ABC LLC Operating Agreement - Complex

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ABC, LLC A DELAWARE LIMITED LIABILITY COMPANY
November [], 2012
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ABC, LLC
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT is made effective as of the [] day of November, 2012, by and among Student A (SA), Student B (SB), Mr. Jos Prez (JP), Mr. Pedro Prez (PP) and Mrs. Mara Prez (MP). RECITALS WHEREAS, on January 1, 2012, the Certificate of Formation of ABC, LLC, a limited liability company organized under the laws of the State of Delaware (the Company), was filed with the Delaware Secretary of State. WHEREAS, that certain Limited Liability Company Agreement (the LLC Agreement) was entered into by SA, as sole Member of the Company, as of January 1, 2012, providing for the management of the business and the affairs of the Company, the allocation of profits and losses, the distribution of cash of the Company among the Members, the rights, obligations and interests of the Members to each other and to the Company, and certain other matters. WHEREAS, the parties hereto desire to enter into this Agreement (as defined below) to amend and restate the LLC Agreement in its entirety. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Members hereby agree as follows: ARTICLE I DEFINITIONS Capitalized terms used in this Agreement have the meanings specified in the Certificate of Formation or elsewhere in this Agreement. In referring to sections or provisions of the Code or Treasury Regulations, it is intended that the terms partner and partnership (or variations thereof) appearing therein shall be read, respectively, as Member or Company (or variations thereof). 1.1 Act means the Delaware Limited Liability Company Act, codified in the Delaware General Corporation Law, Section 18-101 et seq., as the same may be amended from time to time. 1.2 Section 3.3. Additional Capital Contribution has the meaning set forth in
1.3 Adjusted Capital Account Deficit means, with respect to any Person, the deficit balance, if any, in such Persons Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (a) credit to such Capital Account any amounts which such Person is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the next to the last sentence of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations after taking into account any changes during such year in Company Minimum Gain and Member Minimum Gain; and (b) debit to such Capital Account the items described in Section 1.7041(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted consistently therewith. 1.4 Affiliate means with respect to a specified Person: (a) any Person that directly or indirectly through one or more intermediaries, alone or through an affiliated group, controls, is controlled by, or is under common control with, such specified Person, (b) any Person that is an officer, director, partner, trustee, or employee of, or serves in a similar capacity with respect to, such specified Person (or an Affiliate of such specified Person), (c) any Person that, directly or indirectly, is the beneficial owner of 10% or more of any class of equity securities of, or otherwise has a substantial beneficial interest in, the specified Person or of which the specified Person is directly or indirectly the owner of 10% or more of any class of equity securities or in which the specified Person has a substantial beneficial interest, or (d) any relative or spouse of the specified Person. 1.5 Agreement means this Amended and Restated Limited Liability Company Agreement, as originally executed and as amended from time to time. 1.6 Allocated Portion of a Member, with respect to any Offered Interest pursuant to Article VIII, means the portion of such Offered Interest that such Member is entitled to purchase, stated as a percentage, the numerator of which shall be such Members Percentage Interest as of the applicable date, and the denominator of which shall be the aggregate Percentage Interests of all Members having the right to purchase such Membership Interests pursuant to Article VIII as of the applicable date. 1.7 Board of Managers has the meaning set forth in Section 5.1(a).
1.8 Bona Fide Offer means a written offer from any proposed Transferee of any Offered Interest that states (a) the form and amount of consideration being offered by such proposed Transferee for such Offered Interest, (b) other material terms of the proposed Transfer, and (c) the proposed timetable for the consummation of the proposed Transfer. 1.9 Book Value means, with respect to any asset of the Company, the assets adjusted basis for federal income tax purposes, except as follows:
Intent.ABC LLC Operating Agreement_Complex
(a) The initial Book Value of any asset contributed by a Member to the Company shall be such assets gross fair market value at the time of such contribution, as determined by the Board of Managers; (b) The Book Value shall be adjusted in the same manner as would the assets adjusted basis for federal income tax purposes, except that the depreciation deduction taken into account each Fiscal Year for purposes of adjusting the Book Value of an asset shall be the amount of Depreciation with respect to such asset taken into account for purposes of computing Net Income or Net Loss for the Fiscal Year; (c) The Book Value of any asset distributed to a Member by the Company shall be such assets gross fair market value at the time of such distribution, as determined by the Board of Managers; and (d) The Book Value of all assets of the Company shall be adjusted to equal their respective gross fair market values as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of property (including cash) as consideration for an interest in the Company; (C) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); and (D) the grant or vesting of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company; provided, however, that the adjustments pursuant to clauses (A) and (B) above shall be made only if and to the extent that the Board of Managers determines that such adjustments are necessary, appropriate or advisable to reflect the relative economic interests of the Members in the Company. 1.10 Budget has the meaning set forth in Section 5.1(d)(ii).
1.11 Business means the operation of a subscription-based prepaid credit and debit card linked to a mobile application and point-of-sale system allowing cardholders to access real-time paperless discounts at affiliated merchants and any and all other licit activities reasonably necessary or convenient to carry out the foregoing or approved by the Board of Managers from time to time. 1.12 Business Day means any day that is not a Saturday, Sunday or other day on which commercial banks in Delaware are authorized or required by law to remain closed. 1.13 Capital Account means, in respect of any Member, the capital account that the Company establishes and maintains for such Member pursuant to Section 3.2. 1.14 Capital Contribution means, with respect to any Member, the aggregate amount of money and the fair market value of any property (other than money) contributed to the Company (net of any liabilities assumed by the Company or secured by such property) with respect to the Membership Interests held by such Member. The initial Capital Contributions of the Members are reflected on Schedule I.
1.15 Cash Flow means all cash, revenues and funds received by the Company, less the following: (i) interest, principal and other amounts due with respect to any indebtedness of the Company, (ii) cash funds used to pay expenses of the Company (including any fees paid to the Members for services rendered to the Company), and (iii) reasonable reserves for future expenses, debt payments, capital improvements and replacements, or any other purpose related to the business of the Company, as reasonably determined by the Members as provided in Section 5.1(a) hereof. 1.16 Certificate of Formation means the Certificate of Formation of the Company filed pursuant to Section 2.1. 1.17 Code means the Internal Revenue Code of 1986, as amended, or any corresponding provision of any succeeding law. 1.18 Company means ABC, LLC, a Delaware limited liability company.
1.19 Company Minimum Gain means the excess of the Nonrecourse Liabilities of the Company over the adjusted tax basis of property securing such liabilities. The amount of Company Minimum Gain shall be determined in accordance with Treasury Regulations Section 1.704-2(d). 1.20 Company Right of First Refusal Exercise Notice has the meaning ascribed thereto in Section 8.5(b). 1.21 Company Right of First Refusal Option has the meaning ascribed thereto in Section 8.5(b). 1.22 Company Right of First Refusal Option Period has the meaning ascribed thereto in Section 8.5(b). 1.23 Company Right of First Refusal Notice has the meaning ascribed thereto in Section 8.5(a). 1.24 Controls, Control, Controlling, whether or not capitalized, means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity through ownership of voting securities, contract or otherwise. 1.25 Section 3.2 hereof. Conversion Loan shall have the meaning assigned to that term in
1.26 Deceased Member means any Member who becomes deceased during the term of this Agreement. 1.27 Depreciation means an amount equal to the depreciation, amortization or other cost-recovery deduction allowable with respect to an asset for the Fiscal Year or other period, except that if the Book Value of an asset differs from its adjusted tax basis at the beginning of the Fiscal Year or other period, Depreciation will be an amount which bears the same ratio to the beginning Book Value as the Federal income tax depreciation, amortization or other cost-recovery deduction for the Fiscal Year or other period bears to the beginning adjusted
tax basis; provided, however, that if the Federal income tax depreciation, amortization or other cost-recovery deduction for the Fiscal Year or other period is zero, Depreciation will be determined by reference to the beginning Book Value using any reasonable method. 1.28 Disabled Member shall mean any Employee Member who becomes Disabled, during the term of this Agreement. As used herein, Disabled shall mean and include (i) to the extent that the Company may, now or hereafter, maintain any policy of long term disability insurance covering any Employee Member, then Disability shall mean the definition of disability in such policy, or (ii) if such Employee Member is a party to an employment agreement with the Company, the definition, if any, of disability in such employment agreement, or (iii) in any other event, Disability shall mean such Employee Members substantial inability to perform the services normally performed by such Employee Member, as determined by a physician reasonably acceptable to the Company, which inability continues for more than sixty (60) consecutive days, or for more than ninety (90) days in any twelve month period. In the event an Employee Member makes a Permitted Transfer to a trust, as provided in Section 8.3 hereof, the trust shall be deemed a Disabled Member in the event the grantor of the trust becomes Disabled. In the event that the Company maintains a policy of long term disability insurance covering any Employee Member, which Employee Member is also a party to an employment agreement with the Company, in the event of any inconsistency between the definitions of disability contained in those documents, the definition contained in the employment agreement shall control for purposes of this Section 1.25. 1.29 Divorced Member means any Member who, during the term of this Agreement, becomes subject or party to a legal separation, action for dissolution of marriage, separation agreement, or property settlement agreement, as a result of which all or any portion of such Members Membership Interest become or are required to be Transferred to such Members spouse or ex-spouse. 1.30 1.31 Drag Along Notice has the meaning set forth in Section 8.6(a). Drag Along Sale has the meaning set forth in Section 8.6.
1.32 Economic Risk of Loss shall be determined under the rules specified in Regulations Section 1.752-2. 1.33 Effective Date means the date first above written.
1.34 Employee Member shall mean any Member who is an employee of the Company, or otherwise performs services for the Company substantially on a full-time basis. 1.35 ERISA means the Employee Retirement Income Security Act of 1974, as amended, and all guidance promulgated thereunder. 1.36 Estate of the Deceased Member means and includes, as those terms are understood and defined under applicable state law:
(a) The duly appointed and qualified executor, executrix, administrator, administratrix, administrator with will annexed or administratrix with will annexed under the estate of the Deceased Member; (b) The surviving joint tenant of the Deceased Member if the Membership Interest are owned by the Deceased Member and any other Person as joint tenants; (c) Any other Person who may, because of the community property law or other laws of any jurisdiction, acquire without formal probate proceedings any right, title or interest in or to the Membership Interest by reason of the death of the Deceased Member; and (d) In the event a Member makes a Permitted Transfer to a trust pursuant to Section 8.3 hereof, the trust to which such Permitted Transfer is made, following the death of the Member making such Permitted Transfer. 1.37 1.38 Excluded Proceeding has the meaning set forth in Section 10.2. Executive has the meaning set forth in Section 11.1(a).
1.39 Fiscal Year means the Companys fiscal year, which shall be the calendar year (except as otherwise required by law), and any partial year with respect to the fiscal years in which the Company is organized and dissolved or terminated. 1.40 Free Cash Flow shall have the meaning assigned to that term in Section 4.3(a) hereof. 1.41 Funding Member(s) has the meaning set forth in Section 3.2.
1.44 Intellectual Property shall mean all of the software, systems, source code, object code, executables and any other materials, including, but not limited to, manuals, documentation and any other materials used (or useful, if any), related to or associated with the offering, implementation, operation, and/or functioning of the Business and all of the following worldwide intangible legal rights, whether or not filed, perfected, registered or recorded and whether now or hereafter existing, filed, issued or acquired: (i) all patents, patent applications, and patent rights, including any and all continuations, divisions, reissues, reexaminations or extensions thereof; (ii) all rights to inventions, discoveries, and ideas, whether patentable or not, including the right to seek patent protection for inventions and discoveries; (iii) all rights associated with works of authorship, including but not limited to copyrights, copyright applications and copyright registrations; (iv) all rights relating to the protection of trade secrets, know-how and other confidential information, including, but not limited to, rights in industrial property and all associated information and other confidential or proprietary information; (v) all industrial design rights; (vi) the right to obtain an assignment of any of the rights set forth in the preceding clauses under employment agreements and otherwise; and (vii) any rights analogous to those set forth in the preceding clauses and any other proprietary rights relating to intangible property together with all rights corresponding thereto throughout the world, including, without limitation, all income, royalties, damages and payments for past and future infringements thereof, together with full right to sue for and recover all damages and profits recoverable for
infringements of such rights, and all intellectual property rights and all other proprietary information including but not limited to trade secrets. 1.42 LLC Agreement has the meaning assigned to that term in the Recitals.
1.43 Losses means all damages, liabilities, awards, judgments, assessments, fines, sanctions, penalties, charges, costs, liens, losses, payments, expenses and fees, including all court costs and reasonable attorneys and accountants fees and expenses sustained or incurred in connection with the defense or investigation of any Proceeding. 1.44 Majority Members means Members holding at least Fifty One Percent (51%) of the Percentage Interests. 1.45 Member or Members means the parties to this Agreement, and any other Person, who otherwise acquires a Membership Interest and has become a party to this Agreement, as permitted under this Agreement, whos Membership Interest, has not been terminated. The parties expressly agree that the initial Members may, in their sole discretion, create a class of Membership Interests, which shall be granted and issued to Employee Members (other than the initial Members). The terms of such Membership Interests shall be as defined in an addendum to this Agreement, but it is the intention of the initial Members that such Membership Interests will entitle the Employee Members only to receive a stated percentage of the net proceeds of certain capital events or transactions involving the Company, and that the Employee Members who are granted such Membership Interests shall not be granted voting rights, or participate in management of the Company, and that the rights and privileges of such Membership Interests will be limited to those provided in the addendum establishing such Membership Interests, and references herein to Members shall include the Employee Members which are holders of such Membership Interests only to the extent expressly provided in such addendum. 1.46 Member Minimum Gain has the meaning of partner nonrecourse debt minimum gain set forth in Treasury Regulations Section 1.704-2(i)(2), which generally defines partner nonrecourse debt minimum gain as the Company Minimum Gain attributable to Member Nonrecourse Debt. 1.47 Member Nonrecourse Debt has the meaning set forth for partner nonrecourse debt in Treasury Regulations Section 1.704-2(b)(4), which generally defines partner nonrecourse debt as any liability of the Company to the extent such liability is nonrecourse and a partner (i.e., Member) (or related person) bears the economic risk of loss pursuant to Treasury Regulations Section 1-752.2. 1.48 Member Nonrecourse Deductions means items of Company loss, deduction, or Code Section 705(a)(2)(b) expenditures that are attributable to Member Nonrecourse Debt within the meaning of Regulations Section 1.704-2(i). 1.49 Membership Interest means a Members entire interest in the Company, including such Members economic interest, Percentage Interest, right to vote and to participate in the management of the Company, and the right to information concerning the business and affairs of the Company, if and to the extent any or all of such rights are granted, all
as defined in this Agreement, or in any addendum to this Agreement adopted for the purpose of establishing such class of Membership Interest. 1.50 Member Right of First Refusal Exercise Notice has the meaning set forth in Section 8.5(c). 1.51 Section 8.5(c). 1.52 Section 8.5(c). Member Right of First Refusal Notice has the meaning set forth in Member Right of First Refusal Option has the meaning set forth in
1.53 Member Right of First Refusal Option Period has the meaning set forth in Section 8.5(c). 1.54 Net Income and Net Loss means, for each fiscal year of the Company (or other period for which Net Income and Net Loss must be computed), an amount equal to the Companys after-tax income or loss for such year or period, determined in accordance with Code Section 703(a) and the Regulations, and, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss. The determination of Net Income and Net Loss pursuant to the previous sentence shall be subject to the following adjustments: (a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss shall be added to such taxable income or loss; (b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net Income or Net Loss shall be subtracted from Net Income or Net Loss; (c) Gains or losses resulting from any disposition of a Company asset with respect to which gains or losses are recognized for federal income tax purposes shall be computed with reference to the Book Value of the Company asset disposed of, notwithstanding the fact that the adjusted tax basis of such Company asset differs from its Book Value; (d) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing the taxable income or loss, there will be taken into account Depreciation; (e) If the Book Value of any Company asset is adjusted pursuant to the definition of Book Value, the amount of the adjustment will be taken into account as gain or loss from the disposition of the asset for purposes of computing Net Income or Net Loss; and (f) Notwithstanding any other provision of this subsection, any items of income, gain, loss or deduction that are specially allocated shall not be taken into account in computing Net Income or Net Loss.
1.55
Non-Funding Member(s) has the meaning set forth in Section 3.3.
1.56 Nonrecourse Liability has the meaning set forth in Treasury Regulations Section 1.752-1(a)(2). 1.57 Non-Vested Member(s) has the meaning set forth in Section 3.5.
1.58 Notice means a written notice required or permitted under this Agreement. A Notice shall be deemed given or sent when deposited, as certified mail, return receipt requested, postage and fees prepaid, in the United States mails; when personally delivered to the recipient; when transmitted by electronic means (including e-mail), and such transmission is electronically confirmed as having been successfully transmitted; or when delivered to the home or office of a recipient in the care of a person whom the sender has reason to believe will promptly communicate the Notice to the recipient. 1.59 1.60 Offered Interest has the meaning set forth in Section 8.5(a). Offeror has the meaning set forth in Section 8.5(a).
1.61 Percentage Interest means the percentage of ownership interest of a Member in the Company as set forth opposite the name of such Member under the column Percentage Interest in Schedule I hereto, which shall be amended from time to time in accordance to Section 3.2 of this Agreement to reflect any Membership Interests accruing to any new duly admitted Member, any changes resulting from a Conversion Election or the sale or transfer by any Member of its Membership Interests. 1.62 Permitted Transferee has the meaning set forth in Section 8.3.
1.63 Person means and includes any natural person, corporation, firm, joint venture, partnership, limited liability company, trust, unincorporated organization, government or any department, political subdivision or agency of a government. 1.64 Post-Employment Period means the 2-year period beginning on the date of the transfer of the Membership Interests of the Company by Executive. 1.65 Pro Rata Allotment has the meaning set forth in Section 8.9(c).
1.66 Proceeding means and includes any action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative or investigative in nature. 1.67 Purchase Price means the form and amount of consideration to be paid by the Company for any Offered Interest, which shall be the same as that set forth in the related Bona Fide Offer, or in the event that the Company purchases less than all of the Offered Interest, the ratable portion thereof. 1.68 Qualified Appraiser has the meaning set forth in Section 8.5(e).
1.69
Regulatory Allocations has the meaning set forth in Section 4.2(f).
1.70 Remaining Members mean the Members other than the Offeror or the Selling Member, as appropriate. 1.71 Remaining Offered Interest means, with respect to any proposed Transfer subject to Section 8.5, the portion of any Offered Interest that the Members has not notified the Offeror it wishes to purchase pursuant to Section 8.5(b) by exercising the Members Right of First Refusal Option, which portion shall be expressed as a percentage of all Membership Interests then outstanding. 1.72 Sale Event means the conveyance, sale, lease, transfer or other disposition in any transaction or series of related transactions, of all or substantially all of the Companys business or assets, or the merger, consolidation or similar transaction of the Company with another entity. 1.73 Selling Member means the Estate of a Deceased Member, a Disabled Member, a Divorced Member or a Terminated Member, as applicable. 1.74 hereof. 1.75 Supermajority Members means Members holding at least Sixty Percent (60%) of the Percentage Interests. 1.76 Terminated Member means any Employee Member, other than SA, whose employment with the Company is terminated during the term of this Agreement. As used herein, termination of the employment of any Employee Member shall mean any termination of the employment of such Member as an employee of the Company, whether by the Company or the Member, for any reason, including by death or disability, and is expressly not limited to a termination of the employment of an Employee Member for cause. 1.77 Transfer means and includes, in respect of a Membership Interest, or any element thereof, when used as a noun, any sale, hypothecation, pledge, assignment, attachment, gift or other disposition of a Membership Interest or any element thereof, and, when used as a verb, to sell, hypothecate, pledge, assign, attach, bequest or otherwise dispose of a Membership Interest or any element thereof. 1.78 Transferee means a Person who obtains or receives a Membership Interest or any element thereof by means of a Transfer. 1.79 Treasury Regulations means the income tax regulations promulgated by the United States Department of the Treasury and published in the Federal Register for the purpose of interpreting and applying the provisions of the Code, as such Regulations may be amended from time to time, including corresponding provisions of applicable successor regulations. Senior Loan shall have the meaning assigned to that term in Section 3.2
ARTICLE II ORGANIZATIONAL MATTERS 2.1 Filing of Certificate of Formation. The parties have organized the Company pursuant to the Act and the provisions of the LLC Agreement and, for that purpose, have caused the Certificate of Formation to be prepared, executed and filed with the Delaware Secretary of State on January 1, 2012. The Members agree that the rights, duties and liabilities of the Members shall be as provided in the Act, except as otherwise expressly provided herein. 2.2 Name of Company. The name of the Company is ABC, LLC. The Company may do business under that name and under any other name or names that the Members select. If the Company does business under a name other than that set forth in its Certificate of Formation, then the Company shall comply with any requirements of the Act or applicable law. 2.3 Address of Company. The principal executive office of the Company shall be situated at [_____________________________], or such other place or places as may be determined by the Members from time to time. 2.4 Agent for Service of Process. The agent for service of process on the Company shall be Business Filings Incorporated, 108 West 13th Street, Wilmington, Delaware 19801 or such other agent as may be determined by the Members from time to time. 2.5 Business Purposes. The purpose of the Company is to conduct the Business. In conducting the Business, the Company may engage in any lawful act or activity for which a limited liability company may be organized under the Act. The Company shall possess and may exercise all powers necessary or convenient to the conduct and promotion of the Company's business or activities. 2.6 Tax Treatment as Partnership. It is the intent of the Members that the Company shall always be operated in a manner consistent with its treatment as a partnership for Federal and State income tax purposes. Except as provided in the foregoing sentence, the Members intend the Company to be a limited liability company under the Act, and that they be Members, and not partners in a partnership. No Member shall take any action inconsistent with the express intent of the parties hereto. 2.7 Term of Companys Existence. The term of existence of the Company commenced on the Effective Date of filing of the Certificate of Formation with the Delaware Secretary of State, and shall continue in perpetuity, unless sooner terminated by the provisions of this Agreement or as provided by law. ARTICLE III CAPITAL ACCOUNTS AND CAPITAL CONTRIBUTIONS 3.1 Capital Accounts. The Company shall maintain a separate Capital Account for each Member. The Capital Account of each Member shall be increased by: (i) the amount of money contributed by such Member to the Company, (ii) the Book Value of the
property contributed by such Member to the Company (net of any liabilities relating to such contributed property that the Company is considered to assume or take subject to under Code Section 752); (iii) allocations to such Member of Companys Net Income and (iv) other additions made in accordance with the Code and Treasury Regulations. The Capital Account of each Member shall be decreased by: (i) the amount of money distributed to such Member by the Company, (ii) the Book Value of the property distributed to such Member by the Company (net of any liability secured by such property distributed thereof), and (iii) allocations to such Member of Companys Net Loss realized by the Company during each taxable year; and (iv) other deductions made in accordance with the Code and Treasury Regulations. 3.2 Additional Capital Contributions. The Members shall be required to make additional capital contributions to the Company to cover operating expenses and ongoing capital requirements of the business as required in the Budget and/or determined by the Board of Managers from time to time (each an Additional Capital Contribution). Any approved Additional Capital Contribution shall be pro-rata in the same proportion as the Percentage Interest held by such Member in the Company at the time of making the Additional Capital Contribution. Except as otherwise provided to the contrary herein, in the event that one or more of the Members is not able to satisfy its proportionate share of the Additional Capital Contributions as approved by the Board of Managers (the Non-funding Member(s)), then the remaining Member(s) (the Funding Member(s)), at their sole discretion, may elect to fund the Non-funding Member(s)s proportionate share of the Additional Capital Contribution. Such amount shall be a senior loan to the Company, secured by a lien on the Company and its assets, and bearing interest at an annual percentage rate of LIBOR 90-day plus 5% with a term of one (1) year (the Senior Loan). Such Senior Loan will be repaid directly by the Company out of the first distributions otherwise distributable to the Non-Funding Member(s). The Funding Member(s) shall, in its sole discretion, have the option, from time to time and at any time, to convert such Senior Loan into additional Membership Interests of the Company (the Conversion Election). If the Funding Member(s) make a Conversion Election, the Percentage Interest of the Funding Member(s) in the Company shall be increased to a percentage equal to the quotient (rounded up to the nearest one hundredth of one percent) obtained when the Senior Loan subject to the Conversion Election of a Funding Member(s) is added to the fair market value of the Percentage Interest owned by such Funding Member(s) as of the date of the Conversion Election, and the result is divided by the sum of the Senior Loan subject to the Conversion Election and the fair market value of the Percentage Interest in the Company owned by all Members as of the date of the Conversion Election. The Percentage Interest of the Non-Funding Member(s) shall be decreased by the aggregate Percentage Interest increase of all Funding Member(s) as a result of funding such Non-Funding Member(s)' portion of the Additional Capital Contribution. The determination of the Fair Market value of the Percentage Interests in the Company for purposes of the above computation, shall be made by the Board of Managers, which determination, absent manifest error, shall be conclusive. 3.3 Return of Capital Contributions. Except in accordance with the terms of this Agreement, no Member shall be entitled to withdraw, redeem, or to receive a return of, any part of a Capital Contribution or to receive any distributions, whether of money or property, from the Company.
3.4 No Interest on Capital Contributions or Capital Accounts. Except as otherwise provided in this Agreement, no interest shall be paid on any Capital contributions or on the balance of any Capital Account. 3.5 Repurchase Option of the Company. Notwithstanding anything herein to the contrary, the Members covenant and agree that (a) in the event that any of SB, JP PP, MP and/or any other Person who hereinafter becomes a Member (the Non-Vested Member(s)) does not achieve its annual performance requirements that may be set forth by the Board of Managers from time to time; or (b) if any of the Non-Vested Members were to breach any covenant or obligation of theirs under this Agreement or their respective employment agreements (collectively a Repurchase Event), the Company shall have the option, but not the obligation, to repurchase all of the Membership Interests acquired by said Non-Vested Member pursuant to this Agreement in accordance with the following terms and conditions: (i) If the Repurchase Event occurs within twelve (12) months from the date of this Agreement, then the Company shall have the right to call and repurchase all of the Non-Vested Member(s) Membership Interests in the Company for One Dollar ($1.00); (ii) If the Repurchase Event occurs within the period beginning on the first day of the thirteenth (13th) month and ending on the last day of the twenty fourth (24th) month from the date of this Agreement, then the Company shall have the right to call and repurchase (a) sixty seven percent (67%) of the Non-Vested Member(s) Membership Interests in the Company for One Dollar ($1.00); and (b) all or part of the remaining thirty three percent (33%) at its fair market value (as the same is determined by the Board of Managers, which determination shall be conclusive, absent manifest error), provided however, that in no event shall the fair market value of the Membership Interests being repurchased be less than the Book Value thereof. The Company may, at its sole discretion, elect to exercise either or both of the two repurchase rights described in this section. (iii) If the Repurchase Event occurs within the period beginning on the first day of the twenty fifth (25th) month and ending on the last day of the thirty sixth (36th) month from the date of this Agreement, then the Company shall have the right to call and repurchase (a) thirty four percent (34%) of the Non-Vested Member(s) Membership Interests in the Company for One Dollar ($1.00); and (b) all or part of the remaining sixty six percent (66%) at its fair market value (as the same is determined by the Board of Managers, which determination shall be conclusive, absent manifest error), provided however, that in no event shall the fair market value of the Membership Interests being repurchased be less than the Book Value thereof. The Company may, at its sole discretion, elect to exercise either or both of the two repurchase rights described in this section; (iv) If the Repurchase Event occurs after the last day of the thirty sixth (36th) month from the date of this Agreement, then the Company shall have the right to call and repurchase all or part of the Non-Vested Member(s) Membership Interests in the Company at its fair market value (as the same is determined by the Board of Managers, which determination shall be conclusive, absent manifest error), provided however, that in no event shall the fair market value of the Membership Interests being repurchased be less than the Book Value thereof.
ARTICLE IV PROFITS, LOSSES AND DISTRIBUTIONS 4.1 Allocations of Net Income and Net Loss. Subject to Section 4.2, Net Income and Net Loss of the Company shall be allocated among the Members as follows: (a) Net Income. Net Income of the Company for each Fiscal Year shall be allocated to the Members in the following order of priority: (i) First, to the Members having Adjusted Capital Account Deficits, in proportion to, and to the extent of, those Adjusted Capital Account Deficits; and (ii) Second, to the Members in proportion to, and to the extent of, the excess, if any, of the cumulative amount of Net Loss previously allocated to each Member pursuant to Section 4.1(b)(ii) over the cumulative amount of Net Income previously allocated to each such Member pursuant to Section 4.1(a)(i) and (ii); and (iii) Percentage Interests. (b) Net Loss. Net Loss of the Company for each Fiscal Year shall be allocated to the Members in the following order of priority: (i) First, to the Members in proportion to, and to the extent of, the excess, if any, of the cumulative amount of Net Income previously allocated to each Member pursuant to Section 4.1(a) over the cumulative amount of Net Loss previously allocated to each such Member pursuant to this Section 4.1(b)(i); (ii) Interests. Notwithstanding the foregoing, allocations of Net Loss to a Member shall be made only to the extent that such allocations of Net Loss will not create or increase an Adjusted Capital Account Deficit for that Member. Any Net Loss not allocated to a Member because of the foregoing sentence shall be allocated to the other Members (to the extent the other Members are not limited in respect of the allocation of Net Loss under the previous sentence) in accordance with this Section 4.1(b). Any Net Loss reallocated under this provision shall be taken into account in computing subsequent allocations of Net Income and Net Loss so that the net amount of any item so allocated and the Net Income and Net Loss allocated to each Member, to the extent possible, shall be equal to the net amount that would have been allocated to each such Member if no reallocation of losses had occurred under this provision. 4.2 Regulatory Allocations. Notwithstanding any other provision of this Agreement, the following special allocations shall be made in the following order: (a) Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any fiscal year, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, for subsequent years) in an amount equal to such Members share of the net decrease in Company Minimum Gain, as determined
Third, to the Members in proportion to their respective
Second, to the Members in proportion to their Percentage
under Treasury Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4.2(a) is intended to comply with the minimum gain chargeback requirements of Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith. (b) Chargeback Attributable to Member Nonrecourse Debt. If there is a net decrease in Member Minimum Gain during any Fiscal Year, each Member with a share of Member Minimum Gain at the beginning of such Fiscal Year shall be specially allocated items of income and gain for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) in an amount equal to such Members share of the net decrease in Member Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-2(i)(4) and (5). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2)(i). This Section 4.2(b) is intended to comply with the partner minimum gain chargeback requirements of Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith. (c) Qualified Income Offset. If any Member unexpectedly receives any adjustment, allocation or distribution described in Treasury Regulations Section 1.7041(b)(2)(ii)(d)(4), (5) or (6) which results in an Adjusted Capital Account Deficit for the Member, such Member shall be allocated items of income and book gain in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible; provided, that an allocation pursuant to this Section 4.2(c) shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article IV have been tentatively made as if this Section 4.2(c) were not in the Agreement. This Section 4.2(c) is intended to constitute a qualified income offset as provided by Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. (d) Member Nonrecourse Deductions. Member Nonrecourse Deductions shall be allocated among the Members who bear the Economic Risk of Loss for the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in the ratio in which they share Economic Risk of Loss for such Member Nonrecourse Debt. This provision is to be interpreted in a manner consistent with the requirements of Treasury Regulations Section 1.704-2(b)(4) and (i)(1). (e) Nonrecourse Deductions. Any Nonrecourse Deductions (as defined in Treasury Regulations Section 1.704-2(b)(1)) for any Fiscal Year or other period shall be specially allocated to the Members in proportion to their Percentage Interests. (f) Regulatory Allocations. The allocations set forth in this Section 4.2 (the Regulatory Allocations) are intended to comply with certain requirements of the applicable Treasury Regulations promulgated under Code Section 704(b). It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss, or deduction pursuant to this Section 4.2(f). Therefore, notwithstanding any other provision of this Section 4.2 (other than the Regulatory Allocations), the Company shall make such offsetting
special allocations of Company income, gain, loss, or deduction in whatever manner the Board of Managers determines is appropriate so that, after such offsetting allocations are made, each Members Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not in this Agreement. 4.3 Distributions of Cash Flow. Except as provided in Section 4.8, the Cash Flow of the Company shall be distributed to the Members in the following order: (a) If at any time after the approval of the Companys third (3rd) year business plan, the Companys projections reflect excess cash availability after the necessary provisions for working capital, debt servicing and capital expenditures (Free Cash Flow), the Company will distribute at least fifty percent (50%) of Free Cash Flow to SA until such time as SA has received distributions under this Section that are equal to the fair market value of the Intellectual Property contributed by her to the Company, as of the date hereof, which the Members hereby agree has a value of eight hundred thousand United States dollars (US$800,000.00). (b) Once SA has received distributions under Section 4.3(a) in the amount of eight hundred thousand United States dollars (US$800,000.00), the Company will distribute Cash Flow in the aggregate amounts as the Board of Managers may determine in proportion to the Capital Account Balance of each Member. 4.4 Record Dates. All Net Income and Net Loss shall be allocated, and all distributions shall be made, to the Persons shown on the records of the Company to have been Members as of the last day of the taxable year for which the allocation or distribution is to be made. Notwithstanding the foregoing, unless the Companys taxable year is separated into segments, if there is a Transfer of a Membership Interest during the taxable year, the Net Income and Net Loss shall be allocated between the original Member and the successor on the basis of the number of days each was a Member during the taxable year; provided, however, the Companys taxable year shall be segregated into two or more segments in order to account for Net Income, Net Loss, or proceeds attributable to any extraordinary non-recurring items of the Company. 4.5 Withholding Taxes.
(a) Notwithstanding any other provision of this Agreement, each Member authorizes the Company to withhold and to pay over, or otherwise pay, any withholding or other taxes payable by the Company or any of its Affiliates (pursuant to the Code or any provision of the United States federal, state, local or foreign tax law) with respect to such Member or as a result of such Members participation in the Company; and if and to the extent that the Company shall be required to withhold or pay any such withholding or other taxes, such Member shall be deemed for all purposes of this Agreement to have received a payment from the Company as of the time such withholding or other tax is required to be paid, which payment shall be deemed to be a distribution with respect to such Members interest in the Company. To the extent that such deemed distribution to such Member (or any successor to such Member) for any taxable period exceeds the distributions that such Member would have received for such period but for such withholding, such excess shall be treated as an interest-free advance to such Member. Amounts so treated as advanced to any Member shall be repaid by such Member to the Company within
thirty (30) days after the Company delivers a written request to such Member for such repayment; provided, however, that if any such repayment is not made, the Company may (without prejudice to any other rights of the Company) collect such unpaid amounts from any subsequent Company distributions that otherwise would be made to such Member. (b) Any withholdings referred to in this Section 4.5 shall be made at the maximum applicable statutory rate under the applicable tax law unless the Members shall have received an opinion of counsel or other evidence, satisfactory to the Members, to the effect that a lower rate is applicable, or that no withholding is applicable. (c) If the Company receives a distribution from or in respect of which tax has been withheld, the Company shall be treated as having received cash in an amount equal to the amount of such withheld tax, and each Member shall be treated as having received as a distribution the portion of such amount that is attributable to such Members interest in the Company as equitably determined by the Members. 4.6 No Restoration of Negative Capital Accounts. obligated to restore a Capital Account with a balance of less than zero. No Member shall be
4.7 Compliance with Laws and Regulations. It is the intent of the Members that each Members distributive share of Company tax items be determined in accordance with this Agreement to the fullest extent permitted by Sections 704(b) and 704(c) of the Code. Therefore, notwithstanding anything to the contrary contained herein, if the Company is advised, as a result of the adoption of new or amended regulations pursuant to Code Sections 704(b) and 704(c), or the issuance of authorized interpretations, that the allocations provided in this Agreement are unlikely to be respected for Federal income tax purposes, the Members are hereby granted the power to amend the allocation provisions of this Agreement, on advice of accountants and legal counsel, to the minimum extent necessary to cause such allocation provisions to be respected for Federal income tax purposes. 4.8 Distributions with Respect to Taxes.
(a) In the event that for United States Federal, Delaware, or other state income tax purpose, as applicable, the Members shall include their share of taxable income in their information returns without actually having received such taxable income, then, if the funds are available, the Company shall make mandatory pro-rata distributions to the Members for the payment of taxes in accordance with the following: (i) the amount distributable with respect to any year shall be equal to the aggregate amount of United States Federal, Delaware and other state income taxes payable by the Members, as applicable, with respect to the taxable income of the Company allocable to the Members, assuming, for purposes of determining the amount of such distribution, that each Member will be taxed on the net amount set forth in the Member's information return at the highest marginal United States Federal income tax rate for such year, and at the highest marginal Delaware or other state income tax rates applicable to any Member for each such taxable year; and
(ii) such distributions shall be payable at such time or times and in such amounts as will enable the Members to avoid penalties and interest otherwise payable on account of the failure to pay a sufficient amount of estimated taxes as required by law. (b) The amount of any Tax Distributions made to a Member under Section 4.8(a) shall be offset against future distributions to which such Member is entitled under Section 4.3 as quickly as possible in such a manner that, immediately after any distribution has been made pursuant to Section 4.3, the cumulative amount of distributions that have actually been received by each Member pursuant to Sections 4.3 and 4.8(a) shall equal (to the extent possible) the distributions to which such Member would have been entitled if all such distributions had been made by the Company in accordance with Section 4.3. ARTICLE V MANAGEMENT 5.1 Management.
(a) Management by the Board of Managers. The Members hereby agree that all decisions concerning the management, operation, finances and policy of the Companys business shall be made by a board of managers (the Board of Managers), initially composed of four (4) managers. SA shall have the right to select three (3) managers and SB, JP, PP and MP, by majority of their collective Membership Interests, shall have the right to select the other manager. The Board of Managers shall have full, complete and exclusive authority, power and discretion to manage and control the business, property and affairs of the Company, to make or delegate all decisions regarding those matters and to perform any and all acts or activities customary or incidental to the management, operation, finances and policy of the Companys business, property or affairs. In the event of any deadlock among the members of the Board of Managers regarding the Business, or the operations of the Company, the decision of the Majority Members shall control. (b) Removal; Vacancies. Each Member agrees to vote all of its Membership Interests having voting power (and any other Membership Interests over which it exercises voting control), for the removal of any manager upon the request of the Persons or Member(s) then entitled to nominate such manager as set forth in Section 5.1(a) above, and for the election to the Board of Managers of a substitute designated by such Member(s) in accordance with the provisions hereof. Each Member further agrees to vote all of its Membership Interests having voting power (and any other Membership Interests over which it exercises voting control) in such manner as shall be necessary or appropriate to ensure that any vacancy on the Board of Managers occurring for any reason shall be filled only in accordance with the provisions of this Article V. (c) Meetings by the Board of Managers. The Company shall not be required to hold annual or other periodical meetings of the Board of Managers. Meetings of the Board of Managers may be held through the use of telephone conference or similar communications equipment, so long as all Members participating in such meeting can hear and communicate with one another. Such participation shall be deemed attendance at the meeting. Any action that may be taken at any meeting of the Board of Managers may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by Members having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting
in which all the members of the Board of Managers were present and voted. If the Board of Managers is requested to consent to a matter without a meeting, each manager shall be given prior written notice of the matter to be voted upon. Any action taken without a meeting shall be effective when the required minimum number of votes of the Board of Managers have been received. The required quorum of the Board of Managers shall be constituted by the participation of three (3) managers in each meeting of the Board of Managers. Each manager shall have one (1) vote on all matters to be decided by the Board of Managers. All decisions, approvals and other actions of the Board of Managers shall require the vote of three (3) members of the Board of Managers. Decisions of the Board of Managers made in accordance with this Section 5.1(c) shall be binding upon the Company and each Member. (d) Actions on Behalf of Company. Without limiting the generality of Section 5.1(c), the Board of Managers or any proper designee of the Board of Managers is authorized and empowered to carry out and implement any and all of the following actions on behalf of the Company (provided such actions are in conformity with the aforesaid Section 5.1(c)): (i) engaging personnel, including the officers of the Company, and doing such other acts and incurring such other expenses on behalf of the Company as it may deem necessary or advisable in connection with the conduct of the Companys affairs, including the determination and payment of distributions to Members, and compensation to the Members (if any), in accordance with this Agreement; (ii) Budget); (iii) engaging and compensating independent attorneys, accountants, investment advisers, agents or other such Persons as it may deem necessary or advisable; (iv) opening, maintaining, conducting and closing accounts, including depositary, custodial, brokerage, margin, client or discretionary accounts, with banks, brokers, investment advisers, or other Persons, and paying the fees and charges for transactions in such accounts; (v) executing, delivering and performing such other contracts, agreements, and such other undertakings as it may deem necessary or advisable for the conduct of the Companys business; (vi) Person; (vii) amending Schedule I hereto, from time to time, to accurately reflect the Members and their respective Percentage Interests and Capital Accounts; and (viii) filing, if advisable, a Code Section 754 election for the Company. (e) Devotion of Time as Members. Each Member agrees to devote such time and attention to the Company and its Business as may be reasonably necessary to perform their
determining the Companys annual operating budget (the
determining the amount and timing of payment of any bonus to any
obligations under this Agreement. The Members shall devote to the Company such efforts as they shall deem reasonably necessary to manage the Business and affairs of the Company, and none of the Members or the Company shall have any interest or right in or to any other activities conducted by the other Members, or to the income or proceeds derived therefrom. Nothing contained in this Agreement shall preclude any Member from acting as a director, stockholder, officer, official, consultant or employee of any Person, from receiving compensation for services rendered in connection with the foregoing, from acting as a principal or employee of any Person with whom the Company may contract for services or otherwise, or participating in profits derived from investments in any such Person, or from investing in any securities or other property for its own account; provided, that such participation or involvement shall not interfere with the performance by such Person of its duties for the Company or its obligations under this Agreement or any other agreement between such Person and the Company. (f) Compensation and Reimbursement. The Members shall receive such compensation for services rendered to the Company as the Board of Managers shall determine in accordance with Section 5.1(c) hereof. The Company shall also, subject to any Budget adopted pursuant to Sections 5.1(c) or 5.1(d), reimburse the Members for reasonable out-of-pocket expenditures that such Members makes on behalf of the Company, as long as such Members submits substantiating evidence of such expenditures to the Company. (g) Exculpation. The Members shall not be liable to the Company or any Member for any claims, costs, expenses, damages or losses arising out of or in connection with the performance of their duties as Members, or for any act or omission performed or omitted to be performed by the Members in good faith and pursuant to the authority granted to the Members under this Agreement, other than those directly attributable to such Members own gross negligence or willful misconduct. The Members shall not be liable to any Member for claims, costs, expenses, damages or losses due to circumstances beyond the Members control, including, without limitation, due to the negligence, dishonesty, bad faith or misfeasance of any employee, broker or other agent of the Company. Any fiduciary duties of the Members hereby are reduced to the maximum extent permissible under Delaware law. 5.2 Officers. The Board of Managers may appoint officers of the Company, provided, however, that no such appointment, nor any actions of any officers so appointed, shall alter or amend the authority and powers of the Members or the Board of Managers as provided in Section 5.1(c). Any number of offices may be held by the same person. The Members may choose such officers and agents, as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Managers. The officers of the Company shall be empowered to carry out the day-to-day operations of the Company and to implement the actions authorized by the Board of Managers. Any officer may be removed either with or without cause by the Board of Managers at any time. Any officer may resign at any time by giving written notice to the Board of Managers. No officer need be a Member. 5.3 Title to Assets. The Members shall cause all assets of the Company to be held in the name of the Company.
ARTICLE VI MEMBERSHIP, MEETINGS, VOTING 6.1 Members and Voting Rights.
(a) Except as expressly set forth in this Agreement, no Member shall have any rights or preferences in addition to or different from those possessed by any other Member. Members shall have the right to vote or grant written consent upon those matters as to which this Agreement or the Act requires such Member action. Each Member shall vote in proportion to its Percentage Interest as of the governing record date, determined in accordance with Section 6.2 hereof. Unless otherwise provided in this Agreement, no Member shall be prohibited from voting merely by reason of the fact that the Member would be voting on a matter of particular interest to that Member. (b) Notwithstanding anything to the contrary contained in this Agreement, the prior approval of the Supermajority Members is required to cause the Company to take any of the following actions: (i) to authorize a Sale Event;
(ii) converting the Company from a limited liability company to any other type of business organization, including, without limitation, a business organization in a foreign jurisdiction; (iii) filing bankruptcy or other insolvency proceedings, or application to any tribunal for, or consenting to the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official, with respect to the Company and its assets; and (iv) amending the Certificate of Formation or this Agreement.
6.2 Record Dates. The record date for determining the Members entitled to Notice at any meeting or to vote, or entitled to receive any distribution, or to exercise any right in respect of any other lawful action, shall be the date set by the Board of Managers. 6.3 Membership Certificates. The Company may, but shall not be required, to issue certificates evidencing Membership Interests to Persons who, from time to time, are Members of the Company; provided, that once such certificates have been issued, they shall continue to be issued as necessary to reflect current Membership Interests held by Members. Certificates shall be in such form as may be approved by the Members, and shall bear conspicuous legends evidencing the restrictions on transfer described in, and the purchase rights of the Company and Members set forth in, Article VIII. All issuances, reissuances, exchanges and other transactions in Units involving Members shall be recorded in a permanent ledger as part of the books and records of the Company. 6.4 Meetings: Call, Notice and Quorum. The Company shall not be required to hold an annual meeting of Members. Special meetings of the Members may be called at any time by any Member, for the purpose of addressing any matters on which the Members may vote by delivering Notice to the Members. Meetings may be held at the principal executive office of
the Company or at such other location as may be designated by the Member calling such meeting. Following the call of a meeting, the Members shall give Notice of such meeting not less than three (3) or more than sixty (60) days prior to the date of the meeting to all Members entitled to vote at the meeting. The Notice shall state the place, date, and hour of the meeting and the general nature of business to be transacted. No other business may be transacted at the meeting. A quorum at any meeting of Members shall consist of Members representing in excess of Fifty One Percent (51%) of all Percentage Interests outstanding as of the record date for such meeting, represented in person or by proxy. The Members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a quorum, if the action taken, other than adjournment, is approved by the requisite Percentage Interests as specified in this Agreement or the Act. 6.5 Adjournment of Meetings. A meeting of Members at which a quorum is present may be adjourned to another time or place and any business which might have been transacted at the original meeting may be transacted at the adjourned meeting. If a quorum is not present at an original meeting, that meeting may be adjourned by the vote of a majority of the Percentage Interest represented at that meeting either in person or by proxy. Notice of the adjourned meeting need not be given to Members entitled to Notice if the time and place thereof are announced at the meeting at which the adjournment is taken, unless the adjournment is for more than forty-five (45) days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, in which cases Notice of the adjourned meeting shall be given to each Member of record entitled to vote at the adjourned meeting in the manner provided in Section 6.4. 6.6 Waiver of Notice. The transactions of any meeting of Members, however called and noticed, and wherever held, shall be as valid as though consummated at a meeting duly held after regular call and notice, if a quorum is present at that meeting, either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs either a written waiver of notice, a consent to the holding of the meeting, or an approval of the minutes of the meeting. Attendance of a Member at a meeting shall constitute waiver of notice, except when that Member objects, at the beginning of the meeting, to the transaction of any business on the ground that the meeting was not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required to be described in the notice of the meeting and not so included, if the objection is expressly made at the meeting. 6.7 Proxies. At all meetings of Members, a Member may vote in person or by proxy, which must be in writing. Such proxy shall be filed with the Members before or at the time of the meeting, and may be filed by electronic mail or facsimile transmission to the Members at the principal office of the Company or such other address as may be given by the Members to the Members for such purposes. 6.8 Participation in Meetings by Telephone Conference. Members may participate in a meeting through use of telephone conference or similar communications equipment, so long as all Members participating in such meeting can hear and communicate with one another. Such participation shall be deemed attendance at the meeting.
6.9 Action by Members Without a Meeting. Any action that may be taken at any meeting of the Members may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by Members having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all Members entitled to vote thereon were present and voted. If the Members are requested to consent to a matter without a meeting, each Member shall be given Notice of the matter to be voted upon in the manner described in Section 6.4. Any action taken without a meeting shall be effective when the required minimum number of votes have been received. Prompt Notice of the action taken shall be given to all Members who have not consented to the action. 6.10 No Withdrawal. Except as otherwise provided in this Agreement, no Member may withdraw from the Company without the prior written consent of the Majority Members, which consent may be withheld, conditioned or delayed for any reason whatsoever. 6.11 Restriction on Members Authority. No Member is an agent of the Company solely by virtue of being a Member, and no Member has the authority to act for or bind the Company or any other Member solely by virtue of being a Member.
ARTICLE VII ACCOUNTING AND FINANCIAL REPORTING 7.1 Accounts and Accounting. Proper and complete books of account of the Companys business, in which each Company transaction shall be fully and accurately entered, shall be kept at the Companys principal executive office, and at such other locations as the Members shall determine from time to time. 7.2 Accounting. The financial statements of the Company shall be prepared in a form which is appropriate and adequate for the Companys business and for carrying out the provisions of this Agreement. The annual accounting period of the Company shall be its taxable year. The Companys taxable year shall be selected by the Members, subject to the requirements of the Code. 7.3 Records. At all times during the term of existence of the Company, and beyond that term if the Members deems it necessary, the Members shall keep or cause to be kept the books of account referred to in Section 7.1, together with: (a) True and complete information regarding the status of the business and financial condition of the Company; (b) A copy of the Certificate of Formation and all amendments thereto;
(c) Copies of the Companys Federal, state, and local income tax or information returns and reports, if any, for each of the Companys taxable years; (d) A current list of the name and last known business, residence or mailing address of each Member and Members;
(e) A copy of this Agreement and the Certificate of Formation and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which this Agreement and the Certificate of Formation and all amendments thereto have been executed; and (f) True and complete information regarding the amount of Capital Contributions in the form of cash and a description and statement of the agreed value of any other Capital Contributions of each Member and which each Member has agreed to contribute in the future, and the date on which each became a Member. 7.4 Members Rights to Records.
(a) Upon the request of any Member, for purposes reasonably related to the interest of such Member, the Members shall cause to be promptly delivered to such Member, at the expense of such Member, a copy of the information required to be maintained pursuant to Section 7.3. (b) Each Member has the right, upon reasonable Notice, for purposes reasonably related to the interests of such a Member, to inspect and copy during normal business hours any of the records required by Section 7.3. 7.5 Financial Reports; Budget. In connection with its management of the dayto-day operations of the Company, the Members shall, among other things: (a) Within 120 days after the end of each Fiscal Year, deliver to the Members annual audited financial statements for the Company; (b) Send, or cause to be sent, in writing to each Member within 90 days after the end of each Fiscal Year the information reasonably necessary for each Member to complete federal and state income tax or information returns, and a copy of the Companys federal, state, and local income tax or information returns for such Fiscal Year. 7.6 Tax Matters Member. SA shall act as Tax Matters Member of the Company pursuant to section 6231(a)(7) of the Code. ARTICLE VIII WITHDRAWAL OF MEMBERS; TRANSFERS OF MEMBERSHIP INTERESTS; PREEMPTION 8.1 Transfer and Assignment of Interests. Subject to the requirements of this Article VIII, a Member may only Transfer all or any part of its Membership Interest upon and no new Members may be admitted to the Company without the prior written approval of the Board of Managers, which approval may be withheld, conditioned or delayed for any reason and for no reason. The vote of the Members shall not be required to admit a new Member. After the consummation of any Transfer of any part of a Members Membership Interest, the Membership Interest so transferred shall continue to be subject to the terms and provisions of this Agreement and any further Transfers shall be required to comply with all the terms and provisions of this
Agreement. Any voluntary Transfer in violation of the provisions of this Article VIII shall be void ab initio. 8.2 Further Restrictions on Transfer of Interests. In addition to other restrictions contained in this Agreement, no Member shall Transfer all or any part of its Membership Interest: (i) without compliance with all federal and state securities laws to the extent applicable; and (ii) unless the transferor pays all expenses reasonably incurred by the Company, including reasonable attorneys fees and costs, in connection with the Transfer. 8.3 Permitted Transfers. Notwithstanding the provisions of Sections 8.1, 8.5 and 8.6, so long as the transferring Member retains sole voting rights with respect to the transferred Membership Interest, the economic interest of the Membership Interest of any Member may be transferred, with or without consideration, subject to compliance with Section 8.1, and without the prior consent of the Board of Managers, to (i) an inter vivos trust for estate planning purposes, (ii) a spouse or any lineal descendant of a Member, and with respect to a Member that is a trust, the spouse or lineal descendant of its trustor, or (iii) an Affiliate of such Member, provided, however, that no such Permitted Transfer shall alter, limit or amend the obligations of such Member as provided in this Agreement. 8.4 Effective Date of Permitted Transfers. Any Permitted Transfer of all or any portion of a Members Membership Interest shall be effective on the day following the date upon which the requirement of Section 8.2 has been satisfied. The Member that is a party to the Transfer shall provide all other Members with written notice of such Transfer as promptly as possible after the requirements of Section 8.2 have been met, as well as any such documents as reasonably requested by the other Members upon such request. Any Transferee of all or any portion of a Members Membership Interest shall be subject to the terms and provisions of this Agreement. 8.5 Right of First Refusal.
(a) Prior to any Member (the Offeror) Transferring all or part of its Membership Interest (the Offered Interest) to any Person or group of Persons, other than in a Permitted Transfer, the Offeror must receive a Bona Fide Offer. Upon receipt of a Bona Fide Offer, the Offeror shall deliver a written notice (the Company Right of First Refusal Notice) to the Members, which shall include a copy of the Bona Fide Offer, and shall set forth all relevant information regarding such proposed Transfer, including but not limited to, (a) the identity and address of the proposed Transferee, (b) the Percentage Interest associated with such Offered Interest, (c) the form and amount of consideration to be paid by such proposed Transferee for such Offered Interest, (d) all other terms and conditions of such proposed Transfer, including but not limited to representations and warranties to be given to the proposed Transferee and similar provisions, and (e) if such an agreement has been prepared, the form of agreement pursuant to which such Transfer is to be made, together with all ancillary documents referred to in such agreement. (b) The Company shall have the right, but not the obligation (the Company Right of First Refusal Option), to purchase all or any portion of the Offered Interest at the Purchase Price. The Company may exercise its Company Right of First Refusal Option only by providing written notice thereof (the Company Right of First Refusal Exercise Notice) to
the Offeror within sixty (60) days after its receipt of the Company Right of First Refusal Notice (the Company Right of First Refusal Option Period); provided, however, that if the Purchase Price consists of, or includes, non-cash consideration, (i) the fair market value of such non-cash consideration shall be determined pursuant to Section 8.5(e), (ii) the Company Right of First Refusal Option Period shall not commence until the fair market value of such non-cash consideration has been so determined, and (iii) the Company shall have the right to pay the Offeror a cash amount equal to the fair market value of such non-cash consideration in lieu of delivering such non-cash consideration. In the event that the Company elects to exercise the Company Right of First Refusal Option, and, subject to the limitations of Section 8.5(d), is entitled to purchase such Offered Interest, the Company shall pay the Offeror the Purchase Price on or before the later of (y) (A) if the Company exercises its Company Right of First Refusal Option to purchase all of the Offered Interest, forty five (45) days after the delivery of the Company Right of First Refusal Exercise Notice to the Offeror, or (B) if the Company purchases only a portion of the Offered Interest, fifteen (15) days after the expiration of the Member Right of First Refusal Option Period, and (z) such other date as expressly set forth in the Company Right of First Refusal Notice. (c) In the event the Company does not elect to purchase all of the Offered Interest pursuant to the Company Right of First Refusal Option, the Offeror shall deliver to each of the Remaining Members (i) a copy of the Company Right of First Refusal Notice and any other updated information relating to the information contained in the Company Right of First Refusal Notice (including, if applicable, the fair market value of any non-cash consideration offered in the Bona Fide Offer as determined in accordance with Section 8.5(e)), (ii) a statement of the portion of the Offered Interest, expressed as a percentage of all the Membership Interests, that the Company elected to purchase pursuant to Section 8.5(b) (if any), and (c) a statement of the Remaining Offered Interest, expressed as a percentage of all the Membership Interests (collectively, the Member Right of First Refusal Notice). Each Remaining Member shall have the right, but not the obligation (the Member Right of First Refusal Option), to purchase its Allocated Portion of the Remaining Offered Interest at the purchase price (or cash amount equal to the fair market value thereof as determined by Section 8.5(e)) set forth in the Company Right of First Refusal Notice. Each Remaining Member may exercise its Member Right of First Refusal Option by providing notice thereof (which notice shall include the maximum portion of such Remaining Offered Interest that such Remaining Member desires to purchase) (the Member Right of First Refusal Exercise Notice) to the Offeror within thirty (30) days after its receipt of the Member Right of First Refusal Notice (the Member Right of First Refusal Option Period). In the event that any Remaining Member elects to exercise its Member Right of First Refusal Option, and, subject to the limitations of Section 8.5(d), is entitled to purchase its Allocated Portion, such Remaining Member shall pay the Offeror the purchase price of its Allocated Portion on or before the later of (y) fifteen (15) days after the expiration of the Member Right of First Refusal Option Period, and (z) such other date as expressly set forth in the Member Right of First Refusal Notice. (d) In the event that the Company and the Remaining Members elect not to purchase (in the aggregate) all of the Offered Interest pursuant to Section 8.5(b) and 8.5(c), the Company and the Remaining Members shall have no right to purchase any of the Offered Interest pursuant to this Section 8.5, and the Offeror shall have the right, but not the obligation, subject to compliance with Section 8.1, Section 8.2 and Section 8.6, to Transfer all of the Offered Interest to the proposed Transferee, for the purchase price and upon the terms and
conditions set forth in the Member Right of First Refusal Notice, which right shall be exercisable for a period of sixty (60) days immediately following the expiration of the Member Right of First Refusal Option Period. If the Transfer is not consummated within such period in the manner described above, then the Offeror shall continue to hold the Offered Interest subject to the provisions of this Agreement and the provisions of this Article VIII must be satisfied de novo before the Offeror can Transfer the Offered Interest. (e) Non-cash Consideration
(i) In the event that the consideration offered by a proposed Transferee consists, in whole or in part, of non-cash consideration, the fair market value of such non-cash consideration shall be determined by the Offeror in its good faith reasonable discretion, and shall be set forth in the Company Right of First Refusal Notice. If the Company, based upon its good faith reasonable belief, objects to such fair market value determination within ten (10) days after delivery to it of the Company Right of First Refusal Notice, the fair market value of such non-cash consideration shall be determined in writing by a duly qualified appraiser having a minimum of five (5) years of experience in making similar appraisals (a Qualified Appraiser) mutually agreed to by the Offeror and the Members. If the Offeror and the Members are unable to agree as to a single Qualified Appraiser, then each of the Offeror and the Members shall appoint one (1) Qualified Appraiser, and the two (2) Qualified Appraisers so appointed shall appoint a third (3rd) Qualified Appraiser. Each Qualified Appraiser appointed hereunder shall prepare and deliver to each of the Offeror and the Company a written appraisal of the fair market value of the non-cash consideration as of the date of the Company Right of First Refusal Notice, and the fair market value of such non-cash consideration shall be equal to the average of the two (2) written appraisals closest in value. The Offeror shall be responsible for all appraisal fees incurred in determining the fair market value of any non-cash consideration hereunder. (ii) The Company and each Member hereby acknowledge that time is of the essence with respect to the determination of any non-cash consideration pursuant to this Section 8.5(e), and hereby agree to cooperate fully with the other parties, and take all necessary and advisable actions, in order to facilitate the determination of such fair market value in an expeditious and timely basis, including without limitation, by executing additional instruments, documents and agreements as may be reasonably necessary to facilitate the determination of such fair market value. 8.6 Drag Along Rights. In the event that one or more Offeror(s) that are deemed individually or in the aggregate the Majority Members entertains a Bona Fide Offer to sell the Membership Interests held at such time by such Offeror from a proposed Transferee that is not controlled by any of the Members and that is also willing to buy the Membership Interests of all the remaining Members, each of the other Members hereby agrees, if requested by such Offeror in connection with such Offerors acceptance of the Bona Fide Offer, to transfer for value to such proposed Transferee the Membership Interests held by such Member(s) in the manner and on the terms set forth in this Section 8.6 (a Drag Along Sale). The number of Membership Interests to be sold by each Member shall be equal to the Percentage Interests held by such Member in the Company. (a) Drag Along Notice. The Offeror shall cause the Bona Fide Offer and all of the terms thereof to be reduced to writing and shall promptly notify the Members and the
Company as to whether or not the Offeror intends to exercise its Drag Along Sale rights (such notice, the Drag Along Notice) in connection with such Bona Fide Offer. The Drag Along Notice shall be accompanied by a true copy of the Bona Fide Offer (which shall identify the proposed Transferee and all relevant information in connection therewith). If the Offeror intends to effect the Drag Along Sale referred to in the Drag Along Notice on substantially the terms set forth in such notice, each Member shall be bound and obligated to transfer the Membership Interests subject to such Drag Along Sale as calculated in accordance with this Section 8.6 on the same terms and conditions as the Offeror with respect to each type of Membership Interest sold. (b) Drag Along Sale Closing. Within ten (10) calendar days after the date of the Drag Along Notice, the Offeror shall promptly notify each Member of the Percentage Interests held by such Member that will be included in the Drag Along Sale and of the date on which the Drag Along Sale will be consummated, which date shall be no later than the earlier of (i) thirty (30) calendar days after the date of the Drag Along Notice; (ii) thirty (30) calendar days after the execution by the Offeror of the sale of its Membership Interests; and (iii) the satisfaction of any governmental approval or filing requirements, if any. Each Member may effect its participation in such Drag Along Sale hereunder by delivery to the proposed Transferee, or to the Offeror for delivery to the proposed Transferee, of one or more instruments or certificates, properly endorsed for transfer, representing the Membership Interests it is obligated to sell pursuant hereto. At the time of consummation of the Drag Along Sale, the proposed Transferee shall remit directly to the Offeror and each other participating Member that portion of the sale proceeds to which each such Person is entitled by reason of its participation with respect thereto. (c) Failure to Consummate. In the event that the Drag Along Sale is not consummated within the period required by this Section 8.6(b) or the Transferee fails timely to remit to each participating Member its respective portion of the sale proceeds, the Bona Fide Offer shall be deemed to lapse, and any Offered Interest pursuant to such Bona Fide Offer shall be in violation of the provisions of this Agreement unless the Offeror sends a new Drag Along Notice and once again complies with the provisions of this Section 8.6 with respect to such Bona Fide Offer. (d) Status of Transferee. A Transferee shall take the Membership Interests transferred pursuant to a Drag Along Sale free and clear of any further restrictions of this Article VIII. 8.7 Involuntary Transfers. Upon any involuntary Transfer of a Membership Interest in violation of this Article VIII (including, without limitation, by means of the dissolution, death or mental disability of a Member, a court award in a divorce or similar proceeding or by other operation of law), the Transferee shall hold only an economic interest in the Membership Interests. 8.8 Purchase of a Selling Members Membership Interest.
(a) Notice of Death, Disability or Divorce of Member. Upon the death of a Member, the Estate of the Deceased Member shall promptly give notice of the Deceased Member's death to the Company, which notice shall identify the representative of the Estate of the Deceased Member with whom the Company is to deal in connection with the matters provided in this Article VIII. Upon a Member becoming a Disabled Member or a Divorced
Member, such Disabled Member, Divorced Member or his personal representative shall promptly give notice of the Member's Disability or Divorce to the Company, which notice shall identify the representative, if any, of the Disabled Member or Divorced Member with whom the Company is to deal in connection with the matters provided in this Article VIII. In the event that the Estate of the Deceased Member, Disabled Member or Divorced Member or his representative, fails or refuses to give such notice, such failure or refusal shall not limit the rights of the Company or the Remaining Members pursuant to Sections 8.8(b) and 8.8(c) below, but the time periods provided in said Sections shall not be deemed to commence until such notice is given. (b) Company's Option to Purchase Membership Interest. The Company shall have ninety (90) days after notice of the death of a Member pursuant to Section 8.8(a) above is deemed given, or after the date on which it becomes aware or has actual notice that a Member becomes a Disabled Member, a Divorced Member or a Terminated Member (the Company Option Period) to purchase the Selling Member's Membership Interest for a purchase price determined as provided in Section 8.8(g) (the Selling Member Repurchase Event), by giving written notice to the Selling Member or its representative within the Company Option Period. Failure of the Company to give such notice within the Company Option Period shall be deemed an election by the Company not to purchase the Selling Member's Membership Interest. (c) Remaining Members' Option to Purchase Selling Member's Membership Interest. In the event the Company elects not to purchase the Selling Member's Membership Interest or only elects to purchase a portion thereof, the Selling Member shall give notice to the Remaining Members which notice shall include a statement of the purchase price determined in accordance with Section 8.8(h) and the remaining amount of the Selling Member's Membership Interest. The Remaining Members shall have thirty (30) days after such notice is deemed delivered (the Remaining Members Option Period) to elect to purchase the remaining Selling Member's Membership Interest for the purchase price provided in Section 8.8(g), by giving written notice to the Selling Member within the Remaining Members Option Period. In the event that more than one of the Remaining Members elects to purchase the remaining Selling Member's Membership Interest and the portion of the Selling Member's Membership Interest which they desire to purchase in the aggregate exceeds the remaining Selling Member's Membership Interest, then each Remaining Member electing to purchase shall be entitled to purchase such Members Allocated Portion of the Selling Member's Membership Interest. Failure of the Remaining Members to give written notice of election to purchase within the Remaining Members Option Period shall be deemed an election not to purchase. (d) Transfer by Selling Member. In the event the options to purchase set forth in Sections 8.8(b) and 8.8(c) above are not exercised as to all of the Selling Member's Membership Interest, the Selling Member may continue to hold only the economic interest of such Membership Interest subject to the provisions of this Agreement, including but not limited to the restrictions on Transfer set forth in this Article VIII, and provided that, in the case of a Member becoming a Deceased Member, the Estate of the Deceased Member shall execute a counterpart of this Agreement. (e) Court Approval and Costs of Performance. In the event of the purchase of the Membership Interest of a Deceased Member pursuant to this Article VIII, the Estate of the Deceased Member shall apply for and obtain any necessary court approval of any sale or
Transfer of the Deceased Member's Membership Interest pursuant to this Agreement, and shall indemnify and hold the Company and the Remaining Members harmless from any and all costs and expenses incurred for securing any court orders, approvals, decrees, inheritance and estate tax clearances, and other procedures required to deliver to the purchasers or Transferees full title to the Deceased Member's Membership Interest, free and clear from any and all liens, charges, encumbrances, or legal or equitable claims of others. (f) Binding on Estate. The Members shall each provide by last valid Will, by codicil or other valid and enforceable instrument that their respective Estates of Deceased Members are bound by the terms and conditions of this Agreement. Notwithstanding the foregoing, the failure or refusal of any Member to comply with the provisions of this Section 8.8(f) shall not in any manner limit the applicability, effect or enforceability of this Agreement. (g) Valuation of Selling Members Membership Interest. In the event the Company or the Remaining Members wish to purchase the Membership Interest of a Selling Member, the purchase price of the Selling Members Membership Interest shall be determined as per the following terms and conditions: (i) If the Selling Member Repurchase Event occurs within twelve (12) months from the date of this Agreement, then the Company or the Remaining Members shall have the right to call and repurchase all of the Selling Members Membership Interests in the Company for One Dollar ($1.00); (ii) If the Selling Member Repurchase Event occurs within the period beginning on the first day of the thirteenth (13th) month and ending on the last day of the twenty fourth (24th) month from the date of this Agreement, then the Company or the Remaining Members shall have the right to call and repurchase (a) seventy seven percent (77%) of the Selling Members Membership Interests in the Company for One Dollar ($1.00); and (b) all or part of the remaining thirty three percent (33%) at its fair market value (as the same is determined by the Board of Managers, which determination shall be conclusive, absent manifest error), provided however, that in no event shall the fair market value of the Membership Interests being repurchased be less than the Book Value thereof. (iii) If the Selling Member Repurchase Event occurs within the period beginning on the first day of the twenty fifth (25th) month and ending on the last day of the thirty sixth (36th) month from the date of this Agreement, then the Company shall have the right to call and repurchase (a) thirty four percent (34%) of the Selling Members Membership Interests in the Company for One Dollar ($1.00); and (b) all or part of the remaining sixty six percent (66%) at its fair market value (as the same is determined by the Board of Managers, which determination shall be conclusive, absent manifest error), provided however, that in no event shall the fair market value of the Membership Interests being repurchased be less than the Book Value thereof. The Company may, at its sole discretion, elect to exercise either or both of the two repurchase rights described in this section; (iv) If the Selling Member Repurchase Event occurs after the last day of the thirty sixth (36th) month from the date of this Agreement, then the Company or the Remaining Members shall have the right to call and repurchase all or part of the Selling Members Membership Interests in the Company at its fair market value (as the same is
determined by the Board of Managers, which determination shall be conclusive, absent manifest error), provided however, that in no event shall the fair market value of the Membership Interests being repurchased be less than the Book Value thereof. 8.9 Right to Participate in Issues of New Membership Interests.
(a) Following the date hereof, the Company agrees that it will not sell or issue: (a) any Membership Interests of the Company, (b) options, warrants or rights carrying any rights to purchase Membership Interests of the Company, unless the Company first submits a written notice to each Member identifying the terms of the proposed sale (including price, number or aggregate principal amount of Membership Interests and all other material terms), and offers to each Member the opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the Membership Interests (subject to increase for over-allotment if any Member does not fully exercise its rights) on terms and conditions, including price, not less favorable than those on which the Company proposes to sell such Membership Interests to a third party or parties. The Companys offer pursuant to this Section 8.9 shall remain open and irrevocable for a period of thirty (30) days following receipt by the Members of such written notice. (b) Acceptance. Each Member may elect to purchase the Membership Interests so offered by giving written notice thereof to the Company within such 30-day period referred to above, including in such written notice the maximum number of Membership Interests of the Company that such Member wishes to purchase, including the number of such Membership Interests it would purchase if one or more other Members do not elect to purchase their respective Pro Rata Allotments. (c) Calculation of Pro Rata Allotment. Each Members Pro Rata Allotment of such Membership Interests shall be based on the Percentage Interest of such Member as of the date of such written offer. If one or more Members do not elect to purchase their respective Pro Rata Allotment, each of the electing Members may purchase such Membership Interests on a pro rata basis, based upon the relative holdings of Membership Interests of each of the electing Members in the case of over-subscription. (d) Sale to Third Party. Any Membership Interests so offered that are not purchased by the Members pursuant to the offer set forth in Section 8.9(a) above may be sold by the Company, but only on terms and conditions not more favorable than those set forth in the notice to the Members, at any time within sixty (60) calendar days following the termination of the above-referenced 30-day period, but may not be sold to any other Person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 60-day period without renewed compliance with this Article VIII. ARTICLE IX DISSOLUTION AND WINDING UP 9.1 Mandatory Dissolution. The Company shall be dissolved immediately upon the first to occur of the following events:
(a) Formation; (b) (c) (d)
The happening of any event of dissolution specified in the Certificate of The sale of all or substantially all of the Companys assets; The approval of SA and the Supermajority Members; and The entry of a decree of judicial dissolution.
9.2 Winding Up. Upon the dissolution of the Company, the Company shall engage in no further business other than that necessary to wind up the business and affairs of the Company. The Members shall wind up the affairs of the Company in an orderly manner. The Members shall give Notice of the commencement of winding up by mail to all known creditors and claimants against the Company whose addresses appear in the records of the Company. After paying or adequately providing for the payment of all known debts and liabilities of the Company (including all costs of dissolution), the remaining assets of the Company shall be distributed or applied in the following order of priority: (a) First, to the establishment of reasonable reserves which the Members may deem reasonably necessary for contingent or unforeseen liabilities or obligations of the Company; (b) Second, to SA in an amount equal to eight hundred thousand dollars ($US800,000.00) less any distributions previously received by SA under Section 4.3(a) of this Agreement; and (c) balances. 9.3 Distributions in Kind. Any non-cash asset distributed to one or more Members shall first be valued at its fair market value to determine the Net Income or Net Loss that would have resulted if such asset were sold for such value. Such Net Income or Net Loss shall then be allocated among the Members pursuant to Article IV, and the Members Capital Accounts shall be adjusted to reflect such allocations. The amount distributed and charged to the Capital Account of each Member receiving an interest in such distributed asset shall be the fair market value of such interest (net of any liability secured by such asset that such Member assumes or takes subject to). The Board of Managers shall reasonably determine the fair market value of such asset. 9.4 Deficits. Each Member shall look solely to the assets of the Company for the return of its investment, and if the Company property remaining after the payment or discharge of the debts and liabilities of the Company is insufficient to return the investment of each Member, such Member shall have no recourse against any other Member for indemnification, contribution or reimbursement except as specifically provided in this Agreement. Third, to the Members in accordance with their positive Capital Account
ARTICLE X LIABILITY/INDEMNIFICATION 10.1 Liability.
(a) No Member shall be personally liable for any debt, obligation or liability of the Company, whether that liability or obligation arises in contract, tort or otherwise, except as otherwise provided in the Act or in this Agreement. Provided, however, that in the event that the Company takes on loans or lines of credit to advance the purposes of the Business, for which the lenders require the personal guaranties of the Members, all Members of the Company shall be obligated to provide their personal guaranties. (b) No Member shall be liable, responsible or accountable, in damages or otherwise, to any Member or to the Company for any act or omission by such Member within the scope of the authority conferred on such Member by this Agreement, except for any liability that result from such Members gross negligence or willful misconduct. 10.2 Indemnification of Members, Officers and Certain Agents. The Company shall defend, indemnify and hold harmless the Members, and any officer of the Company and their respective partners, officers, directors, shareholders, members and trustees (individually, an Indemnitee) to the fullest extent permitted by law in effect on the date hereof and to such greater extent permitted by law as may hereafter from time to time permit, against any and all Losses, amounts paid in settlement, judgments, fines, penalties and ERISA excise taxes actually incurred by or levied against such Indemnitee in connection with any Proceeding to which the Indemnitee was or is a party or is threatened to be made a party, or in which the Indemnitee is otherwise involved, by reason of the fact that the Indemnitee was or is a Member, manager, or officer of the Company, other than such a Proceeding initiated by the Company, or any other Member or Members (an Excluded Proceeding). Each Indemnitee is entitled to indemnification under this Section 10.2 in the case of such Proceedings (other than Excluded Proceedings) in all instances, without further action or determination by the Company, except in the event that it is judicially determined, that the Indemnitee is guilty of gross negligence, bad faith, fraud or willful misconduct in the discharge of Indemnitees duties as an agent of the Company. 10.3 Defense of Proceeding.
(a) An Indemnitee shall give prompt written notice to the Company of the commencement, assertion or threat of any Proceeding in respect of which such Indemnitee shall seek defense or indemnification hereunder. Any failure to so notify the Company shall not relieve the Company from any liability that it may have to such Indemnitee under this Agreement unless the failure to give such notice materially and adversely prejudices the Company. (b) The Company (with the approval of the Majority Members) shall have the right to assume control of the defense, settlement or other disposition of such Proceeding on such terms, as it deems appropriate; provided, however:
(i) If the Company so elects to assume the control of the defense, settlement or other disposition of such Proceeding, it will notify the Indemnitee reasonably promptly so as to avoid any material adverse prejudice to the Indemnitee; (ii) The Indemnitee shall be entitled, at Indemnitees own expense, to participate in the defense of any Proceeding; (iii) The Company shall obtain the prior written approval of the Indemnitee, which approval shall not be unreasonably withheld or delayed, before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such Proceeding or any liability in respect thereof if, pursuant to or as a result of such settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnitee; (iv) The Company shall not consent to the entry of any judgment or enter into any settlement with or involving any claimant or plaintiff that does not include as an unconditional term thereof the execution and delivery of a release from all liability in respect of such Proceeding by such claimant or plaintiff to, and in favor of, each of the Indemnitees; and (v) The parties hereto shall extend reasonable cooperation in connection with the defense of any Proceeding pursuant to this and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested. (c) In the event the Company elects not to assume control of the defense, settlement or other disposition of such Proceeding, (i) the Company shall make payments of all amounts required to be made pursuant to the provisions of this Article X to or for the account of the Indemnitee from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due and payable, provided, that the Indemnitee has agreed in writing to reimburse the Company for the full amount of such payments if the Indemnitee is ultimately determined not to be entitled to such indemnification, (ii) Indemnitee shall obtain the prior written approval of the Company, which approval shall not be unreasonably withheld, before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such Proceeding or any liability in respect thereof; and (iii) the parties hereto shall extend reasonable cooperation in connection with the defense of any Proceeding pursuant to this and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested. 10.4 Permissive Indemnification. Subject to the mandatory indemnification obligations of the Company set forth in Section 10.2, the Company (with the approval of the Majority Members) may, but shall not be obligated to, indemnify any Person who was or is a party or is threatened to be made a party to, or otherwise becomes involved in, any Proceeding (including, without limitation, an Excluded Proceeding) by reason of the fact that such Person was or is a Member, officer, employee, or agent of the Company, to the same extent as is provided in Sections 10.2 and 10.3 with respect to the Indemnitees set forth therein or to such
lesser extent and upon such terms and conditions as the Majority Members deem appropriate in their business judgment. 10.5 Indemnity Not Exclusive. The indemnification and advancement of expenses provided by, or granted pursuant to, the provisions of this Article X, shall not be deemed exclusive of any other rights to which any Person seeking indemnification or advancement of expenses may be entitled under any agreement, action of the Members, or otherwise, both as to action in such Persons capacity as an agent of the Company and as to action in another capacity while serving as an agent. All rights to indemnification under this Article X shall be deemed to be provided by a contract between the Company and each Indemnitee while this Agreement and relevant provisions of the Act and other applicable law, if any, are in effect. Any repeal or modification hereof or thereof shall not affect any such rights then existing. 10.6 Insurance. The Company may purchase and maintain insurance, at the Companys expense, on behalf of the Members, and such other persons as the Members shall determine, against any liability that may be asserted against, or any expense that may be incurred by, such person in connection with the activities of the Company or the Members acts or omissions as the Members of the Company, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. 10.7 Partial Indemnification. If a Person is entitled under any provision of this Article X to indemnification by the Company for a portion of Losses, incurred by such Person in connection with any Proceeding but not, however, for the total amount thereof, the Company shall nevertheless indemnify such Person for the portion of such Losses, amounts paid in settlement, judgments, fines, penalties or ERISA excise taxes to which such Person is entitled. 10.8 Heirs and Estate. The indemnification provisions and advancement of expenses provided by, or granted pursuant to, this Article X shall, unless otherwise provided when authorized or ratified, continue as to a Person who has ceased to be an agent of the Company and shall inure to the benefit of such Persons heirs and estate. 10.9 Assets. Any indemnification under this Article X shall be satisfied solely out of the assets of the Company. No Member shall be subject to personal liability or required to fund or cause to be funded any obligation by reason of these indemnification provisions. ARTICLE XI CONFIDENTIALITY 11.1 Acknowledgements by Employee Member.
(a) Except for SA, any other Member who is or at any time becomes an employee (the Executive) of the Company acknowledges that: (i) the services to be performed by him for the Company are of a special, unique, unusual, extraordinary, and intellectual character; (ii) the Companys business is national in scope and its products is marketed throughout the United States; (iii) the Company competes with other businesses that are or could be located in any part of the United States; and (iv) the provisions of this Section 11.1 are reasonable and necessary to protect the Companys business.
(b) Covenants of Executive. In consideration of the acknowledgments by Executive, and in consideration of the compensation and benefits to be paid or provided to Executive by the Company, Executive covenants that he will not, directly or indirectly: (i) except in the course of Executives employment hereunder, and during the Post-Employment Period, engage or invest in, own, manage, operate, finance, control, or participate in the ownership, management, operation, financing, or control of, be employed by, associated with, or in any manner connected with, lend Executives name or any similar name to, lend Executives credit to or render services or advice to, any business whose products or activities compete in whole or in part with the products, services, or activities of the Company within any state of the United States where the Company does business; provided, however, that Executive may purchase or otherwise acquire up to (but not more than) 1% of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934. (ii) whether for Executives own account or for the account of any other Person, at any time during the course of Executives employment hereunder and the PostEmployment Period, solicit business of the same or similar type being carried on by the Company, from any Person known by Executive to be a customer of the Company, whether or not Executive had personal contact with such Person during and by reason of Executives employment with the Company or with any Affiliate of the Company; (iii) whether for Executives own account or the account of any other Person: (i) at any time during the course of his employment hereunder and the Post-Employment Period, solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any Person who is or was an employee of the Company at any time during the course of Executives employment hereunder or in any manner induce or attempt to induce any employee of the Company to terminate his employment with the Company; or (ii) at any time during the course of Executives employment hereunder and the Post-Employment Period, interfere with the Companys relationship with any Person, including any Person who at any time during the course of Executives employment hereunder was an employee, contractor, supplier, or customer of the Company; or (iv) at any time during or after the course of Executives employment hereunder, disparage the Company or any of its shareholders, directors, officers, employees, or agents; (vi) Executive understands, acknowledges, and agrees that any and all inventions, improvements, trademarks, trade names, copyrights, Intellectual Property, registered material, domain names, web pages, trade secrets, discoveries, formulae, standards, or processes relating to services rendered by or products manufactured, sold, or distributed by the Company which are invented, discovered or learned by Executive during the terms of this Agreement, whether of a patentable nature or not, shall be the sole and absolute property of the Company, and the Company shall be the sole and absolute owner of all patent and other rights in connection therewith. Upon request by the Company, Executive will do any and all acts and execute and deliver such documents as may be deemed by the Company or its counsel to be necessary or
advisable to vest in the Company all of the rights, title and interest of Executive in and to the foregoing. All such matters discovered by Executive after the date of execution of this Agreement shall be fully disclosed by it as soon as practicable to the appropriate officers and directors of the Company. Executive shall at all times, both during the term of this Agreement and after the termination thereof, regardless of the cause of termination or of any breach of this Agreement, keep all such matters secret from everyone and shall disclose such matters to no one except the Company and/or Company personnel in the normal course of business and as authorized by the Company. Executive agrees that at all times, both during the term of this Agreement and after the termination thereof, regardless of the cause of termination or of any breach of this Agreement, it shall hold inviolate and keep secret all knowledge or information as to the processes, inventions, formulae, standards, trade secrets, and confidential information of the Company acquired by it, and that it shall not divulge, furnish, or make accessible any of the same or anything relating to the same to any competitor or other person, firm, or corporation, except when authorized to do so in writing by the Company. If any covenant in this Section 11.1 is held to be unreasonable, arbitrary, or against public policy, such covenant will be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as a court of competent jurisdiction may determine to be reasonable, not arbitrary, and not against public policy, will be effective, binding, and enforceable against Executive. The period of time applicable to any covenant in this Section 11.1 will be and be deemed automatically extended by the duration of any violation by Executive of such covenant. Executive will, while any covenant under this Section 11.1 is in effect, give notice to the Company, within 10 days after accepting any other employment, of the identity of Executives new employer. The Company may notify such new employer that Executive is bound by this Agreement and, at the Companys election, furnishes such employer with a copy of this Agreement or relevant portions thereof. ARTICLE XII DISPUTE RESOLUTION 12.1 Dispute Resolution Process. The Members recognize that disputes as to certain matters may from time to time arise during the Term of this Agreement that relate to a Members rights and/or obligations hereunder. If the Members cannot resolve any such dispute within 30 days after written notice of a dispute from one Member to the others, any Member may, by written notice to the other Members, have such dispute referred to an arbitrator. 12.2 Arbitration. Any controversy or claim arising out of, or relating to this Agreement, or the breach thereof, shall be determined by Arbitration administered by the American Arbitration Association then in effect in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The place of arbitration shall be [_______, Delaware]. The United States Arbitration Act (Title 9, U.S. Code, as amended) shall govern the interpretation, enforcement, and proceedings pursuant to the arbitration clause in this Agreement. The Members shall
mutually agree on a single arbitrator, but if the Members are unable or fail to agree upon the arbitrator, a single arbitrator shall be selected by the American Arbitration Association. Except as may be required by law, neither a Member nor the arbitrator may disclose the existence, content, or results of any arbitration arising hereunder without the prior written consent of each of the Members. The language of the arbitration shall be English. The losing Member shall bear all of the costs and expenses of the arbitrators and the administrative fees of the arbitration. The arbitrator will have no authority to award punitive, consequential or other damages not measured by the prevailing Members actual damages, except as may be required by statute. ARTICLE XIII GENERAL PROVISIONS 13.1 Notices. Any Notice which may or must be given under this Agreement shall be addressed to a Member at the address set forth under such Members name in Schedule I hereto, or, if such Notice is by means of facsimile or e-mail, to the facsimile number or e-mail address, as applicable, set forth under Members name in Schedule I hereto. 13.2 Entire Agreement; Amendment. This Agreement shall constitute the whole and entire agreement of the parties hereto with respect to the matters set forth herein and shall not be modified or amended in any respect except in accordance with Section 6.1(b)(viii). 13.3 Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. 13.4 Jurisdiction. The parties hereto hereby consent to the exclusive jurisdiction of the state and federal courts sitting in [________], Delaware, for any action, suit, proceeding, claim or counterclaim directly or indirectly arising out of, under or in any way relating to this Agreement or the transactions contemplated by this Agreement. 13.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Members and their respective legal representatives, successors and assigns. 13.6 Injunctive Relief; Specific Performance. The parties hereby agree and acknowledge that a breach of any material term, condition or provision of this Agreement that provides for an obligation other than the payment of money would result in severe and irreparable injury to the other party, which injury could not be adequately compensated by an award of money damages, and the parties therefore agree and acknowledge that they shall be entitled to seek injunctive relief in the event of any breach of any material term, condition or provision of this Agreement, or to enjoin or prevent such a breach, including without limitation an action for specific performance hereof, and the parties hereby irrevocably consent to the issuance of any such injunction. The parties further agree that no bond or surety shall be required in connection therewith. 13.7 Counterparts. This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile, and each of which will
be deemed an original of this Agreement, and all of which, when taken together, shall be deemed to constitute one and the same Agreement. 13.8 Waiver. No term, condition or provision of this Agreement may be waived except by an express written instrument to such effect signed by the party hereto to whom the benefit of such term, condition or provision runs. No such waiver of any term, condition or provision of this Agreement shall be deemed a waiver of any other term, condition or provision, irrespective of similarity, or shall constitute a continuing waiver of the same term, condition or provision, unless otherwise expressly provided. No failure or delay on the part of any party hereto in exercising any right, power or privilege under any term, condition or provision of this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege. 13.9 Number and Gender. The use of the neuter gender herein shall be deemed to include the feminine and masculine genders. The use of either the singular or the plural includes the other unless the context clearly requires otherwise. 13.10 Further Assurances. Each party hereto shall timely execute and deliver any and all additional documents, instruments, notices, and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 13.11 Partition. Each Member irrevocably waives any right which it may have to maintain an action for partition with respect to property of the Company. 13.12 Authority to Contract. Each party hereto hereby represents and covenants to the other Members that it has the capacity and authority to enter into this Agreement without the joinder of any other person. All undertakings and agreements herein shall be binding upon the Members hereto, their permitted successors and assigns. 13.13 Titles and Headings. The Article, Section and Paragraph titles and headings contained in this Agreement are inserted only as a matter of convenience and for ease of reference and in no way define, limit, extend or proscribe the scope of this Agreement or the intent or content of any provision hereof. All references to sections, articles, schedules or exhibits contained herein mean sections, articles, schedules or exhibits of this Agreement unless otherwise stated. 13.14 Validity and Severability. If any provision of this Agreement is held invalid or unenforceable, such decision shall not affect the validity or enforceability of any other provision of this Agreement, all of which other provisions shall remain in full force and effect. 13.15 Statutory References. Each reference in this Agreement to a particular statute or regulation, or a provision thereof, shall be deemed to refer to such statute or regulation, or provision thereof, or to any similar or superseding statute or regulation, or provision thereof, as is from time to time in effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
By: __________________________ STUDENT A
__________________________________ STUDENT B
_____________________________ JOSE PEREZ
__________________________________ PEDRO PEREZ
_____________________________ MARIA PEREZ
SCHEDULE I Members, Percentage Interests, Capital Contributions Members Percentage Interest Capital Contributions
Student A
45%
$4,500.00
Student B
25% 10%
$ 2,500.00 $ 1,000.00
Jos Prez
Pedro Prez
10%
$ 1,000.00
Mara Prez Totals
10%
$ 1,000.00
100%
SCHEDULE II INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

ABC LLC Operating Agreement - Complex

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ABC, LLC A DELAWARE LIMITED LIABILITY COMPANY

November [], 2012

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ABC, LLC

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Non-Funding Member(s) has the meaning set forth in Section 3.3.

Intent.ABC LLC Operating Agreement_Complex

Regulatory Allocations has the meaning set forth in Section 4.2(f).

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Third, to the Members in proportion to their respective

Second, to the Members in proportion to their Percentage

Intent.ABC LLC Operating Agreement_Complex

determining the Companys annual operating budget (the

determining the amount and timing of payment of any bonus to any

Intent.ABC LLC Operating Agreement_Complex

ARTICLE VI MEMBERSHIP, MEETINGS, VOTING 6.1 Members and Voting Rights.

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

(a) Formation; (b) (c) (d)

Intent.ABC LLC Operating Agreement_Complex

ARTICLE X LIABILITY/INDEMNIFICATION 10.1 Liability.

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

Intent.ABC LLC Operating Agreement_Complex

By: __________________________ STUDENT A

_____________________________ JOSE PEREZ

__________________________________ PEDRO PEREZ

_____________________________ MARIA PEREZ

Intent.ABC LLC Operating Agreement_Complex

Mara Prez Totals

Intent.ABC LLC Operating Agreement_Complex

SCHEDULE II INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

Intent.ABC LLC Operating Agreement_Complex

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