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EXHIBIT 3.17
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
NEWCUP, LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED AS OF JANUARY 25, 2002
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LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
NEWCUP, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF NEWCUP, LLC
(this "Operating Agreement"), dated as of January 25, 2002, is (a) adopted by
the initial Manager (as defined below) and (b) executed and agreed to, for good
and valuable consideration, by the Members (as defined below).
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Operating Agreement, the
following terms have the following meanings:
"ACT" means the Delaware Limited Liability Company Act and any
successor statute, as amended from time to time.
"ADJUSTED CAPITAL ACCOUNT" means, with respect to any Member, the
Member's Capital Account balance, increased by the Member's share of Company
Minimum Gain and Member Minimum Gain.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant fiscal year or other period, after giving effect to the following
adjustments: (i) any amounts that such Member is, or is deemed to be, obligated
to restore pursuant to Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations,
the penultimate sentence of Section 1.704-2(g)(1) of the Treasury Regulations,
or the penultimate sentence of Section 1.704-2(i)(5) of the Treasury
Regulations, shall be credited to such Capital Account; and (ii) the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6) of the Treasury
Regulations shall be debited to such Capital Account. For these purposes, no
Member who has an unconditional obligation to restore any deficit balance in his
Capital Account in accordance with the requirements of Section
1.704-1(b)(2)(ii)(b)(3) of the Treasury Regulations shall have an Adjusted
Capital Account Deficit. The foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted
consistently therewith.
"AFFILIATE" means any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in question. As used
in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
"BANKRUPT MEMBER" means (except to the extent a Required Interest
consents otherwise) any Member (i) that makes a general assignment for the
benefit of
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creditors; (ii) is declared insolvent in any state insolvency proceeding; (iii)
becomes the subject of an order for relief under Chapter 7 of the United States
Bankruptcy Code, 11 U.S.C. Section 101 ET SEQ., or successor statute (the
"Bankruptcy Code"); (iv) becomes a voluntary debtor in a case under Chapter 11
of the Bankruptcy Code and fails to achieve confirmation of a plan of
reorganization within 180 days; (v) becomes an involuntary debtor in a case
under either Chapter 7 or 11 of the Bankruptcy Code and fails to achieve a
dismissal of the case within 90 days, or, with respect to a Chapter 11 case in
which an order for relief is entered prior to the expiration of 90 days, fails
to achieve confirmation of a plan of reorganization within 180 days of the
commencement of the involuntary case; or (vi) consents to or is subjected to the
appointment of a trustee, receiver or liquidating trustee with respect to all or
substantially all of its properties, and, where such appointment was contested,
there has been a failure to vacate such appointment within 90 days of
appointment.
"BOOK DEPRECIATION" means for any asset for any fiscal year or other
period an amount that bears the same ratio to the Gross Asset Value of that
asset at the beginning of such fiscal year or other period as the federal income
tax depreciation, amortization, or other cost recovery deduction allowable for
that asset for such year or other period bears to the adjusted tax basis of that
asset at the beginning of such year or other period. If the federal income tax
depreciation, amortization, or other cost recovery deduction allowable for any
asset for such year or other period is zero, the Book Depreciation for that
asset shall be determined with reference to such beginning Gross Asset Value
using any reasonable method selected by the Members.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a
holiday on which national banking associations in the State of Delaware are
closed.
"CAPITAL ACCOUNT" means the capital account maintained for a Member
pursuant to Section 4.5 of this Operating Agreement.
"CAPITAL CONTRIBUTION" means any contribution by a Member to the
capital of the Company.
"CERTIFICATE" has the meaning given that term in Section 2.1.
"CODE" means the Internal Revenue Code of 1986 and any successor
statute, as amended from time to time.
"COMPANY" means Newcup, LLC, a Delaware limited liability company.
"COMPANY MINIMUM GAIN" has the meaning set forth in Section
1.704-2(b)(2) of the Treasury Regulations.
"DEFAULT INTEREST RATE" means a rate per annum equal to the lesser of
(a) fifteen percent (15%) per annum and (b) the maximum rate permitted by
applicable law.
"DGCL" means the Delaware General Corporation Law and any successor
statute, as amended from time to time.
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"DISPOSE," "DISPOSING," or "DISPOSITION" means a sale, assignment,
transfer, exchange, mortgage, pledge, grant of a security interest, or other
disposition or encumbrance (including, without limitation, by operation of law),
or the acts thereof, whether or not for consideration.
"GENERAL INTEREST RATE" means a rate per annum equal to the lesser of
(a) nine percent (9%) per annum, and (b) the maximum rate permitted by
applicable law.
"GROSS ASSET VALUE" has the meaning set forth in Section 4.5(c) of
this Operating Agreement.
"INITIAL MANAGER" means Cupcorp, Inc., a Delaware corporation.
"Losses" has the meaning set forth in Section 4.5(b) of this Operating
Agreement.
"MANAGERS" means the Initial Manager of the Company and any Person or
Persons hereafter elected as a Manager of the Company as provided in this
Operating Agreement, but does not include any Person who has ceased to be a
Manager of the Company.
"MEMBER" means any Person executing this Operating Agreement as of the
date of this Operating Agreement as a member or hereafter admitted to the
Company as a member as provided in this Operating Agreement; but does not
include any Person who has ceased to be a member in the Company.
"MEMBERSHIP INTEREST" means the interest of a Member in the Company,
including, without limitation, rights to distributions (liquidating or
otherwise) and allocations.
"MEMBER MINIMUM GAIN" means partnership minimum gain attributable to
partner nonrecourse debt as determined under the rules of Section 1.704-2(i) of
the Treasury Regulations.
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in Section
1.704-2(i)(2) of the Treasury Regulations.
"PERMITTED TRANSFEREE" has the meaning given that term in Section
3.3(b).
"PERSON" means an individual or a corporation, limited liability
company, partnership, trust, estate, unincorporated organization, association,
or other entity.
"PROCEEDING" has the meaning given that term in Section 8.1.
"PROFITS" has the meaning set forth in Section 4.5(b).
"REQUIRED INTEREST" means one or more Members having among them more
than fifty percent (50%) of the Sharing Ratios of all Members.
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"SHARING RATIO" with respect to any Member means the percentage set
forth opposite each Member's name on Exhibit A to this Operating Agreement, as
such Exhibit may be amended from time to time in accordance with this Operating
Agreement.
"TREASURY REGULATIONS" means the Department of Treasury Regulations
promulgated under the Code, whether proposed, temporary, or final, as amended
and in effect (including corresponding provisions of succeeding regulations).
Other terms defined herein have the meanings so given them.
1.2 CONSTRUCTION. Whenever the context requires, the gender of all
words used in this Operating Agreement includes the masculine, feminine, and
neuter. All references to an Article or a Section refer to the Certificate and
sections of this Operating Agreement, and all references to Exhibits are to
Exhibits attached hereto, each of which is made a part hereof for all purposes.
ARTICLE II
ORGANIZATION
2.1 FORMATION. The Company has been organized as a Delaware
limited liability company by the filing of a Certificate of Formation (the
"Certificate") under and pursuant to the Act and the issuance of a certificate
of organization for the Company by the Secretary of State of Delaware.
2.2 NAME. The name of the Company is "Newcup, LLC" and all Company
business must be conducted in that name or such other names that comply with
applicable law as the Managers may select from time to time.
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE
UNITED STATES; OTHER OFFICES. The registered office of the Company required by
the Act to be maintained in the State of Delaware shall be the office of the
initial registered agent named in the Certificate or such other office as the
Managers may designate from time to time in the manner provided by law. The
registered agent of the Company in the State of Delaware shall be the initial
registered agent named in the Certificate or such other Person or Persons as the
Managers may designate from time to time in the manner provided by law. The
principal office of the Company in the United States shall be at such place as
the Managers may designate from time to time, which need not be in the State of
Delaware, and shall keep the street address of such principal office at the
registered office of the Company in the State of Delaware. The Company may have
such other offices as the Managers may designate from time to time.
2.4 PURPOSES. The purpose of the Company is to make equity and
debt investments and engage in all related activities, including, from time to
time, borrowing money in furtherance of such investments or other operations of
the Company.
2.5 FOREIGN QUALIFICATION. Prior to the Company's conducting
business in any jurisdiction other than Delaware, the Managers shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within
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the control of the Managers, with all requirements necessary to qualify the
Company as a foreign limited liability company in that jurisdiction. At the
request of the Managers, each Member shall execute, acknowledge, swear to, and
deliver all certificates and other instruments conforming with this Operating
Agreement that are necessary or appropriate to qualify, continue, and terminate
the Company as a foreign limited liability company in all such jurisdictions in
which the Company may conduct business.
2.6 TERM. The Company commenced on the date the Secretary of State
of Delaware issued a certificate of organization for the Company and shall
continue in existence until terminated pursuant to this Operating Agreement.
2.7 NO STATE LAW PARTNERSHIP. The Members intend that the Company
not be a partnership (including, without limitation, a limited partnership) or
joint venture, and that no Member or Manager be a partner or joint venturer of
any other Member or Manager, for any purposes other than federal and state tax
purposes, and this Operating Agreement may not be construed to suggest
otherwise. This Section 2.7 shall not, however, prohibit the Company from
becoming a partner or joint venturer of a partnership or joint venture with one
or more other Persons.
ARTICLE III
MEMBERSHIP; DISPOSITIONS OF INTERESTS
3.1 INITIAL MEMBERS. The initial Members of the Company are the
Persons executing this Operating Agreement as of the date of this Operating
Agreement as Members, each of which is admitted to the Company as a Member
effective contemporaneously with the execution by such Person of this Operating
Agreement.
3.2 RESTRICTIONS ON THE DISPOSITION OF AN INTEREST.
(a) Except as specifically provided in this Section 3.2, a
Disposition of an interest in the Company may not be effected without the
consent of (i) a majority of the Managers who are Members (excluding any Manager
who is making such Disposition), or (ii) if there are not Managers of the type
described in clause (i), a Required Interest; provided, however, that no
Disposition may be made to a Person that is a competitor of SF Holdings, Inc.
(as defined in Section 3.2(b)). Any attempted Disposition by a Person of an
interest or right, or any part thereof, in or in respect of the Company other
than in accordance with this Section 3.2 shall be, and is hereby declared, null
and void AB INITIO.
(b) Notwithstanding the provisions of Section 3.2(a), the
interest of any Member in the Company may be transferred without the consent of
the Managers or any of the Members if (i) the transfer occurs by reason of or
incident to the death, dissolution, divorce, liquidation, merger or share
exchange of the transferor Member, and (ii) the transferee is a Permitted
Transferee. A "Permitted Transferee" is any member of such Member's immediate
family, or a trust, corporation, limited liability company, or partnership
controlled by such Member, members of such Member's immediate family, or another
Person controlling, controlled by, or under common control with such Member,
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provided that such Person is not a competitor of SF Holdings, Inc., a Delaware
corporation ("SF Holdings") or its Affiliates. For purposes of the preceding
sentence, a "competitor" means any Person other than SF Holdings or its
Affiliates that is engaged in the business of producing and selling food
service, packaging, tissue and/or party goods products and reasonable expansions
and extensions thereof.
(c) Subject to the provisions of Section 3.2(d), 3.2(e),
and 3.2(f), a Person to whom an interest in the Company is transferred has the
right to be admitted to the Company as a Member with the Sharing Ratio so
transferred to such Person, only if (i) the Member making such transfer grants
the transferee (including a Permitted Transferee) the right to be so admitted,
and (ii) such transfer (including a transfer to a Permitted Transferee) is
consented to in accordance with Section 3.2(a).
(d) The Company may not recognize for any purpose any
purported Disposition of all or part of the Membership Interest unless and until
the other applicable provisions of this Section 3.2 have been satisfied and the
Managers have received, on behalf of the Company, a document (i) executed by
both the Member effecting the Disposition (or if the transfer is on account of
the death, incapacity, or liquidation of the transferor, its representative) and
the Person to whom or which the Membership Interest or part thereof is Disposed,
(ii) including the notice address of any Person to be admitted to the Company as
a Member and its agreement to be bound by this Operating Agreement in respect of
the Membership Interest or part thereof being obtained, (iii) setting forth the
Sharing Ratios after the Disposition of the Member effecting the Disposition and
the Person to whom or which the Membership Interest or part thereof is Disposed
(which together must total the Sharing Ratio of the Member effecting the
Disposition before the Disposition), and (iv) containing a representation and
warranty that the Disposition was made in accordance with all applicable laws
and regulations (including federal and state securities laws). Each Disposition
and, if applicable, admission complying with the provisions of this Section
3.2(d) is effective as of the first day of the calendar month immediately
succeeding the month in which the Managers receive the notification of
Disposition and the other requirements of this Section 3.2 have been met.
(e) For the right of a Member to Dispose of a Membership
Interest or any part thereof or of any Person to be admitted to the Company in
connection therewith to exist or be exercised, (i) either (A) the Membership
Interest or part thereof subject to the Disposition or admission must be
registered under the Securities Act of 1933, as amended, and any applicable
state securities laws or (B) the Company must receive a favorable opinion of the
Company's legal counsel or of other legal counsel acceptable to the Managers to
the effect that the Disposition or admission is exempt from registration under
those laws and (ii) the Company must receive a favorable opinion of the
Company's legal counsel or of other legal counsel acceptable to the Managers to
the effect that the Disposition or admission, when added to the total of all
other sales, assignments, or other Dispositions within the preceding twelve (12)
months, would not result in the Company's being considered to have terminated
within the meaning of Section 708 of the Code. The Managers, however, may at
their discretion waive the requirements of this Section 3.2(e).
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(f) The Member effecting a Disposition and any Person
admitted to the Company in connection therewith shall pay, or reimburse the
Company for, all costs incurred by the Company in connection with the
Disposition or admission (including, without limitation, the legal fees incurred
in connection with the legal opinions referred to in Section 3.2(e)) on or
before the tenth (10th) day after the receipt by that Person of the Company's
invoice for the amount due. If payment is not made by the date due, the Person
owing that amount shall pay interest on the unpaid amount from the date due
until paid at a rate per annum equal to the Default Interest Rate.
3.3 INTERESTS IN A MEMBER. A Member that is not a natural person
may not cause or permit an interest, direct or indirect, in itself to be
Disposed of such that, after the Disposition, (a) the Company would be
considered to have terminated within the meaning of Section 708 of the Code or
(b) without the consent of the Managers and a Required Interest, that Member
shall cease to be controlled by substantially the same Persons who control it as
of the date of its admission to the Company or (c) to a competitor of SF
Holdings. On any breach of the provisions of clauses (b) or (c) of the
immediately preceding sentence, the Company shall have the option to buy, and on
exercise of that option the breaching Member shall sell, the breaching Member's
Membership Interest, all in accordance with Section 11.1 as if the breaching
Member were a Bankrupt Member.
3.4 INFORMATION. In addition to the other rights specifically set
forth in this Operating Agreement, each Member is entitled to all information to
which that Member is entitled to have access pursuant to Section 18-305 of the
Act under the circumstances and subject to the conditions therein stated.
3.5 LIABILITY TO THIRD PARTIES. No Member or Manager shall be
liable for the debts, obligations or liabilities of the Company, including under
a judgment decree or order of a court.
3.6 WITHDRAWAL. A Member does not have the right or power to
withdraw from the Company as a Member except in connection with a Disposition of
the entirety of such Member's interest in accordance with Section 3.2.
3.7 LACK OF AUTHORITY. No Member (other than a Manager or an
officer acting in that capacity) has the authority or power to act for or on
behalf of the Company, to do any act that would be binding on the Company, or to
incur any expenditures on behalf of the Company.
3.8 NO PREEMPTIVE RIGHTS. No Member shall have any preemptive or
preferential right to acquire any Membership Interest or security of any class
that may at any time be issued, sold or offered for sale by the Company.
Notwithstanding the preceding sentence, however, the Company and one or more
Members may by separate contractual arrangement provide preemptive or
preferential rights to acquire any Membership Interest or security of any class
that may at any time be issued, sold or offered for sale by the Company.
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3.9 REDEMPTION OF MEMBERSHIP INTERESTS. If, at any time SF
Holdings, or its Affiliates, collectively, acquire Membership Interests with
aggregate Sharing Ratios in excess of 50% of all Sharing Ratios of all Members,
then concurrent with such acquisition the Company shall redeem the Membership
Interests of all Members (other than SF Holdings and its Affiliates) for an
aggregate redemption amount equal to $1,000,000 payable by wire transfer of
immediately available funds to accounts designated by the Members whose
interests are to be redeemed, pro rata based on the relative Sharing Ratios of
such Members.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTIONS. Contemporaneously with the execution by
such Member of this Operating Agreement, each Member shall make the Capital
Contributions described for that Member in EXHIBIT A.
4.2 SUBSEQUENT CONTRIBUTIONS. Additional Capital Contributions may
be made from time to time as agreed upon by the unanimous consent of all
Members.
4.3 RETURN OF CONTRIBUTIONS. A Member is not entitled to the
return of any part of its Capital Contributions or to be paid interest in
respect of either its capital account or its Capital Contributions. An unrepaid
Capital Contribution is not a liability of the Company or of any Member. A
Member is not required to contribute or to lend any cash or property to the
Company to enable the Company to return any Member's Capital Contributions.
4.4 ADVANCES BY MEMBERS. If the Company does not have sufficient
cash to pay its obligations, any Member(s) that agrees to do so, with the
Managers' consent, may advance all or part of the needed funds to or on behalf
of the Company. An advance described in this Section 4.4 constitutes a loan from
the Member to the Company, bears interest at the General Interest Rate from the
date of the advance until the date of payment, and is not a Capital
Contribution.
4.5 CAPITAL ACCOUNTS.
(a) A Capital Account shall be established and maintained
for each Member in accordance with the following provisions.
(i) Each Member's Capital Account shall be
increased by (A) the amount of money contributed by that Member to the
Company, (B) the Gross Asset Value of property contributed by that Member
to the Company (net of liabilities secured by the contributed property that
the Company is considered to assume or take subject to under Section 752 of
the Code), and (C) allocations to that Member of Profits (or items
thereof), including income and gain exempt from tax and income and gain
described in Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations, but
excluding income and gain described in Section 1.704-1(b)(4)(i) of the
Treasury Regulations.
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(ii) Each Member's Capital Account shall be
decreased by (A) the amount of money distributed to that Member by the
Company, (B) the Gross Asset Value of property distributed to that Member
by the Company (net of liabilities secured by the distributed property that
the Member is considered to assume or take subject to under Section 752 of
the Code), (C) allocations to that Member of expenditures of the Company
described in Section 705(a)(2)(B) of the Code, and (D) allocations of
Losses (or items thereof), including loss and deduction described in
Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations, but excluding
items described in clause (C) above and loss or deduction described in
Sections 1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii) of the Treasury
Regulations.
(iii) The Members' Capital Accounts also shall
be maintained and adjusted as permitted by the provisions of Section
1.704-1(b)(2)(iv)(f) of the Treasury Regulations and as required by the
other provisions of Sections 1.704-l(b)(2)(iv) and 1.704(b)(4) of the
Treasury Regulations, including adjustments to reflect the allocations to
the Members of depreciation, depletion, amortization, and gain or loss as
computed for book purposes rather than the allocation of the corresponding
items as computed for tax purposes, as required by Section
1.704-1(b)(2)(iv)(g) of the Treasury Regulations.
(iv) A Member that has more than one Membership
Interest shall have a single Capital Account that reflects all its
Membership Interests, regardless of the class of Membership Interests owned
by that Member and regardless of the time or manner in which those
Membership interests were acquired. On the transfer of all or part of a
Membership Interest, the Capital Account of the transferor that is
attributable to the transferred Membership interest or part thereof shall
carry over to the transferee Member in accordance with the provisions of
Section 1.704-1(b)(2)(iv)(1) of the Treasury Regulations.
(b) "Profits" and "Losses" mean, for each fiscal year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Section 703(a) of the Code (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), but with the following adjustments for such fiscal year
or other period:
(i) Income of the Company that is exempt from
federal income tax as described in Section 705(a)(1)(B) of the Code and not
otherwise taken into account in computing Profits and Losses pursuant to
this Section 4.5(b) shall be added to such taxable income or loss as if it
were taxable income.
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(ii) Any expenditures of the Company described
in Section 705(a)(2)(B) of the Code, or treated as expenditures under
Section 705(a)(2)(B) of the Code pursuant to Section 1.704-1(b)(2)(iv)(i)
of the Treasury Regulations, and not otherwise taken into account in
computing Profits and Losses, shall be subtracted from such taxable income
or loss as if such expenditures were deductible items.
(iii) If the Gross Asset Value of any Company
asset is adjusted pursuant to this Operating Agreement, the amount of the
adjustment shall be taken into account as gain or loss from the disposition
of the asset for purposes of computing such taxable income or loss.
(iv) Gain or loss resulting from any
disposition of property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed by reference to the Gross
Asset Value of the property disposed of, notwithstanding that the adjusted
tax basis of the property differs from the Gross Asset Value of the
property.
(v) In lieu of the deduction for depreciation,
cost recovery, or amortization taken into account in computing such taxable
income or loss, there shall be taken into account Book Depreciation for
such fiscal year or other period.
(vi) Notwithstanding any other provision of
this Operating Agreement, any items that are specially allocated pursuant
to Section 5.3(a) or 5.3(b) of this Operating Agreement shall not be taken
into account as taxable income or loss for purposes of computing Profits
and Losses.
If the Company's taxable income or taxable loss for the year or period, as
adjusted pursuant to subparagraphs (i)-(vi) above, is a positive amount, that
amount shall be the Company's Profit for such fiscal year or other period; and
if negative, that amount shall be the Company's Loss for such fiscal year or
other period.
(c) "Gross Asset Value" means, for any asset, the asset's
adjusted basis for federal income tax purposes, except as set forth below:
(i) The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair market value
of the asset on the date of determination, as determined by the
contributing Members and the Company.
(ii) The Gross Asset Values of all assets shall
be adjusted to equal their gross fair market values, as determined by the
Members, as of the following times: (A) the contribution of more than a DE
MINIMIS amount of money or other property to the Company as a Capital
Contribution by a new or existing Member, or the distribution by the
Company to a retiring or continuing Member of more than a DE MINIMIS
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amount of property as consideration for an interest in the Company, if the
Members reasonably determine that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Members in
the Company; or (B) the liquidation of the Company within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations.
(iii) The Gross Asset Value of any Company asset
distributed to any Member shall be the gross fair market value of such
asset on the date of distribution.
(iv) The Gross Asset Values of Company assets
shall be increased (or decreased) to reflect any adjustment to the adjusted
basis of such assets pursuant to Section 734(b) of the Code 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 Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations; provided, however, that
Gross Asset Values shall not be adjusted pursuant to this Section
4.5(c)(iv) to the extent the Managers determine that an adjustment pursuant
to Section 4.5(c)(ii) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
Section 4.5(c)(iv).
(v) If the Gross Asset Value of an asset has
been determined or adjusted pursuant to Section 4.5(c)(i), (ii) or (iv),
such Gross Asset Value shall thereafter be adjusted by the Book
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS.
(a) GENERAL ALLOCATIONS. Except as may be required by
Section 704(c) of the Code and Section 1.704-1(b)(2)(iv)(f)(4) of the Treasury
Regulations, Profits and Losses of the Company shall be allocated among the
Members as follows:
(i) Except as otherwise provided in Section
5.3 of this Operating Agreement, Profits shall be allocated as follows:
(A) First, in an aggregate amount
equal to, and in proportion to, the excess of the aggregate Losses
previously allocated pursuant to Section 5.1(a)(iii) over the Profits
allocated pursuant to this Section 5.1(a)(i)(A), until such excess is
reduced to zero;
(B) Next, in an aggregate amount
equal to, and in proportion to, the excess of the aggregate Losses
previously allocated pursuant to Section
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5.1(a)(ii) over the Profits allocated pursuant to this Section
5.1(a)(i)(B), until such excess is reduced to zero;
(C) Thereafter, to the Members in
proportion to their Sharing Ratios.
(ii) Except as otherwise provided in Sections
5.1(a)(iii) and 5.3 of this Operating Agreement, Losses for any fiscal year
or other period shall be allocated to the Members in proportion to their
Sharing Ratios.
(iii) The aggregate amount of Losses allocated
pursuant to Section 5.1(a)(ii) hereof and the next sentence of this Section
5.1(a)(iii) to any Member for any fiscal year shall not exceed the maximum
amount of losses that may be allocated to such Member without causing such
Member to have an Adjusted Capital Account Deficit at the end of such
fiscal year. All Losses in excess of the limitation in this Section
5.1(a)(iii) with respect to any Member with a positive Adjusted Capital
Account shall be allocated solely to the other Members in proportion to
their Sharing Ratios. If no other Member may receive an additional
allocation of Losses pursuant to this Section 5.1(a)(iii), such additional
Losses not allocated pursuant to Section 5.1(a)(ii) of this Operating
Agreement or the preceding sentence shall be allocated solely to those
Members that bear the economic risk for such additional Losses within the
meaning of Section 704(b) of the Code and the Treasury Regulations
thereunder. If it is necessary to allocate Losses under the preceding
sentence, the Managers shall determine which Members bear the economic risk
for such additional Losses.
(b) TRANSFER. All items of Profit, Loss, income, gain,
loss, deduction, and credit allocable to any Membership Interest that may have
been transferred shall be allocated between the transferor and the transferee
based on the portion of the calendar year during which each was recognized as
owning that Membership Interest, without regard to the results of Company
operations during any particular portion of that calendar year and without
regard to whether cash distributions were made to the transferor or the
transferee during that calendar year; provided, however, that this allocation
must be made in accordance with a method permissible under Section 706 of the
Code and the Treasury Regulations thereunder.
5.2 DISTRIBUTIONS.
(a) GENERAL. From time to time (but at least once
annually), the Managers shall determine in their reasonable judgment to what
extent (if any) the Company's cash on hand exceeds its current and anticipated
needs, including, without limitation, for operating expenses, debt service,
acquisitions, and a reasonable contingency reserve. Except as otherwise provided
in Article XII, if such an excess exists, the Managers may in their sole
discretion cause the Company to distribute to the
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Members an amount in cash equal to that excess in proportion to their respective
Sharing Ratios.
(b) OVERRIDING DISTRIBUTION. Notwithstanding the provisions
of Section 5.2(a) above, if at any time distributions to a Member would create
or increase an Adjusted Capital Account Deficit and if another Member has a
positive Capital Account balance (after such Adjusted Capital Account Deficit
and Capital Account balances have been adjusted to reflect the allocations of
Profits, Losses, income, gains, and losses pursuant to this Article V, and
taking into account interim Profits, Losses, income, gains, and losses
(determined using such accounting methods as shall be selected by the Managers)
for the period ending on or before such distribution), such cash or assets shall
be distributed first to the Member having a positive Capital Account balance in
an amount equal to such positive balance, and the remaining cash or assets, if
any, shall be distributed in accordance with Section 5.2(a) of this Operating
Agreement.
(c) PAYMENTS NOT DEEMED DISTRIBUTIONS. Any amounts paid
pursuant to Section 6.10 or Article VIII of this Operating Agreement shall not
be deemed to be distributions for purposes of this Operating Agreement.
(d) WITHHELD AMOUNTS. Notwithstanding any other provision
of this Section 5.2 to the contrary, each Member hereby authorizes the Company
to withhold and to pay over, or otherwise pay, any withholding or other taxes
payable by the Company with respect to the Member as a result of the Member's
participation in the Company; if and to the extent that the Company shall be
required to withhold or pay any such taxes, such Member shall be deemed for all
purposes of this Operating Agreement to have received a payment from the Company
as of the time such withholding or tax is paid, which payment shall be deemed to
be a distribution with respect to such Member's Membership Interest to the
extent that the Member (or any successor to such Member's Membership Interest)
is then entitled to receive a distribution. To the extent that the aggregate
amount of such payments to a Member for any period exceeds the distributions to
which such Member is entitled for such period, the amount of such excess shall
be considered a loan from the Company to such Member. Such loan shall bear
interest (which interest shall be treated as an item of income to the Company)
at the General Interest Rate until discharged by such Member by repayment, which
may be made by the Company out of distributions to which such Member would
otherwise be subsequently entitled. Any withholdings authorized by this Section
5.2(d) shall be made at the maximum applicable statutory rate under the
applicable tax law unless the Company shall have received an opinion of counsel
or other evidence satisfactory to the Managers to the effect that a lower rate
is applicable, or that no withholding is applicable.
(e) DISTRIBUTIONS IN LIQUIDATION OF MEMBER'S MEMBERSHIP
INTEREST. For purposes of this Operating Agreement, a liquidation of a Member's
Membership Interest means the termination of the Member's entire Membership
Interest other than in connection with the dissolution, winding up, and
termination of the Company. Where a Member's Membership Interest is to be
liquidated by a series of distributions, the Membership Interest shall not be
considered as liquidated until the final distribution has been made. If a
Member's Membership Interest is to be liquidated,
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liquidating distributions shall be made in accordance with the positive Capital
Account balance of that Member (as determined after taking into account all
Capital Account adjustments with respect to that Member's Membership Interest
for the taxable year during which the liquidation occurs, as determined in
accordance with Section 706 of the Code). A distribution in liquidation of a
Member's Membership Interest shall be made by the end of the taxable year in
which such liquidation occurs, or, if later, within 90 days after the Member's
Membership Interest is liquidated.
5.3 SPECIAL ALLOCATIONS OF PROFITS AND LOSSES.
(a) SPECIAL ALLOCATIONS.
(i) QUALIFIED INCOME OFFSET. If any Member has
an Adjusted Capital Account Deficit, items of income and gain shall be
specially allocated (on a gross basis) to each such Member in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit of such
Member as quickly as possible; provided, however, that an allocation
pursuant to this Section 5.3(a)(i) shall be made only if and to the extent
that a Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Article V have been tentatively made
as if this Section 5.3(a)(i) were not in this Operating Agreement. It is
intended that this Section 5.3(a)(i) constitute a "qualified income offset"
within the meaning of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations and shall be interpreted and applied in a manner consistent
with such Treasury Regulations.
(ii) GROSS INCOME ALLOCATION. If any Member has
a deficit Capital Account at the end of any fiscal year, and such deficit
Capital Account is in excess of the sum of (A) the amount such Member is
obligated to restore pursuant to any provisions of this Operating Agreement
and (B) the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Sections 1.704-2(g)(i) and
1.704-2(i)(5) of the Treasury Regulations, each such Member shall be
specially allocated items of income and gain in the amount of such excess
as quickly as possible, provided that an allocation pursuant to this
Section 5.3(a)(ii) shall be made only if and to the extent that such Member
would have a deficit Capital Account in excess of such sum after all other
allocations provided for in Article V have been made as if Section
5.3(a)(i) hereof and this Section 5.3(a)(ii) were not in this Operating
Agreement.
(iii) MINIMUM GAIN CHARGEBACK - COMPANY
NONRECOURSE LIABILITIES. If there is a net decrease in Company Minimum Gain
during any Company taxable year, certain items of income and gain shall be
allocated (on a gross basis) to the Members in the amounts and manner
described in Section 1.704-2(f) of the Treasury Regulations. This Section
5.3(a)(iii) is intended to comply with the minimum gain chargeback
requirement (set forth in Section 1.704-2(f) of the Treasury
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Regulations) relating to Company nonrecourse liabilities (as defined in
Section 1.704-2(b)(3) of the Treasury Regulations) and shall be so
interpreted.
(iv) MINIMUM GAIN CHARGEBACK - MEMBER
NONRECOURSE DEBT. If there is a net decrease in Member Minimum Gain during
any Company taxable year, certain items of income and gain shall be
allocated (on a gross basis) as quickly as possible to those Members who
had a share of the Member Minimum Gain (determined pursuant to Section
1.704-2(i)(5) of the Treasury Regulations) in the amounts and manner
described in Section 1.704-2(i)(4) of the Treasury Regulations. This
Section 5.3(a)(iv) is intended to comply with the minimum gain chargeback
requirement (set forth in Section 1.704-2(i)(4) of the Treasury
Regulations) relating to Member nonrecourse debt (as defined in Section
1.704-2(b)(4) of the Treasury Regulations) and shall be so interpreted.
(v) BASIS ADJUSTMENTS. To the extent an
adjustment to the adjusted tax basis of any Company asset pursuant to
Sections 734(b) or 743(b) of the Code is required, pursuant to Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations, to be taken into account
in determining Capital Accounts, the amount of such 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 such
basis), and such gain or loss shall be specially allocated to the Members
in a manner consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such Section of the Treasury
Regulations.
(vi) NONRECOURSE DEDUCTIONS. Member Nonrecourse
Deductions shall be allocated in accordance with Section 1.704-2(i)(1) of
the Treasury Regulations to the Member who bears the economic risk of loss
with respect to such deductions.
(vii) ALLOCATION OF PROCEEDS OF NONRECOURSE
LIABILITY. The determination of whether any distribution by the Company is
allocable to the proceeds of a nonrecourse liability of the Company shall
be made by the Member under any reasonable method that is in compliance
with Section 1.704-2(h) of the Treasury Regulations.
(b) CURATIVE ALLOCATIONS. The allocations set forth in
Sections 5.1(a)(iii) and 5.3(a) hereof (the "Regulatory Allocations") are
intended to comply with certain requirements of Section 1.704-1(b) of the
Treasury Regulations. The Members hereby acknowledge and agree that the
Regulatory Allocations may not be consistent with the manner in which the
Members intend to make Company distributions. Accordingly, the Managers are
hereby authorized and directed to make other allocations of Profit, Loss, or
Book Depreciation among the Members in any reasonable manner that the Managers
deem appropriate, in their sole discretion, so as to prevent the Regulatory
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Allocations from distorting the manner in which the Company distributions would
otherwise be divided among the Members pursuant to Sections 5.2 and 12.2 hereof.
In general, the Members anticipate that this will be accomplished by specially
allocating other Profits, Losses, or Book Depreciation among the Members so
that, after such offsetting special allocations are made, the amount of each
Member's Capital Account will be, to the extent possible, equal to the Capital
Account balance such Member would have had if the Regulatory Allocations were
not a part of this Operating Agreement and all Company items had been allocated
to the Members solely pursuant to Section 5.1(a) hereof.
(c) TAX ALLOCATIONS: CODE SECTION 704(c). In accordance
with Section 704(c) of the Code and the Treasury 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 the initial
Gross Asset Value of such property (determined in accordance with Section
4.5(c)(i) hereof). In accordance with the requirements of Section
1.704-1(b)(4)(i) of the Treasury Regulations, if the Gross Asset Value of any
Company asset is adjusted pursuant to Section 4.5(c)(ii) hereof, 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 the Gross Asset Value of such asset in the same
manner as such variations are taken into account under Section 704(c) of the
Code and the Treasury Regulations thereunder with respect to property
contributed to the Company. Any elections or other decisions relating to such
allocation shall be made by the Managers in any manner that reasonably reflects
the purpose and intention of this Operating Agreement. Allocations pursuant to
this Section 5.3(c) are solely for purposes of federal, state, and local taxes
and shall not affect or be taken into account in computing any Member's Capital
Account or share of Profits, Losses, other items, or distributions pursuant to
this Operating Agreement.
(d) OTHER ALLOCATION RULES.
(i) For purposes of determining the Profits,
Losses, or any other item allocable to any period (including periods before
and after the admission of a new Member), Profits, Losses, and any such
other item shall be determined on a daily, monthly, or other basis, as
determined and allocated by the Managers using any permissible method under
Section 706 of the Code and the Treasury Regulations thereunder.
(ii) For federal income tax purposes, every
item of income, gain, loss, and deduction shall be allocated among the
Members in accordance with the allocations under Sections 5.1, 5.3(a),
5.3(b), and 5.3(c) of this Operating Agreement.
(iii) The Members are aware of the income tax
consequences of the allocations made by this Section 5.3 and Section 5.1
and hereby agree to be bound by the provisions of this Section 5.3 and
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Section 5.1 in reporting their shares of Company income and loss for income
tax purposes.
(iv) To the extent permissible under Section
704 of the Code and the Treasury Regulations thereunder, in making
allocations provided for in this Section 5.3 and Section 5.1, ordinary
income realized by the Company from recapture of previously reported
deductions shall be allocated to those Members (or their successors in
interest) to whom such deductions were originally allocated and in
proportion to such original allocations. Any obligation relating to the
recapture of previously reported credits shall be allocated to those
Members (or their successors in interest) to whom such credits were
originally allocated and in proportion to such original allocations.
(v) It is intended that the allocations in
Sections 5.1, 5.3(a), 5.3(b), and 5.3(c) of this Operating Agreement effect
an allocation for federal income tax purposes consistent with Section 704
of the Code and comply with any limitations or restrictions therein. The
Managers shall have complete discretion to make the allocations pursuant to
this Section 5.3 and Section 5.1 in any reasonable manner consistent with
Section 704 of the Code and to amend the provisions of this Operating
Agreement as appropriate to comply with the Treasury Regulations
promulgated under Section 704 of the Code, if in the opinion of counsel to
the Company, such an amendment is advisable to reflect allocations among
the Members consistent with those Treasury Regulations.
(vi) The Members agree that their Membership
Interests represent their interests in Company profits for purposes of
allocating excess nonrecourse liabilities pursuant to Section 1.752-3(a)(3)
of the Treasury Regulations.
ARTICLE VI
MANAGERS
6.1 MANAGEMENT BY MANAGERS.
(a) Except for situations in which the approval of the
Members is required by the Certificate, this Operating Agreement or by
nonwaivable provisions of applicable law, and subject to the provisions of
Section 6.2, (1) the powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Managers; and (2) the Managers may make all decisions and
take all actions for the Company not otherwise provided for in this Operating
Agreement, including, without limitation, the following:
(i) entering into, making, and performing
contracts, agreements, and other undertakings binding the Company that
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may be necessary, appropriate, or advisable in furtherance of the purposes
of the Company and making all decisions and waivers thereunder;
(ii) opening and maintaining financial
institution and investment accounts and arrangements, drawing checks and
other orders for the payment of money, and designating individuals with
authority to sign or give instructions with respect to those accounts and
arrangements;
(iii) maintaining or causing to be maintained
the assets of the Company;
(iv) collecting sums due the Company;
(v) to the extent that funds of the Company
are available therefor, paying debts and obligations of the Company;
(vi) acquiring, utilizing for Company purposes,
and disposing of any asset of the Company;
(vii) borrowing money or otherwise committing
the credit of the Company for Company activities and voluntary prepayments
or extensions of debt;
(viii) accepting capital contributions to the
Company and adjusting the Sharing Ratios set forth on Exhibit A in
accordance therewith;
(ix) selecting, removing, and changing the
authority and responsibility of lawyers, accountants, and other advisers
and consultants;
(x) obtaining insurance for the Company;
(xi) determining distributions of Company cash
and other property as provided in Section 5.2;
(xii) instituting, prosecuting, defending and
settling any legal, arbitration or administrative actions or proceedings on
behalf of or against the Company; and
(xiii) establishing a seal for the Company.
(b) Notwithstanding the provisions of Section 6.1(a), the
Managers may not cause the Company to do any of the following without complying
with any applicable requirements of the Act:
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(i) sell, lease, exchange or otherwise dispose
of (other than by way of a pledge, mortgage, deed of trust or trust
indenture) all or substantially all the Company's property and assets (with
or without goodwill), outside the usual and regular course of the Company's
business;
(ii) be a party to a merger or an exchange or
acquisition of the type described in Section 209 of the Act; and
(iii) amend or restate the Certificate.
Whenever in this Operating Agreement a reference is made to the Managers, such
reference shall include a sole Manager, who shall have all the authority of the
Managers set forth herein.
6.2 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY AND
DUTIES.
(a) In managing the business and affairs of the Company and
exercising its powers, the Managers shall act (i) collectively through meetings
and written consents pursuant to Sections 6.5 and 6.7, (ii) through committees
pursuant to Section 6.2(b), and (iii) through Managers to whom authority and
duties have been delegated pursuant to Section 6.2(c).
(b) The Managers may, from time to time, designate one or
more committees, each of which shall be comprised of one or more Managers. Any
such committee, to the extent provided in such resolution or in the Certificate
or this Operating Agreement, shall have and may exercise all of the authority of
the Managers, subject to any limitations set forth in the Act. At every meeting
of any such committee, the presence of a majority of all the members thereof
shall constitute a quorum, and the affirmative vote of a majority of the members
present shall be necessary for the adoption of any resolution. The Managers may
dissolve any committee at any time, unless otherwise provided in the Certificate
or this Operating Agreement.
(c) The Managers may, from time to time, delegate to one or
more Managers such authority and duties as the Managers may deem advisable. In
addition, the Managers may assign titles (including, without limitation,
President, Vice President, Secretary, Assistant Secretary, Treasurer and
Assistant Treasurer) to any such Manager. Unless the Managers decide otherwise,
if the title is one commonly used for officers of a business corporation formed
under the DGCL, the assignment of such title shall constitute the delegation to
such Manager of the authority and duties that are normally associated with that
office, subject to any specific delegation of authority and duties made pursuant
to the first sentence of this Section 6.2(c). Any number of titles may be held
by the same Manager. Any delegation pursuant to this Section 6.2(c) may be
revoked, with or without cause, at any time by the Managers.
(d) Any Person dealing with the Company, other than a
Member, may rely on the authority of any Manager or officer in taking any action
in the name of the Company without inquiry into the provisions of this Operating
Agreement or
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compliance herewith, regardless of whether that action actually is taken in
accordance with the provisions of this Operating Agreement.
6.3 NUMBER AND TERM OF OFFICE. The number of Managers of the
Company shall be determined from time to time by resolution of the Managers;
provided, however, that no decrease in the number of Managers that would have
the effect of shortening the term of an incumbent Manager may be made by the
Managers. If the Managers make no such determination, the number of Managers
shall be the number set forth in the Certificate as the number of Managers
constituting the initial Managers. Each Manager shall hold office for the term
for which he is elected and thereafter until his successor shall have been
elected and qualified, or until his earlier death, resignation or removal.
Unless otherwise provided in the Certificate, Managers need not be Members or
residents of the State of Delaware.
6.4 VACANCIES; REMOVAL; RESIGNATION. Subject to other provisions
of this Section, any vacancy occurring in the Managers may be filled by election
at an annual or special meeting of the Members called for that purpose or by the
affirmative vote of a majority of the remaining Managers, though the remaining
Managers may constitute less than a quorum. A Manager elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office. Any
Manager position to be filled by reason of an increase in the number of Managers
shall be filled by election at any meeting of Members or may be filled by the
Managers for a term of office continuing only until the next election of one or
more Managers by the Members; provided that the Managers may not fill more than
two such Manager positions during the period between any two successive annual
meetings of Members. Members holding a Required Interest may, at any time and
with or without cause, terminate the term of office of all or any of the
Managers by a vote at any annual or special meeting called for that purpose.
Such removal shall be effective immediately upon such Member action even if
successors are not elected simultaneously, and the Manager vacancies caused by
such action shall be filled only by election by the Members. Any Manager may
resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time be specified, at the time of
its receipt by the remaining Managers. The acceptance of a resignation shall not
be necessary to make it effective, unless expressly so provided in the
resignation.
6.5 MEETINGS.
(a) Unless otherwise required by law or provided in the
Certificate or this Operating Agreement, a majority of the total number of
Managers fixed by, or in the manner provided in, the Certificate or this
Operating Agreement shall constitute a quorum for the transaction of business of
the Managers, and the act of a majority of the Managers present at a meeting at
which a quorum is present shall be the act of the Managers. A Manager who is
present at a meeting of the Managers at which action on any Company matter is
taken shall be presumed to have assented to the action unless his dissent shall
be entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the Person acting as secretary of the meeting before
the adjournment thereof or shall deliver such dissent to the Company immediately
after
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the adjournment of the meeting. Such right to dissent shall not apply to a
Manager who voted in favor of such action.
(b) Meetings of the Managers may be held at such place or
places as shall be determined from time to time by resolution of the Managers.
At all meetings of the Managers, business shall be transacted in such order as
shall from time to time be determined by resolution of the Managers. Attendance
of a Manager at a meeting shall constitute a waiver of notice of such meeting,
except where a Manager attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.
(c) In connection with any annual meeting of Members at
which Managers were elected, the Managers may, if a quorum is present, hold
their first meeting for the transaction of business immediately after and at the
same place as such annual meeting of the Members. Notice of such meeting at such
time and place shall not be required.
(d) Regular meetings of the Managers shall be held at such
times and places as shall be designated from time to time by resolution of the
Managers. Notice of such regular meetings shall not be required.
(e) Special meetings of the Managers may be called by any
Manager on at least twenty-four (24) hours notice to each other Manager. Such
notice need not state the purpose or purposes of, nor the business to be
transacted at, such meeting, except as may otherwise be required by law or
provided for by the Certificate or this Operating Agreement.
6.6 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The
Managers in their discretion may submit any act or contract for approval or
ratification at any annual meeting of the Members, or at any special meeting of
the Members called for the purpose of considering any such act or contract, and
any act or contract that shall be approved or be ratified by a Required Interest
shall be as valid and as binding upon the Company and upon all the Members as if
it shall have been approved or ratified by every Member of the Company. Failure
of the Managers for any reason (or for no reason) to submit any act or contract
to the Members for approval or ratification shall not in any way act to, or be
deemed to, make such act or contract void or voidable.
6.7 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the Act, the Certificate or this Operating Agreement to
be taken at a meeting of the Managers or any committee designated by the
Managers may be taken without a meeting if a consent in writing, setting forth
the action to be taken, is signed by all the Managers or members of such
committee, as the case may be. Such consent shall have the same force and effect
as a unanimous vote at a meeting and may be stated as such in any document or
instrument filed with the Secretary of State of Delaware, and the execution of
such consent shall constitute attendance or presence in person at a meeting of
the Managers or any such committee, as the case may be. Subject to the
requirements of the Act, the Certificate or this Operating Agreement for notice
of
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meetings, unless otherwise restricted by the Certificate, Managers, or members
of any committee designated by the Managers, may participate in and hold a
meeting of the Managers or any committee of Managers, as the case may be, by
means of a conference telephone or similar communications equipment by means of
which all Persons participating in the meeting can hear each other, and
participation in such meeting shall constitute attendance and presence in person
at such meeting, except where a Person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
6.8 REIMBURSEMENT. The Managers and the officers of the Company
shall be entitled to be reimbursed for reasonable out-of-pocket costs and
expenses incurred in the course of their service hereunder.
ARTICLE VII
MEETINGS OF MEMBERS
7.1 MEETINGS.
(a) A quorum shall be present at a meeting of Members if
the holders of a Required Interest are represented at the meeting in person or
by proxy. With respect to any matter, other than a matter for which the
affirmative vote of the holders of a specified portion of the Sharing Ratios of
all Members entitled to vote is required by the Act, the affirmative vote of a
Required Interest at a meeting of Members at which a quorum is present shall be
the act of the Members.
(b) All meetings of the Members shall be held at the
principal place of business of the Company or at such other place within or
without the State of Delaware as shall be specified or fixed in the notices or
waivers of notice thereof; provided that any or all Members may participate in
any such meeting by means of conference telephone or similar communications
equipment pursuant to Section 7.5.
(c) Notwithstanding the other provisions of the Certificate
or this Operating Agreement, the chairman of the meeting or the holders of a
Required Interest shall have the power to adjourn such meeting from time to
time, without any notice other than announcement at the meeting of the time and
place of the holding of the adjourned meeting. If such meeting is adjourned by
the Members, such time and place shall be determined by a vote of the holders of
a Required Interest. Upon the resumption of such adjourned meeting, any business
may be transacted that might have been transacted at the meeting as originally
called.
(d) An annual meeting of the Members, for the election of
the Managers and for the transaction of such other business as may properly come
before the meeting, shall be held at such place, within or without the State of
Delaware, on such date and at such time as the Managers shall fix and set forth
in the notice of the meeting, which date shall be within thirteen (13) months
subsequent to the date of organization of the Company or the last annual meeting
of Members, whichever most recently occurred.
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(e) Special meetings of the Members for any proper purpose
or purposes may be called at any time by the Managers or the holders of at least
ten percent (10%) of the Sharing Ratios of all Members. If not otherwise stated
in or fixed in accordance with the remaining provisions hereof, the record date
for determining Members entitled to call a special meeting is the date any
Member first signs the notice of that meeting. Only business within the purpose
or purposes described in the notice (or waiver thereof) required by this
Operating Agreement may be conducted at a special meeting of the Members.
(f) Written or printed notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the Managers or Person calling
the meeting, to each Member entitled to vote at such meeting. If mailed, any
such notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the Member at his address provided for in Section 14.2, with
postage thereon prepaid.
(g) The date on which notice of a meeting of Members is
mailed or the date on which the resolution of the Managers declaring a
distribution is adopted, as the case may be, shall be the record date for the
determination of the Members entitled to notice of or to vote at such meeting,
including any adjournment thereof, or the Members entitled to receive such
distribution.
(h) The right of Members to cumulative voting in the
election of Managers is expressly denied.
7.2 VOTING LIST. The Managers shall make, at least ten (10) days
before each meeting of Members, a complete list of the Members entitled to vote
at such meeting or any adjournment thereof, arranged in alphabetical order, with
the address of and the Sharing Ratios held by each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the registered
office or principal place of business of the Company and shall be subject to
inspection by any Member at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any Member during the whole time of the
meeting. The original membership records shall be prima-facie evidence as to who
are the Members entitled to examine such list or transfer records or to vote at
any meeting of Members. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at the meeting.
7.3 PROXIES. A Member may vote either in person or by proxy
executed in writing by the Member. A telegram, telex, cablegram or similar
transmission by the Member, or a photographic, photostatic, facsimile or similar
reproduction of a writing executed by the Member shall be treated as an
execution in writing for purposes of this Section. Proxies for use at any
meeting of Members or in connection with the taking of any action by written
consent shall be filed with the Managers, before or at the time of the meeting
or execution of the written consent, as the case may be. All proxies
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shall be received and taken charge of and all ballots shall be received and
canvassed by the Managers, who shall decide all questions touching upon the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless an inspector or inspectors shall have been appointed
by the chairman of the meeting, in which event such inspector or inspectors
shall decide all such questions. No proxy shall be valid after eleven (11)
months from the date of its execution unless otherwise provided in the proxy. A
proxy shall be revocable unless the proxy form conspicuously states that the
proxy is irrevocable and the proxy is coupled with an interest. Should a proxy
designate two (2) or more Persons to act as proxies, unless that instrument
shall provide to the contrary, a majority of such Persons present at any meeting
at which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or if only one be
present, then such powers may be exercised by that one; or, if an even number
attend and a majority do not agree on any particular issue, the Company shall
not be required to recognize such proxy with respect to such issue if such proxy
does not specify how the Sharing Ratios that are the subject of such proxy are
to be voted with respect to such issue.
7.4 CONDUCT OF MEETINGS. All meetings of the Members shall be
presided over by the chairman of the meeting, who shall be the Chairman of the
Managers or another Manager approved by a majority of the Managers. The chairman
of any meeting of Members shall determine the order of business and the
procedure at the meeting, including such regulation of the manner of voting and
the conduct of discussion as seem to him in order.
7.5 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE.
(a) Any action required or permitted to be taken at any
annual or special meeting of Members may be taken without a meeting, without
prior notice, and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holder or holders of not less
than the minimum Sharing Ratios that would be necessary to take such action at a
meeting at which the holders of all Sharing Ratios entitled to vote on the
action were present and voted. No written consent shall be effective to take the
action that is the subject to the consent unless, within sixty (60) days after
the date of the earliest dated consent delivered to the Company in the manner
required by this Section, a consent or consents signed by the holder or holders
of not less than the minimum Sharing Ratios that would be necessary to take the
action that is the subject of the consent are delivered to the Company by
delivery to its registered office, its principal place of business, or the
Managers. Delivery shall be by hand or certified or registered mail, return
receipt requested. Delivery to the Company's principal place of business shall
be addressed to the Managers. A telegram, telex, cablegram or similar
transmission by a Member, or a photographic, photostatic, facsimile or similar
reproduction of a writing signed by a Member, shall be regarded as signed by the
Member for purposes of this Section. Prompt notice of the taking of any action
by Members without a meeting by less than unanimous written consent shall be
given to those Members who did not consent in writing to the action.
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(b) The record date for determining Members entitled to
consent to action in writing without a meeting shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Company by delivery to its registered office, its principal
place of business, or the Managers. Delivery to the Company's principal place of
business shall be addressed to the Managers.
(c) If any action by Members is taken by written consent,
any Certificate or documents filed with the Secretary of State of Delaware as a
result of the taking of the action shall state, in lieu of any statement
required by the Act concerning any vote of Members, that written consent has
been given in accordance with the provisions of the Act and that any written
notice required by the Act has been given.
(d) Members may participate in and hold a meeting by means
of conference telephone or similar communications equipment by means of which
all Persons participating in the meeting can hear each other, and participation
in such meeting shall constitute attendance and presence in person at such
meeting, except where a Person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
ARTICLE VIII
INDEMNIFICATION
8.1 RIGHT TO INDEMNIFICATION. The Company shall indemnify persons
who are or were a Manager or officer of the Company both in their capacities as
Managers and officers of the Company and, if serving at the request of the
Company as a director, manager, officer, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, limited liability
company, trust, partnership, joint venture, sole proprietorship, employee
benefit plan or other enterprise, in each of those capacities, against any and
all liability and reasonable expense that may be incurred by them in connection
with or resulting from (a) any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative (collectively, a "Proceeding"), (b) an appeal in such a
Proceeding, or (c) any inquiry or investigation that could lead to such a
Proceeding, all to the full extent permitted by the Act. The Company shall pay
or reimburse, in advance of the final disposition of the Proceeding, to all
persons who are or were a Manager or officer of the Company all reasonable
expenses incurred by such person who was, is or is threatened to be made a named
defendant or respondent in a Proceeding to the full extent permitted by the Act.
The Company may indemnify persons who are or were an employee or agent (other
than a Manager or officer) of the Company, or persons who are not or were not
employees or agents of the Company but who are or were serving at the request of
the Company as a director, officer, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, trust, partnership,
joint venture, sole proprietorship, employee benefit plan or other enterprise
(collectively, along with the Managers and officers of the Company, such persons
are referred to herein as "Corporate Functionaries") against any and all
liability and reasonable expense that may be incurred by them in connection with
or resulting from (a) any Proceeding, (b) an appeal in such a Proceeding, or (c)
any inquiry or investigation that could lead to such a Proceeding, all to the
full
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extent permitted by the Act. The rights of indemnification provided for in this
Article VIII shall be in addition to all rights to which any Corporate
Functionary may be entitled under any agreement or vote of Members or as a
matter of law or otherwise.
8.2 INSURANCE. The Company may purchase or maintain insurance on
behalf of any Corporate Functionary against any liability asserted against him
and incurred by him in such a capacity or arising out of his status as a
Corporate Functionary, whether or not the Company would have the power to
indemnify him against the liability under the Act or this Operating Agreement;
provided, however, that if the insurance or other arrangement is with a person
or entity that is not regularly engaged in the business of providing insurance
coverage, the insurance or arrangement may provide for payment of a liability
with respect to which the Company would not have the power to indemnify the
person only if including coverage for the additional liability has been approved
by the Members of the Company. Without limiting the power of the Company to
procure or maintain any kind of insurance or arrangement, the Company may, for
the benefit of persons indemnified by the Company, (i) create a trust fund, (ii)
establish any form of self insurance, (iii) secure its indemnification
obligation by grant of any security interest or other lien on the assets of the
Company, or (iv) establish a letter of credit, guaranty or surety arrangement.
Any such insurance or other arrangement may be procured, maintained or
established within the Company or its affiliates or with any insurer or other
person deemed appropriate by the Managers of the Company regardless of whether
all or part of the stock or other securities thereof are owned in whole or in
part by the Company. In the absence of fraud, the judgment of the Managers of
the Company as to the terms and conditions of such insurance or other
arrangement and the identity of the insurer or other person participating in an
arrangement shall be conclusive, and the insurance or arrangement shall not be
voidable and shall not subject the Managers approving the insurance or
arrangement to liability, on any ground, regardless of whether Managers
participating in approving such insurance or other arrangement shall be
beneficiaries thereof.
8.3 SAVINGS CLAUSE. If this Article VIII or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify and hold harmless each Manager, Member
or any other Person indemnified pursuant to this Article VIII as to costs,
charges and expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative to the full extent permitted by
any applicable portion of this Article VIII that shall not have been invalidated
and to the fullest extent permitted by applicable law.
ARTICLE IX
TAXES
9.1 TAX RETURNS. The Managers shall cause to be prepared and filed
all necessary federal and state income tax returns for the Company, including
making the elections described in Section 9.2. Each Member shall furnish to the
Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.
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9.2 TAX ELECTIONS. The Company shall make the following elections
on the appropriate tax returns:
(a) to adopt the calendar year as the Company's fiscal
year;
(b) if a distribution of Company property as described in
Section 734 of the Code occurs or if a transfer of a Membership Interest as
described in Section 743 of the Code occurs, on written request of any Member,
to elect, pursuant to Section 754 of the Code, to adjust the basis of Company
properties;
(c) to elect to amortize the organizational expenses of the
Company and the startup expenditures of the Company ratably over a period of
sixty (60) months as permitted under Section 195 and Section 709(b) of the Code;
and
(d) any other election including, without limitation,
whether the Company shall adopt a cash or accrual method of accounting as the
Managers may deem appropriate and in the best interests of the Members.
Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of this Operating Agreement (including, without
limitation, Section 2.7) shall be construed to sanction or approve such an
election.
9.3 TAX MATTERS PARTNER. A majority of the Managers who are
Members shall designate one Manager that is a Member to be the "tax matters
partner" of the Company pursuant to Section 6231(a)(7) of the Code; or, if there
is no Manager that is a Member, the "tax matters partner" shall be a Member that
is designated as such by a Required Interest. Any Member who is designated "tax
matters partner" shall take such action as may be necessary to cause each other
Member to become a "notice partner" within the meaning of Section 6223 of the
Code. Any Member who is designated "tax matters partner" shall inform each other
Member of all significant matters that may come to its attention in its capacity
as "tax matters partner" by giving notice thereof on or before the fifth (5th)
Business Day after becoming aware thereof and, within that time, shall forward
to each other Member copies of all significant written communications it may
receive in that capacity. Any Member who is designated "tax matters partner" may
not take any action contemplated by Sections 6222 through 6232 of the Code
without the consent of a Required Interest, but this sentence does not authorize
such Manager (or any other Manager) to take any action left to the determination
of an individual Member under Sections 6222 through 6232 of the Code.
ARTICLE X
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
10.1 MAINTENANCE OF BOOKS. The Company shall keep books and records
of accounts and shall keep minutes of the proceedings of its Members, its
Managers and each committee of the Managers. The books of account for the
Company shall be maintained on a cash or accrual basis (as determined by the
Managers) in
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accordance with the terms of this Operating Agreement, except that the capital
accounts of the Members shall be maintained in accordance with Section 4.5. The
calendar year shall be the accounting year of the Company.
10.2 REPORTS. On or before the one hundred twentieth (120th) day
following the end of each fiscal year during the term of the Company, the
Managers shall cause each Member to be furnished with a balance sheet, an income
statement, and a statement of changes in Members' capital of the Company for, or
as of the end of, that fiscal year. Additionally, the Company shall deliver to
its Members K-1 Statements to enable each Member to prepare its required income
tax return.
10.3 ACCOUNT. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name and with financial institutions and firms that the Managers
determine. The Managers may not commingle the Company's funds with the funds of
any Member; however, Company funds may be invested in a manner the same as or
similar to the Managers' investment of their own funds or investments by their
Affiliates.
ARTICLE XI
BANKRUPTCY OF A MEMBER
11.1 BANKRUPT MEMBERS. If any Member becomes a Bankrupt Member, the
Company shall have the option, exercisable by notice from the Managers to the
Bankrupt Member (or its representative) at any time prior to the one hundred
eightieth (180th) day after receipt of notice of the occurrence of the event
causing it to become a Bankrupt Member, to buy, and on the exercise of this
option the Bankrupt Member or its representative shall sell, its Membership
Interest. The purchase price shall be an amount equal to the fair market value
thereof determined by agreement by the Bankrupt Member (or its representative)
and the Managers; however, if those Persons do not agree on the fair market
value on or before the thirtieth (30th) day following the exercise of the
option, either such Person, by notice to the other, may require the
determination of fair market value to be made by an independent appraiser
specified in that notice. If the Person receiving that notice objects on or
before the tenth (10th) day following receipt to the independent appraiser
designated in that notice, and those Persons otherwise fail to agree on an
independent appraiser, either such Person may petition the United States
District Judge for the District of Delaware then senior in service to designate
an independent appraiser. The determination of the independent appraiser,
however designated, is final and binding on all parties. The Bankrupt Member and
the Company each shall pay one half of the costs of the appraisal. The purchaser
shall pay the fair market value as so determined in four equal cash
installments, the first due on closing and the remainder (together with
accumulated interest on the amount unpaid at the General Interest Rate) due on
each of the first three (3) anniversaries thereof. The payment to be made to the
Bankrupt Member or its representative pursuant to this Section 11.1 is in
complete liquidation and satisfaction of all the rights and interest of the
Bankrupt Member and its representative (and of all Persons claiming by, through,
or under the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against
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the Company and (insofar as the affairs of the Company are concerned) against
the Members, and constitutes a compromise to which all Members have agreed
pursuant to Section 18-502(b) of the Act.
ARTICLE XII
DISSOLUTION, LIQUIDATION, AND TERMINATION
12.1 DISSOLUTION. The Company shall dissolve and its affairs shall
be wound up on the first to occur of the following:
(a) the vote or written consent of a Required Interest; or
(b) entry of a decree of judicial dissolution of the
Company under Section 18-802 of the Act.
12.2 LIQUIDATION AND TERMINATION. On dissolution of the Company,
the Managers shall act as liquidating trustee or may appoint one or more Members
as liquidating trustee. The liquidating trustee shall proceed diligently to wind
up the affairs of the Company and make final distributions as provided herein
and in the Act. The costs of liquidation shall be borne as a Company expense.
Until final distribution, the liquidating trustee shall continue to operate the
Company properties with all of the power and authority of the Managers. The
steps to be accomplished by the liquidating trustee are as follows:
(a) as promptly as possible after dissolution and again
after final liquidation, the liquidating trustee shall cause a proper accounting
to be made of the Company's assets, liabilities, and operations through the last
day of the calendar month in which the dissolution occurs or the final
liquidation is completed, as applicable;
(b) the liquidating trustee shall pay, satisfy or discharge
from Company funds all of the debts, liabilities and obligations of the Company
(including, without limitation, all expenses incurred in liquidation and any
advances described in Section 4.4) or otherwise make adequate provision for
payment and discharge thereof (including, without limitation, the establishment
of a cash escrow fund for contingent liabilities in such amount and for such
term as the liquidating trustee may reasonably determine); and:
(c) all remaining assets of the Company shall be
distributed to the Members as follows:
(i) the liquidating trustee may sell any or
all Company property, including to Members, and any resulting Profit or
Loss from each sale shall be computed and allocated to the Capital Accounts
of the Members as provided in Article V of this Operating Agreement;
(ii) with respect to all Company property that
has not been sold, the fair market value of that property shall be
determined and the Capital Accounts of the Members shall be adjusted to
reflect the
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manner in which the unrealized Profit, Loss, income, gain, loss, and
deduction inherent in such property that has not previously been reflected
in the Capital Accounts would be allocated among the Members if there were
a taxable disposition of that property for the fair market value of that
property on the date of distribution; and
(iii) Company property shall be distributed
among the Members in accordance with the positive Capital Account balances
of the Members, as determined after taking into account all Capital Account
adjustments for the taxable year of the Company during which the
liquidation of the Company occurs (other than those made by reason of this
clause (iii)); and those distributions shall be made by the end of the
taxable year of the Company during which the liquidation of the Company
occurs (or, if later, ninety (90) days after the date of the liquidation).
All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.2. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.2 constitutes a complete
distribution to the Member with respect to its Membership Interest and the
Member's interest in the Company's property, and constitutes a compromise to
which all Members have consented within the meaning of Section 18-502 of the
Act. To the extent that a Member returns funds to the Company, it has no claim
against any other Member for those funds, except to the extent any Member is
obligated to return a distribution to the Company pursuant to Section 18-804(c)
of the Act.
12.3 DEFICIT CAPITAL ACCOUNT. Notwithstanding anything to the
contrary in this Operating Agreement, and notwithstanding any custom or rule of
law to the contrary, if any Member has a negative balance in its Capital Account
on the date of the liquidation of such Member's "interest in the partnership"
(within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations)
after taking into account allocations of Profits, Losses, and other items of
income, gain, loss, deduction or credit, and distributions of cash or property
(in each case as provided in Article V), that Member shall have no obligation to
restore the negative balance or to make any Capital Contribution by reason
thereof, and the negative balance shall not be considered an asset or a
liability of the Company or of any Member.
12.4 CERTIFICATE OF DISSOLUTION. On completion of the distribution
of Company assets as provided herein, the Company is terminated, and the
Managers (or such other Person or Persons as the Act may require or permit)
shall file a Certificate of Cancellation with the Secretary of State of
Delaware, cancel any other filings made pursuant to Section 2.5, and take such
other actions as may be necessary to terminate the Company.
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ARTICLE XIII
CERTIFICATES
13.1 FORM OF CERTIFICATES.
(a) The Company may deliver certificates representing the
Membership Interests to which all Members are entitled. Certificates
representing Membership Interests of the Company shall be in such form as shall
be approved and adopted by the Managers and shall be numbered consecutively and
entered in the records of the Company as they are issued. Each certificate shall
state on the face thereof that the Company is organized under the laws of the
State of Delaware, the name of the Member, and the Membership Interest. Each
certificate shall also set forth on the back thereof a full or summary statement
of matters required by the Act, the Certificate or this Operating Agreement to
be described on certificates representing Membership Interests, and shall
contain a conspicuous statement on the face thereof referring to the matters set
forth on the back thereof.
(b) Certificates shall be signed by one or More of the
Managers or, if persons be elected to such offices, by the President or any Vice
President and by the Secretary or any Assistant Secretary, and may be sealed
with the seal of the Company. Either the seal of the Company or the signatures
of the Manager(s) or officers, or both, may be facsimiles. In case any Manager
or officer who has signed, or whose facsimile signature or signatures have been
used on such certificate or certificates, shall cease to be a Manager or officer
of the Company, whether because of death, resignation or otherwise, before such
certificate or certificates have been delivered by the Company or its agents,
such certificate or certificates may nevertheless be issued and delivered as
though the person or persons who signed the certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be a
Manager or officer of the Company.
13.2 LOST CERTIFICATES. The Company may direct that a new
certificate be issued in place of any certificate theretofore issued by the
Company alleged to have been lost or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate to be lost or destroyed.
When authorizing the issue of a new certificate, the Managers in their
discretion and as a condition precedent to the issuance thereof, may require the
owner of the lost or destroyed certificate, or his legal representative, to
advertise the same in such manner as it shall require and/or give the Company a
bond in such form, in such sum, and with such surety or sureties as it may
direct as indemnity against any claim that may be made against the Company with
respect to the certificate alleged to have been lost, stolen or destroyed.
13.3 TRANSFER OF CERTIFICATES. Certificates representing Membership
Interests shall be transferable, subject to the provisions of Section 3.3, only
on the records of the Company by the holder thereof in person or by his duly
authorized attorney. Subject to any restrictions on transfer set forth in the
Certificate, this Operating Agreement or any agreement among Members to which
this Company is a party or has notice, upon surrender to the Company of a
certificate representing a Membership
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Interest duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the Company to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
13.4 REGISTERED MEMBERS. Except as otherwise provided in the Act or
other Delaware law, the Company shall be entitled to regard the Member in whose
name any certificates issued by the Company are registered in the records of the
Company at any particular time as the owner of such Membership Interest and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Membership Interest on the part of any other person, whether or
not it shall have express or other notice thereof.
ARTICLE XIV
GENERAL PROVISIONS
14.1 OFFSET. Whenever the Company is to pay any sum to any Member,
any amounts that Member owes the Company may be deducted from that sum before
payment.
14.2 NOTICES. Except as expressly set forth to the contrary in this
Operating Agreement, all notices, requests, or consents provided for or
permitted to be given under this Operating Agreement must be in writing and must
be given either by depositing that writing in the United States mail, addressed
to the recipient, postage paid, and registered or certified with return receipt
requested or by delivering that writing to the recipient in person, by courier,
or by facsimile transmission; and a notice, request, or consent given under this
Operating Agreement is effective on receipt by the Person to receive it. All
notices, requests, and consents to be sent to a Member must be sent to or made
at the addresses given for that Member on Exhibit A or in the instrument
described in Section 3.3(d), or such other address as that Member may specify by
notice to the other Members. Any notice, request, or consent to the Company or
the Managers must be given to the Managers at the following address: 200
Crescent Court, Suite 1600, Dallas, Texas 75201. Whenever any notice is required
to be given by law, the Certificate or this Operating Agreement, a written
waiver thereof, signed by the Person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
14.3 ENTIRE AGREEMENT. This Operating Agreement constitutes the
entire agreement of the Members and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written. However, nothing herein shall preclude some or all of
the Members from entering into one or more separate agreements concerning
voting, ownership and Disposition of Membership Interests or shall preclude the
Company from becoming a party to any such agreement.
14.4 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or
implied, to or of any breach or default by any Person in the performance by that
Person of its obligations with respect to the Company is not a consent or waiver
to or of any other
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breach or default in the performance by that Person of the same or any other
obligations of that Person with respect to the Company. Failure on the part of a
Person to complain of any act of any Person or to declare any Person in default
with respect to the Company, irrespective of how long that failure continues,
does not constitute a waiver by that Person of its rights with respect to that
default until the applicable statute-of-limitations period has run.
14.5 AMENDMENT OR MODIFICATION. This Operating Agreement may be
amended or modified from time to time only by a written instrument adopted by
the Managers and executed and agreed to by a Required Interest, except for any
provision for which the approval of a different specified portion of the Sharing
Ratios of all Members entitled to vote is expressly required by this Operating
Agreement; provided, however, that (a) an amendment or modification decreasing a
Member's Membership Interest is effective only with that Member's consent, or
(b) an amendment or modification reducing the required Membership Interest or
other measure for any consent or vote in this Operating Agreement is effective
only with the consent or vote of Members having the Membership Interest or other
measure theretofore required.
14.6 BINDING EFFECT. Subject to the restrictions on Dispositions
set forth in these Operating Agreement, this Operating Agreement is binding on
and inure to the benefit of the Members and their respective heirs, legal
representatives, successors, and assigns.
14.7 GOVERNING LAW; SEVERABILITY. THIS OPERATING AGREEMENT IS
GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE
GOVERNANCE OR THE CONSTRUCTION OF THIS OPERATING AGREEMENT TO THE LAW OF ANOTHER
JURISDICTION. In the event of a direct conflict between the provisions of this
Operating Agreement and (a) any provision of the Certificate, or (b) any
mandatory provision of the Act, the applicable provision of the Certificate or
the Act shall control. If any provision of this Operating Agreement or the
application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of this Operating Agreement and the
application of that provision to other Persons or circumstances is not affected
thereby and that provision shall be enforced to the greatest extent permitted by
law.
14.8 FURTHER ASSURANCES. In connection with this Operating
Agreement and the transactions contemplated hereby, each Member shall execute
and deliver any additional documents and instruments and perform any additional
acts that may be necessary or appropriate to effectuate and perform the
provisions of this Operating Agreement and those transactions.
14.9 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any
right it may have to maintain any action for dissolution of the Company or for
any partition of the property of the Company.
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14.10 INDEMNIFICATION. To the fullest extent permitted by law, each
Member shall indemnify the Company, each Manager and each other Member and hold
them harmless from and against all losses, costs, liabilities, damages, and
expenses (including, without limitation, costs of suit and attorney's fees) they
may incur on account of any breach by that Member of this Operating Agreement.
14.11 NOTICE TO MEMBERS OF PROVISIONS OF THIS OPERATING AGREEMENT.
By executing this Operating Agreement, each Member acknowledges that it has
actual notice of (a) all of the provisions of this Operating Agreement,
including, without limitation, the restrictions on the transfer of Membership
interests set forth in Article III, and (b) all of the provisions of the
Certificate. Each Member hereby agrees that this Operating Agreement constitute
adequate notice of all such provisions, including, without limitation, any
notice requirement under Chapter 8 of the Delaware Uniform Commercial Code
relating to uncertificated securities, and each Member hereby waives any
requirement that any further notice thereunder be given.
14.12 COUNTERPARTS. This Operating Agreement may be executed in any
number of counterparts with the same effect as if all signing parties had signed
the same document. All counterparts shall be construed together and constitute
the same instrument.
14.13 CREDITORS. None of the provisions of this Operating Agreement
shall be for the benefit of or enforceable by any creditors of the Company.
14.14 POWER OF ATTORNEY.
(a) GRANT OF POWER. Each Member hereby constitutes and
appoints the Manager designated by the Managers to exercise this power of
attorney and his or her authorized representatives (and any successor thereto by
assignment, election, or otherwise and the authorized representatives thereof)
with full power of substitution as his true and lawful agent and
attorney-in-fact, with full power and authority in his name, place, and stead,
to execute, swear to, acknowledge, deliver, file, and record in the appropriate
public offices, as applicable or appropriate (i) all certificates and other
instruments and all amendments or restatements thereof that such Manager deems
reasonable and appropriate or necessary to qualify or register, or continue the
qualification or registration of, the Company as a limited liability company in
all jurisdictions in which the Company may conduct business or own property;
(ii) all instruments, including an amendment or restatement of this Operating
Agreement, that such Manager deems appropriate or necessary to reflect any
amendment, change, or modification of this Operating Agreement in accordance
with their terms; (iii) all conveyances and other instruments or documents that
such Manager deems appropriate or necessary to reflect the dissolution and
liquidation of the Company pursuant to the terms of this Operating Agreement;
(iv) all instruments relating to the admission or substitution of any Member;
(v) all ballots, consents, approvals, waivers, certificates, and other
instruments appropriate or necessary, in the sole discretion of such Manager, to
make, evidence, give, confirm, or ratify any vote, consent, approval, agreement,
or other action that is made or given by Members hereunder, is deemed to be made
or given by
34
<Page>
Members hereunder, or is consistent with the terms of this Operating Agreement
and appropriate or necessary, in the sole discretion of such Manager, to
effectuate the terms or intent of this Operating Agreement; provided that, with
respect to any action that requires the vote, consent, or approval of a stated
percentage of Members under the terms of this Operating Agreement, such Manager
may exercise the power of attorney granted in this subsection (v) only after the
necessary vote, consent, or approval has been made or given. Nothing herein
contained shall be construed as authorizing such Manager to amend this Operating
Agreement except in accordance with Article VI of this Operating Agreement or as
otherwise provided in this Operating Agreement.
(b) IRREVOCABILITY. The foregoing power of attorney is
irrevocable and coupled with an interest, and it shall survive, and not be
affected by, the death, incompetence, incapacity, disability, dissolution,
bankruptcy, or termination of any Member and the transfer of all or any portion
of his Company Interest and shall extend to such Member's heirs, successors,
assigns, and personal representatives. Each Member agrees to be bound by any
representations made by the Manager acting in good faith pursuant to the power
of attorney; and each Member hereby waives any and all defenses that may be
available to contest, negate, or disaffirm any action of the Manager taken in
good faith under the power of attorney. Each Member shall execute and deliver to
the Manager within 15 days after receipt of the Manager's request therefor,
further designations, powers of attorney, and other instruments the Manager
deems necessary to effectuate this Operating Agreement and the purposes of the
Company.
[Signature Page Follows]
35
<Page>
IN WITNESS WHEREOF, following adoption of this Operating Agreement by
the Manager, the Members have executed this Operating Agreement as of the date
first set forth above.
ADOPTED: APPROVED AS ADOPTED:
MANAGER: MEMBER:
CUPCORP, INC. CUPCORP, INC.
By: /s/ Mark Attanasio By: /s/ Mark Attanasio
--------------------------------- ---------------------------------
Name: Mark Attanasio Name: Mark Attanasio
Title: President Title: President
<Page>
EXHIBIT A
<Table>
<Caption>
NAME, ADDRESS AND INITIAL CAPITAL INITIAL CAPITAL INITIAL
CONTRIBUTION OF EACH MEMBER CONTRIBUTION SHARING RATIO
- --------------------------------- --------------- -------------
Cupcorp, Inc. $ 1,000,000 100%
c/o TCW/Crescent Mezzanine, L.L.C.
11100 Santa Monica Blvd.
Suite 2000
Los Angeles, CA 90025
Attention: Rufus Rivers
</Table>
<Page>
FIRST AMENDMENT TO LIMITED LIABILITY
COMPANY OPERATING AGREEMENT OF
NEWCUP, LLC
A Delaware Limited Liability Company
This First Amendment ("Amendment"), dated as of February 27, 2004, to the
Limited Liability Company Agreement of Newcup, LLC, dated as of January 25, 2002
(the "Agreement") is (a) adopted by the sole Manager and (b) executed and agreed
to, for good and valuable consideration, by the sole Member. Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
such terms in the Agreement.
WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein to reflect certain additional understandings between the parties with
respect to the Company.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound hereby, agree as follows:
1. AMENDMENT. Section 2.4 of the Limited Liability Company Operating Agreement
shall be deleted in its entirety and replaced with the following new
Section 2.4:
Section 2.4 PURPOSES. The purpose of the Company is to engage in any lawful
business, purpose or activity for which a limited liability company may be
formed under the Delaware Limited Liability Company Act as set forth in
Section 18-106 of the Act.
2. MISCELLANEOUS.
(a) This Amendment may be executed in multiple counterparts, all of which
shall together be considered one and the same agreement
(b) This Amendment shall be governed and construed in accordance with the
laws of the State of Delaware applicable to contracts to be made and
performed entirely therein without giving effect to the principles of
conflicts of law thereof or of any other jurisdiction.
(c) Headings of this Amendment are for convenience of the parties only,
and shall be given no substantive or interpretative effect whatsoever.
(d) Except as otherwise provided herein, all terms and conditions of the
Agreement shall remain in full force and effect.
<Page>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be signed as of the date first written above.
APPROVED AS ADOPTED:
CUPCORP, INC., as sole Member
/s/ Susan H. Marks
---------------------------------
Name: Susan H. Marks
Title: Treasurer
Adopted:
/s/ Ronald L. Whaley
- --------------------------------------
Name: Ronald L. Whaley
Title: Sole Manager