LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
MEMBERWORKS CANADA LLC
(A Delaware Limited Liability Company)
Dated as of April 30, 1999
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
MEMBERWORKS CANADA LLC
(A Delaware Limited Liability Company)
This Limited Liability Company Operating Agreement (this "Agreement") of
MemberWorks Canada LLC (the "Company"), dated as of April 30, 1999, is adopted
and agreed to by MemberWorks Incorporated, a Delaware corporation, as the sole
member of the Company (the "Member") as the limited liability operating
agreement of the Company in accordance with the provisions of the Delaware
Limited Liability Company Act (the "Act").
ARTICLE I
DEFINITIONS
-----------
1.1. Definitions. The following terms used in this Agreement shall have the
following meanings:
"Act" has the meaning set forth in the introductory paragraph.
"Agreement" has the meaning set forth in the introductory paragraph.
"Code" shall mean the Internal Revenue Code of 1986,.as amended from time
to time.
"Company" has the meaning set forth in the introductory paragraph.
"Liquidating Agent" has the meaning set forth in Section 8.2 of this
Agreement.
"Member" shall mean MemberWorks Incorporated, as well as any other person
or entity hereafter admitted as a member of the Company in accordance with
Article VII of this Agreement.
ARTICLE II
ORGANIZATIONAL MATTERS
----------------------
2.1. Formation. The Company has been formed as a limited liability company
pursuant to the provisions of the Act by the filing of the Articles of
Organization with the Secretary of State of the State of Delaware. The Member
hereby adopts, confirms and ratifies the Articles of Organization and all acts
taken in connection therewith.
2.2. Name. The name of the Company is "MemberWorks Canada LLC" The Member
may change the name of the Company or adopt such trade or fictitious names as he
may determine. The Member shall file, or shall cause to be filed, any trade or
fictitious name certificates and similar filings, and amendments thereto, that
the Member considers appropriate or advisable.
2.3. Term. The term of the Company shall commence on the date hereof and
shall continue in perpetuity or until terminated in accordance with this
Agreement. The existence of the Company as a separate legal entity shall
continue until the filing of the Articles of Dissolution as provided in Section
8.5 of this Agreement and the Act.
2.4. Purpose. The purpose of the Company shall be to carry on any lawful
business, purpose or activity for which limited liability companies may be
formed under the Act and engaging in any and all activities necessary,
advisable, convenient and/or incidental thereto.
2.5. Registered Office/Agent. The registered office of the Company in the
State of Delaware is located at 15 East North Street, Dover, Delaware. The name
and address of the registered agent of the Company for service of process on the
Company in the State of Delaware is United Corporate Services, 15 East North
Street, Dover, Delaware The Company may, upon compliance with the applicable
provisions of the Act, change its registered office or registered agent from
time to time in the discretion of the Member.
2.6. Principal Office. The principal office of the Company shall be located
in Stamford, Connecticut. The Company may, upon compliance with the applicable
provisions of the Act, change the location of its principal office from time to
time in the discretion of the Member.
ARTICLE III
RIGHTS AND DUTIES OF THE MEMBER
-------------------------------
3.1. Management of the Business of the Company.
3.1.1 The business and affairs of the Company shall be conducted and
managed solely by the Member.
3.1.2 The Member shall have full power and authority to execute, on
behalf of the Company, any and all documents necessary or desirable in
connection with the business of the Company, including, without limitation, (a)
contracts and commitments of every kind and nature, (b) checks or other
instruments for the payment of Company funds and (c) notes, mortgages or other
evidences of indebtedness of the Company.
3.1.3 Third parties may rely upon a certificate of the Member as to
the due authorization of any act performed or any instrument executed on behalf
of the Company.
3.1.4 The Member may engage agents, officers, employees or independent
contractors to act on behalf of the Company and may delegate authority to such
persons.
2
3.2. Exculpation and Indemnification. Neither the Member nor any officer or
authorized agent of the Company (each an "Indemnified Person" and collectively
the "Indemnified Persons") shall be liable to the Company, or any other person
or entity who has an interest in the Company, for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such person in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Agreement, except that such Indemnified Person shall be liable to the extent of
any such loss, damage or claim incurred solely by reason of the willful
misfeasance or bad faith of such Indemnified Person. In the event that an
Indemnified Person becomes involved, in any capacity, in any threatened, pending
or completed action, suit proceeding or investigation in connection with any
matter arising out of or relating to the business or affairs of the Company, to
the fullest extent permitted by applicable law, any legal and other expenses
(including the cost of any investigation and preparation) incurred by such
Indemnified Person in connection therewith shall, from time to time, be advanced
by the Company prior to the final disposition of such action, suit, proceeding
or investigation upon receipt by the Company of an undertaking by or on behalf
of the Indemnified Person to repay such amount if it shall ultimately be
determined that such Indemnified Person is not entitled to be indemnified by the
Company in connection with such action, suit, proceeding or investigation as
provided in the exception contained in the next sentence. To the fullest extent
permitted by law, the Company also shall indemnify and hold harmless an
Indemnified Person against any losses, claims, damages, liabilities,
obligations, penalties, actions, judgments, suits, proceedings, costs, expenses
(including without limitation attorney fees and expenses) and disbursements of
any kind or nature whatsoever (collectively "Costs") to which such Indemnified
Person may become subject in connection with any matter arising out of or in
connection with the business or affairs of the Company, except to the extent
that any such Costs result solely from the willful misfeasance or bad faith of
such Indemnified Person. If for any reason (other than the willful misfeasance
or bad faith of such Indemnified Person) the foregoing indemnification is
unavailable to an Indemnified Person, or insufficient to hold him or her
harmless, then the Company shall contribute to the amount paid or payable by
such Indemnified Person as a result of such Costs in such proportion as is
appropriate to reflect not only the relative benefits received by the Company on
the one hand and such Indemnified Person on the other hand but also the relative
fault of the Company and such Indemnified Person, as well as any relevant
equitable considerations. The reimbursement, indemnity and contribution
obligations of the Company under this paragraph shall be in addition to any
liability that the Company may otherwise have to any Indemnified Person and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of any Indemnified Person. The reimbursement,
indemnity and contribution obligations of the Company under this paragraph shall
be limited to the assets of the Company, and Member shall not have any personal
liability on account thereof. The foregoing provisions shall survive any
termination of this Agreement.
3
ARTICLE IV
CAPITAL CONTRIBUTIONS
---------------------
4.1. Capital Contributions. The Member shall make an initial capital
contribution to the Company as set forth on Schedule I to this Agreement. The
Member may, but shall not be required to, make further capital contributions
from time to time as it may determine.
ARTICLE V
COMPANY ALLOCATIONS
-------------------
5.1. Adjustments to Capital Accounts. A capital account shall be maintained
for the Member, and shall initially be credited with the value of the initial
capital contribution made by the Member as set forth on Schedule I of this
Agreement. The capital account of the Member shall be adjusted from time to time
by crediting to such account all (i) additional capital contributions by the
Member, and (ii) profit (including income exempt from taxation), all as
hereinafter allocated to such Member, and shall be debited with (a)
distributions made to the Member, (b) loss, and (c) expenditures described in
Section 705(a)(2)(B) of the Code, all as allocated to the Member.
5.2. Allocations and Distributions. All profit or loss and each item
comprising the same shall be allocated to the Member. The Company shall make
distributions of available cash to the Member from time to time as the Member
may determine after maintaining such reserves, as the Member deems appropriate.
ARTICLE VI
ACCOUNTING PROVISIONS
---------------------
6.1. Fiscal Year. The fiscal year of the Company shall end on the last day
of December of each year.
6.2. Books and Accounts. Complete and accurate books and accounts shall be
maintained for the Company at the principal place of business of the Company.
6.3. Tax Reporting. The Member shall cause the results of operations of the
Company to be included on the Federal, state and local income tax returns of the
Member, as though all assets of the Company were owned, and all such results of
operations were realized, directly by the Member and not by the Company, to the
extent such reporting is permitted by applicable law. To the extent such
reporting is not permitted, the Member shall cause to be prepared and shall file
any Federal, state and local tax returns required to be filed by the Company.
6.4. Tax Status.
6.4.1 The Company shall take appropriate steps to cause the Company to
be disregarded as an entity separate from the Member for purposes of Federal,
state and local taxation while
4
continuing to be respected as an entity separate from the Member for all
purposes of Federal, state and local law other than taxation.
6.4.2 Consistent with Section 6.4.1, any election made by the Member
for tax purposes in connection with the Member's tax returns, which include the
results of operations of the Company, or its assets shall be deemed made by, and
shall bind, the Company to the extent applicable to the Company's assets or
results of operations.
ARTICLE VII
ADMISSION OF MEMBERS; ASSIGNMENT BY MEMBER;
-------------------------------------------
WITHDRAWAL OF MEMBER
--------------------
7.1. Admission; Withdrawal. The Member may transfer, assign or otherwise
dispose of all or any portion of his interest in the Company and admit new
members to the Company on such terms as he may determine.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION OF THE COMPANY
------------------------------------------
8.1. Events of Dissolution.
8.1.1 The Company shall be dissolved upon the earlier of any of the
following events:
(a) The determination of the Member; or
(b) As required by the Act.
8.2. General. Upon the dissolution of the Company, the Company shall be
dissolved and liquidated in accordance with this Article VIII. The dissolution
and liquidation shall be conducted and supervised by the Member or the Member's
successor-in-interest (the Member or such other person, as the case may be,
being herein called the "Liquidating Agent"). The Liquidating Agent shall have
all of the rights and powers with respect to the assets and liabilities of the
Company, in connection with the liquidation and dissolution of the Company,
which the Member had with respect to the assets and liabilities of the Company
during the term of the Company, and the Liquidating Agent is hereby expressly
authorized and empowered to execute any and all documents necessary or desirable
to effectuate the dissolution and liquidation of the Company and the transfer of
any property of the Company.
8.3. Priority on Liquidation. The Liquidating Agent shall, to the extent
feasible, liquidate the assets of the Company as promptly as practicable. The
proceeds of such liquidation shall be applied in the following order of
priority:
(a) First, to the payment of matured debts and liabilities of
the Company and the costs and expenses of the dissolution and liquidation;
5
(b) Second, to the setting up of any reserves which the
Liquidating Agent may deem reasonably necessary for any contingent or unforeseen
liabilities of the Company; and
(c) Third, to the Member or his successor-in-interest.
8.4. Orderly Liquidation. A reasonable time shall be allowed for the
orderly liquidation of the assets of the Company and the discharge of
liabilities to creditors so as to minimize the losses normally attendant upon a
liquidation.
8.5. Statements on Liquidation. The Liquidating Agent shall cause to be
prepared a statement, which shall set forth the assets and liabilities of the
Company as of the date of complete liquidation. The Member's share of the
Company's net assets shall be one hundred percent (100%). Upon compliance with
the foregoing distribution plan, the Liquidating Agent shall execute,
acknowledge and cause to be filed Articles of Dissolution of the Company in
accordance with the Act.
ARTICLE IX
MISCELLANEOUS PROVISIONS
------------------------
9.1. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without regard to principles
of conflicts of law thereof.
9.2. Section Headings. Section headings herein have been inserted for
reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part any of the terms or
provisions of this Agreement.
9.3. Amendment. Any amendment of, or supplement to or other modification of
this Agreement must be in a written instrument executed by the Member and the
Company.
9.4. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be deemed to have been duly given on the date of
service, if personally served or sent by telecopy; on the business day after
notice is delivered to a courier or mailed by express mail, if sent by courier
delivery service or express mail for next day delivery; and on the third day
after mailing, if mailed to the party to whom notice is to be given, by first
class mail, registered, return receipt requested, postage prepaid.
9.5. Severability; Binding Effect. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or unenforceability of any of the terms and
provisions of this Agreement in any other jurisdiction. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their successors
and assigns.
9.6. Effective Date. This Agreement shall be effective as of the date first
above written.
[Remainder of this page intentionally left blank.]
6
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first above written.
COMPANY:
MEMBERWORKS CANADA LLC
By: MEMBERWORKS INCORPORATED
Its Sole Member
By: /s/ James B. Duffy
------------------------------------------
Name: James B. Duffy
Title: Executive Vice President,
Chief Financial Officer and Secretary
MEMBER:
MEMBERWORKS INCORPORATED
By: /s/ James B. Duffy
------------------------------------------
Name: James B. Duffy
Title: Executive Vice President,
Chief Financial Officer and Secretary
7
SCHEDULE I
- --------------------------------------------------------------------------------
Name Initial Capital Contribution
- ---- ----------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8