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Hirschfeld Industries, Inc.
|
S-1
Nov 16, 5:30 PM ET
Hirschfeld Industries, Inc. S-1
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Contents
260
ARTICLE 1 DEFINITIONS
ARTICLE 2 CONSENT TO ISSUANCE; PURPOSE; TERM; CONFLICTS OF INTEREST
SECTION 2.1 Consent to Issuance of Units; Admission of New Member.
SECTION 2.2 Company Name.
SECTION 2.3 Registered Office; Registered Agent; Principal Office in the United States; Other Offices.
SECTION 2.4 Purpose.
SECTION 2.5 Foreign Qualification.
SECTION 2.6 Term.
SECTION 2.7 Fiscal Year.
SECTION 2.8 No State-Law Partnership.
SECTION 2.9 Consent and Acknowledgment of Legend.
SECTION 2.10 Affiliate Contracts.
ARTICLE 3 MANAGEMENT; MEETINGS AND ACTIONS; COMPENSATION; LIABILITY OF MANAGERS
SECTION 3.1 Management.
SECTION 3.2 Appointment of Managers.
(a) for so long as Martifer shall hold any Units, three (3) individuals will be appointed by Martifer (the “Martifer Managers”) and shall initially be those individuals set forth as such on Schedule II attached hereto; and
(b) for so long as Hirschfeld shall hold any Units, three (3) individuals will be appointed by Hirschfeld (the “Hirschfeld Managers”) and shall initially be those individuals set forth as such on Schedule II attached hereto.
SECTION 3.3 Number of Managers; Appointment of Additional Managers.
(a) Subject to Section 3.2 hereof, the number of Managers may be increased or decreased from time to time by consent of a Majority Interest; provided, however, that for so long as each of Martifer and Hirschfeld owns 50% of the Units, any such increase or decrease shall be in increments of two.
(b) (i) Any vacancy created by an increase described in Section 3.3(a) hereof shall be filled by a Majority Interest; provided, however, that for so long as each of Martifer and Hirschfeld owns 50% of the Units, any such vacancies shall be filled by the appointment of an equal number of Martifer Managers and an equal number of Hirschfeld Managers, each in the manner set forth in Section 3.4(d)(i) or 3.4(d)(ii) hereof, as applicable.
(c) (i) Any vacancy created by a mandatory resignation described in Section 3.4(b)(i) hereof shall be filled by the Assignee of all of Martifer’s Units if such Assignee holds at least 50% of the outstanding Units, or by consent of a Majority Interest if such Assignee does not hold at least 50% of the outstanding Units.
SECTION 3.4 Term; Mandatory Resignations; Removal; Vacancies.
(a) Term.
(b) Mandatory Resignations.
(i) In the event Martifer shall not hold any Units, all Martifer Managers shall immediately resign such that, thereafter, there shall be no Martifer Managers, and Martifer will have no further rights to direct the appointment of any Managers.
(ii) In the event Hirschfeld shall not hold any Units, all Hirschfeld Managers shall immediately resign such that, thereafter, there shall be no Hirschfeld Managers, and Hirschfeld will have no further rights to direct the appointment of any Managers.
(c) Removal.
(i) Any Manager may be removed for cause by the Board (which vote or consent shall exclude the subject Manager), such “cause” being limited to: (A) any action or omission by the subject Manager that constitutes fraud, deceit, or wrongful taking against the Company or any of its subsidiaries as reasonably determined by the Board; (B) any willful misconduct or gross negligence of the subject Manager in connection with the performance of any of his or her duties; (C) the entry of any legal order that has the effect of precluding the subject Manager from performing his or her duties for more than 30 consecutive Days; (D) the conviction of the subject Manager of, or the entry of a plea of guilty or nolo contendere by the Subject Manager to, a felony; or (E) any moral turpitude of, or bankruptcy, insolvency or general assignment for the benefit of his or her creditors by, the subject Manager.
(ii) Any Martifer Manager may be removed without cause only by Martifer. Any Hirschfeld Manager may be removed without cause only by Hirschfeld. Any Manager who was appointed as such pursuant to Section 3.3(b) or 3.3(c) hereof and
is not a Martifer Manager or a Hirschfeld Manager may be removed without cause only by the Member who appointed such Manager or, if such Manager was not appointed by any single Member, by consent of a Majority Interest.
(d) Vacancies.
(i) Any vacancy created by the resignation, death or removal for cause or without cause of a Martifer Manager (except for a resignation pursuant to Section 3.4(b)(i) hereof) shall be filled with a Martifer Manager, who shall be an individual appointed by Martifer.
(ii) Any vacancy created by the resignation, death or removal for cause or without cause of a Hirschfeld Manager (except for a resignation pursuant to Section 3.4(b)(ii) hereof) shall be filled with a Hirschfeld Manager, who shall be an individual appointed by Hirschfeld.
(iii) Any vacancy created by the resignation, death or removal for cause or without cause of a Manager who was appointed as such pursuant to Section 3.3(b) or 3.3(c) hereof and is not a Martifer Manager or a Hirschfeld Manager shall be filled with an individual nominated by the Member who appointed such Manager or, if such Manager was not appointed by any single Member, by an individual nominated by the Board and approved and elected by a Majority Interest.
SECTION 3.5 Actions by Board; Meetings; Committees; Certain Actions; Observers.
(a) The Board shall hold at least four regularly scheduled meetings during each Fiscal Year. Meetings of the Board shall be held (i) at the time and place fixed by resolution of the Board or (ii) upon the call of the Chairman of the Board and the Vice Chairman of the Board. The Secretary or officer of the Company performing his or her duties shall give at least 24 hours’ notice of all meetings of the Board to be held by means of conference telephone or other communications equipment, and at least 96 hours’ notice of all meetings of the Board to be held in person, all such notices to be given by telephone, mail, telegram, facsimile, email or hand delivery to the last known number or address of each Manager entitled to vote at any such meeting, and notice need not be given of regular meetings held at such time as may be fixed by a resolution of the Board. Meetings of the Board may be held at any time without notice if all Managers entitled to vote at any such meeting are present, in person or by proxy, or if those not present waive notice either before or after the meeting.
(b) With respect to all matters, unless otherwise expressly provided herein, the Board will act by a Majority Vote. In the event that one or more Managers appointed by any single Member is not present at a duly convened meeting of the Board of Managers, the participating Managers that were appointed by the same single Member shall be entitled to exercise all rights and privileges, including voting rights, of such non-participating Manager(s). For purposes of this Section 3.5(b), if a Member holds a Majority Interest, then any Manager appointed by a Majority Interest pursuant to this Agreement shall be deemed to have been appointed by such Member.
(c) Any action required to be, or which may be, voted on, consented to or approved by the Board may be taken without a meeting, without prior notice and without taking a vote if a consent or consents in writing, setting forth the action so taken, are signed by Managers having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all the Managers entitled to vote thereon were present and voted; provided, however, that no such action shall be effective unless the Board shall have sent to each Manager (including, without limitation, via electronic mail) a copy of the consent with respect to such proposed action at least 36 hours prior to the taking of such action. A consent transmitted by electronic transmission by a Manager or by a Person or Persons authorized to act for a Manager shall be deemed to be written and signed for purposes of this Section 3.5(c).
(d) Meetings of the Board may be held by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.5(d) shall constitute presence in person at the meeting. Managers and committee members shall be reimbursed by the Company for all reasonable and documented out-of-pocket expenses incurred in connection with the attendance of any meetings.
(e) The Board may designate one or more committees and appoint members of the Board to serve on such committee or committees; provided, however, that for so long as each of Martifer and Hirschfeld owns 50% of the Units, any such committees shall be comprised of an equal number of Martifer Managers and Hirschfeld Managers.
(f) Notwithstanding anything to the contrary set forth in this Agreement, including, without limitation, Section 3.5(b) hereof, neither the Board nor any committee of the Board shall perform or engage in, or cause or permit the Company, or any of its officers or employees on behalf of the Company, to perform or engage in, any of the following acts or transactions, unless approved by a Unanimous Vote:
(i) make any material change to the Company’s primary line of business;
(ii) authorize, issue or enter into any agreement, plan or other commitment providing for the issuance (contingent or otherwise) of any Units or other equity interests in the Company, or any securities convertible into or exchangeable or exercisable for any such Units or other equity interests in the Company;
(iii) enter into any transaction with an Affiliate of the Company (other than a subsidiary of the Company) (including, without limitation, the purchase, sale, lease or exchange of any property, or rendering of any service or modification or amendment of any existing agreement or arrangement);
(iv) directly or indirectly redeem, purchase or otherwise acquire any Units (including warrants, options or other securities or rights to acquire any such Units); provided, however, that only a Majority Vote shall be required for the Company to redeem, purchase or otherwise acquire any Units on a pro rata basis from all Members in accordance with their respective Sharing Ratios;
(v) (A) sell, assign, transfer, lease or otherwise Dispose of, in any single transaction or related series of transactions, fixed assets with the greater of a Book Value or fair market value in excess of two hundred thousand dollars ($200,000) in the aggregate, (B) enter into any material joint venture or strategic alliance with a third party or (C) merge or consolidate the Company or any subsidiary, whether or not the Company or such subsidiary survives such merger or consolidation;
(vi) acquire, or permit any subsidiary to acquire, any material business (whether by a purchase of fixed assets, purchase of equity interests, merger or otherwise) with the greater of a Book Value or fair market value in excess of two hundred thousand dollars ($200,000) in the aggregate;
(vii) approve the Company’s annual budget for each Fiscal Year;
(viii) approve of or make any loans to Members, their respective Affiliates, any Managers, officers or employees of the Company and its subsidiaries, excluding travel and similar advances made in the ordinary course of business;
(ix) commence a voluntary case under any applicable bankruptcy, insolvency or other similar Law now or hereafter in effect; or consent to the entry of an order for relief in an involuntary case, or to the conversion of any involuntary case to a voluntary case under any such Law; or consent to the appointment of or taking of possession by a receiver, trustee or other custodian for all or substantially all of its property; or make a general assignment for the benefit of creditors or wind up, liquidate or dissolve the Company or any of its subsidiaries;
(x) select or replace the Company’s independent public accountants or adopt any new or materially modify any existing accounting policy (including a change to the Company’s Fiscal Year), principle or practice (including internal controls) or financial reporting system of the Company or its subsidiaries, except as otherwise required by Law or generally accepted accounting principles in effect in the United States from time to time; or
(xi) commit to do any of the foregoing or delegate authority to, or permit, any Person to approve the taking of any of the actions set forth above.
(g) Each of Martifer and Hirschfeld shall have the right at any time and from time to time to appoint up to two (2) representatives (the “Observers”), who shall be entitled to participate in a non-voting observer capacity at any or all meetings of the Board and all committees thereof. Such right shall from time to time be exercisable by delivery to the Company of written notice from the appointing Member specifying the name of any such Observer, subject to the Company’s right to approve such Observer (such approval not to be unreasonably withheld, conditioned or delayed). No Observer, while acting as such, shall be or be deemed a Manager of the Company or, in his or her capacity as an Observer, have any ability to direct the management of the Company, whether by voting or consenting with respect to any action to be taken or otherwise. The appointing Member may at any time, by written notice to the Company, revoke the appointment of any Observer, effective immediately or at any later time specified in such written notice, and at such time all of such Observer’s rights under this
Section 3.5 shall be terminated. The Observers shall initially be those individuals set forth as such on Schedule II attached hereto.
(h) Each Observer shall be entitled to receive all notices, minutes, documents and information furnished in connection with each such meeting to the members of the Board at the time that such Board members are furnished such notices, minutes, documents and information, or as promptly as practicable thereafter, and notice of any action taken by written consent approving a transaction; provided, however, that each Observer shall prior thereto have entered into a nondisclosure agreement, in form and substance reasonably satisfactory to the Company, and shall have agreed that such information will only be used in its role as an Observer and not in any other role or for any other purpose. Notwithstanding the foregoing, such observer rights shall not extend to (i) meetings at which matters covered by any legally recognized privilege are to be discussed and the presence of the Observers could be reasonably expected (based on advice of the Company’s legal counsel) to lead to a loss of such privilege or (ii) information covered by any legally recognized privilege if the dissemination of such information to the Observers could be reasonably expected (based on advice of the Company’s legal counsel) to lead to the loss of such privilege. The Member appointing each Observer shall be responsible for all costs and expenses of such Observer in connection with such Observer’s attendance at such meetings. These observer rights shall be for the sole benefit of Martifer and Hirschfeld and shall not be transferable to any other Person.
(i) At each regularly scheduled meeting of the Board, the agenda shall include updates from at least one Martifer Manager and at least one Hirschfeld Manager, and a general discussion by the Board, with respect to the current status of the market in [****] for towers [****] for wind turbine markets, and any other metal-based components reasonably related to wind turbine markets.
SECTION 3.6 Compensation.
SECTION 3.7 Appointment and Removal of Officers.
(a) The officers of the Company shall include a Chairman of the Board, a Vice Chairman, a Chief Executive Officer and a Secretary, each of whom shall be appointed by the Board in accordance with Section 3.7(b) hereof. In addition, the Board may appoint such other officers, and assign titles to any such individuals, as it deems advisable from time to time. Each officer shall have such duties and authority as may be delegated to such officer from time to time by the Board. In addition, unless inconsistent with the duties and authority specifically delegated to an officer by the Board, if the title of any officer is one commonly used for officers
of a business corporation formed under the Act, the assignment of such title shall constitute the delegation to such person of the duties and authority that are normally associated with that office for business corporations formed under the Act. Any officer appointed pursuant to Section 3.7(b) hereof may be removed with or without cause only by the Member who appointed such officer. Any other officer may be removed with or without cause by a Majority Vote.
(b) The Board shall appoint the Chairman of the Board, Vice Chairman of the Board, Chief Executive Officer and Secretary of the Company at the direction of Martifer and Hirschfeld, as the case may be, as follows: (i) during the three-year period beginning on the Effective Date (the “First Period”), Martifer shall have the right to direct the appointment of the Chief Executive Officer and the Vice Chairman of the Board of the Company and Hirschfeld shall have the right to direct the appointment of the Chairman of the Board and the Secretary of the Company; (ii) during the three-year period beginning immediately upon the expiration of the First Period (the “Second Period”), Hirschfeld shall have the right to direct the appointment of the Chief Executive Officer and the Vice Chairman of the Board of the Company and Martifer shall have the right to direct the appointment of the Chairman of the Board and the Secretary of the Company; (iii) during the three-year period beginning immediately upon the expiration of the Second Period, Martifer shall again have the right to direct the appointment of the Chief Executive Officer and the Vice Chairman of the Board of the Company and Hirschfeld shall again have the right to direct the appointment of the Chairman of the Board and the Secretary of the Company; and (iv) thereafter, the right to direct the appointment of the Chief Executive Officer and the Vice Chairman of the Board of the Company, on the one hand, and the Chairman of the Board and Secretary of the Company, on the other hand, shall continue to alternate in this manner for each successive three-year period.
(c) Each officer appointed pursuant to Section 3.7(b) hereof shall, in the event that the Member who appointed such officer no longer holds any Units, be deemed to have resigned, without any action required by the Board, the Members or the relevant officer, from all offices to which such person was appointed by such former Member, effective for all purposes as of the time that such Member no longer holds any Units; provided, however, that in the event that the Assignee of such former Member’s Units holds at least 50% of the outstanding Units, then such Assignee shall have the right to fill any vacancies created pursuant to this Section 3.7(c) and shall have the same rights to direct the appointment of officers pursuant to Section 3.7(b) hereof as such former Member had immediately prior to Disposing of its Units; and further provided, however, that if such Assignee does not hold at least 50% of the outstanding Units, then any vacancies created pursuant to this Section 3.7(c) shall be filled by a Majority Interest.
SECTION 3.8 Liability of Managers to Third Parties.
ARTICLE 4 MEMBERS; DISPOSITIONS OF UNITS; PREEMPTIVE RIGHTS; WITHDRAWAL; LIABILITY
SECTION 4.1 Members.
(a) The Members of the Company are Martifer, which was admitted as a Member of the Company upon its execution of the Original Agreement on June 17, 2009; and Hirschfeld, which was admitted as a Member of the Company effective as of the Effective Date. There is only one class of Units of the Company.
SECTION 4.2 Representations and Warranties.
(a) Each Member hereby represents and warrants to the Company and each other Member as follows:
(i) (A) that Member is duly incorporated, organized, or formed (as applicable), validly existing, and (if applicable) in good standing under the Law of the jurisdiction of its incorporation, organization or formation; (B) if required by applicable Law, that Member is duly qualified and in good standing in the jurisdiction of its principal place of business, if different from its jurisdiction of incorporation, organization or formation; and (C) that Member has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and all necessary actions by the board of directors, shareholders, managers, members, trustees, beneficiaries or other applicable Persons necessary for the due authorization, execution, delivery and performance of this Agreement by that Member have been duly taken.
(ii) that Member has duly executed and delivered this Agreement, and it constitutes the legal, valid and binding obligation of that Member enforceable against it in accordance with its terms (except as may be limited by bankruptcy, insolvency or similar laws of general application and by the effect of general principles of equity, regardless of whether considered at Law or in equity);
(iii) that Member’s authorization, execution, delivery, and performance of this Agreement does not and will not (A) conflict with, or result in a breach, default or violation of, (I) the organizational documents of such Member (if it is an Entity), (II) any contract or agreement to which that Member is a party or is otherwise subject, or (III) any Law, order, judgment, decree, writ, injunction or arbitral award to which that Member is subject; or (B) require any consent, approval, or authorization from, filing or registration with, or notice to, any Governmental Authority or other Person, unless such requirement has already been satisfied and the Company has been notified thereof;
(iv) that Member is familiar with the existing or proposed business, financial condition, properties, operations, and prospects of the Company (including that the Company has no operating history); it has asked such questions, and conducted such due diligence, concerning such matters and concerning its acquisition of its Units as it has desired to ask and conduct, and all such questions have been answered to its full
satisfaction; it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Company; it understands that owning Units involves various risks, including the restrictions on Dispositions and Encumbrances set forth in Section 4.5 hereof, the lack of any public market for its Units, the risk of owning its Units for an indefinite period of time and the risk of losing its entire investment in the Company; it is able to bear the economic risk of such investment; it is acquiring its Units for investment, solely for its own beneficial account and not with a view to or any present intention of directly or indirectly selling, transferring, offering to sell or transfer, participating in any distribution, or otherwise Disposing of all or a portion of its Units; and it acknowledges that the Units have not been registered under the Securities Act or any other applicable federal or state securities laws, and that the Company has no intention, and shall not have any obligation, to register or to obtain an exemption from registration for the Units or to take action so as to permit sales pursuant to the Securities Act (including Rules 144 and 144A thereunder).
(b) The Company hereby represents and warrants to each Member as follows, with all such representations and warranties being given only as of the Effective Date:
(i) The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The Units, when issued by the Company, will be validly issued, fully paid and non-assessable and not subject to any adverse claim.
(ii) The execution, delivery and performance of this Agreement by the Company has been duly authorized by all necessary limited liability company action on the part of the Company, and the Company has full limited liability company power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Company, enforceable against it in accordance with its terms (except as may be limited by bankruptcy, insolvency or similar laws of general application and by the effect of general principles of equity, regardless of whether considered at Law or in equity).
(iii) The capitalization of the Company is set forth on Schedule I attached hereto. Except as set forth in this Agreement, on Schedule I attached hereto or as required by Law, there are no outstanding options, warrants, preemptive rights, subscription rights, convertible securities or other agreements or plans under which the Company is or may become obligated to issue, sell or transfer any Units.
(iv) Neither the Company nor anyone acting on its behalf has offered Units or any similar security for sale to or otherwise approached or negotiated in respect of such offer in a manner constituting a general solicitation. Neither the Company nor anyone on its behalf has taken any action that would subject the issuance or sale of any of the Company’s Units to the registration requirements of Section 5 of the Securities Act of 1933, as amended.
SECTION 4.3 Rights of Members.
SECTION 4.4 Meetings of and Actions by Members.
(a) The Board may call a meeting of the Members at any time and from time to time by giving notice to each Member in writing of the time, place and purpose of such meeting at least seven Days in advance of such meeting.
(b) With respect to all matters, unless otherwise expressly provided herein, the Members will act by a Majority Interest.
(c) Any action required to be, or which may be, voted on, consented to or approved by the Members may be taken without a meeting, without prior notice and without taking a vote if a consent or consents in writing, setting forth the action so taken, are signed by Members having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Members entitled to vote thereon were present and voted; provided, however, that no such action shall be effective unless the Board shall have sent to each Member (including, without limitation, via electronic mail) a copy of the consent with respect to such proposed action at least one Day prior to the taking of such action. A consent transmitted by electronic transmission by a Member or by a person or persons authorized to act for a Member shall be deemed to be written and signed for purposes of this Section 4.4(c). If a written consent is executed by less than all of the Members entitled to vote on the action so taken, the Company shall promptly cause a copy of the executed written consent to be delivered to each Member that did not execute it; provided, however, that the failure of the Company to so deliver a written consent shall not invalidate the action taken pursuant to such written consent.
(d) Meetings of the Members may be held by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 4.4(d) shall constitute presence in person at the meeting. All such meetings shall be held at such reasonable places as the Company shall designate and during normal business hours or at such other times as are otherwise agreed to by the Members. All expenses of each Member attending the meetings shall be borne by such Member.
SECTION 4.5 Dispositions and Encumbrances of Units by Members.
(a) General Restriction on Members. No Member may Dispose of or Encumber all or any portion of its Units (including any rights or obligations related thereto)
except in strict accordance with this Section 4.5. Any attempted Disposition or Encumbrance of all or any portion of its Units (including any rights or obligations related thereto), other than in strict accordance with this Section 4.5, shall be, and is hereby declared, null and void ab initio. The Members agree that breach of the provisions of this Section 4.5 may cause irreparable injury to the Company for which monetary damages (or other remedy at Law) are inadequate in view of (i) the complexities and uncertainties in measuring the actual damages that would be sustained by reason of the failure of a Member to comply with such provisions, (ii) the uniqueness of the Company’s business and (iii) the relationship among the Members. Accordingly, the Members agree that the provisions of this Section 4.5 may be enforced by specific performance (without the posting of bond or other security).
(b) Dispositions of Units of Members.
(i) General Restrictions.
(A) Without the prior written consent of all other Members, no Member may make any Disposition of any Units (including any rights or obligations related thereto) that does not result in the Disposition of all Units (including all rights and obligations related thereto) held by such Member immediately prior to such Disposition; provided, however, that, notwithstanding anything to the contrary contained herein, the foregoing restriction shall not apply in the case of a Disposition to a Permitted Affiliate of such Member following the prior written consent of the Company (not to be unreasonably withheld, conditioned or delayed).
(B) No Member may Dispose of or Encumber all or any portion of its Units (including any rights or obligations related thereto) during the period beginning on the Effective Date and ending on the fourth (4th) anniversary thereof (the “Lock-Up Period”); provided, however, that, notwithstanding anything to the contrary contained herein, the restrictions on the Disposition and Encumbrance with respect to all or any portion of each Member’s Units (including its Common Interest) during the Lock-Up Period shall not apply in the case of (I) a Disposition by a Member to the Company, if approved in advance by the Board in accordance with Section 3.5(f) hereof; (II) a merger or similar transaction entered into by or on behalf of the Company, if approved in advance by the Board in accordance with Section 3.5(f) hereof; (III) a Disposition to a Permitted Affiliate of such Member following the prior written consent of the Company (not to be unreasonably withheld, conditioned or delayed); or (IV) a Disposition required by the rules and regulations of a Governmental Authority, provided that such Member has provided to the Company a certificate executed by an executive officer of such Member stating that it has determined in good faith, after consultation with legal counsel, that such Disposition is required under such rules and regulations.
(C) Following the expiration of the Lock-Up Period, if a Member desires to make a Disposition of all or any portion of its Units (including its Common Interest), it must, as applicable, first comply with Section 4.5(b)(iii) (Preferential Purchase Rights) and Section 4.5(b)(iv) (Tag-Along Rights);
provided, however, that, notwithstanding anything to the contrary contained herein, compliance with Section 4.5(b)(iii) (Preferential Purchase Rights) and Section 4.5(b)(iv) (Tag-Along Rights) shall not be required in the case of (I) a Disposition by a Member to the Company, if approved in advance by the Board in accordance with Section 3.5(f) hereof; (II) a merger or similar transaction entered into by or on behalf of the Company, if approved in advance by the Board in accordance with Section 3.5(f) hereof; (III) a Disposition to a Permitted Affiliate of such Member following the prior written consent of the Company (not to be unreasonably withheld, conditioned or delayed); or (IV) a Disposition required by the rules and regulations of a Governmental Authority, provided that such Member has provided to the Company a certificate executed by an executive officer of such Member stating that it has determined in good faith, after consultation with legal counsel, that such Disposition is required under such rules and regulations.
(ii) Admission of Assignee as a Member. An Assignee has the right to be admitted to the Company as a Member with respect to the Units (and attendant Sharing Ratio) so Disposed to such Assignee; provided that such Assignee (A) has been granted the entire rights, and assumed the entire obligations, associated with the Units so disposed (and not merely limited rights and obligations that, together with other rights and obligations, constitute the entire rights and obligations with respect to such Units (“Partial Rights”)) and (B) complies with the requirements of Section 4.5(b)(vii) hereof.
(iii) Preferential Purchase Right.
(A) Application and Procedure. Should any Member at any time desire to Dispose of all or a portion of its Units (except in the circumstances described in the proviso to Section 4.5(b)(i)(A) hereof and the first proviso to Section 4.5(b)(i)(C) hereof, but subject to all other provisions contained in Section 4.5(b)(i) hereof), such Member (the “Disposing Member”) shall promptly give notice thereof (each, a “Disposition Notice”) to the Company and to each other Member (collectively, the “Non-Disposing Members”). The Disposition Notice shall set forth all relevant information with respect to the proposed Disposition, including the name and address of the prospective acquirer, the proposed purchase price, which must be proposed to be and actually be paid in its entirety in cash at closing, the precise Units that are the subject of the Disposition, and copies of all available and relevant proposed purchase and sale documents. Each Non-Disposing Member shall have the preferential right to acquire all or any portion of such Units (I) on the same terms and conditions as are set forth in the Disposition Notice (including, without limitation, the proposed purchase price), (II) on the terms and conditions set forth in Section 4.5(b)(iii)(B) hereof, and (III) in accordance with the following procedures: each Non-Disposing Member shall have 45 Days following its receipt of the Disposition Notice in which to notify the Company and the Disposing Member whether it desires to exercise its preferential right to purchase. A written notice in which a Non-Disposing Member exercises such right is referred to herein as an “Exercise Notice” and each Non-Disposing Member that exercises such right is referred to herein as a “Purchasing Member.” If any Non-Disposing Member does not respond by delivering an Exercise Notice
to the Company and the Disposing Member during the period set forth in this Section 4.5(b)(iii)(A), then such Non-Disposing Member shall be deemed to have waived such right. Each Purchasing Member shall have the right to participate in the Disposition in the same proportion that its Sharing Ratio (excluding any Partial Rights) bears to the aggregate Sharing Ratios of all Purchasing Members, collectively (or on such other basis as the Purchasing Members may mutually agree).
(B) Closing. If the preferential right is exercised in accordance with Section 4.5(b)(iii)(A) hereof, the closing of such purchase shall occur at the principal place of business of the Company on the 30th Day after the expiration of the preferential right period described in Section 4.5(b)(iii)(A) hereof (or, if later, the fifth Business Day after the receipt of all applicable regulatory and governmental approvals to the purchase), unless the Disposing Member and the Purchasing Members agree upon a different place or date. At the closing, (I) the Disposing Member shall (w) execute and deliver to each Purchasing Member an assignment of the Units being Disposed to such Purchasing Member, in form and substance reasonably acceptable to such Purchasing Member, containing a general warranty of title as to such Units (including that such Units are free and clear of any Encumbrances other than any Encumbrance related to a pledge of such Units to a financial institution providing debt financing to the Company); (x) deliver to each Purchasing Member the Units being Disposed to such Purchasing Member free and clear of any Encumbrance (other than any Encumbrance related to a pledge of such Units to a financial institution providing debt financing to the Company); (y) deliver to each Purchasing Member certificates, if applicable, representing the Units being Disposed to such Purchasing Member accompanied by duly executed stock powers (or equivalent documents); and (z) execute and deliver to each Purchasing Member any other instrument or document reasonably requested by such Purchasing Member that is reasonably necessary to give effect to the Disposition of such Units from the Disposing Member to such Purchasing Member; and (II) each Purchasing Member shall deliver to the Disposing Member the proposed purchase price (pro-rata in proportion to the number of Units being acquired by each Purchasing Member) in immediately available funds.
(C) Waiver of Preferential Right. If the Non-Disposing Members do not elect (or otherwise fail) to purchase all of the applicable Units set forth in the applicable Disposition Notice, each Purchasing Member shall have the right to purchase its pro-rata portion of such unpurchased Units by providing an additional Exercise Notice to the Company and the Disposing Member of its intent to do so within 10 Days after the expiration of the period set forth in the Disposition Notice. If, after the expiration of such 10 Day period, any of the applicable Units set forth in the applicable Disposition Notice remain unpurchased, the Disposing Member shall have the right, subject to compliance with the provisions of this Section 4.5 (including, without limitation, Section 4.5(b)(iv) hereof), to Dispose of such Units described in the Disposition Notice (or such portion thereof that the Non-Disposing Members did not elect to purchase) to the proposed Assignee strictly in accordance with the terms of the
Disposition Notice for a period of 60 Days after the expiration of the applicable preferential right period or, if later, after the failure of the Purchasing Members to complete such purchase in accordance with Section 4.5(b)(iii)(B) hereof or this Section 4.5(b)(iii)(C) hereof. If, however, the Disposing Member fails to Dispose of such Units within such period, the proposed Disposition to the proposed Assignee shall again become subject to the preferential right set forth in this Section 4.5(b)(iii).
(iv) Tag-Along Rights. In the event a Member elects to make a Disposition of all or any portion of its Units (except in the circumstances described in the proviso to Section 4.5(b)(i)(A) hereof and the first proviso to Section 4.5(b)(i)(C) hereof, but subject to all other provisions contained in Section 4.5(b)(i) hereof, and after first complying with the procedures set forth in Section 4.5(b)(iii) hereof) (the “Tag-Along Disposing Member”), then each other Member (each, a “Potential Tag-Along Participant”) is hereby granted the non-assignable right to Dispose, at the relevant selling price, that proportion of its Units as is described below. The Tag-Along Disposing Member shall deliver a notice (each, a “Tag-Along Notice”) to the Potential Tag-Along Participants, which shall set forth all relevant information with respect to the proposed Disposition, including the identity of the buyer, the proposed purchase price, the precise Units that are the subject of the sale, and any other terms and conditions of the proposed Disposition (including copies of all available and relevant proposed purchase and sale documents). The Potential Tag-Along Participants shall have the right to sell Units (other than Partial Rights) for the same price per Unit, and on the same terms and conditions, as are set forth in the Tag-Along Notice. Each Potential Tag-Along Participant shall have 45 Days following its receipt of the Tag-Along Notice in which to notify the Tag-Along Disposing Member whether it desires to exercise its sell right. A notice in which a Potential Tag-Along Participant exercises such right is referred to herein as a “Tag-Along Exercise Notice,” and a Potential Tag-Along Participant that delivers a Tag-Along Exercise Notice is referred to herein as a “Tag-Along Member.” Any Potential Tag-Along Participant that does not respond during the applicable period shall be deemed to have waived such right. Each Tag-Along Member shall have the right to participate in the Disposition in the same proportion that its Sharing Ratio (excluding any Partial Rights) bears to the aggregate Sharing Ratios of all Tag-Along Members and the Tag-Along Disposing Member, collectively (or on such other basis as the Tag-Along Members and the Tag-Along Disposing Member may mutually agree). The Tag-Along Disposing Member shall use commercially reasonable good faith efforts to obtain the agreement of the buyer to the participation of the Tag-Along Members. Notwithstanding the Tag-Along Disposing Member’s commercially reasonable good faith efforts as contemplated by the immediately preceding sentence, if the buyer is unwilling or unable to acquire the Units of the Tag-Along Members that have chosen to participate in such Disposition, then the Tag-Along Disposing Member may proceed with such Disposition without the written consent of the Tag-Along Members.
(v) Member Liability. Notwithstanding any other provision to the contrary contained herein, in no event will any Tag-Along Member’s liability in respect of such Disposition, whether in respect of expenses, indemnification obligations, other third party indemnities or otherwise, exceed the lesser of (A) such Member’s pro rata
share of such liabilities actually paid in respect of such Disposition; or (B) the net proceeds actually received by such Member in such Disposition; provided, however, that the foregoing limitations shall not apply to a Member’s liability with respect to (y) representations and warranties given by such Member regarding such Member’s authority, title to Units and tax status; or (z) any fraud committed by such Member.
(vi) Special Provisions Regarding Involuntary Dispositions.
(A) If an involuntary Disposition (“Involuntary Disposition”) shall occur in violation of this Agreement and such Disposition is not for whatever reason declared null and void ab initio as required by Section 4.5(a) hereof, then the Members described in Section 4.5(b)(iii) hereof shall have the same rights as specified in Section 4.5(b)(iii) hereof with respect to the Units or Partial Rights subject to the Involuntary Disposition as if the same had been a proposed voluntary Disposition under Section 4.5(b)(iii) hereof and shall be governed by Section 4.5(b)(iii) hereof except that (i) the time periods shall run from the date of receipt by the applicable Members of actual notice of the Involuntary Disposition and (ii) such rights shall be exercised by notice to the transferee of the Units or Partial Rights subject to the Involuntary Disposition (the “Involuntary Transferee”) rather than to the Member who suffered or will suffer the Involuntary Disposition.
(B) In the event the provisions of Section 4.5(b)(iv)(A) hereof are held to be unenforceable with respect to any particular Involuntary Disposition, the applicable Members shall have the applicable rights specified in Section 4.5(b) hereof with respect to any Disposition by an Involuntary Transferee, and each Member agrees that any Involuntary Disposition shall be subject to such rights, in which case the Involuntary Transferee shall be deemed to be the Disposing Member for purposes of Section 4.5(b) hereof, and shall be bound by the provisions of Section 4.5(b) hereof and other related provisions of this Agreement.
(vii) Requirements Applicable to All Dispositions and Subsequent Admissions of Members. In addition to the requirements set forth in Section 4.5(b) hereof, any Disposition of Units or Partial Rights (including a Common Interest), and any admission of an Assignee as a Member shall also be subject to the following requirements, and such Disposition (and admission, if applicable) shall not be effective unless such requirements are complied with; provided, however, that the Board may waive any of the following requirements:
(A) Disposition Documents. The following documents must be delivered to the Company and must be satisfactory, in form and substance, in all reasonable respects, to the Board:
(I) Disposition Instrument. A copy of the instrument pursuant to which the Disposition is effected.
(II) Ratification of Agreement. An instrument, executed by the Member making the Disposition and its Assignee, containing the following information and agreements, to the extent they are not contained in the instrument described in Section 4.5(b)(vii)(A)(I) hereof: (a) the notice address of the Assignee; (b) the applicable Sharing Ratios after the Disposition of the Member effecting the Disposition and its Assignee (which together must equal the applicable Sharing Ratio of the Member effecting the Disposition immediately before the Disposition); (c) if the Assignee is to be admitted as a Member, (i) the Assignee’s ratification of this Agreement and agreement to be bound by it, and (ii) its confirmation that the representations and warranties in Section 4.2 hereof are true and correct with respect to it; (d) if the Assignee is not to be admitted as a Member, an acknowledgment by the Assignee that the Common Interest (or other applicable Partial Rights) acquired by it is subject in all respects to this Agreement; and (e) representations and warranties by the Member and its Assignee (i) that the Disposition (and admission, if applicable), is being made in accordance with all applicable Law, and (ii) that the factual matters set forth in the opinions delivered pursuant to Sections 4.5(b)(vii)(A)(III) and (IV) hereof are true and correct in all respects.
(III) Securities Law Opinion. Unless the Units (or Partial Rights) subject to the Disposition are registered under the Securities Act and any applicable state securities Law, a favorable opinion of the Company’s legal counsel, or of other legal counsel reasonably acceptable to the Board, to the effect that the Disposition (and admission, if applicable) is being made pursuant to a valid exemption from registration under those Laws.
(IV) Tax Opinion. The Company must receive a favorable opinion of the Company’s legal counsel or legal counsel reasonably acceptable to the Board to the effect that the Disposition would not result in the Company’s being considered to have terminated within the meaning of Tax Code Section 708.
(B) Payment of Expenses. The Member effecting a Disposition and its Assignee shall pay, or reimburse the Company for, all costs and expenses incurred by the Company in connection with the Disposition (and admission, if applicable), including the legal fees incurred in connection with the legal opinions referred to in Sections 4.5(b)(vii)(A)(III) and (IV) hereof, on or before the 10th Day after the receipt by that Person of the Company’s invoice for the amount due. If payment is not made by the date due, the Person owing that amount shall pay interest on the unpaid amount from the date due until paid at a rate per annum equal to the Default Rate.
(C) Effective Date. Each Disposition (and admission, if applicable) complying with the provisions of this Section 4.5 is effective as of the
first calendar Day of the month immediately succeeding the month in which all of the requirements of this Section 4.5(b)(vii) have been met.
(c) Encumbrances of Units by Members. A Member may not Encumber all or any portion of its Units (including any rights or obligations related thereto) without the prior written consent of a Majority Interest; provided, however, that the pledge of any Member’s Units to any financial institution providing debt financing to such Member or any of its Affiliates (including the Company) for the benefit of the Company shall not constitute an Encumbrance for purposes hereof.
SECTION 4.6 Buy/Sell Agreement.
(a) Offer. Any Member (the “Offering Member”) shall have the right at any time following the expiration of the Lock-Up Period to make an offer (the “Buy/Sell Offer”) to purchase all (but not less than all) of the Units held by the other Member (the “Offeree Member”). The Buy/Sell Offer shall be in writing and contain a value per Unit (the “Buy/Sell Value”) as specified by the Offering Member for such Units and established by the Offering Member in its Sole Discretion.
(b) Alternative Purchase or Sale. Upon the receipt of a Buy/Sell Offer as set forth in Section 4.6(a) hereof, the Offeree Member shall have the alternative either (i) to sell all (but not less than all) of its Units to the Offering Member for a price equal to the product of (A) the number of Units held by the Offeree Member times (B) the Buy/Sell Value, or (ii) to purchase all (but not less than all) of the Units held by the Offering Member for a price equal to the product of (A) the number of Units held by the Offering Member times (B) the Buy/Sell Value (the “Buy/Sell Transaction”). The closing of the Buy/Sell Transaction pursuant to this Section 4.6(b) shall be held at the time and in the manner provided in Section 4.6(d) hereof.
(c) Election of Alternative. The Offeree Member shall give written notice (the “Response Notice”) to the Offering Member within 45 Days from the date of receipt of the Buy/Sell Offer, indicating whether the Offeree Member elects to sell its Units to the Offering Member or to purchase the Offering Member’s Units. Failure to provide the Offering Member with written notice of the Offeree Member’s election within such 45 Day period shall be conclusively deemed to be an election by the Offeree Member to sell its Units to the Offering Member in accordance with the Buy/Sell Offer. If there are more than two Members when a Buy/Sell Offer is made, and more than one Offeree Member elects to purchase all of the Offering Member’s Units, then each such electing Offeree Member shall have the right to participate in the Buy/Sell Transaction in the same proportion that its Sharing Ratio (excluding any Partial Rights) bears to the aggregate Sharing Ratios of all electing Offeree Members, collectively (or on such other basis as the electing Offeree Members may mutually agree). If there are more than two Members when a Buy/Sell Offer is made, and one or more Offeree Members elects to sell all of its Units and one or more Offeree Members elects to purchase the Offering Member’s Units, then the Offeree Members making the purchase election may elect, at their option, by providing an additional Response Notice at least 10 Days prior to the closing of the Buy/Sell Transaction, to purchase all of the Units that were offered to be sold by the other Offeree Members. If a Member makes a Buy/Sell Offer and such Member is an Affiliate of one or more other Members, and one or more Offeree Members elects to purchase all of the Offering Member’s Units, then
the Buy/Sell Transaction shall include, and such electing Offeree Member(s) must purchase, all Units held by the Offering Member and all of its Affiliates, collectively.
(d) Buy/Sell Closing. The closing of the Buy/Sell Transaction shall occur at the principal place of business of the Company on the 60th Day after the date of receipt of the Buy/Sell Offer by the Offeree Member (or, if later, the fifth Business Day after the receipt of all applicable regulatory and governmental approvals to the purchase), unless the Offering Member and the Offeree Member agree upon a different place or date. At the closing of the Buy/Sell Transaction, (i) the selling Member shall (A) deliver an assignment of the Units, in form and substance reasonably acceptable to such purchasing Member, containing a general warranty of title as to such Units (including that such Units are free and clear of any Encumbrances other than any Encumbrance related to a pledge of such Units to a financial institution providing debt financing to the Company); (B) deliver the Units subject to the Buy/Sell Transaction free and clear of any Encumbrance (other than any Encumbrance related to a pledge of such Units to a financial institution providing debt financing to the Company); (C) deliver to the purchasing Member certificates, if applicable, representing the Units subject to the Buy/Sell Transaction accompanied by duly executed stock powers (or equivalent documents); and (D) any other instrument or document reasonably requested by the purchasing Member that is reasonably necessary to give effect to the Buy/Sell Transaction; and (ii) the purchasing Member shall remit to selling Member the consideration to which it is entitled in immediately available funds.
SECTION 4.7 Issuance of Additional Units and Additional Securities.
(a) Subject to Section 4.8 hereof, additional Units (“Additional Units”), and any securities that by their terms are, directly or indirectly, convertible into or exchangeable or exercisable for Additional Units (including, without limitation, any option, warrant or other subscription or purchase right with respect to Additional Units) (any such securities, “Additional Securities”), may be created and issued to existing Members or to other Persons pursuant to this Section 4.7 and such other Persons may be admitted to the Company as Members, at the direction of, and upon the approval of the Board in accordance with Section 3.5(f) hereof. Without limiting the preceding sentence, the terms of admission or issuance must specify the Sharing Ratios applicable thereto and the adjusted Sharing Ratios of the existing Members, if applicable, and the same shall be reflected in an amendment to this Agreement, and such an amendment need be executed only by the Chairman of the Board or the Chief Executive Officer of the Company. In addition, the Chairman of the Board or the Chief Executive Officer shall update the Sharing Ratios each time Additional Units are issued by the Company, including those issued in accordance with Section 6.3 hereof. The admission of a new Member shall be effective only after such new Member has executed and delivered to the Company an instrument containing the notice address of the new Member, the new Member’s ratification of this Agreement and agreement to be bound by it, and its confirmation that the representations and warranties in Section 4.2 hereof are true and correct with respect to it.
(b) The provisions of this Section 4.7 shall not apply to Dispositions of Units or admissions of Assignees in connection therewith, such matters being governed by Section 4.5.
SECTION 4.8 Preemptive Rights.
(a) In General. In the event the Company proposes to issue Additional Units or Additional Securities in accordance with Section 4.7 hereof (each, a “Qualifying Issuance”), each Member is hereby granted the preemptive, non-assignable right to purchase, at the relevant offering price, that proportion of such Qualifying Issuance as is described below; provided, however, that (i) no Member shall have any preemptive right to purchase any Additional Units or Additional Securities as described in this Section 4.8 issued in connection with any merger or acquisition or similar transaction entered into by or on behalf of the Company with an independent third party; and (ii) the rights set forth in this Section 4.8 shall not apply with respect to Units issuable pursuant to any equity-based employee incentive plan; further provided, that, for purposes of clarification, no member of management or other employee of the Company or any of its subsidiaries shall be considered, or deemed to be, Affiliates of any Member solely as a result of such individual’s position with the Company or any such subsidiary.
(b) Procedure. The Company shall deliver a notice (each, an “Issuance Notice”) to the Members, which Issuance Notice shall set forth all relevant information with respect to the Qualifying Issuance, including the purchase price, the precise Additional Units or Additional Securities that are the subject of the Qualifying Issuance and any other terms and conditions of the Qualifying Issuance. Each Member shall have the right to acquire such Additional Units or Additional Securities for the same purchase price, and on the same terms and conditions, as are set forth in the Issuance Notice. Each Member shall have 10 Days following its receipt of the Issuance Notice in which to notify the Company whether it desires to exercise its preemptive right, which may only be exercised by such Member in proportion with its Sharing Ratio immediately prior to the Qualifying Issuance. In the event that any Member does not purchase its proportional amount of the Qualifying Issuance, such Member’s portion not so purchased may be purchased by other Members purchasing their full proportional shares of the Qualifying Issuance in such proportion as the Members desiring to purchase so agree or, failing agreement, in proportion to their respective Sharing Ratios immediately prior to the Qualifying Issuance based only on each such Member desiring to purchase their full proportional shares of such Qualifying Issuance. Any Member that does not respond during the applicable period shall be deemed to have waived such right.
SECTION 4.9 Restriction on Dispositions of Securities of Members.
SECTION 4.10 Withdrawal of Member.
SECTION 4.11 Liability of Members to Third Parties.
ARTICLE 5
RESTRICTIVE COVENANTS; CORPORATE OPPORTUNITIES
SECTION 5.1 Restrictive Covenants.
(a) Covenant Not To Compete. For so long as a Member (directly or indirectly through one or more Affiliates) owns any Units and for [****] thereafter (with respect to such Member, the “Restricted Period”), without the prior written consent of the Board (which consent may be withheld in the Sole Discretion of the Board) in accordance with Section 3.5(f) hereof, neither such Member nor any of its Affiliates shall, directly or indirectly (in any capacity, including as a shareholder, partner, member, investor, lender, principal, director, manager, officer, employee, consultant or agent of any Person other than the Company), (i) engage in, or hold, acquire or finance an interest, or otherwise invest in any Person (other than the Company) that engages in, or operate, manage, control or participate in the operation, management or control of, or consult to, advise or be employed by or an agent of, any Prohibited Business in the Restricted Area; or (ii) enter into any contract or other agreement with any Person for [****] (each, a “Contract Opportunity”) without first (A) providing notice of such Contract Opportunity to the Company and the other Members, which notice shall include all material information with respect to such Contract Opportunity known to the Member providing such notice; (B) providing the Company a reasonable opportunity to participate in such Contract Opportunity; and (C) using commercially reasonable best efforts to direct such Contract Opportunity to the Company. Notwithstanding the foregoing, no Member shall be required to obtain the consent of the Board to pursue a Prohibited Business with respect to the manufacture and supply of “any other metal-based components reasonably related to wind turbine markets” as contemplated above, unless the Company is capable at such time, or would be capable in a reasonable time period thereafter using commercially reasonable efforts, of manufacturing and supplying such products.
(b) Covenant Not To Solicit. During the Restricted Period for any Member, without the prior written consent of the Company (which consent may be withheld in the Company’s Sole Discretion), neither such Member nor any of its Affiliates shall, directly or indirectly (in any capacity, including as a shareholder, partner, member, investor, lender, principal, director, manager, officer, employee, consultant or agent of any Person other than the Company) (i) solicit or influence, or attempt to solicit or influence, any customer or potential customer, supplier or other business relation of the Company that operates its business within the Restricted Area, or any Person that is, or within the [****] period immediately preceding the date of such activity was, a purchaser of goods or services from the Company, to cease doing business with the Company or to purchase any goods or services in [****] that are substantially similar to any goods or services sold or provided by the Company in connection with its business operations at any time during the Restricted Period from any Person other than the Company, or knowingly prejudice the relationship between the Company and any customer or potential customer, supplier or other business relation of the Company; or (ii) employ, or recruit or solicit
for employment, any Person who is, or within the [****] period immediately preceding the date of such activity was, an employee of the Company.
(c) Passive Investments. No Member’s ownership of not more than 4.99% of any class of equity securities of any Entity having such class of equity securities actively traded on a national securities exchange shall be deemed, in and of itself, to violate the prohibitions set forth in Section 5.1(a) hereof.
(d) Exception for Certain Affiliates of Hirschfeld. Notwithstanding anything contained herein to the contrary, with respect to any Entity that is at any time an Affiliate of Hirschfeld, but is at no time a Hirschfeld Affiliate, the restrictive covenants set forth in this Section 5.1 shall apply only for so long as such Entity remains an Affiliate of Hirschfeld.
(e) Covenant Not to Use or Disclose Confidential Information. Each Member understands and acknowledges that during the Restricted Period, such Member may be making use of, acquiring or adding to the Company’s Confidential Information. In order to protect the Company’s Confidential Information, each Member agrees that it shall not in any way utilize any of the Company’s Confidential Information except in connection with its efforts for the Company. Each Member further agrees not to use any of the Company’s Confidential Information for such Member’s own benefit or the benefit of any Person, except the Company, at any time. Except as expressly authorized in writing by the Company, no Member shall at any time copy, reproduce or remove from the Company’s premises the original or any copies of the Company’s Confidential Information, and no Member shall at any time disclose any of the Company’s Confidential Information to any Person except in accordance with discharging such Member’s duties to the Company.
(f) Equitable Relief. Each Member acknowledges and agrees that the Company would be irreparably harmed by any violation of the restrictive covenants set forth in this Section 5.1, that money damages would be inadequate and the Company would have no adequate remedy at Law and that, in addition to all other rights and remedies available to the Company at Law or in equity, the Company will be entitled to injunctive and other equitable relief to prevent or enjoin any such violation, without posting any bond or security. If any Member, or any of its Affiliates, violates any of the restrictive covenants set forth in this Section 5.1, the Restricted Period will automatically be extended for a period of time equal to the sum of (i) the length of time during which the violation of this Section 5.1 was continuing; plus (ii) the length of time during which any court proceedings necessary to stop such violation were ongoing.
(g) Court Modification. Notwithstanding the foregoing, if any of the restrictive covenants set forth in this Section 5.1 is found by a court of competent jurisdiction to contain limitations as to time, geographic area or scope of activity that are not reasonable or impose a greater restraint than is necessary to protect the goodwill or legitimate business interests of the Company and its Affiliates, then such court is hereby authorized and requested to reform such provisions to the minimum extent necessary to cause the limitations contained in this Section 5.1 as to time, geographic area and scope of activity to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and legitimate business interests of the Company and its Affiliates.
SECTION 5.2 Corporate Opportunities.
(a) No Member, nor any Affiliate of any Member, shall, directly or indirectly, acquire, finance or otherwise manage, operate or invest in (or facilitate the acquisition, financing, management or operation of, or investment in) any business that engages in, or intends to engage in, the business of manufacturing or supplying towers [****] for wind turbine markets, or any other metal-based components reasonably related to wind turbine markets, located within [****] (each, a “Corporate Opportunity”), except as provided in this Article 5; provided, however, that, no Member shall be required to comply with this Section 5.2 with respect to a Corporate Opportunity relating to the manufacture and supply of “any other metal-based components reasonably related to wind turbine markets” as contemplated above, unless the Company is capable at such time, or would be capable in a reasonable time period thereafter using commercially reasonable efforts, of manufacturing and supplying such products.
(b) In the event that any Member or any Affiliate of any Member (in each case, the “Initiating Member”) becomes aware of a Corporate Opportunity, the Initiating Member shall provide notice of such Corporate Opportunity to the Company and the other Members (collectively, the “Opportunity Members”), which notice shall include all information with respect to such Corporate Opportunity as is known to the Initiating Member. The Board shall determine, as promptly as reasonably practicable (but in any event within 10 Days), by a Majority Vote (which Majority Vote shall be determined without reference to any Managers appointed by the Initiating Member), whether the Company shall pursue such Corporate Opportunity and seek to consummate a transaction in connection therewith. In the event that the Board declines such Corporate Opportunity for the Company, the Initiating Member shall be free to pursue such Corporate Opportunity and seek to consummate a transaction with respect thereto; provided, however, that, in the event that the Initiating Member is able to consummate the Corporate Opportunity on terms and conditions that are, considered in the aggregate, more favorable to the Initiating Member than those presented to the Company, the Initiating Member shall re-offer the Corporate Opportunity to the Company on such terms and conditions, after which the Board shall determine, as promptly as reasonably practicable (but in any event within 10 Days), by a Majority Vote (which Majority Vote shall be determined without reference to any Managers appointed by the Initiating Member or its Affiliates), whether the Company shall pursue such Corporate Opportunity and seek to consummate a transaction in connection therewith. For the avoidance of doubt, any investment held by any Member, or any Affiliate of any Member, as of the Effective Date shall not be considered a Corporate Opportunity hereunder.
(c) In the event that any Member, or any Affiliate of any Member, determines to produce “any other metal-based components reasonably related to wind turbine markets” as contemplated in Section 5.2(a) above, such Member shall be considered for all purposes an “Initiating Member” as contemplated by Section 5.2(b) hereof and the Company shall be entitled to exercise all of the rights as contemplated by Section 5.2(b) hereof with respect thereto.
(d) Notwithstanding anything contained herein to the contrary, with respect to any Entity that is at any time an Affiliate of Hirschfeld, but is at no time a Hirschfeld Affiliate, the restrictive covenants set forth in this Section 5.2 shall apply only for so long as such Entity remains an Affiliate of Hirschfeld.
(e) Except as expressly set forth in this Agreement, each Member may have other business and financial interests and investments and may engage in any other business or trade, profession or employment whatsoever, on its own account, or in partnership with, or as an employee, officer, manager, director, creditor, advisor, stockholder or member of any other Person, and no Member shall be required to devote its entire time (or cause its respective officers, directors, employees or agents to devote their entire time) to the business of the Company.
ARTICLE 6
CAPITAL CONTRIBUTIONS
SECTION 6.1 Contributions.
Each Member has contributed or shall contribute (or has caused or shall cause to be contributed on its behalf) to the Company on or before the Effective Date the Capital Contribution set forth opposite its name on Schedule I attached hereto.
SECTION 6.2 Return of Contributions.
SECTION 6.3 Additional Capital Contributions.
(a) The Board shall determine from time to time what additional capital, if any, is needed by the Company to fund operating deficits or for other Company purposes. The Board shall specify in a written notice (each, a “Capital Call Notice”) to each Member the total amount of additional capital required at such time, the Capital Contribution required to be made by each Member, which shall be determined on a pro rata basis in accordance with the Sharing Ratios, and the date by which such Capital Contributions are required to be made. Each Member shall be obligated to make a Capital Contribution to the Company in cash in the amount specified in the Capital Call Notice. On the first Business Day after the due date specified in the Capital Call Notice, the Company shall issue to each Member that has made its Capital Contribution as specified in such Capital Call Notice that number of Additional Units that is equal to the product of (i) the amount of the Capital Contribution made by such Member times (ii) the quotient obtained by dividing (A) the total number of outstanding Units on such date by (B) an amount equal to the Outstanding Capital Contributions immediately prior to giving effect to all Capital Contributions made pursuant to such Capital Call Notice.
(b) If a Member (the “Declining Member”) refuses to make a Capital Contribution required pursuant to Section 6.3(a) hereof and within 45 Days of when required pursuant to Section 6.3(a) hereof, each of the other Members (each, a “Non-Declining Member”)
may, at its option and in the same proportion that its Sharing Ratio bears to the aggregate Sharing Ratios of all Non-Declining Members:
(i) make an advance to the Company in cash in an amount equal to the Capital Contribution that the Declining Member failed to make, which advance shall be deemed a loan to the Declining Member repayable on demand with interest at the lesser of 15% per annum, compounded monthly, or the maximum rate of interest permitted by applicable Law; or
(ii) make an additional Capital Contribution in cash in an amount equal to the amount of the Capital Contribution which the Declining Member failed to make, in which event the Non-Declining Members shall be issued that number of Additional Units that would have been issued to the Declining Member pursuant to Section 6.3(a) hereof if the Declining Member had made a Capital Contribution equal to that portion of the Declining Member’s Capital Contribution made by the Non-Declining Member;
provided, however, that in the event that there is more than one Non-Declining Member and any Non-Declining Member does not exercise its rights under this Section 6.3(b), then each of the other Non-Declining Members may elect, at its option and in the same proportion that its Sharing Ratio bears to the aggregate Sharing Ratios of all such exercising Non-Declining Members, to exercise such non-exercising Non-Declining Member’s rights under this Section 6.3(b) with respect to such non-exercising Non-Declining Member’s pro rata portion of the Capital Contribution that the Declining Member failed to make.
SECTION 6.4 Advances by Members.
SECTION 6.5 Capital Accounts.
ARTICLE 7
ALLOCATIONS AND DISTRIBUTIONS
SECTION 7.1 Restrictions on Distributions.
SECTION 7.2 Distributions of Net Cash Flow.
SECTION 7.3 Distributions of Net Capital Proceeds.
SECTION 7.4 Priority of Distributions.
(a) First, if and to the extent that the Company expects to report or does report to Members items of income or gain on Form K-1 with respect to their Common Interests in connection with the Company’s US partnership return on Form 1065 for any Fiscal Year in excess of items of deduction or loss, without regard to the source thereof, minimum distributions shall be made (i) to each Member that is not taxed as a corporation for federal income tax purposes in an amount equal to the amount of federal and state income tax that would be payable by an individual with respect to that Member’s share of such net taxable income or gain (based on the highest combined federal and state marginal income tax rate then applicable to any individual in the United States, regardless of the actual tax rate applicable to a Member to whom said net income or gain is allocated and, for clarity, without taking into account any reduced rate of tax applicable to long-term capital gains), and (ii) to each Member that is a corporation for federal income tax purposes in an amount equal to the amount of federal and state income and franchise taxes that would be payable by a corporation with respect to that Member’s share of such net taxable income or gain (based on the highest combined federal and state marginal income and franchise tax rate then applicable to a corporation incorporated in such Member’s state of organization with respect to income or receipts earned in said state, regardless of the actual tax rate applicable to such Member to whom said net income or gain is allocated). The amount of such distributions shall be based upon the amount of net taxable income and gain allocated to the Members in accordance with this Agreement. In no event shall distributions be made to Members under this Section 7.4(a) for taxes actually paid by the Company. All such
distributions shall be made by wire transfer not later than the first due date, without regard to extensions, on which a federal income tax return reflecting such income would be required to be filed. Such distributions also shall be made earlier on those dates upon which federal estimated tax payments are required for individuals and corporations, as applicable (such distributions for federal estimated tax payments to be based upon reasonable estimates). In the event that on the second anniversary of the Effective Date, and on each subsequent second anniversary thereafter, the aggregate amounts distributed to the Members pursuant to this Section 7.4(a) during the preceding two-year period are not in proportion to their Sharing Ratios for such period, then as soon as reasonably practicable thereafter, and to the extent Net Cash Flow is available therefor, the Company shall be required to make additional distributions until the aggregate amounts distributed to the Members pursuant to this Section 7.4(a) are in proportion to their Sharing Ratios for such period. Any federal, state or local income tax withholding or other withholdings required by applicable Law shall be treated as a distribution to the Member for whose benefit the withholding has been made and, upon demand by the Company, such Member shall indemnify the Company in full for any amounts imposed on the Company (including interest and penalties) with respect to such withholdings; and
(b) Second, to the Members in accordance with their Sharing Ratios.
SECTION 7.5 Distributions on Dissolution and Winding Up.
SECTION 7.6 Allocations of Profit.
SECTION 7.7 Allocations of Loss.
SECTION 7.8 Adjustment of Book Value.
(a) The initial Book Value of any asset contributed to the Company by a Member shall be the fair market value of the asset as of the date of contribution.
(b) The Book Value of each asset shall be its respective fair market value, as of (i) the issuance of an interest in the Company to a new or existing Member in exchange for a
Capital Contribution, (ii) the distribution by the Company to a Member in liquidation of the Members’ interest in the Company, (iii) the liquidation of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), and (iv) the grant of an interest in the Company as consideration for the provision of services to or for the benefit of the Company by a new or existing Member. The determination of the fair market value of property as required under this Section 7.8(b) shall be made by an independent appraiser selected by a Majority Interest.
(c) The Book Value of each asset distributed to any Member will be the fair market value of the asset as of the date of distribution.
(d) The Book Value of each asset will be increased or decreased to reflect any adjustment to the adjusted basis of the asset under Tax Code Section 734(b) or 743(b), but only to the extent that the adjustment is taken into account in determining Capital Accounts under Treasury Regulation Section 1.704-1(b)(2)(iv)(m), provided that the Book Value will not be adjusted under this Section 7.8(d) to the extent that an adjustment under Section 7.8(b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment under this Section 7.8(d).
(e) Book Value will be adjusted by Book Depreciation, and gain or loss on a disposition of any asset shall be determined by reference to such asset’s Book Value as adjusted herein.
SECTION 7.9 Tax Allocations; Tax Code Section 704(c).
(a) Except as otherwise provided in this Section 7.9, each item of income, gain, loss, deduction and credit determined for federal income tax purposes shall be allocated among the Members in the same manner as each correlative item of income, gain, loss, deduction and credit is allocated to the Members for purposes of maintaining their respective Capital Accounts.
(b) Under Tax Code Section 704(c) and Treasury Regulation Section 1.704-3, income, gain, loss, and deduction with respect to any asset contributed to the capital of the Company, solely for federal income tax purposes, shall be allocated among the Members so as to take into account any variation between the adjusted tax basis of the asset for federal income tax purposes and the initial Book Value and if such asset has a built-in loss (as defined in Tax Code Section 704(c)(1)(C)) such built-in loss shall be taken into account only in determining the amount of items allocated to the contributing Member. If the Book Value of any asset is adjusted under Section 7.8, subsequent allocations of income, gain, loss and deduction, solely for federal income tax purposes, will be allocated among the Members so as to take into account any variation between the adjusted tax basis of the asset and its Book Value as adjusted in the manner required under Treasury Regulation Section 1.704-3(a)(6). The allocations required by this Section 7.9 shall be made using the traditional method with curative allocations as provided in Treasury Regulation Section 1.704-3(c).
SECTION 7.10 Stop Loss.
SECTION 7.11 Minimum Gain Chargeback.
SECTION 7.12 Member Nonrecourse Minimum Gain Chargeback.
SECTION 7.13 Qualified Income Offset.
SECTION 7.14 Gross Income Allocation.
SECTION 7.15 Nonrecourse Deductions.
SECTION 7.16 Member Nonrecourse Deductions.
SECTION 7.17 Tax Code Section 754 Adjustments.
SECTION 7.18 Curative Allocation.
SECTION 7.19 Common Interests in Company.
SECTION 7.20 Withholding.
SECTION 7.21 Varying Common Interests.
SECTION 7.22 Common Interest in Company Profits.
ARTICLE 8 EXCULPATION; INDEMNIFICATION
SECTION 8.1 In General.
SECTION 8.2 Insurance.
SECTION 8.3 Advancements.
SECTION 8.4 Nonexclusivity of Rights.
SECTION 8.5 No Increase in Member’s Liability.
SECTION 8.6 Beneficiaries.
SECTION 8.7 Timing; Effect of Amendments.
SECTION 8.8 Reserves.
SECTION 8.9 Survival.
ARTICLE 9 TAXES
SECTION 9.1 Tax Returns.
SECTION 9.2 Tax Elections.
SECTION 9.3 Tax Matters Member.
(a) The “tax matters partner” of the Company pursuant to Tax Code Section 6231(a)(7) shall be the Member that is designated by a Majority Interest. The “tax matters partner” is referred to herein as the “Tax Matters Member”. The Tax Matters Member shall take such action as may be necessary to cause to the extent possible each other Member to become a “notice partner” within the meaning of Tax Code Section 6223. Unless otherwise changed by a Majority Interest, the initial Tax Matters Member shall be Hirschfeld.
(b) Any cost or expense incurred by the Tax Matters Member in connection with its duties, including the preparation for or pursuance of administrative or judicial proceedings, shall be paid by the Company.
(c) Any Member that enters into a settlement agreement with respect to any Company item (within the meaning of Tax Code Section 6231(a)(3)) shall notify the other Members of such settlement agreement and its terms within 90 Days from the date of the settlement.
(d) No Member shall file a request pursuant to Tax Code Section 6227 for an administrative adjustment of Company items for any taxable year without first notifying the other Members. If a Majority Interest consents to the requested adjustment, the Tax Matters Member shall file the request for the administrative adjustment on behalf of the Members. If such consent is not obtained within 30 Days from such notice, or within the period required to timely file the request for administrative adjustment, if shorter, any Member, including the Tax Matters Member, may file a request for administrative adjustment on its own behalf. Any Member intending to file a petition under Tax Code Sections 6226, 6228, or other Tax Code Section with respect to any item involving the Company shall notify the other Members of such intention and the nature of the contemplated proceeding. In the case where the Tax Matters Member is the Member intending to file such petition on behalf of the Company, such notice shall be given within a reasonable period of time to allow the other Members to participate in the choosing of the forum in which such petition will be filed.
(e) If any Member intends to file a notice of inconsistent treatment under Tax Code Section 6222(b), such Member shall give reasonable notice under the circumstances to the other Members of such intent and the manner in which the Member’s intended treatment of an item is (or may be) inconsistent with the treatment of that item by the other Members.
ARTICLE 10 BOOKS, RECORDS AND BANK ACCOUNTS
SECTION 10.1 Books and Records.
SECTION 10.2 Accounts.
ARTICLE 11 CERTIFICATES
SECTION 11.1 Certificates Representing Units.
SECTION 11.2 Registration of Transfer and Exchange.
SECTION 11.3 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) makes proof by affidavit, in form and substance satisfactory to the Company, that a previously issued certificate has been lost, destroyed or stolen;
(b) requests the issuance of a new certificate before the Company has received notice that the certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;
(c) if requested by the Company, delivers to the Company such security or indemnity as may be required by the Company, in form and substance reasonably satisfactory to the Company, with surety or sureties and with fixed or open penalty as the Company may direct, in its reasonable discretion, to indemnify the Company from any claim that may be made on account of the alleged loss, destruction or theft of the certificate; and
(d) satisfies any other reasonable requirements imposed by the Company.
SECTION 11.4 Record Holder.
ARTICLE 12 EVENTS REQUIRING WINDING UP
SECTION 12.1 Dissolution.
(a) the consent of a Majority Interest; and
(b) the events requiring winding up as set forth in Section 18-801 of the Act or any successor provision thereof.
SECTION 12.2 Winding Up and Termination.
(a) as promptly as possible after dissolution and again after final winding up, the liquidator 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 calendar day of the month in which the dissolution occurs or the final winding up is completed, as applicable;
(b) the liquidator shall cause the notice described in the Act, if any, to be mailed to each known creditor of and claimant against the Company in the manner described in the Act;
(c) the liquidator shall pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of the Company (including all expenses incurred in winding up and any advances described in Section 6.3 hereof) or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidator may reasonably determine); and
(d) all remaining assets of the Company shall be distributed to the Members as follows:
(i) the liquidator may sell any or all Company property, including to Members, and any resulting gain or loss from each sale shall be computed and allocated to the Capital Accounts of the Members in accordance with the provisions of Article 7;
(ii) with respect to all Company property that has not been sold, the fair market value of that property shall be determined and the Capital Accounts of the
Members shall be adjusted to reflect the manner in which the unrealized income, gain, loss, and deduction inherent in property that has not been reflected in the Capital Accounts previously would be allocated among the Members if there were a taxable disposition of that property for the fair market value of that property on the date of distribution;
(iii) Company property shall be distributed among the Members in accordance with Section 7.5 hereof; and those distributions shall be made by the end of the taxable year of the Company during which the liquidation of the Company occurs (or, if later, 90 Days after the date of the liquidation); and
SECTION 12.3 Deficit Capital Accounts.
SECTION 12.4 Certificate of Cancellation.
ARTICLE 13 GENERAL PROVISIONS
SECTION 13.1 Offset.
SECTION 13.2 Notices.
SECTION 13.3 Entire Agreement.
SECTION 13.4 Effect of Waiver or Consent.
SECTION 13.5 Amendment or Restatement; No Waiver.
SECTION 13.6 Binding Effect.
SECTION 13.7 Governing Law, Severability.
SECTION 13.8 Further Assurances.
SECTION 13.9 Waiver of Certain Rights.
SECTION 13.10 Directly or Indirectly.
SECTION 13.11 Indemnification by Members.
SECTION 13.12 Counterparts.
SECTION 13.13 Construction.
SECTION 13.14 No Third Party Rights.
SECTION 13.15 Creditors; No Waiver.
SECTION 13.16 Rule of Construction.