OPERATING AGREEMENT FOR SUNWIN USA LLC
Exhibit 10.2
FOR
SUNWIN
USA LLC
Units
in Sunwin USA LLC (the “Company”) have not been registered with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, or the
state securities laws of any state. Without such registration, Units
may not be sold, pledged, hypothecated, or otherwise transferred by a Member at
any time whatsoever, except upon delivery to the Company of an opinion of
counsel satisfactory to the Company that registration is not required for such
transfer and/or the submission to the Company of such other evidence as may be
satisfactory to the Company to the effect that any such transfer will not
violate the Securities Act of 1933, as amended, and/or applicable state
securities laws, and/or any rule or regulation promulgated
thereunder. In addition, any sale or other transfer of Units is
subject to certain restrictions that are set forth in this
Agreement.
This is
an Operating Agreement effective as of _________, 2009 among the Company and
those persons and entities identified on Annex A
hereto and any Person who subsequently becomes a member of the Company, as
reflected on the Company’s records (each a “Member” and, collectively, the
“Members”).
ARTICLE
1
The
Members formed the Company pursuant to the Delaware Limited Liability Company
Act, effective as of the filing of the Company’s Certificate of Formation with
the Delaware Secretary of State. A duly authorized officer of the
Company shall from time to time execute or cause to be executed all such
certificates or other documents or cause to be done all such filing, recording,
publishing or other acts as may be necessary or appropriate to comply with the
requirements for the formation and operation of a limited liability company
under the Act. The rights and duties of the Manager, officers and
Members shall be as provided in the Act, except as modified by this
Agreement. The Company shall also be qualified to do business in such
other states as the Manager from time to time deems appropriate.
ARTICLE
2
The
business of the Company will be conducted under the name ”Sunwin USA LLC,” or
such other assumed or changed names as the Manager may approve from time to
time; provided, however, that the Company shall provide notice of any such
assumed or changed names to the Members as promptly as practicable after such
change. The original principal office of the Company will be located
at ________________, or such other place as the Manager may from time to time
determine.
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ARTICLE
3
“Act” shall mean the Delaware
Limited Liability Company Act, as it may be amended from time to time, and any
successor thereto.
“Affiliate” shall mean, with
respect to a specific Person (a) any other Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
the control of a Person or a group of Persons that control the specified Person;
(b) any other Person of which the Member or other specified Person is an officer
or partner or is the beneficial owner of 10% or more of any class of equity
security or interest; (c) any trust or estate in which the specified Person or
an Affiliate of the specified Person has a beneficial interest or as to which
the specified Person serves as a trustee or in another fiduciary capacity; and
(d) any spouse, ancestor, descendant, brother or sister of the specified Person
and any spouse of any of the aforementioned individuals; and (e) any member,
shareholder, director, officer, Manager or other individual that is a member of
key management of such specified Person. The term “control” means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership, by contract
or otherwise.
“Agreement” shall mean this
Operating Agreement, as amended, modified or supplemented from time to
time.
“Bankruptcy” shall be deemed to
have occurred with respect to any Person, at the time the Person: (a)
makes an assignment for the benefit of creditors; (b) files a voluntary petition
in bankruptcy; (c) is adjudicated bankrupt or insolvent; (d) files a petition or
answer seeking for the Person any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Law; (e)
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against such Person in any proceeding of this
nature; (f) seeks, consents to, or acquiesces in the appointment of a trustee,
receiver, or liquidator of such Person or of all or any substantial part of such
Person’s property; or (g) if within 120 days after the commencement of any
proceeding against such Person seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Law, the
proceeding has not been dismissed, or if within 120 days after the appointment
without such Person’s consent or acquiescence of a trustee, receiver, or
liquidator of such Person, or of all or any substantial part of such Person’s
properties, the appointment is not vacated or stayed or within 120 days after
the expiration of any stay, the appointment is not vacated.
“Business Day” shall mean a day
other than a Saturday, a Sunday, or a holiday on which national banking
associations are required or permitted by Law to be closed in
Delaware.
“Capital Account” shall mean
the individual account maintained, during any period in which there is more than
one Member, for each Member by the Company, calculated pursuant to Section
7.4.
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“Capital Contribution” shall
mean the money and the fair market value of property (net of liabilities assumed
by the Company or to which the property is subject) contributed to the Company
by a Member, and as maintained in the Company’s records. The Company
shall maintain records that set forth the agreed upon fair market value of each
of the assets (other than cash) contributed to the capital of the Company as
determined by the contributing Member and the Company.
“Covered Person” shall mean any
Member, acting in its capacity as a Member under this Agreement, any Affiliate
of a Member acting in its capacity as a direct or indirect owner of a Member or
any officer, director, shareholder, partner, member, employee, representative,
agent or Manager of the Company, a Member, or their respective Affiliates, in
each case, acting in connection with this Agreement. The term
“Covered Person” shall not include any Member or Affiliate of a Member or any
officer, director, shareholder, partner, member, employee, representative, agent
or Manager of the Company, a Member, or their respective Affiliates, in any case
acting in connection with any contract or agreement with the Company other than
this Agreement.
“Disability” shall mean an
individual’s inability (as determined by a physician appointed by the Company)
due to accident or physical or mental illness, to adequately and fully perform
the duties that the individual was performing for the Company when the
disability began. If at any time the physician appointed by the
Company makes a determination with respect to an individual’s disability, that
determination shall be final, conclusive, and binding upon the Company, the
individual suffering the Disability and his successors in interest.
“Dispose,” “Disposing” or “Disposition” shall mean
(a) with respect to any asset (including Units or any portion thereof), a
sale, assignment, transfer, conveyance, gift, exchange or other disposition of
such asset, whether such disposition be voluntary, involuntary or by operation
of law, including the following: (i) in the case of an asset
owned by an individual, a transfer of such asset upon the death of its owner,
whether by will, intestate succession or otherwise; (ii) in the case of an
asset owned by a Person (other than an individual), (A) a merger,
combination or consolidation or similar reorganization of such Person,
(B) a distribution of such asset in connection with the dissolution,
liquidation, winding up or termination of such Person (unless, in the case of
dissolution, such Person’s business is continued without the commencement of
liquidation or winding up); and (iii) a disposition in connection with, or
in lieu of, a foreclosure of an Encumbrance on such asset, but such terms shall
not include the creation of such an Encumbrance; and (b) with respect to
Units only, any Disposition of an equity interest or other ownership interest in
a Person that, directly or indirectly, owns Units; provided, however, that the
immediately preceding clause (b) shall not apply to any Disposition for so long
as the transferee in such Disposition has no, and does not exercise any,
decision-making authority with respect to the Company.
“Economic Risk of Loss” shall
mean “economic risk of loss” as described in Treas. Reg.
§ 1.752-2.
“Encumber,” “Encumbering” or “Encumbrance” shall mean the
creation or existence of a security interest, lien, pledge, charge, mortgage,
deed of trust, or other encumbrance, whether such encumbrance be voluntary,
involuntary or by operation of law.
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“Governmental Authority” shall
mean any federal, state, county, municipal or local government or regulatory
department, body, political subdivision, commission, instrumentality, agency,
ministry, court, judicial or administrative body, taxing authority or other
authority having jurisdiction over the Company or the Member, as the case may
be.
“Gross Negligence” shall mean
the gross negligence of a Person pursuant to Delaware Law.
“Inactive Member” shall mean a
Member that has no right to (a) interfere, vote or otherwise participate in the
management or administration of the Company’s business or affairs,
(b) vote, interfere or otherwise participate in any matter subject to the
vote, approval or consent of the Members, (c) inspect the Company’s books of
account or records, or (d) request any information or an accounting of the
Company’s transactions.
“Incapacity” or “Incapacitated” shall mean the
adjudicated incompetency or death of an individual, or dissolution of the entity
comprising any Member, and shall also include the death of an individual Member
when that Member has transferred all or any part of such Member’s Units to an
entity with an extended life (e.g., corporation or
trust).
“IRC” shall mean the Internal
Revenue Code of 1986, as amended, modified or rescinded from time to time, or
any similar provision of succeeding Law.
“Law” shall mean (a) any law,
legislation, statute, act, rule, ordinance, decree, treaty, regulation, order,
judgment or other similar legal requirement, or (b) any legally binding
announcement, directive or published practice or interpretation thereof enacted,
issued or promulgated by any Governmental Authority.
“Manager” shall mean the Person
appointed to manage the business and affairs of the Company pursuant to Section
13.1.
“Member Nonrecourse Debt” shall
mean “partner nonrecourse debt” as defined in Treas. Reg.
§ 1.704-2(b)(4).
“Member Nonrecourse Debt Minimum
Gain” shall mean the sum of each Member’s share of the “minimum gain”
attributed to a “partner nonrecourse debt” as those terms are used in Treas.
Reg. § 1.704-2(i)(2).
“Member Nonrecourse Deductions”
shall mean “partner nonrecourse deductions” as defined in Treas. Reg.
§ 1.704-2(i)(2).
“Minimum Gain” shall mean
“partnership minimum gain” as defined in Treas. Reg.
§ 1.704-2(b)(2).
“Net Cash Flow” shall mean for
any fiscal year, (a) the sum of (i) all cash receipts of the Company
from any sources for such period other than Capital Contributions or loan
proceeds, and (ii) any funds released by the Board of Managers from
previously established reserves (referred to in (b)(ii) below) less (b) the sum
of (i) all cash expenditures of the Company for such period not funded by
Capital Contributions or loan proceeds and not paid out of
previously
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established
reserves (referred to in (b)(ii) below) and (ii) a reasonable reserve for
future expenditures as determined by the Board of Managers.
“Net Profits” shall mean the
Company’s Taxable Income minus the Company’s Tax Losses for the applicable
period.
“Person” shall mean an
individual, corporation, partnership, limited liability company, joint stock
company, trust, association, unincorporated entity, or any division
thereof.
“Prime Rate” shall mean the
prime rate as published in The
Wall Street Journal from time to time.
“Taxable Income” and “Tax Losses,” shall mean, for
each fiscal year, or portion thereof, of the Company during which there is more
than one (1) Member, the Company’s taxable income or loss for such fiscal year,
or portion thereof, determined in accordance with IRC § 703(a), with
the following adjustments:
(a) All
items of income, gain, loss, deduction, or credit required to be stated
separately pursuant to IRC § 703(a)(1) shall be included in computing Taxable
Income and Tax Losses;
(b) Any
income of the Company exempt from federal income tax and not otherwise taken
into account in computing Taxable Income and Tax Losses shall be included in
computing such Taxable Income and Tax Losses;
(c) Any
expenditures of the Company described in IRC § 705(a)(2)(B) (or treated as such
pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(i)) and not otherwise taken
into account in computing Taxable Income or Tax Losses, shall be subtracted from
Taxable Income or Tax Losses;
(d) Gain
or loss resulting from any taxable disposition of Company assets shall be
computed by reference to the adjusted book value of the assets disposed of,
notwithstanding the fact that the adjusted book value differs from the adjusted
basis of the assets for federal income tax purposes;
(e) Items
of depreciation, amortization or other cost recovery with respect to Company
property having a book value that differs from its adjusted basis for tax
purposes shall be computed by references to such property’s book value in
accordance with Treas. Reg. §704-1 (b)(2)(iv)(g); and
(f) Notwithstanding
any other provision of this definition, any items which are specially allocated
pursuant to the Regulatory Allocations (as defined in Section 9.5) shall not be
taken into account in computing Taxable Income and Tax Losses.
“Units” shall mean the units of
ownership in the Company set forth in records maintained by the Company, which
shall be amended to reflect any additional or transferee Members and any changes
in the Members’ Units. Except as otherwise provided in this Agreement
or by non
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waivable
provisions of the Act, each Unit shall entitle the owner thereof to one vote on
each matter on which Members are entitled to vote pursuant to the terms of this
Agreement.
“Willful Misconduct” shall mean
action taken or not taken by a Person or by a director, officer, Manager,
xxxxxxx or other employee or agent of the Person, which action is knowingly or
intentionally taken or not taken: (a) with intent that injury or
damage would result therefrom, or (b) with actual knowledge at the time of
taking or not taking such action that such action taken or not taken is or would
be a material default under this Agreement, or with conscious indifference to
the consequences thereof, or in knowing violation of any Law. Without
limiting the foregoing definition in any way, Willful Misconduct does not
include any act or failure to act which is involuntary, accidental,
unintentional or negligent, based on any theory of negligence, or which is
required in order to comply with any Law.
(a) The
singular includes the plural and the plural includes the singular.
(b) A
reference to the masculine gender shall be deemed to be a reference to the
feminine gender and vice versa.
(c) The
word “or” is not exclusive.
(d) A
reference to a Person includes its permitted successors and permitted
assigns.
(e) The
words “include,” “includes” and “including” are not limiting.
(f) The
words “hereof,” “herein” and “hereunder” and words of similar import when used
in any document shall refer to such document as a whole and not to any
particular provision of such document.
(g) The
term “day” shall mean calendar day. Whenever an event or action is to
be performed by a particular date or a period ends on a particular date, and the
date in questions falls on a day which is not a Business Day, the event or
action shall be performed, or the period shall end, on the next succeeding
Business Day.
(h) All
references in this Agreement to any Law shall be to such Law as amended,
supplemented, modified and replaced from time to time.
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ARTICLE
4
The
business the Company shall be authorized to conduct shall be any and all
activities that limited liability companies are authorized to conduct under the
Laws of the State of Delaware and approved by the Manager in accordance with the
terms of this Agreement. The Members agree that, for any period
during which there is more than one Member, the Company shall be treated as a
partnership for federal, state and local income tax purposes, and the Members
agree not to take any position or make any election, in a tax return or
otherwise, inconsistent with such treatment; provided, however, the filing of
federal, state and local tax returns shall not be construed to create, and the
Members intend that the Company not be, a partnership (other than for tax
purposes) among the Members. In the event there is only one Member,
the Company shall be treated as a disregarded entity for federal, state and
local income tax purposes or in such other manner as may be required based on
elections under the IRC made by the Company at the direction of the
Managers.
ARTICLE
5
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Company
shall hold all of its real and personal property in the name of the Company and
not in the name of any Member.
5.7 Units as
Securities. Each Unit of the Company shall be treated as a
"Security" governed by Article 8 of the Delaware Uniform Commercial
Code.
ARTICLE
6
The term
of the Company began at the time and date the Company’s Certificate of Formation
was filed with the Delaware Secretary of State, and shall continue until
dissolution in accordance with the terms of this Agreement.
ARTICLE
7
7.1 Initial
Contribution. The Company has converted from a Florida
corporation to become a Delaware limited liability company. Sunwin
International Nutraceutical, Inc.’s (“Sunwin International”) initial Capital
Contribution is that capital in the Company at the time of its
conversion. Wild Flavors, Inc.’s (“WILD”) initial Capital
Contribution consists of certain services set forth on Annex B attached hereto
over a period of two years commencing as of February 5, 2008 (the “Services”)
that it will provide to the Company, which the Members have agreed are worth
$1,000,000.00. In the event WILD fails to provide the Services, WILD
shall forfeit a number of Units it owns in proportion to the value of the
Services it failed to provide.
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the
Additional Capital Contribution set forth in the ACC Request. If, and
only if, Sunwin International and WILD do not in the aggregate provide the
entire amount of the determined and requested Additional Capital Contribution
within 25 days of the ACC Determination Date, then the such parties shall seek
one or more third parties to make and provide capital contributions to the
Company in the maximum amount such that WILD’s capital contribution, Sunwin
International’s capital contribution and all capital contributions made by
parties other than such parties in the aggregate are equal to the Additional
Capital Contribution set forth in the ACC Request. The Members hereby
agree that the value of each Unit of the Company to be received by the parties
making a capital contribution to the Company pursuant to an ACC Request shall be
$222.22 per Unit. The Members further agree to amend this Agreement,
to the extent necessary as a result of satisfaction of the investment of the
Additional Capital Contribution and in a form acceptable to the Manager, within
10 days after the Company’s receipt of such Additional Capital
Contribution.
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of such
Member’s Capital Contribution or Capital Account, if any, or to receive any
distribution from the Company.
ARTICLE
8
ARTICLE
9
The
Members agree that the provisions of this ARTICLE 9 shall apply only in the
event that there is more than one Member:
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allocations
of Tax Losses shall again be allocated among the Members pro rata in
accordance with their Units. Tax Losses not allocated to a Member as
a result of this Section 9.2 shall be reallocated among those Members with
positive Capital Account balances pro rata in accordance with their
Units.
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ARTICLE
10
(a) Within
20 days after the end of each fiscal quarter, such information concerning the
Company as shall be necessary for the preparation by Sunwin of reports on Form
10-Q and Form 10-K it files with the Securities and Exchange Commission and at
the end of each fiscal year end, such information concerning the Company as
shall be necessary for the preparation by a Member of such Member’s income tax
or other tax returns; and
(b) Other
information as shall be reasonably necessary for the Members to be advised of
the results of the Company’s operations.
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delivered
to the Members from time to time during each fiscal year, in connection with
distributions or otherwise, unaudited statements showing the results of the
Company’s operations to the date of that unaudited statement.
ARTICLE
11
The
fiscal year of the Company shall end on April 30 of each calendar
year.
ARTICLE
12
The
Company’s funds shall be deposited in such bank account(s), or invested in such
interest-bearing or non-interest-bearing investments, as shall be designated by
the Manager. All withdrawals from any such bank account(s) shall be
made by an authorized officer. The Company’s funds shall be held in
the name of the Company and shall not be commingled with those of any other
Person.
ARTICLE
13
(a) The
business and affairs of the Company shall be managed by its Manager in
accordance with this Agreement. The Manager shall constitute the
“manager” of the Company as contemplated under the Act. Except for
situations in which the approval of the Member is expressly required in this
Agreement or by nonwaivable provisions of the Act, all powers of the Company
shall be exercised by or under the authority of, and the business and affairs of
the Company shall be managed under the direction of, the Manager.
(b) The
Company will have one manager, which will be WILD Flavors, Inc. WILD
shall continue as Manager of the Company for so long as the distribution
agreement dated February 5, 2009, among Sunwin International Nutraceuticals,
Inc., the Company, and WILD remains in effect. For so long as WILD is
the Manager, no increase in the number of Managers shall be approved by the
Members nor shall any action be taken by the Members that would in any way
terminate, limit, or restrict the Manager’s authority and rights under this
Agreement without the prior written approval of WILD.
(c) The
Manager may resign at any time by delivering written notice to the
Company. A resignation shall be effective when the notice is
delivered unless the notice specifies a later effective date. A
Manager shall be deemed to have resigned effective upon the Incapacity or
Disability of such Manager.
(d) Except
as the Members and the Manager may unanimously otherwise agree, the Manager
shall not be entitled to compensation from the Company for its services as
Manager, provided, however, that nothing in this subsection shall be deemed to
prevent the Manager from being compensated for additional services pursuant to
Section 13.3, below.
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(e) To
the extent not prohibited by this Agreement or by nonwaivable provisions of the
Act or other federal, state or local laws, the Members hereby (i) agree and
acknowledge that any Member or Manager of the Company, as applicable, who has a
direct or indirect interest in a transaction involving the Company shall be
entitled to vote on such transaction, regardless of such interest; and
(ii) waives any objection it may have to the right of a Manager
or Member to vote on a transaction involving the Company in which such Manager
or Member has an interest.
(f) The
Manager shall not have the authority to make, alter, amend or rescind this
Agreement. For so long as WILD is the Manager, the Members shall not
make, alter, amend or rescind this Agreement without the prior written approval
of the Manager.
(g) Neither
the Manager nor, for so long as WILD is the Manager, the Members shall undertake
the following without the prior written approval of the other:
(i) causing
the Company to dissolve or sell all or substantially all of its
assets;
(ii) causing
the Company to enter into any merger, consolidation, joint venture or similar
transaction with any Person; or
(iii) making,
altering, amending or rescinding the Company’s Certificate of
Formation.
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by the
Manager, but in no extent greater than is permitted under the Act, indemnify its
employees and other agents permitted to be indemnified by the Act.
(a) No
Member shall have the power or authority to bind the Company unless such Member
has been authorized in writing by the Manager to act as an agent of the
Company.
(b) Meetings
of the Members shall be held at such times and places as are set by Members
holding a majority of the outstanding Units entitled to
vote. Meetings of the Members may be called by any Member or Members
owning 25% of the Units upon at least 10 calendar days’ prior written
notice to the Members. The notice for a meeting shall state the
purpose or purposes of such meeting and shall provide the time, date and place
of such meeting, which shall be during normal business hours, on a Business Day
and at the Company’s principal office unless the Members holding a majority of
the outstanding Units entitled to vote consent to a different time, date and/or
location. A Member may waive any notice required by this Agreement
before or after the date and time stated in the notice. The waiver
shall be in writing and be delivered to the Company for inclusion in the minutes
or filing with the Company’s records. Attendance at a meeting shall
constitute a waiver of any objection as to lack of notice or defective notice of
the meeting, unless the Member at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting. Meetings
may be held by any means of communication by which all the Members participating
may simultaneously hear each other during the meeting.
(c) A
quorum of the Members shall consist of Members holding a majority of the
outstanding Units having voting rights. If a quorum is present when a
vote is taken, which shall be a prerequisite to the taking of any action of the
Members at a meeting, then the affirmative vote of a majority (or such greater
percentage as is required by this Agreement or nonwaivable provision of the Act)
of the Units held by Members in attendance at the meeting and having voting
rights shall be the act of the Members.
(d) Actions
of the Members may be taken by written action executed by Members owning Units
constituting a majority (or such greater percentage as is required by this
Agreement or nonwaivable provisions of the Act) of the votes held by Members
having voting rights, which writing will be filed with or entered upon the
records of the Company.
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ARTICLE
14
(a) Upon
the Bankruptcy or Incapacity of any Member, that Member shall be (i) deemed to
be an Inactive Member, and (ii) promptly provide notice of such occurrence to
the Company and the other Members, and all acts, consents and decisions with
respect to the Company shall thereafter be made by the other
Members. The Inactive Member shall, nonetheless, be entitled to
receive such Member’s share of any distributions.
(b) For
180 days from and after the date the Company and the other Members receive
written notice that a Member has become an Inactive Member pursuant to Section
14.1(a), the other Members shall have an irrevocable option, pro rata in
accordance with the relative ownership of Units of Members exercising their
option or in such other proportions to which such Members may agree (including
through redemption of the Units by the Company) to purchase all or any portion
of the Inactive Member’s Units. If any Member elects to purchase all
or any portion of the Inactive Member’s Units, the Member shall notify the
Inactive Member of such party’s intention to do so within such time period, and
such Units shall be purchased by the other Members exercising their option in
proportion to their respective Units at that time or in such other proportion as
such Members may mutually agree. The purchase price of an Inactive
Member’s Units purchased pursuant to this Section 14.1 shall be the
Contract Price as defined by Section 14.8, and shall be payable at the time
and in the manner specified in Section 14.9. If the other
Members purchase less than all of the Inactive Member’s Units, then the Inactive
Member shall remain as such.
(a) No
Member shall Dispose of all or any part of such Member’s Units, except in
compliance with this Agreement. Except as otherwise provided in this
Agreement, a Member may Dispose of all or any portion of its Units only with the
consent of Members owning a majority of the Units entitled to
vote. The Disposition of any Member’s Units, in whole or in part,
whether or not in compliance with this Agreement shall not release the Member
making such Disposition from such Member’s obligations under this Agreement
unless the transferee of such Units is approved as a substituted Member by
Members holding a majority of Units entitled to vote, and the transferee, in
writing assumes the obligations of the Member making such
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Disposition
and acknowledges and agrees to be bound by this Agreement. Any Member
who attempts to Dispose of such Member’s Units in violation of this Agreement,
whether by operation of law or otherwise, shall be deemed to have become an
Inactive Member and shall further be deemed to have granted the Company and the
remaining Members the option to purchase such Member’s Units at 75% of the
Contract Price, subject to the terms (other than the purchase price) of Section
14.1(b). The approved Disposition pursuant to this Section 14.3 shall
confer upon the transferee the right to become a substituted Member, in the
following manner and subject to the following conditions (any or all of which
may be waived by the consent of Members holding a majority of the Units entitled
to vote):
(i) Each
Disposition shall be effective as of the day that the Members approve the
Disposition;
(ii) No
Disposition will be effective if the Disposition would, in the opinion of
counsel to the Company (or other counsel acceptable to the Members), contravene
the then applicable rules of any Governmental Authority;
(iii) No
Disposition to a minor or incompetent shall be effective in any respect, except
that this limitation shall not apply to a Disposition in trust for the benefit
of a minor, or in custodianship under the Uniform Transfers to Minors Act or
similar legislation;
(iv) Each
transferee that is not a previously approved Member shall, in writing, ratify
and agree to be bound by the terms of this Agreement;
(v) The
Manager shall have received a copy of the instrument pursuant to which the
Disposition is effected;
(vi) The
Manager shall have received an instrument, executed by the Member making the
Disposition and the transferee, containing the following information,
commitments and agreements, to the extent they are not contained in the
instrument described in Section 14.3(a)(v):
(A) The
notice address of the transferee;
(B) After
giving effect to the Disposition, the commitments of the new Member to make
Capital Contributions, if any, to the Company in accordance with this Agreement;
and
(C) Representations
and warranties by the Member making the Disposition and the transferee that the
Disposition and admission are being made in accordance with all applicable Laws;
and
(vii) A
favorable opinion of legal counsel reasonably acceptable to the Members, to the
effect that the Disposition and admission (A) are being made pursuant to a
valid exemption from registration under the Securities Act of 1933 and
applicable state securities laws and in accordance with those laws, and
(B) in the event there is more than one (1) Member, would not result in the
Company being considered to have been terminated within the meaning of the
IRC.
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(b) Except
as otherwise provided in this Agreement, the transferee of Units who is not
approved as a substituted Member by Members holding a majority of the
outstanding Units entitled to vote shall be deemed to be an Inactive
Member. Such Disposition merely entitles the transferee to receive
the share of any distributions to which the Member making the Disposition would
otherwise be entitled and the transferee shall have only those rights specified
in the Act (as limited by this Agreement), and the Member making the Disposition
shall remain liable for such Member’s obligations, if any, under this
Agreement.
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(a) The
“Contract Price” shall equal the fair market value of the Units that are the
subject of the Disposition as of the date of the event triggering the
Disposition. The fair market value shall be determined by agreement
of the Members, on the one hand, and the Member Disposing of the Units, on the
other hand, within 30 days after the event triggering the
Disposition. If the Members cannot determine the fair market value of
the Units that are the subject of the Disposition, then an appraiser that shall
be selected in accordance with Section 14.8(b) shall determine the fair
market value of such Units, taking into account the terms of this Agreement and
restrictions on such Units as set forth in this Agreement and the
Act.
(b) If
the appraisal of Units is required pursuant to Section 14.8(a), then an
appraiser shall be selected by agreement of the Members, on the one hand, and
the Member Disposing of the Units, on the other hand, or, if no appraiser can be
agreed upon by such parties, or such parties do not appoint an appraiser, then
the Company’s regularly employed accounting firm shall select the
appraiser. The cost of the appraiser shall be split between the
Member making the Disposition of Units being appraised and the
Company. The decision of the appraiser shall be final and binding
upon the Members and the Company.
(a) Any
Units Disposed of to the Company or the other Members pursuant to
this ARTICLE 14, other than pursuant to Section 14.6 (provided that the
terms of the offer include payment terms), shall be paid for, at the purchaser’s
option, either (i) all in cash at the time the Units are Disposed, or
(ii) by a down payment computed in accordance with Section 14.9(b) and
delivery of a promissory note signed by the purchaser(s) for the balance of the
applicable purchase price. The closing on the Disposition of any
Units shall occur within 30 days after determination of the Contract Price,
unless otherwise specified in this Agreement or in that option or
offer.
(b) If
the purchaser(s) elect(s) the second option in Section 14.9(a), then such
purchaser(s) shall pay as a down payment 20% of the applicable purchase
price. The remaining unpaid portion of the purchase price shall be
represented by a promissory note of such purchaser(s), in such form as shall be
reasonably acceptable to the Member making the Disposition, and providing for
four equal annual installments of the remaining unpaid portion of the purchase
price, with each installment due on the anniversary of the Disposition of the
Units. That promissory note shall provide for the payment of interest
with each payment of principal on the unpaid portion of that promissory note
from time to time, at the Prime Rate, as adjusted each January 1 and July 1,
compounded semi-annually.
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disassociation
of a Member under the Act shall cause a disassociation of such Member from the
Company.
ARTICLE
15
(a) Subject
the provisions of Section 13(g), above, and to winding up and termination of the
Company pursuant to ARTICLE 16, the approval of the Members of the sale or other
disposition of all or substantially all of the assets of the Company;
or
(b) Subject
the provisions of Section 13(g), above, and to winding up and termination of the
Company pursuant to ARTICLE 16, the approval of the Members of the dissolution
of the Company.
Except as
provided in this ARTICLE 15, no event of disassociation of a Member or a Manager
under the Act or event of dissolution under the Act shall cause a dissolution of
the Company.
ARTICLE
16
(a) Upon
dissolution of the Company, the Manager will proceed to liquidate and wind up
the business of the Company. Upon the winding up of the Company, the
business of the Company may be continued in order to maximize the Company’s
value as a going concern for eventual sale. If there is more than one
Member at the time the Company is dissolved and liquidated, the Members shall
continue to share profits and losses during the period of liquidation in
accordance with ARTICLE 9. The Manager, in lieu of selling all or any
of the Company assets, may convey the assets in kind to the
Members. If the Company’s assets are distributed to the Members, then
all such assets shall be valued at their then fair market value as determined by
the Members and, in the event such dissolution occurs at a time when there is
more than one Member, the difference, if any, of such fair market value over (or
under) the adjusted basis of such assets to the Company shall be credited (or
charged) to the Capital Accounts of the Members in accordance with ARTICLE
9. Fair market value shall be used for purposes of determining the
amount of any distribution to a Member pursuant to this Section
16.1. If the Members are unable to agree on the fair market value of
any Company asset, then the fair market
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value
shall be determined by a qualified independent appraiser selected by the Members
or, if no appraiser can be agreed upon by the Members, then selected by the
Company’s regularly employed accounting firm. The Company assets and
the proceeds of any liquidation sale will be applied and distributed at the
closing of any sale in the following order of priority:
(b) To
the payment of all debts and liabilities of the Company and all expenses of
liquidation;
(c) To
the setting up of such reserves as the Manager may deem necessary for any
contingent liabilities of the Company. Any reserves will be deposited
with an escrow, to be applied to the discharge of any contingent liabilities,
and, at the expiration of whatever period the Manager may deem advisable, the
balance will be distributed as provided in clause (c) below; and
(d) The
balance, if any, will be distributed to the Members in accordance with their
Units.
ARTICLE
17
(a) Except
as otherwise provided by the Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Covered Person shall
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Covered Person. No Member shall
be liable for the debts or liabilities of any other Member.
(b) Except
as otherwise expressly required by Law, a Member, in its capacity as Member,
shall have no liability in excess of (i) the amount of its Capital
Contribution, (ii) its share of any assets and undistributed profits of the
Company, (iii) its obligation to make other payments expressly provided for
in this Agreement, and (iv) the amount of any distributions wrongfully
distributed to it.
(c) No
Member shall be liable for the return of all or any portion of the Capital
Contribution of any other Member.
(d) Except
as otherwise expressly provided herein, no Member shall have any priority over
any other Member as to the return of its Capital Contribution or as to
compensation by way of income.
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(a) The
doing of any act or the failure to do any act by any Covered Person, the effect
of which may cause or result in loss or damage to the Company, if done or
omitted to be done in good faith reliance upon advice of independent legal
counsel or accountants employed by or on behalf of the Company, or if done or
omitted to be done in good faith and in a manner reasonably believed to be
within the scope of the authority granted by this Agreement and in or not
opposed to the best interests of the Company, shall not subject any such Person
to any liability to the Company or the Members; provided, however, that the
foregoing shall not relieve any Person of liability hereunder if it shall have
been determined by a court of competent jurisdiction that such Person committed
an act or omission that constitutes fraud, Gross Negligence or Willful
Misconduct.
(b) To
the fullest extent permitted by Law, the Company shall indemnify each Covered
Person and shall save and hold each Covered Person harmless from and in respect
of all: (i) fees, costs and expenses incurred in connection with
or resulting from any claim, action or demand against the Covered Person
(including any claim, action or demand arising under common law or statute),
including attorneys’ fees, which arises out of or in any way relates to the
Company, its properties, business or affairs, or which arises by reason of any
of them being a Covered Person; and (ii) such claims, actions and demands
and any losses or damages resulting therefrom (including all claims, actions and
demands arising under common law or statute), including amounts paid in
settlement or compromise of any such claim, action or demand; provided that this
indemnity shall not extend to conduct by any Covered Person, if it shall have
been determined by a court of competent jurisdiction that such Person committed
an act of fraud, Gross Negligence or Willful Misconduct.
(c) The
foregoing right of indemnification shall be in addition to any rights to which
any Member or Covered Person may otherwise be entitled (under the Act or
otherwise), shall continue as to a Covered Person who has ceased to serve in
such capacity, and shall inure to the benefit of the executors, administrators,
personal representatives, successors or assigns of each such
Person.
(d) A
Covered Person shall not be denied indemnification in whole or in part under
this Section 17.2 because the Covered Person had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(a) To
the fullest extent permitted by applicable law, the Company shall pay the
expenses incurred by any Covered Persons acting on behalf of the Company in
defending a civil or criminal action, suit or proceeding against the Company or
any Covered Person, upon receipt of an undertaking by such Person to repay such
payment if such Person shall be determined not to be entitled to indemnification
therefor as provided herein. Any right of indemnity granted under
this ARTICLE 17 may be satisfied only out of the assets of the Company, and
no Member shall personally be liable with respect to any such claim for
indemnification.
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(b) The
Company shall cause to be paid all expenses of the Company which may include,
but shall not be limited to: (i) all costs of borrowed money;
(ii) legal, audit, accounting, brokerage, and other fees; (iii) fees
and expenses paid to independent contractors; (iv) the cost of any
insurance obtained in connection with the business of the Company;
(v) expenses of revising, amending, converting, modifying or terminating
this Agreement or the existence of the Company; (vi) expenses in connection
with distributions made by the Company to, and communications and bookkeeping
and clerical work necessary in maintaining relations with, Members; and
(vii) costs of any accounting, statistical or bookkeeping services and
equipment necessary for the maintenance of the books and records of the
Company.
ARTICLE
18
18.2 Governing
Law. This Agreement and the rights of the parties to this
Agreement shall be governed by and interpreted in accordance with the Laws of
the State of Delaware, without regard to or application of its conflict of laws
principles.
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other
than those with respect to which it is held invalid, illegal or unenforceable,
shall not be affected thereby.
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MEMBERS:
By:_______________________________________
Its:_______________________________________
WILD FLAVORS, INC.
By:_______________________________________
Its:_______________________________________
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ANNEX
A
OF
SUNWIN
USA LLC
|
Member
Name and Address
|
Units
of Membership
|
|
Attention: Xxxxxxxx
Xxx, CEO
0
Xxxxxxxxx Xxxxxx
Xxxx,
Xxxxxxxx, Xxxxx 000000
|
5,500
|
|
WILD
Flavors, Inc.
Attention: Chief
Operating Officer
0000
Xxxxxxx Xxxxxx
Xxxxxxxx,
Xxxxxxxx, XXX 00000
|
4,500
|
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