1
Exhibit 3.18
OPERATING AGREEMENT
OF
HUNTSMAN PACKAGING OF CANADA, LLC
a Utah Limited Liability Company
1998
2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................... 1
1.1 Act.................................................................. 1
1.2 Agreement or Operating Agreement..................................... 1
1.3 Articles of Organization............................................. 1
1.4 Capital Account...................................................... 1
1.5 Code................................................................. 2
1.6 Company.............................................................. 2
1.7 Division............................................................. 2
1.8 Effective Date....................................................... 2
1.9 Manager.............................................................. 2
1.10 Member or Members.................................................... 2
1.11 Treasury Regulations................................................. 2
ARTICLE II FORMATION OF LIMITED LIABILITY COMPANY............................. 3
2.1 Creation............................................................. 3
2.2 Company Name......................................................... 3
2.3 Company Offices and Agent for Service of Process..................... 3
2.4 Name and Address of Member........................................... 3
2.5 Number of Members.................................................... 3
2.6 Character of Business................................................ 4
2.7 Period of Duration................................................... 4
ARTICLE III CAPITAL CONTRIBUTIONS............................................. 4
3.1 Contributions to Capital............................................. 4
3.2 Initial Capital Interests............................................ 4
3.3 Additional Contributions............................................. 4
3.4 Interest on Contributions............................................ 5
3.5 Withdrawal of Capital................................................ 5
ARTICLE IV CAPITAL ACCOUNTS; DRAWING ACCOUNTS................................. 5
4.1 Capital Accounts..................................................... 5
4.2 Drawing Accounts..................................................... 5
4.3 Distribution of Profits.............................................. 6
4.4 Transfers from Drawing Accounts to Capital Accounts.................. 6
4.5 Allocation of Losses in Excess of Capital Account.................... 6
4.6 Qualified Income Offset.............................................. 6
4.7 Return of Capital.................................................... 6
ARTICLE V PROFITS AND LOSSES.................................................. 6
5.1 Allocation of Profits and Losses..................................... 6
5.2 Liability of Members................................................. 7
5.3 Distribution in Kind................................................. 7
ARTICLE VI ACCOUNTING FOR THE COMPANY......................................... 7
-i-
3
6.1 Accounting Methods; Fiscal Year...................................... 7
6.2 Meetings and Review of Financial Statements.......................... 7
6.3 Records.............................................................. 7
ARTICLE VII MANAGEMENT OF COMPANY............................................. 8
7.1 Management by Managers............................................... 8
7.2 Management by Members................................................ 8
7.3 Authority of Managers................................................ 8
7.4 Restrictions on Manager.............................................. 9
7.5 Number, Term and Qualifications...................................... 9
7.6 Manner of Acting..................................................... 9
7.7 Appointment and Removal.............................................. 9
7.8 Fiduciary Responsibilities........................................... 10
7.9 Bank Accounts........................................................ 10
7.10 Permitted Transactions............................................... 10
7.11 Time and Attention Required of Managers and Members.................. 10
7.12 President and Vice President of the Company.......................... 11
ARTICLE VIII COMPENSATION TO MANAGER.......................................... 11
ARTICLE IX CONTINUATION OF COMPANY UPON THE DEATH, INCAPACITY,
RESIGNATION, EXPULSION, BANKRUPTCY OR DISSOLUTION
OF A MEMBER.......................................................... 11
ARTICLE X TRANSFER OF INTEREST................................................ 12
10.1 Transfer by a Member................................................. 12
10.2 Requirements of Transferee........................................... 13
10.3 Compliance with Securities Laws...................................... 13
10.4 Options to Purchase Interests........................................ 13
10.5 Rights of First Refusal of Members................................... 14
10.6 Transfer Provisions Binding.......................................... 15
10.7 Encumbrances......................................................... 15
ARTICLE XI ADMISSION OF NEW MEMBERS........................................... 15
ARTICLE XII DISSOLUTION, WINDING UP AND CANCELLATION.......................... 15
12.1 Events Causing Dissolution........................................... 15
12.2 Method of Winding Up and Cancellation................................ 16
ARTICLE XIII ENCUMBRANCES..................................................... 16
ARTICLE XIV INDEMNITY......................................................... 17
ARTICLE XV MISCELLANEOUS...................................................... 17
15.1 Notices.............................................................. 17
15.2 Entire Agreement; Amendments......................................... 17
15.3 Construction......................................................... 17
15.4 Interpretation....................................................... 17
-ii-
4
15.5 Execution of Further Instruments..................................... 18
15.6 Headings............................................................. 18
15.7 Agreement to be Binding.............................................. 18
15.8 Provisions Contrary to Act; Severability............................. 18
-iii-
5
OPERATING AGREEMENT
OF
HUNTSMAN PACKAGING OF CANADA, LLC
THIS OPERATING AGREEMENT OF HUNTSMAN PACKAGING OF CANADA, LLC, a Utah
limited liability company, is made and entered into as of February 27, 1998, by
and among the Company, Huntsman Packaging Corporation, a Utah corporation and
the initial Member, and each other person who becomes a Member in accordance
with Article 11 below. The capitalized terms used herein without definition have
the meanings specified in Article 1 below.
WHEREAS, Huntsman Packaging Corporation desires to form a limited
liability company under the laws of the State of Utah; and
WHEREAS, on the date of this Agreement, Huntsman Packaging Corporation has
caused the Company to be organized by filing Articles of Organization with
respect to the Company with the Division.
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement shall have the meanings specified
below:
1.1 ACT.
The term "Act" shall mean the Utah Limited Liability Company Act, as set
forth in Sections 48-2b-101 through 48-2b-157, Utah Code Annotated, as amended
from time to time.
1.2 AGREEMENT OR OPERATING AGREEMENT.
The terms "Agreement" or "Operating Agreement" shall mean this Operating
Agreement as the same may be modified or amended from time to time in accordance
with Section 15.2 hereof.
1.3 ARTICLES OF ORGANIZATION.
The terms "Articles" and "Articles of Organization" shall mean the
Articles of Organization of the Company which shall be filed with the Division.
The Articles shall be in the form attached as Exhibit A to this Agreement.
1.4 CAPITAL ACCOUNT.
The term "Capital Account" shall refer to a Member's equity in the Company
as described and adjusted in Article 4 of this Agreement.
-1-
6
1.5 CODE.
The term "Code" shall mean the Internal Revenue Code of 1986, as amended,
including any applicable Treasury Regulations promulgated thereunder.
1.6 COMPANY.
The term "Company" shall mean the Utah limited liability company to be
formed under this Agreement, and as the same shall exist hereafter, pursuant to
this Agreement and the Articles, and in accordance with the Act, the name of
which currently is Huntsman Packaging of Canada, LLC
1.7 DIVISION.
The term "Division" shall mean the Utah Department of Commerce, Division
of Corporations and Commercial Code or any other department or division of the
State of Utah which hereafter may be given responsibility for administering the
Act and accepting filings in behalf of the Company.
1.8 EFFECTIVE DATE.
The term "Effective Date" shall mean the date of filing of the Articles
with the Division.
1.9 MANAGER.
The term "Manager" or "Managers" shall mean one or more managers as
appointed by the Members from time to time pursuant to Article 7 below, and as
authorized by Sections 48-2b-125(2) and (3) of the Act. The current Managers are
Richard P. Durham, Jack E. Knott, N. Brian Stevenson and Ronald G. Moffitt, and
each shall remain a Manager until his position as such is terminated in
accordance with the provisions of Article 7 below. The term "Manager" or
"Managers" shall mean any successor or additional managers to the initial
Managers, designated in accordance with Article 7 hereof, during the period of
such responsibilities.
1.10 MEMBER OR MEMBERS.
The terms "Member" or "Members" shall mean Huntsman Packaging Corporation
or any person or persons who are permitted to be, and become, a successor to all
or any portion of its interests in the Company, or any persons who may become
additional members of the Company in accordance with the provisions of Article
11 below and Section 48-2b-122 of the Act.
1.11 TREASURY REGULATIONS.
The term "Treasury Regulations" shall refer to the income tax regulations
promulgated under the Code and effective as of the date hereof, as modified and
supplemented or superseded after the date hereof. Where a specific Treasury
Regulation is referenced, the reference shall be deemed to extend to any
successor regulation of similar scope, whether or not denominated by the same
section number or heading.
-2-
7
ARTICLE II
FORMATION OF LIMITED LIABILITY COMPANY
2.1 CREATION.
On the Effective Date, the Member has caused the Company to be organized
pursuant to the Act. The terms and provisions of this Agreement will be
construed and interpreted in accordance with the terms and provisions of the
Act.
2.2 COMPANY NAME.
The name of the Company shall be Huntsman Packaging of Canada, LLC and the
business of the Company shall be conducted under that name in the State of Utah
and under such name or variations thereof, as any Manager may deem necessary or
appropriate to comply with the requirements of any other jurisdiction in which
the Company may elect to do business. If necessary, each Manager will use his
best efforts to take the action required to comply with the Act, assumed name
act, fictitious name act, or similar statute in effect in each jurisdiction or
political subdivision in which the Company proposes to do business.
2.3 COMPANY OFFICES AND AGENT FOR SERVICE OF PROCESS.
The principal place of business of the Company, where the Company records
as specified in the Act shall be kept shall be 500 Huntsman Way, Salt Lake City,
Utah 84108. The address of the registered agent of the Company, where legal
process may be served as designated in the Articles or amendments thereto, shall
be 500 Huntsman Way, Salt Lake City, Utah 84108, and the name of the current
registered agent at that address is Ronald G. Moffitt. The Member may from time
to time change the principal place of business of the Company and/or the
registered agent, and amend the Articles to reflect such change, and may in its
discretion establish additional places of business of the Company.
2.4 NAME AND ADDRESS OF MEMBER.
The name and business address of the Member of the Company is as follows:
Huntsman Packaging Corporation
500 Huntsman Way
Salt Lake City, Utah 84108
2.5 NUMBER OF MEMBERS.
The Member identified herein shall constitute the sole member in the
Company, and, except as expressly provided for herein, no additional Members
shall be admitted to the Company. The Member shall not sell or assign its
interest in the Company except as provided in Article 10 of this Agreement.
-3-
8
2.6 CHARACTER OF BUSINESS.
The character and purposes of the Company and its business are (a) to
operate a chemicals business and to own, lease and operate the properties and
assets necessary to operate such chemicals business; (b) to purchase, lease,
sell, own and operate, and to finance the acquisition and operation of, real
property and personal property; (c) to incur indebtedness, secured or unsecured,
for any of the purposes of the Company; (c) to invest and reinvest the assets of
the Company in, and to purchase or otherwise acquire, hold, sell, transfer,
exchange or otherwise dispose of, or realize upon, securities of all types and
descriptions and any other interests in business ventures; (d) to engage in any
other lawful business activity permitted under the laws of the State of Utah;
and (e) any other purposes that are necessary to protect or enhance the
properties and assets of the Company.
2.7 PERIOD OF DURATION.
The period of the Company's duration or term shall be fifty (50) years
commencing on the Effective Date; provided, however, that the Company may be
dissolved prior to the end of such term in accordance with the provisions of
Article 12 below.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 CONTRIBUTIONS TO CAPITAL.
The Member shall contribute to the Company the property interests which
are more particularly described in Exhibit B attached hereto and by this
reference made a part hereof. The agreed fair market value of such property
interests or services also are set forth in Exhibit B hereto. In the event a
Member transfers to the Company property which is subject to an underlying
encumbrance and to which there is recourse to the transferring Member, then and
in such event, the underlying liability shall remain with the transferring
Member.
3.2 INITIAL CAPITAL INTERESTS.
The interests of the Member in the initial capital of the Company are as
follows:
Member Percent Interest
- ------ ----------------
Huntsman Packaging Corporation 100%
3.3 ADDITIONAL CONTRIBUTIONS.
The Members may from time to time, with the consent of all Members, make
additional capital contributions, as provided for herein. Each such contribution
shall be satisfied in cash or by a contribution of an interest in property equal
in value to the specified contribution amount for each Member. The Members have
not agreed to and are not obligated to make any other contributions.
-4-
9
3.4 INTEREST ON CONTRIBUTIONS.
No interest shall be paid on the initial capital accounts of the Company
or on any subsequent capital contributions made by the Members.
3.5 WITHDRAWAL OF CAPITAL.
No withdrawals of the Company capital will be permitted except on the vote
of all of the Members, or except in accordance with the provisions of Articles 4
and 12 of this Agreement.
ARTICLE IV
CAPITAL ACCOUNTS; DRAWING ACCOUNTS
4.1 CAPITAL ACCOUNTS.
An individual capital account shall be maintained for each Member. The
interest of each Member in the capital of the Company shall consist of its share
of the capital of the Company as shown in Article 3 hereof increased by (a) its
additional contributions to capital and (b) its share of Company profits
transferred to capital, and decreased by (i) distributions to it in reduction of
its Company capital and (ii) its share of Company losses, if transferred from
its drawing account. For federal income tax purposes, (x) if the Company has
only one Member (and such Member is a corporation), it will be treated as a
branch of such Member, or (y) if the Company has two or more Members, it will be
treated a partnership and its Members will be treated as partners (accordingly,
the capital accounts shall be established, maintained, and adjusted in
accordance with the requirements of Treasury Regulation Section 1.704-1(b) (2)
(iv) and any successor regulations, as the same may be determined by the
Internal Revenue Service, and all particular accounting requirements of those
regulations necessary to have the allocations of this Operating Agreement
recognized shall be deemed incorporated by this reference).
4.2 DRAWING ACCOUNTS.
Separate drawing accounts shall be maintained for the Members. All
withdrawals made by the Members shall be charged to their drawing accounts. Each
Member's share of profits and losses shall be credited or charged to its drawing
account. Unless a balance in a Member's drawing account in its favor (a credit
balance) is transferred to its capital account as hereinafter provided, it shall
constitute a liability of the Company to that Member payable as provided in
paragraph 4.3 of this Article 4, without interest; it shall not constitute a
part of its capital account or its interest in the capital of the Company.
Unless a deficit in a Member's drawing account (a debit balance) is transferred
to its capital account as hereinafter provided, it shall constitute an
obligation of that Member to the Company and shall not reduce its capital
account or its interest in the capital of the Company, regardless of whether
said deficit is occasioned by the Member's drawings in excess of its share of
Company profits or by charging the Member for its share of Company losses.
Payment of any obligation thus owing to the Company shall be made in a manner
and time determined by the Managers, together with Members who are not Managers
holding a majority of the interest of all such Members in the capital of the
Company.
-5-
10
4.3 DISTRIBUTION OF PROFITS.
If the Managers determine that any portion of the credit balances in the
Members' drawing accounts should be retained for the reasonable needs of the
business, such portion shall be retained in the drawing accounts of the Company.
Any portion of the Members' drawing accounts which is not so retained for the
reasonable needs of the business, shall be distributed to the Members in
accordance with their respective interests therein no less often than annually.
4.4 TRANSFERS FROM DRAWING ACCOUNTS TO CAPITAL ACCOUNTS.
The Managers may transfer all or part of any credit balances or debit
balances in the Members' drawing accounts to the Members' capital accounts at
any time, provided the transfers are made proportionately to each Member's
interest in capital unless otherwise agreed in writing by all the Members.
4.5 ALLOCATION OF LOSSES IN EXCESS OF CAPITAL ACCOUNT.
No allocation shall be made to a Member to the extent that the allocation
causes or increases a deficit balance in the Capital Account of that Member at
the end of the taxable year of the Company to which the allocation relates after
the Capital Account has been reduced as required by Treasury Regulation Section
1.704-l(b) (2) (ii) (d).
4.6 QUALIFIED INCOME OFFSET.
In the event any Member unexpectedly receives an adjustment, allocation or
distribution that results in a deficit balance in such Member's Capital Account,
there shall be allocated to such Member items of Company income and gain in an
amount and manner sufficient to eliminate such deficit balance as quickly as
possible in accordance with Treasury Regulation Section 1.704-1(b) (2) (ii) (d).
4.7 RETURN OF CAPITAL.
Each Member shall look solely to the Company assets for the return of its
contributions to Company capital, and if the Company assets are insufficient to
return such contributions, it shall have no recourse against any other Member
for that purpose. There is no right given the Members to receive upon
liquidation of the Company any property other than cash in return for its
contributions. The provisions of Article 12 shall govern the procedure and
computation of amounts available for distribution upon dissolution of the
Company.
ARTICLE V
PROFITS AND LOSSES
5.1 ALLOCATION OF PROFITS AND LOSSES.
Except as otherwise expressly set forth in this Agreement, the net profits
or net losses of the Company shall be credited or charged to the Members at the
end of each fiscal year of the
-6-
11
Company in the ratios set forth in paragraph 3.2 of Article 3 above, or in the
adjusted ratios if an adjustment in the proportionate shares of a Member has
been made pursuant to Article 4 above.
5.2 LIABILITY OF MEMBERS.
No Member shall personally be liable for any of the losses of the Company
beyond his capital interest in the Company.
5.3 DISTRIBUTION IN KIND.
The Company may, upon approval of Members holding a majority of the
interest in the capital of the Company, make distributions in kind. All Members
must accept distributions in kind, including a distribution of any asset in kind
to the extent that the percentage of the asset distributed to the Member exceeds
the percentage of that asset which is equal to the percentage in which the
Member shares in distribution from the Company.
ARTICLE VI
ACCOUNTING FOR THE COMPANY
6.1 ACCOUNTING METHODS; FISCAL YEAR.
Profits and losses of the Company shall be determined in accordance with
generally accepted accounting principles, and shall include gains or losses from
the sale of Company assets. The fiscal year of the Company, for both accounting
and tax reporting purposes, shall commence on January 1 and terminate on
December 31 of each year.
6.2 MEETINGS AND REVIEW OF FINANCIAL STATEMENTS.
Not less than once a year, a meeting of all Members shall be held. The tax
returns and any financial statements shall be reviewed and discussed at that
meeting. On written request, any Member shall be entitled to copies of tax
returns and any financial statements prepared for the Company.
6.3 RECORDS.
The Company shall keep at its principal place of business the records
required to be kept there pursuant to Section 48-2b-119 of the Act. Said records
are subject to inspection and copying at the reasonable request and at the
expense of any Member during ordinary business hours.
-7-
12
ARTICLE VII
MANAGEMENT OF COMPANY
7.1 MANAGEMENT BY MANAGERS.
Management of the Company shall initially be vested in four (4) Managers,
and thereafter as appointed by the Members from time to time. The initial
Managers of the Company shall be Richard P. Durham, Jack E. Knott, N. Brian
Stevenson and Ronald G. Moffitt, and they shall each continue as Managers of the
Company until their respective death, resignation, or removal. Upon the death,
resignation or removal of any Manager, the Members may elect a new Manager in
accordance with the provisions of this Article 7. In the event that the Managers
of the Company as provided in this Article 7 are no longer serving, the business
of the Company shall be under the exclusive management of the Members, and in
such case, the agreement of a majority in interest of all Members (in accordance
with their proportionate share of the capital of the Company) shall be necessary
for all decisions affecting the Company, and individual Members shall have no
power as such. In the event the Managers are changed, the Company shall file
with the Division an amendment to the Articles of Organization, as required by
law.
7.2 MANAGEMENT BY MEMBERS.
At all times when there are not one or more Managers appointed to act
hereunder by the Members pursuant to this Article 7, all business of the Company
shall, as indicated above, be under the exclusive management of the Members and
the agreement of a majority in interest of all Members (in accordance with their
proportionate share of the capital of the Company) shall be necessary for all
decisions affecting the Company. All actions which are or may be taken by or on
behalf of the Company, or regarding the management of the Company, by the
Managers of the Company, as provided herein or under the Act, shall be taken by
the Members at all times when there is no Manager acting hereunder.
7.3 AUTHORITY OF MANAGERS.
The Managers may exercise all the powers of the Company whether derived
from law, the Articles of Organization or this Agreement (except such powers as
are by statute, by the Articles of Organization, or by this Agreement vested
solely in the Members), and shall have the right, power and authority to do on
behalf of the Company all things which are necessary or desirable to carry out
the business of the Company, including, but not limited to, the right, power and
authority (a) to sell, exchange, or grant an option for the sale or exchange of
the property of the Company in the ordinary course of business, (b) to invest
and reinvest any available funds, (c) to incur all reasonable expenditures, (d)
to employ and dismiss from employment any and all employees, agents, independent
contractors, attorneys, and accountants, (e) to prepay in whole or in part,
refinance, modify, or extend any indebtedness, (f) to do any and all of the
foregoing at such price, rental or amount, for cash, securities, or other
property and upon such terms as the Managers deem proper, (g) to place record
title to any property in the name of the Company, (h) to adjust, compromise,
settle, or refer to arbitration any claim against or in favor of the Company or
any nominee, and to institute, prosecute, and defend any legal proceeding
relating to the business or property of the Company, (i) to delegate all or any
portion of the powers granted
-8-
13
hereunder to one or more attorneys-in-fact, and (j) to execute, acknowledge and
deliver any and all instruments to effectuate any and all of the foregoing.
7.4 RESTRICTIONS ON MANAGER.
No Manager shall, without the written consent or written ratification of
the specific act by all Members:
(a) Do any act to make it impossible to carry on the ordinary
business of the Company.
(b) Confess a judgment against the Company.
(c) Possess Company property in the name of the Manager or assign
rights of the Manager in specific Company property for other than a Company
purpose.
(d) Admit a person as a Member except as otherwise provided in this
Agreement.
(e) Continue the business with Company property after its
bankruptcy, dissolution, cancellation or other cessation to exist.
(f) Incur indebtedness other than normal accounts payable
indebtedness in the ordinary course of business.
(g) Sell, exchange, lease, mortgage, pledge, transfer, or otherwise
encumber or dispose of any portion of the assets of the Company, except in the
ordinary course of business.
(h) Enter into any transaction with, make payments to, or receive
payments from, directly or indirectly, any Manager, Member, or other affiliate
of the Company.
7.5 NUMBER, TERM AND QUALIFICATIONS.
The Company may have one or more Managers. Subject to the provisions of
Section 7.1, appointment of Manager(s) or increases or decreases in the number
of Managers may be made as the Members shall from time to time determine, by
agreement of Members holding a majority of the interest in the capital of the
Company, or by amendment to this Agreement. Each Manager shall hold office until
the Manager's successor shall have been appointed. A Manager need not be a
Member of the Company.
7.6 MANNER OF ACTING.
At all times when the Company is managed by Managers, except as otherwise
set forth in the Articles of Organization or this Agreement, any Manager shall
have the authority to bind the Company in accordance with the Act.
7.7 APPOINTMENT AND REMOVAL.
A Manager may be appointed only by the approval of Members holding a
majority of the interest in the capital of the Company. Any Manager may be
immediately and permanently
-9-
14
removed, with or without cause, upon the approval of Members holding a majority
of the interest in the capital of the Company.
7.8 FIDUCIARY RESPONSIBILITIES.
Each Member and Manager shall, in all events, account to the Company and
to the Members for any benefit, and hold, as trustee for the Company and the
Members, any profits derived by a Member or Manager from any transaction
connected with the formation, conduct or liquidation and winding up of the
Company or from any use by a Member or Manager of Company property, and such
duty extends to the personal representatives of any deceased Member or Manager
involved in the liquidation and winding up of the Company. All management,
investments, accountings, and distributions shall be conducted by the Members or
Managers, as the case may be, subject to good faith and fiduciary
responsibility. However, no Member or Manager shall be liable for any loss or
depreciation in the value of the Company or any of its assets or business
occurring by reason of error of judgment in making any sale, any investment or
reinvestment, or any management, investment or business decision whatsoever,
provided such loss or depreciation in value has not occurred through the actual
fraud, gross negligence or willful default of such Member or Manager. Good faith
and fiduciary responsibility shall be required of all Members and Managers.
7.9 BANK ACCOUNTS.
The Company shall maintain checking or other accounts in such bank or
banks as the Managers shall determine and all funds received by the Company
shall be deposited therein and withdrawn therefrom under such general or
specific authority as the Members shall grant to the Managers.
7.10 PERMITTED TRANSACTIONS.
The fact that any Member, or any affiliate of a Member, or any employee,
partner, officer, or director of either a Member or an affiliate of a Member, is
employed by, or is directly or indirectly interested in or connected with, or is
any person employed by the Company or any affiliate of the Company to render or
perform a service, or from or through whom the Company or any affiliate of the
Company may make any sale or purchase, or from whom the Company or any affiliate
of the Company may borrow, shall not prohibit the Company or any affiliate of
the Company from engaging in any transaction with such person, or create any
duty of legal justification additional to that which would exist if such person
were not so related to the Company, and neither the Company nor any other Member
shall have any right in or to any benefits derived from such transaction by such
Member or person.
7.11 TIME AND ATTENTION REQUIRED OF MANAGERS AND MEMBERS.
The parties understand that the Managers and Members have other business
activities that take a substantial portion of their time and attention.
Accordingly, the Managers and Members are required to devote to the business of
the Company only the time and attention that they in their sole discretion shall
deem necessary.
-10-
15
7.12 PRESIDENT AND VICE PRESIDENT OF THE COMPANY.
The Company may, but is not required to have, a President and one or more
Vice Presidents. The Managers of the Company shall appoint the President and the
Vice Presidents of the Company, if any, and each such officer shall serve until
his or her successor has been appointed and such officers may be immediately and
permanently removed, with or without cause, upon the approval of the Managers.
If the Managers elect to appoint a President and/or Vice President of the
Company, such President and Vice President shall perform such duties and have
such authority as may be assigned and delegated to him or her by the Managers.
The initial President of the Company shall be Richard P. Durham and the initial
Vice Presidents shall be Jack E. Knott, N. Brian Stevenson and Ronald G.
Moffitt.
ARTICLE VIII
COMPENSATION TO MANAGER
In the sole discretion of the Members, each Manager may be entitled to
receive a salary or fee each year set by the Members in a reasonable amount to
cover his work regarding the business of the Company in proportion to the amount
of work done by each Manager each year, but in no event to exceed the salary or
fee ordinarily paid for comparable managerial services rendered by uninterested
managers in similar businesses. If paid, such salary or fee shall be deducted
from Company income, like any other expense, in determining the net profit or
net loss distributable to the Members under Article 5. If paid, such salary or
fee shall be an obligation of the Company and shall not be an obligation of the
individual Members. The compensation of each Manager may be reviewed
periodically and adjusted by the Members in order to give each Manager fair
compensation.
ARTICLE IX
CONTINUATION OF COMPANY UPON THE DEATH,
INCAPACITY, RESIGNATION, EXPULSION,
BANKRUPTCY OR DISSOLUTION OF A MEMBER
In the event a Member dies, becomes incapacitated, resigns, is expelled,
becomes bankrupt, or is dissolved (a "terminating Member"), the Company shall
terminate and dissolve and immediately wind up its affairs and the Company shall
thereafter conduct only activities necessary thereto, and the Company shall be
dissolved in accordance with the provisions of Article 12 below and shall file
Articles of Dissolution with the Division, unless within ninety (90) days of the
date of the event causing such termination, the remaining Members unanimously
agree to continue the Company and its operations. If the remaining Members
unanimously agree to continue the Company and its operations, then:
(a) The terminating Member shall have the right to require the
Company to pay, in equal monthly amounts over a period of one (1) year without
interest, an amount equal to the fair market value of the terminating Member's
interest in the Company, including goodwill, if any. Notwithstanding other
provisions hereof, the Company, or if the Company determines that it is not able
or willing to do so, then the remaining Members, in that order, shall have the
right, at
-11-
16
their election, to purchase the terminating Member's interest in the Company,
upon such terms and conditions as they and the terminating Member, or the legal
representative or representatives of the terminating Member if he is deceased,
may agree. If the parties cannot agree upon the price for such a sale, then the
Manager and the terminating Member or his personal representative shall each
select and appoint an appraiser. If the appraisers so selected are not able to
agree on a valuation, then they shall select a third appraiser, and the decision
of a majority of the three (3) appraisers shall be binding upon all interested
parties. In the event the terminating Member is the sole Manager and the Company
is purchasing the interest, Members holding a majority of interest in the
capital of the Company shall select such appraiser. The acquiring party or
parties and the terminating Member, or the legal representative or
representatives of the terminating Member if he is deceased, shall share equally
the cost of the appraisal. In the event the parties are unable to agree upon
mutually acceptable terms and conditions, then the purchase price shall be paid
in cash in equal monthly amounts over a period of one (1) year without interest.
(b) If under the Act, the loss of the Member is an event which
requires that an Amendment regarding the Company's Articles be filed with the
Division or some other authority, or that some other action be taken by the
Company, then within the time provided for under the Act for the filing of such
an Amendment or taking such other action, the remaining Members shall cause such
an Amendment to be properly filed or such other action to be taken.
(c) The Company shall continue until the end of the term for which
it is formed or until the subsequent event of termination of the membership of
another Member, in which event a determination of whether the Company should be
continued by the remaining members in accordance with the provisions above shall
again be made.
If no election to continue the Company is made within the specified time,
the Company shall immediately wind up its affairs and be dissolved by filing
Articles of Dissolution with the Division. For purposes of this Article 9, the
bankruptcy of a Member shall be deemed to occur when the Member is adjudicated a
bankrupt under federal bankruptcy laws or has executed and delivered an
assignment for the benefit of creditors.
ARTICLE X
TRANSFER OF INTEREST
10.1 TRANSFER BY A MEMBER.
A Member may not sell, assign or otherwise transfer all or any part of his
interest in the Company, thereby substituting such transferee for himself as a
new Member of the Company, except with the written consent of Members holding a
majority of the interest in the capital of the Company, which consent may be
withheld for any reason and without any liability to the Company or to any other
Member. Notwithstanding anything to the contrary contained herein, a Member
shall have the right at any time to sell or give his interest in the Company to
another Member.
-12-
17
10.2 REQUIREMENTS OF TRANSFEREE.
Subject to the other provisions of this Article 10, any Member who desires
to transfer all or any part of his interest and who obtains the consent of the
Managers and the Members to such transfer shall comply with the requirements of
Section 10.3 and shall arrange for his transferee to be bound by this Agreement,
as it may then be amended, by having such transferee execute two counterparts of
an instrument of assignment satisfactory in form to the Company and by
delivering the same to the Company together with any such other information that
may be required by counsel to the Company. The transferee may be required to pay
any and all reasonable filing and recording fees, legal fees, accounting fees,
and other charges and fees incurred by the Company and its counsel as a result
of such transfer. Each assignment or transfer shall be effective on the Company
records as of the first day of the calendar month following the month during
which the Company actually receives the aforesaid instrument of assignment
executed by both the transferor and transferee; however, no attempted assignment
or transfer shall be effective or recognized by the Company or the Members until
all requirements of this Article 10 have been satisfied.
10.3 COMPLIANCE WITH SECURITIES LAWS.
Notwithstanding any provision in this Article 10 to the contrary, no
interest may be sold, pledged, hypothecated or otherwise transferred except in
compliance with the registration requirements of the Securities Act of 1933, as
amended, and applicable state securities laws or applicable exemptions from
registration under those laws. The Company may further require an opinion of
counsel from counsel acceptable to the Company that the proposed transfer would
constitute a transaction that is exempt from the registration requirements of
all applicable federal and state securities laws. All costs of complying with
the requirements of this paragraph, including the costs of a review of the
matter by counsel for the Company, shall be borne by the transferor and
transferee.
10.4 OPTIONS TO PURCHASE INTERESTS.
Each Member hereby grants to the other Members, as hereinafter provided,
the option to purchase the Member's interest in the Company upon certain
conditions set forth in the balance of this Section 10.4.
(a) In the event that any Member's interest in the Company
("Membership Interest") is voluntarily transferred without complying with the
provisions of this Article 10 or if such Membership Interest is involuntarily
transferred, then the other Members ("purchasing Members") shall have the right
and option, for a period of ninety (90) days following the Company's knowledge
of the occurrence of such event, to purchase the Membership Interest of the
Member who voluntarily or involuntarily transferred such interest ("transferring
Member") by giving a written notice ("Notice of Intention") to exercise the
option to the transferring Member. If there is more than one other purchasing
Member, then each purchasing Member shall have the right to purchase such
portion of the transferring Member's interest as the percentage interest owned
by said purchasing Member at such time bears to the total interest owned by all
other purchasing Members; provided, however, that if any purchasing Member does
not purchase his full proportion of the allotment of the Membership Interest,
the unaccepted Membership
-13-
18
Interest may be purchased by the other purchasing Members proportionately. In
the event said option is exercised, then the purchasing Members shall have the
right to purchase the Membership Interest of the transferring Member upon the
terms and conditions set forth in subparagraph (b), below.
(b) The purchase price for the Membership Interest of the
transferring Member under this Section 10.4 shall be fair market value of such
Membership Interest. In the event that the purchasing Members and the
transferring Member (or his legal representatives) cannot agree on the fair
market value of the interest in the Company, then the purchasing Members and the
transferring Member shall each appoint an appraiser. In the event the appraisers
so appointed are unable to mutually agree upon the fair market value of the
Membership Interest then they shall appoint a third appraiser and the decision
of a majority of the three (3) appraisers so appointed shall be binding upon all
interested parties. The fees and other costs of the appraisals shall be shared
equally one-half by the purchasing Members and one-half by the transferring
Member involved in the dispute. The purchase price as determined in this
subparagraph (b) shall be paid to the transferring Member upon such terms and
conditions as are mutually agreed to by the parties. In the event the parties
are unable to agree upon mutually acceptable terms and conditions, then the
purchase price shall be paid in cash in equal monthly amounts over a period of
one (1) year without interest.
10.5 RIGHTS OF FIRST REFUSAL OF MEMBERS.
In addition to the option rights granted under Article 9 and Section 10.4,
the other Members shall have the right of first refusal to acquire the
Membership Interest of any Member ("transferring Member") who is offering such
interest in the Company to any person, on terms and conditions identical to
those of the proposed sale. Prior to a proposed sale, written notice of the
price and terms of the proposed sale and a true and correct copy of the contract
or offer to purchase, together with the identity of the proposed buyer, must be
provided to the other Members ("non-offering Members"), which notice shall
constitute an offer of the interest to the non-offering Members on the terms and
conditions set forth in the notice. If there is more than one other non-offering
Member, then each non-offering Member shall have the right to purchase such
portion of the membership offered for sale as the percentage interest owned by
said Member at such time bears to the total percentage membership owned by all
other non-offering Members; provided, however, that if any Member does not
purchase his full proportionate allotment of the Membership Interest, the
unaccepted Membership Interest may be purchased by the other non-offering
Members proportionately. Failure of the non-offering Members to accept the offer
within thirty (30) days after delivery of the notice to them shall constitute
rejection of the offer. In the event that the non-offering Members reject the
offer (and after the other provisions of this Article 10 have been satisfied),
the transferring Member shall have the right to sell the Membership Interest to
the proposed buyer identified in the written notice, provided that the sale is
made on terms and conditions identical to those disclosed in the written notice
to the non-offering Members and that a binding written agreement of sale is
entered into and transfer completed within thirty (30) days after the rejection
by the non-offering Members. Notwithstanding the foregoing, any Member may
transfer any or all of his Membership Interest which may now or hereafter be
owned by him, solely to or for the benefit of one or more persons in the class
consisting of the Member and members of the Member's family (as hereinafter
defined), subject only to written notification to the Company of the proposed
transfer. The term
-14-
19
"Member's family" or "members of the Member's family" for purposes of this
Agreement shall be deemed to include any lineal ancestor and lineal descendant
of the Member, including legally adopted children, and spouse of the transferor.
Transfers in trust, the primary and non-beneficiaries of which are members of
the Member's family, shall also be exempt pursuant to the preceding paragraph.
10.6 TRANSFER PROVISIONS BINDING.
Any sale, assignment or transfer or purported sale, assignment or transfer
of any interest in the Company shall be null and void unless made strictly in
accordance with the provisions of Article 9 or this Article 10. The transferee
of any Membership Interest in the Company shall be subject to all the terms,
conditions, restrictions, and obligations of this Agreement. A transferee who
has properly acquired the interest of a Member in the Company may become a
Member of the Company only if the transferee is admitted as a Member in
accordance with the provisions of Article 11. If such transferee is not so
admitted, then such transferee shall have no right to participate in the
management of the business and affairs of the Company or to become a Member; the
only rights to which such transferee shall be entitled are the share of profits
or other compensation by way of income and the return of contributions to which
the transferor was entitled.
10.7 ENCUMBRANCES.
No Member shall in any way encumber, pledge, hypothecate, or otherwise use
its Membership Interest as collateral or security for an obligation, without the
prior written consent of the majority of all the Members, which consent may be
withheld for any reason without liability to the Company or any other Member.
ARTICLE XI
ADMISSION OF NEW MEMBERS
Additional Members may be admitted to the Company with the prior written
consent of Members holding a majority of the interest in the capital of the
Company. In the event that a new Member makes a contribution to the Company in
return for admission into the Company, the share of such new Member and all
other Members in the capital and the profits and losses of the Company, shall be
in such proportion as may be agreed upon among all of the Members. In the event
new Members are admitted to the Company, the Members shall file with the
Division an amendment to the Articles, as required by law.
ARTICLE XII
DISSOLUTION, WINDING UP AND CANCELLATION
12.1 EVENTS CAUSING DISSOLUTION.
The Company shall be dissolved and its affairs shall be wound up when any
one or more of the following occurs:
-15-
20
(a) The term of the Company expires.
(b) If there is not at least one (1) Member.
(c) If, after the death, incapacity, withdrawal, resignation,
expulsion, bankruptcy or dissolution of a Member, the business of the Company is
not continued pursuant to the provisions of Article 9 hereof.
(d) All Members vote to dissolve the Company.
12.2 METHOD OF WINDING UP AND CANCELLATION.
Upon the occurrence of any event causing dissolution as provided in
paragraph 12.1, above, the Company shall immediately commence to liquidate and
wind up its affairs. The Members shall continue to share profits and losses
during the period of liquidation and winding up in the same proportions as
before commencement of winding up and dissolution. Any gain or loss in
disposition of the Company properties in the process of liquidation and winding
up shall be credited or charged to the Members in the ratio of their capital in
the Company, as provided in Article 4. The proceeds from the liquidation and
winding up shall be applied in the following order:
(a) To creditors of the Company, including Members who are
creditors, to the extent permitted by law, in satisfaction of liabilities of the
Company other than those liabilities to Members on account of their
contributions or on account of a Member's withdrawal from the Company or
pursuant to a withdrawal of capital.
(b) To the Members in repayment of the amount of their respective
Capital Accounts after taking into account all capital account adjustments for
the taxable year during which the liquidation occurs (other than those made
pursuant to this subsection (b)).
For purposes of determining the amount of such distributions, all Company
assets shall be valued by the liquidator at their then fair market value, and
any gains or losses that arise from their sale at such valuation or, in the
event of distributions to be made in kind, that would arise assuming such a sale
were made, shall be allocated as specified in this Agreement and in accordance
with Treasury Regulation Section 1.704-l (b) (2) (iv) (f).
When all debts, liabilities, and obligations of the Company have been paid
or discharged, or adequate provision has been made to do so, and all of the
remaining property and assets of the Company have been distributed to the
Members, Articles of Dissolution shall be executed and filed with the Division
as required by Section 48-2b-139 of the Act.
ARTICLE XIII
ENCUMBRANCES
Except as provided in Article 10, no Member shall in any way encumber,
pledge, hypothecate or otherwise use his Membership Interest as collateral or
security for an obligation, without the prior written consent of the majority of
all of the Members.
-16-
21
ARTICLE XIV
INDEMNITY
The Company shall indemnify and save harmless each Manager from any
personal loss or damage incurred by such Manager by reason of any act performed
by such Manager for and on behalf of the Company and in furtherance of its
interests; provided, however, the provisions of this Article 14 shall apply only
to acts of such Manager complying with Section 7.8.
ARTICLE XV
MISCELLANEOUS
15.1 NOTICES.
Any notices to or between the Members shall be in writing and shall be
delivered by hand to the Member or be sent by registered mail, return receipt
requested, to the address of each Member as the same appears in the books and
records of the Company. Notice shall be deemed to be received on the earlier of
the date actually received or the third day after being deposited in the United
States mail as above described.
15.2 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement shall constitute the entire contract between the parties,
and there are no other or further agreements outstanding not specifically
mentioned herein; provided, however, that this Agreement may be amended,
altered, supplemented or modified by the written agreement of all the Members.
15.3 CONSTRUCTION.
The parties to this Agreement intend that (a) if there is only one Member,
the Company shall be classified as a sole proprietorship, if the Member is an
individual, or as a branch, if the Member is a corporation, and (b) if there is
more than one Member, each Member be recognized as a partner for purposes of
Section 704(e) of the Code, and that the distributive share of each Member in
the profits and losses of the Company shall be included in his gross income (it
is the intention of the Members that the provisions of Subchapter K of the Code
be applicable to the taxation of the Company and its Members). All provisions of
this Operating Agreement shall be construed in accordance with these expressed
intentions.
15.4 INTERPRETATION.
Unless otherwise provided, all terms shall have the meaning given them in
the ordinary English usage and as customarily used. Words in any gender shall
include both other genders and the neuter. Whenever the context requires, the
singular shall include the plural, the plural shall include the singular, and
the whole shall include any part thereof.
-17-
22
15.5 EXECUTION OF FURTHER INSTRUMENTS.
The Members shall cooperate with each other in good faith to accomplish
the objectives and purposes hereof and to that end, from time to time, they
shall make, execute and deliver such other and further instruments as may be
necessary or convenient in the fulfillment of this Agreement.
15.6 HEADINGS.
The headings in this Agreement are included solely for convenience of
reference and shall not limit, expand, or otherwise affect the construction of
any of the provisions of this Agreement.
15.7 AGREEMENT TO BE BINDING.
This Agreement shall be governed by the laws of the State of Utah and
shall inure to the benefit of and shall be binding upon each of the Members and
their respective personal representatives, executors, heirs, successors and
assigns (including successors and assigns by operation of law and involuntary
event, as well as by voluntary act).
15.8 PROVISIONS CONTRARY TO ACT; SEVERABILITY.
To the extent any provision of the Agreement varies or contradicts the
general provisions of the Act, each Member hereby consents to such variation or
contradiction. If any provision of this Agreement or the application of such
provision to any person or circumstance, shall be held invalid, the remainder of
this Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
[Signature Page Follows]
-18-
23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HUNTSMAN PACKAGING CORPORATION, a Utah corporation
By: /s/ Ronald G. Moffitt
----------------------------------------------------
Its Executive Vice President and Chief Financial Officer
HUNTSMAN PACKAGING OF CANADA, LLC,
a Utah limited liability company
By: /s/ Ronald G. Moffitt
----------------------------------------------------
Its Manager - Vice President
24
EXHIBIT A
ARTICLES OF ORGANIZATION
OF HUNTSMAN PACKAGING OF CANADA, LLC
The undersigned, acting as a manager of a limited liability company under
the Utah Limited Liability Company Act, adopts the following Articles of
Organization for such limited liability company.
1. Name. The name of the limited liability company is Huntsman Packaging
of Canada, LLC (the "Company").
2. Period of Duration. The period of duration of the Company shall be
fifty (50) years from the date these Articles of Organization are filed with the
Utah Department of Commerce, Division of Corporations and Commercial Code.
3. Business Purposes. The business purposes for which the Company is
organized are as follows: (a) to operate a chemicals business and to own, lease
and operate the properties and assets necessary to operate such chemicals
business; (b) to purchase, lease, sell, own and operate, and to finance the
acquisition and operation of, real property and personal property; (c) to incur
indebtedness, secured or unsecured, for any of the purposes of the Company; (d)
to invest and reinvest the assets of the Company in, and to purchase or
otherwise acquire, hold, sell, transfer, exchange or otherwise dispose of, or
realize upon, securities of all types and descriptions and any other interests
in business ventures; (e) to engage in any other lawful business activity
permitted under the laws of the State of Utah; and (f) any other purposes that
are necessary to protect or enhance the properties and assets of the Company.
4. Registered Office and Registered Agent. The street address of the
Company's initial registered office and the name of the Company's initial
registered agent at such street address are as follows:
Ronald G. Moffitt
500 Huntsman Way
Salt Lake City, Utah 84108
5. Management. The Company shall be managed by managers. The names and
street addresses of the initial managers of the Company are as follows:
Richard P. Durham
500 Huntsman Way
Salt Lake City, Utah 84108
Jack E. Knott
500 Huntsman Way
Salt Lake City, Utah 84108
A-1
25
N. Brian Stevenson
500 Huntsman Way
Salt Lake City, Utah 84108
Ronald G. Moffitt
500 Huntsman Way
Salt Lake City, Utah 84108
6. Substitute Service of Process. The Director of the Utah Department of
Commerce, Division of Corporations and Commercial Code is hereby appointed as
the agent of the Company for service of process if the registered agent has
resigned, the registered agent's authority has been revoked or the registered
agent cannot be found or served with the exercise of reasonable diligence.
The undersigned hereby affirms that he is a manager of the Company and
that the facts stated in the foregoing Articles of Organization are true.
/s/ Ronald G. Moffitt
-----------------------------------------
Ronald G. Moffitt
ACKNOWLEDGMENT OF REGISTERED AGENT
The undersigned, Ronald G. Moffitt, hereby acknowledges that he has been
named as registered agent of Huntsman Packaging of Canada, LLC, a Utah limited
liability company, and hereby agrees to act as registered agent of said limited
liability company.
/s/ Ronald G. Moffitt
-----------------------------------------
Ronald G. Moffitt
A-2
26
EXHIBIT B
CAPITAL CONTRIBUTIONS
MEMBER DESCRIPTION OF CONTRIBUTION
------ ---------------------------
Huntsman Packaging Corporation All assets of Ellehammer Industries,
Ltd.
B-1