<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(Amendment No. _____ )*
AUTOCYTE, INC.
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
052768 10 8
(CUSIP Number)
STEVEN N. FARBER, ESQ.
PALMER & DODGE LLP
ONE BEACON STREET
BOSTON, MA 02108-3190
(617) 573-0100
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)
SEPTEMBER 10, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
- ------------------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 6 pages)
<PAGE> 2
SCHEDULE 13D
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CUSIP NO. 052768 10 8 Page 2 of 6 Pages
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<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY)
JAMES B. POWELL, M.D.
- --------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
2 (b) [ ]
- --------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF -- PERSONAL FUNDS OF JAMES B. POWELL, M.D.
- --------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or
5 2(e) [ ]
- --------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
UNITED STATES OF AMERICA
- --------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
NUMBER OF 7
2,141,763(1)
SHARES
-------------------------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
8
OWNED BY 0
-------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,141,763(1)
-------------------------------------------------------------------------------
PERSON SHARED DISPOSITIVE POWER
10
WITH 0
- --------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,141,763(1)
- --------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
12
- --------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
17.2%
- --------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
IN
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Comprised of 2,141,763 shares held by Allemanni, LLC, of which Dr. Powell
is the Manager. Dr. Powell disclaims beneficial ownership of the shares
held by Allemanni, LLC except to the extent of his proportionate
pecuniary interest therein.
<PAGE> 3
SCHEDULE 13D
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CUSIP NO. 052768 10 8 Page 3 of 6 Pages
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<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY)
ALLEMANNI, LLC
56 199 7672
- ------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
2 (b) [ ]
- ------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF -- PERSONAL FUNDS OF JAMES B. POWELL, M.D., MANAGER OF ALLEMANNI, LLC
- ------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or
5 2(e) [ ]
- ------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
NORTH CAROLINA
- ------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
NUMBER OF 7
2,141,763
SHARES
-----------------------------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
8
OWNED BY 0
-----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,141,763
-----------------------------------------------------------------------------------
PERSON SHARED DISPOSITIVE POWER
10
WITH 0
- ------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,141,763
- ------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
12
- ------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
17.2%
- ------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
OO-LIMITED LIABILITY COMPANY
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE> 4
SCHEDULE 13D
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CUSIP NO. 052768 10 8 Page 4 of 6 Pages
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ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to
shares of common stock, par value $.01 per share (the "Common Stock") of
AutoCyte, Inc., a Delaware corporation, (the "Company" or the "Issuer"). The
principal executive offices of the Issuer are located at 112 Orange Drive, Elon
College, North Carolina 27244.
ITEM 2. IDENTITY AND BACKGROUND
(a) Name:
James B. Powell, M.D.
Allemanni, LLC
(b) Business Address:
For each of Dr. Powell and Allemanni, LLC:
James B. Powell, M.D.
c/o AutoCyte, Inc.
112 Orange Drive
Elon College
North Carolina 27244
(c) Principal Occupation:
Dr. Powell is Chief Executive Officer of the Issuer.
The Issuer develops, manufactures and markets an
integrated automated sample preparation and image
analysis system to support cyto-technologists and
pathologists in cervical cancer screening.
Allemanni, LLC is an estate planning device for
Dr. Powell.
(d),(e) Legal Proceedings:
During the last five years, Dr. Powell and Allemanni,
LLC: (i) have not been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors); and (ii) have not been parties to a
civil proceeding of a judicial or administrative body
of competent jurisdiction where, as a result of such
proceeding, they were or are subject to a judgment,
decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to,
federal or state securities laws or finding any
violation with respect to such laws.
(f) Citizenship:
Dr. Powell is a citizen of the United States of
America. Allemanni, LLC is a limited liability
company existing under the laws of the State of North
Carolina
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The 1,925,386 shares of Common Stock of AutoCyte, Inc. held
prior to the Company's initial public offering by Allemanni, LLC, of which Dr.
Powell is the Manager, were purchased with an aggregate of $2,845,000. Of this
$2,845,000, $40,000 originally came from Dr. Powell's children and the remainder
came from Dr. Powell's personal funds. All of the 150,000 shares purchased in
the Company's initial public offering of Common Stock by Allemanni, LLC, were
purchased with an aggregate of $1,500,000 of Dr. Powell's personal funds. The
66,377 shares of Common Stock purchased by Allemanni, LLC upon a warrant
exercise on October 24, 1997, were purchased with an aggregate of $134,944 of
Dr. Powell's personal funds.
ITEM 4. PURPOSE OF TRANSACTION
The shares of Common Stock held by Allemanni, LLC prior to the
Company's initial public offering of Common Stock were purchased for investment
purposes in connection with Dr. Powell becoming Chief Executive Officer of the
Company. The 150,000 shares purchased by Allemanni, LLC in the Company's initial
public offering, as well as the 66,377 shares purchased on October 24, 1997
upon the exercise of a warrant, were also purchased for investment purposes.
Dr. Powell and Allemanni, LLC have no present plans or proposals for
disposition of the shares beneficially owned by them or for acquisition of
additional shares. Dr. Powell and Allemanni, LLC, however, expect to evaluate
on a continuing basis their goals and objectives, other business opportunities
available to them, and general economic and equity market conditions, as well
as the Issuer's business operations and prospects. Based on such evaluations,
Dr. Powell and/or Allemanni, LLC may change their plans and
<PAGE> 5
SCHEDULE 13D
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CUSIP NO. 052768 10 8 Page 5 of 6 Pages
- ----------------------------------- --------------------------------
intentions and may determine to sell or otherwise dispose of some or all of the
shares beneficially owned by them or to acquire additional shares.
Dr. Powell and Allemanni, LLC have no present plans or proposals for:
(i) an extraordinary corporate transaction involving the Company or its
subsidiaries, (ii) a sale or transfer of a material amount of the assets of the
Company or of its subsidiaries, (iii) a change in the Board of Directors or
management of the Company, (iv) a change in the capitalization or dividend
policy of the Company, (v) a change in the charter or bylaws of the Company, or
(vi) any other material change in the Company's or any of its subsidiaries'
business or corporate structure.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the close of business on October 24, 1997,
Allemanni, LLC was the beneficial owner of 2,141,763
shares of Common Stock. As of the close of business
on October 24, 1997, Dr. Powell was the beneficial
owner of 2,141,763 shares of Common Stock, composed
entirely of the shares held by Allemanni, LLC. Dr.
Powell disclaims beneficial ownership of the
2,141,763 shares held by Allemanni, LLC except to the
extent of his proportionate pecuniary interest
therein. Such shares constituted approximately 17.2%
of the 12,479,877 shares of Common Stock outstanding
at that time.
(b) Dr. Powell has sole power to vote, or to direct the
vote, and to dispose, or to direct the disposition
of, all shares of Common Stock reported in this
Statement as beneficially owned by him and Allemanni,
LLC.
(c) On September 10, 1997, Allemanni, LLC purchased
150,000 shares of the Common Stock of the Issuer in
the Issuer's initial public offering of Common Stock
for an aggregate of $1,500,000. On October 24, 1997,
Allemanni, LLC exercised a warrant to purchase 66,377
shares of the Common Stock of the Company for an
aggregate of $134,944.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
In connection with the Issuer's initial public offering of
Common Stock, Dr. Powell and Allemanni, LLC each agreed, subject to certain
limited exceptions, not to offer, sell, contract to sell, pledge, grant any
option to purchase, transfer or otherwise dispose of, directly of indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or warrants or other rights to purchase or acquire
Common Stock until March 3, 1998. Pursuant to the Operating Agreement of
Allemanni, LLC, Dr. Powell has been appointed manager of Allemanni, LLC and has
full power to vote and dispose of the shares held by Allemanni, LLC.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit Index
Exhibit No. Description
----------- -----------
A Lock-Up Agreements for Dr. Powell and
Allemanni, LLC
B Operating Agreement of Allemanni, LLC,
dated September 27, 1996
<PAGE> 6
SCHEDULE 13D
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CUSIP NO. 052768 10 8 Page 6 of 6 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: November 3, 1997 /s/ James B. Powell
------------------------------------
James B. Powell, M.D., individually
and as Manager of Allemanni, LLC
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of the filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
Note. Six copies of this statement, including all exhibits, should be filed with
the Commission.
Attention. Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE> 7
EXHIBIT A
Name: Allemanni, LLC
--------------
(please print)
June 26, 1997
DILLON, READ & CO. INC.
UBS SECURITIES LLC
c/o DILLON, READ & CO. INC.
535 MADISON AVENUE
NEW YORK, NEW YORK 10022
Re: Restriction on Transfers of Securities
Dear Sirs:
AutoCyte, Inc., a Delaware corporation (the "Company"), proposes to
sell shares ("Shares") of its common stock, $0.01 par value per share (the
"Common Stock"), in a public offering (the "Offering") underwritten by
underwriters (the "Underwriters") for whom Dillon, Read & Co. Inc. and UBS
Securities LLC are acting as representatives (the "Representatives") of the
several Underwriters.
The Representatives have indicated that the prospect of sales or other
transfers of Common Stock prior to 180 days after the Offering could undermine
their underwriting effort. Accordingly, the Underwriters have requested that the
undersigned agree not to sell any Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock prior to the expiration of 180 days
after the effective date of the Company's registration statement on Form S-1
(the "Registration Statement") to be filed by the Company with the Securities
and Exchange Commission in connection with the Offering. The undersigned
recognizes that it is in the best financial interests of the Company and its
stockholders that the Company complete the Offering and that the Underwriters
will be relying on the undersigned's agreement set forth herein.
The undersigned further recognizes that the undersigned's shares of
Common Stock or securities convertible into or exercisable or exchangeable for
Common Stock are or may be subject to certain restrictions on transferability,
including those imposed by the federal securities laws. Notwithstanding these
restrictions, the undersigned has agreed to enter into this Agreement in order
to give further assurance to the Underwriters that the undersigned's Common
Stock will not enter the public market at a time that might impair the
underwriting effort.
Therefore, the undersigned agrees that the undersigned will not,
without the prior written consent of Dillon, Read & Co. Inc., directly or
indirectly, offer, sell, contract to sell, pledge, grant any option to purchase,
transfer, hypothecate or otherwise dispose (or enter into any transaction which
is designed to, or could be expected to, result in the disposition by any
person) of any shares of Common Stock of the Company (including, without
limitation, shares which may be deemed to be beneficially owned by the
undersigned in accordance with the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended), or any
securities convertible into or exercisable or exchangeable for Common Stock of
the Company, or any rights to purchase or acquire Common Stock of the Company or
any securities convertible into or exercisable or exchangeable for Common Stock
of the Company (other than pursuant to bona fide gifts to persons who agree in
writing to be bound by the provisions of this Agreement), from the date of this
letter until the date 180 days after the effective date of the Registration
Statement.
Very truly yours,
By: /s/ James B. Powell
--------------------------
Name: James B. Powell
--------------------------
(please print)
Title: Manager, Allemanni, LLC
--------------------------
<PAGE> 8
Name: James P. Powell
---------------
(please print)
June 26, 1997
DILLON, READ & CO. INC.
UBS SECURITIES LLC
c/o DILLON, READ & CO. INC.
535 MADISON AVENUE
NEW YORK, NEW YORK 10022
Re: Restriction on Transfers of Securities
Dear Sirs:
AutoCyte, Inc., a Delaware corporation (the "Company"), proposes to
sell shares ("Shares") of its common stock, $0.01 par value per share (the
"Common Stock"), in a public offering (the "Offering") underwritten by
underwriters (the "Underwriters") for whom Dillon, Read & Co. Inc. and UBS
Securities LLC are acting as representatives (the "Representatives") of the
several Underwriters.
The Representatives have indicated that the prospect of sales or other
transfers of Common stock prior to 180 days after the Offering could undermine
their underwriting effort. Accordingly, the Underwriters have requested that the
undersigned agree not to sell any Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock prior to the expiration of 180 days
after the effective date of the Company's registration statement on Form S-1
(the "Registration Statement") to be filed by the Company with the Securities
and Exchange Commission in connection with the Offering. The undersigned
recognizes that it is in the best financial interests of the Company and its
stockholders that the Company complete the Offering and that the Underwriters
will be relying on the undersigned's agreement set forth herein.
The undersigned further recognizes that the undersigned's shares of
Common Stock or securities convertible into or exercisable or exchangeable for
Common Stock are or may be subject to certain restrictions on transferability,
including those imposed by the federal securities laws. Notwithstanding these
restrictions, the undersigned has agreed to enter into this Agreement in order
to give further assurance to the Underwriters that the undersigned's Common
Stock will not enter the public market at a time that might impair the
underwriting effort.
Therefore, the undersigned agrees that the undersigned will not,
without the prior written consent of Dillon, Read & Co. Inc., directly or
indirectly, offer, sell, contract to sell, pledge, grant any option to purchase,
transfer, hypothecate or otherwise dispose (or enter into any transaction which
is designed to, or could be expected to, result in the disposition by any
person) of any shares of Common Stock of the Company (including, without
limitation, shares which may be deemed to be beneficially owned by the
undersigned in accordance with the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended), or any
securities convertible into or exercisable or exchangeable for Common Stock of
the Company, or any rights to purchase or acquire Common Stock of the Company or
any securities convertible into or exercisable or exchangeable for Common Stock
of the Company (other than pursuant to bona fide gifts to persons who agree in
writing to be bound by the provisions of this Agreement), from the date of this
letter until the date 180 days after the effective date of the Registration
Statement.
Very truly yours,
By: /s/ James P. Powell
--------------------------
Name: James P. Powell
--------------------------
(please print)
Title:
--------------------------
<PAGE> 9
EXHIBIT B
OPERATING AGREEMENT
OF
ALLEMANNI, LLC
SEPTEMBER 27, 1996
<PAGE> 10
OPERATING AGREEMENT
OF
ALLEMANNI, LLC
This Operating Agreement of Allemanni, LLC, a limited liability company
organized pursuant to the North Carolina Limited Liability Company Act, is
entered into by and among the Company and the individuals listed on Schedule I
hereto (the "Members"), and is effective as of September 27, 1996.
ARTICLE I
DEFINITIONS
The following terms used in this Operating Agreement shall have the
following meanings:
(a) "Agreed Purchase Price." The amount unanimously agreed upon and
specified in writing, signed by all the Members and the legal representative of
the estate of a Deceased Member, if applicable. If no such amount is unanimously
agreed upon within sixty (60) days after service of any notice required herein,
then the parties shall agree upon a single independent appraiser to determine
the value of the Interest, which determination shall be binding and conclusive
upon the Members or their successors in interest. If the Members are neither
able to agree on the Agreed Purchase Price nor a single appraiser, then an
appraiser shall be selected as follows: the Deceased Member's personal
representative or the Transferring Member shall select one appraiser; the other
Members shall by a vote of a Majority in Interest select one appraiser; and the
two appraisers so chosen shall select a third appraiser. The third appraiser
selected shall perform the appraisal of the interest, which appraisal shall be
binding and conclusive upon the Members or their successors in interest.
(b) "Articles of Organization." The Articles of Organization of
Allemanni, LLC, as filed with the Secretary of State of North Carolina effective
as of September 27, 1996, as the same may be amended from time to time.
(c) "Capital Account." A capital account maintained in accordance with
the rules contained in Treasury Regulations ss.1.704-1(b), as amended from time
to time, and the rules under Article VIII where they do not conflict with the
Code and Treasury Regulations.
(d) "Code." The Internal Revenue Code of 1986, as amended from time to
time.
(e) "Company." Allemanni, LLC.
<PAGE> 11
(f) "Economic Interest." The right of a Member or Economic Interest
Owner to share in the Company's Net Profits, Net Losses and distributions of the
Company's assets pursuant to this Operating Agreement and the North Carolina
Act.
(g) "Economic Interest Owner." The owner of an Economic Interest who is
not a Member. (See Sections 12.05 and 13.01(c)). Except as otherwise expressly
provided in this Operating Agreement, an Economic Interest Owner shall not have
any right to vote on, consent to or otherwise participate in any decision of the
Members or Managers.
(h) "Entity." Any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
cooperative or association or any foreign trust or foreign business
organization.
(i) "Fiscal Year." The Company's fiscal year, which shall be the
calendar year.
(j) "Majority in Interest." Ownership Interests of Members which, taken
together, exceed fifty percent (50%) of the aggregate of all Ownership Interests
of Members whose vote, consent or approval is required with respect to a
particular matter.
(k) "Manager." Any person that is designated to serve as a manager of
the Company pursuant to Article V of this Operating Agreement. "Managers" refers
to such persons as a group.
(l) "Member." Each of the parties who executes a counterpart of this
Operating Agreement as a Member and each person who may hereafter become a
Member. If a Person is already a Member immediately prior to the purchase or
other acquisition by such Person of an Economic Interest, such Person shall have
all the rights of a Member with respect to such purchased or otherwise acquired
Economic Interest. The initial Members are listed on Schedule I hereto.
(m) "Membership Interest." A Member's Economic Interest in the Company
and, in addition, all rights granted to Members pursuant to this Operating
Agreement or the North Carolina Act.
(n) "Net Income" and "Net Losses", respectively, mean the income or
loss of the Company as determined in accordance with the method of accounting
followed by the Company for Federal income tax purposes, including, for all
purposes, any income exempt from tax and any expenditures of the Company which
are described in Section 705(a)(2)(B) of the Code; provided, however, that if
any property is carried on the books of the Company at a value that differs from
that property's adjusted basis for tax purposes, gain, loss, depreciation and
amortization with respect to such property shall be computed with reference to
the book basis of such property, consistently with the requirement of the
Regulations; and provided, further, that any item specially allocated under
Article X hereof shall be excluded from the computation of Net Income and Net
Losses.
2
<PAGE> 12
(o) "North Carolina Act." The North Carolina Limited Liability Company
Act, N.C. Gen. Stat. ss.57C-1-01, et seq.
(p) "Operating Agreement." This Operating Agreement as originally
executed and as amended from time to time.
(q) "Ownership Interest." The percentage interest of each Member and
Economic Interest Owner in the Company. The initial Ownership Interests of the
Members are as shown on Schedule I hereto.
(r) "Person." Any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such "Person"
where the context so permits.
(s) "Transferring Member." A Member or Economic Interest Owner who
sells, assigns, pledges, hypothecates or otherwise transfers all or any portion
of his Membership Interest or Economic Interest in accordance with Article XII
of this Operating Agreement.
(t) "Treasury Regulations" or "Regulations." The Federal Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time.
(u) "Withdrawal Event." The bankruptcy, insolvency, death, dissolution
or incompetency of a Member.
ARTICLE II
FORMATION OF COMPANY
2.01 Formation. The Company was formed on September 27, 1996, by M. Todd
Jackson and Greg M. Chabon (the "Organizers") who executed and delivered
Articles of Organization to the Secretary of State of North Carolina in
accordance with the provisions of the North Carolina Act. By executing the
Assignment of Membership Interests below, the Organizers have transferred all of
their right, title and interest in the Company to the Members.
2.02 Agreement. For and in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Members executing this
Operating Agreement hereby agree to the terms and conditions of the Operating
Agreement, as it may from time to time be amended according to its terms. It is
the express intention of the Members that the Operating Agreement shall be the
sole source of agreement of the parties, and, except to the extent a provision
of this Operating Agreement expressly incorporates federal income tax rules by
reference to sections of the Code or Regulations or is expressly prohibited or
ineffective under the North Carolina Act, the Operating Agreement shall govern.
3
<PAGE> 13
2.03 Name. The name of the Company is Allemanni, LLC.
2.04 Registered Office and Principal Place of Business; Registered
Agent. The Company shall have its registered office at 2307 York Road,
Burlington, North Carolina, 27215, or at such other place as the Managers from
time to time shall determine. The registered agent of the Company at such
address shall be James B. Powell, or such other person as the Managers from time
to time shall determine.
2.05 Term. The Company shall be dissolved and its affairs wound up in
accordance with the North Carolina Act and the Operating Agreement on December
31, 2026, unless the term shall be extended by amendment to this Operating
Agreement and the Articles of Organization, or unless the Company shall be
sooner dissolved and its affairs wound up in accordance with the North Carolina
Act or this Operating Agreement.
ARTICLE III
BUSINESS OF COMPANY
The business of the Company shall be:
(a) To accomplish any lawful business whatsoever, or which shall
at any time appear conducive to or expedient for the protection or
benefit of the Company and its assets;
(b) To exercise all other powers necessary to or reasonably
connected with the Company's business which may be legally exercised by
limited liability companies under the North Carolina Act; and
(c) To engage in all activities necessary, customary,
convenient, or incident to any of the foregoing.
ARTICLE IV
NAMES OF INITIAL MEMBERS
The names of the initial Members are as shown on Schedule I attached
hereto and made a part hereof. Schedule I shall be amended by the Company as of
the effectiveness of any transfer or subsequent issuance of any Membership
Interest.
ARTICLE V
RIGHTS AND DUTIES OF MANAGERS
5.01 Management. The business and affairs of the Company shall be
managed by its Managers. Except for matters with respect to which the approval
of the Members is expressly
4
<PAGE> 14
required by this Operating Agreement or by nonwaivable provisions of applicable
law, the Managers shall have full and complete authority, power and discretion
to manage and control the business, affairs and properties of the Company, to
make all decisions regarding those matters and to perform any and all other acts
or activities incident to the management of the Company's business.
5.02 Number; Tenure; Qualifications. The Company shall initially have
one Manager, which must be a Member of the Company. The Manager shall hold
office until the earlier of:
(a) a Withdrawal Event with respect to such Manager;
(b) the resignation of such Manager; or
(c) removal of such Manager for gross negligence, self-dealing or
embezzlement by a Majority in Interest.
5.03 Designation of Managers. The initial Manager of the Company shall
be James B. Powell, who consents to his designation as Manager by executing this
Operating Agreement.
5.04 Removal of Manager. Any Manager of the Company may be removed for
gross negligence, self-dealing, or embezzlement by the affirmative vote of a
Majority in Interest.
5.05 Certain Powers of Managers. Without limiting the generality of
Section 5.01, the Managers, subject to Section 5.06 hereof, shall have power and
authority, on behalf of the Company:
(a) To acquire property from any Person, and the fact that a
Manager or a Member is directly or indirectly affiliated or connected
with any such Person shall not prohibit the Managers from dealing with
that Person;
(b) To borrow money for the Company from banks, other lending
institutions, Members, or affiliates of Members on such terms as the
Managers deem appropriate, and in connection therewith, to hypothecate,
encumber and grant security interests in the assets of the Company to
secure repayment of the borrowed sums;
(c) To purchase liability and other insurance to protect the
Company's property and business;
(d) To hold and own any Company real and/or personal properties
in the name of the Company;
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(e) To invest any Company funds temporarily (by way of example
but not limitation) in time deposits, short-term governmental
obligations, commercial paper or other investments;
(f) To sell or dispose of the Company's assets in the ordinary
course of the Company's business;
(g) To employ accountants, legal counsel, managing agents or
other experts to perform services for the Company and to compensate them
from Company funds;
(h) To enter into any and all other agreements on behalf of the
Company, with any other Person for any purpose, in such forms as the
Managers may approve; and
(i) To do and perform all other acts as may be necessary or
appropriate to the conduct of the Company's business.
5.06 Major Transactions. The Manager shall have the authority, without
the prior consent of the Members, to:
(a) Amend the Articles of Organization;
(b) Amend this Operating Agreement;
(c) Issue any Membership Interest or Economic Interest;
(d) Sell, transfer or otherwise dispose of all or
substantially all of the assets of the Company prior to
dissolution in accordance with this Agreement; or
(e) Merge the Company into or with another entity.
5.07 Limitation of Liability. No Manager shall have personal liability
for any debts or obligations of the Company. In addition, no Manager shall have
personal liability to the Company or any Member or Economic Interest Owner for
breach of duty as a manager except as expressly provided by Section 57C-4-07 of
the North Carolina Act and except with respect to (a) acts or omissions that the
Manager knew at the time of such acts or omissions were clearly in conflict with
the interest of the Company or (b) any transaction from which the Manager
derived an improper personal benefit.
5.08 Managers Have No Exclusive Duty to Company. No Manager shall be
required to manage the Company as his sole and exclusive function and any
Manager may have other business interests and may engage in other activities in
addition to those relating to the Company. Neither the Company nor any Member
shall have any right to share or participate in such other interests or
activities of any Manager or to the income or proceeds derived
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therefrom, and no Manager shall incur any liability to the Company or to any of
the Members as a result of engaging in any other business or venture.
5.09 Indemnity of the Managers. To the fullest extent permitted by the
North Carolina Act, the Company shall indemnify each Manager and make advances
for expenses to him with respect to any matter arising out of or relating to the
Company or his status as a manager.
5.10 Compensation. The Manager shall be entitled to receive reasonable
compensation, as determined in the sole discretion of the Manager.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
6.01 No Liability for Company Obligations. No Member shall have personal
liability for any debts or obligations of the Company.
6.02 Priority and Return of Capital. Except as otherwise expressly
provided in this Operating Agreement, no Member or Economic Interest Owner shall
have priority over any other Member or Economic Interest Owner, either as to the
return of contributions to capital or as to Net Income, Net Losses or
distributions of the Company's assets. This Section 6.02 shall not apply to
loans (as distinguished from contributions to capital) which a Member has made
to the Company.
ARTICLE VII
MEETINGS OF MEMBERS
7.01 Meetings. Meetings of the Members, for any purpose or purposes, may
be called by any of the then serving Managers.
7.02 Place of Meetings. The Managers calling the meeting may designate
any place, either within or outside the State of North Carolina, as the place of
meeting.
7.03 Notice of Meetings. Written notice stating the place, day and hour
of the meeting and the purpose or purposes for which the meeting is called shall
be delivered to each Member not less than ten days before the date of the
meeting, either personally or by courier service. If delivered by courier
service, such notice shall be deemed to be delivered three calendar days after
being dispatched, addressed to the Member at its address as it appears on the
books of the Company, with all delivery charges prepaid.
7.04 Meeting of All Members. If all of the Members shall meet at any
time and place, either within or outside of the State of North Carolina and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any lawful action may be
taken.
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7.05 Manner of Acting. The affirmative vote of Members holding a
Majority in Interest shall be the act of the Members, unless the vote of a
greater or lesser proportion or number is otherwise required by the North
Carolina Act, by the Articles of Organization, or by this Operating Agreement.
7.06 Proxies. At all meetings of Members a Member may vote in person or
by proxy executed in writing by the Member or by a duly-authorized attorney in
fact. Such proxy shall be filed with the Company before or at the time of the
meeting.
7.07 Action by Members Without a Meeting. Action required or permitted
to be taken at a meeting of Members may be taken without a meeting if the action
is evidenced by one or more written consents describing the action taken and
signed by all of the Members. Any such consent shall be delivered to the Company
for filing with the Company records. Action taken under this Section is
effective when all Members have signed an appropriate consent, unless the
consent specifies a different effective date.
7.08 Waiver of Notice. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the person entitled to such
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
ARTICLE VIII
CONTRIBUTIONS; OWNERSHIP INTERESTS; CAPITAL ACCOUNTS
8.01 Members' Contributions to Capital. Each Member shall contribute
such property as set forth on Schedule I hereto as its share of the initial
contribution to capital. If no time for the contribution is specified in
Schedule I, then the contribution to capital shall be made upon the filing of
the Articles of Organization with the Secretary of State. The value of the
contributions to capital shall be set forth on Schedule I. No interest shall
accrue on any contribution to capital, and no Member shall have the right to
withdraw or be repaid any contribution to capital except as provided in this
Operating Agreement.
8.02 Initial Ownership Interests. The initial Ownership Interests of the
Members are as reflected in Schedule I attached hereto and made a part hereof.
8.03 Additional Contributions. Except as set forth in Section 8.01, no
Member shall be required to make any capital contributions to the Company. If
the Managers determine that additional contributions to capital are necessary or
appropriate in connection with the conduct of the Company's business (including
without limitation, expansion or diversification), the Members shall have the
opportunity (but not the obligation) to participate in such additional
contributions to capital on a pro-rata basis in accordance with their Ownership
Interests. If fewer than all of the Members participate in the additional
contributions to capital on a pro rata basis in accordance with their Ownership
Interests, then the Capital Accounts of each Member and Economic Interest Owner
shall be restated to reflect the fair market value of the Company's assets and
liabilities, and the Ownership Interest of each Member and Economic Interest
Owner
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shall be adjusted based on such restated Capital Accounts and the amount of the
additional contributions to capital.
8.04 Interest On and Return of Contributions to Capital.
(a) No Member shall be entitled to interest on his contribution
to capital or to return of his contributions to capital, except as otherwise
specifically provided for herein.
(b) A Member shall not receive out of the Company's property any
part of such Member's contribution to capital until all liabilities of the
Company, except liabilities to Members on account of their contributions to
capital, have been paid or there remains property of the Company sufficient to
pay them.
(c) A Member, irrespective of the nature of such Members'
contribution to capital, has only the right to demand and receive cash in return
for such contribution to capital.
8.05 Capital Accounts.
(a) The Company shall maintain a separate Capital Account for
each Member and Economic Interest Owner pursuant to the principles of this
Section 8.05 and Treasury Regulation Section 1.704-1(b)(2)(iv). The initial
Capital Account of each Member shall be the initial capital contribution made or
deemed made by such Member pursuant to this Article VIII. The Capital Account of
each Member and Economic Interest Owner shall be increased by (i) the amount of
any subsequent capital contributions by such Member to the Company and (ii) such
Member's allocable share of Net Income pursuant to Section 10.01, decreased by
(i) the amount of cash distributed to such Member by the Company and (ii) such
Member's allocable share of Net Loss and specially allocated items pursuant to
Section 10.01, and otherwise adjusted as herein provided.
(b) The provisions of this Section 8.05 and other provisions of
this Operating Agreement relating to the proper maintenance of Capital Accounts
are designed to comply with the requirements of Treasury Regulation Section
1.704-1(b). The Members intend that such provisions be interpreted and applied
in the manner consistent with such Treasury Regulations. The Managers are
authorized to modify the manner in which the Capital Accounts are maintained if
the Managers determine that such modification (i) is required or prudent to
comply with the Treasury Regulations and (ii) is not likely to have a material
effect on amounts distributable to any Member upon dissolution of the Company.
Notwithstanding anything herein to the contrary, this Operating Agreement shall
not be construed as creating a deficit restoration obligation or otherwise
personally obligate any Member to make a capital contribution in excess of that
required by Section 8.01.
8.06 Loans to Company. Nothing in this Operating Agreement shall prevent
any Member from making secured or unsecured loans to the Company by agreement
with the Company.
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ARTICLE IX
DISTRIBUTIONS
9.01 Distributions. All distributions of cash or other property shall be
made to Members and Economic Interest Owners based on their Ownership Interests
on the date of such distribution. Distributions shall be made at such time or
times as may be determined by the Managers. All amounts withheld pursuant to the
Code or any provisions of state or local tax law with respect to any
distribution shall be treated as amounts distributed pursuant to this Section
9.01.
9.02 Limitation Upon Distributions. No distribution shall be made to
Members if, after giving effect to the distribution: (i) the Company would not
be able to pay its debts as they become due in the usual course of business; or
(ii) the Company's total assets would be less than the sum of its total
liabilities.
ARTICLE X
ALLOCATIONS
10.01 Allocations in General. The Net Income, Net Losses and
distributive shares of tax items shall be allocated to the Members and Economic
Interest Owners pro rata based upon their respective Ownership Interests during
the period over which such Net Income, Net Losses and tax items were accrued.
The Managers shall have the authority to make any special allocations as
necessary or appropriate for compliance with the provisions of Subchapter K of
the Code, including without limitation ss.ss.704(b) and 704(c) thereof, and
Regulations promulgated thereunder.
10.02 Special Rule Regarding Members' Capital Accounts. No Member or
Economic Interest Owner shall be entitled to any allocation of Net Losses if
such allocation would result in the Member or Economic Interest Owner having a
negative Capital Account balance while any other Member or Economic Interest
Owner has a positive Capital Account balance. In such event, Net Losses shall be
allocated to the Members with positive Capital Accounts until such Capital
Accounts, as adjusted, have been reduced to zero.
10.03 Qualified Income Offset. Any Member or Economic Interest Owner who
unexpectedly receives an adjustment, allocation or distribution as described in
Treasury Regulations ss.1.704-1(b)(2)(ii)(d)(4)-(6) shall be allocated items of
Company income and gain in an amount and manner to eliminate any deficit in such
Member's Capital Account (after adjustment as described in Section 8.05) as
quickly as possible. This provision is intended to be a "qualified income
offset" as defined in Treasury Regulations ss.1.704-1(b)(2)(ii)(d), such
Regulation being hereby incorporated by reference.
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10.04 Minimum Gain Chargeback. If there is a net decrease in the
Company's minimum gain (as such term is defined in Treasury Regulations
ss.1.704-1T(b)(4)(iv)(c)) during any taxable year, each Member or Economic
Interest Owner shall be allocated, before any other allocation is made of
Company items for such taxable year, an amount equal to the greater of (i) such
Person's share of the net decrease in Company minimum gain allocable to the
disposition of Company property subject to nonrecourse liability, or (ii) the
negative balance in such Person's Capital Account (after adjustment as described
in Article VIII). This provision is intended to be a "minimum gain chargeback"
as defined in Treasury Regulation ss.1.704-1T(b)(4)(iv)(e), such Regulation
being hereby incorporated by reference.
ARTICLE XI
BOOKS AND RECORDS
11.01 Records and Financial Statements. The books and records of the
Company shall be maintained, and the Company's tax returns shall be filed, using
the cash method of accounting. Proper and complete records and books of account
shall be caused to be kept by the Managers in which shall be entered fully and
accurately all transactions and other matters relating to the Company's business
in such detail and completeness as is customary and usual for businesses of the
type engaged in by the Company. The books and records shall at all times be
maintained at the registered or principal office of the Company and shall be
open to the reasonable inspection and examination of the Members or their duly
authorized representatives during reasonable business hours.
11.02 Tax Returns. The Managers shall cause the preparation and timely
filing of all tax returns required to be filed by the Company pursuant to the
Code and all other tax returns deemed necessary and required in each
jurisdiction in which the Company does business. Copies of such returns, or
pertinent information therefrom, shall be furnished to the Members within 90
days after the end of each Fiscal Year.
ARTICLE XII
TRANSFERABILITY
12.01 General. Except as otherwise specifically provided in this Article
XII, neither a Member nor an Economic Interest Owner shall have the right to:
(a) sell, assign, pledge, hypothecate, transfer, exchange or
otherwise transfer for consideration (collectively, "sell"), or
(b) gift, bequeath or otherwise transfer without consideration
(whether or not by operation of law),
all or any part of his Membership Interest or Economic Interest.
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12.02 Right of First Refusal (a) If any Member or Economic Interest
Owner (hereinafter the Transferring Member) shall desire to sell all or any part
of his Membership Interest or Economic Interest, he must first receive a bona
fide written offer to purchase such Interest for cash and then comply with the
provisions of this Section 12.02.
(b) Within ten days after receiving the bona fide offer to purchase, the
Transferring Member shall give to the Company written notice of his intention to
sell. Such notice shall contain:
(i) the name and address of the prospective purchaser;
(ii) the portion of the Interest involved in the proposed
sale; and
(iii) the price being offered to the Transferring Member, the
terms of payment and any other terms of such proposed
sale.
Such notice shall also be accompanied by a copy of the written offer to
purchase. Not later than 30 days after the effective date of the determination
of Agreed Purchase Price, the Company (or a Person designated by the Company)
shall have the option, exercisable by notice in writing to the Transferring
Member, to purchase the entire Interest proposed to be sold at the price and on
the terms contained in the bona fide offer, or at the Agreed Purchase Price
determined at the end of the month immediately following the month during which
such notice is given, whichever is selected by the Company. The Company may pay
the purchase price for the Interest (i) in cash or (ii) by a down payment of not
less than 20% of the purchase price and delivery of a promissory note
substantially in the form attached hereto as Schedule II for the balance. Any
such promissory note shall call for equal quarterly installments of principal
payable over five years, with interest, calculated quarterly, at a rate equal to
the published prime rate of NationsBank, N.A. (Carolinas), or its corporate
successor, as in effect on the first business day of each such calendar quarter
during which the interest accrues. The option granted in this Section 12.02(b)
shall expire at the end of the 30-day period. Any election by the Company to
purchase less than the entire Interest proposed to be transferred shall be of no
effect.
(c) If the option to purchase the entire Interest of the Transferring
Member is not exercised within 30 days of receipt of notice by the Company, then
the Transferring Member shall be free thereafter for a period of 60 days to sell
the Interest in the Company to the prospective purchaser named in the notice
given pursuant to Section 12.02(b) at the same price and on the same terms as
set forth in said notice, subject to Section 12.05 of this Operating Agreement.
If such 60-day period shall expire without a sale, then the options provided
herein shall again take effect. No transferee pursuant to this Section 12.02
shall have the right to be substituted as a Member, except as provided in
Section 12.05.
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12.03. Death of a Member.
(a) Upon the death of any Member (the "Deceased Member"), for a period
of 60 days following the qualification of the Deceased Member's personal
representative the Company shall have the right and option, exercisable by
notice in writing to the Deceased Member's personal representative, to purchase
the entire Interest owned by the Deceased Member at the time of his death at the
Agreed Purchase Price, determined at the end of the month within which death
occurs. The option granted in this Section 12.03(a) shall expire at the end of
such 60-day period. Any election by the Company to purchase less than the entire
Interest owned by the Deceased Member at the time of his death shall be of no
effect. Each Member hereby binds his personal representative to sell the entire
Interest in the Company owned by him at the time of his death in accordance with
the provisions of this Section 12.03.
(b) If the option to purchase the entire Membership Interest of the
Deceased Member is not exercised within the 60-day period, then the devisee or
heir entitled to receive the Deceased Member's Interest pursuant to his will or
applicable intestacy statutes shall receive such Interest, subject to Section
12.05 of this Operating Agreement.
12.04 Permitted Transfer. Notwithstanding Sections 12.01, 12.02 and
12.03 above, any Member or Economic Interest Owner may freely assign or transfer
all or any portion of his Interest to a lineal descendant of James B. Powell (or
to a trust or other entity for the sole benefit of, or controlled by, a lineal
descendant of James B. Powell), provided that such transferee agrees to be bound
by this Operating Agreement and any and all amendments hereto which may have
been adopted by the Members prior to such assignment or transfer. No such
transferee shall have the right to participate in the management of the Company
or be admitted as a Member, except as provided in Section 12.05.
12.05 Transferee Not Member in Absence of Majority in Interest Consent.
(a) Notwithstanding anything contained herein to the contrary, the sale or gift
of a Membership Interest to a transferee or donee who is not a Member
immediately prior to the sale or gift shall constitute the transfer of an
Economic Interest only, and the transferee or donee shall be only an Economic
Interest Owner and shall have no right to participate in the management of the
business and affairs of the Company, to participate in the designation of
Managers or to become a Member, unless a Majority in Interest of the Members
agree that such transferee shall become a Member. No transfer of an Economic
Interest in the Company shall be effective unless and until written notice
(including the name and address of the transferee or donee and the date of such
transfer) has been provided to the Company and the nontransferring Members.
(b) Upon and contemporaneously with any sale, gift or transfer by a
Member which, under subsection (a) above, constitutes the transfer of an
Economic Interest only, the Company shall purchase from the Member, and the
Member shall sell to the Company for a purchase price of $100, all remaining
rights and interests retained by the Member which immediately prior to such
sale, gift or transfer were associated with his Membership Interest that was
transferred.
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ARTICLE XIII
DISSOLUTION AND TERMINATION
13.01 Dissolution.
(a) The Company shall be dissolved upon the occurrence of any of
the following events:
(i) when the period fixed for the duration of the
Company shall expire pursuant to Section 2.05 hereof;
(ii) by the unanimous written agreement of all Members;
(iii) upon the occurrence of a Withdrawal Event, unless
there is at least one remaining Member and the business of the
Company is continued with the written consent of a Majority in
Interest of the remaining Members (other than the Member who
caused the Withdrawal Event); provided, however, that such
written consents must be delivered to the Company within 30 days
after the Withdrawal Event; or
(iv) the entry of a decree of judicial dissolution or
the issuance of a certificate of dissolution under the North
Carolina Act.
(b) If a Member who is an individual dies or a court of
competent jurisdiction adjudges him to be incompetent to manage his
person or his property, the Member's executor, administrator, guardian,
conservator, or other legal representative may exercise all of the
Member's rights for the purpose of settling his estate or administering
his property.
(c) A Member who withdraws (a "Withdrawing Member") or whose
Membership Interest is otherwise terminated by virtue of a Withdrawal
Event, shall become an Economic Interest Owner and shall be entitled
only to those distributions to which he would have been entitled if he
had continued to be a Member, unless otherwise agreed by a Majority in
Interest of the remaining Members. Notwithstanding anything to the
contrary in this Agreement, a Withdrawing Member shall not have any
right to have his Membership Interest or Economic Interest redeemed by
the Company or purchased by the other Members, or otherwise receive any
distributions other than those provided for in the preceding sentence.
(d) Except as expressly permitted in this Operating Agreement, a
Member shall not voluntarily withdraw as a Member of the Company, or
take any voluntary action which directly causes a Withdrawal Event.
Damages for breach of this Section 13.01(d) shall be monetary damages
only (and no specific performance), and such damages may be offset
against distributions by the Company to which the Withdrawing Member
would otherwise be entitled.
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13.02 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, the Managers shall immediately proceed to
wind up the affairs of the Company and, in connection therewith, shall:
(i) Sell or otherwise liquidate all of the Company's
assets as promptly as practicable (except to the extent the
Managers may determine to distribute any assets in kind);
(ii) Allocate any profit or loss resulting from such
sales to the Members and Economic Interest Owners in accordance
with Section 10.01 hereof;
(iii) Discharge all liabilities of the Company,
including liabilities to Members and Economic Interest Owners
who are creditors (to the extent permitted by law and excluding
liabilities for distributions);
(iv) Establish such reserves as may be reasonably
necessary to provide for contingent liabilities of the Company;
(v) Distribute the remaining assets in the following
order:
(1) An amount equal to the then remaining
positive balances in the Capital Accounts of the
Members and Economic Interest Owners shall be
distributed in proportion to the amount of such
balances; and
(2) Any other assets shall be distributed to
the Members and Economic Interest Owners, pro rata in
accordance with their respective Ownership Interests.
(b) If any assets of the Company are distributed in kind, such
assets shall be distributed to the Members and Economic Interest Owners
entitled thereto as tenants-in-common in the same proportions as the
Members and Economic Interest Owners would have been entitled to cash
distributions if such property had been sold for cash and the net
proceeds thereof distributed. In the event that distributions in kind
are made to the Members upon dissolution and liquidation of the Company,
the Capital Account balances of such Members and Economic Interest
Owners shall be adjusted to reflect the Members' allocable share of gain
or loss which would have resulted if the distributed property had been
sold at its fair market value.
(c) Notwithstanding anything to the contrary in this Operating
Agreement, upon a liquidation within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Treasury Regulations, if any Member or
Economic Interest Owner has a deficit Capital Account (after giving
effect to all contributions, distributions, allocations and other
Capital Account adjustments for all taxable years, including the year
during which such liquidation occurs),
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such Person shall have no obligation to make any contribution to
capital, and the negative balance of such Person's Capital Account shall
not be considered a debt owed by such Person to the Company or to any
other person for any purpose whatsoever.
(d) Upon completion of the winding up, liquidation, and
distribution of the assets, the Company shall be deemed terminated.
(e) The Managers shall comply with any applicable requirements
of applicable law pertaining to the winding up of the affairs of the
Company and the final distribution of its assets.
13.03 Return of Contribution Nonrecourse to Other Members. Upon
dissolution, each Member shall look solely to the assets of the Company for the
return of its Contribution to Capital. If the assets remaining after the payment
or discharge of the debts and liabilities of the Company is insufficient to
return the cash contribution of one or more Members, such Member or Members
shall have no recourse against any other Member or against any Manager.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.01. Application of North Carolina Law. This Operating Agreement, and
the application or interpretation hereof, shall be governed exclusively by its
terms and by the laws of the State of North Carolina, and specifically the North
Carolina Act.
14.02 Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings,
designations, powers of attorney, and other instruments necessary to comply with
any laws, rules or regulations.
14.03 Construction. Whenever the singular number is used in this
Operating Agreement and when required by the context, the same shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter genders and vice versa.
14.04 Headings The headings in this Operating Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Operating Agreement or any provisions
hereof.
14.05 Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
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14.06 Rights and Remedies Cumulative. The rights and remedies provided
by this Operating Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive the right to further use of that
right or remedy or to use any other rights or remedies. Such rights and remedies
are given in addition to any other rights and remedies available under
applicable law.
14.07 Severability. If any provision of this Operating Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Operating Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
14.08 Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
14.09 Creditors. None of the provisions of this Operating Agreement
shall be for the benefit of or enforceable by any creditors of the Company.
14.10 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
14.11 Federal Income Tax Elections. All elections required or permitted
to be made by the Company under the Code shall be made by the Managers in their
sole discretion. For all purposes permitted or required by the Code, the Members
constitute and appoint James B. Powell as Tax Matters Member or, if James B.
Powell is no longer a Member, then such other Member as shall be designated by a
Majority in Interest of the Members. No Member who is designated Tax Matters
Member may take any action contemplated by ss.ss.6222 through 6232 of the Code
without the consent of the Managers.
14.12 Notices. Any and all notices, offers, demands or elections
required or permitted to be made under this Operating Agreement ("Notices")
shall be in writing, signed by the party giving Notice, and shall be deemed
given and effective when delivered personally or by courier service. If
delivered by courier service, Notice shall be deemed to be delivered three (3)
calendar days after being dispatched, addressed to the Member at its address as
it appears on the books of the Company, with all delivery charges prepaid.
14.13 Amendments. Any amendment to this the only Operating Agreement of
the Company approved by the Members pursuant to Section 5.06 shall be in
writing, adopted by the Managers, and signed by Members holding a Majority in
Interest. The Operating Agreement shall not include any oral agreements made by
Members or Managers.
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14.14. Invalidity. The invalidity or unenforceability of any particular
provision of this Operating Agreement shall not affect the other provisions
hereof, and the Operating Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted. If any particular
provision herein is construed to be in conflict with the provisions of the North
Carolina Act, the North Carolina Act shall control and such invalid or
unenforceable provisions shall not affect or invalidate the other provisions
hereof, and this Agreement shall be construed in all respects as if such
conflicting provision were omitted.
14.15 Arbitration. Any dispute, controversy or claim arising out of or
in connection with, or relating to, this Operating Agreement or any breach or
alleged breach hereof shall, upon the request of any party involved, be
submitted to, and settled by, arbitration in North Carolina, pursuant to the
Commercial Arbitration Rules then in effect of the American Arbitration
Association (or at any time or at any other place or under any other form of
arbitration mutually acceptable to the parties so involved). Any award rendered
shall be final and conclusive upon the parties and a judgment thereon may be
entered in the highest court of any forum, state or federal, having
jurisdiction. The expenses of the arbitration shall be borne equally by the
parties to the arbitration, provided that each party shall pay for and bear the
cost of its own experts, evidence and counsel's fees, except that in the
discretion of the arbitrator, any award may include the cost of a party's
counsel if the arbitrator expressly determines that the party against whom such
award is entered has caused the dispute, controversy or claim to be submitted to
arbitration as a dilatory tactic.
14.16 Determination of Matters not Provided for in this Agreement. The
Managers shall decide any questions arising with respect to the Company and this
Agreement which are not specifically or expressly provided for in this
Agreement.
14.17 Further Assurances. The Members each agree to cooperate, and to
execute and deliver in a timely fashion any and all additional documents
necessary to effectuate the purposes of the Company and this Agreement,
including but not limited to consents to jurisdiction for a taxing jurisdiction
with regard to the collection of income taxes attributable to the Member's
income and interest and penalties assessed on such income.
14.18 Conflicts of Interest. A Member or Manager shall be entitled to
enter into transactions that may be considered to be competitive with, or a
business opportunity that may be beneficial to, the Company, it being expressly
understood that some of the Members may enter into transactions that are similar
to the transactions into which the Company may enter. Notwithstanding the
foregoing, Members shall account to the Company and hold as trustee for it any
property, profit, or benefit derived by the Member, without the consent of the
other Members, in the conduct and winding up of the Company business or from a
use or appropriation by the Member of Company property including information
developed exclusively for the Company and opportunities expressly offered to the
Company. A Member, including a Manager who is a Member, does not violate a duty
or obligation to the Company merely because the Member's conduct furthers the
Member's own interest. A Member may lend money to and transact other business
with the Company. The rights and obligations of a Member who
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lends money to or transacts business with the Company are the same as those of a
person who is not a Member subject to other applicable law. No transaction with
the Company shall be voidable solely because a Member has a direct or indirect
interest in the transaction if either the transaction is fair to the Company or
the disinterested managing Members or disinterested Members, in either case
knowing the material facts of the transaction and the Member's interest,
authorize, approve, or ratify the transaction.
IN WITNESS WHEREOF, the undersigned, being all of the initial Managers
and all of the initial Members of the Company, have caused this Agreement to be
duly adopted by the Company as of the day and year first written above, and do
hereby assume and agree to be bound by and to perform all of the terms and
provisions set forth in this Agreement.
MEMBERS:
/s/ James B. Powell
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James B. Powell
/s/ Daphne Powell Markcrow
----------------------------------------------
Daphne Powell Markcrow
/s/ Anne Ellington Powell
----------------------------------------------
Anne Ellington Powell, as custodian for John
Banks Powell under the North Carolina
Uniform Transfers to Minors Act
/s/ Anne Ellington Powell
----------------------------------------------
Anne Ellington Powell, as custodian for James
Rosser Powell under the North Carolina
Uniform Transfers to Minors Act
/s/ Anne Ellington Powell
----------------------------------------------
Anne Ellington Powell, as custodian for Helen
Bobbitt Powell under the North Carolina
Uniform Transfers to Minors Act
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OPERATING AGREEMENT OF ALLEMANNI, LLC
Assignment of Membership Interests
FOR VALUE RECEIVED, M. Todd Jackson and Greg M. Chabon (collectively,
the "Assignors"), as the organizers and the initial members of the Company, do
hereby transfer and assign all of their membership interest in the Company, and
all of their right, title and interest as members of the Company, to the Members
(as defined above), and each of the Members, by his execution above, does hereby
accept the assignment provided for herein and consent thereto, and the Members
acknowledge and agree that the Assignors served as organizers of the Company for
convenience purposes only and have no liabilities or obligations to the Company
or the Members.
IN WITNESS WHEREOF, this instrument is duly executed by each of the
undersigned parties, effective as of the day and year first written above.
/s/ M. Todd Jackson
------------------------
M. Todd Jackson
/s/ Greg M. Chabon
------------------------
Greg M. Chabon
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The following Schedules to the Operating Agreement have been omitted:
Schedule I -- Table of Members
Schedule II -- Form of Installment Note
