Exhibit 3.21
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BI ACQUISITION, LLC
LIMITED LIABILITY COMPANY AGREEMENT
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Dated as of August 18, 1999
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Table of Contents
Page
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ARTICLE 1
GENERAL ...................................................................1
1.1 Definitions ..........................................................1
1.2 Construction .........................................................4
ARTICLE 2
ORGANIZATION ..............................................................5
2.1 Formation ............................................................5
2.2 Name .................................................................5
2.3 Registered Office and Registered Agent ...............................5
2.4 Term .................................................................5
2.5 Purposes and Powers ..................................................6
ARTICLE 3
UNITS; MEMBERSHIP .........................................................6
3.1 Units Generally; Membership Interests ................................6
3.2 Authorization and Issuance of Units ..................................6
3.3 Unit Certificates ....................................................6
3.4 Issuance of Units ....................................................7
3.5 New Members from the Issuance of Units ...............................7
ARTICLE 4
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS ................................7
4.1 Capital Contributions ................................................7
4.2 Capital Accounts .....................................................8
4.3 Negative Capital Accounts ............................................9
4.4 No Withdrawal ........................................................9
4.5 Loans From Members ...................................................9
4.6 Status of Capital Contributions ......................................9
ARTICLE 5
ALLOCATIONS OF PROFITS AND LOSSES ........................................10
5.1 Allocation of Profits and Losses ....................................10
5.2 Regulatory and Special Allocations ..................................10
5.3 Curative Allocations ................................................11
5.4 Tax Allocations .....................................................11
(i)
ARTICLE 6
DISTRIBUTIONS ............................................................12
6.1 Generally ...........................................................12
6.2 Distributions .......................................................12
ARTICLE 7
MANAGEMENT OF THE COMPANY ................................................13
7.1 Board of Directors ..................................................13
7.2 Officers ............................................................15
7.3 Fiduciary Duties ....................................................16
7.4 Performance of Duties; Liability of Directors and Officers ..........16
7.5 Indemnification .....................................................16
ARTICLE 8
MEMBERS; VOTING RIGHTS ...................................................17
8.1 Meetings of Members .................................................17
8.2 Voting Rights .......................................................18
8.3 Registered Members ..................................................18
8.4 Limitation of Liability .............................................18
8.5 Withdraw; Resignation ...............................................18
8.6 Authority ...........................................................18
ARTICLE 9
TAXES ....................................................................19
9.1 Tax Status ..........................................................19
ARTICLE 10
TRANSFER OF UNITS ........................................................19
10.1 Restrictions ........................................................19
10.2 General Restrictions on Transfer ....................................19
10.3 Procedure for Transfers .............................................19
10.4 Legend ..............................................................20
10.5 Limitations .........................................................21
10.6 Pledge of Units .....................................................21
ARTICLE 11
DISSOLUTION AND LIQUIDATION ..............................................21
11.1 Dissolution .........................................................21
11.2 Liquidation .........................................................22
(ii)
ARTICLE 12
GENERAL/MISCELLANEOUS PROVISIONS .........................................23
12.1 Notices ............................................................23
12.2 Governing Law ......................................................23
12.3 Entire Agreement ...................................................23
12.4 Effect of Waiver or Consent ........................................24
12.5 Amendment or Modification ..........................................24
12.6 Binding Effect .....................................................24
12.7 Counterparts .......................................................24
12.8 Severability........................................................24
12.9 Headings ...........................................................24
12.10 Further Assurances .................................................24
12.11 Specific Performance; Remedies .....................................24
(iii)
BI ACQUISITION, LLC
LIMITED LIABILITY COMPANY AGREEMENT
This LIMITED LIABILITY COMPANY AGREEMENT of BI Acquisition, LLC (the
"Company"), is made as of August 18, 1999, by Muzak LLC, a Delaware limited
liability company, as sole member ("Muzak").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein made and other good and valuable consideration, the Member hereby agrees
as follows:
ARTICLE 1
GENERAL
1.1 Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
"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 Taxable Year, after giving effect to the following adjustments:
(i) Crediting to such Capital Account any amount which such Member is
obligated to restore or is deemed to be obligated to restore pursuant to
Treasury Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2 (g)(1), and
1.704-2(i); and
(ii) Debiting to such Capital Account the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Agreement" means this Limited Liability Company Agreement, as
originally executed and as may be amended, modified, supplemented or restated
from time to time.
"Bankruptcy" means, with respect to a Member, (i) that such Member has
(A) made an assignment for the benefit of creditors; (B) filed a voluntary
petition in bankruptcy; (C) been adjudged bankrupt or insolvent, or had entered
against such Member an order of relief in any bankruptcy or insolvency
proceeding; (D) filed a petition or an answer seeking for such Member any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation or filed an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Member in any proceeding of such nature; or (E)
sought, consented to, or acquiesced in the appointment of a trustee, receiver or
liquidator of such Member or of all or any substantial part of such Member's
properties; (ii) 120 days have elapsed after the commencement of any proceeding
against such Member seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation and such proceeding has not been dismissed; or (iii) 90 days have
elapsed since the appointment without such Member's consent or acquiescence of a
trustee, receiver or liquidator of
such Member or of all or any substantial part of such Member's properties and
such appointment has not been vacated or stayed or the appointment is not
vacated within 90 days after the expiration of such stay.
"Book Value" means, with respect to any Company property, the
Company's adjusted basis for federal income tax purposes, adjusted from time to
time to reflect the adjustments required or permitted by Treasury Regulation
Section 1.704-1(b)(2)(iv)(d)-(g); provided that the Book Value of each asset of
the Company shall be adjusted as of the date of this Agreement pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(f) in a manner determined by the
Board so that the aggregate Book Value of the Company's assets (net of the
Company's liabilities) as of such date is equal to the aggregate initial Capital
Account balances of the Members (immediately after the Member's Capital
Contribution is made).
"Capital Account" means the capital account maintained for a Member
pursuant to Section 4.2.
"Capital Contribution" means the cash and/or agreed fair market value
of any asset or property of any nature contributed by a Member to the Company
pursuant to the provisions of this Agreement.
"Certificate" means the Certificate of Formation, as such Certificate
of Formation may be amended, supplemented or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Common Unit" means a Unit having the rights and obligations specified
with respect to "Common Units" in this Agreement.
"Company Minimum Gain" has the meaning set forth for "partnership
minimum gain" in Treasury Regulation Section 1.704-2(d).
"Delaware Act" means the Delaware Limited Liability Company Act, as
the same may be amended from time to time.
"Liquidating Distribution" means any distribution pursuant to Section
11.2 hereof.
"Majority of the Board" means, at any time, a combination of any of
the then Directors constituting more than fifty percent (50%) of the number of
Directors who are then elected and qualified.
"Majority in Voting Interest" means, at any time, a Member or Members
which own a majority of the Voting Units outstanding at such time.
"Member Minimum Gain" with respect to each Member Nonrecourse Debt,
means the amount of Company Minimum Gain (as determined according to Treasury
Regulation
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Section 1.704-2(d)(1)) that would result if such Member Nonrecourse Debt were
treated as a nonrecourse liability, determined in accordance with Treasury
Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4), substituting the term "Company" for the term
"partnership" and the term "Member" for the term "partner" as the context
requires.
"Member Nonrecourse Deduction" has the meaning set forth in Treasury
Regulation Section 1.704-2(i), substituting the term "Member" for the term
"partner" as the context requires.
"Members" means each Person identified on the Member Schedule as of
the date hereof who has executed this Agreement or a counterpart hereof and each
Person who may hereafter be admitted as a Member in accordance with the terms of
this Agreement. The Members shall constitute the "members" (as that term is
defined in the Delaware Act) of the Company.
"Membership Interest" means the interest acquired by a Member in the
Company, including such Member's right (based on the type and class of Unit or
Units held by such Member), if any, (a) to a distributive share of Profits,
Losses, and other items of income, gain, loss, deduction and credits of the
Company, (b) to a distributive share of the assets of the Company, (c) to vote
on, consent to or otherwise participate in any decision of the Members, and (d)
to any and all other benefits to which such Member may be entitled as provided
in this Agreement or the Delaware Act.
"Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Section 1.704-2(b) (substituting the term "Company" for the term
"partnership" as the context requires).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Offering" means an underwritten public offering and sale of
Common Units pursuant to an effective registration statement under the
Securities Act; provided that a Public Offering shall not include an offering
made in connection with a business acquisition or combination pursuant to a
registration statement on Form S-4 or any similar form, or an employee benefit
plan pursuant to a registration statement on Form S-8 or any similar form.
"Public Sale" means any sale of Registered Securities to the public
pursuant to an offering registered under the Securities Act or, after the
consummation of an initial Public Offering, to the public pursuant to the
provisions of Rule 144 (or any similar rule or rules then in effect) under the
Securities Act.
"Restricted Securities" means (a) all Units issued by the Company and
(b) any securities issued with respect to, or in exchange for, the Units
referred to in clause (a) above in connection with a conversion, combination of
units or shares, recapitalization, merger, consolidation or other
reorganization, including in connection with the consummation of any
reorganization plan.
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As to any particular Restricted Securities, such securities shall cease to be
Restricted Securities when they have been Transferred pursuant to a Public Sale.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a partnership, limited liability
company, association or other business entity if such Person or Persons shall be
allocated a majority of partnership, limited liability company, association or
other business entity gains or losses or shall be or control the managing
director, manager or a general partner of such partnership, limited liability
company, association or other business entity.
"Taxable Year" means the Company's taxable year ending on or about
December 31 (or part thereof in the case of the Company's first and last taxable
year), or such other year as is (i) required by Section 706 of the Code or (ii)
determined by the Board (if no year is so required by Section 706 of the Code).
"Transfer" means any direct or indirect sale, transfer, conveyance,
assignment, hypothecation, gift, delivery or other disposition (other than a
pledge).
"Treasury Regulations" shall mean that except where the context
indicates otherwise, the final, temporary, proposed, or proposed and temporary
regulations of the Department of the Treasury under the Code as such regulations
may be lawfully changed from time to time.
"Unit" means a unit representing a fractional part of the Membership
Interests of all of the Unitholders and shall include all types and classes of
Units; provided that any type or class of Unit shall have the designations,
preferences and/or special rights set forth in this Agreement and the Membership
Interests represented by such type or class of Unit shall be determined in
accordance with such designations, preferences and/or special rights.
"Unitholder" means with respect to any Unit, the record holder thereof
as evidenced on the Member Schedule.
"Voting Units" means the Common Units.
1.2 Construction. Whenever the context requires, the gender of all words
used in this Agreement includes the masculine, feminine and neuter and the
singular number includes the plural number and vice versa. All references to
Articles and Sections refer to articles and sections of this
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Agreement, and all references to Schedules are to Schedules attached hereto,
each of which is made a part hereof for all purposes.
ARTICLE 2
ORGANIZATION
2.1 Formation.
(a) The Company was formed upon the filing of the Certificate of
Formation of the Company (the "Certificate of Formation") with the Secretary of
State of the State of Delaware on July 23, 1999, pursuant to the Delaware Act.
This Agreement shall constitute the "limited liability company agreement" (as
that term is used in the Delaware Act) of the Company. The rights, powers,
duties, obligations and liabilities of the Members shall be determined pursuant
to the Delaware Act and this Agreement. To the extent that the rights, powers,
duties, obligations and liabilities of any Member are different by reason of any
provision of this Agreement than they would be in the absence of such provision,
this Agreement shall, to the extent permitted by the Delaware Act, control.
(b) Any officer of the Company as an "authorized person" within the
meaning of the Delaware Act, shall, at any time he or she becomes aware that any
statement in the Certificate was false when made, that any matter described
therein has changed making the Certificate false in any material respect, or
that the applicable Members have approved an amendment to the Certificate in
accordance with the terms hereof, promptly execute, deliver and file any and all
amendments thereto and restatements thereof in accordance with the Delaware Act.
(c) At the time the Company has more than one Member, the Company
shall be treated as a partnership for federal, foreign, state and local income
tax purposes, and each Member and the Company shall file all tax returns and
shall otherwise take all tax and financial reporting positions in a manner
consistent with such treatment. The Company shall not be deemed a partnership or
joint venture for any other purpose.
2.2 Name. The name of the Company is "BI Acquisition, LLC" or such other
name or names as the Board may from time to time designate; provided, that the
name shall always contain the words "Limited Liability Company", "LLC" or
"L.L.C."
2.3 Registered Office and Registered Agent. The Company's registered office
shall be at Corporation Service Company, 1013 Centre Road, Wilmington, Delaware,
19805, and the name of its initial registered agent at such address shall be
Corporation Service Company.
2.4 Term. The term of existence of the Company shall be perpetual from the
date the Certificate of Formation was filed with the Secretary of State of
Delaware, unless the Company is dissolved in accordance with the provisions of
this Agreement.
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2.5 Purposes and Powers. The purposes and character of the business of the
Company shall be to transact any or all lawful business for which limited
liability companies may be organized under the Delaware Act. The Company shall
have any and all powers which are necessary or desirable to carry out the
purposes and business of the Company, including the ability to incur and
guaranty indebtedness, to the extent the same may be legally exercised by
limited liability companies under the Delaware Act. The Company shall carry out
the foregoing activities pursuant to the arrangements set forth in this
Agreement. Notwithstanding anything herein to the contrary, nothing set forth
herein shall be construed as authorizing the Company to possess any purpose or
power, or to do any act or thing, forbidden by law to a limited liability
company organized under the laws of the State of Delaware.
ARTICLE 3
UNITS; MEMBERSHIP
3.1 Units Generally; Membership Interests. The Membership Interests of the
Members shall be represented by issued and outstanding Units, which may be
divided into one or more types or classes, with each type or class having the
rights and privileges, including voting rights, if any, set forth in this
Agreement. The Secretary of the Company shall maintain a schedule of all Members
from time to time, their respective mailing addresses and the Units held by them
(as the same may be amended, modified or supplemented from time to time, the
"Member Schedule"), a copy of which as of the date hereof is attached hereto as
Schedule A. The Members shall have no interest in the Company other than the
interests conferred by this Agreement and represented by the Units, which shall
be deemed to be personal property giving only the rights conferred by this
Agreement. Ownership of a Unit (or fraction thereof) shall not entitle a
Unitholder to call for a partition or division of any property of the Company or
for any accounting.
3.2 Authorization and Issuance of Units.
(a) Common Units. The Company hereby authorizes the issuance of Common
Units, 100 of which shall be issued on the date hereof as set forth on the
Members Schedule (as in effect on the date hereof).
(b) Additional Units. Except as expressly provided by this Agreement,
the Company shall not authorize, issue or sell, or cause to be authorized,
issued or sold, any Units.
3.3 Unit Certificates.
(a) The Units are securities governed by Article 8 of the Uniform
Commercial Code (the "UCC"), shall be represented by certificates and are
"certificated securities" as defined in Article 8 of the UCC. Each such
certificate shall be signed by an officer of the Company, certifying the number
of Units owned by the holder of such Units and stating the type and class of
such Units. All certificates for each type and class of Units shall be
consecutively numbered or otherwise identified. The name of the Person to whom
the Units represented thereby are issued, with the number, type and class of
Units and date of issue, shall be entered on the books of the Company and, until
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such Units are transferred on the books of the Company (including the Member
Schedule), such Person shall be deemed to be the owner of such Units for all
purposes. Units shall only be transferred on the books of the Company (including
the Member Schedule) by the holder of record thereof or by such holder's
attorney duly authorized in writing, upon surrender to the Company of the
certificate(s) for such Units endorsed by the appropriate Person(s), with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the Company may reasonably require, and accompanied by all
necessary transfer stamps. In that event, provided all other conditions to
transfer have been met, it shall be the duty of the Company to issue a new
certificate to the Person entitled thereto, cancel the old certificate(s), and
record the transaction on its books (including the Member Schedule).
(b) Any officer of the Company may direct a new certificate(s) to be
issued in place of any certificate(s) previously issued by the Company alleged
to have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate(s), such officer may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate(s), or his or her legal
representative, to give the Company a bond sufficient to indemnify the Company
against any claim that may be made against the Company on account of the loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
3.4 Issuance of Units. The Company (with the approval of the Board) shall
have the right to issue any authorized but unissued Units; provided, that the
Company shall not issue any Units to any Person unless such Person has executed
and delivered to the Secretary of the Company the documents described in Section
3.5 hereof.
3.5 New Members from the Issuance of Units. In order for a Person to be
admitted as a Member of the Company pursuant to the issuance of Units to such
Person such Person shall have executed and delivered to the Secretary of the
Company a written undertaking to be bound by the terms and conditions of this
Agreement substantially in the form of Exhibit A hereto. Upon the amendment of
the Member Schedule by the Secretary of the Company and the satisfaction of any
other applicable conditions, including the receipt by the Company of payment for
the issuance of the applicable Units, such Person shall be admitted as a Member
and deemed listed as such on the books and records of the Company and thereupon
shall be issued his or its Units.
ARTICLE 4
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
4.1 Capital Contributions.
(a) Muzak, the sole Member of the Company as of the date hereof, is
deemed to have made all of the Capital Contributions made to the Company on or
prior to the date hereof and is deemed to own the number, type and class of
Units in the amounts set forth opposite such Member's name on the Member
Schedule as in effect on the date hereof.
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(b) At any time the Members may make additional Capital Contributions
to the Company provided that any such additional Capital Contributions are made
by all Members pro rata based upon the number of the then issued and outstanding
Common Units. Except as expressly provided herein, no Member, in its capacity as
a Member, shall have the right to receive any other cash or any property of the
Company.
4.2 Capital Accounts.
(a) Maintenance Rules. The Company shall maintain for each Member a
separate capital account (a "Capital Account") in accordance with this Section
4.2(a), which shall control the division of assets upon liquidation of the
Company to the extent provided in Section 11.2(b)(iii). Each Capital Account
shall be maintained in accordance with the following provisions:
(i) Such Capital Account shall be increased by the cash amount or
Book Value of any property contributed by such Member to the Company
pursuant to this Agreement, such Member's allocable share of Profits
and any items in the nature of income or gains which are specially
allocated to such Member pursuant to Section 5.2 or Section 5.3, and
the amount of any liabilities of the Company assumed by such Member or
which are secured by any property distributed to such Member.
(ii) Such Capital Account shall be decreased by the cash amount
or Book Value of any property distributed to such Member pursuant to
this Agreement, such Member's allocable share of Losses and any items
of in the nature of deductions or losses which are specially allocated
to such Member pursuant to Section 5.2 or Section 5.3, and the amount
of any liabilities of such Member assumed by the Company or which are
secured by any property contributed by such Member to the Company.
(iii) If all or any portion of a Unit is transferred in
accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it
relates to the transferred Unit (or portion thereof).
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section
1.704-1(b) of the Treasury Regulations and shall be interpreted and applied in a
manner consistent with such Treasury Regulations. If the Board determines that
it is prudent to modify the manner in which the Capital Accounts, or any
increases or decreases to the Capital Accounts, are computed in order to comply
with such Treasury Regulations, the Board may authorize such modifications.
(b) Definition of Profits and Losses. "Profits" and "Losses" mean, for
each Taxable Year or other period, an amount equal to the Company's taxable
income or loss for such Taxable Year or other period, determined in accordance
with Code Section 703(a) (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments:
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(i) The computation of all items of income, gain, loss and
deduction shall include tax-exempt income and those items described in
Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to
the fact that such items are not includable in gross income or are not
deductible for federal income tax purposes.
(ii) If the Book Value of any Company property is adjusted
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f),
the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such property.
(iii) Items of income, gain, loss or deduction attributable to
the disposition of Company property having a Book Value that differs
from its adjusted basis for tax purposes shall be computed by
reference to the Book Value of such property.
(iv) Items of depreciation, amortization and other cost recovery
deductions with respect to Company property having a Book Value that
differs from its adjusted basis for tax purposes shall be computed by
reference to the property's Book Value in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(g).
(v) To the extent an adjustment to the adjusted tax basis of any
Company property pursuant to Code Sections 732(d), 734(b) or 743(b) is
required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), 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).
4.3 Negative Capital Accounts. If any Member has a deficit balance in its
Capital Account, such Member shall have no obligation to restore such negative
balance or to make any Capital Contributions to the Company by reason thereof,
and such negative balance shall not be considered an asset of the Company or of
any Member.
4.4 No Withdrawal. No Member shall be entitled to withdraw any part of its
Capital Contribution or Capital Account or to receive any distribution from the
Company, except as expressly provided herein.
4.5 Loans From Members. Loans by Members to the Company shall not be
considered Capital Contributions.
4.6 Status of Capital Contributions.
(a) No Member shall receive any interest, salary or drawing with
respect to its Capital Contributions or its Capital Account, except as otherwise
specifically provided in this Agreement.
(b) Except as otherwise provided herein and by applicable state law,
no Member shall be required to lend any funds to the Company or to make any
additional Capital Contributions
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to the Company. No Member shall have any personal liability for the repayment of
any Capital Contribution of any other Member.
ARTICLE 5
ALLOCATIONS OF PROFITS AND LOSSES
5.1 Allocation of Profits and Losses.
(a) Allocation of Profits. After giving effect to the allocations set
forth in Section 5.2 and Section 5.3, Profits for any Taxable Year (or other
period) shall be allocated to the Members pro rata (based upon the number of
Common Units) in accordance with their ownership of Common Units.
(b) Allocation of Losses. After giving effect to the allocations set
forth in Section 5.2 and Section 5.3, Losses for any Taxable Year (or other
period) shall be allocated to the Members pro rata (based upon the number of
Common Units) in accordance with their ownership of Common Units.
5.2 Regulatory and Special Allocations. Notwithstanding the provisions of
Section 5.1:
(a) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or 743(b) is required to be taken
into account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated, as provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), as an item of Profits (if the adjustment increases
the basis of the asset) or Losses (if the adjustment decreases such basis) and
such Profits or Losses 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.
(b) If there is a net decrease in Company Minimum Gain (determined
according to Treasury Regulation Section 1.704-2(d)(1)) during any Taxable Year,
each Member shall be specially allocated Profits for such Taxable Year (and, if
necessary, subsequent Taxable Years) in an amount equal to such Member's share
of the net decrease in Company Minimum Gain, determined in accordance with
Treasury Regulation Section 1.704-2(g). The items to be so allocated shall be
determined in accordance with Treasury Regulation Sections 1.704-2(f)(6) and
1.704-2(j)(2). This paragraph is intended to comply with the minimum gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(c) Member Nonrecourse Deductions shall be allocated in the manner
required by Treasury Regulation Section 1.704-2(i). Except as otherwise provided
in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in
Member Minimum Gain during any Taxable Year, each Member that has a share of
such Member Minimum Gain shall be specially allocated Profits for such Taxable
Year (and, if necessary, subsequent Taxable Years) in an amount equal to that
Member's share of the net decrease in Member Minimum Gain. Items to be allocated
pursuant to this paragraph shall be determined in accordance with Treasury
Regulation Sections 1.704-2(i)(4) and
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1.704-2(j)(2). This paragraph is intended to comply with the minimum gain
chargeback requirements in Treasury Regulation Section 1.704-2(i)(4) and shall
be interpreted consistently therewith.
(d) In the event any Member unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), Profits shall be specially allocated to
such Member in an amount and manner sufficient to eliminate the Adjusted Capital
Account Deficit created by such adjustments, allocations or distributions as
quickly as possible. This paragraph is intended to comply with the qualified
income offset requirement in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
(e) The allocations set forth in paragraphs (a), (b), (c) and (d)
above (the "Regulatory Allocations") are intended to comply with certain
requirements of the Treasury Regulations under Code Section 704. Notwithstanding
any other provisions of this Article 4 (other than the Regulatory Allocations),
the Regulatory Allocations shall be taken into account in allocating Profits and
Losses among Members so that, to the extent possible, the net amount of such
allocations of Profits and Losses and other items and the Regulatory Allocations
to each Member shall be equal to the net amount that would have been allocated
to such Member if the Regulatory Allocations had not occurred.
5.3 Curative Allocations. If the Board determines, after consultation with
counsel experienced in income tax matters, that the allocation of any item of
Company income, gain, loss, deduction or credit is not specified in this Article
5 (an "unallocated item"), or that the allocation of any item of Company income,
gain, loss, deduction or credit hereunder is clearly inconsistent with the
Members' economic interests in the Company (determined by reference to the
general principles of Treasury Regulation Section 1.704-1(b) and the factors set
forth in Treasury Regulation Section 1.704-1(b)(3)(ii)) (a "misallocated item"),
then the Board may allocate such unallocated items, or reallocate such
misallocated items, to reflect such economic interests; provided that no such
allocation will be made without the prior consent of each Member that would be
affected thereby (which consent no such Member may unreasonably withhold) and
provided further that no such allocation shall have any material effect on the
amounts distributable to any Member, including the amounts to be distributed
upon the complete liquidation of the Company.
5.4 Tax Allocations.
(a) All income, gains, losses, deductions and credits of the Company
shall be allocated, for federal, state and local income tax purposes, among the
Members in accordance with the allocation of such income, gains, losses,
deductions and credits among the Members for computing their Capital Accounts,
except that if any such allocation for tax purposes is not permitted by the Code
or other applicable law, the Company's subsequent income, gains, losses,
deductions and credits shall be allocated among the Members for tax purposes, to
the extent permitted by the Code and other applicable law, so as to reflect as
nearly as possible the allocation set forth herein in computing their Capital
Accounts.
(b) Items of Company taxable income, gain, loss and deduction with
respect to any property contributed to the capital of the Company shall be
allocated among the Members in accordance with Code Section 704(c) and the
traditional method of Treasury Regulation Section
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1.704-3(b) so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its Book Value.
(c) If the Book Value of any Company property is adjusted pursuant to
Section 4.2, subsequent allocations of items of taxable income, gain, loss and
deduction with respect to such property shall take account of any variation
between the adjusted basis of such property for federal income tax purposes and
its Book Value in the same manner as under Code Section 704(c).
(d) Allocations of tax credit, tax credit recapture, and any items
related thereto shall be allocated to the Members according to their interests
in such items as determined by the Board taking into account the principles of
Treasury Regulation Section 1.704-1(b)(4)(ii).
(e) Allocations pursuant to this Section 5.4 are solely for purposes
of federal, state and local taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or share of Profits,
Losses, distributions or other items pursuant to any provisions of this
Agreement.
ARTICLE 6
DISTRIBUTIONS
6.1 Generally.
(a) Subject to Section 6.2, the Board shall have sole discretion
regarding the amounts and timing of distributions to Members, in each case
subject to the retention and establishment of reserves of, or payment to third
parties of, such funds as it deems necessary with respect to the reasonable
business needs of the Company which shall include the payment or the making of
provision for the payment when due of the Company's obligations, including the
payment of any management or administrative fees and expenses or any other
obligations.
(b) Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not make any distribution to Members if such
distribution would violate Section 18-607 of the Delaware Act or other
applicable law or if such distribution would violate any of the Company's debt
financing agreements or any debt financing agreement of which the Company is a
guarantor.
6.2 Distributions. Except as provided in Section 11.2(b), distributions to
be made by the Company on any date shall be made to the Members (with such
distribution to the Members to be divided among such Members pro rata in
accordance with their Common Units).
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ARTICLE 7
MANAGEMENT OF THE COMPANY
7.1 Board of Directors.
(a) Establishment. There is hereby established a committee (the
"Board") comprised of natural persons (the "Directors") having the authority and
duties set forth in this Agreement. Each Director shall be entitled to one vote.
Any decisions to be made by the Board shall require the approval of a majority
of the votes of the then Directors. Except as provided in the immediately
preceding sentence, no Director acting alone, or with any other Director or
Directors, shall have the power to act for or on behalf of, or to bind the
Company. Each Director shall be a "manager" (as that term is defined in the
Delaware Act) of the Company, but, notwithstanding the foregoing, no Director
shall have any rights or powers beyond the rights and powers granted to such
Director in this Agreement. Directors need not be residents of the State of
Delaware.
(b) Powers. The business and affairs of the Company shall be managed
by or under the direction of the Board.
(c) Number of Directors; Term of Office. The authorized number of
Directors shall, as of the date hereof, continue to be one Director and,
hereafter, the authorized number of Directors may be increased or decreased by
the Board. The Directors shall, except as hereinafter otherwise provided for
filling vacancies, be elected by vote of the Members and shall hold office until
their respective successors are elected and qualified or until their earlier
resignation or removal.
(i) Holders of a majority of the outstanding Voting Units may
remove, with or without cause, any Director and fill the vacancy.
Vacancies caused by any such removal by the Members and not filled by
the Members at the meeting at which such removal shall have been made
or pursuant to the applicable written consent of the Members, may be
filled by a majority of the votes of the Directors then in office,
although less than a quorum, and any Director so elected to fill any
such vacancy shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.
(ii) A Director may resign at any time by giving written notice
to that effect to the Board. Any such resignation shall take effect at
the time of the receipt of that notice or any later effective time
specified in that notice; and, unless otherwise specified in that
notice, the acceptance of the resignation shall not be necessary to
make it effective. Any vacancy caused by any such resignation or by
the death of any Director or any vacancy for any other reason
(including due to the authorization by the Members of a newly created
Directorship) and not filled by the Members may be filled by the
affirmative vote of a majority of the Directors then in office,
although less than a quorum, and any Director so elected to fill any
such vacancy shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.
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(d) Meetings of the Board. The Board shall meet at such time and at
such place (either within or without the State of Delaware) as the Board may
designate. Special meetings of the Board shall be held on the call of any
Director upon at least four (4) days (if the meeting is to be held in person) or
two (2) days (if the meeting is to be held by telephone communications) oral or
written notice to the Directors, or upon such shorter notice as may be approved
by all of the Directors. Any Director may waive such notice as to himself. A
record shall be maintained by the Secretary of the Company of each meeting of
the Board.
(i) Conduct of Meetings. Any meeting of the Directors may be held
in person or telephonically.
(ii) Quorum. A Majority of the Board shall constitute a quorum of
the Board for purposes of conducting business. If a quorum shall not
be present at any meeting of the Board, then the Directors present at
the meeting may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present. A Director may vote or be present at a meeting either in
person or by proxy.
(iii) Attendance and Waiver of Notice. Attendance of a Director
at any meeting shall constitute a waiver of notice of such meeting,
except where a Director 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. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of
the Board need be specified in the notice or waiver of notice of such
meeting.
(iv) Actions Without a Meeting. Notwithstanding any provision
contained in this Agreement, any action of the Board may be taken by
written consent without a meeting. Any such action taken by the Board
without a meeting shall be effective only if the written consent or
consents are in writing, set forth the action so taken, and are signed
by a Majority of the Board, or such greater number of the Directors
that would be necessary to take such action at a meeting of the Board.
(e) Compensation of the Directors. Directors, as such, shall not
receive any stated salary for their services, but shall receive such
compensation for their services as may be from time to time agreed upon by a
Majority in Voting Interest. In addition, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board, provided that nothing contained in this Agreement shall be
construed to preclude any Director from serving the Company or any of its
Subsidiaries in any other capacity and receiving compensation for such service.
(f) Appointment of Director. Royce Yudkoff is hereby designated as the
Director of the Company until his successor has been duly appointed and
qualified, or until his earlier death, resignation or removal in accordance with
the terms and conditions of this Agreement.
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7.2 Officers.
(a) Appointment of Officers. The Board shall appoint individuals as
officers ("officers") of the Company, which shall include (i) a Chief Executive
Officer, (ii) a Treasurer, (iii) a Secretary and (iv) such other officers (such
as a President or any number of Vice Presidents) as the Board deems advisable.
No officer need be a Member or a Director. An individual can be appointed to
more than one office. Each officer of the Company shall be a "manager" (as that
term is used in the Delaware Act) of the Company, but, notwithstanding the
foregoing, no officer of the Company shall have any rights or powers beyond the
rights and powers granted to such officer in this Agreement. The officers of the
Company as of the date hereof are listed on the attached Schedule B.
(b) Duties of Officers Generally. Under the direction of and, at all
times, subject to the authority of the Board, the officers shall have full and
complete discretion to manage and control the day-to-day business, operations
and affairs of the Company in the ordinary course of its business, to make all
decisions affecting the day-to-day business, operations and affairs of the
Company in the ordinary course of its business and to take all such actions as
he or she deems necessary or appropriate to accomplish the foregoing. In
addition, the officers shall have such other powers and duties as may be
prescribed by the Board or this Agreement. The Chief Executive Officer shall
have the power and authority to delegate to any agents or employees of the
Company rights and powers of officers of the Company to manage and control the
day-to-day business, operations and affairs of the Company in the ordinary
course of its business, as the Chief Executive Officer may deem appropriate from
time to time.
(c) Authority of Officers. Subject to Section 7.2(b), any officer of
the Company shall have the right, power and authority to transact business in
the name of the Company or to act for or on behalf of or to bind the Company.
With respect to all matters within the ordinary course of business of the
Company, third parties dealing with the Company may rely conclusively upon any
certificate of any officer to the effect that such officer is acting on behalf
of the Company.
(d) Removal, Resignation and Filling of Vacancy of Officers. The Board
may remove any officer, for any reason or for no reason, at any time. Any
officer may resign at any time by giving written notice to the Board, and such
resignation shall take effect at the date of the receipt of that notice or any
later time specified in that notice; provided, that unless otherwise specified
in that notice, the acceptance of the resignation shall not be necessary to make
it effective. Any such resignation shall be without prejudice to the rights, if
any, of the Company or such officer under this Agreement. A vacancy in any
office because of death, resignation, removal or otherwise shall be filled in
the manner prescribed in this Agreement for regular appointments to that office.
(e) Compensation of Officers. The officers shall be entitled to
receive compensation from the Company as determined by the Board.
(f) Chief Executive Officer. Under the direction of and, at all times,
subject to the authority of the Board, the Chief Executive Officer shall have
general supervision over the day-to-day business, operations and affairs of the
Company. The Chief Executive Officer shall have such other powers and perform
such other duties as may from time to time be prescribed by the Board.
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(g) Treasurer. The Treasurer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Company, including accounts of its
assets, liabilities, receipts, disbursements, gains, losses, capital and Units.
The Treasurer shall have the custody of the funds and securities of the Company,
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Company. The Treasurer shall have such other powers and perform
such other duties as may from time to time be prescribed by the Board.
(h) Secretary. The Secretary shall (i) keep the minutes of the
meetings of the Members and the Board in one or more books provided for that
purpose; (ii) see that all notices are duly given in accordance with the
provisions of this Agreement and as required by law; (iii) be custodian of the
company records; (iv) keep a register of the addresses of each Member which
shall be furnished to the Secretary by such Member; (v) have general charge of
the Members Schedule; and (vi) in general perform all duties incident to the
office of a secretary of a company. The Secretary shall have such other powers
and perform such other duties as may from time to time be prescribed by the
Board.
7.3 Fiduciary Duties. The Directors, in the performance of their duties as
such, shall owe to the Members duties of loyalty and due care of the type owed
by the directors of a corporation to the stockholders of such corporation under
the laws of the State of Delaware. The officers, in the performance of their
duties as such, shall owe to the Members duties of loyalty and due care of the
type owed by the officers of a corporation to the stockholders of such
corporation under the laws of the State of Delaware.
7.4 Performance of Duties; Liability of Directors and Officers. In
performing his or her duties, each of the Directors and the officers shall be
entitled to rely in good faith on the provisions of this Agreement and on
information, opinions, reports, or statements (including financial statements
and information, opinions, reports or statements as to the value or amount of
the assets, liabilities, profits or losses of the Company or any facts pertinent
to the existence and amount of assets from which distributions to Members might
properly be paid), of the following other Persons or groups: (a) one or more
officers or employees of the Company; (b) any attorney, independent accountant,
or other Person employed or engaged by the Company; or (c) any other Person who
has been selected with reasonable care by or on behalf of the Company, in each
case as to matters which such relying Person reasonably believes to be within
such other Person's professional or expert competence. The preceding sentence
shall in no way limit any Person's right to rely on information to the extent
provided in Section 18-406 of the Delaware Act. No individual who is a Director
or an officer of the Company, or any combination of the foregoing, shall be
personally liable under any judgment of a court, or in any other manner, for any
debt, obligation, or liability of the Company, whether that liability or
obligation arises in contract, tort, or otherwise, solely by reason of being an
Director or an officer of the Company or any combination of the foregoing.
7.5 Indemnification. Notwithstanding Section 7.3, the Directors and
officers shall not be liable, responsible or accountable for damages or
otherwise to the Company, or to the Members, and, to the fullest extent allowed
by law, each Director and each officer shall be indemnified and held harmless by
the Company, including advancement of reasonable attorneys' fees and other
expenses, but only to the extent that the Company's assets are sufficient
therefor, from and against all claims,
16
liabilities, and expenses arising out of any management of Company affairs;
provided that (a) such Director's or officer's course of conduct was pursued in
good faith and believed by him to be in the best interests of the Company and
(b) such course of conduct did not constitute gross negligence or willful
misconduct on the part of such Director or officer and otherwise was in
accordance with the terms of this Agreement. The rights of indemnification
provided in this Section 7.5 are intended to provide indemnification of the
Directors and the officers to the fullest extent permitted by Delaware General
Corporation Law regarding a corporation's indemnification of its directors and
officers and will be in addition to any rights to which the Directors or officer
may otherwise be entitled by contract or as a matter of law and shall extend to
his heirs, personal representatives and assigns. The absence of any express
provision for indemnification herein shall not limit any right of
indemnification existing independently of this Section 7.5. Each Director's and
each officer's right to indemnification pursuant to this Section 7.5 may be
conditioned upon the delivery by such Director or such officer of a written
undertaking to repay such amount if such individual is determined pursuant to
this Section 7.5 or adjudicated to be ineligible for indemnification, which
undertaking shall be an unlimited general obligation.
ARTICLE 8
MEMBERS; VOTING RIGHTS
8.1 Meetings of Members.
(a) Generally. Meetings of the Members may be called by the Board or
by a Member or Members holding not less than 50% of the then outstanding Voting
Units. All meetings of the Members shall be held telephonically or at the
principal office of the Company or at such other place within or without the
State of Delaware as may be determined by the Board or Member(s) calling the
meeting and set forth in the respective notice or waivers of notice of such
meeting. A record shall be maintained by the Secretary of the Company of each
meeting of the Members.
(b) Notice of Meetings of Members. Written or printed notice stating
the place, day and hour of the meeting shall be delivered not fewer than 2 days
before the date of the meeting, either personally or by any written method by
which it is reasonable to expect that the Members would receive such notice not
later than the business day prior to the date of the meeting, to each holder of
Voting Units (with a copy to the Secretary of the Company), by or at the
direction of the Member(s) calling the meeting or the Board, as the case may be.
Such notice may, but need not, specify the purpose or purposes of such meeting
and may, but need not, limit the business to be conducted at such meeting to
such purpose(s).
(c) Quorum. Except as otherwise provided herein or by applicable law,
at any time, a majority of the then outstanding Voting Units, represented in
person or by proxy, shall constitute a quorum of Members for purposes of
conducting business. Once a quorum is present at the meeting of the Members, the
subsequent withdrawal from the meeting of any Member prior to adjournment or the
refusal of any Member to vote shall not affect the presence of a quorum at the
meeting. If, however, such quorum shall not be present at any meeting of the
Members, the Members entitled to vote at such meeting shall have the power to
adjourn the meeting from time to time,
17
without notice other than announcement at the meeting, until Members which own a
majority of the then outstanding Voting Units shall be present or represented.
Except as otherwise required by applicable law, resolutions of the Members at
any meeting of Members shall be adopted by the affirmative vote of a majority of
the Voting Units represented and entitled to vote at such meeting at which a
quorum is present.
(d) Actions Without a Meeting. Unless otherwise prohibited by law, any
action to be taken at a meeting of the Members may be taken without a meeting if
a consent or consents in writing, setting forth the action so taken, shall be
signed by a Member or Members holding not less than a majority of the then
outstanding Voting Units and such consent or consents are delivered to the
Secretary of the Company. A record shall be maintained by the Secretary of the
Company of each such action taken by written consent of a Member or Members.
8.2 Voting Rights. Except as specifically provided herein or otherwise
required by applicable law, each Member shall be entitled to one vote per Voting
Unit held by such Member. A Member which owns Voting Units may vote or be
present at a meeting either in person or by proxy. There will be no cumulative
voting in the election or removal of Directors.
8.3 Registered Members. The Company shall be entitled to treat the owner of
record of any Units as the owner in fact of such Unit for all purposes, and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such Unit on the part of any other person, whether or not it shall
have express or other notice of such claim or interest, except as expressly
provided by this Agreement or the laws of the State of Delaware.
8.4 Limitation of Liability. Except as otherwise provided in the Delaware
Act or in this Agreement, no Member will be obligated personally for any debt,
obligation or liability of the Company or of any other Member by reason of being
a Member, whether arising in contract, tort or otherwise. Except as otherwise
provided in the Delaware Act, by law or expressly in this Agreement, no Member
will have any fiduciary or other duty to another Member with respect to the
business and affairs of the Company. No Member will have any responsibility to
restore any negative balance in his or her Capital Account or to contribute to
or in respect of the liabilities or obligations of the Company or return
distributions made by the Company except as required by the Delaware Act or
other applicable law.
8.5 Withdraw; Resignation. A Member shall not cease to be a Member as a
result of the Bankruptcy of such Member. So long as a Member continues to own or
hold any Units, such Member shall not have the ability to resign as a Member
prior to the dissolution and winding up of the Company and any such resignation
or attempted resignation by a Member prior to the dissolution or winding up of
the Company shall be null and void. As soon as any Person who is a Member ceases
to own or hold any Units, such Person shall no longer be a Member.
8.6 Authority. No Member, in its capacity as a Member, shall have the power
to act for or on behalf of, or to bind the Company.
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ARTICLE 9
TAXES
9.1 Tax Status. The Members intend that at the time, if any, that the
Company has more than one Member, the Company be treated as a partnership for
federal, foreign, state and local income tax purposes and the Company and each
Member shall file all tax returns on the basis consistent therewith.
ARTICLE 10
TRANSFER OF UNITS
10.1 Restrictions. Each Member acknowledges and agrees that such Member
shall not Transfer any Unit(s) except in accordance with the provisions of this
Article 10. Any attempted Transfer in violation of the preceding sentence shall
be deemed null and void for all purposes, and the Company will not record any
such Transfer on its books or treat any purported transferee as the owner of
such Unit(s) for any purpose.
10.2 General Restrictions on Transfer.
(a) Notwithstanding anything to the contrary in this Agreement, no
transferee of any Unit(s) received pursuant to a Transfer (but excluding
transferees that were Members immediately prior to such a Transfer, who shall
automatically become a Member with respect to any additional Units they so
acquire) shall become a Member in respect of or be deemed to have any ownership
rights in the Unit(s) so Transferred unless a Person is admitted as a Member as
set forth in Section 10.3(a).
(b) Following a Transfer of any Unit(s) that is permitted under this
Article 10, the transferee of such Unit(s) shall succeed to the Capital Account
associated with such Unit(s) and shall receive allocations and distributions
under Articles 4, 5, 6 and 11 in respect of such Unit(s).
(c) Any Member who Transfers all of his or its Units (i) shall cease
to be a Member upon such Transfer, and (ii) shall no longer possess or have the
power to exercise any rights or powers of a Member of the Company.
10.3 Procedure for Transfers. Subject in all events to the general
restrictions on Transfers contained in Sections 10.1 and 10.2, a Member may
Transfer all or any part of his or its Units in accordance with this Section
10.3.
(a) No Transfer of Unit(s) may be completed until the prospective
transferee is admitted as a Member of the Company by executing and delivering to
the Secretary of the Company a written undertaken to be bound by the terms and
conditions of this Agreement substantially in the form of Exhibit A hereto. Upon
the amendment of the Member Schedule by the Secretary of the Company and the
satisfaction of any other applicable conditions, such prospective transferee
shall be
19
admitted as a Member and deemed listed as such on the books and records of the
Company and thereupon the Company shall reissue the applicable Units in the name
of such prospective transferee.
(b) Unless waived by the Company, no Member may Transfer any
Restricted Securities (except pursuant to an effective registration statement
under the Securities Act) without first delivering to the Company an opinion of
counsel reasonably acceptable in form and substance to the Company (which
counsel will be reasonably acceptable to the Company) that registration under
the Securities Act is not required in connection with such Transfer. If such
opinion of counsel reasonably acceptable in form and substance to the Company
further states that no subsequent Transfer of such Restricted Securities will
require registration under the Securities Act, the Company will promptly upon
such Transfer deliver new certificates for such securities which do not bear the
Securities Act legend set forth in Section 10.4(b).
10.4 Legend.
(a) The certificates representing the Units will bear the following
legend:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN A LIMITED LIABILITY COMPANY
AGREEMENT AMONG THE ISSUER AND ITS MEMBERS. A COPY OF SUCH LIMITED
LIABILITY COMPANY AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(b) Each certificate or instrument evidencing Restricted Securities
and each certificate or instrument issued in exchange for or upon the Transfer
of any Restricted Securities (if such securities remain Restricted Securities
after such Transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER."
Upon the request of any holder of Restricted Securities, the Company shall
remove the Securities Act legend set forth above from the certificates for such
Restricted Securities; provided, that such Restricted Securities are eligible
for sale pursuant to Rule 144(k) (or any similar rule or rules then in effect)
under the Securities Act.
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10.5 Limitations.
(a) Notwithstanding anything to the contrary in this Agreement, no
Unit may be Transferred if such Transfer would result in the Company having more
than 100 "beneficial owners" as defined and determined by the Investment Company
Act of 1940, as amended from time to time.
(b) In order to permit the Company to qualify for the benefit of a
"safe harbor" under Code Section 7704, notwithstanding anything to the contrary
in this Agreement, no Transfer of any Unit shall be permitted or recognized by
the Company (within the meaning of Treasury Regulation Section 1.7704-1(d)) if
and to the extent that such Transfer would cause the Company to have more than
100 partners (within the meaning of Treasury Regulation Section 1.7704-1(h),
including the look-through rule in Treasury Regulation Section 1.7704-1(h)(3)).
10.6 Pledge of Units.
(a) Notwithstanding anything contained herein to the contrary, any
Member shall have the ability to pledge any Unit(s) owned by such Member and
such pledge shall not be a "Transfer" of such Unit(s) for purposes of this
Agreement.
(b) Upon the Transfer of Units owned by Muzak pursuant to Section 7.2
of the Pledge and Security Agreement, dated as of March 18, 1999 (the "Pledge
Agreement"), among Muzak, Muzak Holdings LLC, certain subsidiaries of Muzak, and
Canadian Imperial Bank of Commerce (the "Administrative Agent"), as such Pledge
Agreement may be amended and restated from time to time, and without need for
any further action or notice under this Agreement, the transferee of such Units
shall be admitted as a Member of the Company and shall acquire all right, title
and interest in such Units, including all rights under this Agreement, and Muzak
shall be withdrawn as a Member hereunder and shall have no further right, title
or interest in such Units or under this Agreement.
ARTICLE 11
DISSOLUTION AND LIQUIDATION
11.1 Dissolution. The Company shall be dissolved and its affairs wound up
only upon the happening of any of the following events:
(a) the sale or other disposition by the Company of all or
substantially all of the assets it then owns;
(b) the written consent of Members holding greater than a majority of
the outstanding Common Units; or
(c) the entry of a decree of judicial dissolution under (S)18-802 of
the Delaware Act.
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Dissolution of the Company shall be effective on the day on which the event
occurs giving rise to the dissolution, but the Company shall not terminate until
the winding up of the Company has been completed, the assets of the Company have
been distributed as provided in Section 11.2 and the Certificate shall have been
cancelled.
11.2 Liquidation.
(a) Upon dissolution of the Company, a liquidator or liquidating
committee appointed by the Board shall be the liquidator (the "Liquidator"). The
Liquidator shall be entitled to receive such compensation for its services as
may be approved by the Board. The Liquidator shall agree not to resign at any
time without 30 days prior written notice. Except as expressly provided in this
Article 11, the Liquidator appointed in the manner provided herein shall have
and may exercise, without further authorization or consent of any of the parties
hereto, all of the powers conferred upon the officers of the Company under the
terms of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers) to the extent
necessary or desirable in the good faith judgment of the Liquidator to carry out
the duties and functions of the Liquidator hereunder for and during such period
of time as shall be reasonably required in the good faith judgment of the
Liquidator to complete the winding up and liquidation of the Company as provided
for herein.
(b) The Liquidator shall liquidate the assets of the Company, and
apply and distribute the proceeds of such liquidation, in the following order of
priority, unless otherwise required by mandatory provisions of applicable law:
(i) the payment to the creditors of the Company, including
Members, in order of priority provided by law;
(ii) to establish or add to such reserves as the Liquidator may
deem necessary or appropriate; and
(iii) to the Members (with such distribution to the Members to be
divided among such Members pro rata in accordance with their Common
Units).
The reserves established pursuant to subparagraph (ii) shall be paid over by the
Liquidator to a bank or other financial institution, to be held in escrow for
the purpose of paying any contingent or unforeseen liabilities or obligations
and, at the expiration of such period as the Liquidator deems advisable, such
reserves shall be distributed to the Members in the priorities set forth in this
Section 11.2(b).
(c) The Members shall not be responsible for restoring any negative
balance in their Capital Accounts upon termination or dissolution of the
Company.
(d) In any termination or dissolution of the Company, the Company may
distribute the assets of the Company to Members in cash, ratably in kind or any
combination thereof. Each distribution in kind of property pursuant to Section
11.2(b)(iii) shall be distributed based upon the fair market value of such
property. If a Liquidating Distribution is made both in cash and in kind,
22
such Liquidating Distribution shall be made so that, to the fullest extent
practicable, the percentage of cash and any other assets distributed with
respect to each type of Unit is identical.
(e) Distributions upon liquidation of the Company (or any Member's
interest in the Company) and related adjustments shall be made by the end of the
Taxable Year of the liquidation (or, if later, within ninety (90) days after the
date of such liquidation) or as otherwise permitted by Treasury Regulation
Section 1.704-1(b)(2)(ii)(b), including requirements (2) and (3) thereof.
(f) Upon completion of the distribution of the assets of the Company
as provided in Section 11.2(b) hereof, the Company shall be terminated and the
Liquidator shall cause the cancellation of the Certificate in the State of
Delaware and of all qualifications and registrations of the Company as a foreign
limited liability company in jurisdictions other than the State of Delaware and
shall take such other actions as may be necessary to terminate the Company.
(g) Each Member hereby waives any rights to partition of the assets of
the Company.
ARTICLE 12
GENERAL/MISCELLANEOUS PROVISIONS
12.1 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this 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 Agreement is
effective on receipt by the Person who receives it. All notices, requests and
consents to be sent to a Member must be sent to or made at the address (or
facsimile number) given for that Member on the Member Schedule or such other
address (or facsimile number) as that Member may specify by notice to the
Secretary of the Company. Any notice, request or consent to the Company must be
given to the Secretary of the Company at the Company's chief executive offices.
Whenever any notice is required to be given by law or this 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.
12.2 Governing Law. This Agreement and the rights of the parties hereunder
shall be interpreted in accordance with the laws of the State of Delaware, and
all rights and remedies shall be governed by such laws without regard to
principles of conflicts of laws.
12.3 Entire Agreement. This Agreement constitute the entire agreement of
the parties thereto relating to the Company and supersede all prior contracts or
agreements with respect to the Company, whether oral or written. This Agreement
amends and restates the Original Agreement in its entirety.
23
12.4 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 hereunder or with respect to the Company is not a consent or
waiver to or of any other breach or default in the performance by that Person of
the same or any other obligations of that Person hereunder or 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 hereunder or 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.
12.5 Amendment or Modification. This Agreement and the Certificate may be
amended or modified from time to time, only by the prior approval of the holders
of no less than a majority of the then outstanding Common Units.
12.6 Binding Effect. Subject to the restrictions on Transfers set forth in
this Agreement, this Agreement is binding on and shall inure to the benefit of
the Members and their respective heirs, legal representatives, successors and
permitted assigns.
12.7 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original for all purposes, but all of
which taken together shall constitute only one agreement.
12.8 Severability. Each provision of this Agreement shall be considered
severable and if for any reason any provision or provisions herein (a) are
determined to be invalid or contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid or (b) would cause any Member to be bound by the
obligations of the Company under the laws of any state or locale as the same may
now or hereafter exist, such provision or provisions shall be deemed void and of
no effect.
12.9 Headings. All section headings or captions contained in this Agreement
are for convenience only and shall not be deemed part of the text of this
Agreement.
12.10 Further Assurances. The Members will execute and deliver such further
instruments and do such further acts and things as may be required to carry out
the intent and purposes of this Agreement.
12.11 Specific Performance; Remedies. The Company and the Members shall be
entitled to enforce their rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement (including
costs of enforcement) and to exercise any and all other rights existing in their
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that the
Company or any Member may in its or his sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance or injunctive
relief (without posting a bond or other security) in order to enforce or prevent
any violation or threatened violation of the provisions of this Agreement. No
remedy conferred upon or reserved to the Company or any Member by this Agreement
is intended to be exclusive of any other remedy. Each and every such remedy
shall be cumulative and shall be
24
in addition to any other remedy given to the Company or any Member hereunder or
now or hereafter existing at law or in equity or by statute.
* * * * *
25
IN WITNESS WHEREOF, this Limited Liability Company Agreement has been duly
executed on the day and year first above written.
MUZAK LLC
By: /s/ Robert MacInnis
------------------------------
Name: Robert MacInnis
Title: Vice President
Schedule A
Muzak LLC
(as of August 18, 1999)
Common
Name of Member Units
- --------------- ------
Muzak LLC 100
---
Totals 100
===
Addresses of Members
1. Muzak LLC
2901 Third Avenue, Suite 400
Seattle, Washington 98121
Attention: President
Exhibit A
FORM OF JOINDER TO
LIMITED LIABILITY COMPANY AGREEMENT
THIS JOINDER to the Limited Liability Company Agreement of BI
Acquisition, LLC, a Delaware limited liability company (the "Company"), dated as
of July 23, 1999, as amended or restated from time to time, by and among and the
Members of the Company (the "Agreement"), is made and entered into as of
by and between the Company and ("Holder"). Capitalized
- ---------- -------------
terms used herein but not otherwise defined shall have the meanings set forth in
the Agreement.
WHEREAS, on the date hereof, Holder has acquired Common
----------
Units from and the Agreement and the Company require Holder, as a
-------------
holder of such Common Units, to become a party to the Agreement, and Holder
agrees to do so in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Joinder hereby agree as
follows:
1. Agreement to be Bound. Holder hereby agrees that upon execution of this
Joinder, it shall become a party to the Agreement and shall be fully bound by,
and subject to, all of the covenants, terms and conditions of the Agreement as
though an original party thereto and shall be deemed, and is hereby admitted as,
a Member for all purposes thereof.
2. Member Schedule. For purposes of the Member Schedule, the address of the
Holder is as follows:
[Name]
[Address]
3. Governing Law. This Agreement and the rights of the parties hereunder
shall be interpreted in accordance with the laws of the State of Delaware, and
all rights and remedies shall be governed by such laws without regard to
principles of conflicts of laws.
4. Descriptive Headings. The descriptive headings of this Joinder are
inserted for convenience only and do not constitute a part of this Joinder.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as
of the date first above written.
MUZAK LLC
By:
----------------------------------------
Name:
Title:
[HOLDER]
By:
----------------------------------------
Name:
Title:
SCHEDULE B
Officers of BI Acquisition LLC
(as of August 18, 1999)
Initial Officers
Name Title
- ---- -----
William Boyd President and Chief Executive Officer
Peni Garber Vice President and Secretary
Royce Yudkoff Vice President
Robert Maclnnis Vice President
Charles A. Salderini Chief Operating Officer
Brad D. Bodenman Chief Financial Officer