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EXHIBIT 10.41
LIMITED LIABILITY COMPANY AGREEMENT
OF
US GREENFIBER LLC,
A DELAWARE LIMITED LIABILITY COMPANY
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TABLE OF CONTENTS
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PAGE
ARTICLE I DEFINITIONS.................................................................................1
ARTICLE II GENERAL.....................................................................................7
2.01 Name of the Limited Liability Company................................................................7
2.02 Office of the Limited Liability Company; Agent for Service of Process................................7
2.03 Organization........................................................................................7
2.04 Purposes............................................................................................7
2.05 Members.............................................................................................7
2.06 Term................................................................................................8
2.07 Liability of Members................................................................................8
ARTICLE III CAPITAL CONTRIBUTIONS; ADDITIONAL FINANCING..................................................9
3.01 Capital Accounts....................................................................................9
3.02 Initial Capital Contributions; Assumption of Liabilities.............................................9
3.03 Representations and Warranties.....................................................................11
3.04 Indemnification for Breaches of Representations and Warranties, etc.................................12
3.05 Subsequent Capital Contributions...................................................................12
3.06 Failure to Contribute..............................................................................12
3.07 No Other Contributions; No Withdrawal of or Interest on Capital.....................................14
3.08 Third Party Loans..................................................................................14
ARTICLE IV DISTRIBUTIONS..............................................................................14
4.01 Distribution of Distributable Cash..................................................................14
4.02 Distributions of Distributable Cash from Capital Transactions and Net Proceeds upon Liquidation....14
4.03 Distributions Upon Transfer or Admission............................................................15
4.04 Certain Payments to the Internal Revenue Service Treated as Distributions...........................15
4.05 Distribution of Assets in Kind.....................................................................16
ARTICLE V ALLOCATION OF NET PROFITS AND NET LOSSES....................................................16
5.01 Basic Allocations..................................................................................16
5.02 Regulatory Allocations.............................................................................17
5.03 Allocations Upon Transfer or Admission..............................................................17
ARTICLE VI MANAGEMENT.................................................................................18
6.01 Management of the LLC..............................................................................18
6.02 Approved Budget....................................................................................22
6.03 Contracts with Members, etc........................................................................22
6.04 Binding the LLC....................................................................................23
6.05 Indemnification and Exculpation....................................................................23
6.06 No Solicitation or Hiring of Former Employees.......................................................24
6.07 Non-Competition Agreement..........................................................................24
6.08 Other Activities...................................................................................25
ARTICLE VII FISCAL MATTERS.............................................................................25
7.01 Books and Records..................................................................................25
7.02 Financial Information..............................................................................25
7.03 Bank Accounts......................................................................................26
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7.04 Fiscal Year........................................................................................26
7.05 Tax Matters Partner................................................................................26
7.06 Information........................................................................................26
7.07 Audits.............................................................................................27
7.08 Tax Audits.........................................................................................27
7.09 Confidentiality....................................................................................27
ARTICLE VIII TRANSFERS OF INTERESTS.....................................................................28
8.01 General Restrictions on Transfer...................................................................28
8.02 Right of First Refusal.............................................................................28
8.03 Failure to Fully Exercise Options; Co-Sale..........................................................29
ARTICLE IX OPTION TO SELL OTHER MEMBER'S INTEREST......................................................30
9.01 Option to Sell the Other Member's Interest..........................................................30
9.02 Notification of Offers.............................................................................31
ARTICLE X DISSOLUTION AND LIQUIDATION................................................................31
10.01 Events Causing Dissolution.........................................................................31
10.02 Continuation of the LLC............................................................................31
10.03 Procedures on Dissolution..........................................................................31
10.04 Distributions Upon Liquidation.....................................................................32
10.05 Survival of Certain Provisions.....................................................................32
ARTICLE XI GENERAL PROVISIONS.........................................................................32
11.01 Notices............................................................................................32
11.02 Word Meanings; Schedules and Exhibits...............................................................32
11.03 Binding Provisions.................................................................................33
11.04 Applicable Law.....................................................................................33
11.05 Arbitration........................................................................................33
11.06 Counterparts.......................................................................................34
11.07 Separability of Provisions.........................................................................34
11.08 Article and Section Titles.........................................................................34
11.09 Amendments.........................................................................................34
11.10 Third Party Beneficiaries..........................................................................34
11.11 Certain Ancillary Document Matters; Entire Agreement................................................35
11.12 Offset.............................................................................................35
11.13 Waiver of Partition................................................................................35
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US GREENFIBER LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT of US GreenFiber LLC, a Delaware
limited liability company (the "LLC"), dated as of the 26th day of June, 2000,
by and between the Members (as defined below).
ARTICLE I
DEFINITIONS
The following capitalized terms used in this Agreement shall have the respective
meanings ascribed to them below:
"AAA" has the meaning given it in Section 11.05(a).
"ACT" means the Delaware Limited Liability Company Act, in effect at the time of
the initial filing of the Certificate with the office of the Secretary of State
of the State of Delaware, and as thereafter amended from time to time.
"ADJUSTED CAPITAL ACCOUNT" means, for each Member, such Member's Capital Account
balance increased by such Member's Share of "minimum gain" and of "partner
nonrecourse debt minimum gain" (as determined pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), respectively).
"AFFILIATE" shall mean, with respect to any specified Person, (i) any Person
that directly or indirectly controls, is controlled by, or is under common
control with such specified Person, (ii) any Person that directly or indirectly
controls 50% or more of the outstanding equity securities of the specified
Person or of which the specified Person is directly or indirectly the owner of
50% or more of any class of equity securities, (iii) any Person that is an
officer of, director of, member of, partner in, or trustee of, or serves in a
similar capacity with respect to, the specified Person or of which the specified
Person is an officer, director, partner, member or trustee, or with respect to
which the specified Person serves in a similar capacity, or (iv) any Person that
is a member of the immediate family of the specified Person; provided, however,
that, for the purposes of this Agreement or any Ancillary Document, the LLC
shall not be deemed to be an Affiliate of any Member.
"AGREEMENT" means this Operating Agreement as it may be amended, supplemented,
or restated from time to time.
"ANCILLARY DOCUMENTS" means the U.S. Fiber Assignment Documentation, the
GreenStone Assignment Documentation, and any other agreements, documents or
instruments executed and delivered in connection herewith or therewith.
"APPOINTING AUTHORITY" has the meaning given it in Section 11.05(b).
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"APPROVED BUDGET" means the budget approved by the Board of Managers pursuant to
Section 6.02 below.
"BANKRUPTCY" means the occurrence of any of the following events:
(i) A Member or the LLC makes an assignment for the benefit of
creditors;
(ii) A Member or the LLC files a voluntary petition in bankruptcy;
(iii) A Member or the LLC is adjudged a bankrupt or insolvent, or
has entered against it an order for relief, in any bankruptcy or insolvency
proceeding;
(iv) A Member or the LLC files a petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation;
(v) A Member or the LLC files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against it in any proceeding of this nature;
(vi) A Member or the LLC seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the Member or the LLC or of
all or any substantial part of the Member's or the LLC's properties; or
(vii) 120 days elapse after the commencement of any proceeding
against a Member or the LLC seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, if the proceeding has not been dismissed, or if within 90 days
after the appointment without its consent or acquiescence of a trustee, receiver
or liquidator of the Member or the LLC or of all or any substantial part of the
Member's or the LLC's properties, the appointment is not vacated or stayed, or
within 90 days after the expiration of any such stay, the appointment is not
vacated.
"BOARD OF MANAGERS" means the board of managers of the LLC as more fully
described in Section 6.01(d) below.
"BUSINESS" means the business of the LLC as described in Section 2.04 below.
"BUSINESS DAY" means any day on which banking institutions in the State of North
Carolina are required or permitted by law to be open for business, other than a
Saturday or a Sunday.
"CAPITAL ACCOUNT" means a separate account maintained for each Member and
adjusted in accordance with Treasury Regulations under Section 704 of the Code.
To the extent consistent with such Treasury Regulations, the adjustments to such
accounts shall include the following:
(i) There shall be credited to each Member's Capital Account the
amount of any cash actually contributed by such Member to the capital of the
LLC, the fair market value of any property contributed by such Member to the
capital of the LLC, the amount of liabilities of the LLC assumed by the Member
or to which property distributed to the Member was subject
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and such Member's share of the Net Profits of the LLC and of any items in the
nature of income or gain separately allocated to the Members; and there shall be
charged against each Member's Capital Account the amount of all cash
distributions to such Member, the fair market value of any property distributed
to such Member by the LLC, the amount of liabilities of the Member assumed by
the LLC or to which property contributed by the Member to the LLC was subject
and such Member's share of the Net Losses of the LLC and of any items in the
nature of losses or deductions separately allocated to the Members.
(ii) If the LLC at any time distributes any of its assets in-kind
to any Member, the Capital Account of each Member shall be adjusted to account
for that Member's allocable share of the Net Profits, Net Losses or items
thereof that would have been realized by the LLC had it sold the assets that
were distributed at their respective fair market values (taking Code Section
7701(g) into account) immediately prior to their distribution.
(iii) If elected by the LLC at any time specified in Treasury
Regulation Section 1.704-1(b)(2)(ii)(F), the Capital Account balance of each
Member shall be adjusted to the extent provided under such Treasury Regulation
to reflect the Member's allocable share (as determined under Article V) of the
Net Profits or Net Losses that would be realized by the LLC if it sold all of
its property at its fair market value (taking Code Section 7701(g) into account)
on the day of the adjustment.
(iv) In the event any interest in the LLC is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest.
"CAPITAL CONTRIBUTION" means any contribution by a Member to the capital of the
LLC.
"CAPITAL TRANSACTION" means a sale or other disposition of all or a portion of
the LLC's property in a single transaction or in a series of related
transactions, other than such a sale or disposition in the ordinary course of
the LLC's business, and any refinancing.
"CARRYING VALUE" means, with respect to any asset, the asset's adjusted basis
for federal income tax purposes; PROVIDED, HOWEVER, that (i) the initial
Carrying Value of any asset contributed to the LLC shall be adjusted to equal
its gross fair market value at the time of its contribution and (ii) the
Carrying Values of all assets held by the LLC shall be adjusted to equal their
respective gross fair market values (taking Code Section 7701(g) into account)
upon an adjustment to the Capital Accounts of the Members described in paragraph
(iii) of the definition of "Capital Account." The Carrying Value of any asset
whose Carrying Value was adjusted pursuant to the preceding sentence thereafter
shall be adjusted in accordance with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(g).
"CERTIFICATE" means the certificate of formation of the LLC filed under and
pursuant to the Act with the office of the Secretary of State of the State of
Delaware, as it may, from time to time, be amended in accordance with the Act.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
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"CONSENT" means, subject to the provisions of Section 3.06(c), the mutual
written consent of the Members.
"DEFAULT RATE" means a rate per annum equal to the lesser of (a) 8% plus the
Interest Rate, and (b) the maximum rate permitted by applicable law.
"DELINQUENT MEMBER" has the meaning given it in Section 3.06(a).
"DISPUTE" has the meaning given it in Section 11.05(a).
"DISTRIBUTABLE CASH" means, with respect to any fiscal period, the excess of all
cash receipts of the LLC from any source whatsoever, including normal
operations, sales of assets, proceeds of borrowings, capital contributions of
the Members, proceeds from a Capital Transaction, and any and all other sources
over the sum of the following amounts:
(i) cash disbursements for advertising and promotion expenses,
salaries, employee benefits (including profit-sharing, bonus and similar plans),
fringe benefits, accounting and bookkeeping services and equipment, commodity
costs, costs of inventory, costs of sales of assets, utilities, rental payments
with respect to equipment or real property, management fees and expenses,
insurance, real estate taxes, legal expenses, costs of repairs and maintenance,
and any and all other items which are customarily considered to be "operating
expenses";
(ii) payments of interest, principal and premium and points and
other costs of borrowing under any indebtedness of the LLC, including without
limitation any mortgages or deeds of trust encumbering the real property or
other assets owned or leased by the LLC;
(iii) payments made to purchase inventory or capital assets, and for
capital construction, rehabilitation, acquisitions, alterations and
improvements;
(iv) payments to employees or former employees of the LLC in
connection with any phantom equity or similar bonus plan; and
(v) amounts set aside as reserves for working capital, contingent
liabilities, replacements or for any of the expenditures described in clauses
(i), (ii), (iii) and (iv) above which are deemed by the Board of Managers to be
necessary to meet the current and anticipated future needs of the LLC.
"ENTITY" means any corporation, limited liability company, limited or general
partnership, trust, estate, unincorporated association, governmental agency,
bureau, department or other body, or any other organization or entity.
"FUNDING NOTICE" has the meaning given it in Section 3.05(a).
"GAAP" means United States generally accepted accounting principles consistently
applied.
"GREENSTONE" means GreenStone Industries, Inc., a Delaware corporation.
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"GREENSTONE ASSIGNMENT DOCUMENTATION" means the instruments of assignment made
by GreenStone to the LLC as of the date hereof, as listed hereto on EXHIBIT 1.
"INTEREST RATE" means a rate per annum equal to the lesser of (a) 2% plus the
rate per annum publicly announced by Bank of America in Charlotte, North
Carolina as its prime commercial rate, and (b) the maximum rate permitted by
applicable law.
"INVESTED CAPITAL" means, at any point in time, for any Member, the excess of
(i) the aggregate amount of the capital contributed to the LLC by such Member
over (ii) the aggregate amount distributed (or deemed distributed) to such
Member pursuant to Section 4.01(b) or 4.02(c).
"LENDING MEMBER" has the meaning given it in Section 3.06(a).
"LIQUIDATOR" has the meaning given it in Section 10.03.
"LLC" has the meaning given it in the introductory paragraph hereof.
"LLC ACCOUNT" means a financial institution account established by or on behalf
of the LLC and identified on SCHEDULE B.
"MEMBER" means any Person executing this Agreement as of the date of this
Agreement as a member or hereafter admitted to the LLC as a member as provided
in this Agreement, but such term does not include any Person which has ceased to
be a member of the LLC.
"MEMBERSHIP INTEREST" means all of a Member's interest in the LLC, including the
rights to receive allocations and distributions, to designate officers and
managers of the LLC, to vote, and to consent or approve any matter, and any
other rights of a Member as specified in this Agreement or the Act.
"NET PROFITS" AND "NET LOSSES" mean the taxable income or loss, as the case may
be, for a period as determined in accordance with Code Section 703(a) computed
with the following adjustments:
(i) Items of gain, loss, and deduction shall be computed based
upon the Carrying Values of the LLC's assets (in accordance with Treasury
Regulation Sections 1.704-1(b)(2)(iv)(g) and 1.704-3(d)) rather than upon the
assets' adjusted bases for federal income tax purposes;
(ii) Any tax-exempt income received by the LLC shall be included as
an item of gross income;
(iii) The amount of any adjustments to the Carrying Values of any
assets of the LLC pursuant to Code Section 743 shall not be taken into account;
(iv) Any expenditure of the LLC described in Code Section
705(a)(2)(B) (including any expenditures treated as being described in Code
Section 705(a)(2)(B) pursuant to Treasury Regulations under Code Section 704(b))
shall be treated as a deductible expense;
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(v) The amount of items of income, gain, loss or deduction
specially allocated to any Members pursuant to Section 5.02 shall not be
included in the computation; and
(vi) The amount of any items of Net Profits or Net Losses deemed
realized pursuant to paragraphs (ii) and (iii) of the definition of "Capital
Account" shall be included in the computation.
"PERCENTAGE INTEREST" means, with respect to each Member, the percentage set
forth opposite such Member's name on SCHEDULE A.
"PERSON" means any individual or Entity.
"PRESIDENT" means the person occupying the office of the President (as provided
in Section 6.01(e)(ii) of the LLC at any time or from time to time.
"PRIORITY RETURN" means, at any point in time, for any Member, that amount
which, when considered together with all amounts previously distributed (or
deemed distributed) to such Member pursuant to Section 4.01(a) or 4.02(b), will
result in such Member having received a 10% annual return, compounded annually,
on such Member's weighted average Invested Capital.
"THIRD PARTY COSTS" means reasonable out-of-pocket costs and expenses incurred
by the relevant Person and its Affiliates (other than travel and related
expenses incurred by employees of such Person and its Affiliates) that have been
or will be paid to Persons who are not Affiliates of such Person.
"TRANSFER" and any grammatical variation thereof means any sale, exchange,
redemption, assignment, conveyance, license, sublicense, encumbrance,
hypothecation, gift, pledge, grant of a security interest, or other transfer,
disposition or alienation in any way (whether voluntarily, involuntarily or by
operation of law), including any assignment or distribution resulting from
merger, consolidation or other business combination, death, incompetency,
Bankruptcy, liquidation or dissolution; provided, however, that "Transfer" shall
not include (i) a bona fide pledge by a Member of its interest in the LLC to one
or more financial institutions in connection with a credit facility obtained by
the Member, as part of a general pledge of the Member's assets, or (ii) a
transfer of a Member's interest to a directly or indirectly wholly-owned
subsidiary of such Member.
"U.S. FIBER" means U.S. Fiber, Inc., a North Carolina corporation.
"U.S. FIBER ASSIGNMENT DOCUMENTATION" means the instruments of assignment made
by U.S. Fiber to the LLC as of the date hereof, as listed hereto on EXHIBIT 2.
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ARTICLE II
GENERAL
2.01 NAME OF THE LIMITED LIABILITY COMPANY. The name of the LLC is "US
GreenFiber LLC". The name of the LLC may be changed at any time or from time to
time by Consent of the Members.
2.02 OFFICE OF THE LIMITED LIABILITY COMPANY; AGENT FOR SERVICE OF PROCESS. The
address of the principal office of the LLC is:
809 W. Hill Street
Charlotte, N.C. 28208
and the name and address of the resident agent for service of process on the LLC
in the State of Delaware for purposes of Section 18-104 of the Act is:
Corporation Trust Center
1209 Orange Street
Wilmington, DE
The Board of Managers may cause the LLC to establish places of business of the
LLC within and without the State of Delaware, as and when required by the LLC's
business and in furtherance of its purposes set forth in Section 2.04 hereof,
and may appoint agents for service of process in all jurisdictions in which the
LLC shall conduct business. The President may cause the LLC to change from time
to time its resident agent for service of process, or the location of its
principal office or of its office in the State of Delaware where the LLC
maintains its records as required by the Act; provided, however, that the
President shall cause the LLC to promptly notify all Members in writing of any
such change.
2.03 ORGANIZATION. The President shall cause to be filed such certificates and
documents as may be necessary or appropriate to comply with the Act and any
applicable requirements for the operation of a limited liability company in
accordance with the laws of the State of Delaware and any other jurisdictions in
which the LLC shall conduct business, and shall continue to do so for so long as
the LLC conducts business therein.
2.04 PURPOSES. The purposes of the LLC are to engage in the cellulose fibers
business, including the manufacturing, marketing and selling of insulation,
mulch and other cellulose-based products, and to engage in any and all lawful
activities directly or indirectly related to or incidental to the foregoing (the
"Business"). The LLC may also, as appropriate, consider the use of alternative
fibers.
2.05 MEMBERS.
(a) The initial Members of the LLC are identified on SCHEDULE A.
Additional Members may be admitted to the LLC pursuant to and in accordance with
Article VIII hereof, or otherwise with the prior Consent of the Members. In
connection with any such admission, this Agreement (including SCHEDULE A) shall
be amended to reflect each additional Member, its
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Capital Contribution, if any, its Percentage Interest, any other rights and
obligations of such additional Member, and any other changes desired by the
Members to be made in connection with the admission of such additional Member.
(b) No Member shall have any right to resign, withdraw or retire from the
LLC except as may be otherwise expressly provided herein (including upon a
Transfer of all of such Member's Membership Interest in accordance with the
provisions of Article VIII, or by operation of the provisions of Article IX),
and any attempt by a Member to do so shall be of no force or effect and null and
void AB INITIO. The Members expressly agree that, if a Member resigns, withdraws
or retires from the LLC in violation of the foregoing covenant, such Member (i)
shall be immediately liable to the LLC for the full amount of all Capital
Contributions required to be made by such Member hereunder excluding all Capital
Contributions previously made by such Member (notwithstanding the fact that such
Member may not otherwise be obligated hereunder to make all or a portion of such
Capital Contributions until a later date), and (ii) shall be liable to the LLC
for damages to the full extent permitted by the Act.
(c) No Member may be expelled or required to resign, withdraw or retire
from the LLC (except upon a Transfer of all of such Member's Membership Interest
in accordance with the provisions of Article VIII, or by operation of the
provisions of Article IX).
2.06 TERM. The LLC commenced upon the effectiveness of the Certificate and
shall have a perpetual existence, unless and until it is dissolved and
terminated in accordance with Article X.
2.07 LIABILITY OF MEMBERS. The liability of each Member for the losses, debts
and obligations of the LLC shall be limited to such Member's Capital
Contributions actually made or actually then due to the LLC by such Member
pursuant to the terms hereof; provided, however, that under applicable law, a
Member may under certain circumstances be liable to the LLC to the extent of
previous distributions made to such Member in the event that the LLC does not
have sufficient assets to discharge its liabilities. Without limiting the
foregoing, (i) no Member, in its capacity as a Member, shall have any liability
or obligation to restore any negative balance in its Capital Account, and (ii)
the failure of the LLC to observe any formalities or requirements relating to
exercise of its powers or management of its business or affairs under this
Agreement or the Act shall not be grounds for imposing personal liability on any
Member for liabilities of the LLC.
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ARTICLE III
CAPITAL CONTRIBUTIONS; ADDITIONAL FINANCING
3.01 CAPITAL ACCOUNTS. For each Member (and each permitted assignee), the LLC
shall establish and maintain a separate Capital Account.
3.02 INITIAL CAPITAL CONTRIBUTIONS; ASSUMPTION OF LIABILITIES. The Members
agree as follows:
(a) On or before the Closing (as defined in Section 3.02(f) below), U.S.
Fiber shall contribute to the capital of the LLC all of its assets, properties,
claims, rights and interests of U.S. Fiber which exist on the Closing Date, of
every kind and nature and description, whether tangible or intangible, real,
personal or mixed, to the extent such assets are used by U.S. Fiber exclusively
in the cellulose fibers business, including without limitation the assets set
forth in EXHIBIT 3-A attached hereto (the "U.S. Fiber Assets"). The U.S. Fiber
Assets shall be free and clear of all liens, claims and security interests,
subject only to the U.S. Fiber Assumed Liabilities.
(b) At the Closing, the LLC shall assume and agree to perform, pay and
discharge the liabilities of U.S. Fiber described on EXHIBIT 3-B attached hereto
(the "U.S. Fiber Assumed Liabilities").
(c) On or before the Closing, GreenStone shall contribute to the capital
of the LLC all of its assets, properties, claims, rights and interests of
GreenStone which exist on the Closing Date, of every kind and nature and
description, whether tangible or intangible, real, personal or mixed, to the
extent such assets are used by GreenStone exclusively in the cellulose fibers
business, including without limitation the assets set forth in EXHIBIT 4-A
attached hereto (the "GreenStone Assets"). The GreenStone Assets shall be free
and clear of all liens, claims and security interests, subject only to the
GreenStone Assumed Liabilities.
(d) At the Closing, the LLC shall assume and agree to perform, pay and
discharge the liabilities of GreenStone described on EXHIBIT 4-B attached hereto
(the "GreenStone Assumed Liabilities").
(e) At the Closing, each of U.S. Fiber and GreenStone shall contribute
$2,500,000 in cash to the capital of the LLC by wire transfer of immediately
available funds.
(f) The obligation of a Member to consummate the transactions described in
this Section 3.02 (the "Closing") shall be subject to the satisfaction or waiver
of the following conditions. The Closing shall occur at a time and place which
is mutually acceptable to the Members within 10 business days following the
satisfaction or waiver of all such conditions. In the event that the Closing
does not take place within 120 days after the date of this Agreement, then at
the written election of either Member this Agreement shall be void and of no
further force or effect, and neither party shall have any liability to the
other.
(i) CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE OTHER
MEMBER; COMPLIANCE WITH COVENANTS AND OBLIGATIONS. The representations and
warranties of the other
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Member set forth in this Agreement shall be true on and as of the Closing as
though such representations and warranties were made on and as of such date,
except for any changes permitted by the terms hereof or consented to in writing
by the Member. The other Member shall have performed and complied with all
terms, conditions, covenants, obligations, agreements and restrictions required
by this Agreement to be performed or complied with by it prior to or at the
Closing.
(ii) CORPORATE PROCEEDINGS. All corporate and other proceedings
required to be taken on the part of such Member and the other Member to
authorize or carry out this Agreement and to convey, assign, transfer and
deliver the Assets to be transferred by it shall have been taken.
(iii) GOVERNMENTAL APPROVALS. All governmental agencies,
departments, bureaus, commissions and similar bodies, the consent, authorization
or approval of which is necessary under any applicable law, rule, order or
regulation for the consummation by the Members of the transactions contemplated
by this Agreement shall have consented to, authorized, permitted or approved
such transactions.
(iv) CONSENTS OF LENDERS, LESSORS AND OTHER THIRD PARTIES. All
Members shall have received all requisite consents and approvals of all lenders,
lessors and other third parties whose consent or approval is required in order
for the Members to consummate the transactions contemplated by this Agreement.
(v) ADVERSE PROCEEDINGS. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the LLC to own or use the U.S. Fiber Assets or the GreenStone
Assets after the Closing.
(vi) CLOSING DELIVERIES. The Member and the LLC shall have received
at or prior to the Closing from the other Member:
(A) the other Member's Assignment Documentation;
(B) such certificates of the other Member's officers and such
other documents evidencing satisfaction of the conditions specified in this
Section 3.02(f) as the Buyer shall reasonably request;
(C) certificates of the Secretary of the other Member
attesting to the incumbency of the other Member's officers, respectively, and
the authenticity of the resolutions authorizing the transactions contemplated by
the Agreement;
(D) a title policy or policies (together, the "Title Policy")
from one or more title companies reasonably acceptable to the LLC (the "Title
Insurer"), in form and substance reasonably satisfactory to the LLC covering the
real estate being transferred by the other Member;
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(E) such affidavits and indemnities executed by the other
Member as the Title Insurer may reasonably require in order to omit from the
Title Policy all exceptions for (i) judgments, bankruptcies or other returns
against persons or entities whose names are the same as or similar to the other
Member; (ii) parties in possession; (iii) mechanics' liens; and (iv) hazardous
waste (if applicable). It shall be the obligation of the other Member to obtain
the Title Policy and the cost of the Title Policy shall be borne by the other
Member; and
(F) such other documents, instruments or certificates as the
Member may reasonably request.
(g) At any time and from time to time after the Closing, at GreenStone's
request and without further consideration, U.S. Fiber promptly shall execute and
deliver such instruments of sale, transfer, conveyance, assignment and
confirmation, and take such other action, as GreenStone may reasonably request
to more effectively transfer, convey and assign to the LLC, and to confirm the
LLC's title to, all of the U.S. Fiber Assets, to put the LLC in actual
possession and operating control thereof, to assist the LLC in exercising all
rights with respect thereto and to carry out the purpose and intent of this
Agreement. At any time and from time to time after the Closing, at U.S. Fiber's
request and without further consideration, GreenStone promptly shall execute and
deliver such instruments of sale, transfer, conveyance, assignment and
confirmation, and take such other action, as U.S. Fiber may reasonably request
to more effectively transfer, convey and assign to the LLC, and to confirm the
LLC's title to, all of the GreenStone Assets, to put the LLC in actual
possession and operating control thereof, to assist the LLC in exercising all
rights with respect thereto and to carry out the purpose and intent of this
Agreement.
3.03 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and warrants
to the other Member, as of the date hereof, that:
(a) such Member is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and is
duly qualified and in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification;
(b) such Member has full corporate power and authority to enter into this
Agreement and each Ancillary Document to which such Member is a party and to
perform its obligations hereunder and thereunder;
(c) the execution, delivery and performance of this Agreement and each
Ancillary Document to which such Member is a party have been duly authorized by
all necessary corporate action on the part of such Member;
(d) this Agreement and each Ancillary Document to which such Member is a
party have been duly executed and delivered by such Member;
(e) the authorization, execution, delivery and performance by such Member
of this Agreement and each Ancillary Document to which such Member is a party do
not conflict with any other agreement or arrangement to which such Member is a
party or by which it is bound;
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(f) this Agreement and each Ancillary Document to which such Member is a
party constitute the valid, binding and enforceable agreements of such Member;
and
(g) each of the representations and warranties set forth on EXHIBIT 5
attached hereto is true and correct on the date hereof.
3.04 INDEMNIFICATION FOR BREACHES OF REPRESENTATIONS AND WARRANTIES, ETC. Each
of the Members hereby agrees to indemnify the other Member as and to the extent
set forth in EXHIBIT 6 attached hereto.
3.05 SUBSEQUENT CAPITAL CONTRIBUTIONS.
(a) In the event of a Funding Shortfall (as defined below), the President
may, by notice given to each Member (a "Funding Notice"), request the Members to
make additional Capital Contributions to the LLC. Each Member shall, not later
than five Business Days after the date of the relevant Funding Notice (or, if a
later date is specified for the making of the relevant Capital Contributions in
such Funding Notice, not later than such date), contribute to the LLC its
Percentage Interest of the aggregate amount of Capital Contributions requested
by such Funding Notice, in cash by wire transfer of immediately available funds
to the account specified in such Funding Notice unless otherwise set forth in
such Funding Notice. For purposes hereof, a "Funding Shortfall" means the amount
by which the sum of the cash then held by the LLC and the cash anticipated in
the Approved Budget to be generated by the LLC over the next succeeding
six-month period is less than the cash anticipated in the Approved Budget to be
used by the LLC over such period and otherwise reasonably required by the LLC to
pay expenditures actually incurred.
(b) Notwithstanding anything to the contrary herein, the provisions of
this Section 3.05 are not intended to, and shall not, be interpreted, construed
or implied to create any rights in favor of any third party.
3.06 FAILURE TO CONTRIBUTE.
(a) If a Member does not timely contribute all or any portion of a Capital
Contribution required to be made by such Member pursuant to Section 3.02 or
Section 3.05(a), the President shall cause the LLC to exercise, on notice to
such Member (the "Delinquent Member"), one or more of the following remedies:
(i) taking such action (including arbitration and enforcement
proceedings) as the President may deem appropriate to obtain payment by the
Delinquent Member of the portion of the Delinquent Member's Capital Contribution
that is in default, together with interest thereon at the Default Rate from the
date that the Capital Contribution was due until the date that it is made, all
at the cost and expense of the Delinquent Member;
(ii) at the request of the other Member (the "Lending Member"),
permitting the Lending Member to advance the portion of the Delinquent Member's
Capital Contribution that is in default, with the following results:
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(A) the sum advanced shall constitute a loan from the Lending
Member to the Delinquent Member and a Capital Contribution of that sum to the
LLC by the Delinquent Member pursuant to the applicable provisions of this
Agreement,
(B) the principal balance of such loan and all accrued unpaid
interest thereon shall be due and payable in full on the fifth Business Day
after written demand therefor by the Lending Member to the Delinquent Member,
(C) the amount loaned shall bear interest at the Default Rate
from the date on which the advance is deemed made until the date that the loan,
together with all interest accrued thereon, is repaid to the Lending Member,
(D) all distributions from the LLC that otherwise would be
made to the Delinquent Member (whether before or after dissolution of the LLC)
instead shall be paid to the Lending Member until the loan and all interest
accrued thereon have been paid in full to the Lending Member (with payments
being applied first to accrued and unpaid interest and then to principal),
(E) the payment of the loan and interest accrued thereon shall
be secured by a security interest in the Delinquent Member's Membership
Interest, as more fully set forth in Section 3.06(b), and
(F) the Lending Member shall have the right, in addition to
the other rights and remedies granted to it pursuant to this Agreement or
available to it at law or in equity, to take any action (including court
proceedings) that the Lending Member may deem appropriate to obtain payment by
the Delinquent Member of the loan and all accrued and unpaid interest thereon,
at the cost and expense of the Delinquent Member;
(iii) exercising the rights of a secured party under the Uniform
Commercial Code of the State of Delaware, as more fully set forth in Section
3.06(b); or
(iv) exercising any other rights and remedies available at law or
in equity.
(b) Each Member grants to the LLC, and to each Lending Member with respect
to any loans made by the Lending Member to such Member as a Delinquent Member
pursuant to Section 3.06(a)(ii), as security, equally and ratably, for the
payment of all Capital Contributions that such Member has agreed to make and the
payment of all loans and interest accrued thereon made by the Lending Member to
such Member as a Delinquent Member pursuant to Section 3.06(a)(ii), a security
interest in and a general lien on its Membership Interest and the proceeds
thereof, all under the Uniform Commercial Code of the State of Delaware. On any
default in the payment of a Capital Contribution or in the payment of such a
loan or interest accrued thereon, the LLC or the Lending Member, as applicable,
shall be entitled to all the rights and remedies of a secured party under the
Uniform Commercial Code of the State of Delaware with respect to the security
interest granted in this Section 3.06(b). Each Member shall execute and deliver
to the LLC and the other Member all financing statements and other instruments
that the President or the Lending Member, as applicable, may request to
effectuate and carry out the preceding provisions of this Section 3.06(b). At
the option of the President or the Lending Member, this Agreement or a carbon,
photographic, or other copy hereof may serve as a financing statement.
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(c) In addition to the remedies which may be exercised by the LLC as set
forth in Section 3.06(a), if a Member becomes, and for so long as such Member
remains, a Delinquent Member, such Delinquent Member may not initiate the
procedures contemplated by Article IX. For the purposes of this Section 3.06(c),
if the LLC exercises the remedies set forth in Section 3.06(a)(ii) and the
Lending Member advances the portion of the Delinquent Member's Capital
Contribution that is in default as set forth therein, the Delinquent Member
shall not cease to be such until the loan to the Delinquent Member arising by
reason of such advance, together with interest accrued thereon, is repaid in
full to the Lending Member.
3.07 NO OTHER CONTRIBUTIONS; NO WITHDRAWAL OF OR INTEREST ON CAPITAL. Except as
otherwise provided in this Article III, no Member shall be obligated or
permitted to contribute any additional capital to the LLC. No interest shall
accrue on any Capital Contributions, and no Member shall have the right to
withdraw or to be repaid any Capital Contribution made by it or to receive any
other payment in respect of its Membership Interest, including as a result of
the withdrawal or resignation of such Member from the LLC (whether in violation
of Section 2.05(b) or otherwise), except as specifically provided in this
Agreement.
3.08 THIRD PARTY LOANS. In the event that the LLC requires additional funds to
carry out its purposes, to conduct its business and affairs, or to meet its
obligations, or to make any expenditure authorized by this Agreement, the LLC
may borrow funds from such Persons, and on such terms and conditions, as may be
approved by the President or, to the extent such approval is required by the
provisions of Section 6.01(b), by the Board of Managers.
ARTICLE IV
DISTRIBUTIONS
4.01 DISTRIBUTION OF DISTRIBUTABLE CASH. Distributable Cash, other than
Distributable Cash arising from Capital Transactions or constituting net
proceeds upon liquidation of the LLC, shall be distributed to the Members, at
such times and in such amounts as the Board of Managers may approve (it being
acknowledged that the Board of Managers will be instructed that it is the desire
of the Members that Distributable Cash be distributed rather than retained by
the LLC for extended periods), as follows:
(a) First, to the Members, in proportion to their respective amounts of
Priority Return, until the Priority Return of each Member has been reduced to
zero;
(b) Second, to the Members, in proportion to their respective amounts of
Invested Capital, until the Invested Capital of each Member has been reduced to
zero; and
(c) The balance, if any, to the Members in accordance with their
Percentage Interests.
4.02 DISTRIBUTIONS OF DISTRIBUTABLE CASH FROM CAPITAL TRANSACTIONS AND NET
PROCEEDS UPON LIQUIDATION. Distributable Cash arising from Capital Transactions
or constituting net proceeds upon liquidation of the LLC, shall be distributed
to the Members as follows:
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(a) First, to all Members with positive Adjusted Capital Account balances
(after such balances have been adjusted to reflect all debits and credits
required by applicable Treasury Regulations under Section 704(b) of the Code for
all events through and including the Capital Transaction or the distribution in
liquidation of the LLC, as the case may be) in proportion to and to the extent
of such positive balances;
(b) Second, to the Members, in proportion to their respective amounts of
Priority Return, until the Priority Return of each Member has been reduced to
zero;
(c) Third, to the Members, in proportion to their respective amounts of
Invested Capital, until the Invested Capital of each Member has been reduced to
zero; and
(d) The balance, if any, to the Members in accordance with their
Percentage Interests.
Amounts distributed pursuant to paragraph (a) above shall be considered to have
been distributed pursuant to paragraphs (b) through (e) (as applicable) to the
extent that they would have been distributed pursuant to paragraphs (b) through
(e) had paragraph (a) not been contained in this Agreement.
4.03 DISTRIBUTIONS UPON TRANSFER OR ADMISSION. In the event that a Member
acquires an interest in the LLC either by transfer from another Member or by
acquisition from the LLC, an equal portion of the Distributable Cash (other than
Distributable Cash from a Capital Transaction) of the LLC for the year in which
such acquisition occurs shall be allocated to each day of such year, and such
Distributable Cash so allocated to the portion of the year prior to the date of
the acquisition of the interest in the LLC by the Member shall be distributed
among the Members without giving effect to such acquisition, and such
Distributable Cash so allocated to the portion of the year from and after the
date of the acquisition of such interest shall be distributed among the Members
by giving effect to such acquisition. Distributable Cash from a Capital
Transaction or upon the liquidation of the LLC shall be distributed to the
Members based upon the actual ownership of interests in the LLC on the date of
the event giving rise to such Distributable Cash.
4.04 CERTAIN PAYMENTS TO THE INTERNAL REVENUE SERVICE TREATED AS DISTRIBUTIONS.
(a) For purposes of this Section 4.04, the Board of Managers may assume
that any Member who fails to provide to the Board of Managers or the Treasurer
satisfactory evidence of its tax status for United States federal income tax
purposes is a foreign person taxable as a corporation.
(b) Notwithstanding anything to the contrary herein, to the extent that
the LLC is required, or elects, pursuant to applicable law, either (i) to pay
tax (including estimated tax) on a Member's allocable share of LLC items of
income or gain, whether or not distributed, or (ii) to withhold and pay over to
the tax authorities any portion of a distribution otherwise distributable to a
Member, the Board of Managers or Treasurer may pay over such tax or such
withheld amount to the tax authorities, and such amount shall be treated as a
distribution to such Member at the time it is paid to the tax authorities.
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4.05 DISTRIBUTION OF ASSETS IN KIND. No Member shall have the right to require
any distribution of any assets of the LLC in kind. If any assets of the LLC are
distributed in kind, such assets shall be distributed on the basis of their fair
market value as determined by the Board of Managers. Any Member entitled to any
interest in such assets shall, unless otherwise determined by the Board of
Managers, receive separate assets of the LLC and not an interest as a
tenant-in-common with other Members so entitled in any asset being distributed.
ARTICLE V
ALLOCATION OF NET PROFITS AND NET LOSSES
5.01 BASIC ALLOCATIONS.
(a) Except as provided in Sections 5.02 below (which shall be applied
first), Net Profits of the LLC for any relevant period shall be allocated as
follows:
(i) First, to any Members having negative Adjusted Capital Account
balances, in proportion to and to the extent of such negative balances; and
(ii) The balance, if any, to the Members in such proportions and in
such amounts as would result in the Adjusted Capital Account balance of each
Member equaling, as nearly as possible, such Member's share of the then LLC
Capital determined by calculating the amount the Member would receive if an
amount equal to the LLC Capital were distributed to the Members in accordance
with the provisions of Section 4.02 hereof, other than clause (a) thereof.
(b) Except as provided in Sections 5.02 below (which shall be applied
first), Net Losses of the LLC for any relevant period shall be allocated among
the Members as follows:
(i) First, to each Member with a positive Adjusted Capital Account
balance, in the amount of such positive balance; provided, however, that if the
amount of Net Losses to be allocated is less than the sum of the Adjusted
Capital Account balances of all Members having positive Adjusted Capital Account
balances, then the Net Losses shall be allocated to the Members in such
proportions and in such amounts as would result in the Adjusted Capital Account
balance of each Member equaling, as nearly as possible, such Member's share of
the then LLC Capital determined as set forth in Section 5.01(a) above; and
(ii) The balance, if any, to the Members in accordance with their
Percentage Interests.
(c) If the amount of Net Profits allocable to the Members pursuant to
Section 5.01(a)(ii) or the amount of Net Losses allocable to them pursuant to
Section 5.01(b)(i) is insufficient to allow the Adjusted Capital Account balance
of each Member to equal such Member's share of the LLC Capital, such Net Profits
or Net Losses shall be allocated among the Members in such a manner as to
decrease the differences between the Members' respective Adjusted Capital
Account balances and their respective shares of the LLC Capital in proportion to
such differences.
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(d) Allocations of Net Profits and Net Losses provided for in this Section
5.01 shall generally be made as of the end of the fiscal year of the LLC;
PROVIDED, HOWEVER, that allocations of items of Net Profits and Net Losses
described in clause (vi) of the definition of "Net Profits" and "Net Losses"
shall be made at the time deemed realized as described in the definition of
"Capital Account."
5.02 REGULATORY ALLOCATIONS. Notwithstanding the provisions of Section 5.01
above, the following allocations of Net Profits, Net Losses and items thereof
shall be made in the following order of priority:
(a) Items of income or gain (computed with the adjustments contained in
paragraphs (i), (ii) and (iii) of the definition of "Net Profits and Net
Losses") for any taxable period shall be allocated to the Members in the manner
and to the minimum extent required by the "minimum gain chargeback" provisions
of Treasury Regulation Section 1.704-2(f) and Treasury Regulation Section
1.704-2(i)(4).
(b) All "nonrecourse deductions" (as defined in Treasury Regulation
Section 1.704-2(b)(1)) of the LLC for any year shall be allocated to the Members
in accordance with their respective Percentage Interests; provided, however,
that nonrecourse deductions attributable to "partner nonrecourse debt" (as
defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated to the
Members in accordance with the provisions of Treasury Regulation Section
1.704-2(i)(1).
(c) Items of income or gain (computed with the adjustments contained in
paragraphs (i), (ii) and (iii) of the definition of "Net Profits and Net
Losses") for any taxable period shall be allocated to the Members in the manner
and to the extent required by the "qualified income offset" provisions of
Treasury Regulation Section 1.704-1(b)(2)(ii)(D).
(d) In no event shall Net Losses of the LLC be allocated to a Member if
such allocation would cause or increase a negative balance in such Member's
Adjusted Capital Account (determined for purposes of this Section 5.02(d) only,
by increasing the Member's Adjusted Capital Account balance by the amount the
Member is obligated to restore to the LLC pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(c).
(e) Except as otherwise provided herein or as required by Code Section
704, for tax purposes, all items of income, gain, loss, deduction or credit
shall be allocated to the Members in the same manner as are Net Profits and Net
Losses; provided, however, that if the Carrying Value of any property of the LLC
differs from its adjusted basis for tax purposes, then items of income, gain,
loss, deduction or credit related to such property for tax purposes shall be
allocated among the Members so as to take account of the variation between the
adjusted basis of the property for tax purposes and its Carrying Value in the
manner provided for under Code Section 704(c).
5.03 ALLOCATIONS UPON TRANSFER OR ADMISSION. In the event that a Member
acquires an interest in the LLC either by Transfer from another Member or by
acquisition from the LLC, the LLC shall close its books as of the date of the
acquisition and (i) Net Profits and Net Losses and items thereof computed for
the portion of the year ending on the date of the acquisition shall be
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allocated among the Members without regard to such acquisition, and (ii) Net
Profits and Net Losses and items thereof computed for the portion of the year
commencing on the day following the date of the acquisition shall be allocated
among the Members taking into account such acquisition. For purposes of
determining the date on which the acquisition occurs, the LLC may make use of
any convention allowable under Section 706(d) of the Code.
ARTICLE VI
MANAGEMENT
6.01 MANAGEMENT OF THE LLC.
(a) BOARD OF MANAGERS. The business and affairs of the LLC shall be
managed by or under the direction of a Board of Managers, who may exercise all
of the powers of the LLC (including, without limitation, as set forth in Section
6.01(b), but subject to the provisions of Section 6.01(c) except as otherwise
provided by law or this Agreement). All management and other responsibilities
not specifically reserved to the Members in this Agreement shall be vested in
the Board of Managers, and the Members shall have no voting rights except as
specifically provided in this Agreement or required by non-waivable provisions
of applicable law. In the event of a vacancy on the Board of Managers, the
remaining Managers, except as otherwise provided by law, may exercise the powers
of the full Board until the vacancy is filled.
(b) ACTIONS REQUIRING THE APPROVAL OF THE BOARD OF MANAGERS. Without
limiting the foregoing Section 6.01(a), the LLC shall not, without the approval
of the Board of Managers, engage in or undertake any of the following actions or
activities:
(i) granting any wage or salary increases to any officer of the
LLC or entering into any employment agreements or severance arrangements with
any officer or other employee of the LLC;
(ii) causing or permitting the LLC to sell or otherwise dispose of
or acquire any real estate;
(iii) causing or permitting the LLC to make, or permitting to exist,
any pledge, mortgage or otherwise encumbrance on any assets of the LLC, other
than arising solely out of capital or operating leases for the purchase or use
of equipment (provided that the aggregate fair market value or book value of any
equipment so purchased or used pursuant to such leases does not exceed
$100,000);
(iv) causing or permitting the LLC to make any capital expenditure,
or to acquire any businesses (whether by assets acquisition, merger or
otherwise), except as set forth in the Approved Budget in which such expenditure
or acquisition is to be made, or incurring any other obligations, or making any
other expenditures, in any period in excess of the Approved Budget for such
period;
(v) causing or permitting the LLC to enter into any contract or
agreement with a term in excess of three years or involving payments by or to
the LLC in excess of $1,000,000
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over the term of such contract or agreement (taking into account any permitted
renewals or extensions thereof);
(vi) except as set forth in clause (i) above, causing or permitting
the LLC to incur any indebtedness for borrowed money, or to guarantee any
obligation of any other person or entity;
(vii) providing loans to any third party, or guarantees or otherwise
extend credit to or for any other party;
(viii) making any election under the Internal Revenue Code of 1986,
as amended, with respect to the tax position of the LLC, unless such power has
been previously delegated by the Board of Managers to the LLC;
(ix) appointing, removing or otherwise changing any officer of the
LLC;
(x) engaging in any business other than as set forth in Section
2.04;
(xi) subject to the last sentence of this Section 6.01(b), causing
or permitting the LLC to initiate any litigation, or to enter into any
settlement agreement in connection with any litigation or regulatory proceeding
involving the payment by the LLC of $100,000 or more pursuant to such
settlement, or to enter into any settlement agreement brought by any
governmental authority against the LLC under OSHA or environmental laws;
(xii) causing or permitting the LLC to cancel, amend or restate, or
relinquish any material rights under, any contract or agreement of the kind
described in clause (v) above to which the LLC is a party;
(xiii) causing or permitting the LLC to enter into or engage in any
transaction, contract, agreement or arrangement with a Member, Manager, officer
of the LLC, or an Affiliate of any of the foregoing (provided, however, that any
actions with respect to the enforcement of any such transaction, contract,
agreement or arrangement shall be in the sole discretion and control of the
members of the Board of Managers not affiliated with the Member which is, or
whose representative is a Manager or officer which is, party to any such
transaction, contract, agreement or arrangement);
(xiv) causing or permitting the LLC to enter into or engage in any
transaction, contract, agreement or arrangement that (A) is unrelated to the
LLC's purposes (as set forth in Section 2.04), (B) otherwise contravenes the
Certificate or this Agreement, (C) would make it impossible to carry on the
ordinary business of the LLC, or (D) is not apparently for the carrying on of
the business of the LLC in the usual way; and
(xv) causing or permitting the LLC to become Bankrupt or to
commence liquidation (but this provision shall not be construed to require any
Member to ensure the profitability or solvency of the LLC).
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Notwithstanding any other provision of this Agreement, each Member shall have
the right to take any action on behalf of the LLC as may be reasonably deemed
necessary by such Member to enforce the obligations of the other Member to the
LLC.
(c) ACTIONS REQUIRING THE CONSENT OF THE MEMBERS. The LLC shall not,
without the Consent of the Members, engage in or undertake any of the following
actions or activities:
(i) causing or permitting the LLC (A) to be a party to a merger,
consolidation, share exchange, interest exchange or other transaction authorized
by or subject to the provisions of Section 18-209 of the Act, or (B) to convert
into any other type of entity; or
(ii) admitting any person as a Member of the LLC, or purchasing or
redeeming the interest of any Member, other than as expressly set forth in this
Agreement.
(d) GOVERNANCE ISSUES REGARDING MANAGERS.
(i) The number of Managers who shall constitute the whole Board of
Managers shall be four (4), two (2) of whom shall be designated by U.S. Fiber
and two (2) of whom shall be designated by GreenStone. Managers need not be
Members of the LLC.
(ii) Each Manager shall hold office until his death, resignation or
removal in accordance with the provisions hereof.
(iii) Any Manager may resign by delivering his written resignation
to (A) the President or any other officer of the LLC designated by the Board of
Managers to receive such resignations, and (B) each Member. Such resignation
shall be effective upon receipt unless it is specified to be effective at some
other time or upon the happening of some other event.
(iv) Any Manager may be removed at any time, with or without cause,
by the Member which had designated such person as Manager as set forth in
Section 6.01(d)(i), by delivering written notice of such removal to (A) the
President or any other officer of the LLC designated by the Board of Managers to
receive such notices, and (B) each other Member. Such removal shall be effective
upon the giving of the notice specified in the preceding sentence to each person
or entity entitled thereto, unless such notice is specified to be effective at
some other time or upon the happening of some other event.
(v) Any vacancy on the Board of Managers resulting from the death,
resignation or removal of any Manager shall be filled, as promptly as
practicable, by the Member which had designated the Manager whose position has
become vacant, by designating a replacement Manager in a written notice given to
(A) the President or any other officer designated by the Board of Managers to
receive such notices, and (B) each other Member. Such designation of a
replacement Manager shall be effective upon the giving of the notice specified
in the preceding sentence to each person or entity entitled thereto, unless such
notice is specified to be effective at some other time or upon the happening of
some other event.
(vi) Regular meetings of the Board of Managers may be held without
notice at such time and place as shall be determined from time to time by the
Board of Managers; provided that any Manager who is absent when such a
determination is made shall be given
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notice of the determination. Special meetings of the Board of Managers may be
held at any time and place designated in a call by the President or any Manager.
Notice of any special meeting of Managers shall be given to each Manager by the
officer or the Manager calling the meeting. Notice shall be duly given to each
Manager (A) by giving notice to such Manager in person or by telephone at least
48 hours in advance of the meeting, (B) by sending a telegram, telex or
facsimile transmission, or delivering written notice by hand, to his last known
business or home address at least 48 hours in advance of the meeting, or (C) by
mailing written notice to his last known business or home address at least five
days in advance of the meeting. A notice or waiver of notice of a meeting of the
Board of Managers need not specify the purposes of the meeting.
(vii) At any meeting of the Board of Managers, the vote of a
majority of all Managers then in office (whether or not present at the relevant
meeting) shall be sufficient to take any action, unless a different vote is
specified by law or this Agreement.
(viii) Managers or any members of any committee designated by the
Managers may participate in a meeting of the Board of Managers or such committee
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation by such means shall constitute presence in person at such meeting.
Any action required or permitted to be taken at any meeting of the Board of
Managers or of any committee of the Board of Managers may be taken without a
meeting, if the members of the Board or committee, as the case may be, who would
be empowered to take the relevant action at a duly convened meeting of the Board
or committee, as the case may be, consent to the action in writing, and the
written consents are filed with the minutes of proceedings of the Board or
committee.
(ix) The Board of Managers may, by resolution, designate one or
more committees, each committee to consist of one or more of the Managers of the
LLC. Any such committee, to the extent provided in the resolution of the Board
of Managers and subject to the provisions of the Act, shall have and may
exercise all the powers and authority of the Board of Managers in the management
of the business and affairs of the LLC. Each such committee shall keep minutes
and make such reports as the Board of Managers may from time to time request.
Except as the Board of Managers may otherwise determine, any committee may make
rules for the conduct of its business, but unless otherwise provided by the
Managers or in such rules, its business shall be conducted as nearly as possible
in the same manner as is provided in this Agreement for the Board of Managers.
(x) Managers shall not be paid for their services as such.
(e) OFFICERS.
(i) The officers of the LLC shall consist of (A) the President,
(B) a Vice President of Sales, (C) a Vice President of Manufacturing, (D) a
Chief Financial Officer and such other officers with such other titles as the
Board of Managers may determine; provided, however, that, if the Board of
Managers so determine to establish any such other officer position with a title
customarily used in corporations organized and existing under the Delaware
General Corporation Law, such officer shall, to the maximum extent possible,
have the duties and responsibilities associated with such officer position in
such corporations.
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(ii) The President shall be the Chief Executive Officer of the LLC
and have general charge and supervision of the business and affairs of the LLC.
Mr. Dennis Barrineau shall serve as the initial President of the LLC. The
President shall be appointed by the Board of Managers.
(iii) No officer need be a Member or a Manager. Any two or more
offices may be held by the same individual. All officers other than the
President shall be appointed by the President of the LLC, subject to the
approval of the Board of Managers.
(iv) Except as otherwise provided by law or by this Agreement, each
officer shall hold office until his death, resignation or removal, unless a
different term is specified in the action of the Board of Managers designating
such officer. Any officer may resign by delivering his written resignation to
the President, any Manager, or each Member. Such resignation shall be effective
upon receipt unless it is specified to be effective at some other time or upon
the happening of some other event. Any officer, including the President, may be
removed at any time, with or without cause, by action of the Board of Managers.
(v) Except as the Board of Managers may otherwise determine, no
officer who resigns or is removed shall have any right to any compensation as an
officer for any period following his resignation or removal, or any right to
damages on account of such removal, whether his compensation be by the month or
by the year or otherwise, unless such compensation is expressly provided in a
duly authorized written agreement with the LLC.
(vi) Any vacancy occurring for any reason in the offices set forth
in clauses (A) through (D) of paragraph (i) above shall be filled by the Board
of Managers as promptly as practicable. The Board of Managers may, in their
mutual discretion, fill any vacancy occurring in any other office for any reason
or leave such vacancy unfilled for such period as they may determine.
6.02 APPROVED BUDGET. Not later than 30 days prior to the beginning of any
fiscal year during the term of this Agreement, the President of the LLC shall
submit to the Board of Managers an annual budget, which shall include in
reasonable detail a listing of anticipated revenues and expenses, including an
operating plan, a capital expenditure plan and an itemization of any other
anticipated expenditures of the LLC for such fiscal year. Such budget shall also
show such anticipated revenues and expenses for each fiscal quarter of such
fiscal year. Such budget will be submitted to the Board of Managers and, once
approved by the Board of Managers shall constitute the "Approved Budget" of the
LLC for such fiscal year and each fiscal quarter therein. In the event that the
Board of Managers fails to approve the budget submitted by the President of the
LLC prior to the beginning of the fiscal period covered by such budget, the
"Approved Budget" for such period shall, until a new budget is approved, be
deemed to be equal to the corresponding period of the most recent Approved
Budget (the "Prior Budget"), plus an additional amount which the LLC shall be
deemed authorized to spend in such period until a budget is approved equal to 5%
of the expenditures on a line item basis as set forth for the corresponding
period in the most recent Approved Budget.
6.03 CONTRACTS WITH MEMBERS, ETC.. The LLC may engage in business with, or
enter into one or more agreements, leases, contracts or other arrangements for
the furnishing to or by the LLC
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of goods, services or space with, any Member, Manager, officer or employee of
the LLC, or an Affiliate of any of the foregoing, and may pay compensation in
connection with such business, goods, services or space, provided in each case
that the relevant agreement, lease, contract or other arrangement or transaction
is, to the extent required under Section 6.01, approved by the Board of Managers
in accordance with the provisions of such Section 6.01.
6.04 BINDING THE LLC. Except as the President may generally or in any
particular case or cases otherwise authorize, and subject to the other
provisions of this Agreement, all deeds, leases, contracts, bonds, notes,
checks, drafts or other obligations made, accepted or endorsed by the LLC shall
be signed by the President or such other officer or officers of the LLC as the
President may designate.
6.05 INDEMNIFICATION AND EXCULPATION.
(a) No Manager or officer shall have any liability to the LLC or to any
Member for any loss suffered by the LLC which arises out of any action or
inaction of such Manager or officer if such Manager or officer determined in
good faith that such course of conduct was in the best interests of the LLC and
such course of conduct did not constitute gross negligence, willful misconduct
or a breach of this Agreement by such Manager or officer.
(b) The Members' respective obligations to each other and to the LLC under
this Agreement are limited to the express obligations expressly described in
this Agreement, which obligations the Members shall carry out with ordinary
prudence and in a manner characteristic of business persons in similar
circumstances. Each Member and Manager may, with respect to any vote, consent or
approval that it, he is entitled to grant pursuant to this Agreement, grant or
withhold such vote, consent or approval in its, his or her sole and absolute
discretion, with or without cause, and subject to such conditions as it, he
shall deem appropriate. The Members acknowledge and agree that the relationship
among them as members of the LLC as specified in this Agreement is, to the
maximum extent permissible under the Act, contractual in nature and not
fiduciary. Accordingly, pursuant to Section 18-1101 of the Act, the Members
agree that to the maximum extent permissible under the Act, each Member's
fiduciary and any other similar duties and obligations to the LLC or any other
Member (if any) shall be eliminated (or, if complete elimination of such duties
and obligations is deemed to be not permissible under the Act, then reduced to
the maximum extent permissible) hereby.
(c) Each Manager and officer shall be indemnified by the LLC against any
losses, judgments, liabilities, expenses and amounts paid in settlement of any
claims sustained by him with respect to actions taken by such Manager or officer
on behalf of the LLC, provided that no indemnification shall be provided for any
person with respect to any matter as to which he shall have been adjudicated in
any proceeding to have been grossly negligent or to have acted with willful
misconduct or in breach of this Agreement, or in which he shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that his action was in the best interest of the LLC. Without limiting the
foregoing, the Board of Managers may elect (on a case by case basis) to permit
such indemnification to include payment by the LLC of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding, upon receipt of an undertaking by the
person indemnified to repay such payment if he shall be adjudicated not to be
entitled to indemnification under this
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Section 6.04, which undertaking may be accepted without reference to the
financial ability of such person to make repayment. Any indemnification to be
provided hereunder may be provided although the person to be indemnified is no
longer a Manager or officer.
(d) Any indemnity under this Section 6.05 shall be paid from, and only to
the extent of, LLC assets, and no Member shall have any personal liability on
account thereof in the absence of a separate written agreement to the contrary.
The LLC shall not incur the cost of that portion of any insurance, other than
public liability insurance, which insures any party against any liability as to
which such party is herein prohibited from being indemnified.
6.06 NO SOLICITATION OR HIRING OF FORMER EMPLOYEES. Except as provided by law
or with the Consent of the Members, during the period that a Member is a Member
and for a period of two years after a Member ceases to be a Member, the Member
shall not solicit any person who is then, or at any time within the six months
preceding such date was, an employee of the LLC to terminate his employment with
the LLC or to become an employee of the Member or hire any person.
6.07 NON-COMPETITION AGREEMENT.
(a) During the period that a Member is a Member and for a period of two
years after a Member ceases to be a Member, such Member shall not (i)
manufacture, market or sell any product which has the same or substantially the
same form, function and primary application as any existing or proposed product
manufactured by the LLC at any time while the Member was a Member or (ii) engage
in any business competitive with the business of the LLC as conducted at any
time while the Member was a Member, in the United States or Canada.
Notwithstanding the foregoing, (X) GreenStone shall not be deemed to be in
violation of this Section by virtue of its "Engineered for Life(TM)" product
line, provided that GreenStone does not manufacture any cellulose-based products
and so long as any cellulose-based products sold by GreenStone are purchased
from the LLC; and (Y) in the event that a Member (an "Acquiring Member")
acquires any competitive business as a non-integral part of an acquisition made
by the Acquiring Member, the Acquiring Member shall not be deemed to be in
violation of this Section if (i) it promptly offers such competitive business to
the LLC for purchase at a cash purchase price equal to five times the
twelve-month trailing EBITDA of such business for the most recently completed
twelve months, or, if less, the amount actually paid by the Acquiring Member for
such business; and (ii) in the event that the other Member declines on behalf of
the LLC to have the LLC purchase such business, it disposes of such business
within 18 months of the date of acquisition thereof by the Acquiring Member.
(b) The parties hereto agree that the duration and geographic scope of the
non-competition provision set forth in this Section 6.07 are reasonable. In the
event that any court determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that extent unenforceable,
the parties hereto agree that the provision shall remain in full force and
effect for the greatest time period and in the greatest area that would not
render it unenforceable. The parties intend that this non-competition provision
shall be deemed to be a series of separate covenants, one for each and every
county of each and every state of the United States of America and each and
every political subdivision of each and every country outside the United States
of America where this provision is intended to be effective. Each Member agrees
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that damages are an inadequate remedy for any breach of this provision and that
the LLC shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this non-competition provision.
(c) For purposes of Section 6.06 and this Section 6.07, "GreenStone" shall
include all of GreenStone's Affiliates, and "U.S. Fiber" shall include all of
U.S. Fiber's Affiliates.
6.08 OTHER ACTIVITIES. Subject to the compliance with their respective
obligations hereunder and under any other agreements to which they are a party,
each Member may engage in and possess interests in other business ventures and
investment opportunities of every kind and description, independently or with
others, including acting as stockholders, members and general or limited
partners of corporations, partnerships or other limited liability companies.
Subject to such compliance, neither the LLC nor the other Member, nor any
Manager or officer of the LLC, shall have any rights in or to such ventures or
opportunities or the income or profits therefrom.
ARTICLE VII
FISCAL MATTERS
7.01 BOOKS AND RECORDS. The President shall keep or cause another officer of
the LLC or a designated third party to keep, at the principal office of the LLC
or in such other location as the President may designate, complete and accurate
books and records of the LLC, maintained in such form and manner as the
President may determine, as well as any other documents and information required
to be furnished to the Members under the Act, all of which shall be available
for examination and copying by any Member, at its reasonable request and at its
expense during ordinary business hours, to the extent provided by the Act.
7.02 FINANCIAL INFORMATION. The LLC shall prepare, or shall cause to be
prepared, and shall provide to the Members, as soon as practicable after the end
of each fiscal year of the LLC, and in any event on or before the 60th day
thereafter, a balance sheet, an income statement and a statement of changes in
Members' capital in the LLC for, or as of the end of, such year, certified by an
internationally recognized firm of certified public accountants selected by the
President with the Consent of the Members. Such financial statements shall be
prepared in accordance with GAAP and shall be accompanied by a report of the
certified public accountants certifying the statements and stating that (a)
their examination was made in accordance with GAAP and, in their opinion, the
financial statements fairly present the financial position, financial results of
operations, and changes in Members' capital in accordance with GAAP, and (b) in
making the examination and reporting on the financial statements described
above, nothing came to their attention that caused them to believe that (i) the
income and revenues were not paid or credited in accordance with the financial
and accounting provisions of this Agreement, (ii) the costs and expenses were
not charged in accordance with the financial and accounting provisions of this
Agreement, or (iii) either Member failed to comply in any material respect with
the financial and accounting provisions of this Agreement, or if they are unable
to make one or more of the statements set forth in clauses (i) through (iii)
above, specifying in detail the reasons for such inability. The LLC also shall
prepare and provide to the Members, as soon as practicable after the end of each
fiscal quarter of the LLC, and in any event on or before the 30th day
thereafter, a
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balance sheet, an income statement and a statement of changes in Members'
capital in the LLC for, or as of the end of, (x) such quarter and (y) the
portion of the then current fiscal year of the LLC ending at the end of such
quarter, in each case unaudited but certified as to accuracy and completeness by
the chief financial officer of the LLC or, if no such officer is serving at the
relevant time, by another appropriate officer of the LLC designated by the
President. The LLC also shall prepare and provide to the Members (A) as soon as
practicable after the end of each fiscal year of the LLC, and in any event on or
before the 75th day thereafter, such information as may be required by the
Members in order to file their respective federal, state and, to the extent
applicable, local income tax returns, and (B) such other reports relating to the
LLC's business and affairs as any Member may reasonably request. The LLC shall
bear the cost of all reports specified in this Section 7.02.
7.03 BANK ACCOUNTS. The President shall (or shall authorize and direct one or
more other officers of the LLC to) cause the LLC to open and maintain one or
more accounts with one or more financial institutions as the President or such
other officers may determine to be necessary or advisable. The President shall
make such statements and determinations (including statements and determinations
concerning withdrawal authority of officers and employees of the LLC) as may be
necessary to implement the provisions of this Section 7.03, and each Member
hereby unconditionally appoints the President as such Member's true and lawful
attorney-in-fact (which appointment is irrevocable and is coupled with an
interest) for the purpose of adopting, ratifying, executing and delivering such
documents and instruments setting forth such Consents, resolutions and other
agreements or decisions of the Members as the President may deem to be necessary
or appropriate to implement the provisions of this Section 7.03. No funds
belonging to any Person other than the LLC (whether or not a Member) shall in
any way be deposited or kept in any such account of the LLC or otherwise be
commingled with any funds of the LLC.
7.04 FISCAL YEAR. The fiscal year of the LLC shall end on December 31 of each
year.
7.05 TAX MATTERS PARTNER. U.S. Fiber shall serve as the "tax matters partner"
of the LLC. If at any time U.S. Fiber is not eligible under the Code to serve,
or refuses to serve, as the "tax matters partner," GreenStone shall serve as the
"tax matters partner." The "tax matters partner" is hereby authorized to and
shall perform all duties of a "tax matters partner" under the Code and shall
serve as "tax matters partner" until its resignation or until the designation of
its successor, whichever occurs sooner. The "tax matters partner" shall be
reimbursed by the LLC for all reasonable expenses actually incurred by the "tax
matters partner" in connection with its performance of its duties as such, and
the LLC shall indemnify and hold harmless the "tax matters partner," to the
maximum extent permissible under the Act, from and against any and all losses,
claims, liabilities, costs and expenses incurred by the "tax matters partner" in
connection with its performance of its duties as such, except insofar as the
same may have been incurred by reason of gross negligence or willful misconduct
of such "tax matters partner."
7.06 INFORMATION. In addition to the other rights specifically set forth in
this Agreement, each Member shall be entitled to all information to which such
Member is entitled to have access pursuant to Section 18-305 of the Act, under
the circumstances and subject to the conditions therein stated, and in
compliance with such other conditions as may be reasonably established by the
Board of Managers.
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7.07 AUDITS. Each Member shall have the right to conduct, or cause to be
conducted, from time to time, an audit of the books and records of the LLC. The
Member conducting the audit shall bear the entire expense of the audit.
7.08 TAX AUDITS. Each Member shall have the right to review and approve (which
approval shall not be unreasonably withheld) any proposed tax audit adjustment
before it is accepted by the Tax Matters Partner.
7.09 CONFIDENTIALITY.
(a) Unless the Members acting by Consent determine otherwise, each Member
shall hold in strict confidence any confidential information regarding the
business of the LLC or of the other Member (or its Affiliates), and the LLC
shall so hold in confidence any such information regarding any Member (or its
Affiliates), whether such information is received from the LLC, the other Member
or its Affiliates, or another Person; provided, however, that such restrictions
shall not apply to (i) information that is or becomes available to the public
generally without breach of this Section 7.09(a); (ii) disclosures required to
be made by applicable laws and regulations, stock exchange requirements or
requirements of the Nasdaq National Market or the National Association of
Securities Dealers, Inc.; (iii) disclosures required to be made pursuant to a
court or governmental order, subpoena or legal process; (iv) disclosures to
officers, directors, employees or Affiliates of such Member (and the officers,
directors and employees of such Affiliates), and to auditors, counsel, and other
professional advisors to such Persons, or to the LLC or its officers, employees
and professional advisors (provided, however, that all such Persons have been
informed of the confidential nature of the information), or (v) disclosures in
connection with any litigation or dispute among the Members, the LLC and the
officers of the LLC; provided further that any disclosure pursuant to clause
(ii), (iii) or (iv) of this sentence shall be made only subject to such
procedures as the Person making such disclosure determines in good faith are
reasonable and appropriate in the circumstances, taking into account the need to
maintain the confidentiality of such information and the availability, if any,
of procedures under laws, regulations, court or governmental orders, subpoenas,
or other legal process. Each Member and the LLC shall notify each other Member
and/or the LLC, as appropriate, immediately upon becoming aware of any court or
governmental order, subpoena, or other legal process providing for the
disclosure or production of information subject to the provisions of the
immediately preceding sentence and, to the extent not prohibited by applicable
law, immediately shall supply each other Member and/or the LLC, as appropriate,
with a copy of any such court or governmental order, subpoena, or other legal
process. In addition, each Member shall notify each other Member and/or the LLC,
as appropriate, prior to disclosing or producing any information subject to the
provisions of the two immediately preceding sentences and, to the extent not
prohibited by applicable law, shall permit each other Member and/or the LLC, as
appropriate, to seek a protective order protecting the confidentiality of such
information. The rights and obligations of a Member pursuant to this Section
7.09(a) shall continue following the time it ceases to be a Member. Each Member
acknowledges that disclosure of information in violation of the provisions of
this Section 7.09(a) may cause irreparable injury to the LLC and the Members for
which monetary damages are inadequate, difficult to compute, or both.
Accordingly, each Member agrees that its and the LLC's obligations under this
Section 7.09(a) may be enforced by specific performance and that breaches or
prospective breaches of this Section 7.09(a) may be preliminarily and/or
permanently enjoined. Notwithstanding the
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foregoing, each Member acknowledges that the other Member may be required to
file this Agreement and related documentation as an exhibit to its filings with
the Securities and Exchange Commission and hereby consents to any such filing.
(b) Each officer and employee of the LLC shall be required by the LLC, in
connection with the commencement of such Person's employment by, or service
with, the LLC, to enter into a written agreement with the LLC (whether an
employment agreement or otherwise) containing confidentiality, non-disclosure,
non-use and non-competition provisions prepared by counsel to the LLC.
ARTICLE VIII
TRANSFERS OF INTERESTS
8.01 GENERAL RESTRICTIONS ON TRANSFER. No Member may Transfer all or any part
of its Membership Interest (including the interest of an assignee within the
meaning of Section 18-702 of the Act) to any Person except (i) with the prior
written approval of the other Member, the granting or denying of which approval
shall be in such other Member's sole and absolute discretion, (ii) following the
second anniversary of the Closing Date, pursuant to Sections 8.02 and 8.03
below, or (ii) by operation of the provisions of Article IX or pursuant to an
exercise by the Lending Member or the LLC of the remedies granted them by the
provisions of Sections 3.06(a)(ii)(E) or 3.06(a)(iii), respectively, and Section
3.06(b). Any Transfer in contravention of the foregoing sentence or any other
provision of this Agreement shall be null and void and ineffective to transfer
all or any part of any Membership Interest (including the interest of an
assignee within the meaning of Section 18-702 of the Act), and shall not bind,
or be recognized by, or on the books of, the LLC, and any transferee or assignee
in such transaction shall not be or be treated as or deemed to be a Member (or
an assignee) for any purpose. If any Member shall at any time attempt or purport
to Transfer a Membership Interest, or any part thereof, in contravention of any
of the provisions of this Agreement, then the other Member shall, in addition to
all rights and remedies at law and equity, be entitled to a decree or order
restraining and enjoining such transaction, and the offending Member shall not
plead in defense thereto that there would be an adequate remedy at law, it being
expressly hereby acknowledged and agreed that damages at law would be an
inadequate remedy for a breach or threatened breach of the provisions of this
Agreement concerning such transactions.
8.02 RIGHT OF FIRST REFUSAL.
(a) Notwithstanding the provisions of Section 8.01 above, in the event a
Member desires to Transfer any portion of its Membership Interest, or any
interest therein, following the second anniversary of the Closing Date, such
Member (the "Selling Member") shall first deliver written notice of his desire
to do so (the "Notice") to the LLC and to the other Member, in the manner
prescribed in Section 11.01 of this Agreement. The Notice must specify: (i) the
name and address of the party to which the Selling Member proposes to sell or
otherwise dispose of the Membership Interest or an interest in the Membership
Interest (the "Offeror"), (ii) the nature of the Membership Interest the Selling
Member proposes to sell or otherwise dispose of (the "Offered Interest"), (iii)
the consideration to be delivered to the Selling Member for the proposed
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sale, transfer or disposition, and (iv) all other material terms and conditions
of the proposed transaction.
(b) The LLC shall have the first option to purchase all or any part of the
Offered Interest for the consideration and on the terms and conditions specified
in the Notice. The Company must exercise such option, no later than 30 days
after such Notice is deemed under Section 11.01 hereof to have been delivered to
it, by written notice to the Selling Member.
(c) In the event the LLC does not exercise its option within such 30-day
period with respect to all of the Offered Interest, the LLC shall, by the last
day of such period, give written notice of that fact to the other Member (the
"Purchaser Notice"). The Purchaser Notice shall specify the Offered Interest not
purchased by the LLC (the "Remaining Interest").
(d) In the event the LLC duly exercises its option to purchase all or part
of the Offered Interest, the closing of such purchase shall take place at the
offices of the LLC on the later of (i) the date 20 days after the expiration of
such 30-day period or (ii) the date that the other Member consummates its
purchase of Remaining Interest under paragraph (g) below.
(e) To the extent that the consideration proposed to be paid by the
Offeror for the Offered Interest consists of property other than cash or a
promissory note, the consideration required to be paid by the LLC and/or the
other Member exercising their options hereunder may consist of cash equal to the
value of such property, as determined in good faith by agreement of the Selling
Member and the LLC and/or the other Member acquiring such Offered Interest.
(f) Notwithstanding anything to the contrary herein, neither the LLC nor
the other Member shall have any right to purchase any of the Offered Interest
hereunder unless the Company and/or the other Member exercise their option or
options to purchase all of the Offered Interest.
(g) Subject to Section 8.03, the other Member shall have an option,
exercisable for a period of three days from the date of delivery of the
Purchaser Notice, to purchase the Remaining Interest for the consideration and
on the terms and conditions reflected in the Notice. Such option shall be
exercised by delivery by such Member of written notice to the Selling Member.
Alternatively, the other Member may within the same three-day period, notify the
Selling Member of its desire to participate in the sale of the Membership
Interests on the terms set forth in the Notice, and the nature of the Membership
Interest it wishes to sell.
(h) The closing of the purchase of the Remaining Interest shall take place
at the offices of the LLC no later than 15 days after the date of the Purchaser
Notice.
8.03 FAILURE TO FULLY EXERCISE OPTIONS; CO-SALE.
(a) If the LLC and the other Member do not exercise their options to
purchase all of the Offered Interest within the periods described in this
Agreement (the "Option Period"), then all options of the LLC and the other
Member to purchase the Offered Interest, whether exercised or not, shall
terminate, but the other Member shall be entitled to sell its Membership
Interest in the transaction pursuant to this Section. The LLC shall promptly, on
expiration of the Option Period, notify the Selling Member of the nature of the
Membership Interest the other Member
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wishes to sell. The Selling Member shall use reasonable efforts to interest the
Offeror in purchasing, in addition to the Offered Interest, the Membership
Interest the other Member wishes to sell. If the Offeror does not wish to
purchase the entire Membership Interest made available by the Selling Member and
the other Member, then each Member shall be entitled to sell a portion of the
Membership Interest being sold to the Offeror, in the same proportion as the
Percentage Interest of such Members; provided, however, that the price to be
paid to each Member shall be in the proportion of the amount that would be
distributed to the Members pursuant to Section 4.02 if all of the assets of the
LLC were sold for the aggregate purchase price being paid by the Offeror and the
proceeds thereof were distributed to the Members. The transaction contemplated
by the Notice shall be consummated not later than 75 days after the expiration
of the Option Period.
(b) If the other Member does not elect to sell the full Membership
Interest which it is entitled to sell pursuant to the preceding paragraph, the
Selling Member shall be entitled to sell to the Offeror, according to the terms
set forth in the Notice, the Membership Interest which equals the difference
between the Membership Interest desired to be purchased by the Offeror and the
Membership Interest the other Member is entitled to sell pursuant to Section
8.3. If the Selling Member wishes to Transfer any such Membership Interest at a
price which differs from that set forth in the Notice, upon terms different from
those previously offered to the LLC and the other Member, or more than 60 days
after the expiration of the Option Period, then, as a condition precedent to
such transaction, such Membership Interest must first be offered to the LLC and
the other Member on the same terms and conditions as given the Offeror, and in
accordance with the procedures and time periods set forth above.
(c) The proceeds of any sale made by the Selling Member without compliance
with the provisions of this Section 8 shall be deemed to be held in constructive
trust in such amount as would have been due the other Member if the Selling
Member had complied with this Agreement.
ARTICLE IX
OPTION TO SELL OTHER MEMBER'S INTEREST
9.01 OPTION TO SELL THE OTHER MEMBER'S INTEREST. Following the second
anniversary of the Closing, either Member (the "Electing Member") shall have the
right to elect to Transfer its Membership Interest to a person which is not an
Affiliate of such Electing Member, subject to compliance with the provisions of
Sections 8.02 and 8.03 above; provided, however, that in the event that (A) the
Electing Member desires to sell its entire Membership Interest in the LLC, (B)
the LLC and the other Member (the "Non-Electing Member") do not exercise their
options to purchase all of the Offered Interest within the periods described in
Section 8.02, and (C) the Non-Electing Member does not elect to sell all of its
Membership Interest to the Offeror pursuant to Section 8.03, then the Electing
Member shall have the right to require the Non-Electing Member to sell its
entire Membership Interest to the Offeror on the same terms as, and at the same
time as, the Electing Member sells its interest to the Offeror; provided that
the price to be paid to each Member shall be in the proportion of the amount
that would be distributed to the Members pursuant to Section 4.02 if all of the
assets of the LLC were sold for the aggregate
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purchase price being paid by the Offeror and the proceeds thereof were
distributed to the Members.
9.02 NOTIFICATION OF OFFERS. Each Member agrees to promptly notify the other
Member of any bona fide offer it receives from a third party to purchase all or
any portion of a Membership Interest in the LLC; provided, however, that no
Member shall have any liability to the other Member for failing to so notify the
other Member.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.01 EVENTS CAUSING DISSOLUTION. The LLC shall be dissolved and its affairs
wound up upon:
(a) The sale or other disposition of all or substantially all of the
assets of the LLC, or any merger, consolidation or other business combination or
similar transaction as a result of which the LLC is not the surviving entity;
(b) Subject to the provisions of Section 10.02, the occurrence of any
event which terminates the membership of a Member under the Act;
(c) The election to dissolve the LLC made by approval of the Board of
Managers in accordance with Section 6.01(b)(xv); or
(d) The entry of a decree of judicial dissolution under Section 18-802 of
the Act.
10.02 CONTINUATION OF THE LLC. Notwithstanding the occurrence of an event
specified in Section 10.01(b), the LLC shall not be dissolved and its business
and affairs shall not be discontinued or wound up, and the LLC shall remain in
existence as a limited liability company under the laws of the State of
Delaware, if the remaining Member elects, within 90 days after such occurrence,
to continue the LLC and its business without dissolution or winding up;
provided, however, that such remaining Member shall, automatically and with no
further action being necessary on the part of any Person, be deemed to have so
elected to continue the LLC and its business without dissolution or winding up
unless such remaining Member expressly elects in writing, within such 90-day
period, not to continue the LLC and its business.
10.03 PROCEDURES ON DISSOLUTION. Dissolution of the LLC shall be effective on
the day on which occurs the event giving rise to the dissolution, but the LLC
shall not terminate until the Certificate shall have been cancelled and the
assets of the LLC shall have been distributed as provided herein.
Notwithstanding the dissolution of the LLC, prior to the termination of the LLC,
as aforesaid, the business of the LLC and the affairs of the Members, as such,
shall continue to be governed by this Agreement. The President or a liquidator
appointed by the President (or, if there be none, by the Consent of the Members)
shall liquidate the assets of the LLC (the Person so charged with liquidating
the assets of the LLC, the "Liquidator"), apply and distribute the proceeds
thereof as contemplated by this Agreement and cause the cancellation of the
Certificate.
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10.04 DISTRIBUTIONS UPON LIQUIDATION. In each case except as may be required
otherwise by provisions of the Act which may not be modified by a limited
liability company's operating agreement:
(a) After payment of liabilities owing to creditors, the Liquidator shall
set up such reserves as it deems reasonably necessary for any contingent or
unforeseen liabilities or obligations of the LLC. Said reserves may be paid over
by the Liquidator to a bank or another appropriate financial institution, to be
held in escrow for the purpose of paying any such contingent or unforeseen
liabilities or obligations and, at the expiration of such period as the
Liquidator may deem advisable, such reserves shall be distributed to the Members
or their assigns in the manner set forth in paragraph (b) below.
(b) After paying such liabilities and providing for such reserves, the
Liquidator shall cause the remaining net assets of the LLC to be distributed to
and among the Members in the priority set forth in Section 4.02 above. In the
event that any part of such net assets consists of notes or accounts receivable
or other noncash assets, the Liquidator may take whatever steps he deems
appropriate to convert such assets into cash or into any other form which would
facilitate the distribution thereof. If any assets of the LLC are to be
distributed in kind, such assets shall be distributed on the basis of their fair
market value net of any liabilities.
10.05 SURVIVAL OF CERTAIN PROVISIONS. The provisions of Sections 3.04, 6.05,
6.06 and 6.07 shall survive for a period of 24 months after the date of
cancellation of the Certificate upon liquidation and distribution of the assets
of the LLC as set forth in Section 10.03.
ARTICLE XI
GENERAL PROVISIONS
11.01 NOTICES. Except to the extent specifically provided otherwise, any and all
notices under this Agreement shall be deemed given (a) on the second Business
Day after being sent by express mail, receipt confirmed telecopy, or an
internationally recognized commercial overnight delivery service providing a
receipt for delivery, or (b) on the date actually received, if sent by any other
method. In order to be effective, all such notices shall be addressed, if to the
LLC (or a specified officer thereof), at its office in the State of North
Carolina where the LLC maintains its records as set forth in the Certificate,
and if to a Member, at such Member's last address of record on the books of the
LLC, and copies of such notices shall also be sent to the last address for the
recipient which is known to the sender, if different from the address so
specified.
11.02 WORD MEANINGS; SCHEDULES AND EXHIBITS. The words such as "herein,"
"hereto," "hereof," and "hereunder" refer to this Agreement as a whole and not
merely to a subdivision in which such words appear unless the context otherwise
requires. The word "including" (and grammatical variations thereof) shall be
construed to mean "including, without limitation" (and grammatical variations
thereof), and shall not be interpreted so as to imply exclusivity or
comprehensive listing, unless the context otherwise requires. The singular shall
include the plural and the masculine gender shall include the feminine and
neuter, and vice versa, unless the context otherwise requires. References to
Articles, Sections, Schedules and Exhibits shall be construed as references to
the Articles and Sections of, and the Schedules and Exhibits to, this
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Agreement, in each case unless the context otherwise requires. All such
Schedules and Exhibits shall be deemed to be, and constitute, an integral part
hereof for all purposes.
11.03 BINDING PROVISIONS. Subject to the restrictions on Transfers set forth
herein, the covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, the parties hereto, their heirs, legal representatives,
successors and assigns.
11.04 APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, including the Act, as
interpreted by the courts of the State of Delaware, notwithstanding any rules
regarding choice of law to the contrary.
11.05 ARBITRATION.
(a) The parties hereto agree that any and all legal disputes,
controversies or claims arising out of or relating to the interpretation or
enforcement of this Agreement or any Ancillary Document or any breach or
termination of any thereof (each, a "Dispute") (other than any Dispute with
respect to which this Agreement or the relevant Ancillary Document provides for
temporary or preliminary injunctive or other similar provisional relief, which
relief may be obtained without reference to this Section 11.05) shall be
resolved by agreement among all parties to the relevant Dispute or, if notice is
given by any such party as provided below and the matter is not settled within
30 days thereafter, by reference to arbitration in accordance with the
Commercial Arbitration Rules, as amended from time to time, of the American
Arbitration Association (the "AAA") and the following provisions; provided,
however, that the provisions of this Section 11.05 shall prevail in the event of
any conflict with such Rules.
(b) The parties to the relevant Dispute shall jointly designate a single
neutral and impartial arbitrator to resolve the Dispute; provided, however, that
if such parties are unable to reach agreement with respect to the identity of
the arbitrator within 30 days after the giving of notice by one party to such
Dispute to each other party to such Dispute of the first party's desire to refer
the matter in dispute to arbitration, then any party to such Dispute may
petition the Chicago, Illinois office of the AAA (the "Appointing Authority")
for appointment of such arbitrator, and all parties to the Dispute shall be
bound by the selection of the Appointing Authority. If any Person appointed as
arbitrator shall die, fail to act, resign, or otherwise become disqualified, a
substitute arbitrator shall be appointed in the manner set forth above within 15
days after such death, failure to act, resignation or other disqualification. If
such substitute appointment is not made within such 15-day period, any party to
the Dispute may petition the Appointing Authority for appointment of such
substitute arbitrator, and such appointment shall be binding on all parties to
the Dispute. No matter how selected, the arbitrator shall have no prior or
existing affiliation or relationship with any party to the relevant Dispute or
its counsel, and shall sign an oath or affirmation of impartiality upon
appointment.
(c) Any arbitration proceedings conducted pursuant to this Section 11.05
shall be held in Chicago, Illinois and shall be conducted in the English
language.
(d) The parties to the Dispute may conduct such pre-hearing discovery
through depositions and requests for the production and copying of documents by
the other parties to the Dispute, in each case in accordance with such
procedures, as the arbitrator may determine. The
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arbitrator may consult with and engage disinterested third parties, including
attorneys, accountants and other consultants, to advise him.
(e) The arbitrator, in deciding any Dispute, shall base his decision on
the record and in accordance with this Agreement, any relevant Ancillary
Documents and applicable law. In no event shall the arbitrator make any ruling,
finding or award that does not conform to the terms and conditions of this
Agreement and any relevant Ancillary Document, is not supported by the weight of
the evidence, or is contrary to applicable law. The final arbitration award
shall be a factually detailed, reasoned opinion stating the arbitrator's
findings of fact and conclusions of law. Unless the arbitrator for good cause
determines otherwise, the final arbitration award shall include attorneys' fees,
costs and expenses of the prevailing party, including expert and non-expert
witness fees and the prevailing party's share of the administrative fee and the
arbitrator's fees and expenses, if any. The final arbitration award and any
other written decisions and conclusions of the arbitrator with respect to the
matters referred to him pursuant hereto shall be final and binding on all
parties to the Dispute, and confirmation and enforcement thereof may be rendered
thereon by any court having jurisdiction upon application of any such party.
11.06 COUNTERPARTS. This Agreement may be executed in several counterparts and
as so executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all of the parties have not signed the same counterpart.
11.07 SEPARABILITY OF PROVISIONS. Each provision of this Agreement shall be
considered separable. To the extent that any provision of this Agreement is
prohibited or ineffective under the Act, this Agreement shall be considered
amended to the smallest degree possible in order to make the Agreement effective
under the Act (and, if the Act is subsequently amended or interpreted in such
manner as to make effective any provision of this Agreement that was formerly
rendered invalid, such provision shall automatically be considered to be valid
from the effective date of such amendment or interpretation).
11.08 ARTICLE AND SECTION TITLES. Article and section titles are included herein
for descriptive purposes only and shall not control or alter the meaning of this
Agreement as set forth in the text.
11.09 AMENDMENTS. Except as otherwise specifically provided herein, this
Agreement (including all Schedules and Exhibits) may be amended or modified only
by a Consent executed by each Member.
11.10 THIRD PARTY BENEFICIARIES. The provisions of this Agreement, including
Article III, are not intended to be for the benefit of any creditor (other than
a Member who is a creditor) or other Person (other than a Member in its capacity
as such) to whom any debts, liabilities or obligations are owed by (or who
otherwise has any claim against) the LLC or any of the Members. Moreover,
notwithstanding anything contained in this Agreement, including Article III, no
such creditor or other Person shall obtain any rights under this Agreement or
shall, by reason of this Agreement, make any claim in respect of any debt,
liability or obligation (or otherwise) against the LLC or any Member.
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11.11 CERTAIN ANCILLARY DOCUMENT MATTERS; ENTIRE AGREEMENT.
(a) At the Closing, each Member and the LLC shall execute each Ancillary
Document to which such Member is a party. Except as otherwise expressly provided
herein, in the event of any irreconcilable conflict between the provisions of
any Ancillary Document and the provisions of this Agreement, the provisions of
this Agreement shall be controlling.
(b) Any breach by any Member of, and any default by any Member under, any
Ancillary Document to which such Member is a party shall be deemed and construed
to be, for all purposes, a breach by such Member of, and a default by such
Member under, this Agreement.
(c) This Agreement, together with the Ancillary Documents, embodies the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. The Members hereby agree that each Member and
each officer of the LLC shall be entitled to rely on the provisions of this
Agreement and the Ancillary Documents, and no Member or officer of the LLC shall
be liable to the LLC or any other Member or officer for any action or refusal to
act taken in good faith reliance on the terms of this Agreement or any Ancillary
Document.
11.12 OFFSET. Whenever the LLC is to pay any sum to any Member, any amounts owed
by such Member to the LLC may be deducted from such sum before payment.
11.13 WAIVER OF PARTITION. Each Member agrees that irreparable damage would be
done to the LLC if any Member brought an action in court to dissolve the LLC.
Accordingly, each Member agrees that it shall not, either directly or
indirectly, take any action to require partition or appraisal of the LLC or of
any of the assets or properties of the LLC, and notwithstanding any provisions
of this Agreement to the contrary, each Member (and its successors and assigns)
accepts the provisions of the Agreement as its sole entitlement on termination,
dissolution and/or liquidation of the LLC and hereby irrevocably waives any and
all right to maintain any action for partition or to compel any sale or other
liquidation with respect to its interest, in or with respect to, any assets or
properties of the LLC. Each Member agrees that it will not petition a court for
the dissolution, termination or liquidation of the LLC.
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IN WITNESS WHEREOF, the Members have executed this Agreement under seal as of
the day and year first above written.
U.S. FIBER, INC.
By: /s/ James W. Bohlig
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Name: James W. Bohlig
----------------------------------------
Title: SVP & Chief Operating Officer
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GREENSTONE INDUSTRIES, INC.
By: /s/ Anita C. Kirchloff
------------------------------------------
Name: Anita C. Kirchloff
----------------------------------------
Title: Secretary
---------------------------------------
GUARANTY
The undersigned hereby guarantees the obligations of its subsidiary pursuant to
the terms of this Agreement.
CASELLA WASTE SYSTEMS, INC.
For its subsidiary U.S. Fiber, Inc.
By: /s/ John W. Casella
------------------------------------------
Name: John W. Casella
----------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
LOUISIANA-PACIFIC CORPORATION
For its subsidiary GreenStone Industries, Inc.
By: /s/ William L. Hebert
------------------------------------------
Name: William L. Hebert
----------------------------------------
Title: Director, Business Development
---------------------------------------
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US GREENFIBER, LLC
SCHEDULE A TO LIMITED LIABILITY COMPANY AGREEMENT
June 26, 2000
MEMBERS
NAME AND BUSINESS
ADDRESS OF MEMBER PERCENTAGE INTEREST
U.S. FIBER, INC. 50%
809-A W. Hill Street
Charlotte, NC 28208
GREENSTONE INDUSTRIES, INC. 50%
111 S.W. Fifth Avenue
Portland, OR 97204
Attn: Vice President and General Counsel
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EXHIBIT 1
LIST OF GREENSTONE ASSIGNMENT DOCUMENTATION
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EXHIBIT 2
LIST OF U.S. FIBER ASSIGNMENT DOCUMENTATION
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EXHIBIT 3-A
LIST OF ASSETS BEING ASSIGNED BY U.S. FIBER TO THE LLC
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EXHIBIT 3-B
LIST OF LIABILITIES BEING ASSUMED BY THE LLC FROM U.S. FIBER
1. All obligations of U.S. Fiber continuing after the Closing under the leases,
contracts and employee benefit plans set forth on the U.S. Fiber Disclosure
Schedule which become due and payable after the Closing Date.
2. All of the liabilities and obligations of U.S. Fiber reflected on SCHEDULE
3-B hereto.
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EXHIBIT 4-A
LIST OF ASSETS BEING ASSIGNED BY GREENSTONE TO THE LLC
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EXHIBIT 4-B
LIST OF LIABILITIES BEING ASSUMED BY THE LLC FROM GREENSTONE
1. All obligations of GreenStone continuing after the Closing under the leases,
contracts and employee benefit plans set forth on the GreenStone Disclosure
Schedule which become due and payable after the Closing Date.
2. All of the liabilities and obligations of GreenStone reflected on SCHEDULE
4-B hereto.
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EXHIBIT 5
REPRESENTATIONS AND WARRANTIES OF EACH OF THE MEMBERS
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EXHIBIT 6
INDEMNIFICATION
(a) INDEMNIFICATION. Each Member each hereby indemnifies and holds
harmless the LLC and the other Member against all claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement costs
and any legal, accounting or other expenses for investigating or defending any
actions or threatened actions) reasonably incurred by the LLC or the other
Member in connection with each and all of the following:
(i) Any breach by the indemnifying party of any representation or
warranty in this Agreement;
(ii) Any breach of any covenant, agreement or obligation of the
indemnifying party contained in this Agreement, any Ancillary Agreement or any
other agreement, instrument or document contemplated by this Agreement;
(iii) Any claims against, or liabilities or obligations of, the
Member not specifically assumed by the LLC pursuant this Agreement; and
(iv) Any warranty claim or product liability claim relating to (i)
products manufactured or sold by the Member prior to the Closing or (ii) the
Member's business or operation prior to the Closing Date.
(b) CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification hereunder the party seeking indemnification (the "Indemnified
Party"), shall promptly notify the party from whom indemnification is sought
(the "Indemnifying Party") of the claim and, when known, the facts constituting
the basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
unless suit shall have been instituted against it and the Indemnifying Party
shall not have taken control of such suit after notification thereof as provided
in paragraph (c) of this EXHIBIT 6.
(c) DEFENSE BY INDEMNIFYING PARTY. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom within 30 days after the date such claim is made, (a) the
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Indemnified Party may defend against such claim or litigation, in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such third party claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by a preponderance of the
evidence that the Indemnified Party did not defend or settle such third party
claim in a commercially reasonable manner.
(d) PAYMENT OF INDEMNIFICATION OBLIGATION. Each Member hereby agrees that
any claim against it for indemnification by the LLC or the other Member under
this EXHIBIT 6 may, at the Indemnified Party's option, be set off against the
LLC's obligation to make payments under the Agreement, and all distributions
from the LLC that otherwise would be made to the Indemnifying Party (whether
before or after dissolution of the LLC) instead shall be paid to the Indemnified
Party until the indemnification obligations have been paid in full to the
Indemnified Party. All indemnification by the Members hereunder (to the extent
not satisfied in the manner specified in the preceding sentence) shall be
effected by payment of cash or delivery of a cashier's or certified check in the
amount of the indemnification liability and shall bear interest at the Default
Rate to the extent not paid within 30 days after written notification thereof is
delivered to the Indemnifying Party.
(e) SURVIVAL OF REPRESENTATIONS; CLAIMS FOR INDEMNIFICATION. All
representations and warranties made by the parties herein or in any instrument
or document furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the parties hereto. All such
representations and warranties shall expire on the second anniversary of the
Closing, except for claims, if any, asserted in writing prior to such second
anniversary, which shall survive until finally resolved and satisfied in full.
All claims and actions for indemnity pursuant to this EXHIBIT 6 for breach of
any representation or warranty shall be asserted or maintained in writing by a
party hereto on or prior to the expiration of such two-year period.
Notwithstanding anything to the contrary in this EXHIBIT 6, neither the LLC nor
any Member shall be entitled to receive, and a Member shall not be obligated to
pay, the first $250,000 in the aggregate of indemnity obligations otherwise
payable by such Member pursuant to paragraph (a)(i) of this EXHIBIT 6.
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U.S. FIBER DISCLOSURE SCHEDULE (EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES)
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GREENSTONE DISCLOSURE SCHEDULE (EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES)