EXHIBIT K
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U-C HOLDINGS, L.L.C.
A Delaware Limited Liability Company
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FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of August 31, 1999
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT
BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT
EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND
COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS................................................... 1
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1.1 Certain Definitions............................................... 1
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1.2 Other Definitions................................................. 7
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1.3 Construction...................................................... 7
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ARTICLE II ORGANIZATION................................................ 7
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2.1 Formation......................................................... 7
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2.2 Name.............................................................. 8
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2.3 Registered Office; Registered Agent; Principal Office; Other 8
Offices...........................................................
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2.4 Purposes.......................................................... 8
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2.5 Term.............................................................. 8
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2.6 No State-Law Partnership.......................................... 8
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ARTICLE III MEMBERSHIP; MEMBER UNITS................................... 9
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3.1 Members........................................................... 9
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3.2 Liability of Members.............................................. 9
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3.3 No Authority to Bind Company...................................... 9
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3.4 Member Units...................................................... 9
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3.5 Issuance of Additional Units and Interests; Admission of New 10
Members; Additional Capital Contributions.........................
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3.6 Representations, Warranties and Agreements of the Members......... 11
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3.7 Capital Contributions............................................. 12
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3.8 Defaulting Members................................................ 13
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3.9 Repurchased Units................................................. 13
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ARTICLE IV CAPITAL ACCOUNTS............................................ 13
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4.1 Establishment and Determination of Capital Accounts............... 13
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4.2 Computation of Amounts............................................ 14
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4.3 Interest; Withdrawal.............................................. 14
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ARTICLE V DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES............. 14
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5.1 Generally......................................................... 14
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5.2 Distributions: Round One Investment............................... 14
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5.3 Distributions: Round Two Investment............................... 16
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5.4 Management Unit Holdback.......................................... 17
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5.5 Allocation of Profits and Losses.................................. 18
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5.6 Capital Contributions............................................. 18
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5.7 Tax Allocations; Code Section 704(c).............................. 19
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ARTICLE VI MANAGEMENT OF THE COMPANY.................................. 20
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6.1 Managing Member................................................... 20
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6.2 Delegation by Managing Member..................................... 20
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6.3 Resignation; Vacancy; Removal..................................... 20
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6.4 Compensation...................................................... 21
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6.5 Board Membership of Subsidiaries.................................. 21
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ARTICLE VII MEMBERS.................................................... 21
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7.1 Membership Status; Resignation.................................... 21
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7.2 No Participation in Management.................................... 22
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7.3 Voting Rights Generally; Voting of Units.......................... 22
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7.4 Conflicts of Interest............................................. 22
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7.5 Outside Activities................................................ 22
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7.6 Confidentiality................................................... 22
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ARTICLE VIII EXCULPATION AND INDEMNIFICATION........................... 23
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8.1 Exculpation....................................................... 23
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8.2 Right to Indemnification.......................................... 23
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8.3 Advance Payment................................................... 24
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8.4 Indemnification of Employees and Agents........................... 24
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8.5 Appearance as a Witness........................................... 24
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8.6 Nonexclusivity of Rights.......................................... 24
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8.7 Savings Clause.................................................... 24
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ARTICLE IX TAXES....................................................... 24
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9.1 Tax Returns....................................................... 24
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9.2 Tax Matters Partner............................................... 25
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ARTICLE X BOOKS, REPORTS............................................... 25
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10.1 Maintenance of Books.............................................. 25
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10.2 Member Tax Information............................................ 25
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ARTICLE XI TRANSFERS................................................... 25
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11.1 Assignment by Members............................................. 25
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11.2 Void Transfers.................................................... 25
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11.3 Substituted Member................................................ 26
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11.4 Effect of Assignment.............................................. 26
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11.5 Permitted Transfers............................................... 27
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11.6 Deliveries for Transfer........................................... 27
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11.7 Prospective Transferees........................................... 27
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11.8 Legend............................................................ 27
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11.9 Effective Date.................................................... 27
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ARTICLE XII DISSOLUTION, LIQUIDATION AND TERMINATION................... 28
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12.1 Dissolution....................................................... 28
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12.2 Liquidation and Termination....................................... 28
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12.3 Management Holder Give Back....................................... 29
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12.4 Deficit Capital Accounts.......................................... 30
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12.5 Cancellation of Certificate....................................... 30
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ARTICLE XIII GENERAL PROVISIONS......................................... 31
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13.1 Notices........................................................... 31
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13.2 Entire Agreement.................................................. 31
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13.3 Effect of Waiver or Consent....................................... 31
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13.4 Amendment, Modification or Waiver................................. 31
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13.5 Binding Effect.................................................... 32
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13.6 Governing Law; Severability....................................... 32
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13.7 Further Assurances................................................ 32
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13.8 Waiver of Certain Rights.......................................... 32
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13.9 Indemnification and Reimbursement for Payments on Behalf of a
Member............................................................ 32
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13.10 Notice to Members of Provisions................................... 33
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13.11 Counterparts...................................................... 33
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13.12 Consent to Jurisdiction........................................... 33
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13.13 Headings.......................................................... 33
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13.14 Remedies.......................................................... 33
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FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF U-C HOLDINGS, L.L.C.
A Delaware Limited Liability Company
THIS FOURTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF U-C HOLDINGS, L.L.C. (this "Agreement"), dated as of August 31, 1999, for
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good and valuable consideration, is adopted by, executed and agreed to by Xxxxxx
Xxxxx & Partners, L.P., a Delaware limited partnership ("WSPI"), Xxxxxx Xxxxx &
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Partners II, L.P., a Delaware limited partnership ("WSPII"), Xxxxxx Xxxxx &
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Partners Dutch, L.P., a Delaware limited partnership ("Dutch") and the other
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Persons listed on Schedule A hereto. This Agreement was originally executed on
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April 25, 1997 and was amended and restated on May 15, 1997 (which such restated
agreement was amended, but not restated, from time to time thereafter) and was
further amended and restated in its entirety on July 23, 1999 and is now further
amended and restated in its entirety as of the date hereof.
ARTICLE I
DEFINITIONS
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1.1 Certain Definitions. As used in this Agreement, the following
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terms have the following meanings:
"Act" means the Delaware Limited Liability Company Act, Title 6,
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Sections 18-106 to 18-1107 and any successor statute, as amended from time to
time.
"Adjusted Capital Account Deficit" shall mean, with respect to any
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Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Fiscal Year or other period, after giving effect to the
following adjustments:
(i) Crediting to such Capital Account any amounts which such Member is
obligated to restore to the Company pursuant to any provision of this Agreement
or is deemed to be obligated to restore pursuant to the penultimate sentences of
Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debiting to such Capital Account the items described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6). This definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" means, with respect to a Person, another Person that
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directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, where "control"
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means the possession, directly or indirectly, of the power to direct the
management and policies of a Person whether through the ownership of voting
securities, contract or otherwise.
"Applicable Class A Percentage" means, on any date of determination,
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the lesser of (i) 20% or (ii) 20% of the quotient obtained by dividing (A) the
number of outstanding Class A Management Units on such date by (B) 2,000.
"Applicable Class B Percentage" means, on any date of determination,
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the lesser of (i) 5% or (ii) 5% multiplied by the quotient obtained by dividing
(A) the number of outstanding Class B Management Units on such date by (B) 500.
"Book Value" means, with respect to any Company property, the
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Company's adjusted basis for federal income tax purposes, adjusted from time to
time to reflect the adjustments required or permitted by Treasury Regulation
Sections 1.704-l(b)(2)(iv)(d)-(g).
"Business Day" means any day other than a Saturday, a Sunday or a
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holiday on which national banking associations in the State of Illinois are
closed.
"Capital Contribution" means the aggregate contributions made by a
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Member to the capital of the Company. The aggregate Capital Contributions as of
the date hereof of each Member is shown opposite such Member's name on Schedule
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A, as the same may be amended from time to time.
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"Cash Inflows" means, with respect to the Investors, all payments or
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distributions of cash received by such Investors directly from the Company with
respect to the Investor Units issued to the Investors pursuant to this Agreement
(including, without limitation, distributions made to the Investors pursuant to
Section 5.4).
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"Cash Outflows" means, with respect to the Investors, all Capital
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Contributions made by such Investors with respect to Investor Units issued to
the Investors pursuant to this Agreement (including, without limitation,
contributions made by the Investors pursuant to Section (5.4).
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"Class A Investor Units" means (i) any Class A Investor Units
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originally issued to the Investors pursuant to this Agreement and designated as
Class A Investor Units on Schedule A, (ii) any Class A Investor Units otherwise
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acquired by a Person holding Class A Investor Units and (iii) any Class A
Investor Units issued with respect to the Class A Investor Units referred to in
clauses (i) or (ii) by way of dividend or Unit split or in connection with a
combination of Units, recapitalization, merger or other reorganization. A Class
A Investor Unit will continue to be a Class A Investor Unit in the hands of any
Person to which such Unit is transferred.
"Class B Investor Units" means (i) any Class B Investor Units
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originally issued to the Investors pursuant to this Agreement and designated as
Class B Investor Units on Schedule A, (ii) any Class B Investor Units otherwise
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acquired by a Person holding Class B Investor Units and (iii) any Class B
Investor Units issued with respect to the Class B Investor Units referred to in
clauses (i) or (ii) by way of dividend or Unit split or in connection with a
combination of Units, recapitalization, merger or other reorganization. A Class
B Investor Unit will continue to be a Class B Investor Unit in the hands of any
Person to which such Unit is transferred.
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"Class A Management Units" means (i) the Class A Management Units (A)
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issued and outstanding as of the date hereof and held by Xxxxx Xxxxx, Xxxxxx X.
Xxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxxx, and Xxxxxx Xxxxx or (B) allocated to the
Pool pursuant to this Agreement and designated as Class A Management Units on
Schedule A and (ii) any Class A Management Units issued with respect to such
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Class A Management Units by way of dividend or Unit split or in connection with
a combination of Units, recapitalization, merger or other reorganization. A
Class A Management Unit will continue to be a Class A Management Unit in the
hands of any Person to which such Unit is transferred.
"Class B Management Units" means (i) the Class B Management Units (A)
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originally issued and outstanding pursuant to this Agreement to the applicable
persons listed on Schedule A or (B) allocated to the Pool pursuant to this
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Agreement and designated as Class B Management Units on Schedule A and (ii) any
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Class B Management Units issued with respect to such Class B Management Units by
way of dividend or Unit split or in connection with a combination of Units,
recapitalization, merger or other reorganization. A Class B Management Unit
will continue to be a Class B Management Unit in the hands of any Person to
which such Unit is transferred.
"Class A Investor IRR" means the annual interest rate (compounded
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annually) which, when used to calculate the net present value of (i) all Cash
Inflows received by any holder of Class A Investor Units with respect to the
Round One Investment and (ii) all Cash Outflows made to any holder of Class A
Investor Units with respect to the Round One Investment through the date of
determination, causes such net present value to equal zero. Any Class A
Investor IRR calculation required pursuant to this Agreement shall be determined
by the Company's regular outside accounting firm. For purposes of any such net
present value calculation, each Cash Inflow and each Cash Outflow specified
above shall be deemed to have been received or made on the first day of the
month nearest to the actual date of such payment.
"Class B Investor IRR" means the annual interest rate (compounded
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annually) which, when used to calculate the net present value of (i) all Cash
Inflows received by any holder of Class B Investor Units with respect to the
Round Two Investment and (ii) all Cash Outflows made to any holder of Class B
Investor Units with respect to the Round Two Investment through the date of
determination, causes such net present value to equal zero. Any Class B
Investor IRR calculation required pursuant to this Agreement shall be determined
by the Company's regular outside accounting firm. For purposes of any such net
present value calculation, each Cash Inflow and each Cash Outflow specified
above shall be deemed to have been received or made on the first day of the
month nearest to the actual date of such payment.
"Class A Investor Yield" means at any time an amount calculated on a
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daily basis (without daily compounding) at the rate of 12.5% per annum,
compounded annually, on the Unreturned Class A Investor Capital and the Unpaid
Class A Investor Yield.
"Class B Investor Yield" means at any time an amount calculated on a
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daily basis (without daily compounding) at the rate of 12.5% per annum,
compounded annually, on the Unreturned Class B Investor Capital and the Unpaid
Class B Investor Yield.
"Class R Management Units" means (i) the Class R Management Units
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originally issued to Xxxxx Xxxxx and Xxxxxx X. Xxxxx and designated as Class R
Management Units on Schedule A and (ii) any Class R Management Units issued with
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respect to such Class R Management Units by way of dividend or Unit split or in
connection with a combination of Units, recapitalization, merger or other
reorganization.
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A Class R Management Unit will continue to be a Class R Management Unit in the
hands of any person to which such Unit is transferred.
"Code" means the Internal Revenue Code of 1986, as amended, and any
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successor statute. Such term shall be deemed to include any future amendments
to the Code or any successor statute to the extent the Managing Member
determines that any such amendments do not adversely affect the relative
economic interests of the Members hereunder.
"Company" means U-C Holdings, L.L.C., a Delaware limited liability
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company.
"CTN" means College Television Network, Inc., a Delaware corporation.
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"Entity" means any general partnership, limited partnership,
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corporation, association, cooperative, joint stock company, trust, limited
liability company, business trust, joint venture, unincorporated organization,
governmental entity (or any department, agency or political subdivision thereof)
or other entity.
"Equity Protection Agreements" means those certain Equity Protection
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Agreements dated as of April 25, 1997 by and between the Company and CTN, as
amended and modified from time to time.
"Family Group" means a Unitholder's spouse and descendants (whether
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natural or adopted) and any trust solely for the benefit of such Unitholder
and/or such Unitholder's spouse and/or descendants.
"Fiscal Year" of the Company means the Company's annual accounting
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period ending on December 31.
"Investor" means any holder of Class A Investor Units or Class B
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Investor Units, and "Investors" shall mean all such Investors collectively.
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"Investor Units" means, collectively, the Class A Investor Units and
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the Class B Investor Units.
"Losses" for any period means all items of Company loss, deduction and
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expense for such period determined in accordance with Section 4.2.
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"Management Holder" means any holder of Management Units.
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"Management Units" means, collectively, the Class A Management Units,
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the Class B Management Units and the Class R Management Units.
"Member" means any Person executing this Agreement as of the date of
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this Agreement as a Member or hereafter admitted to the Company as a Member in
accordance with this Agreement and the Act, but does not include any Person who
has ceased to be a member of the Company or no longer owns Units. The Members
shall constitute the "members" (as that term is defined in the Act) of the
Company.
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"Person" means any individual or Entity, and the heirs, executors,
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administrators, legal representatives, successors and assigns of such Person
where the context so permits.
"Permitted Transferee" means (i) with respect to any Unitholder who is
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a natural person, a member of such Unitholder's Family Group and any Transferee
pursuant to applicable laws of descent and distribution and (ii) with respect to
any Unitholder which is an Entity, any of such Unitholder's Affiliates.
"Pool" means, collectively, (i) any Class B Management Units that have
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not been allocated to any Member or have become unallocated due to repurchase by
the Company and (ii) those certain Class A Management Units listed as of the
date hereof on Schedule A across from the caption "Unallocated Pool".
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"Preferred Units" means (i) any Preferred Units originally issued to
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WSPI, WSPII or Dutch pursuant to this Agreement and designated as Preferred
Units on Schedule A, and (ii) any Preferred Units issued with respect to the
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Preferred Units referred to in clause (i) by way of dividend or Unit split or in
connection with a combination of Units, recapitalization, merger or other
reorganization. A Preferred Unit will continue to be a Preferred Unit in the
hands of any Person to which such Unit is transferred.
"Profits" for any period means all items of Company income and gain
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for such period determined in accordance with Section 4.2.
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"Required Interests" means each of (i) the Members holding at least a
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majority of the Investor Units and (ii) the Members holding at least a majority
of the Management Units.
"Restricted Securities" means (i) the securities issued hereunder, and
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(ii) any securities issued with respect to the securities referred to in clause
(i) above in connection with a conversion, combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Round One Investment" means all Capital Contributions made on or
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after April 25, 1997 and on and before July 23, 1999 plus any Capital
Contributions made with respect to the securities purchased on or before July
23, 1999 and all Capital Contributions made after July 23, 1999 to fund the
exercise of any Warrants and the Equity Protection Agreements pursuant to
Section 3.5(c).
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"Round Two Investment" means all Capital Contributions made after July
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23, 1999 other than Capital Contributions made with respect to a Round One
Investment.
"Round One Proceeds" means any and all proceeds or other distributions
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on or with respect to any securities purchased or otherwise acquired or received
(including any other securities issued with respect to such securities by way of
an interest payment, stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization) by the Company from CTN with the proceeds of the Round One
Investment.
"Round Two Proceeds" means any and all proceeds or other distributions
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on or with respect to any securities purchased or otherwise acquired or received
(including any other securities issued with respect to such securities by way of
an interest payment, stock dividend or stock split or in connection with
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a combination of shares, recapitalization, merger, consolidation or other
reorganization) by the Company from CTN with the proceeds of the Round Two
Investment.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
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"Subsidiary" shall mean, with respect to any Person, (a) any
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corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership, limited liability company or other entity
in which such Person and/or one or more Subsidiaries of such Person shall have
an interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50%.
"Taxable Year" means the Company's taxable year ending December 31 (or
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part thereof, in the case of the Company's last taxable year), or such other
year as is (i) required by Section 706 of the Code or (ii) determined by the
Managing Manager.
"Transfer" means any sale, transfer, assignment, pledge, mortgage,
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exchange, hypothecation, grant of a security interest or other direct or
indirect disposition or encumbrance of an interest (including, without
limitation, by operation of law) or the acts thereof. The terms "Transferee,"
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"Transferred," and other forms of the word "Transfer" shall have correlative
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meanings.
"Treasury Regulations" means the income tax regulations promulgated
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under the Code and effective as of the date hereof. Such term shall be deemed
to include any future amendments to such regulations and any corresponding
provisions of succeeding regulations to the extent the Managing Member
determines that any such amendments and succeeding regulations do not adversely
affect the relative economic interests of the Members hereunder.
"Unitholder" means any holder of a Unit.
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"Unpaid Class A Investor Yield" means at any time with respect to any
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Class A Investor Unit an amount equal to the excess, if any, of (a) the
aggregate Class A Investor Yield accrued through such date with respect to such
Class A Investor Unit, over (b) all prior distributions made by the Company with
respect to such Class A Investor Unit pursuant to Section 5.2(b) and Section
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5.4(a) and Section 12.4.
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"Unpaid Class B Investor Yield" means at any time with respect to any
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Class B Investor Unit an amount equal to the excess, if any, of (a) the
aggregate Class B Investor Yield accrued through such date with respect to such
Class B Investor Unit, over (b) all prior distributions made by the Company with
respect to such Class B Investor Unit pursuant to Section 5.3(b), Section 5.4(a)
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and Section 12.4.
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"Unreturned Class A Investor Capital" means at any time the aggregate
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Capital Contributions with respect to the Class A Investor Units reduced by all
prior distributions made to the holders of Class A Investor Units by the Company
pursuant to Section 5.2(a).
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"Unreturned Class B Investor Capital" means at any time the aggregate
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Capital Contributions with respect to the Class B Investor Units reduced by all
prior distributions made to the holders of Class B Investor Units by the Company
pursuant to Section 5.3(a).
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"Warrants" means those certain Class C Warrants to purchase common
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stock of CTN issued to the Company by CTN on April 25, 1997, to purchase common
stock of CTN issued to the Company by CTN from time to time.
1.2 Other Definitions. Each of the following defined terms has the
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meaning given such term in the Section set forth opposite such defined term:
Defined Term Section
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"Agreement" Preamble
"Board" 6.5
"Capital Account" 4.1
"Certificate" 2.1
"Certificated Units" 11.8
"Defaulting Member" 3.8
"Indemnifying Member" 13.9
"Management Notes" 5.6
"Management Directors" 6.5(a)(ii)
"Managing Member" 6.1
"Other Directors" 6.5(a)(iii)
"Passive Investment" 2.4
"Post-Distribution Capital Contribution" 5.3(f)
"Proceeding" 8.2
"Remaining Assets" 12.2(d)
"Tax Matters Member" 9.2
"Unit" 3.4
1.3 Construction. Whenever the context requires, the gender of allused
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in this Agreement includes the masculine, feminine and neuter. All references to
Articles and Sections refer to articles and sections of this Agreement, and all
references to Schedules are to schedules attached hereto, each of which is made
a part hereof for all purposes.
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ARTICLE II
ORGANIZATION
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2.1 Formation. The Company has been organized as a Delaware limited
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liability company by the filing of a Certificate of Formation (the
"Certificate") under and pursuant to the Act. The rights and liabilities
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of the Members shall be determined pursuant to the Act and this Agreement. To
the extent that the rights or obligations of any Member are different by reason
of any provision of this Agreement than they would be in the absence of such
provision, this Agreement, to the extent permitted by the Act, shall control.
2.2 Name. The name of the Company is "U-C Holdings, L.L.C." and all
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Company business shall be conducted in that name or such other names that comply
with applicable law as the Managing Member may select from time to time.
2.3 Registered Office; Registered Agent; Principal Office; Other
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Offices. The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the initial
registered agent named in the Certificate or such other office (which need not
be a place of business of the Company) as the Managing Member may designate from
time to time in the manner provided by law. The principal office of the Company
shall be at such place as the Managing Member may designate, from time to time,
which need not be in the State of Delaware, and the Company shall maintain
records there.
2.4 Purposes. The nature of the business or purposes to be conducted or
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promoted by the Company is to engage in any lawful act or activity for which
limited liability companies may be organized under the Act. The Company may
engage in any and all activities necessary, desirable or incidental to the
accomplishment of the foregoing. Notwithstanding anything herein to the
contrary, nothing set forth herein shall be construed as authorizing the Company
to possess any purpose or power, or to do any act or thing, forbidden by law to
a limited liability company organized under the laws of the State of Delaware.
The Company shall not (i) create, incur, assume or suffer to exist any
indebtedness for borrowed money or issue evidences of indebtedness or guaranty
indebtedness, or secure the same by a mortgage, pledge or other lien on the
assets of the Company, or (ii) enter into or engage in any transaction which is
reasonably likely to cause WSPI or any of its limited partners which are exempt
from income taxation under Code (S) 501(a) and, if applicable, any pension plan
that any such trust may be a part of, to recognize unrelated business taxable
income as defined in Code (S)(S) 512 and 514. Without limiting the generality of
the preceding sentence, the Company shall not: (i) engage in any trade or
business other than the passive investment in securities of a corporation (a
"Passive Investment") or (ii) create, incur, assume or suffer to exist any
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indebtedness for borrowed money or issue evidences of indebtedness or guarantee
indebtedness in connection with a Passive Investment, or secure the Passive
Investment by a mortgage, pledge or other lien on the assets of the Company, for
any length of time. It is understood and agreed to by the Members and the
Company that the Negative Pledge Agreement, dated as of July 26, 1999, by and
between the Company and LaSalle Bank National Association, and the Guaranty,
dated as of August 31, 1999, from the Company in favor of Canadian Imperial Bank
of Commerce, as Agent, and the lender institutions referenced therein, are both
hereby approved by the Members and neither such agreements shall in any way be
deemed to be a violation of this Section 2.4.
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2.5 Term. The term of the Company commenced on the date the
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Certificate was filed with the office of the Secretary of State of Delaware and
shall continue in existence until December 31, 2007 or termination and
dissolution of the Company as determined under Section 12.1 of this Agreement.
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2.6 No State-Law Partnership. The Members intend that the Company shall
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not be a partnership (including, without limitation, a limited partnership) or
joint venture, and that no Member or the Company shall be a partner or joint
venturer of any other Member or the Company, for any purposes other than federal
and, if applicable, state tax purposes, and this Agreement shall not be
construed to the contrary. The Members intend that the Company shall be treated
as a partnership for federal and, if applicable, state income tax purposes, and
each Member and the Company shall file all tax returns and shall otherwise take
all tax and financial reporting positions in a manner consistent with such
treatment.
ARTICLE III
MEMBERSHIP; MEMBER UNITS
------------------------
3.1 Members. The name and address of each Member, the number of Units of
-------
each class owned by such Member at any time, the percentage of each class of
Units owned by such Member, and the Capital Contribution and Capital Account of
such Member with respect to such Units (as determined in accordance with Section
-------
4.1) shall be set forth next to each Member's name on Schedule A hereto, as
---
amended from time to time in accordance with this Agreement. Each Person listed
on Schedule A, upon (i) his or its execution of this Agreement or counterpart
----------
thereof and (ii) receipt (or deemed receipt) of such Person's Capital
Contribution as set forth on Schedule A, is hereby admitted to the Company as a
----------
Member of the Company. No Member shall be required to make any additional
Capital Contribution except as required by applicable law or by Section 3.5. The
-----------
Members acknowledge that Xxxxxx Xxxxxxx is no longer an employee of CTN, that
the Company has exercised its option pursuant to Xxxxxx Xxxxxxx employment
agreement with CTN (to which the Company is a party) to repurchase all 200 Class
A Management Units held by Xxxxxx Xxxxxxx, but that as of the date hereof such
repurchase has not been completed, that the Company and Xxxxxx Xxxxxxx have not
agreed to the related repurchase price with respect to 66 of those Class A
Management Units, and that at such time as such repurchase has been completed
and the repurchase price is no longer in dispute, all 200 Class A Management
Units will be allocated to the Pool.
3.2 Liability of Members. Except as otherwise required by applicable law
--------------------
and as expressly set forth in this Agreement, no Member shall have any personal
liability whatsoever in his capacity as a Member, whether to the Company, to any
of the other Members, to the creditors of the Company or to any other third
party, for the debts, liabilities, commitments or any other obligations of the
Company or for any losses of the Company, and therefore, a Member shall be
liable only to make the payments provided herein. In accordance with the Act and
the laws of the State of Delaware, a member of a limited liability company may,
under certain circumstances, be required to return amounts previously
distributed to such member. It is the intent of the Members that no distribution
to any Member pursuant to Article V hereof shall be deemed a return of money or
---------
other property paid or distributed in violation of the Act.
3.3 No Authority to Bind Company. No Member (in such Member's capacity as
----------------------------
a Member) shall have the authority or power to represent or act for or on behalf
of the Company, to do any
-9-
act that would be binding on the Company or to make any expenditures or incur
any obligations on behalf of the Company other than the Managing Member. Each
Member hereby consents to the exercise by the Managing Member of the powers
conferred on such Managing Member by law and this Agreement.
3.4 Member Units. Each Member's interest in the Company, including such
------------
Member's interest, if any, in the capital, income, gains, losses, deductions and
expenses of the Company and the right to vote, if any, on certain Company
matters as provided in this Agreement, shall be represented by "Units" (each,
-----
individually, a "Unit," and any number of Units, including fractions thereof,
----
"Units"). As of the date hereof, the Units are comprised of "Class A Investor
----- ----------------
Units," "Class B Investor Units," "Preferred Units," "Class A Management Units,"
----- ---------------------- --------------- ------------------------
"Class B Management Units" and "Class R Management Units". The ownership by a
------------------------ ------------------------
Member of any Class A Investor Units, Class B Investor Units, Preferred Units,
Class A Management Units, Class B Management Units and/or Class R Management
Units shall entitle such Member to allocations of Profits and Losses and other
items and distributions of cash and other property with respect to such Units as
set forth in Article V hereof. Ownership of a Unit by a Member shall entitle
---------
such Member to one (1) vote on any matter voted on by all Members as provided in
this Agreement and/or as required by applicable law. The Managing Member may
cause the Company to issue to a Member certificates representing the Units held
by such Member.
3.5 Issuance of Additional Units and Interests; Admission of New Members;
--------------------------------------------------------------------
Additional Capital Contributions.
--------------------------------
(a) Subject to obtaining the consent of the Required Interests and as
otherwise provided in this Agreement, the Managing Member shall have the right
to cause the Company to issue (i) additional Units or other interests in the
Company (including other classes or series thereof having different rights),
(ii) obligations, evidences of indebtedness or other securities or interests
convertible or exchangeable into Units or other interests in the Company and
(iii) warrants, options or other rights to purchase or otherwise acquire Units
or other interests in the Company; provided, however, that at any time following
-------- -------
the date hereof, the Company shall not issue Units to any Person unless such
Person shall have executed a joinder agreement in form satisfactory to the
Managing Member pursuant to which such Person agrees to be bound by the
provisions of this Agreement; provided further that no consent of the Required
-------- -------
Interests shall be required in connection with the issuance of the Management
Notes on July 23, 1999 or on August 31, 1999. The Managing Member shall
determine the terms and conditions governing the issuance of such additional
interests, including the number and designation of such additional interests,
the preference (with respect to distributions, in liquidation or otherwise) over
any other Units and any required contributions in connection therewith. Subject
to Section 3.5(b) below, a Person to which the Company issues Units or other
--------------
interests in the Company shall be admitted as a Member of the Company only with
the prior written consent of the Managing Member and if such Person has executed
and delivered a counterpart of this Agreement. Notwithstanding the foregoing,
the Managing Member shall have the right, without obtaining the consent of the
Required Interests or any Member, to cause the Company to issue additional
Investor Units in connection with the repurchase by the Company of any Units
held by any Member pursuant to an agreement with such Member on the same terms
with respect to such repurchased units. At least 10 days prior to the issuance
and sale of any additional Investor Units in connection with any such
repurchase, the Company shall give written notice of such issuance to the
Investors (other than any Investor whose Units are being repurchased) and, to
the extent permitted under applicable securities laws without material
expenditure by the Company, each such Investor shall be entitled to purchase in
connection with such issuance a number of additional Investor Units equal to
such Investor's pro rata share
-10-
(based upon the number of Investor Units held by such Investor and the number
of Investor Units held by all Investors other than any Investor whose Units are
being repurchased) of such additional Investor Units. Any Investor Units which
remain unpurchased after such offer to such Investors, shall be reoffered to
such Investors on a pro rata basis until all of such Investor Units shall have
been purchased. Each such Investor may elect to purchase additional Investor
Units by delivering written notice of such election to the Company together with
the purchase price therefor (in the form specified in the Company's notice)
within 10 days after receipt of the Company notice. Each purchasing Investor
shall be entitled to purchase such additional Investor Units at the same price
and on the same terms as such Investor Units are offered by the Company to the
other Investors.
(b) Notwithstanding anything herein to the contrary, Xxxxx Xxxxx shall have
the right in his sole discretion, without obtaining the consent of the Required
Interests or any Member, to (i) cause the Company to issue those certain Class A
Management Units contained in the Pool as of the date hereof or hereafter added
to the Pool pursuant to Section 3.9, or (ii) cause the Company to issue any
-----------
Class B Management Units, or allocate any unallocated Class B Management Units
from the Pool, in an amount not to exceed an aggregate issued and outstanding
number equal to 500 Class B Management Units, in each case to employees of any
Subsidiary of the Company (including, without limitation, employees of CTN but
excluding Xxxxx Xxxxx); provided, however, that prior to any such issuance,
Xxxxx Xxxxx shall require such employees to enter into agreements providing for
the repurchase of such Management Units upon termination of employment and shall
obtain the consent of the Managing Member solely with respect to adequacy of any
repurchase rights in favor of the Company regarding such Class A Management
Units or Class B Management Units; and provided further that the Company shall
not issue Class A Management Units or Class B Management Units, or allocate any
unallocated Class A Management Units or Class B Management Units from the Pool,
to any Person unless such Person shall have executed a joinder agreement in form
satisfactory to the Managing Member pursuant to which such Person agrees to be
bound by the provisions of this Agreement, which such form has already been
approved by the Managing Member. In the event Xxxxx Xxxxx ceases to be an
employee of any Subsidiary of the Company (including, without limitation, CTN)
or ceases to be a Member, the Managing Member shall have the right to issue any
additional Class A Management Units or Class B Management Units, or allocate any
unallocated Class A Management Units or Class B Management Units from the Pool.
(c) Notwithstanding anything to the contrary in Section 3.5(a) above, each
--------------
Investor shall be required to make additional Capital Contributions to the
Company from time to time with respect to the Investor Units held by such
Investor when and as called by the Managing Member upon ten days prior written
notice solely to fund the exercise by the Company of the Warrants or the
exercise by the Company of the purchase rights granted pursuant to the Equity
Protection Agreements. The amount of any such additional Capital Contribution
by such Investor shall be limited to such Investor's pro rata share (based upon
the number of outstanding Investor Units held by such Investor and the number of
outstanding Investor Units held by all Investors) of the aggregate Capital
Contribution being made by all Investors pursuant to such capital call by the
Managing Member. No additional Investor Units will be issued in connection with
any such additional Capital Contribution, unless otherwise decided by the
Managing Member.
3.6 Representations, Warranties and Agreements of the Members. Each
---------------------------------------------------------
Member hereby represents and warrants (severally as to itself only) that:
-11-
(a) The Units have been purchased by such Member and not by any other
Person, with the Member's own funds or by issuance of Management Notes and not
with the funds of any other Person other than pursuant to the issuance of
Management Notes, and for the account of such Member, not as a nominee or agent
and not for the account of any other Person. Such Member has purchased the Units
for investment for an indefinite period, not with a view to the sale or
distribution of any part of all thereof by public or private sale or other
disposition.
(b) Such Member has been advised that the Units have not been registered
under the Securities Act or registered or qualified under any other securities
law, on the ground, among others, that no distribution or public offering of the
Units is to be effected and the Units will be issued by the Company in
connection with a transaction that does not involve any public offering within
the meaning of Section 4(2) of the Securities Act, or the rules and regulations
of the Securities and Exchange Commission and under comparable exemptive
provisions of the securities laws, rules and regulations of other jurisdictions.
Such Member understands that the Company is relying in part on the Member's
representations as set forth herein for purposes of claiming such exemptions and
that the basis for such exemptions may not be present if, notwithstanding such
Member's representations, such Member has in mind merely acquiring Units for
resale on the occurrence or non-occurrence of some predetermined event. Such
Member has no such intention.
(c) Such Member has such knowledge and experience in financial and business
matters that such Member is capable of evaluating the merits and risks of an
investment in Units and has the capacity to protect such Member's own interests
in connection with such Member's proposed investment in Units.
(d) Such Member acknowledges that such Member has been furnished with such
financial and other information concerning the Company as such Member considers
necessary in connection with such Member's investment in Units. Such Member has
carefully reviewed such information and is thoroughly familiar with the proposed
business, operations, properties and financial condition of the Company and has
discussed with representatives of the Company any questions the Purchase may
have had with respect thereto. Such Member understands: (i) the risks involved
in this offering, including the speculative nature of the investment; (ii) the
financial hazards involved in this offering, including the risk of losing such
Member's entire investment; (iii) the lack of liquidity and restrictions on
transfers of Units; and (iv) the tax consequences of this investment. Such
Member has consulted with such Member's own legal, accounting, tax, investment
and other advisers with respect to the tax treatment of an investment by such
Member in Units and the merits and risks of an investment in Units. Such Member
is an "accredited investor" as defined under the Securities Act or has provided
written notice to the Company that such Member is not an "accredited investor"
prior to purchasing any Units or other interest in the Company.
(e) The execution, delivery and performance by such Member of this
Agreement have been duly authorized by such Member. This Agreement constitutes
a valid and binding obligation of such Member, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
-12-
(f) Such Member understands that the Units will be "restricted securities"
as that term is defined in Rule 144 under the Securities Act and, accordingly,
that the Units must be held indefinitely unless they are subsequently registered
under the Securities Act and qualified under any other applicable securities law
or exemptions from such registration and qualification are available. Such
Member understands that the Company is under no obligation to register or
qualify Units under the Securities Act, or any other securities law.
(g) Such Member is a resident of the jurisdiction set forth in such
Member's address on Schedule A.
----------
3.7 Capital Contributions. Each Member has made the Capital Contributions
---------------------
to the Company in cash or assets in the amount set forth opposite such Member's
name on Schedule A hereto. Upon receipt of such Capital Contribution set forth
----------
opposite such Member's name on Schedule A, such Member shall be deemed to own
----------
the number of Units set forth opposite such Member's name on Schedule A.
----------
3.8 Defaulting Members. If any Member (a "Defaulting Member") fails to
------------------ -----------------
make full payment of any portion of any additional Capital Contribution called
by the Managing Member pursuant to Section 3.5(c), the Managing Member may
--------------
undertake any one or more of the following steps:
(a) The Managing Member may pursue and enforce all rights and remedies the
Company may have against such Defaulting Member, including a lawsuit to collect
the overdue amount, with interest calculated thereon at a rate equal to 12%.
(b) Notwithstanding anything herein to the contrary, from and after any
date on which a Defaulting Member's fails to make any additional Capital
Contribution pursuant to Section 3.5(c), if such Defaulting Member continues to
--------------
hold Units, such Defaulting Member shall have no right to receive any
distributions from the Company until such time as the amount of distributions
that would have been made to the Defaulting Member shall have been reduced by an
amount equal to the sum of (A) an amount equal to 18% per annum, compounded
annually, of the unpaid additional Capital Contribution and (B) an amount equal
to the unpaid Capital Contribution, and such reduced amount shall have been
distributed to the Investors other than the Defaulting Member pursuant to
Section 5.2(a) and Section 5.3(a).
-------------- --------------
3.9 Repurchased Units. Any Units issued pursuant to this Agreement which
-----------------
are subsequently held by the Company as a result of any repurchase of such Units
by the Company or otherwise, shall not be considered outstanding Units for any
purpose hereunder, including any Class A Management Units and Class B Management
Units allocated to the Pool. Any Management Units repurchased by the Company
shall be reallocated to the Pool; provided that any Management Units repurchased
--------
by the Company may only be subsequently reissued for a purchase price equal to
or greater than the consideration received in connection with such repurchase.
ARTICLE IV
CAPITAL ACCOUNTS
----------------
-13-
4.1 Establishment and Determination of Capital Accounts. A capital account
---------------------------------------------------
("Capital Account") shall be established for each Member in accordance with the
--------------
Treasury Regulations under Section 704(b) of the Code. In accordance with such
Treasury Regulations, the Capital Account of each Member shall consist of such
Member's Capital Contribution as listed on Schedule A as of the date hereof, and
shall be (i) increased by any additional Capital Contributions made by such
Member pursuant to the terms of this Agreement and such Member's share of items
of income and gain allocated to such Member pursuant to Article V and (ii)
---------
decreased by such Member's share of items of loss, deduction and expense
allocated to such Member pursuant to Article V and any distributions to such
---------
Member of cash or the fair market value of any other property (net of
liabilities assumed by such Member and liabilities to which such property is
subject) distributed to such Member. Any references in this Agreement to the
Capital Account of a Member shall be deemed to refer to such Capital Account as
the same may be increased or decreased from time to time as set forth above. The
Capital Account maintenance rules set forth in this Section 4.1 are intended to
-----------
be consistent with the capital account maintenance rules of Treasury Regulation
Section 1.704-1(b)(2)(iv).
4.2 Computation of Amounts. For purposes of computing the amount of any
----------------------
item of income, gain, loss, deduction or expense to be reflected in Capital
Accounts, the determination, recognition and classification of each such item
shall be the same as its determination, recognition and classification for
federal income tax purposes; provided that (a) any income that is exempt from
-------------
federal income tax shall be added to such taxable income or losses; (b) any
expenditures of the Company described in Section 705(a)(2)(B) of the Code or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable
income or losses; (c) if the Book Value of any Company property is adjusted
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in connection with
a distribution of such property) or (f) (in connection with a revaluation of
Capital Accounts), the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such property; (d) if property that is
reflected on the books of the Company has a Book Value that differs from the
adjusted tax basis of such property, depreciation, amortization and gain or loss
with respect to such property shall be determined by reference to such Book
Value; and (e) the computation of all items of income, gain, loss, deduction and
expense shall be made without regard to any election pursuant to Section 754 of
the Code that may be made by the Company, unless the adjustment to basis of
Company property pursuant to such election is reflected in Capital Accounts
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
4.3 Interest; Withdrawal. No Member shall be paid interest on any Capital
--------------------
Contributions to the Company or on the balance of such Member's Capital Account.
No Member shall have any right (a) to demand the return of such Member's Capital
Contributions or any other distribution from the Company (whether upon
resignation, withdrawal or otherwise), except upon dissolution of the Company
pursuant to Article XII hereof, or (b) to cause a partition of the Company's
-----------
assets.
ARTICLE V
DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES
------------------------------------------------
5.1 Generally. Subject to the provisions of Section 18-607 of the Act, the
---------
Managing Member shall have sole discretion regarding the amounts and timing of
distributions to Members, in each
-14-
case subject to the retention and establishment of reasonable reserves of, or
payment to third parties of, such funds as the Managing Member deems necessary
with respect to the reasonable business needs of the Company which shall include
the payment or the making of provision for the payment when due of the Company's
obligations, including the payment of any management or administrative fees and
expenses or any other obligations.
5.2 Distributions Round One Investment. Except as provided in Sections 5.4
----------------------------------
and 5.6, distributions to be made with respect to any Round One Proceeds at any
time shall be made in the following order and priority:
(a) First, to the holders of Class A Investor Units pro rata according to
-----
their ownership of outstanding Class A Investor Units until the aggregate
distributions with respect to the Class A Investor Units made pursuant to this
Section 5.2(a) reduces the aggregate Unreturned Class A Investor Capital to
--------------
zero;
(b) Second, to the holders of Class A Investor Units pro rata according to
------
their Unpaid Class A Investor Yield until the aggregate distributions with
respect to the Class A Investor Units made pursuant to this Section 5.2(b) and
--------------
Section 5.4(a) reduces the aggregate Unpaid Class A Investor Yield to zero;
--------------
(c) Third, to the holders of the Class R Management Units pro rata
-----
according to their ownership of the outstanding Class R Management Units until
the aggregate distributions with respect to the Class R Management Units made
pursuant to this Section 5.2(c) equals $750,000;
--------------
(d) Fourth, to the holders of the Class A Management Units pro rata
------
according to their ownership of the outstanding Class A Management Units until
the aggregate distributions with respect to the Class A Management Units made
pursuant to this Section 5.2(d) equals the Applicable Class A Percentage of all
--------------
distributions made pursuant to Section 5.2(b) and this Section 5.2(d);
-------------- --------------
(e) Fifth, until such time as the Class A Investor IRR for each holder of
-----
Class A Investor Units equals 30%, the Applicable Class A Percentage to the
holders of Class A Management Units pro rata according to their ownership of
outstanding Class A Management Units and the remainder to the holders of Class A
Investor Units pro rata according to their ownership of outstanding Class A
Investor Units;
(f) Sixth, after such time as the Class A Investor IRR equals 30% for each
-----
holder of Class A Investor Units (i) to the holders of Class A Management Units
the Applicable Class A Percentage, pro rata according to their ownership of
outstanding Class A Management Units and (ii) the remainder to the holders of
Class B Management Units, pro rata according to their ownership of outstanding
Class B Management Units, until the aggregate distributions with respect to the
Class B Management Units made pursuant to this Section 5.2(f) is equal to the
--------------
Applicable Class B Percentage of the aggregate distributions made pursuant to
Section 5.2(b), (d), (e) and this Section 5.2(f) with respect to the Class A
------------------------ --------------
Investor Units and Management Units; and
(g) Seventh, the Applicable Class A Percentage to the holders of Class A
-------
Management Units pro rata according to their ownership of outstanding Class A
Management Units, the Applicable
-15-
Class B Percentage to the holders of the Class B Management Units pro rata
according to their ownership of outstanding Class B Management Units and the
remainder to the holders of Class A Investor Units pro rata according to their
ownership of outstanding Class A Investor Units.
(h) Notwithstanding Sections 5.2(d) through (g), if subsequent to the
--------------- ---
making of any distribution pursuant to Sections 5.2(d) through (g), a Capital
--------------- ---
Contribution with respect to any Class A Investor Units occurs (a "Post-
----
Distribution Class A Capital Contribution"), then in such case (i) the amount
-----------------------------------------
that would otherwise be distributed to holders of Class B Management Units
pursuant to Sections 5.2(f) and (g) shall be reduced (and such amount shall be
---------------- ---
distributed in accordance with Sections 5.2(a) through (e) hereof) by an amount
--------------- ---
equal to the excess, if any, of (x) the aggregate amount of all distributions
previously made to the holders of Class B Management Units pursuant to Sections
--------
5.2(f) and (g) over (y) the aggregate amount of the distributions that would
------ ---
have been made to the holders of Class B Management Units pursuant to Sections
--------
5.2(f) and (g) if all Post-Distribution Class A Capital Contributions had been
------ ---
taken into account for purposes of determining whether the Class A Investor IRR
equaled or exceeded 30% for each holder of Class A Investor Units on the date of
such distributions and (ii) the amount that would otherwise be distributed to
holders of Class A Management Units pursuant to Sections 5.2(d) through (g) and
--------------- ---
clause (i) of this Section 5.2(h) shall be reduced (and such amount shall be
distributed in accordance with Section 5.2(a) and (b) hereof) by an amount equal
-------------- ---
to the excess of (x) the aggregate amount of all distributions previously made
to the holders of Class A Management Units pursuant to Sections 5.2(d) through
---------------
(g) over (y) the aggregate amount of the distributions that would have been made
---
to the holders of Class A Management Units pursuant to Sections 5.2(d) through
---------------
(g) if all Post-Distribution Class A Capital Contributions had been taken into
---
account for purposes of determining whether the Unpaid Class A Investor Yield
had been reduced to zero for all holders of Class A Investor Units on the date
of such distributions.
(i) Attached hereto as Schedule B is an illustrative example of the
----------
operation of this Section 5.2.
-----------
5.3 Distributions Round Two Investment. Except as provided in Sections 5.4
----------------------------------
and 5.6 hereof, distributions to be made with respect to any Round Two Proceeds
at any time shall be made in the following order and priority:
(a) First, to the holders of Class B Investor Units pro rata according to
-----
their ownership of outstanding Class B Investor Units until the aggregate
distributions with respect to the Class B Investor Units made pursuant to this
Section 5.3(a) reduces the aggregate Unreturned Class B Investor Capital to
--------------
zero;
(b) Second, to the holders of Class B Investor Units pro rata according to
------
their Unpaid Class B Investor Yield until the aggregate distributions with
respect to the Class B Investor Units made pursuant to this Section 5.3(b)
--------------
reduces the aggregate Unpaid Class B Investor Yield to zero;
(c) Third, to the holders of the Class A Management Units pro rata
-----
according to their ownership of the outstanding Class A Management Units until
the aggregate distributions with respect to the Class A Management Units made
pursuant to this Section 5.3(c) equals the Applicable Class A Percentage of all
--------------
distributions made pursuant to Section 5.3(b) and this Section 5.3(c);
-------------- --------------
-16-
(d) Fourth, until such time as the Class B Investor IRR for each holder of
------
Class B Investor Units equals 30%, the Applicable Class A Percentage to the
holders of Class A Management Units pro rata according to their ownership of
outstanding Class A Management Units and the remainder to the holders of Class B
Investor Units pro rata according to their ownership of outstanding Class B
Investor Units;
(e) Fifth, after such time as the Class B Investor IRR equals 30% for each
-----
holder of Class B Investor Units (i) to the holders of Class A Management Units
the Applicable Class A Percentage, pro rata according to their ownership of
outstanding Class A Management Units and (ii) the remainder to the holders of
Class B Management Units, pro rata according to their ownership of outstanding
Class B Management Units, until the aggregate distributions with respect to the
Class B Management Units made pursuant to this Section 5.3(e) is equal to the
--------------
Applicable Class B Percentage of the aggregate distributions made pursuant to
Section 5.3(b), (c), (d) and this Section 5.3(e) with respect to the Class B
------------------------ --------------
Investor Units and Management Units; and
(f) Sixth, the Applicable Class A Percentage to the holders of Class A
-----
Management Units pro rata according to their ownership of outstanding Class A
Management Units, the Applicable Class B Percentage to the holders of the Class
B Management Units pro rata according to their ownership of outstanding Class B
Management Units and the remainder to the holders of Class B Investor Units pro
rata according to their ownership of outstanding Class B Investor Units.
(g) Notwithstanding Sections 5.3(b) through (f), if subsequent to the
--------------- ---
making of any distribution pursuant to Sections 5.3(b) through (f), a Capital
--------------- ---
Contribution with respect to any Class B Investor Units occurs (a "Post-
----
Distribution Capital Contribution"), then in such case (i) the amount that would
---------------------------------
otherwise be distributed to holders of Class B Management Units pursuant to
Sections 5.3(e) and (f) shall be reduced (and such amount shall be distributed
--------------- ---
in accordance with Sections 5.3(a) through (d) hereof) by an amount equal to the
--------------- ---
excess, if any, of (x) the aggregate amount of all distributions previously made
to the holders of Class B Management Units pursuant to Sections 5.3(e) and (f)
--------------- ---
over (y) the aggregate amount of the distributions that would have been made to
the holders of Class B Management Units pursuant to Sections 5.3(e) and (f) if
--------------- ---
all Post-Distribution Capital Contributions had been taken into account for
purposes of determining whether the Class B Investor IRR equaled or exceeded 30%
for each holder of Class B Investor Units on the date of such distributions and
(ii) the amount that would otherwise be distributed to holders of Class A
Management Units pursuant to Sections 5.3(c) through (f) and clause (i) of this
--------------- ---
Section 5.3(g) shall be reduced (and such amount shall be distributed in
--------------
accordance with Section 5.3(a) and (b) hereof) by an amount equal to the excess
-------------- ---
of (x) the aggregate amount of all distributions previously made to the holders
of Class A Management Units pursuant to Sections 5.3(c) through (f) over (y) the
--------------- ---
aggregate amount of the distributions that would have been made to the holders
of Class A Management Units pursuant to Sections 5.3(b) through (f) if all Post-
--------------- ---
Distribution Capital Contributions had been taken into account for purposes of
determining whether the Unpaid Class B Investor Yield had been reduced to zero
for all holders of Class B Investor Units on the date of such distributions.
(h) Attached hereto as Schedule C is an illustrative example of the
----------
operation of this Section 5.3.
-----------
5.4 Management Unit Holdback. Notwithstanding Sections 5.2 and 5.3 hereof:
------------ ---
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(a) No distribution shall be made with respect to any Class A Management
Unit until the Unpaid Class A Investor Yield and the Unpaid Class B Investor
Yield have each been reduced to zero. Any distribution to which holders of
Class A Management Units would be entitled pursuant to the terms of Section 5.2
-----------
or 5.3 (as applicable) without regard to this Section 5.4 that is not
--- -----------
distributed by reason of application of the first sentence of this Section 5.4
-----------
shall be held by the Company or, if requested by WSPI, shall be distributed to
WSPI, WSPII or Dutch. If, as a result of any distribution pursuant to Section
-------
5.2 or 5.3 hereof, the Unpaid Class A Investor Yield and the Unpaid Class B
--- ---
Investor Yield have each been reduced to zero, any amounts not distributed with
respect to the Class A Management Units pursuant to the first sentence of this
Section 5.4 shall (prior to any other distributions under Section 5.2 or 5.3
----------- ----------- ---
hereof) be distributed to the holders of Class A Management Units, pro rata
according to their ownership of the outstanding Class A Management Units. If
any amounts required to be distributed with respect to the Class A Management
Units pursuant to the preceding sentence had previously been distributed to
WSPI, WSPII or Dutch pursuant to the second sentence of this Section 5.4, WSPI,
-----------
WSPII or Dutch (as applicable) shall contribute such amount to the Company
(which contributions shall be deemed to be Capital Contributions hereunder).
(b) No distribution shall be made with respect to any Class B Management
Unit until the Class A Investor IRR equals or exceeds 30% for all holders of
Class A Investor Units and the Class B Investor IRR equals or exceeds 30% for
all holders of Class B Investor Units. Any distribution to which holders of
Class B Management Units would be entitled pursuant to the terms of Section 5.2
-----------
or 5.3 (as applicable) without regard to this Section 5.4 that is not
--- -----------
distributed by reason of application of the first sentence of this Section 5.4
-----------
shall be held by the Company or, if requested by WSPI, WSPII or Dutch, shall be
distributed to (i) the Investors until the Unpaid Class A Yield and the Unpaid
Class B Yield have each been reduced to zero for all holders of Class A Investor
Units and Class B Investor Units and (ii) thereafter in accordance with Sections
--------
5.2(d) and (e) and Sections 5.3(c) and (d) hereof. If, as a result of any
------ --- --------------- ---
distribution pursuant to Section 5.2 or 5.3 hereof, the Class A Investor IRR
----------- ---
equals or exceeds 30% for all holders of Class A Investor Units and the Class B
Investor IRR equals or exceeds 30% for all holders of Class B Investor Units,
any amounts not distributed with respect to the Class B Management Units
pursuant to the first sentence of this Section 5.4 shall (prior to any other
-----------
distributions under Section 5.2 or 5.3 hereof) be distributed to the holders of
----------- ---
Class B Management Units, pro rata according to their ownership of the
outstanding Class B Management Units. The Investors and/or any holder of Class
A Management Units who or that received a distribution pursuant to the second
sentence of this Section 5.4(b) shall contribute to the Company an amount equal
--------------
to such person's appropriate share of the amount required to be distributed to
holders of Class B Management Units pursuant to the immediately preceding
sentence.
5.5 Allocation of Profits and Losses.
--------------------------------
(a) Except as set forth in Section 5.5(b) hereof, for each Fiscal Year of
--------------
the Company, all Profits and Losses shall be allocated to the Members' Capital
Accounts in a manner such that, as of the end of such Fiscal Year, the Capital
Account of each Member (which may be either a positive or negative balance)
shall be equal to (a) the amount which would be distributed to such Member,
determined as if the Company were to liquidate all of its assets for the Book
Value thereof and distribute the proceeds thereof pursuant to Section 12.2
------------
hereof, minus (b) the sum of (i) such Member's share of partnership minimum gain
-----
(as determined according to Treasury Regulation Sections 1.704-2(d) and (g)(3))
and partner minimum gain (as determined according to Treasury Regulation Section
1.704-2(i)) and (ii) the amount,
-18-
if any, which such Member is obligated to contribute to the capital of the
Company as of the last day of such Fiscal Year.
(b) If any Unitholder that unexpectedly receives an adjustment, allocation
or distribution described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the
end of any Taxable Year, then Profits for such Taxable Year shall be allocated
to such Unitholder in proportion to, and to the extent of, such Adjusted Capital
Account Deficit. This Section 5.3(b) is intended to be a qualified income
--------------
offset provision as described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.
5.6 Capital Contributions.
---------------------
(a) Notwithstanding anything to the contrary contained in Sections 5.2 and
----------------
5.3, the Members acknowledge that the Management Holders paid a portion of their
---
Capital Contributions by the delivery of promissory notes to the Company, which
notes outstanding as of the date hereof are listed on Schedule A (as amended and
restated from time to time, the "Management Notes") and that all principal and
----------------
accrued interest with respect to the Management Notes which is paid to the
Company by such Management Holders shall be distributed solely to the holders of
the Preferred Units. Each of the Management Holders acknowledges and agrees
that until such time as all principal and accrued interest with respect to the
Management Note of such Management Holder is paid in full, such Management
Holder shall have no right to receive any distributions from the Company and all
distributions which would have been paid by the Company to such Management
Holder shall be retained by the Company as payment with respect to the
Management Note of such Management Holder and distributed in accordance with the
immediately preceding sentence until such Management Notes and all accrued and
unpaid interest thereon is paid in full.
(b) Of the aggregate Capital Contributions made by WSPI, an amount equal
to the aggregate principal amount of all Management Notes issued with respect to
the Round One Investment shall be treated as contributed with respect to
Preferred Units, and the remainder shall be treated as contributed with respect
to Class A Investor Units. Of the aggregate Capital Contributions made by WSPII
or Dutch, an amount equal to the aggregate principal amount of all Management
Notes issued with respect to the Round Two Investment shall be treated as
contributed with respect to Preferred Units, and the remainder shall be treated
as contributed with respect to Class B Investor Units. The Company and the
Members acknowledge and agree that the principal amount of any Management Note
shall be treated as a Capital Contribution and included in the Capital Account
of the Member issuing such Management Note as of the original date of issuance
of such Management Note, or as of the date of assumption of such Management
Note, and that any assumption of the obligation to repay any such Management
Note shall be treated as an assumption of the rights and obligations associated
with such related Capital Contribution.
5.7 Tax Allocations; Code Section 704(c).
------------------------------------
(a) The income, gains, losses, deductions and expenses of the Company shall
be allocated, for federal, state and local income tax purposes, among the
Members in accordance with the allocation of such income, gains, losses,
deductions and expenses among the Members for computing their Capital Accounts,
except that if any such allocation is not permitted by the Code or other
-----------
applicable law,
-19-
the Company's subsequent income, gains, losses, deductions and expenses shall be
allocated among the Members so as to reflect as nearly as possible the
allocation set forth herein in computing their Capital Accounts.
(b) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, deduction and expense with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its fair market value at the time of contribution.
(c) If the Book Value of any Company asset is adjusted pursuant to Section
-------
4.2, subsequent allocations of items of taxable income, gain, loss, deduction
---
and expense with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its
Book Value in the same manner as under Code Section 704(c).
(d) Any elections or other decisions relating to such allocations shall be
made by the Members in any manner that reasonably reflects the purpose and
intent of this Agreement. Allocations pursuant to this Section 5.7 are solely
-----------
for purposes of federal, state and local taxes and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account or share of
profits, losses, other items or distributions pursuant to any provisions of this
Agreement.
(e) The Company and the Members agree to use the "traditional method" with
respect to Section 704(c) of the Code.
ARTICLE VI
MANAGEMENT OF THE COMPANY
-------------------------
6.1 Managing Member. Except as otherwise required by the Act, the business
---------------
and affairs of the Company shall be managed by or under the direction of a
"manager" (as that term is defined in the Act) who shall be a Member (the
---
"Managing Member"). The initial Managing Member shall be WSPI. Except as
---------------
otherwise expressly provided for in this Agreement, the Members hereby consent
to the exercise by the Managing Member of all such powers and rights conferred
on it by the Act with respect to the management and control of the Company. The
Managing Member shall have the power on behalf and in the name of the Company to
carry out any and all of the objectives and purposes of the Company and to
perform all acts and enter into and perform all contracts and other undertakings
which the Managing Member, in its sole discretion, deems necessary or advisable
or incidental thereto, including the power to dispose of or vote any security
held by the Company (including any securities of CTN) or exercise or convert any
right to acquire securities held by the Company (including the Warrants,
convertible preferred stock of CTN and the Equity Protection Agreements).
Notwithstanding the foregoing and except as explicitly set forth in this
Agreement, if a vote, consent or approval of the Members is required by the Act
or other applicable law with respect to any act to be taken by the Company or
matter considered by the Managing Member, the Members agree that they shall be
deemed to have consented to or approved such act or voted on such matter in
accordance with the determination of the Managing Member on such act or matter.
No Member, in his or its capacity as a Member, shall have any power to act for,
sign for or do
-20-
any act that would bind the Company. The Managing Member shall devote such time
and effort to the affairs of the Company as he or it may deem appropriate for
the oversight of the management and affairs of the Company.
6.2 Delegation by Managing Member. The Managing Member shall have the
-----------------------------
power and authority to delegate to one or more other Persons the Managing
Member's rights and powers to manage and control the business and affairs of the
Company, including to delegate to agents and employees of a Member or the
Company, and to delegate by a written agreement with, or otherwise to, other
Persons. The Managing Member may authorize any Person (including, without
limitation, any Member) to enter into and perform under any document on behalf
of the Company.
6.3 Resignation; Vacancy; Removal. The Managing Member may resign by
-----------------------------
delivering his or its written resignation to the Company and to the other
Members. Such resignation shall be effective fourteen (14) business days
following receipt of such resignation by the Company unless some later time is
specified in such resignation. If a vacancy in the position of Managing Member
should for any reason occur, a replacement Managing Member shall be appointed by
WSPI. Any subsequent Managing Member may be removed only by WSPI. The initial
Managing Member may not be removed for any reason.
6.4 Compensation. The Managing Member shall not be entitled to
------------
compensation from the Company in connection with its activities as Managing
Member; provided that the foregoing shall not prevent the Managing Member from
--------
receiving reimbursement for out-of-pocket expenses incurred by the Managing
Member on behalf of the Company, receiving distributions as a Member pursuant to
this Agreement or otherwise receiving compensation from the Company for actions
unrelated to its activities as Managing Member.
6.5 Board Membership of Subsidiaries.
--------------------------------
(a) The Managing Member and each other Member shall cause the Company to
vote all voting securities of CTN over which the Company has voting control and
shall take all other necessary or desirable actions within its control
(including in its capacity as a member of the Board, as defined below) so that
the following individuals shall be elected to the board of directors of CTN (the
"Board") and shall remain directors of the Board until removed in accordance
-----
with Sections 6.5(b) and 6.5(c):
--------------- ------
(i) two representatives designated by the holders of a majority of the
Investor Units (the "Investor Directors"), which Investor Directors shall
------------------
initially be Avy X. Xxxxx and Xxxxxx X. Xxxx;
(ii) Xxxxx Xxxxx, Xxxxx Xxxxx and Xxxxxx Xxxxx (the "Management
----------
Directors"), so long as each such Management Director is employed by CTN; and
(iii) up to six additional representatives designated by the holders of
a majority of the Investor Units, who shall initially include Xxxxxx XxXxxxxxx
(the "Other Directors").
---------------
-21-
(b) The removal from the Board (with or without cause) of any Investor
Director or any Other Director shall only be upon written request of the
Managing Member and under no other circumstances.
(c) Each Management Director shall be removed from the Board automatically
if such Management Director ceases to be employed by CTN for any reason.
(d) In the event that any representative designated hereunder ceases to
serve as a member of the Board during his term of office for any reason, the
resulting vacancy on the Board shall be filled by a representative designated by
the same group or Person that designated such prior representative.
ARTICLE VII
MEMBERS
-------
7.1 Membership Status; Resignation. A Transfer by a Member of all of such
------------------------------
Member's Units shall be deemed to be a resignation by such Member effective upon
consummation of such Transfer and such Member shall not be entitled to any
distributions or payments of any kind from the Company as a consequence of such
transfer and the transferee shall be entitled to succeed to the rights, benefits
and interests in all such Units. Transfers may only be made pursuant to Article
-------
XI hereof. To the fullest extent permitted by law, a Member may not resign or
--
withdraw as a Member of the Company without the consent of the Managing Member,
which consent may be withheld in its sole discretion.
7.2 No Participation in Management. The management of the business and
------------------------------
affairs of the Company shall be vested in whole in the Managing Member in
accordance with Article VI of this Agreement. Except with respect to the
----------
execution and filing of the Certificate, as otherwise specifically provided by
this Agreement or required by the Act, no Member, acting solely in the capacity
of Member, shall participate in the management of or be an agent of the Company
or have any authority to act for or bind the Company.
7.3 Voting Rights Generally; Voting of Units. Except as expressly
--------------------------
provided in this Agreement or as may be required by the Act, Members shall have
no voting, approval or consent rights. Each Member shall be entitled to one (1)
vote for each Unit held by such Member upon any matter upon which Members are
entitled to vote submitted to a vote at a meeting of the Members called by the
Managing Member. Any action required to, or which may be, taken by Members may
be taken without a meeting if consented thereto in a writing setting forth the
action so taken and signed by the Members who constitute a Required Interest and
who are entitled to vote with respect to the subject matter thereof.
7.4 Conflicts of Interest. The Company may transact business with any
---------------------
Member, its Affiliates and each of their respective stockholders, directors,
officers, controlling persons, members, partners and employees; provided, the
terms of those transactions are no less favorable than those the Company could
obtain from unrelated third parties or are approved by a majority of the Members
who have no direct or indirect interest in that transaction.
-22-
7.5 Outside Activities. Each Member of the Company, in its capacity as
------------------
such, its Affiliates and each of their respective stockholders, directors,
officers, controlling persons, members, partners and employees may at any time
and from time to time may engage in and own interests in other business ventures
of any and every type and description, independently or with others (including
ones in competition with the Company) with no obligation to offer to the Company
or any other Member or officer the right to participate therein. Neither the
Company nor any Member of the Company shall have any rights by virtue of this
Agreement or the limited liability company relationship created hereby in any
such business interests or activities of any such Person.
7.6 Confidentiality. Each Member agrees to maintain the confidentiality
---------------
of all proprietary, nonpublic information, documents and materials relating to
the business of the Company or any of its Subsidiaries which the Member now or
in the future may possess, except to the extent disclosure of any such
information is required by law or authorized by the Company or reasonably occurs
in connection with disputes over the terms of this Agreement.
ARTICLE VIII
EXCULPATION AND INDEMNIFICATION
-------------------------------
8.1 Exculpation. No Member (including the Managing Member) shall have
-----------
any duty to the Company or to any Member of the Company except as expressly set
forth herein. No Member (including the Managing Member) shall be liable to any
other Member or the Company for any loss or damage suffered by the Company or
any Member unless such loss or damage is caused by such Member's gross
negligence, willful misconduct, intentional violation of law or material breach
of this Agreement. No Member (including the Managing Member) shall be liable for
errors in judgment or for any acts or omissions that do not constitute gross
negligence, willful misconduct, intentional violation of law or material breach
of this Agreement. Any Member (including the Managing Member) may consult with
counsel and accountants in respect of Company affairs, and provided such Member
acts in good faith reliance upon the advice or opinion of such counsel or
accountants, such Member shall not be liable for any loss or damage suffered by
the Company or any Member in reliance thereon. The preceding sentence shall in
no way limit any Person's right to rely on information to the extent provided in
Section 18-406 of the Act.
8.2 Right to Indemnification. Subject to the limitations and conditions
------------------------
as provided in this Article VIII, each Person who was or is made a party or is
------------
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative (hereinafter a "Proceeding"), or any appeal in such a Proceeding or
----------
any inquiry or investigation that could lead to such a Proceeding, by reason of
the fact that such Person, or a Person of whom such Person is the legal
representative, is or was a Member of the Company or while a Member of the
Company is or was serving at the request of the Company as a manager, director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise, shall be indemnified by the Company (to the
extent of the Company's assets and without requiring any additional Capital
Contributions not otherwise required by this Agreement) to the fullest extent
permitted under applicable law, as the same exist or may hereafter be amended
(but, in the
-23-
case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than said law
permitted the Company to provide prior to such amendment) against judgments,
penalties (including excise and similar taxes and punitive damages), fines,
settlements and reasonable expenses (including, without limitation, attorneys'
fees) actually incurred by such Person in connection with such
Proceeding; provided that (a) such Person's course of conduct was pursued in
--------------
good faith and believed by such Person to be in the best interests of the
Company and (b) such course of conduct did not constitute gross negligence or
willful misconduct on the part of such Person and otherwise was in accordance
with the terms of this Agreement. Indemnification under this Article VIII shall
------------
continue as to a Person who has ceased to serve in the capacity which initially
entitled such Person to indemnity hereunder. The rights granted pursuant to
this Article VIII shall be deemed contractual rights, and no amendment,
------------
modification or repeal of this Article VIII shall have the effect of limiting or
------------
denying any such rights with respect to actions taken or Proceedings arising
prior to any amendment, modification or repeal. It is expressly acknowledged
that the indemnification provided in this Article VIII could involve
------------
indemnification for negligence or under theories of strict liability.
8.3 Advance Payment. The right to indemnification conferred in this
---------------
Article VIII shall include the right to be paid or reimbursed by the Company the
------------
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.2 who was, is or is threatened to be made a named defendant or
-----------
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding shall be
made only upon delivery to the Company of a written affirmation by such Person
of his or her good faith belief that he has met the standard of conduct
necessary for indemnification under Article VIII and a written undertaking, by
------------
or on behalf of such Person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified Person is not entitled to be
indemnified under this Article VIII or otherwise.
------------
8.4 Indemnification of Employees and Agents. The Company shall indemnify
---------------------------------------
and advance expenses to any officer, director, partner, employee, agent of the
Managing Member or of any other Member or the Company to the same extent and
subject to the same conditions that it may indemnify and advance expenses to the
Members including the Managing Member under this Article VIII.
------------
8.5 Appearance as a Witness. Notwithstanding any other provision of this
-----------------------
Article VIII, the Company may pay or reimburse reasonable out-of-pocket expenses
------------
incurred by any Member including the Managing Member or such Managing Member's
officers, directors, employees, partners and agents in connection with such
Person's appearance as a witness or other participation in a Proceeding related
to or arising out of the business of the Company at a time when such Person is
not a named defendant or respondent in the Proceeding.
8.6 Nonexclusivity of Rights. The right to indemnification and the
------------------------
advancement and payment of expenses conferred in this Article VIII shall not be
------------
exclusive of any other right which a Person indemnified pursuant to this Article
-------
VIII may have or hereafter acquire under any law (common or statutory), any
----
agreement, any provision of the Certificate or this Agreement, any vote of
Members or otherwise.
-24-
8.7 Savings Clause. If this Article VIII or any portion hereof shall be
-------------- ------------
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Person indemnified
pursuant to this Article VIII as to costs, charges and expenses (including
------------
attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VIII that shall not have been invalidated and to the fullest extent
------------
permitted by applicable law.
ARTICLE IX
TAXES
-----
9.1 Tax Returns. The Company shall cause to be prepared and filed all
-----------
necessary federal and state income tax returns for the Company, including making
any elections the Managing Member may deem appropriate and in the best interests
of the Members. Each Member shall furnish to the Managing Member all pertinent
information in its possession relating to Company operations that is necessary
to enable the Company's income tax returns to be prepared and filed.
9.2 Tax Matters Partner. The Managing Member shall be the "tax matters
-------------------
partner" of the Company pursuant to Section 6231(a)(7) of the Code (the "Tax
---
Matters Member"). The Tax Matters Member is authorized to represent the Company
--------------
before the Internal Revenue Service and any other governmental agency with
jurisdiction, and to sign such consents and to enter into settlements and other
agreements with such agencies as the Managing Member deems necessary or
advisable.
ARTICLE X
BOOKS, REPORTS
--------------
10.1 Maintenance of Books. The Company shall keep appropriate books and
--------------------
records of accounts and shall keep appropriate minutes of the proceedings of its
Members and any committees. The Fiscal Year of the Company shall be the calendar
year.
10.2 Member Tax Information. Within forty-five (45) days after the end of
----------------------
each Taxable Year, the Company will cause to be delivered to each Person who was
a Member at any time during such Taxable Year a Form K-1 and such other
information, if any, with respect to the Company as may be necessary for the
preparation of such Member's federal, state and local income tax returns.
ARTICLE XI
TRANSFERS
---------
11.1 Assignment by Members. Subject to Section 3.5(b) regarding the rights
--------------------- --------------
of Xxxxx to allocate Units contained in the Pool, no Management Holder shall
transfer any Management Units of
-25-
the Company, or offer to Transfer all or any part of such Management Holder's
Management Units of the Company (whether voluntarily or involuntarily) without
the consent of the Managing Member, which consent may be withheld in the
Managing Member's sole discretion, except for a transfer of Management Units to
the Company to be allocated to the Pool. Each transferee of Units or other
interest in the Company shall as a condition prior to such Transfer execute a
joinder agreement in a form satisfactory to the Managing Member pursuant to
which such transferee shall agree to be bound by the provisions of this
Agreement (it being understood that any such Transfer shall have the effect of
Transferring an economic interest in such Units and shall not have the effect of
Transferring any other rights of a Member unless such Transferee is admitted as
a substitute Member pursuant to Section 11.3). Any Transfer by a Member of any
------------
part of Units to a Person who is not a Member shall not relieve such Member of
any of its obligations with respect to such Units.
11.2 Void Transfers. Any Transfer by any Member of any Units or other
--------------
interest in the Company (a) in contravention of this Agreement (including,
without limitation, the failure of the transferee to execute a counterpart in
accordance with Section 11.1), or (b) which would cause the Company to not be
treated as a partnership for U.S. federal income tax purposes, shall be void and
ineffectual and shall not bind or be recognized by the Company or any other
party. No purported assignee pursuant to a void transfer shall have any right to
any profits, losses or distributions of the Company.
11.3 Substituted Member.
------------------
(a) An assignee of any Units or other interest in the Company held by a
Member, or any portion thereof, shall become a substituted Member entitled to
all the rights of a Member if and only if the assignor gives the assignee such
right, and prior written consent to such assignment and substitution has been
obtained from the Managing Member, which consent may be withheld in such
Managing Member's sole discretion.
(b) The Company and the Members shall be entitled to treat the record owner
of any Units or other interest in the Company as the absolute owner thereof and
shall incur no liability for distributions of cash or other property made in
good faith to such owner until such time as a written assignment of such Units
or other interest in the Company, which assignment is permitted pursuant to the
terms and conditions of Section 11.1 and Section 11.3 hereof, has been received
------------ ------------
and accepted by the Managing Member and recorded on the books of the Company.
(c) Upon the admission of a substituted Member, Schedule A attached hereto
----------
shall be amended to reflect the name, address and Units of such substituted
Member and to eliminate the name and address of and other information relating
to the assigning Member with regard to the assigned Units.
-26-
11.4 Effect of Assignment.
--------------------
(a) Any Member who shall make a permitted assignment under this Agreement
of any Units or other interest in the Company shall cease to be a Member of the
Company with respect to such Units or other interest and shall no longer have
any rights or privileges of a Member with respect to such Units or other
interest, except that unless and until the assignee of such Member is admitted
as a substituted Member in accordance with the provisions of this Article XI,
----------
such assigning Member shall retain the statutory rights and obligations of an
assignor member under applicable law, including, but not by way of limitation,
the right to vote.
(b) Any Person who acquires in any manner whatsoever any Units or other
interest in the Company, irrespective of whether such Person has accepted and
adopted in writing the terms and provisions of this Agreement, shall be deemed
by the acceptance of the benefits of the acquisition thereof to have agreed to
be subject to and bound by of all the terms and conditions of this Agreement
that any predecessor in such Units or other interest in the Company of such
Person was subject to or by which such predecessor was bound. With respect to a
permitted assignment, the Company shall use the "closing of the books method"
for all allocation purposes.
(c) Following an assignment of any Units or other interest that is
permitted under this Agreement, the transferee of such Units or interest shall
be treated as having made all of the Capital Contributions in respect of, and
received all of the distributions received in respect of, such Units or
interest, shall succeed to the Capital Account associated with such Units or
interest and shall receive allocations and distributions under Articles V and
----------
XII in respect of such Units or interest as if such transferee were a Member.
---
11.5 Permitted Transfers. Subject in all events to the general
-------------------
restrictions on Transfers contained in Sections 11.1, 11.2 and 11.3, the
------------- ---- ----
restrictions contained in the first sentence of Section 11.1 shall not apply to
------------
any Transfer of Units by any Unitholder among such Unitholder's Permitted
Transferees so long as such Permitted Transferee shall agree in writing to be
bound by the provisions of this Agreement prior to any such Transfer.
11.6 Deliveries for Transfer.
-----------------------
(a) In connection with the Transfer of any Restricted Securities, the
holder thereof will deliver written notice to the Company describing in
reasonable detail the Transfer or proposed Transfer. In addition, in the case
of any Certificated Units (as defined below), if the holder of such Restricted
Securities delivers to the Company an opinion of counsel satisfactory to the
Company that no subsequent Transfer of such Restricted Securities will require
registration under the Securities Act, the Company will promptly upon such
contemplated Transfer deliver new certificates or instruments, as the case may
be, for such Restricted Securities which do not bear the restrictive legend
relating to the Securities Act as set forth below. If the Company is not
required to deliver new certificates or instruments, as the case may be, for
such Restricted Securities not bearing such legend, the holder thereof will not
Transfer the same until the prospective transferee has confirmed to the Company
in writing its agreement to be bound by the conditions contained in this Section
-------
11.6.
----
(b) Notwithstanding any other provisions of this Article XI, no Transfer of
----------
Units or any other interest in the Company may be made unless in the opinion of
counsel (who may be counsel for the
-27-
Company), satisfactory in form and substance to the Managing Member and counsel
for the Company (which opinion may be waived, in whole or in part, at the
discretion of the Managing Member), such Transfer would not violate any federal
securities laws or any state or provincial securities or "blue sky" laws
(including any investor suitability standards) applicable to the Company or the
interest to be transferred, or cause the Company to be required to register as
an Investment Company under the Investment Company Act of 1940, as amended. Such
opinion of counsel shall be delivered in writing to the Company prior to the
date of the Transfer.
11.7 Prospective Transferees. Subject to the terms of this Agreement, the
-----------------------
Company agrees to cooperate, as may reasonably be requested, in order to provide
any information and access to any information to any prospective transferee in
connection with a proposed Transfer.
11.8 Legend. In the event that certificates representing the Units are
------
issued ("Certificated Units"), such certificates will bear a legend stating that
------------------
the Transfer of the Units is subject to the conditions specified in this
Agreement.
11.9 Effective Date. Any Transfer and any related admission of a Person as
--------------
a Member in compliance with this Article XI shall be deemed effective on such
----------
date that the transferee or successor in interest complies with the requirements
of this Agreement.
ARTICLE XII
DISSOLUTION, LIQUIDATION AND TERMINATION
----------------------------------------
12.1 Dissolution. The Company shall be dissolved and its affairs shall be
-----------
wound up on the first to occur of the following:
(a) the expiration of its term pursuant to Section 2.5;
-----------
(b) prior to April 25, 2002, the written consent of the Required Interests
to dissolve the Company;
(c) after April 25, 2002, the written determination of the Managing Member
(in its self-discretion) to dissolve the Company;
(d) upon the determination of the Managing Member in the event of a sale of
all or substantially all the Company's assets or in the event the Company no
longer owns any securities of CTN; and
(e) the entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act.
The death, retirement, resignation, expulsion, incapacity, bankruptcy or
dissolution of a Member, or the occurrence of any other event that terminates
the continued membership of a Member in the Company,
-28-
shall not cause a dissolution of the Company, and the Company shall continue in
existence subject to the terms and conditions of this Agreement.
12.2 Liquidation and Termination. On dissolution of the Company, the
---------------------------
Managing Member shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator(s) shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator(s) shall continue to operate the Company properties
with all of the power and authority of the Managing Member and the Members. The
steps to be accomplished by the liquidators are as follows:
(a) as promptly as possible after dissolution and again after final
liquidation, the liquidator(s) shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;
(b) the liquidator(s) shall cause the notice described in the Act to be
mailed to each known creditor of and claimant against the Company in the manner
described thereunder;
(c) the liquidator(s) shall pay, satisfy or discharge from Company funds
all of the debts, liabilities and obligations of the Company (including, without
limitation, all expenses incurred in liquidation) or otherwise make adequate
provision for payment and discharge thereof (including, without limitation, the
establishment of a cash fund for contingent liabilities in such amount and for
such term as the liquidator(s) may reasonably determine); and
(d) the remaining assets of the Company (the "Remaining Assets") shall be
----------------
distributed to the Members in accordance with Sections 5.2 through 5.4 and 5.6
--------------------------------
hereof. The Remaining Assets shall be distributed by the end of the taxable
year of the Company during which the liquidation of the Company occurs (or, if
later, 90 days after the date of the liquidation).
All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination, and those
costs, expenses and liabilities shall reduce the amount to be distributed to the
distributees in accordance with Sections 5.2 through 5.4 and 5.6 pursuant to
------------------------ ---
this Section 12.2. The distribution of cash and/or property to a Member in
------------
accordance with the provisions of this Section 12.2 constitutes a complete
------------
return to the Member of its Capital Contributions and a complete distribution to
the Member of its interest in the Company and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds. Any Company assets distributed
in kind will first be written up or down to their fair market value, thus
creating Profits or Losses (if any), which shall be allocated in accordance with
Section 5.5.
-----------
12.3 Management Holder Give Back.
---------------------------
(a) If, subsequent to the making of any distribution pursuant to Section
-------
5.2(d) through (g), one or more Post-Distribution Class A Capital Contributions
------ ---
occurred, then, after the final distribution
-29-
of assets of the Company among the Members as provided in Section 12.2 and
------------
Article V, the following Capital Contributions and distributions shall be made:
---------
(i) To the extent that the amount that would otherwise have been
distributed to holders of Class B Management Units pursuant to Section 5.2(f)
--------------
and (g) and Section 12.2(d) was not reduced in distributions subsequent to such
--- ---------------
Post-Distribution Class A Capital Contributions by an amount equal to the excess
described in Section 5.2(h)(i), then (A) the holders of Class B Management Units
-----------------
shall make a Capital Contribution to the Company (pro rata according to their
respective ownership of Class B Management Units) in an amount equal to the
lesser of (I) the extent to which such reduction was less than such excess
described in Section 5.2(h)(i) or (II) the aggregate amount distributed to
-----------------
holders of Class B Management Units pursuant to Sections 5.2, 5.4(b) and 12.2(d)
-------------------- -------
(but, with respect to distributions pursuant to Section 5.4(b), only to the
-----------
extent such distributions were made with respect to distributions that would
have been made pursuant to Section 5.2, but for the first sentence of Section
----------- -------
5.4(b)), and (B) the amount contributed to the Company pursuant to clause (A) of
------
this Section 12.3(a)(i) shall be distributed in accordance with Section 5.2(a)
------------------ --------------
through (e), and
-----------
(ii) To the extent that the amount that would otherwise have been
distributed to holders of Class A Management Units pursuant to Section 5.2(d)
--------------
through (g) and Section 12.2(d) was not reduced in distributions subsequent to
--- ---------------
such Post-Distribution Class A Capital Contributions by an amount equal to the
excess described in Section 5.2(h)(ii), then (A) the holders of Class A
------------------
Management Units shall make a Capital Contribution to the Company (pro rata
according to their respective ownership of Class A Management Units) in an
amount equal to the lesser of (I) the extent to which such reduction was less
than such excess described in Section 5.2(h)(ii) or (II) the aggregate amount
------------------
distributed to holders of Class A Management Units pursuant to Sections 5.2,
-------------
5.4(a) and 12.2(d) (but, with respect to distributions pursuant to Section
------ ------- -------
5.4(a), only to the extent such distributions were made with respect to
------
distributions that would have been made pursuant to Section 5.2 but for the
-----------
first sentence of Section 5.4(a)), and (B) the amount contributed to the Company
--------------
pursuant to clause (A) of this Section 12.3(a)(ii) shall be distributed in
-------------------
accordance with Section 5.2(a) and (b).
----------------------
(b) If, subsequent to the making of any distribution pursuant to Section
-------
5.3(c) through (f), one or more Post-Distribution Capital Contributions
------ ---
occurred, then, after the final distribution of assets of the Company among the
Members as provided in Section 12.2 and Article V, the following Capital
------------ ---------
Contributions and distributions shall be made:
(i) To the extent that the amount that would otherwise have been
distributed to holders of Class B Management Units pursuant to Section 5.3(d)
--------------
through (f) and Section 12.2(d) was not reduced in distributions subsequent to
--- ---------------
such Post-Distribution Class B Capital Contributions by an amount equal to the
excess described in Section 5.3(g)(i), then (A) the holders of Class B
---------
Management Units shall make a Capital Contribution to the Company (pro rata
according to their respective ownership of Class B Management Units) in an
amount equal to the lesser of (I) the extent to which such reduction was less
than such excess described in Section 5.3(g)(i) or (II) the aggregate amount
-----------------
distributed to holders of Class B Management Units pursuant to Sections 5.3,
-------------
5.4(b) and 12.2(d) (but, with respect to distributions pursuant to Section
------ ------- -------
5.4(b), only to the extent such distributions were made with respect to
distributions that would have been made pursuant to Section 5.3 but for the
-----------
first sentence of Section 5.4(b)), and (B) the amount contributed to the Company
--------------
pursuant to clause (A) of this Section 12.3(b)(i) shall be distributed in
------------------
accordance with Section 5.3(a) through (d); and
--------------------------
-30-
(ii) To the extent that the amount that would otherwise have been
distributed to holders of Class A Management Units pursuant to Section 5.3(c)
--------------
through (f) and Section 12.2(d) was not reduced in distributions subsequent to
--- ---------------
such Post-Distribution Class B Capital Contributions by an amount equal to the
excess described in Section 5.3(g)(ii) then (A) the holders of Class A
------------------
Management Units shall make a Capital Contribution to the Company (pro rata
according to their respective ownership of Class A Management Units) in an
amount equal to the lesser of (I) the extent to which such reduction was less
than such excess described in Section 5.3(g)(ii) or (II) the aggregate amount
------------------
distributed to holders of Class A Management Units pursuant to Sections 5.3,
-------------
5.4(a) and 12.2(d) (but, with respect to distributions pursuant to Section
------ ------- -------
5.4(a), only to the extent such distributions were made with respect to
------
distributions that would have been made pursuant to Section 5.3 but for the
-----------
first sentence of Section 5.4(a)), and (B) the amount contributed to the Company
--------------
pursuant to clause (A) of this Section 12.3(b)(ii) shall be distributed in
-------------------
accordance with Section 5.3(a) and (b).
----------------------
12.4 Deficit Capital Accounts. Except as otherwise provided in Section
------------------------ -------
12.3, and notwithstanding any custom or rule of law to the contrary, to the
----
extent that any Member has a deficit Capital Account balance, upon dissolution
of the Company such deficit shall not be an asset of the Company and such
Members shall not be obligated to contribute such amount to the Company to bring
the balance of such Member's capital account to zero.
12.5 Cancellation of Certificate. On completion of the distribution of
---------------------------
Company assets as provided herein, the Company is terminated, and the Managing
Member (or such other Person or Persons as the Act may require or permit) shall
file a certificate of cancellation with the Secretary of State of Delaware,
cancel any other filings made pursuant to Section 2.5 and take such other
-----------
actions as may be necessary to terminate the Company.
ARTICLE XIII
GENERAL PROVISIONS
------- ----------
13.1 Notices. Except as expressly set forth to the contrary
-------
in this Agreement, all notices, requests or consents provided for or permitted
to be given under this Agreement must be in writing and shall be deemed
delivered: (a) upon delivery if delivered in person; (b) three (3) business
days after deposit in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested; (c)
upon transmission if sent via telecopier, with a confirmation copy sent via
overnight mail, provided that confirmation of such overnight delivery is
-------------
received; or (d) one (1) business day after deposit with a national overnight
courier provided that confirmation of such overnight delivery is received. All
-------------
notices, requests and consents to be sent to a Member must be sent to or made at
the address given for that Member on Schedule A, or such other address as that
----------
Member may specify by notice to the other Members. Any notice, request, or
consent to the Company or the Managing Member must be given to the Managing
Member at the address for the Managing Member set forth on Schedule A. Whenever
----------
any notice is required to be given by law, the Certificate or this Agreement, a
written waiver thereof, signed by the Person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
-31-
13.2 Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the Members and their Affiliates relating to the Company and supersedes all
prior contracts or agreements with respect to the Company, whether oral or
written.
13.3 Effect of Waiver or Consent. A waiver or consent, express or
---------------------------
implied, to or of any breach or default by any Person in the performance by that
Person of its obligations with respect to the Company is not a consent or waiver
to or of any other breach or default in the performance by that Person of the
same or any other obligations of that Person with respect to the Company.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Company, irrespective of how
long that failure continues, does not constitute a waiver by that Person of its
rights with respect to that default until the applicable statute-of-limitations
period has run.
13.4 Amendment, Modification or Waiver. Except as otherwise expressly
---------------------------------
provided herein, this Agreement may be amended, modified or waived from time to
time only by a written instrument adopted by the Managing Member; provided,
however, that (a) except as otherwise expressly provided herein, an amendment or
modification reducing disproportionately a Member's Units or other interest in
profits or losses or in distributions or increasing a Member's Capital
Contribution shall be effective only with that Member's consent, (b) an
amendment, modification or waiver to this Agreement which affects the
liabilities, obligations or rights of a particular class of Units in a manner
which is more adverse than such amendment, modification or waiver affects the
rights of all classes of Units shall be effective only with the consent of the
holders of a majority of the outstanding Units of such class, and (c) an
amendment, modification or waiver reducing the Required Interests for any
consent or vote in this Agreement shall be effective only with the consent or
vote of Members having the interest theretofore required, and provided further
that the Managing Member may amend and modify the provisions of this Agreement
and Schedule A hereto to the extent necessary to reflect the issuance of new
----------
Units or other interests in the Company as contemplated by Section 3.5 as
-----------
determined in good faith by the Managing Member.
13.5 Binding Effect. Subject to the restrictions on Transfers set forth
--------------
in this Agreement, this Agreement is binding on and shall inure to the benefit
of the Members and their respective heirs, legal representatives, successors and
assigns.
13.6 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
---------------------------
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event
of a direct conflict between the provisions of this Agreement and any provision
of the Certificate or any mandatory provision of the Act, the applicable
provision of the Certificate or the Act shall control. If any provision of this
Agreement or the application thereof to any Person or circumstance is held
invalid or unenforceable to any extent, the remainder of this Agreement and the
application of that provision to other Persons or circumstances is not affected
thereby and that provision shall be enforced to the greatest extent permitted by
law.
13.7 Further Assurances. In connection with this Agreement and the
------------------
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments
-32-
and perform any additional acts that may be necessary or appropriate to
effectuate and perform the provisions of this Agreement and those transactions.
13.8 Waiver of Certain Rights. Each Member irrevocably waives any right
------------------------
it may have to demand any distributions or withdrawal of property from the
Company or to maintain any action for dissolution of the Company or for
partition of the property of the Company.
13.9 Indemnification and Reimbursement for Payments on Behalf of a
-------------------------------------------------------------
Member. If the Company is obligated to pay any amount to a governmental agency
------
(or otherwise makes a payment) because of a Member's status or otherwise
specifically attributable to a Member (including, without limitation, federal,
state or local withholding taxes, state personal property taxes, state
unincorporated business taxes, state personal property replacement taxes, etc.),
then such Member (the "Indemnifying Member") shall indemnify the Company in full
-------------------
for the entire amount paid (including, without limitation, any interest,
penalties and expenses associated with such payments). The amount to be
indemnified shall be charged against the Capital Account of the Indemnifying
Member, and, at the option of the Members, either:
------
(a) promptly upon notification of an obligation to indemnify the Company,
the Indemnifying Member shall make a cash payment to the Company equal to the
full amount to be indemnified (and the amount paid shall be added to the
Indemnifying Member's Capital Account but shall not be treated as a Capital
Contribution), or
--
(b) the Company shall reduce distributions which would otherwise be made to
the Indemnifying Member, until the Company has recovered the amount to be
indemnified (and, notwithstanding Section 4.1, the amount withheld shall not be
-----------
treated as a Capital Contribution).
The provisions of this Section 13.9 shall survive a liquidation,
------------
dissolution or termination of the Company.
13.10 Notice to Members of Provisions. By executing this Agreement, each
-------------------------------
Member acknowledges that it has actual notice of (i) all of the provisions
hereof (including, without limitation, the restrictions on the transfer set
forth in Article XI) and (ii) all of the provisions of the Certificate.
13.11 Counterparts. This Agreement may be executed in multiple
------------
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
13.12 Consent to Jurisdiction. Each Member irrevocably submits to the
-----------------------
non-exclusive jurisdiction of the United States District Court for the Northern
District of Illinois and the state courts of the State of Illinois, sitting in
Chicago, for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby. Each Member further
agrees that service of any process, summons, notice or document by U.S.
certified or registered mail to such Member's respective address set forth above
shall be effective service of process in any action, suit or proceeding in
Illinois with respect to any matters to which it has submitted to jurisdiction
as set forth above in the immediately preceding sentence. Each Member
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the United States District Court for the Northern
District of Illinois or the state courts of the State of Illinois, sitting in
Chicago, and hereby irrevocably and unconditionally waives and
-33-
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in such court has been brought in an inconvenient forum.
13.13 Headings. The headings used in this Agreement are for the purpose
--------
of reference only and will not otherwise affect the meaning or interpretation of
any provision of this Agreement.
13.14 Remedies. The Company and the Members shall be entitled to enforce
--------
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement (including costs of enforcement)
and to exercise any and all other rights existing in their favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that the Company or any
Member may in its or his sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance or injunctive relief (without
posting a bond or other security) in order to enforce or prevent any violation
or threatened violation of the provisions of this Agreement.
13.15 Parties in Interest. Except as expressly provided in the Act,
-------------------
nothing in this Agreement shall confer any rights or remedies under or by reason
of this Agreement on any Persons other than the Members and their respective
successors and assigns nor shall anything in this Agreement relieve or discharge
the obligation or liability of any other Person to any party to this Agreement,
nor shall any provision give any other Person any right of subrogation or action
over or against any party to this Agreement.
* * * * * *
-34-
IN WITNESS WHEREOF, the Members have executed this Fourth Amended and
Restated Limited Liability Company Agreement as of the date first set forth
above.
MEMBERS:
XXXXXX XXXXX & PARTNERS, L.P.
By: Xxxxxx Xxxxx & Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxx
-------------------------
Xxxxxx X. Xxxx
Its: Managing Director
XXXXXX XXXXX & PARTNERS II, L.P.
By: Xxxxxx Xxxxx & Partners Management II, L.P.
Its: General Partner
By: Xxxxxx Xxxxx & Partners Management II, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxx
-------------------------
Xxxxxx X. Xxxx
Its: Managing Director
XXXXXX XXXXX & PARTNERS DUTCH, L.P.
By: Xxxxxx Xxxxx & Partners Management II, L.P.
Its: General Partner
By: Xxxxxx Xxxxx & Partners Management II, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxx
-------------------------
Xxxxxx X. Xxxx
Its: Managing Director
-35-
MEMBERS (continued)
/s/ Xxxxxx X. Xxxxxxxxxx
_______________________________
Xxxxxx X. Xxxxxxxxxx
/s/ Xxxxx Xxxxx
_______________________________
Xxxxx Xxxxx
/s/ Xxxxxx X. Xxxxx
_______________________________
Xxxxxx X. Xxxxx
/s/ Xxxxx Xxxxxx
_______________________________
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
_______________________________
Xxxxxx Xxxxx
/s/ Xxxxx Xxxxx
_______________________________
Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
_______________________________
Xxxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
_______________________________
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
_______________________________
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxxxx
_______________________________
Xxxxxx Xxxxxxx
-36-
SCHEDULE B
[TO COME]
-37-
U-C Holdings, LLC
7/21/99
Schedule of Investor Units
--------------------------------------------------------------
Pledged
Xxxxx Xxxxx Issue Date Maturity Date Amount Units Status Purpose
----------- ----------- -------------- ------ ----- ------ -------
Note 12-May-97 1-Jan-03 $333,333.40 333,334 Initial Investment
Note 20-May-98 1-Jan-03 $180,834.00 166,667 Purchase from Xxxxxx
Note 2-Oct-98 1-Jan-03 $283,057.00 283,057 Rights Offering
$797,224.40
Pledged
Xxxxx Xxxxx Issue Date Maturity Date Amount Units Status
----------- ----------- -------------- ------ ----- ------
Note 2-Oct-98 1-Jan-03 $94,352.00 [_______]
Note 20-May-98 1-Jan-03 $180,834.00 166,666 Purchase from Xxxxxx
$275,186.00 #VALUE! (diference is due to
accrued interest).
Pledged
Xxxxxx Xxxxx Issue Date Maturity Date Amount Units Status Purpose
------------ ----------- -------------- ------ ----- ------ -------
Note 12-May-97 1-Jan-03 $333,333.30 333,333 expired Initial Investment
Note 2-Oct-98 1-Jan-03 $188,704.00 166,667 Rights Offering
$522,037.30 $500,000.00 (diference is due to
accrued interest).
Pledged
Xxxx Xxxxxx Issue Date Maturity Date Amount Units Status Purpose
----------- ----------- -------------- ------ ----- ------ -------
Note 12-May-97 12-May-98 $333,333.30 333,333 expired Initial Investment
forfeited
U-C Holdings, LLC
7/21/99
Schedule of Investor Units
-----------------------------------------------------
[FT 1]
Original Original Xxxx Xxxxxx Xxxx Xxxxxx Rights
Investment Investment Transfer on Transfer on Offering
(units) (dollars) (units) (dollars) (units)
4/25/97 4/25/97 5/20/98 5/20/98 7/2/98
----------- ----------- ----------- ----------- -----------
Xxxxxx Xxxxx 15,200,000 $15,200,000 0 $0 8,604,918
Xxxxxx Xxxxxxxxxx 75,000 $75,000 0 $0 42,458
Xxxxx Xxxxx 333,334 $333,334 166,667 $180,834 283,057
Xxxxxx Xxxxx 333,333 $333,333 0 $0 188,704
Xxxxx Xxxxx 0 $0 166,666 $180,834 94,352
Xxxx Xxxxxx 333,333 $333,333 (333,333) $0 0
Xxxx XxXxxxx 0 $0 0 $0 0
Xxxxx Xxxxxx 0 $0 0 $0 0
Xxxx Xxxxxxxxx 0 $0 0 $0 0
Xxxxxxxxx Xxxxx 0 $0 0 $0 0
Xxxxxx Xxxxx 0 $0 0 $0 0
Xxxxxx Xxxxx 0 $0 0 $0 0
Xxx Xxxxx 0 $0 0 $0 0
Xxxxxx Xxxxxxx 0 $0 0 $0 0
--------------------------------------------------------------------
total 16,275,000 $16,275,000 0 $361,668 9,213,489
====================================================================
Total Total
Rights Xxxxxx Xxxxx Xxxxxx Xxxxx Class A Class A
Offering Transfer on Transfer on Investor Units Investor Units
(dollars) (units) (dollars) (units) (dollars)
7/2/98 2/19/99 2/19/99 7/15/99 7/15/99
----------- ----------- ----------- -------------- --------------
Xxxxxx Xxxxx $8,604,918 0 $0 23,804,918 $23,804,918
Xxxxxx Xxxxxxxxxx $42,458 0 117,458 $117,458
Xxxxx Xxxxx 522,037 1,305,095 $514,168
Xxxxxx Xxxxx (522,037) 0 $333,333
Xxxxx Xxxxx 0 261,018 $180,834
Xxxx Xxxxxx 0 0 $333,333
Xxxx XxXxxxx 0 0 $0
Xxxxx Xxxxxx 0 0 $0
Xxxx Xxxxxxxxx 0 0 $0
Xxxxxxxxx Xxxxx 0 0 $0
Xxxxxx Xxxxx 0 0 $0
Xxxxxx Xxxxx 0 0 $0
Xxx Xxxxx 0 0 $0
Xxxxxx Xxxxxxx 0 0 $0
-----------------------------------------------------------------------
total $8,647,376 0 $0 25,488,489 $25,284,044
=======================================================================
FT 1: Xxxxx Xxxxx issued a Promissory Note on May 12, 1997 due on May 12
1998 for $333,333.40 for his purchase of Investor Units Xxxxxx Xxxx
issued a Promissory Note on May 12, 1997 due on May 12 1998 for
$333,333.30 for his purchase of Investor Units Xxxx Xxxxxx issued a
Promissory Note on May 12, 1997 due on May 12 1998 for $333,333.30 for
his purchase of Investor Units
Note 1: X. Xxxxxx forfeited his Class A Investor Units for failure to pay the
purchase price pursuant to the Management Note and the Payment and
Release Agreement. One half of his Investor Units was reissued by the
Company to Xxxxx Xxxxx and the other half to Xxxxx Xxxxx for $180,834
each pursuant to the First Amendment to the Second Amended and Restated
Limited Liability Company Agreement, dated as of May 20, 1999.
Note 2: X. Xxxxx transferred all of his Investor Units to Xxxxx Xxxxx
pursuant to a Payment Agreement and General Release, dated as of
2/19/99, and pursuant to the Note dated 2/12/97 and related Pledge
Agreement and the Note dated 5/12/97 and the related Pledge Agreement.
SCHEDULE A - As of August 31, 1999
----------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Capital Account with
Name and Address of Number of Class A Investor respect to the Class A % of Class A
Members Units Investor Units Investor Units
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000 5/15/97 15,200,000 5/15/97 $15,200,000
Xxxxxxx, Xx 00000 10/2/98 8,604,918 10/2/98 $8,604,918
Telecopy: (000) 000-0000 7/23/99 4,342,829 7/23/99 $4,342,829
(000) 000-0000 ========== ==========
subtotal 28,147,747 subtotal $28,147,747 93.3947778%
Attention: Avy X. Xxxxx
Xxxxxx X. Xxxx
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners II, L.P.
(same as above)
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch, L.P.
(same as above)
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxx
55 West Monroe 5/15/97 75,000 5/15/97 $75,000
Suite 2530 10/2/98 42,458 10/2/98 $42,458
Xxxxxxx, XX 00000 7/23/99 21,428 7/23/99 $21,428
Telecopy: (000) 000-0000 ======== ========
subtotal 138,887 subtotal $138,887 0.4608295%
(000) 000-0000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 1] 5/15/97 333,334 5/15/97 $333,334
0000 Xxxx Xxxxxxx Xxxxx 5/20/98 166,667 5/20/98 $166,667
Suite 275 10/2/98 283,057 10/2/98 $283,057
Xxxxxxx, XX 00000 2/19/99 522,037 2/19/99 $522,037
7/23/99 238,094 7/23/99 $238,094
subtotal 1,543,189 subtotal $1,543,189 5.1203312%
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxx
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx
00 Xxxxxx Xxxxx Xxxxx
Xxx Xxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 2] 5/20/98 166,666 5/20/98 $166,666
000 Xxxxx Xxxxxx, 0xx Fllor 10/2/98 94,352 10/2/98 $94,352
Xxx Xxxx, XX 00000 7/23/99 47,619 7/23/99 $47,619
subtotal 308,636 subtotal $308,636 1.0240615%
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx
0000 Xxxxxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx [FT 3]
0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx [FT4]
-----------------------------------------------------------------------------------------------------------------------------
Unallocated Pool
-----------------------------------------------------------------------------------------------------------------------------
Total 30,138,459 $30,138,459 100.000%
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Number of
Capital Account with Class R
Name and Address of Number of Class B Investor respect to the Class B % of Class B Investor Units
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xx 00000
Telecopy: (000) 000-0000
(000) 000-0000
Attention: Avy X. Xxxxx
Xxxxxx X. Xxxx
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners II, L.P.
(same as above) 8/31/99 13,335,374 8/31/99 $13,335,374
========== ===========
subtotal 13,335,374 subtotal $13,335,374 88.9025%
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch, L.P.
(same as above) 8/31/99 673,843 8/31/99 $673,843
========== ===========
subtotal 673,843 subtotal $673,843 4.4923%
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxx
00 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000 8/31/99 69,124 8/31/99 $69,124 0.4608%
(000) 000-0000 ========== =========
subtotal 69,124 subtotal $69,124
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 1]
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000 65
8/31/99 768,050 8/31/99 $768,050
========== ==========
subtotal 768,050 subtotal $768,050 5.1203%
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxx
0000 Xxxx Xxxxxxx Xxxxx 00
Xxxxx 000
Xxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx
00 Xxxxxx Xxxxx Xxxxx
Xxx Xxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 2]
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000 8/31/99 153,609 8/31/99 $153,609
========= =========
subtotal 153,609 subtotal $153,609 1.0241%
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx
0000 Xxxxxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx [FT 3]
0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx [FT4]
-----------------------------------------------------------------------------------------------------------------------------
Unallocated Pool
-----------------------------------------------------------------------------------------------------------------------------
Total 15,000,000 15,000,000 100% 100
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Capital Capital Capital
Account with Number of Account % of Number Account with
respect to Class A w/r/t Class Class A of Class respect to
Name and Address of Class R Mgmt. Mgmt. A Mgmt Mgmt. B Mgmt Class A Mgmt
Members Units Units Units Units Units Units
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xx 00000
Telecopy: (000) 000-0000
(000) 000-0000
Attention: Avy X. Xxxxx
Xxxxxx X. Xxxx
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners II, L.P.
(same as above)
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch, L.P.
(same as above)
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxx
00 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
(000) 000-0000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 1]
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000 $65 1,100 $1,100 55.00%
Xxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxx
0000 Xxxx Xxxxxxx Xxxxx $35 100 $100 5.00%
Xxxxx 000
Xxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx 000 x000
Xxxxxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx
00 Xxxxxx Xxxxx Xxxxx 000 $100
Xxx Xxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 2]
000 Xxxxx Xxxxxx, 0xx Fllor 100 $100 5.00%
Xxx Xxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx
0000 Xxxxxxx Xxx 50 $50
Xxxxxxxx, Xxxxxxx 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 200 $200
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx [FT 3]
2 Sleepy Hollow 300 $300 15.00% 50 $50
Xxxxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx [FT4] 200 $200
-----------------------------------------------------------------------------------------------------------------------------
Unallocated Pool 200 $200 10.00%
-----------------------------------------------------------------------------------------------------------------------------
Total $100 2,000 $2,000 90% 500 $500
-----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
% of
Class B Capital Account
Name and Address of Mgmt Number of Preferred with respect to % Preferred Total Ending
Members Units Units Preferred Units Units Capital Account
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000 05/15/97 $1,000,000 1,000,000
Xxxxxxx, Xx 00000 10/02/98 $566,113 566,113
Telecopy: (000) 000-0000 7/23/99 $285,713 285,713
(000) 000-0000 =======================================
1,851,826 $1,851,826
100% $28,147,747.00
Attention: Avy X. Xxxxx
Xxxxxx X. Xxxx
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners II, L.P.
(same as above) 8/31/99 921,590 $44,332.00 $13,379,706.00
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch, L.P.
(same as above) 8/31/99 921,590 $877,327.00 $1,551,170.00
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxx
00 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000 $138,887
(000) 000-0000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 1]
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000 $2,311,239
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxx
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx 00.00%
Xxxxxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx
00 Xxxxxx Xxxxx Xxxxx 00.00%
Xxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx [FT 2]
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
$462,245
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx
0000 Xxxxxxx Xxx 10.00%
Xxxxxxxx, Xxxxxxx 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 40.00%
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx [FT 3]
2 Sleepy Hollow 10.00%
Xxxxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx [FT4]
----------------------------------------------------------------------------------------------------------------------------------
Unallocated Pool
----------------------------------------------------------------------------------------------------------------------------------
Total 100% 2,773,485 $2,773,485 100% $45,990,994
----------------------------------------------------------------------------------------------------------------------------------
FT 1 The Investor Units owned by Xxxxx Xxxxx are subject to a Pledge
Agreement to secure payment of promissory notes issued by Xxxxx on May
12, 1997 in the principal amount of $333,333.4, May 20, 1998 in the
principal amount of $180,834, October 2, 1998 in the principal amount
of $238,057, March 1, 1999 in the principal amount of $581,281.75,
July 23, 1999 in the principal amount of $238,092 and on August 31,
1999 in the principal amount of $768,045, all for an aggregate amount
of $2,384,643. The difference between this aggregate balance and the
related Units shown above is due to the capitalization of interest
into principal related to transfers of units but not included as a
Capital Contribution pursuant to the terms of this Agreement.
FT 2 The Investor Units owned by Xxxxx Xxxxx are subject to a Pledge
Agreement to secure payment of promissory notes issued by Xxxxx on May
20, 1998 in the principal amount of $180,834, May 20, 1998 in the
principal amount of $94,352, July 23, 1999 in the principal amount of
$47,620, and August 31, 1999 in the principal amount of $153,615, all
for an aggregate amount of $476,421. The difference between this
aggregate balance and the number of Units shown above is due to the
capitalization of capitalization of interest into principal related to
transfers of units but not included as a Capital Contribution pursuant
to the terms of this Agreement.
FT 3 Xxxxxx Xxxxx has an Option to purchase Class A Investor Units from X.
Xxxxx in an amount equal to .5% of total Class A Investor Units.
FT 4 Xxxxxx Xxxxxxx is no longer an employee of the Company, but as of the
date hereof, the Company has not finalized the repurchase of his 200
Class A Management Units. Upon completion of such repurchase and at
such time as the repurchase price is not in dispute, the 200 Class A
Management Units will be allocated to the Pool.
40
