, the Capital Account of each Member shall be
(a) increased by the amount of any cash contributions or fair market value of
any non-cash contribution made to the LLC by the Member, (b) increased or
decreased by items of Net Income or Net Loss allocated to the Member pursuant to
Article VI, and (c) decreased by any distributions made by the LLC to the
Member.
5.4 NO INTEREST ON CAPITAL CONTRIBUTIONS OR CAPITAL ACCOUNTS. No Member
shall be entitled to receive any interest on its Capital Contributions or its
outstanding Capital Account balance.
5.5 ADVANCES TO LLC. No Member shall advance funds or make loans to the
LLC in excess of the amounts required hereunder to be contributed by it to the
capital of the LLC without the express written consent of the other Member. Any
such approved advances or loans by a Member shall not result in any increase in
the amount of such Member's Capital Account or entitle it to any increase in its
Percentage Interest. The amounts of such advances or loans shall be a debt of
the LLC to such Member and shall be payable or collectible only out of the LLC
Assets in accordance with terms and conditions agreed upon by all Members.
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5.6 LIABILITY OF MEMBERS AND THE BOARD OF REPRESENTATIVES. Except as
otherwise required by any non-waivable provision in the Delaware LLC Act, the
debts, obligations and liabilities of the LLC, whether arising in contract, tort
or otherwise, shall be solely the debts, obligations and liabilities of the LLC,
and none of the Members or the Representatives shall be obligated personally for
any such debt, obligation or liability of the LLC solely by reason of being a
Member or a Representative.
5.7 RETURN OF CAPITAL. Except upon the dissolution of the LLC or as may be
specifically provided in this Agreement, no Member shall have the right to
demand or to receive the return of all or any part of its Capital Account or its
Capital Contributions to the LLC.
5.8 FUTURE FINANCING. The Members anticipate that in the future the LLC
may require additional funds for capital expenditures or working capital
requirements, and any such additional funding shall be obtained from any of the
following sources as may unanimously be approved by the Members.
(a) cash reserves of the LLC;
(b) loans to be obtained from banks and other such independent
sources, in which event, the Members shall exert reasonable efforts to assist
the LLC in obtaining any such loans;
(c) additional Capital Contributions made to the LLC by the Members,
in proportion to their Percentage Interests, in amounts determined by mutual
agreement of the Members;
(d) loans to be made to the LLC by (i) the Members and/or (ii) an
Affiliate of either of the Members; or
(e) any other funding source unanimously agreed upon by the Members.
ARTICLE VI
ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS; TAXES
6.1 ALLOCATION OF NET INCOME OR NET LOSS. Except as otherwise provided in
this Article VI, the Net Income or Net Loss, other items of income, gains,
losses, deductions and credits, and the taxable income, gains, losses,
deductions and credits of the LLC, if any, for each Fiscal Year (or portion
thereof) shall be allocated to the Members in proportion to their Percentage
Interests.
6.2 ALLOCATION OF INCOME AND LOSS WITH RESPECT TO LLC INTERESTS
TRANSFERRED. If any LLC Interest is transferred during any Fiscal Year, the Net
Income or Net Loss
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(and other items referred to in Section 6.1) attributable to such LLC Interest
for such Fiscal Year shall be allocated between the transferor and the
transferee by any method allowed pursuant to Section 706 of the Code and any
regulations promulgated in connection therewith, as determined by the Board of
Representatives.
6.3 DISTRIBUTIONS AND WITHHOLDING.
(a) DISTRIBUTIONS. Distributions to the Members may be made at times
and in amounts as are determined by the Board of Representatives. Except as
otherwise provided in Article XI, distributions shall be made to the Members in
proportion to their Percentage Interests. Distributions may be made in cash or
by distributing property in kind.
(b) WITHHOLDING. The LLC may withhold distributions or portions
thereof if it is required to do so by any applicable rule, regulation or law,
and each Member hereby authorizes the LLC to withhold from or pay on behalf of
or with respect to such Member any amount of federal, state, local or foreign
taxes that the Board of Representatives determines that the LLC is required to
withhold or pay with respect to any amount distributable or allocable to such
Member pursuant to this Agreement. Any amount paid on behalf of or with respect
to a Member pursuant to this Section 6.3(b) shall be treated as having been
distributed to such Member.
6.4 OVERRIDING ALLOCATIONS OF NET INCOME AND NET LOSS.
(a) Prior to any allocation under this Article VI, if there is a net
decrease in LLC minimum gain during any Fiscal Year, each Member shall be
specially allocated items of LLC income and gain for such year (and, if
necessary, subsequent years) in an amount equal to the portion of such Member's
share of the net decrease in LLC minimum gain determined in accordance with
Treasury Regulations Section 1.704-2. Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each respective Member pursuant thereto. This Section 6.4(a) is
intended to comply with the minimum gain chargeback requirements in
Section 1.704-2 of the Treasury Regulations and shall be interpreted
consistently therewith.
(b) Prior to any allocation hereunder (other than the allocation set
forth in Section 6.4(a)), if there is a net decrease in Member minimum gain
attributable to a Member nonrecourse debt during any Fiscal Year, each Member
who has a share of the Member minimum gain attributed to such Member nonrecourse
debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(5),
shall be specially allocated items of LLC income and gain for such year (and, if
necessary, subsequent years) in an amount equal to the portion of such Member's
share of the net decrease in Member minimum gain attributable to such Member
nonrecourse debt, determined in accordance with Treasury Regulations
Section 1.704-2(i)(5). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated
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to each Member pursuant thereto. This Section 6.4(b) is intended to comply with
the partner minimum chargeback requirement in Section 1.704-2 of the Treasury
Regulations and shall be interpreted consistently therewith.
(c) If, during any Fiscal Year a Member unexpectedly receives any
adjustment, allocation or distribution described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and, as a result of such
adjustment, allocation or distribution, such Member has an Excess Negative
Balance in its Capital Account, then items of gross income shall first be
allocated to such Member in an amount equal to its Excess Negative Balance.
(d) Any LLC deductions that are characterized as "nonrecourse
deductions" pursuant to Treasury Regulations Sections 1.704-2(b)(1) and 1.704-
2(c) shall be allocated among the Members in proportion to their Percentage
Interests. Any LLC deductions that are characterized as "partner nonrecourse
deductions" under Treasury Regulations Sections 1.704-2(i)(1) and 1.704-(i)(2)
shall be allocated among the Members as required by Treasury Regulations
Section 1.704-2(g).
6.5 TAXES.
(a) REPORTS. As soon as practicable after the end of each Fiscal
Year, the LLC shall prepare and mail to each Member a report containing all
information necessary for the Member to include its share of taxable income or
loss (or items thereof) in its income tax return.
(b) TAX ALLOCATIONS. Subject to the provisions of Section 6.5(c),
all items of income, gain, loss and deduction for federal and state tax purposes
shall be allocated in accordance with the corresponding "book" items set forth
in Section 6.1 hereof.
(c) CONTRIBUTIONS OF PROPERTY. In accordance with Section 704(c) of
the Code and the Treasury Regulations thereunder, depreciation, amortization,
gain and loss, as determined for tax purposes, with respect to any contributed
property the book value of which differs from its adjusted basis for federal
income tax purposes, shall, for tax purposes, be allocated between 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 book value.
Allocations pursuant to this Section 6.5(c) are solely for purposes of federal,
state and local taxes and shall not affect, or in any way be taken into account
in computing, the capital account of any Member or such Member's share of
profit, loss, other items, or distributions pursuant to any provision of this
Agreement. The provisions of this Section 6.5(c) relating to federal income tax
treatment of an item shall apply for state and local income tax purposes to the
extent permitted under applicable law. Any elections or other decisions
relating to such allocations shall be made by the Board of Representatives
pursuant to Section 7.1(e) of this Agreement.
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(d) TAX MATTERS PARTNER. The "Tax Matters Partner" of the LLC shall be
designated from time to time by the Board of Representatives. The Tax Matters
Partner shall not extend the statue of limitations on behalf of the LLC, submit
any written material to any taxing authority, settle or offer to settle any
controversy, select the LLC's choice of litigation forum in a tax controversy,
or take any other action in its capacity as Tax Matters Partner without the
consent of the Board of Representatives. The Tax Matters Partner shall keep the
Board of Representatives fully advised of the progress of any audit and shall
supply the Board of Representatives with copies of any written communications
received from the Internal Revenue Service or other taxing authority relating to
any audit within ten (10) days of receipt thereof, and shall at least ten (10)
business days prior to submitting any materials to the Internal Revenue Service,
or other taxing authority, provide such materials to the Board of
Representatives. The Tax Matters Partner shall be reimbursed by the LLC for any
reasonable expenses incurred in its capacity as Tax Matters Partner.
ARTICLE VII
MANAGEMENT
7.1 MANAGEMENT OF THE LLC BY THE BOARD OF REPRESENTATIVES.
(a) MANAGEMENT BY THE MEMBERS THROUGH THE BOARD OF REPRESENTATIVES.
The Members shall have the right to manage the business of the LLC and shall
have all powers and rights necessary, appropriate or advisable to effectuate and
carry out the purposes and business of the LLC. However, the Members may
appoint, employ or otherwise contract with any persons or entities for the
transaction of the business of the LLC or the performance of services for or on
behalf of the LLC, and the Members may delegate to any such person(s) or
entity(ies) such authority to act on behalf of the LLC as the Members may from
time to time deem appropriate. Without limiting their rights as Members to
manage the business of the LLC in any way, and as a means to facilitate
efficient communication and operation of the LLC, the Members hereby unanimously
agree that with respect to the management of the business and affairs of the
LLC, the Members shall act through a board of representatives (the "Board of
Representatives"), subject to the limitations set forth in Sections 7.1(j) and
7.4 hereof.
(b) COMPOSITION OF BOARD REPRESENTATIVES; APPOINTMENT AND REMOVAL.
(i) The Board of Representatives shall at all times be composed
of four (4) Representatives (each, a "Representative").
(ii) Each Member shall appoint two individuals to serve as its
initial representatives on the Board of Representatives. Each such individual
shall be a director, officer or employee of the Member that appointed him/her
during the entire time such individual serves on the Board, and shall serve
until such time as he or she resigns, retires, dies or is removed. Any
Representative may be removed with or without
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cause by the Member who appointed such Representative. Upon the resignation,
retirement, death or removal of any Representative, the Member who appointed
such Representative shall designate the replacement Representative.
(c) MEETINGS AND ACTIONS.
(i) The Board of Representatives shall meet (1) at least once
each Fiscal Quarter at the principal offices of the LLC or at such other place
as may be agreed upon from time to time by the Board of Representatives (unless
such meeting shall be waived by all of the Representatives); (2) at such other
times as may be determined by the Board of Representatives; (3) upon the request
of at least two Representatives upon ten (10) days' notice to all
Representatives; or (4) in accordance with Section 8.1, following a failure by
the Board of Representatives to adopt or reject a proposal for action presented
to it. Meetings may be held by telephone if at least one Representative
appointed by each Member so consents. The Board of Representatives shall cause
written minutes to be prepared of all actions taken by the Board of
Representatives and shall cause a copy thereof to be delivered to each
Representative within fifteen (15) days thereof.
(ii) No action may be taken at a meeting of the Board of
Representatives unless a quorum consisting of at least one Representative
appointed by each member is present.
(iii) Each Representative shall be entitled to cast one vote with
respect to any decision made by the Board of Representatives, except with
respect to a determination to seek indemnification pursuant to Section 7.5
hereof, in which event a Representative seeking indemnification hereunder shall
have no vote with respect to his indemnification. Any action to be taken by the
Board of Representatives shall require at least three affirmative votes.
Approval or action by the Board of Representatives shall constitute approval or
action by the LLC and shall be binding on the Members. A Representative may
grant a proxy entitling the other Representative appointed by the same Member to
exercise his voting rights. Such proxy shall be in writing and shall specify a
termination date. The Representatives appointed by the other Member shall be
entitled to inspect the proxy on demand.
(iv) Any action to be taken by the Board of Representatives may
be taken without a meeting if consents in writing setting forth the action so
taken are signed by at least three Representatives.
(d) SUBCOMMITTEES. The Board of Representatives may designate a
subcommittee consisting of at least one Representative appointed by each Member.
Any subcommittee, to the extent provided by the Board of Representatives, shall
have and may exercise all the power and authority of the Board of
Representatives.
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(e) POWER AND AUTHORITY OF THE BOARD OF REPRESENTATIVES. The Board
of Representatives (acting on behalf of the Members of the LLC), by its own
action, or by action of a subcommittee of the Board of Representatives, but not
by delegation to officers or other employees of the LLC, shall have the
exclusive right, power and authority to take the following actions, and no such
action will be taken without the approval of the Board of Representatives.
(i) making overall policy decisions with respect to the business
and affairs of the LLC;
(ii) reviewing and approving annual budgets, strategic plans,
business plans and operating guidelines;
(iii) approving any material contract, agreement or commitment;
(iv) approving the choice of bank depositories, and approving
arrangements relating to signatories on bank accounts;
(v) approving, amending, modifying, terminating or enforcing all
contracts, agreements, leases or other arrangements between the
LLC and any Member or Affiliate of a Member, in accordance with
the criteria set forth in Section 7.4;
(vi) approving any change of the LLC's fiscal year;
(vii) approving all distributions to the Members;
(viii) approving any material conveyance, sale, transfer, assignment,
pledge, encumbrance, or disposal of, or the granting of a
security interest in, any assets of the LLC;
(ix) approving the entry of the LLC into any other partnership or
joint venture;
(x) incurring any material indebtedness or loaning any material sum
or extending credit to any Person in a material amount;
(xi) guaranteeing any material indebtedness of any other Person, or
guaranteeing any contractual obligations of any other Person;
(xii) entering into any material real estate lease, or the
acquisition by the LLC of any real estate;
(xiii) authorizing any Member to act for or to assume any obligation
or responsibility on behalf of the LLC;
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(xiv) employing, appointing, determining the compensation and
removing any LLC employee who will be involved in the day to day management of
the business of the LLC;
(xv) changing any accounting principles used by the LLC,
except to the extent required by generally accepted accounting principles;
(xvi) approving any tax elections of the LLC;
(xvii) conducting litigation to which the LLC is a party;
(xviii) approving the acquisition of any business or a business
division from any Person, whether by asset purchase, stock purchase, merger or
other business combination;
(xix) approving the transfer of any material assets of the LLC,
or any interest therein, other than in the ordinary course of business;
(xx) approving any material amendment to or terminating any
Associated Agreement; and
(xxi) addressing any other strategic issue or approving any
other decision that at least two Representatives determine in good faith should
require approval or other determination by the Representatives.
(f) THIRD PARTY RELIANCE. Third parties dealing with the LLC shall
be entitled to rely conclusively upon the power and authority of the Board of
Representatives and the officers of the LLC as set forth herein.
(g) FIDUCIARY RELATIONSHIP. No Representative or LLC General Manager
shall be liable to the LLC or its Members for monetary damages for breach of
fiduciary duty as an LLC General Manager or Representative or otherwise liable,
responsible or accountable to the LLC or its Members for monetary damages or
otherwise for any acts performed, or for any failure to act; provided, however,
that this provision shall not eliminate or limit the liability of an LLC General
Manager or Representative (i) for any breach of the LLC General Manager's or
Representative's duty of loyalty to the LLC, (ii) for acts or omissions which
involve gross negligence, intentional misconduct or a knowing violation of law,
or (iii) for any transaction from which the Representative received any improper
personal benefit.
(h) REIMBURSEMENT. All expenses incurred with respect to the
organization, operation and management of the LLC shall be borne equally by each
Member. None of the Representatives, in their capacity as such, shall be
entitled to any fees for services rendered for or on behalf of the LLC.
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(i) NO INDIVIDUAL AUTHORITY. Except as otherwise expressly provided
in this Agreement, no Member, acting alone, shall have any obligation to act
for, or undertake or assume any obligation or responsibility on behalf of, the
other Member or the LLC.
(j) MEMBER APPROVAL. Notwithstanding the general authority of the
Representatives under Section 7.1(e), the following matters shall require the
unanimous approval of the Members:
(i) any amendment of this Agreement;
(ii) any merger or consolidation of or involving the LLC;
(iii) any lease, sale, exchange, conveyance, or other transfer
or disposition of all, or substantially all, of the assets of the LLC;
(iv) a change of the name of the LLC;
(v) engaging in a business other than as provided for by this
Agreement;
(vi) the contribution of additional capital by any Member to
the LLC;
(vii) the assignment of any of the property of the LLC in trust
for the benefit of creditors, or the making or filing, or acquiescence in the
making or filing by any other person, of a petition or other action requesting
the reorganization or liquidation of the LLC under the Bankruptcy Laws;
(viii) the issuance of any additional interests in the LLC, the
admission of additional Members, or the admission of substituted Members in
accordance with Section 10.2;
(ix) any other matter that is subject to the agreement,
consent, or approval of the Members hereunder or under any non-waivable
provision of the Delaware LLC Act; and
(x) the withdrawal or resignation of any Member.
7.2 OFFICERS.
(a) LLC GENERAL MANAGER. The Board of Representatives shall appoint
an operations manager of the LLC (the "LLC General Manager"). Subject to the
supervision and authority of the Board of Representatives and the approval
rights of Members, the LLC General Manager (i) shall have responsibility and
authority for
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management of the day-to-day operations of the LLC, and (ii) may execute
agreements and contracts on behalf of the LLC in the ordinary course of the
LLC's business.
(b) OTHER REPRESENTATIVES. The Board of Representatives may appoint
other managers or authorized representatives of the LLC with the authority and
upon terms and conditions the Board of Representatives deem necessary and
appropriate. Any representative shall hold his or her respective office unless
and until such representative is removed by the Board of Representatives.
7.3 OTHER ACTIVITIES OF MEMBERS OR AFFILIATES; NO RESTRICTIONS ON
COMPETITION. Any Member or any Affiliate thereof may have other business
interests or may engage in other business ventures of any nature or description
whatsoever, whether currently existing or hereafter created, and may compete,
directly or indirectly, with the business of the LLC. No Member or Affiliate
thereof shall incur any liability to the LLC as a result of its pursuit of such
other permitted business interests, ventures and competitive activity, and
neither the LLC nor the other Members shall have any right to participate in
such other business ventures or to receive or share in any income or profits
derived therefrom.
7.4 CERTAIN TRANSACTIONS. The LLC is expressly permitted in the normal
course of its business to enter into transactions with any or all Members or
with any Affiliate of any or all Members provided that the price and other terms
of such transactions are fair to the LLC and that the price and other terms of
such transactions are not less favorable to the LLC than those generally
prevailing with respect to comparable transactions between unrelated parties.
7.5 INDEMNIFICATION AND EXCULPATION OF THE MEMBERS, REPRESENTATIVES,
OFFICERS ANY AFFILIATE.
(a) RIGHT OF INDEMNIFICATION. In accordance with Section 18-108 of
the Delaware LLC Act, the LLC shall indemnify and hold harmless any Member,
Representative, LLC General Manager, officer, and Affiliate thereof
(individually, in each case, an "Indemnitee") to the fullest extent permitted by
law from and against any and all losses, claims, demands, costs, damages,
liabilities joint or several), expenses of any nature (including attorneys' fees
and disbursements), judgments, fines, settlements and other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which the Indemnitee may be
involved or threatened to be involved, as a party or otherwise, arising out of
or incidental to the business or activities of or relating to the LLC regardless
of whether the Indemnitee continues to be a Member, a Representative, an LLC
General Manager, an officer or any Affiliate thereof at the time any such
liability or expense is paid or incurred; provided, however, that this provision
shall not eliminate or limit the liability of an Indemnitee (i) for any breach
of the Indemnitee's duty of loyalty to the LLC or its Members, (ii) for acts or
omissions which involve gross negligence, intentional
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misconduct or a knowing violation of law, or (iii) for any transaction from
which the Indemnitee received any improper personal benefit.
(b) ADVANCES OF EXPENSES. Expenses incurred by an Indemnitee in defending
any claim, demand, action, suit, or proceeding subject to this Section 7.5
shall, from time to time, upon request by the Indemnitee, 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 Indemnitee to
repay such amount if it shall be determined in a judicial proceeding or a
appropriate. Any representative shall hold his or her respective office unless
binding arbitration that such Indemnitee is not entitled to be indemnified as
authorized in this Section 7.5.
(c) OTHER RIGHTS. The indemnification provided by this Section 7.5 shall be
in addition to any other rights to which an Indemnitee may be entitled under any
agreement, vote of the Board of Representatives as a matter of law or equity, or
otherwise, both as to an action in the Indemnitee's capacity as a Member, a
Representative, an LLC General Manager, an officer or any Affiliate thereof, and
as to an action in another capacity, and shall continue as to an Indemnitee who
has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns, and administrators of the Indemnitee.
(d) INSURANCE. The LLC may purchase and maintain insurance on behalf of the
Board of Representatives and such other Persons as the Board of Representatives
shall determine against any liability that may be asserted against or expense
that may be incurred by such Persons in connection with the offering of
interests in the LLC or the business or activities of the LLC, regardless of
whether the LLC would have the power to indemnify such Persons against such
liability under the provisions of this Agreement.
(e) EFFECT OF INTEREST IN TRANSACTION. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.5 or otherwise by
reason of the fact that the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted or not expressly prohibited by the terms of this Agreement.
(f) NO THIRD PARTY RIGHTS. The provisions of this Section 7.5 are for the
benefit of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons.
(g) EXCULPATION. The doing of any act or the failure to do any act by any
officer or Representative, or LLC General Manager, the effect of which may cause
or result in loss or damage to the LLC, if done or omitted to be done in good
faith reliance upon advice of independent legal counsel or accountants employed
by or on behalf of the LLC, or if done or omitted to be done in good faith and
in a manner reasonably believed to be within the scope of the authority granted
to such officer or Representative or LLC General Manager, by this Agreement or
the Board of
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Representatives and in or not opposed to the best interests of the LLC shall not
subject any such Person to any liability to the LLC or the Members; provided,
however, that the foregoing shall not relieve any Person of liability hereunder
if it shall have been determined by a court of competent jurisdiction that such
Person acted so as to be liable for fraud, deceit, willful misfeasance, reckless
or intentional misconduct, knowing violation of the law by the Representative or
LLC General Manager, or gross negligence, which liability shall survive such
Person's ceasing to hold its or his office and any dissolution of the LLC.
(h) CONTRIBUTION. If LLC assets are exhausted then to the extent that the
indemnification obligations of the LLC under this Section 7.5 hereof exceed the
assets of the LLC, each Member shall contribute to the LLC fifty percent (50%)
of the amounts necessary to fulfill the obligations of the LLC under Section 7.5
hereof.
7.6 RIGHTS AND OBLIGATIONS OF MEMBERS.
(a) LIMITED LIABILITY. No Member shall be personally liable for any debts,
liabilities, or obligations of the LLC; provided that each Member shall be
responsible (i) for the making of any Capital Contribution required to be made
to the LLC by such Member pursuant to the terms hereof, (ii) for the amount of
any distribution made to such Member that must be returned to the LLC pursuant
to any non-waivable provision of the Delaware LLC Act, and (iii) fifty percent
(50%) of the indemnification obligations of the LLC under Section 7.5 as set
forth in Section 7.5(h) hereof.
7.7 PERFORMANCE OF DUTIES; LIABILITY OF REPRESENTATIVES.
(a) STANDARDS. The Representatives and LLC General Manager shall perform
their managerial duties in good faith, in a manner they reasonably believe to be
in the best interests of the LLC and its Members, and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would use
under similar circumstances. A Representative or LLC General Manager who so
performs the duties of Representative or LLC General Manager shall not have any
liability by reason of being or having been a Representative or LLC General
Manager of the LLC. The Representatives shall be entitled to delegate such of
their powers, authority and responsibilities under this Agreement as they may
deem appropriate from time to time.
(b) RELIANCE ON OTHERS. In performing their duties, the Representatives
shall be entitled to rely on information, opinions, reports or statements,
including financial statements and other financial data, of the following
persons or groups unless they have knowledge concerning the matter in question
that would cause such reliance to be unwarranted and provided that the
Representatives act in good faith and after reasonable inquiry if needed under
the circumstances:
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(i) one or more officers, employees or other agents of the LLC whom the
Representatives reasonably believe to be reliable and competent in the matters
presented; or
(ii) any attorney, independent accountant, valuation consultant, or other
person as to matters that the Representatives reasonably believe to be within
such person's professional or expert competence.
7.8 LIMITED LIABILITY. No person who is a Representative or officer or both a
Representative and an officer of the LLC shall be personally liable under any
judgment of a court, or in any other manner, for any debt, obligation, or
liability of the LLC, whether that liability or obligation arises in contract,
tort, or otherwise, solely by reason of being a Representative or officer or
both a Representative and an officer of the LLC.
ARTICLE VIII
DEADLOCKS
8.1 DEADLOCK RESOLUTION.
(a) DEFINITION OF DEADLOCK. "Deadlock" shall occur if: (i) the Members are
unable to reach unanimous agreement on any matter requiring the unanimous
approval of the Members under Section 7.1(j) during the sixty (60) day period
following a request for a Member vote, (ii) the Board of Representatives casts a
tie vote on a matter (except those matters set forth in Section 7.1(e)(v))
submitted to it at a meeting or in the form of a proposed written consent, and
during the sixty (60) day period following this tie vote, the Board of
Representatives is unable to break the tie. (If the matter is presented in the
form of a proposed written consent, the sixty (60) day period shall commence on
the date that the Representative who was last to receive the proposal received
it.) During this sixty (60) day period, the Board of Representatives shall hold
at least one additional meeting at which it shall make a good faith effort to
break the tie. The additional meeting shall be held at the time and place agreed
to by the Representatives, or if the Representatives are unable to agree, at a
time and place determined by the LLC General Manager, on at least five (5) days'
written notice.
(b) RESOLUTION OF DEADLOCK. If a Deadlock occurs, then such Deadlock shall
promptly be submitted, by any Member, to the dispute resolution procedure set
forth in Section 12.17 hereof ("ADR"). If the Members or Representatives, as the
case may be, are unable to resolve the dispute after complying with the
procedures set forth on the ADR, then either Member may terminate the LLC in
accordance with the provisions of Section 11.1. Further, if the dispute is not
resolved and the LLC is dissolved as provided in the preceding sentence, the
Neutral Party shall be instructed to issue an opinion whether or not, based on a
preponderance of the evidence the Neutral Party has seen or observed during the
ADR that either of the Members has used the provisions of this Section 8.1 as a
means to force a dissolution of the LLC in order to
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avoid the transfer or withdrawal procedures set forth in Article X or
dissolution and liquidation procedures set forth in Article XI. If the Neutral
Party's opinion concludes that one of the Members has used the provisions of
this Section 8.1 in such a manner then an "Improper Deadlock" shall be deemed to
have occurred. In such case, the Member not responsible for improper use of the
provisions of Section 8.1 shall be referred to as the "Non-deadlock Member." If
an Improper Deadlock has occurred then the Non-deadlock Member shall have the
right to terminate the Agreement and receive a Termination Transition Fee in
accordance with Section 11.1(c) hereof.
ARTICLE IX
BANK ACCOUNTS; BOOKS AND RECORDS;
STATEMENTS; TAXES; FISCAL YEAR
9.1 BANK ACCOUNTS. All funds of the LLC shall be deposited in its name in such
checking and savings accounts, time deposits, certificates of deposit or other
accounts at such banks as shall be designated by the Board of Representatives
from time to time, and the Board of Representatives shall arrange for the
appropriate conduct of such account or accounts.
9.2 BOOKS AND RECORDS. The Board of Representatives shall keep, or cause to be
kept, accurate, full and complete books and accounts showing assets,
liabilities, income, operations, transactions and the financial condition of the
LLC. Such books and accounts shall be prepared on the accrual basis of
accounting. Any Member or its designee shall have access thereto at any
reasonable time during regular business hours and shall have the right to copy
said records at its expense. In addition, the LLC will provide such records and
assistance as reasonably requested by either Member to meet such Member's
obligations with respect to audits or internal financial controls.
9.3 FINANCIAL STATEMENTS AND INFORMATION.
(a) PREPARATION IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
All financial statements prepared pursuant to this Section shall present fairly
the financial position and operating results of the LLC and shall be prepared in
accordance with generally accepted accounting principles on the accrual basis
for each Fiscal Year of the LLC during the term of this Agreement.
(b) QUARTERLY REPORT. Within thirty (30) days after the end of each
quarterly period (the "Fiscal Quarter") of each Fiscal Year, commencing with the
first Fiscal Quarter after the date of this Agreement, the Board of
Representatives shall prepare and submit or cause to be prepared and submitted
to the Members an unaudited statement of profit and loss for the LLC for such
Fiscal Quarter and an unaudited balance sheet of the LLC dated as of the end of
such Fiscal Quarter, in each case prepared in accordance with generally accepted
accounting principles consistently applied.
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(c) ANNUAL REPORTS. Within ninety (90) days after the end of each Fiscal
Year during the term of this Agreement, the Board of Representatives shall
prepare and submit or cause to be prepared and submitted to the Members (i) a
balance sheet, together with statements of profit and loss, Members' equity and
changes in financial position for the LLC during such Fiscal Year; (ii) a report
of the activities of the LLC during the Fiscal Year; (iii) a report summarizing
the fees and other remuneration paid by the LLC for such Fiscal Year to the
Board of Representatives and any Affiliate thereof; and (iv) a statement showing
any amounts distributed to the Members in respect of such Fiscal Year.
(d) OTHER REPORTS. The Board of Representatives shall provide to the Members
such other reports and information concerning the business and affairs of the
LLC as may be required by the Delaware LLC Act or by any other law or regulation
of any regulatory body applicable to the LLC.
9.4 ACCOUNTING DECISIONS. All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by the Board of
Representatives.
9.5 WHERE MAINTAINED. The books, accounts and records of the LLC at all
times shall be maintained at the LLC's principal office.
9.6 FISCAL YEAR. The fiscal year of the LLC for financial, accounting,
Federal, state and local income tax purposes shall initially be the fiscal year
commencing on January 1 and ending on December 31 (the "Fiscal Year"). The
Board of Representatives shall have authority to change the beginning and ending
dates of the Fiscal Year if the Board of Representatives, in its sole and
absolute discretion, deems such change to be necessary or appropriate to the
business of the LLC, and shall give written notice of any such change to the
Members within thirty (30) days after the occurrence thereof.
ARTICLE X
TRANSFER AND CONVERSION OF LLC INTERESTS AND THE ADDITION,
SUBSTITUTION AND WITHDRAWAL OF MEMBERS
10.1 TRANSFER OF LLC INTERESTS.
(a) DEFINITION OF TRANSFER. The term "transfer," when used in this Article X
with respect to an LLC Interest, shall include any sale, assignment, gift,
pledge, hypothecation, mortgage, exchange or other disposition, whether by
operation of law or otherwise.
(b) VOID TRANSFERS. No LLC Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article X.
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Any transfer or purported transfer of any LLC Interest not made in accordance
with this Article X shall be void ab initio.
10.2 RESTRICTIONS ON TRANSFERS
(a) CONSENT REQUIRED. No Member may transfer all or any portion of its LLC
Interest or its Capital Account without the express written consent of the
nontransferring Member which may be granted or withheld in its sole and absolute
discretion; provided, however, that no such consent shall be required to permit
a Member to transfer all (or any portion) of its LLC Interest to its wholly
owned subsidiary only for so long as the transferee remains a wholly-owned
subsidiary; provided further that such transfer shall give such wholly-owned
subsidiary only the right to receive distributions, income, gain and loss
allocable to such Member's LLC Interest to which such Member would otherwise be
entitled and such wholly-owned subsidiary must comply with Section 10.2(b) to
become a substituted Member.
(b) SUBSTITUTION. Any transferee of an LLC Interest shall become a
substituted Member upon (i) the express written unanimous consent of the Members
which may be granted or withheld in their sole and absolute discretion; (ii) the
transferee agreeing to be bound by all the terms and conditions of the
Certificate and this Agreement as then in effect; and (iii) receipt of any
necessary regulatory approvals. Unless and until a transferee is admitted as a
substituted Member, the transferee shall have no right to exercise any of the
powers, rights or privileges of a Member hereunder. A Member who has
transferred its LLC Interest shall cease to be a Member upon transfer of the
Member's entire LLC Interest and substitution of the transferee as a Member and
thereafter shall have no further powers, rights or privileges as a Member
hereunder except as provided in Section 7.5.
(c) DEALING WITH MEMBERS. The LLC, each Member, the Board of
Representatives, the LLC General Manager and any other Person or Persons having
business with the LLC need deal only with Members who are admitted as Members or
as substituted Members of the LLC, and they shall not be required to deal with
any other person by reason of transfer by a Member except as otherwise provided
in this Agreement. In the absence of the substitution (as provided herein) of a
Member for a transferring Member, any payment to a Member shall acquit the LLC
and the Board of Representatives of all liability to any other persons who may
be interested in such payment by reason of an assignment by such Member.
10.3 NO RIGHT TO WITHDRAW. No Member shall have any right to resign or
otherwise withdraw from the LLC, without the express written consent of all the
other Members.
10.4 REMOVAL. No Member shall be removed or terminated without such Member's
express written consent.
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ARTICLE XI
DISSOLUTION AND LIQUIDATION
11.1 EVENTS CAUSING DISSOLUTION.
(a) EVENTS. The LLC shall be dissolved and its affairs wound up upon the
occurrence of any of the following events:
(i) DISSOLUTION BY AGREEMENT. The LLC shall be dissolved upon the passage
of ninety (90) days after the consent in writing by all of the Members to
dissolve an wind up the affairs of the LLC (a "Dissolution By Agreement").
(ii) SALE OF ASSETS. The LLC shall be dissolved upon the sale or
disposition of all or substantially all the LLC Assets (which sale or
disposition shall require the unanimous consent of the Members) (a "Sale of
Assets").
(iii) BANKRUPTCY EVENT. The LLC shall be dissolved upon the Bankruptcy,
dissolution, liquidation or, in accordance with Section 7.1(j)(x) hereof, the
withdrawal or resignation (each, a "Bankruptcy Event") of any Member (a
"Bankruptcy Member"). Upon the dissolution of the LLC pursuant to this
subsection (iii) (the "Applicable Date"), the Member other than the Bankruptcy
Member (a "TO Member"), shall be entitled to receive a payment from the other
Member equal in amount to the Termination Transition Fee, which fee shall be
payable within thirty days after the Applicable Date.
(iv) LLC EXPIRATION. The LLC shall be dissolved on the Termination Date
(the "LLC Expiration").
(v) UNLAWFUL EVENT. The LLC shall be dissolved upon the occurrence of any
event (an "Unlawful Event") that would make it unlawful for the business of the
LLC to be continued; PROVIDED, HOWEVER, that if the Unlawful Event was caused by
or resulted from a Member's ("Unlawful Event Member") gross negligence or
intentional conduct, such event shall constitute a "Member Unlawful Event." The
LLC shall be dissolved upon the occurrence of a Member Unlawful Event only upon
notice (also a "Termination Notice") by the Member other than the Unlawful Event
Member (also a "TO Member"), which notice must be given, if at all, within 60
days following the Member Unlawful Event. Upon receipt and delivery of the
Termination Notice (the "Applicable Date"), the TO Member shall be entitled to
receive a payment from the Unlawful Event Member equal in amount to the
Termination Transition Fee, which fee shall be payable within thirty days after
the Applicable Date.
(vi) DEADLOCK. The LLC shall be dissolved upon written notice by either
Member, if a Deadlock occurs and a resolution is not reached after engaging in
the ADR procedure set forth in Section 12.17 hereof; PROVIDED, HOWEVER, that if
the Deadlock is determined pursuant to Section 8.1(b) to be an Improper
Deadlock, then the
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LLC shall be dissolved only upon written notice (a "Termination Notice") by the
Non-deadlock Member (also a "TO Member"), which notice must be given, if at all,
within 60 days following the determination that an Improper Deadlock existed.
Upon the delivery and receipt of the Termination Notice (the "Applicable Date"),
the TO Member shall be entitled to receive a payment from the Deadlock Member
equal in amount to the Termination Transition Fee, which fee shall be payable
within thirty days after the Applicable Date.
(vii) TERMINATION FOR CONVENIENCE. The LLC shall be dissolved upon ninety
(90) days' written notice (a "Termination Notice") by one Member (the
"Terminating Member") to the other Member (the "Non-terminating Member") of its
desire to terminate the LLC ("Termination for Convenience"). Upon the delivery
and receipt of the Termination Notice (the "Applicable Date"), the Non-
terminating Member (also a "TO Member") shall be entitled to receive a payment
from the Terminating Member equal in amount to the Termination Transition Fee,
which fee shall be payable within thirty days after the Applicable Date.
(viii) INTENTIONALLY OMITTED
(ix) LLC START-UP FAILURE. If the Members are unable to reach agreement
as to any of the Associated Agreeements (that were not executed concurrently
with this Agreement) or reach agreement on the Termination Formula (as defined
in Appendix I) within the Associated Agreement Negotiation Period (as may be
extended by mutual consent of the Members), then the Members may, upon mutual
agreement, submit the Associated Agreement disputes and/or the Termination
Formula disputes to the dispute resolution procedure set forth in Section 12.17.
If the Members do not mutually agree to utilize the dispute resolution
procedure, or if such procedure once utilized does not result in an agreement by
the Members on the Associated Agreements or the Termination Formula (as
applicable) (in either case, an "LLC Start-up Failure"), then the LLC shall be
dissolved on the day following the Associated Agreement Negotiation Period or at
the end of the ADR process, as applicable.
(x) UNCURED DEFAULT. If a Member fails to perform any of its material
obligations (a "Defaulting Member") under this Agreement or any of the
Associated Agreements (an "Event of Default"), then the other Member (a
"Nondefaulting Member") shall have the right to give the Defaulting Member
notice (a "Notice of Default"). The Notice of Default shall set forth the nature
of the obligations which the Defaulting Member has failed to perform. If the
Defaulting Member shall dispute whether an Event of Default has occurred, or the
amount of the loss, damage, cost of expense incurred by the Nondefaulting Member
as a consequence of an Event of Default, the matter shall promptly be submitted
to the dispute resolution procedure set forth in Section 12.17 hereof. If the
Defaulting Member fails to cure the Event of Default within thirty (30) days of
the later of (1) receipt of the Nondefaulting Member's Notice of Default in
compliance with this Section, or (2) a determination pursuant to the dispute
resolution procedure set forth in Section 12.17, then an "Uncured Default" shall
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be deemed to have occurred. If an Uncured Default occurs, the LLC shall be
dissolved upon written notice (a "Termination Notice") by the Nondefaulting
Member (also a "TO Member") of its desire to terminate the LLC, which notice
shall be delivered, if at all, within sixty (60) days following the occurrence
of the Uncured Default. Upon the delivery and receipt of the Termination Notice
(the "Applicable Date"), the TO Member shall be entitled to receive a payment
from the Defaulting Member equal in amount to the Termination Transition Fee,
which fee shall be payable within thirty days after the Applicable Date.
(xi) EXERCISE EVENT. If an Exercise Event (as defined in the Warrant
Agreement) occurs with respect to a Member (the "Event Member"), the LLC shall
be dissolved upon written notice (a "Termination Notice") by the Member other
than the Event Member (also a "TO Member") of its desire to terminate the LLC,
which notice shall be delivered, if at all, within sixty (60) days following the
occurrence of the Exercise Event. Upon the delivery and receipt of the
Termination Notice (the "Application Date"), the TO Member shall be entitled to
receive a payment from the Event Member equal in amount to the Termination
Transition Fee, which fee shall be payable within thirty days after the
Applicable Date.
(b) INTENTIONALLY OMITTED
(c) CHANGE IN CONTROL TERMINATION FEES.
(i) Upon the occurrence of an Exercise Event with respect to either
Member and the subsequent delivery of a Termination Notice by the TO Member
pursuant to Section 11.1(a)(xi) at any time during the term of the LLC, or, if
later: (i) prior to the first anniversary of a Deadlock, upon dissolution of the
LLC pursuant to Section 11.1(a)(vi) (other than an Improper Deadlock), or (ii)
prior to the first anniversary of the effective date of this Agreement, upon
dissolution of the LLC pursuant to Section 11.1(a)(ix), such Member shall pay to
the other Member in cash an amount equal to the Change in Control Termination
Fee, which amount shall be payable within thirty (30) days following the
occurrence of the Exercise Event.
(ii) If the LLC is dissolved pursuant to Section 11.1(a) as a result of:
(1) an Uncured Default, (2) an Improper Deadlock, (3) a Bankruptcy Event, (4) a
Member Unlawful Event, or (5) an Exercise Event (with each of the foregoing
hereafter referred to as a "Termination Option Event"), and an Exercise Event
occurs prior to the first anniversary of the Applicable Date relating to such
occurrence (as determined by reference to Section 11.1(a) above), then the TO
Member with respect to such occurrence (also as determined by reference to
Section 11.1(a) above) shall be entitled to receive a payment from the other
Member equal in amount to the Change in Control Termination Fee, which fee shall
be payable within thirty (30) days following the occurrence of the Exercise
Event. In addition, if the LLC is dissolved pursuant to Section 11.1(a)(vii) as
a result of a Termination for Convenience (also, a "Termination Option Event"),
and an Exercise Event occurs prior to the first anniversary of such
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dissolution, then the TO Member with respect to such Termination for Convenience
(as determined by reference to Section 11.1(a) above) shall be entitled to
receive a payment from the other Member equal in amount to the Change in Control
Termination Fee, which fee shall be payable within thirty (30) days following
the occurrence of the Exercise Event. Any Change in Control Termination Fee
payable hereunder shall be in addition to, and not in lieu of, any Termination
Transition Fees payable pursuant to Section 11.1(a).
(iii) Notwithstanding any provision of this Agreement: (a) neither Member
shall be paid more than one Change in Control Termination Fee hereunder, and (b)
no Member shall have any right to receive any Change in Control Termination Fee
or Termination Transition Fee from and after the earlier of (1) such Member
becoming an Event Member (as defined in Section 11.1(a)(xi)), or (2) the other
Member becoming a TO Member. This Article XI shall survive the dissolution and
liquidation of the LLC regardless of the cause. The Members agree that damages
resulting from the dissolution of the LLC as described herein may be impossible
to measure; therefore the Members further agree that the Change in Control
Termination Fee and Termination Transition Fee constitute the Members' best
estimate of the damages that will result to the Member that receives them as a
result of such LLC dissolution; reflecting, among other things, diminution in
the market reputation of such Member, disruption of such Member's ongoing
operations and such Member's costs associated with rebuilding the service
capacity lost as a result of such termination, and therefore the Members agree
that such damages are reasonable under the circumstances and are not a penalty.
The rights granted in this Section 11.1 above shall not be deemed the exclusive
remedy of a Member, but all other rights and remedies, legal and equitable,
shall be available to it.
11.2 CANCELLATION OF CERTIFICATE. Upon the dissolution of the LLC, the
Certificate shall be canceled in accordance with the provisions of Section
18-203 of the Delaware LLC Act, and the Board of Representatives (or any other
person or entity responsible for winding up the affairs of the LLC) shall
promptly notify the Members of such dissolution.
11.3 DISTRIBUTIONS UPON DISSOLUTION.
(a) Upon the dissolution of the LLC, the Board of Representatives (or
any other person or entity responsible for winding up the affairs of the LLC)
shall proceed without any unnecessary delay to sell or otherwise liquidate the
LLC Assets and pay or make due provision for the payment of all debts,
liabilities and obligations of the LLC.
(b) The Board of Representatives (or any other person or entity responsible
for winding up the affairs of the LLC) shall distribute the net liquidation
proceeds and any other liquid assets of the LLC after the payment of all debts,
liabilities and obligations of the LLC (including, without limitation, all
amounts owing to a Member under this Agreement or under any agreement between
the LLC and a Member
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entered into by the Member other than in its capacity as a Member in the LLC),
the payment of expenses of liquidation of the LLC, and the establishment of a
reasonable reserve in an amount estimated by the Board of Representatives to be
sufficient to pay any amounts reasonably anticipated to be required to be paid
by the LLC, which shall be distributed to the Members PRO RATA, in proportion to
the positive balances, if any, in their respective Capital Accounts. It is the
intent of the Members that the Capital Account balances on liquidation would be
such that the Members would receive the same amount of proceeds hereunder as
they would have received had such proceeds been distributed to them under
Section 6.3 hereof; accordingly, if necessary to achieve this economic result
the Board of Representatives is authorized to allocate Net Income, Net Loss and
other items of income, gross income, gain, loss and deduction to the respective
Capital Accounts of the Members to cause them, to the extent possible, to have a
balance equal to the cash which would otherwise be distributed under
Section 6.3.
11.4 REASONABLE TIME FOR WINDING UP. A reasonable time shall be allowed for
the orderly winding up of the business and affairs of the LLC (including,
without limitation, completing commitments under current LLC contracts and
depleting the existing LLC inventory of parts and components) and the
liquidation of its assets pursuant to Section 11.3 in order to minimize any
losses otherwise attendant upon such a winding up.
11.5 DISTRIBUTION IN KIND. Upon the dissolution of the LLC, a Member may in
its sole discretion, choose to receive all or a portion of the distribution due
to it, in kind. Such Member shall be permitted to receive, in kind, any property
that made up any portion of such Members' Capital Contribution or Additional
Capital Contribution. In the event of a distribution in kind, the assets
distributed, in kind, shall be valued by any reasonable means selected by the
Board of Representatives (or any other person or entity responsible for winding
up the affairs of the LLC, and such assets shall be deemed to have been sold for
such value and the Members' capital accounts adjusted by any gain or loss deemed
to have been realized on such deemed sale.
11.6 SURVIVAL OF OBLIGATIONS. Dissolution of the LLC and any termination of
the Associated Agreements for any cause shall not release any party from any
liability which at the time of dissolution or termination has already accrued to
any party.
11.7 DEFICIT CAPITAL ACCOUNTS. No Member shall have any obligation to restore
a deficit balance in its Capital Account upon liquidation of the LLC.
11.8 TRANSITIONAL COOPERATION.
(a) COOPERATION. Each Member and the LLC agree that upon expiration or
termination of this Agreement for any reason and during any notice period
preceding same, the Members and the LLC shall use their best efforts to effect
an orderly and efficient transition of the services provided by the LLC pursuant
to this Agreement and the Associated Agreements ("LLC Services") to each Member.
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(b) TERMINATION ASSISTANCE. Commencing upon any notice of termination by
either Member or ninety (90) days prior to the expiration of the term of this
Agreement, the Members and the LLC will provide any and all assistance
reasonably requested by a Member or the LLC to allow the LLC Services to
continue without interruption or adverse effect and to aid in and facilitate the
orderly and efficient transfer of responsibility for the LLC Services to each
Member. Such termination assistance shall include, without limitation, the
following:
(i) developing, with the assistance of the Members and the LLC, a plan
for the transition of operations from the LLC to each Member; and
(ii) providing to the LLC all products and services upon the same terms
and conditions hereof or in the Associated Agreements until the later of
expiration or termination of: (1) this Agreement, or (2) any agreements entered
into between a Member and a customer prior to the notice of termination that
require components, products or services from the LLC or the other Member.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 COMPLIANCE WITH DELAWARE LLC ACT. Each Member agrees not to take any
action or fail to take any action which, considered alone or in the aggregate
with other actions or events, would result in the termination of the LLC under
applicable law.
12.2 ADDITIONAL ACTIONS AND DOCUMENTS. Each of the Members hereby agrees
to take or cause to be taken such further actions, to execute, acknowledge,
deliver and file or cause to be executed, acknowledged, delivered and filed such
further documents and instruments, and to use best efforts to obtain such
consents, as may be necessary or as may be reasonably requested to fully
effectuate the purposes, terms and conditions of this Agreement, whether before,
at or after the closing of the transactions contemplated by this Agreement.
12.3 NOTICES. All notices, demands, requests or other communications which
may be or are required to be given, served or sent by a Member pursuant to this
Agreement shall be in writing and shall be hand delivered (including delivery by
courier), mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by telegram, telex or facsimile
transmission, addressed as follows:
If to Member A: Wyle Electronics
00000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
ATTN: Xxxxxxx X. Xxxxxxx, Esq.
General Counsel and Secretary
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If to Member B: Xxxxxxxx Industries, Inc.
0000 Xxxxxxx
Xx Xxxxx, XX 00000
Facsimile: (000) 000-0000
ATTN: Xxxxx Xxxx
Chief Financial Officer
Each Member may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request or communication which shall be delivered,
mailed or transmitted in the manner described above shall be deemed sufficiently
given, served, sent or received for all purposes at such time as it is delivered
to the addressee (with an affidavit of personal delivery, the return receipt,
the delivery receipt or (with respect to a telex) the answer back being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
12.4 SEVERABILITY. The invalidity of any one or more provisions hereof or
of any other agreement or instrument given pursuant to or in connection with
this Agreement shall not affect the remaining portions of this Agreement or any
such other agreement or instrument or any part thereof, all of which are
included subject to the condition that they are held valid in law; and in the
event that one or more of the provisions contained herein or therein should be
invalid, or should operate to render this Agreement or any such other agreement
or instrument invalid, this Agreement and such other agreements and instruments
shall be construed as if such invalid provisions had not been inserted.
12.5 SURVIVAL. It is the express intention and agreement of the Members
that all covenants, agreements, statements, representations, warranties and
indemnities made in this Agreement shall survive the execution and delivery of
this Agreement.
12.6 WAIVERS. Neither the waiver by a Member of a breach of or a default
under any of the provisions of this Agreement, nor the failure of a Member, on
one or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right, remedy or privilege hereunder, shall thereafter be construed
as a waiver of any subsequent breach or default of a similar nature, or as a
waiver of any such provisions, rights, remedies or privileges hereunder.
12.7 EXERCISE OF RIGHTS. No failure or delay on the part of a Member or the
LLC in exercising any right, power or privilege hereunder and no course of
dealing between the Members or between a Member and the LLC shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any other rights or
remedies which a Member or the LLC would otherwise have at law or in equity or
otherwise.
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12.8 BINDING EFFECT. Subject to any provisions hereof restricting assignment,
this Agreement shall be binding upon and shall inure to the benefit of the
Members and their respective heirs, devises, executors, administrators, legal
representatives, successors and assigns.
12.9 LIMITATION ON BENEFITS OF THIS AGREEMENT. Subject to Section 7.5, it
is the explicit intention of the Members that no person or entity other than the
Members and the LLC is or shall be entitled to bring any action to enforce any
provision of this Agreement against any Member or the LLC, and that the
covenants, undertakings and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the Members (or
their respective successors and assigns as permitted hereunder) and the LLC.
12.10 AMENDMENT PROCEDURE. This Agreement may only be modified or amended
by the unanimous written consent of the Members.
12.11 ENTIRE AGREEMENT. This Agreement (including the Exhibits and Schedules
hereto which by this reference are incorporated herein) contains the entire
agreement between the Members with respect to the transactions contemplated
herein, and supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein and therein.
12.12 PRONOUNS. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person or entity may require.
12.13 HEADINGS. Article, Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
12.14 GOVERNING LAW. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Delaware excluding the
choice of law rules thereof.
12.15 EXECUTION IN COUNTERPARTS. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
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12.16 ANNOUNCEMENTS. Except as required by law or applicable stock exchange
regulation, no party hereto shall make any announcement, press release or other
public statement relating in any manner to this Agreement, the terms hereof or
the relationship of the parties hereto without first obtaining the consent of
the other parties to the disclosure proposed to be made. The other parties
hereto shall not unreasonably withhold their consent to any request made by a
party pursuant to this Section 12.16. The Members shall use their best efforts
to consult and coordinate with each other before making any announcement, press
release or other public statement as required by law or applicable stock
exchange regulation.
12.17 DISPUTE RESOLUTION.
(a) INVOKING PROCEDURE. In the event of a dispute between the Members
arising out of or related to this Agreement, either Member may invoke the
procedures specified in this Section by giving written notice to the other
Member. Such written notice will describe briefly the nature of the dispute and
shall identify an individual with authority to settle the dispute on behalf of
that Member. The Member receiving such notice shall have ten (10) days within
which to designate an individual with authority to settle the dispute on its
behalf and to notify the other Member of its designation (the individuals so
designated shall be referred to as the "Authorized Individuals").
(b) INVESTIGATION. Each Member's Authorized Individual shall make
whatever investigation each deems appropriate and promptly thereafter, but no
later than thirty (30) days from the date of the original notice invoking these
procedures, shall commence discussions concerning resolution of the dispute. If
the dispute has not been resolved within sixty (60) days from the date of the
original notice invoking these procedures ("Negotiation Period"), the Members
shall submit the matter to alternative dispute resolution ("ADR") in accordance
with the following procedure.
(c) NEUTRAL PARTY. The Members shall have ten (10) days from the expiration
of the Negotiation Period to submit the matter to ADR and agree upon a mutually
acceptable person not affiliated with either party ("Neutral Party"). If no
Neutral Party has been selected within that time period, the Members agree
jointly to request the American Arbitration Association, the Center for Public
Resources, or other mutually agreed-upon organization, to supply within ten (10)
days a list of at least three (3) potential Neutral Parties with qualifications
as specified by the Members in the joint request. Within seven (7) days of
receipt of the list, the Members shall rank the proposed candidates
independently, exchange rankings and select as the Neutral Party the individual
who receives the highest combined ranking who is available to serve.
(d) SCHEDULE. In consultation with the Neutral Party, the Members shall
designate a mutually convenient time and place for the ADR, and unless
circumstances require otherwise, such time shall be not later than forty-five
(45) days after the selection of the Neutral Party.
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(e) DISCOVERY. In the event one or both Members have substantial need for
information in the possession of the other Member or a need to take certain
limited depositions and/or production of principal documents in order to prepare
for the ADR, the Members shall attempt in good faith to agree on a plan for the
expeditious exchange of such information. Should they fail to reach agreement,
either Member may request a meeting with the Neutral Party who shall assist them
in reaching an accommodation; however, if the Neutral Party is unable to assist
them in reaching an accommodation within two (2) days, then the Neutral Party
shall be the final arbiter of permitted discovery.
(f) WRITTEN SUBMISSION. One week prior to the first scheduled session of
the ADR, each Member shall deliver to the Neutral Party and to the other Member
a written summary of its views on the matter in dispute. The summary shall be no
longer than twenty double-spaced pages unless the Members agree otherwise.
(g) REPRESENTATIVES. In the ADR, each Member shall be represented by the
Authorized Individual and by counsel. In addition, each Member may bring
additional persons as necessary to respond to questions or contribute
information as needed. The number of such additional persons to be allowed shall
be mutually agreed by the Members with the assistance of the Neutral Party, if
necessary.
(h) STRUCTURE. The Neutral Party is authorized to conduct joint and
separate meetings with the Members and to help the Members structure whatever
form of presentation of the matter in dispute is most likely to facilitate
resolution. Notwithstanding the form of the presentation, it is the intent of
the Members to provide an opportunity for their Authorized Individual, with or
without the assistance of counsel, and with the assistance of the Neutral Party,
to negotiate a resolution of the matters in dispute. In the event the Neutral
Party holds separate private caucuses with either Member, he or she shall keep
confidential all information learned in such private caucuses unless
specifically authorized to make disclosure of the information to the other
Member. There shall be no stenographic, visual, or audio record made of the ADR.
(i) MANDATORY. The Members agree to participate in the ADR to its
conclusion as designated by the Neutral Party and not to terminate negotiations
concerning resolution of the matters in dispute until at least two (2) weeks
thereafter. Each Member agrees not to commence a lawsuit or seek other remedies
prior to the conclusion of the two (2) week post-ADR negotiation period,
provided that either Member may commence litigation on any date after which the
commencement of litigation could be barred by an applicable statute of
limitations or in order to request an injunction to prevent irreparable harm. In
such event, the Members agree (except as prohibited by court order) to continue
to participate in the ADR to its conclusion.
(j) FEES. The fees of, and authorized costs incurred by, the Neutral Party
shall be advanced by the Members and shared equally by the Members. The
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Neutral Party shall be disqualified as a witness, consultant, expert, or counsel
for any Member with respect to the matters in dispute and any related matters.
(k) LATER PROCEEDINGS. The ADR is a compromise negotiation for purposes of
the Federal Rules of Evidence and state rules of evidence. The entire procedure
is confidential. All conduct, statements, promises, offers, views, and opinions,
whether oral or written, made in the course of the ADR by any of the Members,
their agents, employees, representatives, or other invitees to the ADR and by
the Neutral Party (except as provided in Section 8.1), who is the parties' joint
agent for purposes of these compromise negotiations, are confidential and shall,
in addition and where appropriate, be deemed to be work product and privileged.
Such conduct, statements, promises, offers, views, and opinions shall not be
discoverable or admissible for any purposes, including impeachment, in any
litigation or other proceeding involving the Members and shall not be disclosed
to anyone not an agent, employee, expert, witness, or representative for any of
the Members. Evidence otherwise discoverable or admissible is not excluded from
discovery or admission as a result of its use in the ADR.
12.18 NONDISCLOSURE OF INFORMATION.
(a) CONFIDENTIALITY. All disclosures of information concerning a Member
(whether provided or prepared by such Member, its advisors, representatives or
agents or the LLC (the "Agent") or otherwise), trade secrets, know-how,
financial information, or other confidential information (including, without
limitation, the Member Systems as defined in Section 12.22) (the "Confidential
Information") made by the LLC to any Member or made by any Member to the LLC or
other Member under or in connection with this Agreement or the Associated
Agreements, as well as the terms of this Agreement and all Associated
Agreements, shall be received and maintained in confidence by the recipient
during the term hereof and for three (3) years after dissolution of the LLC and
each Member shall treat all such Confidential Information as confidential and
shall not disclose or use the Confidential Information except as required solely
for the purpose of carrying out this Agreement and the Associated Agreements:
(i) as to the persons directly responsible for the performance of the
obligations of this Agreement and for the effective operation of the LLC;
(ii) as to the professional advisers of the Members and the LLC;
(iii) as to such disclosures to customers of the LLC as are necessary
for the effective carrying on of business by the LLC;
(iv) as to such information as is required by law to be disclosed by the
Members or the LLC in compliance with Section 12.18(c) hereof; and
(v) as to such information as is within the public domain otherwise than
in violation of the provisions of this Section 12.18(a) is already in a
32
recipient's possession or becomes available to a recipient from a source other
than an Agent, provided that such information was lawfully obtained and is not
known by such recipient to be subject to another confidentiality agreement with
or other obligation of secrecy to the other Member or another person.
(b) DUTY OF CARE. Each Member will take such steps as lie within its power
to assure that all managers, officers and employees of the LLC, or of any
Affiliates, to whom confidential information is disclosed, take all proper
precautions to prevent the unauthorized disclosure and use of the Confidential
Information referenced in Section 12.18(a).
(c) REQUESTS FOR DISCLOSURE. If either Member or the LLC is requested or is
required by applicable law (by interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to disclose
any Confidential Information, such Member or LLC will provide the other Member
or LLC with immediate notice of such request and requirement so that the other
Member or LLC may consider seeking a protective order. If in the absence of a
protective order or the receipt of a waiver hereunder the Member or LLC
receiving the request or requirement is nonetheless, in the written opinion of
counsel independent of such Member or LLC and reasonably acceptable to the other
Member or LLC, compelled to disclose any Confidential Information to any
tribunal or any other person or else stand liable for contempt or suffer other
material censure or penalty, such party may disclose such information to such
tribunal or other party without liability hereunder.
(d) RETURN OF MATERIALS. Upon dissolution of the LLC each Member and the
LLC shall promptly redeliver to the other Member all written and other tangible
Confidential Information of such Member. Each Member and the LLC agrees not to
retain any copies, extracts or other reproductions in whole or in part of such
Confidential Information of the other Member. All documents, memoranda, notes
and other writings whatsoever prepared by a Member, its Agents or the LLC based
on or reflecting the information in the Confidential Information of the other
Member also will be destroyed by the preparing Member or LLC as the case may be,
and such destruction will be certified in writing to the Member that provided
such Confidential Information by the authorized officer of the Member who
supervised such destruction.
(e) INJUNCTIVE RELIEF. Each Member and the LLC agrees that money damages
would not be a sufficient remedy for any breach of the agreements in this
Section 12.18 and that the non-breaching party will be entitled to injunctive
relief, specific performance and/or any other appropriate equitable remedies for
any such breach without first complying with the ADR procedures set forth in
Section 12.17 hereof. Such remedies shall not be deemed to be exclusive, but
shall be in addition to all other remedies available at law or in equity. In
addition, if successful, the non-breaching Member will be entitled to payment of
its legal fees and disbursements, court costs and other expenses of enforcing,
defending or otherwise protecting its interests hereunder.
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12.19 WAIVER OF PARTITION AND CERTAIN OTHER RIGHTS. Each of the Members
irrevocably waives any right or power that such Member might have to:
(a) cause the LLC or any of the LLC assets to be partitioned;
(b) cause the appointment of a receiver for all or any portion of the LLC
assets;
(c) compel any sale of all or any portion of the LLC assets; and
(d) file a complaint, or to institute proceeding at law or in equity, to
cause the dissolution or liquidation of the LLC.
Each of the Members has been induced to enter into this Agreement in reliance
upon the waivers set forth in this Section 12.19, and without those waivers no
Member would have entered into this Agreement.
12.20 INVOLVEMENT OF THE LLC IN CERTAIN PROCEEDINGS. If any Member becomes
involved in legal proceedings unrelated to the business of the LLC in which the
LLC is called upon to provide information, the Member will indemnify and hold
harmless the LLC against all costs and expenses, including without limitation
fees and expenses of attorneys and other advisors, incurred by the LLC in
preparing or producing the required information or in resisting any request for
production or obtaining a protective order limiting the availability of the
information actually provided by the LLC.
12.21 ATTORNEY-IN-FACT. Each Member, by execution of this Agreement,
irrevocably constitutes and appoints each Representative as such Member's true
and lawful attorney-in-fact and agent, with full power and authority in such
Member's name, place and stead to execute, acknowledge and deliver, and to file
or record in any appropriate public office (a) any certificate or other
instrument that may be necessary, desirable or appropriate to qualify the LLC as
a limited liability company or to transact business as such in any jurisdiction
in which the LLC conducts business; (b) any amendment to this Agreement adopted
in accordance with Section 12.10, and any certificate or amendment to the
Certificate of Formation or to any certificate or other instrument that may be
necessary, desirable or appropriate to reflect any such amendment to this
Agreement or to reflect any other action of the Board that is taken in
accordance with its power or authority granted under this Agreement or the Act;
(c) any certificates or instruments that may be necessary, desirable or
appropriate to reflect the dissolution and winding up of the LLC; and (d) any
certificates necessary to comply with the provisions of this Agreement. This
power of attorney will be deemed to be coupled with an interest and will survive
the transfer of the Member's Membership Interest.
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12.22 MEMBER SYSTEMS.
(a) SYSTEMS LICENSE. Each Member grants to the LLC a royalty free
non-exclusive license ("License") to use the systems of such Member described in
Schedule 12.22 attached hereto and incorporated herein by this reference as
amended by the Members from time to time (the "Member Systems"), to the extent
such use is permitted by such Member's license agreement with any third party
vendor for such systems, if any. The LLC hereby covenants and agrees that it
shall not, without the express written consent of the licensing Member, which
consent may be withheld in the licensing Member's sole and absolute discretion,
use such licensing Member's Member Systems for the benefit of any party other
than the LLC and LLC shall not disclose information regarding any one Member's
Member System or such Member's data related thereto to the other Member.
(b) REQUIRED CONSENTS. Each Member shall use reasonable efforts without
incurring any expense in excess of a commercially reasonable amount to obtain
any required consents from third parties necessary for the LLC to operate such
Member's Member Systems as contemplated by this Agreement. If the required
consents cannot be obtained for the LLC to operate the Member Systems necessary
to provide services to Members as described in this Agreement and the Associated
Agreements, then each Member and the LLC will work together to achieve an
alternate solution.
(c) FORMAL LICENSE. Prior to the expiration of the Associated Agreement
Negotiation Period, the licensing Member and the LLC shall execute the Systems
License Agreement(s) attached hereto as Exhibit 12.22 granting the LLC a right
to use certain systems as needed to perform the services described in this
Agreement and the Associated Agreements.
(d) LICENSE TERMINATION. The LLC's license to use the Member Systems shall
terminate upon the dissolution of the LLC.
(e) SYSTEM WARRANTIES. With respect to the Member Systems licensed by each
Member hereunder, the Member licensing the particular system ("Licensor") hereby
warrants and represents to the LLC as follows:
(i) OWNERSHIP. Licensor is the owner of Licensor's Member Systems or
otherwise has the right to grant to the LLC the license to use same set forth in
this Section 12.22 without violating any rights of any third party, and there is
currently no actual or threatened suit by any such third party based on an
alleged violation of such right by Licensor;
(ii) QUALITY WARRANTY. Licensor's Member System shall not contain any
material defects and shall function in substantial conformity with the
description, specifications and documentation set forth in Schedule 12.22.
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(f) THE ABOVE IS A LIMITED WARRANTY AND IT IS THE ONLY WARRANTY MADE BY
LICENSOR. LICENSOR MAKES AND LLC RECEIVES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
AND THERE ARE EXPRESSLY EXCLUDED ALL WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. LICENSOR SHALL HAVE NO LIABILITY WITH RESPECT TO ITS
OBLIGATIONS UNDER THIS SECTION 12.22 FOR CONSEQUENTIAL, EXEMPLARY, OR INCIDENTAL
DAMAGES EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE
STATED EXPRESS WARRANTY IS IN LIEU OF ALL LIABILITIES OR OBLIGATIONS OF LICENSOR
FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE DELIVERY, USE OR
PERFORMANCE OF LICENSOR'S MEMBER SYSTEMS.
(g) INDEMNITY. Licensor agrees to indemnify and hold harmless the LLC and
its directors, officers, employees and agents, against any and all losses,
liabilities, judgments, awards and costs (including legal fees and expenses)
arising out of or related to any claim that the LLC's use or possession of
Licensor's Member System, or the License granted by Licensor hereunder,
infringes or violates the copyright, trade secret or other proprietary right of
any third party. Licensor shall defend and settle at its sole expense all suits
or proceedings arising out of the foregoing, provided that the LLC gives
Licensor prompt notice of any such claim of which it learns. No settlement which
prevents the LLC from continuing to use Licensor's Member Systems provided
herein shall be made without the prior written consent of the LLC. In all
events, the LLC shall have the right to participate in the defense of any such
suit or proceeding through counsel of its own choosing.
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IN WITNESS WHEREOF, the undersigned have duly executed this Limited Liability
Company Agreement or have caused this Limited Liability Company Agreement to be
duly executed on their behalf as of the day and year first set forth above.
Member A:
WYLE ELECTRONICS,
A California Corporation
By: /s/ XXXXX XXXXXXXXXXX
-----------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: President and
Chief Executive Officer
Member B:
XXXXXXXX INDUSTRIES,
A California Corporation
By: /s/ XXXXXX XXXXX
-----------------------------------
Name: Xxxxxx Xxxxx
Title: President and
Chief Executive Officer
ADDENDUM I
DEFINITIONS
ADDITIONAL CAPITAL CONTRIBUTION: As defined in Section 5.2.
AFFILIATE: Any Person directly or indirectly controlling, controlled by, or
under common control with the Person in question; if the Person in question is a
corporation, any executive officer or director of the Person in question or of
any corporation directly or indirectly controlling the Person in question. As
used in this definition of "Affiliate", the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
AGREEMENT: This Limited Liability Company Agreement, as it may be further
amended or supplemented from time to time.
APPRAISER: An Independent appraiser or investment bank.
BANKRUPTCY: For the purposes of this Agreement, a Member shall be deemed
"Bankrupt" upon, (i) the entry of a decree or order for relief of the Member by
a court of competent jurisdiction in any involuntary case involving the Member
under any bankruptcy, insolvency or other similar law now or hereafter in
effect; (ii) the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or other similar agent for the Member or for any
substantial part of the Member's assets or property; (iii) the ordering of the
winding up or liquidation of the Member's affairs; (iv) the filing with respect
to the Member of a petition in any such involuntary bankruptcy case, which
petition remains undismissed for a period of ninety (90) days or which is
dismissed or suspended pursuant to Section 305 of the Federal Bankruptcy Code
(or any corresponding provision of any future United States bankruptcy law); (v)
the commencement by the Member of a voluntary case under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (vi) the consent by
the Member to the entry of an order for relief in an involuntary case under any
such law or to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar agent
for the Member or for any substantial part of the Member's assets or property;
(vii) the making by the Member of any assignment for the benefit of creditors;
or (viii) the failure by the Member generally to pay its debts as such debts
become due. To the extent not included herein, any event of bankruptcy set
forth in Section 18-304 of the Delaware LLC Act is deemed incorporated into this
definition.
BANKRUPTCY LAW: as used herein means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
BOARD OF REPRESENTATIVES: As defined in Section 7.1.
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BUSINESS DAY: Monday through Friday of-each week, except that a legal
holiday recognized as such by the Government of the United States shall not be
regarded as a Business Day.
CAPITAL ACCOUNT: As defined in Section 5.3.
CAPITAL CONTRIBUTION: Any property, cash or services contributed to the LLC by
or on behalf of a Member.
CERTIFICATE: The Certificate of Formation, and any and all amendments thereto,
filed on behalf of the LLC with the Recording Office as required under the
Delaware LLC Act.
CODE: The Internal Revenue Code of 1986, as in effect and hereafter amended,
and, unless the context otherwise requires, applicable regulations thereunder.
Any reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of future law.
DEADLOCK: As defined in Section 8.1.
DELAWARE LLC ACT: The Delaware Limited Liability Company Act, as amended
from time to time.
EVENT OF DEFAULT: As defined in Section 11.1(a)(x).
EXCESS NEGATIVE BALANCE: The excess, if any, of (1) the negative balance in a
Member's Capital Account after reducing such balance as required by the Treasury
Regulations, over (2) the sum of (i) the amount, if any, which the Member is
obligated or deemed obligated to restore upon liquidation of the LLC, and (ii)
the Member's share of any minimum gain and of any minimum gain attributable to
Member nonrecourse debt as determined under Treasury Regulations Section 1.704-
2.
FAIR MARKET VALUE: With respect to any property or asset, the dollar value
of the property or asset determined (i) by mutual agreement of the Members, or
(ii) if the Members cannot so agree within twenty (20) days after one Member
first proposes in writing to the other Member that Fair Market Value be
determined, by two independent Appraisers, one selected by each Member,
provided, that if a Member fails to appoint an Appraiser within, ten (10) days
following the expiration of such twenty (20) day period, Fair Market Value shall
be determined by the Appraiser selected by the other Member. If two Appraisers
are selected, each Appraiser shall submit to the Members their respective
appraisals within thirty (30) days after their selection. If a discrepancy
between the dollar value of the appraisals exceeds 10% of the higher appraisal
and the Members do not agree on a settlement of the discrepancy within ten (10)
days after receipt of the appraisals, then a third Appraiser mutually selected
by the Members (or if they cannot so select, then selected by the first two
Appraisers), shall be afforded access
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to the first two appraisals. The third Appraiser shall select one of the
appraisals of the first two Appraisers, which selection shall constitute a final
determination of Fair Market Value of the property or asset and shall be binding
upon the Members. If a discrepancy between the appraisals of the first two
Appraisers is less than 10% of the higher appraisal, then the average of the two
appraisals shall constitute a final determination of Fair Market Value of the
property or asset and shall be binding upon the Members.
FISCAL YEAR: As defined in Section 9.6.
INITIAL CAPITAL CONTRIBUTION: As defined in Section 5.1.
LLC: As defined in the preamble.
LLC ASSETS: All assets and property, whether tangible or intangible and
whether real, personal, or mixed, at any time owned by or held for the benefit
of the LLC.
LLC INTEREST: As to any Member, all of the interest of that Member in the
LLC, including, without limitation, such Member's (i) right to a distributive
share of the income, gain, losses and deductions of the LLC in accordance with
this Agreement, and (ii) right to a distributive share of LLC Assets.
LLC GENERAL MANAGER: As defined in Section 7.2(a).
MEMBER: Member A and Member B and any other Person who shall in the future
execute and deliver this Agreement pursuant to the provisions hereof.
NET INCOME AND NET LOSS. For a period as determined for federal income tax
purposes, the taxable income or loss, respectively, computed with the following
adjustments:
(h) items of gain, loss and deduction relating to LLC Assets shall be
computed based on the Carrying Values of the LLC Assets rather than upon their
Adjusted Bases, and in the case of depreciation, amortization or other cost
recovery deductions, computed using the same method and useful life used by the
LLC in computing such deductions for federal income tax purposes;
(i) income of the LLC shall be treated, for purposes of this definition
only, as gross income; and
(j) expenditures of the LLC described in Section 705(a)(2)(B) of the Code
or treated as such expenditures pursuant to Section 1.704-l(b)(2)(iv)(i) of the
regulations under the Code shall be treated, for purposes of this definition
only, as deductible expenses.
NOTICE OF DEFAULT: As defined in Section 11.1(a)(x).
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PERCENTAGE INTEREST: A Member's percentage share of the total LLC Interests,
which shall be as follows, unless modified by an amendment to this Agreement:
equal to the percentage that its Capital Contributions bears to the sum of all
Capital Contributions. Member A's Initial Percentage Interest is fifty percent
(50%), and Member B's Percentage Interest is fifty percent (50%).
PERSON: Any individual, corporation, association, partnership, limited
liability company, joint venture, trust, estate, or other entity or
organization.
RECORDING OFFICE: The office of the Secretary of State of the State of
Delaware.
REPRESENTATIVE: Any member of the Board of Representatives.
TAX MATTERS PARTNER: That person required by Section 6231(a)(7) of the Code.
TERMINATION DATE: The thirtieth anniversary of the date upon which the
Certificate is duly filed with the Recording Office.
TERMINATION FORMULA: That formula, as mutually agreed between the Members,
which shall be used to calculate an amount that will reflect the value of the
LLC to the TO Member. Member A and Member B, as applicable, shall each allocate
the necessary resources and meet together as soon as possible following the
execution of this Agreement and as often as a party reasonably requests
thereafter, in order to negotiate in good faith the Termination Formula which
shall be mutually agreed between the parties prior to the expiration of the
Associated Agreement Negotiation Period, as extended by mutual agreement between
the Members.
TERMINATION TRANSITION FEE: Equals the greater of: (i) One Hundred Fifty
Thousand Dollars ($150,000), or (ii) the lessor of: (a) the TO Member's actual
share of the LLC operating expenses during the ninety (90) day period
immediately preceding, the notice of termination, if any, otherwise that ninety
(90) day period immediately preceding the LLC termination ("Expense Period") or
(b) fifty percent (50%) of the actual LLC operating expenses for the Expense
Period.
CHANGE IN CONTROL TERMINATION FEE: Equals, initially, twenty five million
dollars ($25,000,000) (which shall be replaced by an amount calculated pursuant
to the Termination Formula upon that date the Members mutually agree upon the
Termination Formula) minus the Warrant Value (as defined below); provided,
however, that if the Change in Control Termination Fee resulting from the
foregoing subtraction is a number that is less than zero, then the Change in
Control Termination Fee shall be deemed to be zero.
TO WARRANT AGREEMENT: That certain Warrant Agreement by and between the TO
Member (as Venture Partner) and the other Member (as Company), dated
concurrently herewith.
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WARRANT AGREEMENT: As to each Member, that certain Warrant Agreement between
such Member (as Venture Partner) and the other Member (as Company) dated
concurrently herewith.
WARRANT VALUE: Equals the average Market Price (as defined in the TO
Warrant Agreement) per share of the Common Stock (as defined in the TO Warrant
Agreement) for the thirty (30) trading days immediately following the Exercise
Event (as defined in the TO Warrant Agreement) minus the then current Exercise
Price (as defined in the TO Warrant Agreement) times the then current Warrant
Number (as defined in the TO Warrant Agreement) related to the Warrants (as
defined in the TO Warrant Agreement) held by the TO Member, its designees or
assigns.
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