EXHIBIT 3.2(e)
OPERATING AGREEMENT
OF
JLG MANUFACTURING, LLC
OCTOBER 3, 1997
TABLE OF CONTENTS
Page
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EXPLANATORY STATEMENT...................................................................1
SECTION 1 DEFINED TERMS.........................................................1
1.1. Act...................................................................1
1.2. Adjusted Capital Account Deficit......................................1
1.3. Affiliate.............................................................2
1.4. Agreement.............................................................2
1.5. Capital Account.......................................................2
1.6. Capital Contribution..................................................2
1.7. Capital Proceeds......................................................3
1.8. Capital Transaction...................................................3
1.9. Cash Flow.............................................................3
1.10. Code..................................................................3
1.11. Company...............................................................3
1.12. Company Minimum Gain..................................................3
1.13. Depreciation..........................................................3
1.14. Gross Asset Value.....................................................3
1.15. Interest..............................................................4
1.16. Interest Holder.......................................................4
1.17. Involuntary Withdrawal................................................4
1.18. Member................................................................5
1.19. Member Nonrecourse Debt...............................................5
1.19. Member Nonrecourse Debt...............................................5
1.20. Member Nonrecourse Debt Minimum Gain..................................5
1.21. Member Nonrecourse Deductions.........................................6
1.22. Membership Rights.....................................................6
1.23. Negative Capital Account..............................................6
1.24. Nonrecourse Deductions................................................6
1.25. Nonrecourse Liability.................................................6
1.26. Operating Percentage..................................................6
1.27. Person................................................................6
1.28. Positive Capital Account..............................................6
1.29. Profit and Loss.......................................................6
1.30. Regulations...........................................................7
1.31. Transfer..............................................................7
SECTION 2 FORMATION AND NAME; OFFICE; PURPOSE; TERM.............................7
2.1. Organization..........................................................7
2.2. Name of the Company...................................................7
2.3. Purpose...............................................................7
2.4. Term..................................................................7
2.5. Registered Office.....................................................7
2.6. Principal Office......................................................8
2.7. Members...............................................................8
SECTION 3 MEMBERS; CAPITAL; CAPITAL ACCOUNTS....................................8
3.1. Initial Capital Contributions.........................................8
3.2. Additional Capital Contributions......................................8
3.3. No Interest on Capital Contributions..................................8
3.4. Return of Capital Contributions.......................................8
3.5. Form of Return of Capital.............................................8
3.6. Capital Accounts......................................................8
3.7. Loans.................................................................8
3.8. No Liability..........................................................8
SECTION 4 PROFIT, LOSS AND DISTRIBUTIONS....................................... 9
4.1. Distributions of Cash Flow and Allocations of Profit or Loss......... 9
4.2. Regulatory Allocations............................................... 9
4.3. Liquidation and Dissolution..........................................11
4.4. General..............................................................11
SECTION 5 MANAGEMENT: RIGHTS, POWERS, AND DUTIES...............................12
5.1. Management...........................................................12
5.2. General Powers.......................................................12
5.3. Meetings of and Voting By Members....................................13
5.4. Liability............................................................13
5.5. Indemnification......................................................14
SECTION 6 TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS.....................14
6.1. Restrictions on Transfer.............................................14
6.2. Voluntary Withdrawal.................................................15
6.3. Involuntary Withdrawal...............................................15
SECTION 7 DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY..............15
7.1. Events of Dissolution................................................15
7.2. Procedure for Winding Up and Dissolution.............................15
7.3. Filing of Certificate of Dissolution.................................16
SECTION 8 BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS........................16
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8.1. Accounts.............................................................16
8.2. Books and Records....................................................16
8.3. Annual Accounting Period.............................................16
8.4. Reports..............................................................16
8.5. Tax Matters Partner..................................................17
8.6. Tax Elections........................................................17
8.7. Title to Company Property............................................17
SECTION 9 GENERAL PROVISIONS...................................................17
9.1. Assurances...........................................................17
9.2. Notifications........................................................17
9.3. Specific Performance.................................................18
9.4. Complete Agreement...................................................18
9.5. Applicable Law.......................................................18
9.6. Section Titles.......................................................18
9.7. Binding Provisions...................................................18
9.8. Waiver of Action for Partition.......................................18
9.9. Terms................................................................18
9.10. Separability of Provisions...........................................18
9.11. Counterparts.........................................................19
9.12. Estoppel Certificate.................................................19
EXHIBITS
Exhibit A - List of Members; Capital; and Percentage Interest
Exhibit B - Certificate of Organization
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JLG MANUFACTURING, LLC
OPERATING AGREEMENT
THIS OPERATING AGREEMENT (this "Agreement") is entered into as of the 3rd of
October, 1997, by and between JLG INDUSTRIES, INC., a Pennsylvania
corporation, and FULTON INDUSTRIES, INC., a Pennsylvania corporation.
EXPLANATORY STATEMENT
WHEREAS, the parties have agreed to organize and operate a
limited liability company in accordance with the Act and subject to the terms
and conditions set forth in this Agreement; and
WHEREAS, JLG Industries, Inc. has provided the capital for
the Company and, pursuant to this Agreement, is directing that a one percent
interest in the Company be issued to Fulton Industries, Inc., its wholly-owned
subsidiary, as a capital contribution.
NOW, THEREFORE, for good and valuable consideration, the
parties, intending to be legally bound, agree as follows:
SECTION 1
DEFINED TERMS
The following capitalized terms shall have the meanings
specified in this Section 1. Other terms are defined in the text of this
Agreement, and throughout this Agreement, those terms shall have the meanings
respectively ascribed to them.
1.1. Act. "Act" means the Pennsylvania Limited
Liability Company Law, 15 P.C.S.A. Section 8901 et seq., as amended from time
to time.
1.2. Adjusted Capital Account Deficit. "Adjusted
Capital Account Deficit" means, with respect to any Interest Holder, the
deficit balance, if any, in the Interest Holder's Capital Account as of the
end of the relevant taxable year, after giving effect to the following
adjustments:
(i) the deficit shall be decreased by the
amounts which the Interest Holder is obligated to restore, if any, pursuant to
this Agreement, or is deemed obligated to restore pursuant to Treas. Reg.
Section 1.704-1(b)(2)(ii)(c); and
(ii) the deficit shall be increased by the
items described in Treas. Reg. Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.3. Affiliate. "Affiliate" means, with respect to any
Member, any Person: (i) which owns more than 5% of the voting interests in the
Member; (ii) in which the Member owns more than 5% of the voting interests;
(iii) in which more than 5% of the voting interests are owned by a Person who
has a relationship with the Member described in clause (i) or (ii) above; (iv)
which appoints one or more members of the governing body of any Member, (v)
which has one or more members of its governing body appointed by a Member,
(vi) which has one or more of its governing body appointed by a Person having
a relationship described in clause (iv) or (v) above with any Member, or (vii)
which receives from or provides to any Member or any Person having a
relationship described in clause (iv) or (v) above with any Member 50% or more
of its income.
1.4. Agreement. "Agreement" means this Agreement, as
amended from time to time.
1.5. Capital Account. "Capital Account" means the
capital accounts created in accordance with Section 3.6. Each Capital Account
shall be maintained in accordance with the following provisions:
(i) an Interest Holder's Capital Account shall
be credited with the Interest Holder's Capital Contribution, the amount of any
Company liabilities assumed by the Interest Holder (or which are secured by
Company property distributed to the Interest Holder), the Interest Holder's
distributive share of Profit and any item in the nature of income or gain
specially allocated to such Interest Holder pursuant to the provisions of
Section 4 (other than Section 4.2.4.); and
(ii) an Interest Holder's Capital Account shall
be debited with the amount of money and the fair market value of any Company
property distributed to the Interest Holder, the amount of any liabilities of
such Interest Holder assumed by the Company (or which are secured by property
contributed by the Interest Holder to the Company), the Interest Holder's
distributive share of Loss and any item in the nature of expenses or losses
specially allocated to the Interest Holder pursuant to the provisions of
Section 4 (other than Section 4.2.4.).
If the book value of Company property is adjusted pursuant to Section 4.2.4.,
the Capital Account of each Interest Holder shall be adjusted to reflect the
aggregate adjustment in the same manner as if the Company had recognized gain
or loss equal to the amount of such aggregate adjustment. If any Interest is
transferred pursuant to the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent the Capital
Account is attributable to the transferred Interests. It is intended that the
Capital Accounts of all Interest Holders shall be maintained in compliance
with the provisions of section 704(b) of the Code and the Regulations
thereunder, and all provisions of this Agreement relating to the maintenance
of Capital Accounts shall be interpreted and applied in a manner consistent
with that Regulation.
1.6. Capital Contribution. "Capital Contribution" means
the total amount of cash and the fair market value of any other assets
contributed (or deemed contributed under
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Treas. Reg. Section 1.704-l(b)(2)(iv)(d)) to the Company by a Member, net of
liabilities assumed or to which the assets arc subject.
1.7. Capital Proceeds. "Capital Proceeds" means the
gross receipts received by the Company from a Capital Transaction.
1.8. Capital Transaction. "Capital Transaction" means
any transaction not in the Ordinary Course of Business which results in the
Company's receipt of cash or other consideration other than Capital
Contributions, including, without limitation, proceeds of sales or exchanges
or other dispositions of property not in the ordinary course of business,
financings, refinancings, condemnations, recoveries of damage awards and
insurance proceeds.
1.9. Cash Flow. "Cash Flow" means all cash funds derived
from operations of the Company (including interest received on reserves),
without reduction for any non-cash charges, but less cash funds used to pay
current operating expenses and to pay or establish reasonable reserves for
future expenses, debt payments, capital improvements and replacements as
determined by the Members. Cash Flow shall not include Capital Proceeds but
shall be increased by the reduction of any reserve previously established.
1.10. Code. "Code" means the Internal Revenue Code of
1986, as amended, or any corresponding provision of any succeeding law.
1.11. Company. "Company" means the limited liability
company formed in accordance with this Agreement.
1.12. Company Minimum Gain. "Company Minimum Gain" has
the meaning set forth in Treas. Reg. Sections 1.704-2(b)(2) and 1.704-2(d) for
partnership minimum gain.
1.13. Depreciation. "Depreciation" shall mean, for each
taxable year, an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such taxable year,
except that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such taxable year,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such taxable year bears to such beginning
adjusted basis; provided, however, that if the adjusted basis for federal
income tax purposes of an asset at the beginning of such taxable year is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the Members.
1.14. Gross Asset Value. "Gross Asset Value" means, with
respect to any asset, the asset's adjusted basis for federal income tax
purposes, except as follows:
1.14.1. The initial Gross Asset Value of any asset
contributed by a Member of the Company shall be the gross fair market value of
such asset, as determined by the contributing Member and the remaining
Members;
1.14.2. The Gross Asset Value of all Company
assets shall be adjusted to equal their respective gross fair market values,
as determined by the Members, as of the
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following time: (i) the acquisition of an additional interest in the Company
by any new or existing Member in exchange for more than a de minimis Capital
Contribution; (ii) the distribution by the Company to a Member of more than a
de minimis amount of Property as consideration for an interest in the Company;
and (iii) the liquidation of the Company within the meaning of Treas. Reg.
Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (i) and (ii) above shall be made only if the Members reasonably
determine that such adjustments are necessary or appropriate to reflect the
relative economic interest of the Members in the Company;
1.14.3. The Gross Asset Value of any Company asset
distributed to any Member shall be adjusted to equal the gross fair market
value of such asset on the date of distribution as determined by the
distribute and the remaining Members; and
1.14.4. The Gross Asset Values of the Company
assets shall be increased (or decreased) to reflect any adjustments to the
adjusted basis of such asset pursuant to section 734(b) or section 743(b) of
the Code, but only to the extent that such adjustments are taken into account
in determining Capital Accounts pursuant to Treas. Reg. Section
1.704-l(b)(2)(iv)(m) and Sections 1.14.1. and 1.14.2. hereof; provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
Section 1.14.4. to the extent that the Members determine that an adjustment
pursuant to Section 1.14.2. hereof is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment pursuant to
this Section 1.14.4.
1.14.5. If the Gross Asset Value of an asset has
been determined or adjusted pursuant to Section 1.14.2. or Section 1.14.4.
hereof, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
1.15. Interest. "Interest" means an Interest Holder's
share of the Profits and Losses of, and the right to receive distributions
from, the Company.
1.16. Interest Holder. "Interest Holder" means any
Person who holds an Interest, whether as a Member or an unadmitted assignee of
a Member.
1.17. Involuntary Withdrawal. "Involuntary Withdrawal"
means, with respect to any Member, the occurrence of any of the following
events:
(i) the Member makes an assignment for the
benefit of creditors;
(ii) the Member files a voluntary petition of
bankruptcy;
(iii) the Member is adjudged bankrupt or
insolvent or there is entered against the Member an order for relief in any
bankruptcy or insolvency proceeding;
(iv) the Member files a petition or answer
seeking for the Member any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any statute,
law, or regulation;
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(v) the Member seeks, consents to, or
acquiesces in the appointment of a trustee for, receiver for, or liquidation
of the Member or of all or any substantial part of the Member's properties;
(vi) the Member files an answer or other
pleading admitting or failing to contest the material allegations of a
petition filed against the Member in any proceeding described in Subsections
(i) through (v);
(vii) any proceeding against the Member seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law or regulation, continues
for one hundred twenty (120) days after the commencement thereof, or the
appointment of a trustee, receiver, or liquidator for the Member or all or any
substantial part of the Member's properties without the Member's agreement or
acquiescence, which appointment is not vacated or stayed for one hundred
twenty (120) days or, if the appointment is stayed, for one hundred twenty
(120) days after the expiration of the stay during which period the
appointment is not vacated;
(viii) if the Member is an individual, the
Member's death or adjudication by a court of competent jurisdiction as
incompetent to manage the Member's person or property;
(ix) if the Member is acting as a Member by
virtue of being a trustee of a trust, the termination of the trust; (x) if the
Member is a partnership or another limited liability company, the dissolution
and commencement of winding up of the partnership or limited liability
company;
(xi) if the Member is a corporation, the
dissolution of the corporation or the revocation of its charter; or
(xii) if the Member is an estate, the
distribution by the fiduciary of the estate's entire interest in the limited
liability company.
1.18. Member. "Member" means each Person signing this
Agreement and any Person who subsequently is admitted as a member of the
Company. If a Member is a corporation, the Member may act through an
authorized representative, with notice of such authorization to be provided in
advance to the Company.
1.19. Member Nonrecourse Debt. "Member Nonrecourse Debt"
has the meaning set forth in Treas. Reg. Section 1.704-2(b)(4) for partner
nonrecourse debt.
1.20. Member Nonrecourse Debt Minimum Gain. "Member
Nonrecourse Debt Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Treas. Reg. Section 1.704-2(i)(3).
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1.21. Member Nonrecourse Deductions. "Member Nonrecourse
Deductions" has the meaning set forth in Treas. Reg. Sections 1.704-2(i)(1)
and 1.704-2(i)(2) for partner nonrecourse deductions.
1.22. Membership Rights. "Membership Rights" means all
of the rights of a Member in the Company, including a Member's: (i) Interest;
(ii) right to inspect the Company's books and records; and (iii) right to
participate in the management of and vote on matters coming before the
Company.
1.23. Negative Capital Account. "Negative Capital
Account" means a Capital Account with a balance of less than zero.
1.24. Nonrecourse Deductions. "Nonrecourse Deductions"
has the meaning set forth in Treas. Reg. Section 1.704-2(b)(1). The amount of
Nonrecourse Deductions for a taxable year of the Company equals the net
increase, if any, in the amount of Minimum Gain during that taxable year,
determined according to the provisions of Treas. Reg. Section 1.704-2(c).
1.25. Nonrecourse Liability. "Nonrecourse Liability" has
the meaning set forth in Treas. Reg. Section 1.704-2(b)(3).
1.26. Operating Percentage. "Operating Percentage" means,
as to a Member, the percentage set forth after the Member's name on Exhibit A,
as amended from time to time, and as to an Interest Holder who is not a
Member, the Operating Percentage of the Member whose Interest is held by such
Interest Holder, to the extent the Interest Holder has succeeded to that
Member's Interest. The Operating Percentage shall be such Member's share of
the operating income and expenses of the Company.
1.27. Person. "Person" means any individual,
corporation, partnership, association, limited liability company, trust,
estate or other entity.
1.28. Positive Capital Account. "Positive Capital
Account" means a Capital Account with a balance greater than zero.
1.29. Profit and Loss. "Profit" and "Loss" means, for
each taxable year of the Company (or other period for which Profit or Loss
must be computed) the Company's taxable income or loss determined in
accordance with section 703(a) of the Code, with the following adjustments:
(i) all items of income, gain, loss,
deduction, or credit required to be stated separately pursuant to section
703(a)(1) of the Code shall be included in computing taxable income or loss;
(ii) any tax-exempt income of the Company not
otherwise taken into account in computing Profit or Loss shall be included in
computing taxable income or loss;
(iii) any expenditures of the Company described
in section 705(a)(2)(b) of the Code (or treated as such pursuant to Treas.
Reg. Section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profit or Loss shall be subtracted from taxable income or loss;
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(iv) gain or loss resulting from any taxable
disposition of Company property shall be computed by reference to the adjusted
book value of the property disposed of, notwithstanding the fact that the
adjusted book value differs from the adjusted basis of such property for
federal income tax purposes;
(v) in lieu of the depreciation, amortization
or cost recovery deductions allowable in computing taxable income or loss,
there shall be taken into account the depreciation computed based upon the
adjusted book value of the asset; and
(vi) notwithstanding any other provision of
this definition, any items which are specially allocated pursuant to Section
4.2. hereof shall not be taken into account in computing Profit or Loss.
1.30. Regulations. "Regulations" mean the income tax
regulations including any temporary regulations. from time to time promulgated
under the Code.
1.31. Transfer. "Transfer" means, when used as a noun,
any voluntary sale, hypothecation, pledge, assignment, attachment or other
transfer, and, when used as a verb, means voluntarily to sell, hypothecate,
pledge, assign or otherwise transfer.
SECTION 2
FORMATION AND NAME; OFFICE; PURPOSE; TERM
2.1. Organization. The parties shall organize a limited
liability company pursuant to the Act and the provisions of this Agreement
and, for that purpose, shall cause a Certificate of Organization in the form
attached as Exhibit B to be executed and filed with the Department of State of
the Commonwealth of Pennsylvania.
2.2. Name of the Company. The name of the Company shall
be "JLG Manufacturing, LLC". The Company may do business under that name and
under any other name or names which the Members select. If the Company does
business under a name other than that set forth in its Certificate of
Organization, then the Company shall file a fictitious name certificate as
required by law.
2.3. Purpose. The Company is organized to undertake any
activities permissible for a limited liability company formed under the Act.
2.4. Term. The Company shall be organized upon the
filing of the Certificate of Organization and shall continue in existence
until December 31, 2099, unless its existence is sooner terminated pursuant to
Section 7 of this Agreement
2.5. Registered Office. The registered office of the
Company required by the Act to be maintained in the Commonwealth of
Pennsylvania shall be the principal office of the Company or such other office
(which need not be a place of business of the Company) as the Members may
designate from time to time.
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2.6. Principal Office. The principal office of the
Company shall be located at 1 JLG Drive, McConnellsburg, Pennsylvania 17233,
or at any other place which the Members designate from time to time.
2.7. Members. The name, present mailing address, and
Operating Percentage of each Member are set forth on Exhibit A.
SECTION 3
MEMBERS; CAPITAL; CAPITAL ACCOUNTS
3.1. Initial Capital Contributions. Upon the execution
of this Agreement, the Members shall contribute, or be deemed to contribute,
to the Company cash and other property in the amounts respectively set forth
on Exhibit A.
3.2. Additional Capital Contributions. Whenever the
Members determine the Company's capital is or is likely to become insufficient
for the conduct of its business, the Members shall call for additional
contributions to capital by the Members. These contributions shall be due and
payable in cash on a date not less than ten (10) days after written notice is
given to the Members. The written notice shall specify the amount to be
contributed and the due date. If additional capital contributions are required
but are not made by the Members in proportion to their Operating Percentages,
the Operating Percentages of the Members shall be adjusted to reflect such
additional capital contributions.
3.3. No Interest on Capital Contributions. Interest
Holders shall not be paid interest on their Capital Contributions.
3.4. Return of Capital Contributions. Except as
otherwise provided in this Agreement, no Interest Holder shall have the right
to receive the return of any Capital Contribution.
3.5. Form of Return of Capital. If an Interest Holder
is entitled to receive a return of a Capital Contribution, the Company may
distribute cash, notes, property or a combination thereof to the Interest
Holder in return of the Capital Contribution.
3.6. Capital Accounts. A separate Capital Account shall
be created and maintained for each Interest Holder. Capital Accounts shall be
maintained as set forth in Section 1.5.
3.7. Loans. Any Member may, at any time, make or cause
a loan to be made to the Company in any amount and on those terms upon which
the other Members and the Member agree.
3.8. No Liability. No Member shall have any personal
liability for any obligation of the Company.
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SECTION 4
PROFIT, LOSS AND DISTRIBUTIONS
4.1. Distributions of Cash Flow and Allocations of
Profit or Loss.
4.1.1. Profit or Loss. After giving effect to
the special allocations set forth in Section 4.2., for any taxable year of the
Company, Profit or Loss shall be allocated to the Interest Holders in
accordance with their Operating Percentage in the Company, as set forth in
Exhibit A.
4.1.2. Cash Flow. Cash Flow for each taxable year
of the Company shall be distributed by the Company to the Interest Holders in
the same manner Profits and Losses are allocated to them at such times and in
such amounts as the Members shall from time to time determine.
4.2. Regulatory Allocations.
4.2.1. Qualified Income Offset. No Interest
Holder shall be allocated Losses or deductions if the allocation causes an
Interest Holder to have an Adjusted Capital Account Deficit. If an Interest
Holder receives (i) an allocation of Loss or deduction (or item thereof) or
(ii) any distribution which causes the Interest Holder to have an Adjusted
Capital Account Deficit at the end of any taxable year, then all items of
income and gain of the Company (consisting of a pro rata portion of each item
of Company income, including gross income and gain) for that taxable year
shall be allocated to that Interest Holder before any other allocation is made
of Company items for that taxable year, in the amount and in proportions
required to eliminate the Adjusted Capital Account Deficit as quickly as
possible. This Section 4.2.1. is intended to comply with, and shall be
interpreted consistently with, the "qualified income offset" provisions of the
Regulations promulgated under section 704(b) of the Code.
4.2.2. Company Minimum Gain. Except as set forth
in Treas. Reg. Section 1.704-2(f)(2), notwithstanding any other provision of
this Agreement, if, during any taxable year, there is a net decrease in
Company Minimum Gain, each Interest Holder, prior to any other allocation
pursuant to this Section 4, shall be specially allocated items of gross income
and gain for such taxable year (and, if necessary, subsequent taxable years)
in an amount equal to that Interest Holder's share of the net decrease in
Company Minimum Gain, computed in accordance with Treas. Reg. Section
1.704-2(g). Allocations of gross income and gain pursuant to this Section
4.2.2. shall be made first from gain recognized from the disposition of
Company assets subject to nonrecourse liabilities (within the meaning of the
Regulations promulgated under section 752 of the Code), to the extent of the
Company Minimum Gain attributable to those assets, and thereafter, from a pro
rata portion of the Company's other items of income and gain for the taxable
year. The items to be so allocated shall be determined in accordance with
Treas. Reg. Sections 1.704-2(f)(6) and 1.704-2(j)(2). It is the intent of the
parties hereto that any allocation pursuant to this Section 4.2.2. shall
constitute a "minimum gain chargeback" under Treas. Reg. Section 1.704-2(f)
and shall be interpreted consistently therewith.
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4.2.3. Member Minimum Gain. Except as otherwise
provided in Treas. Reg. Section 1.704-2(i)(4), notwithstanding any other
provision of this Agreement, if there is a net decrease in Member Nonrecourse
Debt Minimum Gain attributable to a Member Nonrecourse Debt during any taxable
year, each Interest Holder who has a share of the Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Treas. Reg. Section 1.704-2(i)(5), shall be specially
allocated items of income and gain for such taxable year (and, if necessary,
subsequent taxable years) in an amount equal to such Interest Holder's share
of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to
such Member Nonrecourse Debt, determined in accordance with Treas. Reg.
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
determined in accordance with Treas. Reg. Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 4.2.3. is intended to comply with the minimum
gain chargeback requirement in Treas. Reg. Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
4.2.4. Contributed Property. In accordance with
section 704(c) of the Code and the Regulations thereunder, income, gain, loss,
and deduction with respect to any property contributed to the capital of the
Company shall, solely for tax purposes, be allocated among the Members so as
to take account of any variation between the adjusted basis of such property
to the Company for federal income tax purposes and its initial Gross Asset
Value. In the event the Gross Asset Value of any Company asset is adjusted,
subsequent allocations of income, gain, loss, and deduction with respect to
such asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and its Gross Asset Value in the
same manner as under section 704(c) of the Code and the Regulations
thereunder. Any elections or other decisions relating to such allocations
(including but not limited to such simplifying conventions as appropriate)
shall be made by the Members in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
4.2.4. are solely for purposes of federal, state, and local taxes and shall
not affect, or in any way be taken into account in computing, any Person's
Capital Account or share of Profits, Losses, other items, or distributions
pursuant to any provision of this Agreement. A majority of the Members may
amend the provisions of this Section 4.2.4. to conform with any amendments to
the Regulations or with any Regulations promulgated under Section 704(c) of
the Code, provided that such amendments shall not have a material adverse
effect on the amounts distributable to any Member pursuant to this Agreement.
4.2.5. Section 754 Adjustment. To the extent an
adjustment to the tax basis of any Company asset pursuant to section 734(b) or
section 743(b) of the Code is required, pursuant to Treas. Reg. Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of the adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases basis) and the gain or loss shall
be specially allocated to the Interest Holders in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted pursuant to
that Section of the Regulations.
4.2.6. Nonrecourse Deductions. Any Member
Nonrecourse Deductions for any taxable year shall be specially allocated to
the Interest Holder who bears the economic risk of loss with respect to the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Treas. Reg. Section 1.704-2(i)(1).
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4.2.7. Member Loan Nonrecourse Deductions. Any
Member Loan Nonrecourse Deduction for any taxable year or other period shall
be specially allocated to the Interest Holder who bears the risk of loss with
respect to the loan to which the Member Loan Nonrecourse Deduction is
attributable in accordance with Treas. Reg. Section 1.704-2(b).
4.2.8. Unrealized Receivables. If an Interest
Holder's Interest is reduced (provided the reduction does not result in a
complete termination of the Interest Holder's Interest), the Interest Holder's
share of the Company's "unrealized receivables" and "substantially appreciated
inventory" (within the meaning of section 751 of the Code) shall not be
reduced, so that, notwithstanding any other provision of this Agreement to the
contrary, that portion of the Profit otherwise allocable upon a liquidation or
dissolution of the Company pursuant to Section 4.3. hereof which is taxable as
ordinary income (recaptured) for federal income tax purposes shall, to the
extent possible without increasing the total gain to the Company or to any
Interest Holder, be specially allocated among the Interest Holders in
proportion to the deductions (or basis reductions treated as deductions)
giving rise to such recapture. Any questions as to the aforesaid allocation of
ordinary income (recapture), to the extent such questions cannot be resolved
in the manner specified above, shall be resolved by the Members.
4.2.9. Withholding. All amounts required to be
withheld pursuant to section 1446 of the Code or any other provision of
federal, state or local tax law shall be treated as amounts actually
distributed to the affected Interest Holders for all purposes under this
Agreement.
4.3. Liquidation and Dissolution.
4.3.1. If the Company is liquidated, the assets
of the Company shall be distributed to the Interest Holders in accordance with
the balances in their respective Positive Capital Accounts, after taking into
account the allocations of Profit or Loss pursuant to Sections 4.1., 4.2., and
4.4.2., if any.
4.3.2. No Interest Holder shall be obligated to
restore a Negative Capital Account.
4.4. General.
4.4.1. Except as otherwise provided in this
Agreement, the timing and amount of all distributions shall be determined by
the Members.
4.4.2. If any assets of the Company are
distributed in kind to the Interest Holders, those assets shall be valued on
the basis of their fair market value, and any Interest Holder entitled to any
interest in those assets shall receive that interest as a tenant-in-common
with all other Interest Holders so entitled. Unless the Members otherwise
agree, the fair market value of such assets shall be determined by an
independent appraiser selected by the Members. The Profit or Loss for each
unsold asset shall be determined as if the asset had been sold at its fair
market value, and the Profit or Loss shall be allocated as provided in Section
4.1. and shall be properly credited or charged to the Capital Accounts of the
Interest Holders prior to the distribution of the assets in liquidation
pursuant to Section 4.3.
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4.4.3. All Profit and Loss shall be allocated,
and all distributions shall be made, to the Persons shown on the records of
the Company to have been Interest Holders as of the last day of the taxable
year for which the allocation or distribution is to be made. Notwithstanding
the foregoing, unless the Company's taxable year is separated into segments,
if there is a Transfer or an Involuntary Withdrawal during the taxable year,
the Profit and Loss shall be allocated between the original Interest Holder
and the successor on the basis of the number of days each was an Interest
Holder during the taxable year; provided, however, the Company's taxable year
shall be segregated into two or more segments in order to account for Profit,
Loss or proceeds attributable to a Capital Transaction or to any other
extraordinary non-recurring items of the Company.
4.4.4. The Members are hereby authorized, upon
the advice of the Company's tax counsel, to amend this Section 4 to comply
with the Code and the Regulations promulgated under section 704(b) of the
Code; provided, however, that no amendment shall materially affect
distributions to an Interest Holder without such Interest Holder's prior
written consent.
SECTION 5
MANAGEMENT: RIGHTS, POWERS, AND DUTIES
5.1. Management. The business and affairs of the
Company shall be managed by the Members.
5.2. General Powers. The Members shall have full,
exclusive and complete discretion, power and authority, subject in all cases
to the requirements of applicable law, to manage, control, administer and
operate the business and affairs of the Company for the purposes herein
stated, and to make all decisions affecting such business and affairs,
including, without limitation, the power:
5.2.1. to acquire by purchase, lease or
otherwise, any real or personal property, tangible or intangible;
5.2.2. to construct, operate, maintain, finance
and improve, and to own, sell, convey, assign, mortgage or lease any real
estate and any personal property;
5.2.3. to sell, dispose, trade or exchange
Company assets;
5.2.4. to enter into agreements and contracts and
to give receipts, releases and discharges;
5.2.5. to purchase liability and other insurance
to protect the Company's properties and business;
5.2.6. to borrow money for and on behalf of the
Company;
5.2.7. to execute or modify leases with respect
to any part or all of the assets of the Company;
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5.2.8. to prepay, in whole or in part, refinance,
amend, modify or extend any mortgages or deeds of trust which may affect any
asset of the Company and in connection therewith to execute for and on behalf
of the Company any extensions, renewals or modifications of such mortgages or
deeds of trust;
5.2.9. to execute any and all other instruments
and documents which may be necessary or in the opinion of the Members
desirable to carry out the intent and purpose of this Agreement, including,
but not limited to, documents whose operation and effect extend beyond the
term of the Company;
5.2.10. to make any and all expenditures which the
Members, in their sole discretion, deem necessary or appropriate in connection
with the management of the affairs of the Company and the carrying out of
their obligations and responsibilities under this Agreement, including,
without limitation, all legal, accounting and other related expenses incurred
in connection with the organization and financing and operation of the
Company; and
5.2.11. to enter into any kind of activity
necessary to, in connection with, or incidental to, the accomplishment of the
purposes of the Company.
5.3. Meetings of and Voting By Members.
5.3.1. If a vote of the Members is required for
any action hereunder, a meeting of the Members may be called at any time by
any Member. Meetings of Members shall be held (i) at the Company's principal
place of business, or (ii) at such place as the Members shall agree. Not less
than ten (10) nor more than ninety (90) days before each meeting, the Person
calling the meeting shall give written notice of the meeting to each Member
entitled to vote at the meeting. The notice shall state the time, plan and
purpose of the meeting. Notwithstanding the foregoing provisions, each Member
who is entitled to notice waives notice if before or after the meeting the
Member signs a waiver of the notice which is filed with the records of
Members' meetings, or is present at the meeting in person or by proxy. Unless
this Agreement provides otherwise, at a meeting of Members, the presence in
person or by proxy of a majority of Members, by Operating Percentage, shall be
necessary to constitute a quorum. A Member may vote either in person or by
written proxy signed by the Member or by the Member's duly authorized attorney
in fact. Members may participate in any meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Any action required or
permitted to be taken at a meeting of Members may be taken without a meeting
if there is filed with the records of Members' meetings a unanimous written
consent which sets forth the action and is signed by each Member entitled to
vote on the matter.
5.3.2. Except as otherwise provided in this
Agreement, wherever this Agreement requires the approval of, or action by, the
Members, the affirmative vote of a majority of the Members, by Operating
Percentage, of the Members present in person or by proxy at a duly convened
meeting at which a quorum exists shall be required to approve the matter.
5.4. Liability.
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5.4.1. The Members shall not be liable,
responsible or accountable, in damages or otherwise, to any Member or to the
Company for any act performed by them within the scope of the authority
conferred on them by this Agreement, except for willful fraud, an intentional
breach of this Agreement, or as otherwise required by law.
5.4.2. The Members shall not be liable,
responsible or accountable, in damages or otherwise, to any third party for
the obligations of the Corporation.
5.5. Indemnification. The Company shall indemnify any
Member for any act performed by it within the scope of the authority conferred
on such person by this Agreement.
SECTION 6
TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS
6.1. Restrictions on Transfer.
6.1.1. Except as otherwise provided in this
Agreement, no Member may Transfer all, or any portion of, or any interest or
rights in, the Membership Rights owned by the Member without the consent of
all other Members, except that a Member may Transfer any or all of its
Membership Rights to any Person controlling, controlled by, or under common
control with such Member, in its sole and absolute discretion. Each Member
hereby acknowledges the reasonableness of this prohibition in view of the
purposes of the Company and the relationship of the Members. The Transfer of
any Membership Rights in violation of the prohibition contained in this
Section 6.1. shall be deemed invalid, null and void, and of no force or
effect. Any Person to whom Membership Rights are attempted to be Transferred
in violation of this prohibition shall not be entitled to vote on matters
coming before the Members, participate in the management of the Company, act
as an agent of the Company, or have any other rights in or with respect to the
Membership Rights.
6.1.2. Provided that the Conditions of Transfer
set forth in this Agreement are satisfied, an Interest Holder may at any time,
and from time to time, Transfer all or any portion of the Interest Holder's
Interest. The Transfer of an Interest pursuant to this Section 6.1. shall not
result in the Transfer of any of the transferor's Membership Rights in the
Company other than the right to receive allocations of Profits and Losses and
to receive distributions, and the transferee of the Interest shall have no
right to: (i) become a Member; (ii) exercise any Membership Rights other than
those specifically pertaining to the ownership of an Interest; or (iii) act as
an agent of the Company.
6.1.3. As used in Section 6.1.2., "Conditions of
Transfer" means the following conditions to a Transfer:
6.1.3.1. the Transfer will not require
registration of Interests or Membership Rights under any federal or state
securities laws;
6.1.3.2. the Transferee delivers to the
Company a written instrument agreeing to be bound by the terms of Section 6 of
this Agreement;
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6.1.3.3. the Transfer will not result in
the termination of the Company pursuant to section 708 of the Code;
6.1.3.4. the Transfer will not result in
the Company being subject to the Investment Company Act of 1940, as amended;
and
6.1.3.5. the transferor or the transferee
delivers the following information to the Company: (i) the transferee's
taxpayer identification number, and (ii) the transferee's initial tax basis in
the Transferred Interest.
6.2. Voluntary Withdrawal. No Member shall have the
right or power to withdraw from the Company.
6.3. Involuntary Withdrawal. Immediately upon the
occurrence of an Involuntary Withdrawal, the successor of the Withdrawn Member
shall thereupon become an Interest Holder but shall not become a Member. If
the Company is continued as provided in Section 7.1.3., the Company may, but
is not required to, terminate the Interest Holder's interest in the Company by
distributing the Interest Holder's Capital Account to such Interest Holder.
Upon such distribution, all rights the Interest Holder may have in the Company
shall cease. If the interest is not terminated, the Interest Holder shall
remain an Interest Holder with the rights thereof.
SECTION 7
DISSOLUTION, LIQUIDATION AND
TERMINATION OF THE COMPANY
7.1. Events of Dissolution. The Company shall be
dissolved upon the happening of any of the following events:
7.1.1. when the period fixed for its duration in
Section 2.4. has expired;
7.1.2. upon the unanimous written agreement of
all of the Members; or
7.1.3. upon the occurrence of an Involuntary
Withdrawal of a Member, unless a majority by Operating Percentage of the
remaining Members within ninety (90) days after the event or occurrence elect
to continue the business of the Company pursuant to the terms of this
Agreement.
7.2. Procedure for Winding Up and Dissolution. If the
Company is dissolved, the Members shall wind up its affairs. On winding up of
the Company, the assets of the Company shall be distributed, first, to
creditors of the Company, including Interest Holders who are creditors, in
satisfaction of the liabilities of the Company, and then to the Interest
Holders in accordance with Section 4.4.
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7.3. Filing of Certificate of Dissolution. If the
Company is dissolved, the remaining Members shall promptly file the
Certificate of Dissolution, as required by 15 P.C.S.A. Section 8975. If there
are no remaining Members, the Certificate shall be filed by the last Person to
be a Member, if there are no remaining Members nor any Person who last was a
Member, the Certificate shall be filed by the legal or personal
representatives of the Person who last was a Member.
SECTION 8
BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS
8.1. Accounts. The funds of the Company may be deposited
in such types of accounts maintained in the Company's name as the Members may
determine. The Members shall determine the institution or institutions at
which the accounts will be maintained, the types of accounts, and the Persons
who will have authority with respect to the accounts and the funds therein.
8.2. Books and Records.
8.2.1. The Members shall keep, or cause to be
kept, complete and accurate books and records of the Company and supporting
documentation of the transactions with respect to the conduct of the Company's
business. The records shall include, but not be limited to, complete and
accurate information regarding the state of the business and financial
condition of the Company, a copy of the Certificate of Organization and this
Agreement and all amendments to the Certificate and this Agreement: a current
list of the names and last known business, residence, or mailing addresses of
all Members; and the Company's federal, state or local tax returns.
8.2.2. The books and records shall be maintained
in accordance with sound accounting principles and practices and shall be
available at the Company's principal office for examination by any Member or
the Member's duly authorized representative at any and all reasonable times
during normal business hours.
8.2.3. Each Member shall reimburse the Company
for all costs and expenses incurred by the Company in connection with the
Member's inspection and copying of the Company's books and records.
8.3. Annual Accounting Period. The annual accounting
period of the Company shall be its taxable year. The Company's taxable year
shall be the taxable year of the Member having the largest percentage
interest.
8.4. Reports. Within seventy-five (75) days after the
end of each taxable year of the Company, the Members shall cause to be sent to
each Person who was a Member at any time during the accounting year then
ended: (i) an annual compilation report, and (ii) a report summarizing the
fees and other remuneration, if any, paid by the Company to any Member or any
Affiliate in respect of the taxable year. In addition, within seventy-five
(75) days after the
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end of each taxable year of the Company, the Members shall cause to be sent to
each Person who was an Interest Holder at any time during the taxable year then
ended that tax information concerning the Company which is necessary for
preparing the Interest Holder's income tax returns for that year.
8.5. Tax Matters Partner. JLG Industries, Inc. shall be the
tax matters partner ("Tax Matters Partner"). The Tax Matters Partner shall have
all powers and responsibilities provided in section 6221 of the Code. The Tax
Matters Partner shall keep all Members informed of all notices from government
taxing authorities which may come to the attention of the Tax Matters Partner.
The Company shall pay and be responsible for all reasonable costs and expenses
incurred by the Tax Matters Partner in performing those duties. A Member shall
be responsible for any costs incurred by the Member with respect to any tax
audit or tax-related administrative or judicial proceeding against the Member,
even though the proceeding relates to the Company. The Tax Matters Partner may
not compromise any dispute with the Internal Revenue Service without the
approval of the Members.
8.6. Tax Elections. The Members shall have the authority to
make all elections permitted under the Code, including, without limitation,
elections of methods of depreciation and elections under section 754 of the
Code. The decision to make or not make an election shall be in the sole and
absolute discretion of the Members.
8.7. Title to Company Property.
8.7.1. Except as provided in Section 8.7.2., all real
and personal property acquired by the Company shall be acquired and held by the
Company in its name.
8.7.2. The Members may direct that legal title to all
or any portion of the Company's property be acquired or held in a name other
than the Company's name. Without limiting the foregoing, the Members may cause
title to be acquired and held in the names of trustees, nominees or straw
parties for the Company. It is expressly understood and agreed that the manner
of holding title to the Company's property (or any part thereof) is solely for
the convenience of the Company and that all of such property shall be treated as
Company property.
SECTION 9
GENERAL PROVISIONS
9.1. Assurances. Each Member shall execute all such
certificates and other documents and shall do all such filing, recording.
publishing and other acts as appropriate to comply with the requirements of law
for the formation and operation of the Company and to comply with any laws,
rules and regulations relating to the acquisition, operation or holding of the
property of the Company.
9.2. Notifications. Any notice, demand, consent, election,
offer, approval, request or other communication (collectively a "notice")
required or permitted under this Agreement must be in writing and either
delivered personally or sent by certified or registered
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mail, postage prepaid, return receipt requested. A notice must be addressed to a
Member at the Member's last known address on the records of the Company. A
notice to the Company must be addressed to the Company's principal office. A
notice that is sent by mail will be deemed given three (3) business days after
it is mailed. Any party may designate, by notice to all of the others,
substitute addresses or addressees for notices; and, thereafter, notices are to
be directed to those substitute addresses or addressees.
9.3. Specific Performance. The parties recognize that
irreparable injury will result from a breach of any provision of this Agreement,
and money damages will be inadequate to fully remedy the injury. Accordingly, in
the event of a breach or threatened breach of one or more of the provisions of
this Agreement, any party who may be injured (in addition to any other remedies
which may be available to that party) shall be entitled to one or more
preliminary or permanent orders (i) restraining and enjoining any act which
would constitute a breach or (ii) compelling the performance of any obligation
which, if not performed, would constitute a breach.
9.4. Complete Agreement. This Agreement, including the
documents and instruments incorporated herein by reference, constitutes the
complete and exclusive statement of the agreement among the Members. It
supersedes all prior written and oral statements, including any prior
representation, statement, condition or warranty. Except as expressly provided
otherwise herein, this Agreement may not be amended without the written consent
of all of the Members.
9.5. Applicable Law. All questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement shall be governed by the internal
law, not the law of conflicts, of the Commonwealth of Pennsylvania.
9.6. Section Titles. The headings herein are inserted only as
a matter of convenience only, and do not define, limit or describe the scope of
this Agreement or the intent of the provisions hereof.
9.7. Binding Provisions. This Agreement is binding upon, and
inures to the benefit of, the parties hereto and their respective heirs,
executors, administrators, personal and legal representatives, successors and
permitted assigns.
9.8. Waiver of Action for Partition. Each Member irrevocably
waives during the term of the Company any right that such Member may have to
maintain any action for partition with respect to properties held by the
Company.
9.9. Terms. Common nouns and pronouns shall be deemed to
refer to the masculine, feminine, neuter, singular and plural, as the identity
of the Person may in the context require.
9.10. Separability of Provisions. Each provision of this
Agreement shall be considered separable; and if, for any reason, any provision
or provisions herein are determined to be invalid and contrary to any existing
or future law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid.
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9.11. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts each of which shall be deemed an
original, and all of which, when taken together, constitute one and the same
document. The signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
9.12. Estoppel Certificate. Each Member shall, within ten (10)
days after written request by any Member, deliver to the requesting Person a
certificate stating, to the Members' knowledge: (a) that this Agreement is in
full force and effect; (b) that this Agreement has not been modified except by
any instrument or instruments identified in the certificate; and (c) there is no
default hereunder by the requesting Person, or if there is a default, the nature
and extent thereof.
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IN WITNESS WHEREOF, the parties have executed, or cause this
Agreement to be executed, under seal, as of the date set forth hereinabove.
ATTEST: MEMBERS:
JLG INDUSTRIES, INC.
By
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FULTON INDUSTRIES, INC.
By
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