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Limited Liability Company Agreement of Aavid Thermalloy LLC - Aavid Thermal Products Inc., Thermalloy Investment Co. Inc., Thermalloy Inc. and Heat Holdings II Corp.
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Exhibit 3.10
AAVID THERMALLOY, LLC
A DELAWARE LIMITED LIABILITY COMPANY
LIMITED LIABILITY COMPANY AGREEMENT
DATED AS OF FEBRUARY 2, 2000
TABLE OF CONTENTS
Page ARTICLE I - DEFINITIONS...............................................................................2
1.1 DEFINITIONS...............................................................................2
1.2 CONSTRUCTION..............................................................................5
1.3 INCLUDING.................................................................................6
ARTICLE II - ORGANIZATION..............................................................................6
2.1 FORMATION.................................................................................6
2.2 NAME......................................................................................6
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER OFFICES......................6
2.4 PURPOSES..................................................................................6
2.5 POWERS OF THE COMPANY.....................................................................7
2.6 FOREIGN QUALIFICATION.....................................................................8
2.8 NO STATE-LAW PARTNERSHIP..................................................................9
ARTICLE III - MEMBERSHIP; CAPITAL CONTRIBUTIONS; ADDITIONAL INTERESTS...................................9
3.1 MEMBERS...................................................................................9
3.2 NO LIABILITY OF MEMBERS..................................................................10
3.3 INITIAL CAPITAL CONTRIBUTIONS............................................................10
3.4 ISSUANCE OF ADDITIONAL INTERESTS; ADDITIONAL MEMBERS.....................................10
3.5 CERTIFICATION OF UNITS...................................................................11
3.6 REDEMPTION OF UNITS......................................................................11
ARTICLE IV - CAPITAL ACCOUNTS.........................................................................12
4.1 ESTABLISHMENT AND DETERMINATION OF CAPITAL ACCOUNTS......................................12
4.2 COMPUTATION OF AMOUNTS...................................................................13
4.3 NEGATIVE CAPITAL ACCOUNTS................................................................13
4.4 COMPANY CAPITAL..........................................................................14
ARTICLE V - DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES.........................................14
5.2 DISTRIBUTIONS............................................................................14
5.3 ALLOCATION OF PROFITS AND LOSSES.........................................................15
5.4 REGULATORY AND SPECIAL ALLOCATIONS.......................................................16
5.5 TAX DISTRIBUTIONS........................................................................17
5.6 TAX ALLOCATIONS: CODE SECTION 704(C).....................................................18
ARTICLE VI - MANAGEMENT...............................................................................19
6.1 THE MANAGING MEMBER; DELEGATION OF AUTHORITY AND DUTIES..................................19
6.2 OFFICERS.................................................................................20
ARTICLE VII - EXCULPATION AND INDEMNIFICATION..........................................................21
7.1 PERFORMANCE OF DUTIES; NO LIABILITY OF MEMBER AND OFFICERS...............................21
7.2 COMPETING ACTIVITIES.....................................................................22
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7.3 TRANSACTIONS BETWEEN THE COMPANY AND THE MEMBERS........................................22
7.4 Indemnification.........................................................................23
7.5 Power to Indemnify in Actions, Suits or Proceedings Other Than
Those by or in the Right of the Company.................................................23
7.6 Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Company...23
7.7 Authorization of Indemnification........................................................24
7.8 Good Faith Defined......................................................................24
7.9 Indemnification by a Court..............................................................24
7.10 Advancement or Reimbursement of Expenses................................................24
7.11 Nonexclusivity and Survival of Indemnification..........................................25
7.12 Insurance...............................................................................25
7.13 SAVINGS CLAUSE..........................................................................25
ARTICLE VIII - TAXES...................................................................................25
8.1 TAX RETURNS.............................................................................25
8.2 TAX MATTERS PARTNER.....................................................................25
ARTICLE IX - BOOKS, REPORTS AND COMPANY FUNDS........................................................26
9.1 MAINTENANCE OF BOOKS....................................................................26
9.2 MEMBER TAX INFORMATION..................................................................26
ARTICLE X - TRANSFERS AND OTHER EVENTS..............................................................26
10.1 ASSIGNMENT BY MEMBERS...................................................................26
10.2 VOID ASSIGNMENT.........................................................................26
10.3 SUBSTITUTED MEMBER......................................................................27
10.4 EFFECT OF ASSIGNMENT....................................................................27
10.5 LEGEND..................................................................................27
10.6 TRANSFER FEES AND EXPENSES..............................................................28
10.7 OTHER LIMITATIONS.......................................................................28
10.8 EFFECTIVE DATE..........................................................................28
10.9 EFFECT OF INCAPACITY....................................................................28
ARTICLE XI - DISSOLUTION, LIQUIDATION AND TERMINATION................................................28
11.1 DISSOLUTION.............................................................................28
11.2 LIQUIDATION AND TERMINATION.............................................................28
11.3 CANCELLATION OF CERTIFICATE.............................................................29
ARTICLE XII - GENERAL/MISCELLANEOUS PROVISIONS........................................................29
12.1 OFFSET..................................................................................29
12.2 NOTICES.................................................................................29
12.3 ENTIRE AGREEMENT........................................................................30
12.4 EFFECT OF WAIVER OR CONSENT.............................................................30
12.5 AMENDMENT OR MODIFICATION...............................................................30
12.6 BINDING EFFECT..........................................................................30
12.7 GOVERNING LAW...........................................................................30
12.8 FURTHER ASSURANCES......................................................................31
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12.9 WAIVER OF CERTAIN RIGHTS................................................................31
12.10 NOTICE TO MEMBERS OF PROVISIONS.........................................................31
12.11 COUNTERPARTS............................................................................31
12.12 CONSENT TO JURISDICTION.................................................................31
12.13 HEADINGS................................................................................31
12.14 REMEDIES................................................................................31
12.15 SEVERABILITY............................................................................31
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LIMITED LIABILITY COMPANY AGREEMENT
of
AAVID THERMALLOY, LLC
A Delaware Limited Liability Company
THIS LIMITED LIABILITY COMPANY AGREEMENT of Aavid Thermalloy, LLC (the "Agreement") is entered into as of the 2nd day of February, 2000 by and among Aavid Thermal Products, Inc., a Delaware corporation, ("ATP Inc."), Thermalloy Investment Co., Inc., a Delaware corporation ("Thermalloy Co."), Thermalloy, Inc., a Delaware corporation ("Thermalloy, Inc.") and Heat Holdings II Corp., a Delaware corporation ("Heat II"). The parties are sometimes also referred to in this Agreement collectively as the "Members" and individually as a "Member."
WHEREAS, pursuant to the Certificate of Formation (the "Certificate"), the Company was formed; and
WHEREAS, pursuant to a contribution by Aavid Thermal Products, Inc., a New Hampshire corporation ("Aavid - New Hampshire"), of certain of its assets to the Company, the Company issued to Aavid - New Hampshire 21,711 Common Units (as defined below) and 82,501 Preferred Units (as defined below) of the Company; and
WHEREAS, pursuant to a contribution by Thermalloy Investment Company, a Texas corporation ("Thermalloy - Texas") of certain of its assets to the Company, the Company issued to Thermalloy - Texas 646 Common Units and 2,544 Preferred Units of the Company; and
WHEREAS, pursuant to a contribution by Thermalloy, Inc., a Nevada corporation("Thermalloy - Nevada") of certain of its assets to the Company, the Company issued to Thermalloy - Nevada 2,977 Common Units and 1,311 Preferred Units of the Company; and
WHEREAS, pursuant to Plans and Agreements of Merger, each of Thermalloy - Texas, Thermalloy - Nevada and Aavid - New Hampshire were merged into Thermalloy Co., Thermalloy, Inc., and ATP, Inc., respectively;
WHEREAS, Heat II purchased 481,334 Common Units from the Company for $4,813,333 in cash; and
WHEREAS, the parties hereto desire to enter into this Limited Liability Company Agreement to provide for, among other things, the respective rights, obligations and interests of the parties hereto to each other and certain other matters.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein made and intending to be legally bound, the Members hereby agree as follows:
ARTICLE I - DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms have the following meanings:
"Act" means the Delaware Limited Liability Company Act, Title 6, Sections18-101, et seq., and any successor statute, as amended from time to time.
"Additional Interests" has the meaning given that term in Section 3.4.
"Affiliate" of, or a Person "Affiliated" with, a specified Person means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.
"Agreement" means this Limited Liability Company Agreement, as executed and as it may be amended, modified, supplemented or restated from time to time, as the context requires.
"Allocated Preferred Yield Amount" means with respect to each Member or Economic Owner as of any date, the excess, if any, of (i) the aggregate amount of Net Profits previously allocated to such Member or Economic Owner pursuant to Section 5.3(a)(iii) over (ii) the aggregate amount of Net Losses previously allocated to such Member or Economic Owner pursuant to Section 5.3(b)(ii).
"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 hereof pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) in a manner determined by the Managing Member such 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 Members' actual or deemed Capital Contributions pursuant to Section 3.3).
"Capital Account" has the meaning given that term in Section 4.1.
"Capital Contribution" means the aggregate contributions made by a Member to the Company pursuant to Article III as of the date in question, as shown opposite such Member's name on Schedule A, as the same may be amended from time to time.
"Certificate" has the meaning given that term in the Preamble.
"Certificated Interests" has the meaning given that term in Section 10.5.
"Change in Control" means (a) any sale or issuance or series of sales and/or issuances of Common Units or Preferred Units by the Company or any holders thereof which results in any Person or group of affiliated Persons (other than the owners of the Company's Common Units and Preferred Units as of January 31, 2000) owning more than 50% of the Common Units or 50% of the Preferred Units outstanding at the time of such sale or issuance or series of sales and/or issuances, (b) a sale or transfer
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of more than 50% of the assets of the Company and its Subsidiaries on a consolidated basis (measured by either book value in accordance with generally accepted accounting principles consistently applied or fair market value determined in the reasonable good faith judgment of the Managing Member) in any transaction or series of transactions (other than sales in the ordinary course of business) and (c) any merger or consolidation to which the Company is a party, except for a merger in which the Company is the surviving company and, after giving effect to such merger, the holders of the Company's outstanding Units possessing a majority of the voting power (under ordinary circumstances) to elect the Managing Member immediately prior to the merger shall own the Company's outstanding Units possessing the voting power (under ordinary circumstances) to elect the Managing Member.
"Common Unit" means a Unit representing a fractional part of the Membership Interests of the Members and having the rights and obligations specified with respect to Common Units in this Agreement.
"Code" means the Internal Revenue Code of 1986 and any successor statute, as amended from time to time.
"Company" means Aavid Thermalloy, LLC, from and after its formation as a Delaware limited liability company pursuant to the Certificate.
"Company Minimum Gain" has the meaning set forth for "Partnership minimum gain" in Treasury Regulation Section 1.704-2(d).
"Economic Interest" means a Member's or Economic Owner's share of the Company's net profits, net losses and distributions pursuant to this Agreement and the Act, but shall not include any right to participate in the management or affairs of the Company, including the right to vote on, consent to or otherwise participate in any decision of the Members, or any right to receive information concerning the business and affairs of the Company, in each case to the extent provided for herein or otherwise required by the Act.
"Economic Owner" means any owner of an Economic Interest who is not a Member. No owner of an Economic Interest which is not a Member shall be deemed a "member" (as that term is used in the Act) of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.
"Fiscal Period" of the Company means the Fiscal Year or any portion thereof for which determinations are being made pursuant to this Agreement.
"Fiscal Quarter" of the Company means each calendar quarter ending March 31, June 30, September 30 and December 31.
"Fiscal Year" of the Company means the calendar year.
"Incapacity" or "Incapacitated" means (a) with respect to a natural person, the bankruptcy, death, incompetency or insanity of such individual and (b) with respect to any other Person, the bankruptcy, liquidation, dissolution or termination of such Person.
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"Losses" means items of Company loss and deduction determined according to Section 4.2.
"Managing Member" has the meaning given to that term in Section 6.1.
"Member" means the initial Members and each Person who is hereafter admitted as a Member in accordance with the terms of this Agreement and the Act. The Members shall constitute the "members" (as that term is defined in the Act) of the Company. Notwithstanding any provision of this Agreement to the contrary, the Members holding Preferred Units shall constitute a single class or group of members of the Company for all purposes of the Act and this Agreement, and the Members holding Common Units shall constitute a single class or group of members of the Company for all purposes of the Act and this Agreement.
"Member Minimum Gain" has the meaning set forth for "partner nonrecourse debt minimum gain" in Treasury Regulation Section 1.704-2(i).
"Member Nonrecourse Deductions" has the meaning set forth for "partner nonrecourse deductions" in Treasury Regulation Section 1.704-2(i).
"Membership Interest" means a Member's interest in the Company, including such Member's Economic Interest and the right, if any, to participate in the management of the business and affairs of the Company, including the right, if any, to vote on, consent to or otherwise participate in any decision or action of or by the Members and the right to receive information concerning the business and affairs of the Company, in each case to the extent expressly provided in this Agreement or otherwise required by the Act.
"Net Losses" means for any Fiscal Period the excess, if any, of Losses over Profits for such period, disregarding Losses and Profits specially allocated pursuant to Section 5.4.
"Net Profits" means for any Fiscal Period the excess, if any, of Profits over Losses for such period, disregarding Profits and Losses specially allocated pursuant to Section 5.4.
"Officer" means each Person designated as an officer of the Company pursuant to Section 6.2 for so long as such Person remains an officer pursuant to the provisions of Section 6.2.
"Person" means a natural person, partnership (whether general or limited), limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative capacity.
"Preferred Unit" means a Unit representing a fractional part of the Membership Interests of all Members and having the preference rights and other rights and obligations specified with respect to Preferred Units in this Agreement.
"Profits" means items of Company income and gain determined according to Section 4.2.
"Public Offering" means any offering by the Company of its equity securities to the public pursuant to an effective registration statement under the Securities Act of 1933, as then in effect, or any
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comparable statement under any similar federal statute then in force; provided that a Public Offering shall not include an offering made in connection with an employee benefit plan.
"Redemption Price" for each Preferred Unit means the sum of (i) the Unreturned Preferred Capital applicable to such Preferred Unit, plus (ii) any Unpaid Preferred Yield applicable to such Preferred Unit, calculated through the date of redemption.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Tax Matters Member" has the meaning given to that term in Section 8.2.
"Taxable Year" means the Company's taxable year ending December 31 (or part thereof, in the case of the Company's last taxable year), or such other year as is (i) required by Section 706 of the Code or (ii) determined by the Managing Member.
"Transfer" has the meaning given that term in Section 10.1.
"Unit" means a Membership Interest of a Member in the Company representing a fractional part of the Membership Interests of all Members and shall include Common Units and Preferred Units; provided that any class of Units issued shall have designations, preferences or special rights set forth in this Agreement and the Membership Interest represented by such class of Units shall be determined in accordance with such designations, preferences or special rights.
"Unallocated Preferred Yield" means with respect to each Member or Economic Owner as of any date the excess, if any, of (i) the aggregate Yield accrued through such date on the Preferred Units held by such Member or Economic Owner over (ii) such Member's or Economic Owner's Allocated Preferred Yield Amount.
"Unpaid Preferred Yield" means with respect to each Preferred Unit at any time an amount equal to the excess, if any, of (a) the aggregate Yield with respect to such Preferred Unit accrued through such date, over (b) all prior distributions made by the Company with respect to such Preferred Unit pursuant to Section 5.2(a).
"Unreturned Preferred Capital" means with respect to each Preferred Unit at any time the excess, if any, of (a) $1,000 over (b) all prior distributions made by the Company with respect to such Preferred Unit pursuant to Section 5.2(b).
"Yield" means with respect to each Preferred Unit at any time an amount calculated on a daily basis (without daily compounding) at the rate of 12% per annum on (a) the Unreturned Preferred Capital of such Preferred Unit plus (b) all Unpaid Preferred Yield thereon determined as of the date thereof if such date is as of the end of a Fiscal Quarter and otherwise as of the end of the Fiscal Quarter most recently ended.
Other terms defined in this Agreement have the meanings so given them.
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
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number and vice versa. All references to Articles and Sections refer to articles and sections of this Agreement, and all references to Schedules are to Schedules attached hereto, each of which is made a part hereof for all purposes.
1.3 INCLUDING. Reference in this Agreement to "including," "includes" and "include" shall be deemed to be followed by "without limitation."
ARTICLE II - ORGANIZATION
2.1 RIGHTS OF MEMBERS. ATP, Inc., Thermalloy Co., Thermalloy, Inc. and Heat II have all become members of the Company, and the Company has issued the Common Units and Preferred Units as described in the preamble to this Agreement. This Agreement is the Limited Liability Company Agreement of the Company.
The rights, powers, duties, obligations and liabilities of the Members shall be determined pursuant to the Act and this Agreement. If there is a conflict between the provisions of this Agreement and the Act, the provisions of this Agreement shall control, except if the conflict is with respect to a provision which would cause the Company not to be taxed for federal income tax purposes as a partnership or a provision of the Act that cannot be waived by agreement among the Members, in which case the provisions of the Act shall control. If there is a conflict between this Agreement and the Certificate, the provisions of the Certificate shall control.
2.2 NAME. The name of the Company is "Aavid Thermalloy, LLC" and all Company business shall be conducted in that name or in such other names that comply with applicable law as the Managing Member may select from time to time.
2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; 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 (which need not be a place of business of the Company) as the Managing Member 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 Managing Member may designate from time to time in the manner provided by law. The principal office of the Company shall be at such place as the Managing Member may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records there. The Company may have such other offices as the Managing Member may designate from time to time.
2.4 PURPOSES. The nature of the business or purposes to be conducted or promoted by the Company is to engage in any lawful act or activity for which limited liability companies may be organized under the Act. The Company may engage in any and all activities necessary, desirable or incidental to the accomplishment of the foregoing. 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.
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2.5 POWERS OF THE COMPANY.
(a) POWER AND AUTHORITY. Subject to the provisions of this
Agreement, the Company shall have the power and authority to take any
and all actions necessary, appropriate, proper, advisable, convenient
or incidental to or for the furtherance of the purposes set forth in
Section 2.4, including the power:
(i) to conduct its business, carry on its operations
and have and exercise the powers granted to a limited
liability company by the Act in any state, territory, district
or possession of the United States, or in any foreign country
that may be necessary, convenient or incidental to the
accomplishment of the purpose of the Company;
(ii) to acquire by purchase, lease, contribution of
property or otherwise, own, hold, operate, maintain, finance,
refinance, improve, lease, sell, convey, mortgage, transfer,
demolish or dispose of any real or personal property that may
be necessary, convenient or incidental to the accomplishment
of the purpose of the Company;
(iii) to enter into, perform and carry out contracts
of any kind, including contracts with any Member or any
Affiliate thereof, or any agent of the Company necessary to,
in connection with, convenient to or incidental to the
accomplishment of the purpose of the Company;
(iv) to purchase, take, receive, subscribe for or
otherwise acquire, own, hold, vote, use, employ, sell,
mortgage, lend, pledge, or otherwise dispose of, and otherwise
use and deal in and with, shares or other interests in or
obligations of domestic or foreign corporations, associations,
general or limited partnerships (including the power to be
admitted as a partner thereof and to exercise the rights and
perform the duties created thereby), trusts, limited liability
companies (including the power to be admitted as a member or
appointed as a manager thereof and to exercise the rights and
perform the duties created thereby) or individuals or direct
or indirect obligations of the United States or of any
government, state, territory, governmental district or
municipality or of any instrumentality of any of them;
(v) to lend money for any proper purpose, to invest
and reinvest its funds and to take and hold real and personal
property for the payment of funds so loaned or invested;
(vi) to sue and be sued, complain and defend, and
participate in administrative or other proceedings, in its
name;
(vii) to appoint employees and agents of the Company
and define their duties and fix their compensation;
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(viii) to indemnify any Person in accordance with the
Act and to obtain any and all types of insurance;
(ix) to cease its activities and cancel its
Certificate;
(x) to negotiate, enter into, renegotiate, extend,
renew, terminate, modify, amend, waive, execute, acknowledge
or take any other action with respect to any lease, contract
or security agreement in respect of any assets of the Company;
(xi) to borrow money and issue evidences of
indebtedness and guarantee indebtedness (whether of the
Company or any of its subsidiaries), and to secure the same by
a mortgage, pledge or other lien on the assets of the Company;
(xii) to pay, collect, compromise, litigate,
arbitrate or otherwise adjust or settle any and all other
claims or demands of or against the Company or to hold such
proceeds against the payment of contingent liabilities; and
(xiii) to make, execute, acknowledge and file any and
all documents or instruments necessary, convenient or
incidental to the accomplishment of the purpose of the
Company.
(b) MANAGING MEMBER. Subject to the provisions of this
Agreement, (i) the Company, and the Managing Member on behalf of the
Company, may enter into and perform any and all documents, agreements
and instruments contemplated hereby, all without any further act, vote
or approval of any Member and (ii) the Managing Member may authorize
any Person (including any Member or Officer) to enter into and perform
any document on behalf of the Company.
(c) MERGER. Subject to the provisions of this Agreement, the
Company may, with approval of the Managing Member and without the need
for any further act, vote or approval of any Member, merge with, or
consolidate into, another limited liability company (organized under
the laws of Delaware or any other state), a corporation (organized
under the laws of Delaware or any other state) or other business entity
(as defined in Section 18-209(a) of the Act), regardless of whether the
Company is the survivor of such merger or consolidation.
2.6 FOREIGN QUALIFICATION. The Managing Member shall cause the Company to comply with all requirements necessary to qualify the Company as a foreign limited liability company in any jurisdiction in which the Company owns property or transacts business to the extent, in the reasonable judgment of the Managing Member, such qualification or registration is necessary or advisable for the protection of the limited liability of the Members or to permit the Company lawfully to own property or transact business. The Managing Member may and, at the request of the Managing Member or any officer, each Member shall, execute, acknowledge, swear to and deliver any or all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue or
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terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business.
2.8 NO STATE-LAW PARTNERSHIP. The Members intend that the Company shall not be a partnership (including, without limitation, a limited partnership) or joint venture, and that no Member, Economic Owner or Officer shall be a partner or joint venturer of any other Member, Economic Owner or Officer, for any purposes other than federal and, if applicable, state tax purposes, and this Agreement shall not be construed to the contrary. The Members intend that the Company shall be treated as a partnership for federal and, if applicable, state 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.
ARTICLE III - MEMBERSHIP; CAPITAL CONTRIBUTIONS; ADDITIONAL INTERESTS
3.1 MEMBERS.
(a) NAMES, ETC. Subject to the following sentence, the names,
residence, business or mailing addresses, Capital Contributions and the
Units of the Members shall be set forth on Schedule A, as such Schedule
shall be amended from time to time in accordance with the terms of this
Agreement. Any reference in this Agreement to Schedule A shall be
deemed to be a reference to Schedule A as amended and in effect from
time to time. Each Person listed on Schedule A, upon (i) his or its
execution of this Agreement or counterpart thereof and (ii) receipt (or
deemed receipt) of such Person's Capital Contribution as set forth on
Schedule A, is hereby admitted to the Company as a Member of the
Company.
(b) CAPITAL CONTRIBUTIONS; LOANS BY MEMBERS. No Member, as
such, shall be required to lend any funds to the Company or to make any
additional contribution of capital to the Company, except as otherwise
required by applicable law or by this Agreement. Any Member may, with
the approval of the Managing Member, make loans to the Company, and any
loan by a Member to the Company shall not be considered to be a Capital
Contribution. Each Member shall be required to make additional Capital
Contributions only at such times and in such amounts as may be approved
by the Members unanimously. The obligations of Members to make
additional Capital Contributions and their liability to the Company and
other Members with respect thereto shall not confer any rights on any
third parties. Unless otherwise determined by the Members unanimously,
all additional Capital Contributions shall be made in proportion to the
number of Common Units held by each of the Members.
(c) REPRESENTATIONS AND WARRANTIES OF MEMBERS. Each Member
hereby represents and warrants to and acknowledges with the Company
that: (i) such Member is acquiring interests in the Company for
investment only and not with a view to, or for resale in connection
with, any distribution to the public or public offering thereof; (ii)
the interests in the Company have not been registered under the
securities laws of any jurisdiction and cannot be disposed of unless
they are subsequently registered and/or qualified under applicable
securities laws and the provisions of this Agreement have
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been complied with; (iii) the execution, delivery and performance of
this Agreement have been duly authorized by such Member and do not
require such Member to obtain any consent or approval that has not been
obtained and do not contravene or result in a default under any
provision of any law or regulation applicable to such Member or other
governing documents or any agreement or instrument to which such Member
is a party or by which such Member is bound and (iv) this Agreement is
valid, binding and enforceable against such Member in accordance with
its terms.
3.2 NO LIABILITY OF MEMBERS.
(a) NO LIABILITY. Except as otherwise required by applicable
law and as expressly set forth in this Agreement, no Member shall have
any personal liability whatever in such Member's capacity as a Member,
whether to the Company, to any of the other Members, to the creditors
of the Company or to any other third party, for the debts, liabilities,
commitments or any other obligations of the Company or for any losses
of the Company. Each Member shall be liable only to make such Member's
Capital Contribution to the Company and the other payments provided
expressly herein.
(b) RETURN OF DISTRIBUTIONS. In accordance with the Act and
the laws of the State of Delaware, a member of a limited liability
company may, under certain circumstances, be required to return amounts
previously distributed to such Member. It is the intent of the Members
that no distribution to any Member pursuant to Article V hereof shall
be deemed a return of money or other property paid or distributed in
violation of the Act. A Member receiving the payment of any such money
or distribution of any such property shall not be required to return to
any Person any such money or property. However, if any court of
competent jurisdiction holds that, notwithstanding the provisions of
this Agreement, any Member is obligated to make any such payment, such
obligation shall be the obligation of such Member and not of any other
Member.
3.3 INITIAL CAPITAL CONTRIBUTIONS. Each Member has made a Capital Contribution to the Company in cash, property, assets or evidence of indebtedness in the amount set forth opposite such Member's name on Schedule A hereto. Upon receipt of the Capital Contribution set forth opposite such Member's name on Schedule A, each Member shall be deemed to own the number of Preferred Units and Common Units set forth opposite such Member's name on Schedule A.
3.4 ISSUANCE OF ADDITIONAL INTERESTS; ADDITIONAL MEMBERS.
(a) ADDITIONAL INTERESTS. Subject to Section 10.7, the
Managing Member shall have the right to cause the Company to issue or
sell to any Person (including Members and Affiliates of Members) any of
the following (which for purposes of this Agreement shall be
"Additional Interests"): (i) additional Membership Interests or other
interests in the Company (including new classes or series thereof
having different rights); (ii) obligations, evidences of indebtedness
or other securities or interests convertible into or exchangeable for
Membership Interests or other interests in the Company; and (iii)
warrants, options or other rights to purchase or otherwise acquire
Membership Interests or other interests in the Company. The Managing
Member shall determine the terms and conditions governing the issuance
of such Additional Interests, including the number and
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designation of such Additional Interests, the preference (with respect
to distributions, in liquidation or otherwise) over any other
Membership Interests and any required contributions in connection
therewith.
(b) ADDITIONAL MEMBERS AND INTERESTS. In order for a Person to
be admitted as a Member of the Company with respect to an Additional
Interest:
(i) such Person shall have delivered to the Company a
written undertaking to be bound by the terms and conditions of
this Agreement and shall have delivered such documents and
instruments as the Managing Member determines to be necessary
or appropriate in connection with the issuance of such
Additional Interest to such Person or to effect such Person's
admission as a Member; and (ii) the Managing Member or the
Secretary of the Company shall amend Schedule A without the
further vote, act or consent of any other Person to reflect
such new Person as a Member. Upon the amendment of Schedule A,
such Person shall be deemed to have been admitted as a Member
and shall be listed as such on the books and records of the
Company and thereupon shall be issued his or its Membership
Interest, including any Economic Interest that corresponds to
and is part of such Membership Interest. If an Additional
Interest is issued to an existing Member, the Managing Member
or the Secretary of the Company shall amend Schedule A without
the further vote, act or consent of any other Person to
reflect the issuance of such Additional Interest and, upon the
amendment of such Schedule A, such Member shall be issued his
or its Additional Interest, including any Economic Interest
that corresponds to and is part of such Additional Interest.
3.5 CERTIFICATION OF UNITS. The Company shall issue certificates to the Members representing the Membership Interest held by each Member (the "Certificated Interests"). The Members agree that the Certificated Interests shall be deemed to be securities as defined in the Uniform Commercial Code, and any pledge of or grant of a security interest in any Certificated Interests shall be subject to the provisions of the Uniform Commercial Code.
3.6 REDEMPTION OF PREFERRED UNITS. The Preferred Units are redeemable by the Corporation as provided in this Section 3.6.
(a) MANDATORY REDEMPTION. At any time after January 31, 2021, the holders of a majority of the Preferred Units may request redemption of all or any portion of their Preferred Units by delivering a written notice of such request to the Company at least six months prior to the redemption date. Within ten days after receipt of such request, the Company shall give written notice of such request to all other holders of Preferred Units, and such other holders may request redemption of their Preferred Unit by delivering written notice to the Company within 30 days after receipt of the Company's notice. The Company shall be required to redeem all Preferred Units with respect to which such redemption requests have been made at a price per Preferred Unit equal to the Redemption Price within six months after receipt of the initial redemption request.
(b) REDEMPTION PAYMENT. For each Preferred Unit which is to be redeemed, the Company shall be obligated on the redemption date to pay to the holder of such Unit (upon
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surrender by such holder at the Company's principal office of the certificate representing such Unit) an amount equal to the Redemption Price per Unit. If the funds of the Company legally available for payment of the redemption amounts on any payment date are insufficient to make the total payments required to be made, those funds which are legally available shall be used to redeem the maximum number of Preferred Units possible, ratably among the holders of the Units to be redeemed based upon the aggregate Redemption Price owed. At any time thereafter when additional funds of the Company are legally available for the redemption of Preferred Units, such funds shall immediately be used to redeem the balance of the Units which the Company has become obligated to redeem but which it has not redeemed. For purposes of this Agreement, the redemption date of any Unit shall be the date upon which the redemption payment has been paid in full.
(c) PARTIAL REDEMPTION. In case fewer than the total number of Preferred Units represented by any certificate are redeemed, a new certificate representing the number of unredeemed Units shall be issued to the holder of such Units without cost to such holder within three business days after surrender of the certificate representing the redeemed Units.
(d) DIVIDENDS AFTER REDEMPTION DATE. No Preferred Unit to be redeemed is entitled to any distributions accruing after the redemption date. On such date all rights of the holder of such Unit shall cease, and such Unit shall not be deemed to be outstanding.
(e) REDEEMED OR OTHERWISE ACQUIRED UNITS. Any Units which are redeemed or otherwise acquired by the Corporation shall be canceled and shall not be reissued, sold or transferred.
(f) OTHER REDEMPTIONS OR ACQUISITIONS. Neither the Company nor any Subsidiary shall redeem or otherwise acquire any Preferred Units, except as expressly authorized in this Section or pursuant to a purchase offer made pro rata to all holders of Preferred Units on the basis of the number of shares of Preferred Units owned by each such holder.
(g) PRIORITY OF PREFERRED UNITS. So long as any Preferred Units remains outstanding, neither the Company nor any Subsidiary shall redeem, purchase or otherwise acquire directly or indirectly any Common Units (other than acquisitions by the Company pursuant to agreements which permit the Company to repurchase Common Units from former employees or consultants (i) upon termination of services to the Company or (ii) in exercise of the Company's right of first refusal upon a proposed transfer).
ARTICLE IV - CAPITAL ACCOUNTS
4.1 ESTABLISHMENT AND DETERMINATION OF CAPITAL ACCOUNTS. A capital account ("Capital Account") shall be established for each Member and Economic Owner on the books of the Company initially reflecting an amount equal to such Member's or Economic Owner's initial Capital Contribution pursuant to Section 3.3. Each Member's and Economic Owner's Capital Account shall be (a) increased by any additional Capital Contributions made by such Member or Economic Owner pursuant to the terms of this Agreement and such Member's or Economic Owner's share of items of income and gain allocated to such Member or Economic
12
Owner pursuant to Article V, (b) decreased by such Member's or Economic Owner's share of items of loss, deduction and expense allocated to such Member or Economic Owner pursuant to Article V and any distributions to such Member or Economic Owner of cash or the fair market value of any other property (net of liabilities assumed by such Member or Economic Owner and liabilities to which such property is subject) distributed to such Member or Economic Owner and (c) adjusted as otherwise required by the Code and the regulations thereunder, including but not limited to, the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Any references in this Agreement to the Capital Account of a Member or an Economic Owner shall be deemed to refer to such Capital Account as the same may be increased or decreased from time to time as set forth above.
4.2 COMPUTATION OF AMOUNTS. For purposes of computing the amount of any item of Company income, gain, loss or deduction to be allocated pursuant to Article IV and to be reflected in the Capital Accounts, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for federal income tax purposes (including any method of depreciation, cost recovery or amortization used for this purpose), provided that:
(a) 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.
(b) 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.
(c) 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.
(d) 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).
(e) To the extent an adjustment to the adjusted tax basis of
any Company asset 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. No Member or Economic Owner shall be required to pay to the Company or any other Member or Economic Owner any deficit or negative balance which may exist from time to time in such Member's or Economic Owner's Capital Account.
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4.4 COMPANY CAPITAL. No Member or Economic Owner shall be paid interest on any Capital Contribution to the Company or on such Member's or Economic Owner's Capital Account, and no Member or Economic Owner shall have any right (a) to demand the return of such Member's or Economic Owner's Capital Contribution or any other distribution from the Company (whether upon resignation, withdrawal or otherwise), except upon dissolution of the Company pursuant to Article XI hereof or (b) to cause a partition of the Company's assets.
ARTICLE V - DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES
5.1 GENERALLY. Subject to the provisions of Section 18-607 of the Act and Section 5.5, the Managing Member shall have sole discretion regarding the amounts and timing of distributions to Members and Economic Owner, 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.
5.2 DISTRIBUTIONS. Subject to Section 5.5, distributions to be made on any date shall be made in the following order and priority:
(a) First, if any Preferred Units are outstanding, to the
holders of Preferred Units pro rata according to Unpaid Preferred Yield
with respect to the Preferred Units of each such holder until the
aggregate distributions made pursuant to this Section 5.2(a) reduces
the aggregate Unpaid Preferred Yield to zero;
(b) Second, if any Preferred Units are outstanding, to the
holders of Preferred Units pro rata according to the Unreturned
Preferred Capital of the Preferred Units of each such holder until the
aggregate distributions made pursuant to this Section 5.2(b) reduces
the aggregate Unreturned Preferred Capital to zero; and
(c) Third, to the holders of Common Units in proportion to
their ownership of Common Units.
Notwithstanding the foregoing, no distribution to the holders of Common Units, other than distributions, if any, pursuant to Section 5.5, shall be made until the ATT Repayment Date (as defined below). Prior to the ATT Repayment Date, the Company shall be obligated to loan any cash to ATT if ATT requests such loans and the Managing Member reasonably determines such cash is not necessary for the Company's operations and liabilities. Such loans shall bear interest at ATT's Blended Cost of Funds (as defined below), may be prepaid at any time, and shall not be due and payable before the ATT Repayment Date. For purposes of this Section 5.2, the ATT Repayment Date shall be the first date following redemption of all Preferred Units on which ATT has (i) repaid all term bank debt incurred pursuant to its revolving credit and term loan facility with Canadian Imperial Bank of Commerce, as agent, and any refinancing of such facility, (ii) repaid its % Senior Subordinated Notes due 2007 and (iii) caused Fluent, Inc. to redeem its Series A Preferred Stock, par value $.01 per share. For purposes of this Section 5.2, ATT's Blended Cost of Funds shall mean ATT's blended cost of its senior bank debt, senior subordinated notes and
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equity referred to in the preceding sentence, as adjusted from time to time to take into account interest and dividend rates payable and amounts outstanding.
5.3 ALLOCATION OF PROFITS AND LOSSES.
(a) NET PROFITS. For each Fiscal Period of the Company, after
adjusting each Member's Capital Account for all Capital Contributions
and distributions during such Fiscal Period and all special allocations
pursuant to Section 5.4 with respect to such Fiscal Year, all Net
Profits shall be allocated to the Capital Account of each Member and
Economic Owner as follows:
(i) first, to the holders of Preferred Units, in the
proportion and to the extent that Net Losses previously have been
allocated to such holders pursuant to Section 5.3 (b)(iv) and (v) and
not offset by allocations of Net Profits pursuant to this Section
5.3(a)(i);
(ii) second, to the holders of Common Units, in the proportion
and to the extent that Net Losses previously have been allocated to
such holders pursuant to Section 5.3(b)(iii) and not offset by
allocations of Net Profits pursuant to this Section 5.3(a)(ii);
(iii) third, to the holders of Preferred Units, in proportion
to and to the extent of the Unallocated Preferred Yield Amount with
respect to each such Holder; and
(iv) thereafter, the balance, if any, to the holders of Common
Units, pro rata, in proportion to the number of Common Units held.
(b) NET LOSSES. For each Fiscal Period of the Company, after
adjusting each Member's Capital Account for all Capital Contributions
and distributions during such Fiscal Period and all special allocations
pursuant to Section 5.4 with respect to such Fiscal Period, all Net
Losses shall be allocated to the Capital Account of each Member and
Economic Owner as follows:
(i) first, to the holders of Common Units, in the proportion
and to the extent that Net Profits previously have been allocated to
such holders pursuant to Section 5.3(a)(iv) and not offset by
allocations of Net Losses pursuant to this Section 5.3(b)(i);
(ii) second, to the holders of Preferred Units, in the proportion and
to the extent that Net Profits previously have been allocated to such
holders pursuant to Section 5.3(a)(iii) and not offset by allocation of
Net Losses pursuant to this Section 5.3(b)(ii);
(iii) third, to the holders of Common Units. in proportion to and to
the extent of their positive Capital Account balances with respect to
such Common Units,
(iv) fourth, to the holders of Preferred Units, in proportion to and to
the extent of their positive Capital Account balances with respect to
such Preferred Unit; and
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(v) thereafter, the balance to the holders of Preferred Units,
in proportion to their ownership of Preferred Units.
5.4 REGULATORY AND SPECIAL ALLOCATIONS. Notwithstanding the provisions of Section 5.3:
(a) COMPANY MINIMUM GAIN. If there is a net decrease in
Company Minimum Gain during any Taxable Year, each Member and Economic
Owner shall be specially allocated Profits for such Taxable Year (and,
if necessary, subsequent Taxable Years) in an amount equal to such
Member's and Economic Owner'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.
(b) NONRECOURSE DEDUCTIONS. 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 and Economic Owner 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 and Economic Owner'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 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.
(c) QUALIFIED INCOME OFFSET. If any Member or Economic Owner
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 or Economic
Owner in an amount and manner sufficient to eliminate the adjusted
capital account deficit (determined according to Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)) 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.
(d) REGULATORY ALLOCATIONS. The allocations set forth in
paragraphs (a), (b) and (c) 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 V (other than the Regulatory Allocations),
the Regulatory Allocations shall be taken into account in allocating
Profits and Losses among Members and Economic Owners so that, to the
extent possible, the net amount of such allocations of Profits and
Losses and other items and the Regulatory Allocations (including
Regulatory Allocations that, although not yet made, are expected to be
made in the
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future) to each Member and Economic Owner shall be equal to the net
amount that would have been allocated to such Member or Economic Owner
if the Regulatory Allocations had not occurred.
5.5 TAX DISTRIBUTIONS.
(a) QUARTERLY DISTRIBUTIONS. Notwithstanding Sections 5.1 and 5.2 above, so long as the Managing Member has not determined in good faith that such distribution would be prohibited or create a default or event of default under the Act or any financing agreement to which the Company or its Members is subject, then (i) at least ten business days before each date prescribed by the Code for calendar year corporations to pay quarterly installments of estimated tax, the Company shall distribute to the Members and Economic Owners an amount of cash equal to the excess of (x) the Quarterly Estimated Tax Amount for the quarter of the Taxable Year with respect to which such distribution is being made over (y) the amount of Distributions (if any) previously made pursuant to Section 5.2 during such quarter; (ii) if the aggregate amount of such quarterly distributions with respect to any Taxable Year is less than the Company's Tax Amount for such Taxable Year, the Company shall distribute an amount of cash equal to the balance of such Tax Amount ("Shortfall Distributions"); and (iii) the Company shall use its best efforts to make such Shortfall Distributions at, on or before the date prescribed by the Code (without extensions) for calendar year corporations to file federal income tax returns. Distributions pursuant to this Section 5.5 shall be made among the Members and Economic Owners in the same proportion that the Company's taxable income for the Taxable Year is allocated among the Members and Economic Owners, as determined by the Managing Member. Distributions pursuant to this Section 5.5 shall be treated as advance distributions (and shall be offset against future distributions to such Member or Economic Owner) pursuant to Section 5.2(a), (b) or (c), as appropriate. If the aggregate amount of such distributions under this Section 5.5 with respect to any Taxable Year exceeds a Member's or Economic Owner's share of the Company's Tax Amount for such Taxable Year, the Company's obligations to make future distributions to such Member or Economic Owner pursuant to this Section 5.5 shall be reduced by the amount of such excess until such excess has been fully deducted from such distributions.
(b) TAX AMOUNT. The Company's "Tax Amount" for a Taxable Year
shall be the federal, state, and local income taxes which would be
payable by the Company if the Company were taxed for such Taxable Year
at the highest marginal federal, state and local corporate income tax
rate applicable to any Member on the Company's taxable income for the
Taxable Year (computed as if the Company had elected to carry forward
all loss and credit carryovers, taking into account the character of
any loss and credit carry forward as a capital or ordinary loss). The
amounts in respect of tax withholding on payments to or from the
Company for which Members or Economic Owners (or owners directly or
indirectly of such Members or Economic Owners) are credited under
applicable tax law shall be credited against payments of the Tax Amount
to such Members or Economic Owners. The Company's Tax Amount shall be
determined initially by the Managing Member on the basis of figures set
forth on IRS Form 1065 filed by the Company and the similar state or
local forms filed by the Company but shall be subject to subsequent
adjustment pursuant to audit, litigation, settlement, amended return,
or the like.
17
(c) ESTIMATED TAX AMOUNT. The Company's "Estimated Tax Amount"
for a Taxable Year (or Fiscal Period) shall be the Company's Tax Amount
for such Taxable Year (or Fiscal Period) as estimated from time to time
by the Managing Member. In making such estimate, the Managing Member
shall take into account amounts shown on IRS Form 1065 filed by the
Company and similar state or local forms filed by the Company for the
preceding taxable year and other adjustments as in the reasonable
business judgment of the Managing Member are necessary or appropriate
to reflect the estimated operations of the Company for the Taxable Year
(or Fiscal Period). The Company's "Quarterly Estimated Tax Amount" for
any quarter of a Taxable Year shall be the excess of (x) the product of
(I) 1/4 in the case of the first quarter of the Taxable Year, 1/2 in
the case of the second quarter of the Taxable Year, 3/4 in the case of
the third quarter of the Taxable Year and 1 in the case of the fourth
quarter of the Taxable Year and (II) the Company's Estimated Tax Amount
for such Taxable Year over (y) all prior distributions of Quarterly
Estimated Tax Amounts for such Taxable Year.
5.6 TAX ALLOCATIONS: CODE SECTION 704(C).
(a) ALLOCATIONS. The income, gains, losses, deductions and
expenses of the Company shall be allocated, for federal, state and
local income tax purposes, among the Members and Economic Owners in
accordance with the allocation of such income, gains, losses,
deductions and expenses among the Members and Economic Owners for
computing their Capital Accounts, except that if any such allocation is
not permitted by the Code or other applicable law, the Company's
subsequent income, gains, losses, deductions and expenses shall be
allocated among the Members and Economic Owners 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) CONTRIBUTED PROPERTY. In accordance with Code Section
704(c) and the Treasury Regulations thereunder, income, gain, loss,
deduction and expense with respect to any property contributed to the
capital of the Company shall, solely for tax purposes, be allocated
among the Members and Economic Owners 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 fair market value at the time
of contribution under the curative allocation method described in
Treas. Reg. Section 1.704-3(c).
(c) ADJUSTED BOOK VALUE. If the Book Value of any Company
asset is adjusted pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(f) as provided in the definition of Book Value,
subsequent allocations of items of taxable income, gain, loss,
deduction and expense with respect to such asset shall take account of
any variation between the adjusted basis of such asset for federal
income tax purposes and its Book Value in the same manner as under Code
Section 704(c).
(d) TAX CREDITS. Allocations of tax credit, tax credit
recapture, and any items related thereto shall be allocated to the
Members and Economic Owners according to
18
their interests in such items as determined by the Managing Member
taking into account the principles of Treasury Regulation Section
1.704-1(b)(4)(ii).
(e) TAX ELECTIONS. Any elections or other decisions relating
to such allocations shall be made by the Managing Member in any manner
that reasonably reflects the purpose and intent of this Agreement.
Allocations pursuant to this Section 5.6 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 or Economic Owner's
Capital Account or share of profits, losses, other items or
distributions pursuant to any provisions of this Agreement.
(f) EXCESS NONRECOURSE LIABILITIES. For purposes of
determining the Members and Economic Owners' shares of excess
nonrecourse liabilities under Treasury Regulation Section 1.752-3, the
Members' and Economic Owners' percentage interests in Company profits
shall, if any Preferred Units are outstanding, be equal to their
percentage interests in Net Profits allocable pursuant to Section
5.3(a)(iii).
ARTICLE VI - MANAGEMENT
6.1 THE MANAGING MEMBER; DELEGATION OF AUTHORITY AND DUTIES.
(a) MEMBERS AND MANAGING MEMBER. Except as otherwise required
by the Act, the business and affairs of the Company shall be managed by
or under the direction of a "manager"(as that term is defined in the
Act) who shall be a Member (the "Managing Member"). The Managing Member
initially shall be Aavid Thermal Products, Inc. So long as any
Preferred Units remain outstanding, the Managing Member shall be
selected by the holders of a majority of the Preferred Units. If no
Preferred Units remain outstanding, the Managing Member shall be
selected by the holders of a majority of the Common Units. Except as
otherwise expressly provided for in this Agreement, the Members hereby
consent to the exercise by the Managing Member of all such powers and
rights conferred on them by the Act with respect to the management and
control of the Company. Notwithstanding the foregoing and except as
explicitly set forth in this Agreement, if a vote, consent or approval
of the Members is required by the Act or other applicable law with
respect to any act to be taken by the Company or matter considered by
the Managing Member, the Members agree that they shall be deemed to
have consented to or approved such act or voted on such matter in
accordance with the determination of the Managing Member on such act or
matter. No Member, in his or its capacity as a Member, shall have any
power to act for, sign for or do any act that would bind the Company.
The Managing Member shall devote such time and effort to the affairs of
the Company as he or it may deem appropriate for the oversight of the
management and affairs of the Company.
(b) DELEGATION BY MANAGING MEMBER. The Managing Member shall
have the power and authority to delegate to one or more other Persons
the Managing Member's rights and powers to manage and control the
business and affairs of the Company,
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including to delegate to agents and employees of a Member or the
Company (including Officers), and to delegate by a written agreement
with, or otherwise to, other Persons. The Managing Member may authorize
any Person (including, without limitation, any Member or Officer) to
enter into and perform under any document on behalf of the Company.
(c) RESIGNATION. The Managing Member may resign by delivering
his or its written resignation to the Company. Such resignation shall
be effective fourteen (14) business days following receipt of such
resignation by the Company unless some later time is specified in such
resignation.
(d) REMOVAL. The Members with the power to select the Managing
Member may remove any Managing Member at any time.
(e) VACANCY. If a vacancy in the position of Managing Member
should for any reason occur, a replacement Managing Member shall be
appointed by the Members with the power to select the Managing Member.
(f) COMPENSATION. The Managing Member shall not be entitled to
compensation from the Company in connection with its activities as
Managing Member; provided that the foregoing shall not prevent the
Managing Member from receiving reimbursement for out-of-pocket expenses
incurred by the Managing Member on behalf of the Company, receiving
distributions as a Member pursuant to this Agreement or otherwise
receiving compensation from the Company for actions unrelated to its
activities as Managing Member.
(g) COMMITTEES. The Managing Member may, from time to time,
designate one or more committees. Any such committee, to the extent
provided in the enabling resolution and until dissolved by the Managing
Member, shall have and may exercise any or all of the authority of the
Managing Member. At every meeting of any such committee, the presence
of a majority of all the representatives thereof shall constitute a
quorum, and the affirmative vote of a majority of the representatives
present shall be necessary for the adoption of any resolution. The
Managing Member may dissolve any committee at any time.
6.2 OFFICERS.
(a) DESIGNATION AND APPOINTMENT. The Managing Member may, from
time to time, employ and retain Persons as may be necessary or
appropriate for the conduct of the Company's business, including
employees, agents and other Persons (any of whom may be a Member) who
may be designated as Officers of the Company, with titles including but
not limited to "chief executive officer," "chairman," "president," vice
president," "treasurer," "secretary," "general manager," "director" and
"chief financial officer," as and to the extent authorized by the
Managing Member. Any number of offices may be held by the same person.
In its discretion, the Managing Member may choose not to fill any
office for any period as it may deem advisable. Officers need not be
residents of the State of Delaware or Members. Any Officers so
designated shall have
20
such authority and perform such duties as the Managing Member may, from
time to time, delegate to them. The Managing Member may assign titles
to particular Officers. Each Officer shall hold office until his
successor shall be duly designated and shall qualify or until his death
or until he shall resign or shall have been removed in the manner
hereinafter provided. The salaries or other compensation, if any, of
the Officers of the Company shall be fixed from time to time by the
Managing Member.
(b) RESIGNATION/REMOVAL. Any Officer may resign as such at any
time. Such resignation shall be made in writing and shall take effect
at the time specified therein, or if no time is specified, at the time
of its receipt by the Company. The acceptance of a resignation shall
not be necessary to make it effective, unless expressly so provided in
the resignation. Any Officer may be removed as such, either with or
without cause at any time by the Managing Member. Designation of an
Officer shall not of itself create any contractual or employment
rights.
(c) DUTIES OF OFFICERS GENERALLY. The Officers, in the
performance of their duties as such, shall owe to the Company duties of
loyalty and due care of the type owed by the officers of a corporation
to such corporation and its stockholders under the laws of the State of
Delaware.
(d) CHIEF EXECUTIVE OFFICER. Subject to the powers of the
Managing Member, the Chief Executive Officer of the Company shall be in
general and active charge of the entire business and affairs of the
Company, and shall be its Chief Executive Officer and chief policy
making Officer.
(e) CHIEF FINANCIAL OFFICER. The chief financial officer, if
any, 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 chief financial officer 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, and shall deposit all moneys and other valuable effects in the
name and to the credit of the Company in such depositories as may be
designated by the Managing Member. The chief financial officer shall
have such other powers and perform such other duties as may from time
to time be prescribed by the chief executive officer or the Managing
Member.
ARTICLE VII - EXCULPATION AND INDEMNIFICATION
7.1 PERFORMANCE OF DUTIES; NO LIABILITY OF MEMBER AND OFFICERS. No Member (including the Managing Member) shall have any duty to the Company or any Member of the Company except as expressly set forth herein or in other written agreements. No Member (including the Managing Member) or Officer of the Company shall be liable to the Company or to any Member for any loss or damage sustained by the Company or to any Member, unless the loss or damage shall have been the result of gross negligence, fraud or intentional misconduct by the Member (including the Managing Member) or Officer in question or breach of such Person's duties pursuant to this Agreement. In
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performing such Person's duties, each such Person 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: one or more Officers or employees of the Company; any attorney, independent accountant, appraiser or other expert or professional employed or engaged by or on behalf of the Company, the Managing Member or any committee of the Managing Member; or any other Person who has been selected with reasonable care by or on behalf of the Company, the Managing Member or any committee of the Managing Member in each case as to matters which such relying Person reasonably believes to be within such other Person's 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 Act. No Member (including the Managing Member) or Officer of the Company 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 a Member or Officer of the Company or any combination of the foregoing.
7.2 COMPETING ACTIVITIES. Except as may otherwise be agreed in writing and subject to the duties and obligations of the Managing Member and Officers to the Company:
(a) the Members and the officers, directors, security holders,
partners, members, managers, agents, employees and Affiliates of each
of them, may engage or invest in, own and/or manage, independently or
with others, any business activity of any type or description,
including without limitation those that might be in direct or indirect
competition with the Company;
(b) neither the Company nor any other Member shall have any
right in or to any of such other ventures or activities or to the
income or proceeds derived therefrom;
(c) neither the Members nor the officers, directors, security
holders, partners, members, managers, agents, employees or Affiliates
of any of them shall be obligated to present any investment opportunity
or prospective economic advantage to the Company, even if the
opportunity is of the character that, if presented to the Company,
could be taken advantage of by the Company; and
(d) the Members and the officers, directors, security holders,
partners, members, managers, agents, employees and Affiliates of each
of them shall have the right to hold any investment opportunity or
prospective economic advantage for their own account or to recommend
such opportunity to Persons other than the Company.
7.3 TRANSACTIONS BETWEEN THE COMPANY AND THE MEMBERS. Notwithstanding that it may constitute a conflict of interest, the Members or their Affiliates may engage in any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service or the establishment of any salary, other compensation or other terms of employment) with the Company so long as such transaction is approved by the Managing Member, or if such transaction is with the Managing Member or one of its Affiliates, the written consent of all the disinterested Members. No Member shall be deemed by reason of Section 6.1 to have approved any such transaction.
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7.4 INDEMNIFICATION. Each person who at any time shall be, or shall have been, a Member, officer, employee or agent of the Company, or any person who, while a Member, officer, employee or agent of the Company, is or was serving at the request of the Company as a director, member, manager, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another Person, shall be entitled to indemnification as and to the fullest extent permitted by the provisions of Delaware Law or any successor statutory provisions, as from time to time amended. The foregoing right of indemnification shall not be deemed exclusive of any other rights to which one to be indemnified may be entitled as a matter of law or under this Agreement, any other agreement, by vote of the Members or otherwise, both as to any action in an official capacity and as to action in another capacity while holding such office. Any repeal of this Section 7.4 shall be prospective only, and shall not adversely affect any right of indemnification existing at the time of such repeal or modification or thereafter arising as a result of acts or omissions prior to the time of such repeal or modification.
7.5 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE COMPANY. Without limiting the provisions of Section 7.4, subject the Section 7.7, the Company shall indemnify, to the full extent not prohibited by law, any person who was or is a party or is threatened to be made a party (including a witness) to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a Member, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, member, manager, officer, employee or agent of another entity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
7.6 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Without limiting the provisions of Section 7.4, subject to Section 7.7, the Company shall, to the full extent not prohibited by law, indemnify any person who was or is a party or is threatened to be made a party (including a witness) to any threatened, pending or completed action, suit or proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a Member, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, member, manager, officer, employee or agent of another entity against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was
23
brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.
7.7 AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this Article VII (unless ordered by a court) shall be made by the Company as permitted by Delaware Law or as authorized in the specific case upon a determination that indemnification is proper in the circumstances because it is permitted under Delaware Law or the applicable standards of conduct set forth in Section 7.5 or Section 7.6, as the case may be, have been met. Such determination shall be made, in the case of any Member or officer, employee or agent, (i) by a vote of the disinterested Members or (ii) if a majority of Members are not disinterested by independent legal counsel in a written opinion. To the extent, however, that the Member, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case.
7.8 GOOD FAITH DEFINED. For purposes of any determination under this Article VII, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any of the other Members, officers, employees or committees of the Company or by any other person as to matters the person seeking indemnification reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of assets from which distributions to the Members might properly be paid. The provisions of this Section 7.8 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standards of conduct set forth in the provisions of Delaware Law, or in Section 7.5 or Section 7.6, as the case may be.
7.9 INDEMNIFICATION BY A COURT. Notwithstanding any contrary determination in the specific case under Section 8.4, and notwithstanding the absence of any determination thereunder, any Member, officer, employee or agent may apply to any court of competent jurisdiction for indemnification to the extent otherwise permissible under Delaware Law or this Article VII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the Member, officer, employee or agent is proper in the circumstances because it is permitted under the provisions of the Delaware Law, or the Member, officer, employee or agent has met the applicable standards of conduct set forth in Section 7.5 or Section 7.6, as the case may be. Notice of any application for indemnification pursuant to this Section 7.9 shall be given to the Company promptly upon the filing of such application.
7.10 ADVANCEMENT OR REIMBURSEMENT OF EXPENSES. The Company shall pay in advance or reimburse expenses actually or reasonably incurred or anticipated by such
24
Member or officer in connection with his appearance as a witness or other participation in a proceeding whether or not such Member or officer is a named defendant or a respondent in the proceeding. To obtain indemnification or an expense advance, the person requesting indemnification shall submit to the Company a written request with such information as is reasonably available to him. If the expense advance is to be paid prior to final disposition of the proceeding, there shall be included a written statement of such person's good faith belief that he has met the necessary standard of conduct under the Delaware Law and an undertaking to repay any amount paid if it is ultimately determined that those conduct requirements were not met.
7.11 NONEXCLUSIVITY AND SURVIVAL OF INDEMNIFICATION. The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this Article VII shall not be deemed exclusive of any other rights to which one seeking indemnification and advancement of expenses may be entitled under this Agreement, any other agreement, by vote of Members or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the Company that indemnification of any person specified in this Article VII shall be made to the fullest extent permitted by law. The provisions of this Article VII shall not be deemed to preclude the indemnification of any person who is not specified in this Article VII but whom the Company has the power or obligation to indemnify under the provisions of the Delaware Act or otherwise.
7.12 INSURANCE. The Company may purchase and maintain insurance on behalf of any person who is or was a Member, officer, employee or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, employee or agent of an entity against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Company would have the power or the obligation to indemnify him against such liability under the provisions of this Article VII.
7.13 SAVINGS CLAUSE. If this Article VII 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 Person indemnified pursuant to this Article VII as to costs, charges and expenses (including reasonable attorneys' fees), judgments, fines and amounts paid in settlement with respect to any such proceeding, appeal, inquiry or investigation to the full extent permitted by any applicable portion of this Article VII that shall not have been invalidated and to the fullest extent permitted by applicable law.
ARTICLE VIII - TAXES
8.1 TAX RETURNS. The Company shall cause to be prepared and filed all necessary federal, state and local income tax returns for the Company, and shall make any elections the Managing Member may deem appropriate and in the best interests of the Members. Each Member shall furnish to the Company 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.
8.2 TAX MATTERS PARTNER. The Managing Member shall be the "tax matters partner" of the Company pursuant to section 6231(a)(7) of the Code (the "Tax Matters Member"). The Tax Matters Member 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. The Tax Matters Member is authorized to
25
represent the Company before the Internal Revenue Service and any other governmental agency with jurisdiction, and to sign such consents and to enter into settlements and other agreements with such agencies as the Managing Member deems necessary or advisable.
ARTICLE IX - BOOKS, REPORTS AND COMPANY FUNDS
9.1 MAINTENANCE OF BOOKS. The Company shall keep books and records of accounts in accordance with U.S. generally accepted accounting principles and shall keep minutes of the proceedings of its Members and each committee. The Fiscal Year shall be the accounting year of the Company for financial reporting purposes.
9.2 MEMBER TAX INFORMATION. Within ninety (90) days after the end of each Taxable Year, the Managing Member or Officers will cause to be delivered to each Person who was a Member or Economic Owner at any time during such Taxable Year a Form K-1 and such other information, if any, with respect to the Company as may be necessary for the preparation of such Member's or Economic Owner's federal, state and local income tax returns, including a statement showing such Member's or Economic Owner's share of income, gain or loss, expense and credits for such Taxable Year for federal income tax purposes. Any deficiency for taxes imposed on any Member or Economic Owner (including penalties, additions to tax or interest imposed with respect to such taxes) shall be paid by such Member or Economic Owner, and if paid by the Company, shall be recoverable from such Member or Economic Owner pursuant to Section 12.10; provided, however, that this sentence shall not be construed to prevent the operation of Sections 5.5 or 5.2.
ARTICLE X - TRANSFERS AND OTHER EVENTS
10.1 ASSIGNMENT BY MEMBERS. Each Member may sell, assign, transfer, exchange, mortgage, pledge, grant a security interest in, or otherwise dispose of or encumber (including by operation of law) all or any part of such Member's Membership Interest (including any Units or other Economic Interest) (each such event, a "Transfer"), provided that no such Transfer will be effective unless and until the transferee shall have executed and delivered to the Company an agreement in form and substance satisfactory to the Managing Member to be bound by the provisions of this Agreement applicable to the Membership Interest Transferred, and no such assignment shall relieve the assignor of its obligations hereunder unless such assignee is admitted as a substitute Member pursuant to Section 10.3.
10.2 VOID ASSIGNMENT. Any Transfer by any Member in contravention of this Agreement shall be void and ineffectual and shall not bind or be recognized by the Company or any other party. In the event of any Transfer in contravention of this Agreement, the purported transferee shall have no right to any profits, losses or distributions of the Company or any other rights of a Member.
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10.3 SUBSTITUTED MEMBER.
(a) CONDITIONS. An assignee of any Units or other interests in
the Company (or any portion thereof), in accordance with the provisions
of this Article X, shall become a substituted Member entitled to all
the rights of a Member with respect to such assigned interest if and
only if (i) the assignor gives the assignee such right, (ii) the
Managing Member has granted its prior written consent to such
assignment and substitution, which consent may be withheld in the sole
discretion of the Managing Member; (iii) the Managing Member has taken
such action, if any, as may be necessary or required to maintain the
status of the Company as a partnership for federal income tax purposes;
and (iv) the assignee has agreed in writing to be bound by the
provisions of this Agreement.
(b) RECORD HOLDER. The Company shall be entitled to treat the
record owner of any Units or other interest in the Company as the
absolute owner thereof and shall incur no liability for distributions
of cash or other property made in good faith to such owner until such
time as a written assignment of such Units or other interest in the
Company, which assignment is consented to by the Managing Member (which
consent may be withheld in the Managing Member's sole discretion), is
permitted pursuant to the terms and conditions of Section 10.1 and this
Section 10.3, has been received and accepted by the Managing Member and
has been recorded on the books of the Company.
(c) SCHEDULE A. Upon the admission of a substituted Member,
Schedule A attached hereto shall be amended to reflect the name,
address and Units and other interests in the Company of such
substituted Member and to eliminate the name and address of and other
information relating to the assigning Member with regard to the
assigned Units and other interests in the Company.
10.4 EFFECT OF ASSIGNMENT. Following an assignment of an interest that is permitted under this Article X, the transferee of such interest shall be treated as having made all of the Capital Contributions in respect of, and received all of the distributions received in respect of, such interest, shall succeed to the Capital Account associated with such interest and shall receive allocations and distributions under Articles V and XI in respect of such interest as if such transferee were a Member.
10.5 LEGEND. The Certificated Interests will bear the following legend:
"THE INTEREST REPRESENTED BY THIS CERTIFICATE WAS ORIGINALLY ISSUED AS
OF FEBRUARY 2, 2000, HAS 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. THE TRANSFER OF THE INTEREST
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED
IN A LIMITED LIABILITY COMPANY AGREEMENT, AS AMENDED, GOVERNING THE
ISSUER (THE "COMPANY"), BY AND AMONG CERTAIN INVESTORS. A COPY OF SUCH
CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE."
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10.6 TRANSFER FEES AND EXPENSES. The transferor and transferee of any Membership Interest shall be jointly and severally obligated to reimburse the Company for all reasonable expenses (including attorneys' fees and expenses) of any Transfer or proposed Transfer of such interest, whether or not consummated.
10.7 OTHER LIMITATIONS. 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 shall be permitted or recognized (within the meaning of Treasury Regulation Section 1.7704-1(d)) by the Company or the Members 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)).
10.8 EFFECTIVE DATE. Any Transfer and any related admission of a Person as a Member in compliance with this Article X shall be deemed effective on such date that the transferee or successor in interest complies with the requirements of this Agreement.
10.9 EFFECT OF INCAPACITY. Except as otherwise provided herein, the Incapacity of a Member shall not dissolve or terminate the Company. In the event of such Incapacity, the executor, administrator, guardian, trustee or other personal representative of the Incapacitated Member shall be deemed to be the assignee of such Member's Economic Interest and may, subject to the terms and conditions set forth in Section 10.3, become a substituted Member.
10.10 SPECIAL CONSENT TO CERTAIN SIGNIFICANT EVENTS. The consent of the holders of a majority of the Preferred Units, voting together as a separate class of Units, shall be required to approve (a) any Public Offering of any Units of the Corporation, or (b) any Change in Control.
ARTICLE XI - DISSOLUTION, LIQUIDATION AND TERMINATION
11.1 DISSOLUTION. The Company shall be dissolved and its affairs shall be wound up on the unanimous vote of the Members or as otherwise provided under the Delaware Act.
11.2 LIQUIDATION AND TERMINATION. On dissolution of the Company, the Managing Member or such other or additional Member or Members as designated by the Managing Member shall act as liquidator(s). The liquidator(s) 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 liquidator(s) shall continue to operate the Company properties with all of the power and authority of Managing Member and Members, subject to the power of the Managing Member to remove and replace such liquidator(s). The steps to be accomplished by the liquidator(s) are as follows:
(a) As promptly as possible after dissolution and again after
final liquidation, the liquidator(s) shall cause a proper accounting to
be made by a recognized firm of certified public accountants 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.
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(b) The liquidator(s) 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) or otherwise make adequate provision for payment and
discharge thereof (including, without limitation, the establishment of
a cash fund for contingent liabilities in such amount and for such term
as the liquidator may reasonably determine).
(c) After satisfying (whether by payment or reasonable
provision for payment) the debts and liabilities of the Company to the
extent required by law, including without limitation debts and
liabilities to Members who are creditors of the Company to the extent
permitted by law, the remaining assets shall be distributed to the
Members in accordance with their positive Capital Account balances.
Such liquidating distributions shall be made by the end of the Company's taxable year in which the Company is liquidated, or, if later, within ninety (90) days after the date of such liquidation. The liquidator(s) shall cause only cash, evidences of indebtedness and other securities to be distributed in any liquidation. The distribution of cash and/or property to a Member in accordance with the provisions of this Section 11.2 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member of its interest in the Company and all the Company's property. To the extent that a Member returns funds to the Company, it has no claim against any other Member for those funds.
11.3 CANCELLATION OF CERTIFICATE. On completion of the distribution of Company assets as provided herein, the Company is terminated, and shall file a certificate of cancellation with the Secretary of State of the State of Delaware, cancel any other filings made pursuant to Section 2.1 and take such other actions as may be necessary to terminate the Company.
ARTICLE XII - GENERAL/MISCELLANEOUS PROVISIONS
12.1 OFFSET. Whenever the Company is to pay any sum to any Member, any amounts that Member owes to the Company may be deducted from that sum before payment; provided that the full amount that would otherwise be distributed shall be debited from the Member's Capital Account pursuant to Section 4.1.
12.2 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 Schedule A, or such other address (or facsimile number) as that Member may specify by notice to the other Members. Any notice, request or consent to the Company or the Managing Member must be given to the Managing Member or, if appointed, 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
29
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.
12.3 ENTIRE AGREEMENT. This Agreement and other written agreements among the Members of even date herewith constitute the entire agreement among the Members relating to the Company and supersedes all prior contracts or agreements with respect to the Company, whether oral or written.
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 any provision hereof may be amended or modified from time to time only by a written instrument adopted by the Managing Member and may be amended only with the written consent of the Managing Member; provided, however, that (a) except as otherwise expressly provided herein, an amendment or modification (other than amendments or modifications adding new classes of interests or issuing Additional Interests) (x) reducing disproportionately a Member's Units or other interest in profits or losses or in distributions, (y) increasing a Member's Capital Contribution or (z) increasing any other obligation of a Member to the Company in respect of any Membership Interest in a manner which is disproportionately adverse to such Member relative to such obligations of other Members in respect of Membership Interests of the same class or type, shall in each case be effective only with that Member's consent or (b) an amendment or modification reducing the required interest for any consent or vote in this Agreement shall be effective only with the consent or vote of Members having the interest theretofore required. Notwithstanding the preceding sentence, (i) the Managing Member may amend and modify the provisions of this Agreement (including Article V) and Schedule A hereto to the extent necessary to reflect the issuance of interests (including new classes of interests) in the Company, and admission or substitution of any Member, permitted under this Agreement and (ii) notwithstanding anything to the contrary in this Agreement, this Agreement may be amended or modified to the extent necessary to effectuate the issuance of Additional Interests pursuant to Section 3.4 at the direction of the Managing Member.
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 GOVERNING LAW. THIS 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 AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between the provisions of this Agreement and any provision of the Certificate or any mandatory provision of the Act, the applicable provision of the Certificate or the Act shall control.
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12.8 FURTHER ASSURANCES. In connection with this 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 Agreement and those transactions.
12.9 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any right it may have to demand any distributions or withdrawal of property from the Company or to maintain any action for dissolution (except pursuant to Section 18-802 of the Act) of the Company or for partition of the property of the Company.
12.10 NOTICE TO MEMBERS OF PROVISIONS. By executing this Agreement, each Member acknowledges that it has actual notice of (a) all of the provisions hereof (including, without limitation, the restrictions on the transfer set forth in Article X) and (b) all of the provisions of the Certificate.
12.11 COUNTERPARTS. This Agreement may be executed in multiple 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.
12.12 CONSENT TO JURISDICTION. Each Member irrevocably submits to the non-exclusive jurisdiction of the United States District Court for the District of Delaware and the state courts of the State of Delaware, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each Member further agrees that service of any process, summons, notice or document by U.S. certified or registered mail to such Member's respective address set forth above shall be effective service of process in any action, suit or proceeding in Illinois with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each Member irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the United States District Court for the District of Delaware or the state courts of the State of Delaware, and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.
12.13 HEADINGS. The headings used in this Agreement are for the purpose of reference only and will not otherwise affect the meaning or interpretation of any provision of this Agreement.
12.14 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.
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12.15 SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
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IN WITNESS WHEREOF, the Members have executed this Agreement as of the date first set forth above.
MANAGING MEMBER:
AAVID THERMAL PRODUCTS, INC.
By: /s/
------------------------
Name:
Title:
MEMBER:
HEAT HOLDINGS II CORP.
By: /s/ Daniel H. Blumenthal
------------------------
Name: Daniel H. Blumenthal, Vice President
Title:
THERMALLOY INVESTMENT CO., INC.
By: /s/
------------------------
Name:
Title:
THERMALLOY, INC.
By: /s/
------------------------
Name:
Title:
41712.6
33
SCHEDULE A
Total $101,333,333
Capital Preferred Preferred Common Common Members Notice Address Contribution Capital Units Contribution Units ------- -------------- ------------ ------------ --------- ------------ ------ Aavid Thermal One Eagle Square All of its assets and liabilities, $ 82,501 $ 21,711 Products, Inc. Concord, NH 03301 other than the stock of
Thermalloy Investment Co, Inc.
Thermalloy Investment One Eagle Square All of its assets and liabilities, $ 2,544 $ 646 Co., Inc. Concord, NH 03301 other than the stock of
Thermalloy, Inc.
Thermalloy, Inc. One Eagle Square All of its membership units $ 1,311 $ 2,977
Concord, NH 03301 in Aavid Thermalloy SW, LLC
Heat Holdings II Corp. c/o Willis Stein & $4,813,333 (cash) $ 0 0 $4,813,333 481,334
Partners Management
227 West Monroe St.
Suite 4300
Chicago, IL 60606
Total $96,266,667 96,267 $5,066,666 50,666
1