LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF VORTEX OCEAN ONE, LLC A NEVADA LIMITED LIABILITY COMPANY Dated as of June 30, 2008
LIMITED
LIABILITY COMPANY OPERATING AGREEMENT
OF
VORTEX
OCEAN ONE, LLC
A
NEVADA LIMITED LIABILITY COMPANY
Dated
as of June 30, 2008
TABLE
OF
CONTENTS
|
ARTICLE
I. DEFINITIONS AND INTERPRETATION
|
1
|
|
1.1
CERTAIN DEFINITIONS
|
1
|
|
1.2
OTHER DEFINED TERMS
|
4
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1.3
INTERPRETATION
|
5
|
|
ARTICLE
II. INTRODUCTORY MATTERS
|
5
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|
2.1
FORMATION OF LLC
|
5
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2.2
NAME; PRINCIPAL OFFICE; AGENT
|
5
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2.3
PERIOD OF DURATION
|
5
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2.4
BUSINESS AND PURPOSE OF THE LLC
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5
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2.5
TITLE TO ALL PROPERTIES
|
6
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ARTICLE
III. MEMBERS AND CAPITAL CONTRIBUTIONS
|
6
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3.1
MEMBERS; NO PERSONAL LIABILITY
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6
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3.2
INITIAL CAPITAL CONTRIBUTIONS
|
6
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3.3
ADDITIONAL CONTRIBUTIONS
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6
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3.4
RIGHTS WITH RESPECT TO CAPITAL
|
7
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3.5
GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS
|
7
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3.6
SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS
|
8
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3.7
TRANSFEREE'S CAPITAL ACCOUNT
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8
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ARTICLE
IV. ALLOCATION OF PROFITS AND LOSSES
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8
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4.1
ALLOCATION OF NET PROFITS AND NET LOSSES
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8
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4.2
RESIDUAL ALLOCATIONS
|
9
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4.3
QUALIFIED INCOME OFFSET
|
9
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4.4
MINIMUM GAIN CHARGEBACK
|
9
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4.5
MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK
|
9
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4.6
MEMBER NONRECOURSE DEDUCTIONS
|
9
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4.7
SPECIAL ALLOCATIONS
|
9
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4.8
FEES TO MEMBERS OR AFFILIATES
|
10
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4.9
SECTION 704(c) ALLOCATION
|
10
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ARTICLE
V. DISTRIBUTIONS
|
10
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5.1
AVAILABLE CASH FLOW
|
10
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5.2
LIQUIDATING DISTRIBUTIONS
|
11
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ARTICLE
VI. RIGHTS, DUTIES, OBLIGATIONS AND COMPENSATION OF MANAGER AND
OFFICERS
|
11
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6.1
MANAGER
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11
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6.2
LIMITATIONS ON RIGHTS AND POWERS
|
13
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6.3
COMPENSATION OF MANAGER
|
13
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i
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ARTICLE
VII. MEMBERS; MEMBERS' MEETINGS
|
13
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7.1
PLACE OF MEETINGS; MANAGER TO PRESIDE
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13
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7.2
ANNUAL MEETINGS OF MEMBERS
|
14
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7.3
SPECIAL MEETINGS
|
14
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7.4
NOTICE OF MEETINGS
|
14
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7.5
VALIDATION OF MEMBERS' MEETINGS
|
14
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7.6
ACTIONS WITHOUT A MEETING
|
14
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7.7
REQUIRED VOTE
|
15
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7.8
QUORUM AND EFFECT OF VOTE
|
15
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7.9
COMPENSATION OF MEMBERS
|
15
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ARTICLE
VIII. RESTRICTIONS ON TRANSFER OF LLC INTERESTS; ADMISSION OF
NEW
MEMBERS
|
15
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8.1
TRANSFER OR ASSIGNMENT OF INTERESTS
|
15
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8.2.
RIGHT OF FIRST REFUSAL UPON SALE
|
15
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8.3
BUYOUT OPTION
|
16
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8.4
VOID TRANSFERS
|
18
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8.5
SUBSTITUTION OF MEMBERS
|
18
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8.6
ADMISSION OF NEW MEMBERS
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18
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8.7
SUBSEQUENT TRANSFERS SUBJECT TO TERMS OF AGREEMENT
|
18
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8.8
PURCHASE TERMS VARIED BY AGREEMENT
|
18
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8.9
SPOUSAL CONSENT
|
18
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ARTICLE
IX. TERMINATION AND DISSOLUTION
|
18
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9.1
DISSOLUTION
|
18
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9.2
DISASSOCIATION EVENT
|
19
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9.3
STATEMENT OF INTENT TO DISSOLVE
|
19
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9.4
CONDUCT OF BUSINESS
|
19
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9.5
DISTRIBUTION OF NET PROCEEDS
|
19
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ARTICLE
X. BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
|
20
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10.1
MAINTENANCE OF BOOKS AND RECORDS
|
20
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10.2
ANNUAL ACCOUNTING
|
20
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10.3
INSPECTION AND AUDIT RIGHTS
|
21
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10.4
BANK ACCOUNTS; FISCAL YEAR AND ACCOUNTING METHOD
|
21
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10.5
TAX MATTERS
|
21
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10.6
INCOME TAX ELECTIONS
|
21
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ARTICLE
XI. INDEMNIFICATION OF THE MEMBERS, MANAGER, AND THEIR
AFFILIATES
|
22
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11.1
INDEMNIFICATION OF THE MEMBERS AND THEIR PRINCIPALS
|
22
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11.2
EXPENSES
|
22
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11.3
INDEMNIFICATION RIGHTS NON-EXCLUSIVE
|
22
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11.4
ERRORS AND OMISSIONS INSURANCE
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22
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11.5
ASSETS OF THE LLC
|
22
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ii
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ARTICLE
XII. ISSUANCE OF LLC CERTIFICATES
|
23
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12.1
ISSUANCE OF LLC CERTIFICATES
|
23
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12.2
TRANSFER OF LLC INTERESTS
|
23
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12.3
LOST, STOLEN OR DESTROYED CERTIFICATES
|
23
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ARTICLE
XIII. AMENDMENTS
|
24
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13.1
AMENDMENT, ETC. OF OPERATING AGREEMENT
|
24
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13.2
AMENDMENT OF ARTICLES OF ORGANIZATION
|
24
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ARTICLE
XIV. REPRESENTATIONS AND ACKNOWLEDGMENTS
|
24
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14.1
INVESTMENT REPRESENTATIONS
|
24
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14.2
NO REPRESENTATIONS BY LLC
|
24
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14.3
RISK FACTORS
|
24
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ARTICLE
XV. MISCELLANEOUS PROVISIONS
|
24
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15.1
COUNTERPARTS
|
24
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15.2
SURVIVAL OF RIGHTS
|
25
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15.3
SEVERABILITY
|
25
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15.4
NOTIFICATION OR NOTICES
|
25
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15.5
GOVERNING LAW
|
25
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15.6
FURTHER ACTIONS
|
25
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15.7
ARBITRATION OF DISPUTES
|
25
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15.8
THIRD PARTY BENEFICIARIES
|
26
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15.9
PARTITION
|
26
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15.10
ENTIRE AGREEMENT
|
26
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15.11
WAIVER
|
26
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15.12
ATTORNEYS' FEES
|
26
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15.13
CONFIDENTIALITY
|
26
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EXHIBIT A
|
Initial
Member Names and Addresses; Initial Capital Contributions and Percentage
Interests
|
|
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EXHIBIT B
|
Form
of Certificate for LLC Interest
|
|
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EXHIBIT
C
|
TERM
ASSIGNMENT OF OIL AND GAS LEASE dated June 6, 2008
|
|
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EXHIBIT
D
|
RISK
FACTORS
|
iii
VORTEX
OCEAN ONE, LLC
LIMITED
LIABILITY COMPANY OPERATING AGREEMENT
This
Limited Liability Company Operating Agreement (this “Agreement”) is made and
entered into effective as of June 30, 2008 by and among the Persons executing
this Agreement on the signature pages hereof, with reference to the recitals
set
forth below.
R
E C I T
A L S
WHEREAS,
the Member(s) have caused VORTEX OCEAN ONE, LLC (the “LLC”) to be formed
pursuant to the provisions of the provisions of the Nevada Revised Statutes
as
set forth in Title 7, Chapter 86 (the “Statute”); and
WHEREAS,
the Member(s) do hereby adopt this Agreement as the operating agreement of the
LLC.
NOW,
THEREFORE, in consideration of the covenants and the promises made herein,
the
parties hereto hereby agree as follows.
ARTICLE I.
DEFINITIONS
AND INTERPRETATION
1.1 CERTAIN
DEFINITIONS. In
this
Agreement, the following terms have the meanings specified or referred to
in
this Section 1.1, which shall be equally applicable to both the singular
and plural forms.
1.1.1 “Adjusted
Capital Account Deficit”
means,
with respect to any Member, the deficit balance, if any, in such Member's
Capital Account as of the end of the relevant fiscal year of the LLC, after
giving effect to the following adjustments:
(i) increase
such Capital Account by any amounts which such Member is obligated to contribute
to the LLC (pursuant to the terms of this Agreement or otherwise) or is deemed
to be obligated to contribute to the LLC pursuant to Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) reduce
such Capital Account by the amount of the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.1.2 “Affiliate”
means,
when used with reference to a specified Person, (i) the Principal of the
Person, (ii) any Person directly or indirectly controlling, controlled by
or under common control with such Person, (iii) any Person owning or
controlling 10% or more of the outstanding voting interests of such Person
and
(iv) any relative or spouse of such Person.
1.1.3 “Agreement”
means
this Limited Liability Company Operating Agreement, as originally executed
and
as amended from time to time.
1
1.1.4 “Articles
of Organization”
means
the articles of organization filed with the Nevada Secretary of State for
the
purpose of forming the LLC.
1.1.5 “Available
Cash Flow”
means,
with respect to any fiscal year of the LLC or other period, the sum of all
cash
receipts of the LLC from any and all sources, less all cash disbursements
(including loan repayments, capital improvements and replacements) and a
reasonable allowance for Reserves, contingencies and anticipated obligations,
as
determined by the Manager.
1.1.6 “Capital
Contribution”
means
any money, property or services rendered, or a promissory note or other binding
obligation to contribute money, property or services, that a Member contributes
to the LLC as capital in such Member’s capacity as a Member and pursuant to an
agreement among the Members, including an agreement as to the value of such
contribution.
1.1.7 “Code”
means
the Internal Revenue Code of 1986, as amended.
1.1.8 “Depreciation”
means,
for each fiscal year of the LLC or other period, an amount equal to the
depreciation, amortization or other cost recovery reduction allowable with
respect to an asset for such fiscal year or other period.
1.1.9 “Disassociation
Event”
means
the death, retirement, resignation, expulsion, bankruptcy or dissolution
of a
Member, or any other event that terminates the continued membership in the
LLC
of a Member.
1.1.10 “Economic
Interest”
means
a
Person's right to share in the Net Profits, Net Losses or similar items of,
and
to receive distributions from, the LLC, but does not include any other rights
of
a Member including the right to vote or to participate in the management
of the
LLC or, except as provided in Section 10.3, any right to information concerning
the business and affairs of the LLC.
1.1.11 “LLC
Interest”
or
“Interest”
means
an ownership interest in the LLC, which includes the Economic Interest, the
right to vote or participate in the management of the LLC and the right to
information concerning the business and affairs of the LLC, as provided in
this
Agreement and under the Statute.
The
Interests of the Members, and any portion thereof, constitute the personal
property of the holders thereof.
1.1.12 “LLC
Minimum Gain”
means
the amount determined by computing with respect to each nonrecourse liability
of
the LLC, the amount of gain (of whatever character), if any, that would be
realized by the LLC if it disposed (in a taxable transaction) of the Property
subject to such liability in full satisfaction thereof, and by then aggregating
the amounts so computed as set forth in Regulations Section
1.704-2(d).
1.1.13 “Majority
in Interest of the Members”
means
with respect to any date of determination more than 50% of the interests
of the
Members in the current profits and capital of the LLC.
2
1.1.14 “Manager”
means
each Person designated or elected to manage the LLC pursuant to Section 6.1
of this Agreement.
1.1.15 “Member
Nonrecourse Debt”
has
the
meaning set forth in Regulations Section 1.704-2(b)(4).
1.1.16 “Member
Nonrecourse Debt Minimum Gain”
means
an amount, with respect to each Member Nonrecourse Debt, equal to the LLC
Minimum Gain that would result if such Member Nonrecourse Debt were treated
as a
nonrecourse liability of the LLC, determined in accordance with Regulations
Sections 1.704-2(i)(2) and (3).
1.1.17 “Member
Nonrecourse Deductions”
has
the
meaning set forth in Regulations Section 1.704-2(i)(2). The amount of Member
Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal
year of the LLC equals the excess (if any) of the net increase (if any) in
the
amount of Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt during that fiscal year over the aggregate amount of any
distributions during that fiscal year to the Member that bears (or is deemed
to
bear) the economic loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse Debt and are
allocable to an increase in Member Nonrecourse Debt Minimum Gain attributable
to
such Member Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(2).
1.1.18 “Member”
means
a
Person who is a signatory to this Agreement, as the same may be amended from
time to time, and who has not resigned, withdrawn or been expelled as a Member
or, if other than an individual, been dissolved.
1.1.19 “Net
Profits”
and
“Net
Losses”
mean,
for each fiscal year of the LLC or other period, an amount equal to the LLC’s
taxable income or loss for such fiscal year or period, determined in accordance
with Code Section 703(a) (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), with the following
adjustments:
(i) Any
income of the LLC that is exempt from Federal income tax and not otherwise
taken
into account in computing Net Profits or Net Losses shall be added to such
taxable income or loss;
(ii) Any
expenditures of the LLC described in Code Section 705(b)(2)(B) or treated
as
Code Section 705(b)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net
Profits or Net Losses shall be subtracted from such taxable income or
loss;
(iii) Gain
or
loss resulting from any disposition of Property with respect to which gain
or
loss is recognized for Federal income tax purposes shall be computed by
reference to the fair market value of the Property disposed of, notwithstanding
that the adjusted tax basis of such Property differs from its fair market
value;
3
(iv) In
lieu
of depreciation, amortization and other cost recovery deductions taken into
account in computing such taxable income or loss, there shall be taken into
account Depreciation for such fiscal year or other period, computed in
accordance with the Section 1.1.8 hereof, and
(v) Notwithstanding
any other provision of this subsection, any items of income, gain, loss or
deduction which are specifically allocated shall not be taken into account
in
computing Net Profits or Net Losses.
1.1.20 “Percentage
Interests”
of the
Members shall be as set forth on Exhibit A hereto, as the same may be amended
from time to time in accordance with this Agreement or supplemented by a
register of Interests or any other books and records maintained in conformity
with this Agreement by the LLC or its transfer agent or registrar for the
purpose of recording the interests of the LLC’s Interest holders.
1.1.21 “Person”
means
any individual, partnership, limited partnership, corporation, trust, estate,
association, limited liability company or other entity, whether domestic
or
foreign.
1.1.22 “Principal”
means
the individual who is in ultimate control of a Member.
1.1.23 “Property”
means
all assets of the LLC, both tangible and intangible, or any portion
thereof.
1.1.24 “Regulations”
means
the Federal income tax regulations promulgated by the Treasury Department
under
the Code, as such regulations may be amended from time to time.
1.1.25 “Reserves”
means
funds set aside from Capital Contributions or gross cash revenues as reserves.
Such Reserves shall be maintained in amounts reasonably deemed sufficient
by the
Manager for working capital and the payment of taxes, insurance, debt service,
repairs, replacements, renewals or other costs or expenses incident to the
business of the LLC.
1.2 OTHER
DEFINED TERMS. The
following terms have the meanings defined for such terms in the Sections
set
forth below:
|
Term
|
Section
|
|
|
Arbitrator
|
15.7
|
|
|
Buyout
Event
|
8.3.1
|
|
|
Buyout
Notice
|
8.3.1
|
|
|
Buyout
Option
|
8.3.1
|
|
|
Capital
Account
|
3.4.3
|
|
|
Departing
Member
|
8.3.1
|
|
|
Fair
Market Value
|
8.3.2
|
|
|
Indemnitee
|
11.1
|
|
|
LLC
|
Recitals
|
|
|
LLC
Certificate
|
12.1
|
|
|
Period
of Duration
|
2.5
|
|
|
Permitted
Transfer
|
8.1
|
|
|
Remaining
Member
|
8.3.1
|
|
|
Sale
Notice
|
8.2.1
|
|
|
Statute
|
Recitals
|
|
|
Transfer
|
8.1
|
|
|
Vote
|
7.7
|
4
1.3 INTERPRETATION. As
used
in this Agreement, the word “including” means without limitation, the word “or”
is not exclusive and
the
words “herein,” “hereof,” “hereto” and hereunder refer to this Agreement as a
whole. Unless the context otherwise requires, references herein: (i) to
Articles, Sections and Exhibits mean the Articles and Sections of and the
Exhibits attached to this Agreement, (ii) to an
agreement, instrument or other document means such agreement, instrument
or
other document as amended, supplemented and modified from time to time to
the
extent permitted by the provisions thereof and by this Agreement and (iii)
to a
statute means such statute as amended from time to time and includes any
successor legislation thereto. The Exhibits referred to herein shall be
construed with and as an integral part of this Agreement to the same extent
as
if they were set forth verbatim herein. Titles to Articles and headings of
Sections are inserted for convenience of reference only and shall not be
deemed
a part of or to affect meaning or interpretation of this Agreement. The language
herein shall be in all cases construed simply according to its fair meaning
and
not strictly for or against any of the Members.
ARTICLE II.
INTRODUCTORY
MATTERS
2.1 FORMATION
OF LLC. The
parties have formed the LLC pursuant to the provisions of the Statute by
filing
the Articles of Organization with the Nevada Secretary of State.
The
rights and liabilities of the Members shall be determined pursuant to the
Statute and this Agreement. To the extent that the rights or obligations
of any
Member are different by reason of any provision of this Agreement than they
would be in the absence of such provision, this Agreement shall, to the extent
permitted by the Statute, control.
2.2 NAME;
PRINCIPAL OFFICE; AGENT. The
name
of the LLC is “VORTEX OCEAN ONE, LLC.” The
LLC
shall maintain its principal place of business at 00000 Xxxxxxxx Xxxx., Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at any other location mutually agreed
upon by the Members.
The name
and address of the LLC's agent for service of process is KARIS
CORPORATION whose address is 000 Xxxxx Xxxxx Xxxxxx, Xxxxxx xxxx, Xxxxxx
00000.
2.3 PERIOD
OF DURATION. The
period of duration of the LLC (the “Period of Duration”) shall be through 2075,
unless the LLC is sooner terminated or dissolved in accordance with the
provisions of this Agreement.
2.4 BUSINESS
AND PURPOSE OF THE LLC. The
purpose of the LLC is to engage in any lawful activities for which a limited
liability company may be organized under the Statute, provided
that the LLC shall not conduct any banking, insurance or trust company
business.
Specifically, the LLC has been formed to fund the drilling of a well located
in
Xxxxxxxx County, Texas.
5
2.5 TITLE
TO ALL PROPERTIES. Real
and
personal property owned or purchased by the LLC shall be held and owned,
and
conveyance made, in the name of the LLC. Instruments and documents providing
for
the acquisition, mortgage or disposition of Property of the LLC shall be
valid
and binding upon the LLC, except as otherwise limited by this Agreement,
if
executed by the Manager of the LLC.
ARTICLE III.
MEMBERS
AND CAPITAL CONTRIBUTIONS
3.1 MEMBERS;
NO PERSONAL LIABILITY. The
name,
present mailing address and Percentage Interest of each Member is set forth
on
Exhibit A hereto.
No
Member shall have any personal liability for any obligation of the LLC, except
as expressly provided by law.
3.2 CAPITAL
CONTRIBUTIONS
BY MEMBERS. Upon
execution of this Agreement, each Member shall contribute to the LLC the
following:
3.2.1
Emvelco
Corp. shall
cause to be contributed to the LLC the following assets: (i) FIVE HUNDRED
AND
TWENTY FIVE THOUSAND (525,000) fully paid and non-assessable Shares of Emvelco
Corp. common stock; and (ii) that certain TERM ASSIGNMENT OF OIL AND GAS
LEASE
dated as of June 6, 2008 in the name of Emvelco Corp.’s wholly owned subsidiary,
Xxxx Xxxxxxxx Gas Company, LLC, attached hereto as Exhibit C and incorporated
herein by this reference.
3.2.2 Member
Xxxxx Xxxxx shall contribute to the LLC: FIVE HUNDRED AND TWENTY FIVE THOUSAND
DOLLARS ($525,000) in immediately available funds.
3.2.3 As
a
further inducement for the Members entering into this Agreement, Emvelco
Corp.
shall issue and grant to Member Xxxxx Xxxxx TWO HUNDRED THOUSAND (200,000)
Warrants convertible upon exercies to one (1) Common Share of stock at $1.50
per
share for a term of four (4) Years (the “Warrants”). Notwithstanding the
foregoing, however, the Warrants may be converted to Common Shares only if
EMVELCO issues Twenty-Five Million (25,000,000) or more of its Common Stock
so
that there are at least Thirty Million (30,000,000) authorized Shares at
the
time of the conversion term.
3.2.4 Each
Member shall own a fifty percent (50%) Membership Interest in the LLC. In
addition, Member Xxxxx Xxxxx’x Membership Interest shall consist of the
Warrants; however, this shall not affect the percentage ownership interest
of
each Member.
3.3 ADDITIONAL
CONTRIBUTIONS. Except
as
may be otherwise expressly set forth herein, no Member shall be required
to make
any additional Capital Contributions or loan or caused to be loaned to the
LLC
any money or other assets.
6
3.4 RIGHTS
WITH RESPECT TO CAPITAL.
3.4.1 LLC
Capital.
Except
as otherwise provided in this Agreement, no Member shall have the right to
withdraw or receive any return of its Capital Contribution, and no Capital
Contribution may be returned in a form of property other than cash.
3.4.2 No
Interest on Capital Contributions.
Except
as expressly provided in this Agreement, no Capital Contribution of any Member
shall bear any interest or otherwise entitle the contributing Member to any
compensation for the use of contributed capital.
3.4.3 Establishment
of Capital Accounts.
A
separate capital account (each, a “Capital Account”) shall be maintained for
each Member. For book purposes, each Member's Capital Account will be separated
into a contribution account and an income (loss)
account
and will be maintained according to generally accepted accounting principles
consistently applied. Sections 3.5 and 3.6 below describe the appropriate
accounting treatment for tax purposes of the Capital Accounts.
3.5 GENERAL
RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS.
3.5.1 Increases.
The
Capital Account of a Member shall be increased by:
(i) Such
Member's cash contributions;
(ii) The
agreed fair market value of property contributed by such Member (net of
liabilities secured by such contributed property that the LLC is deemed to
assume or take subject to under Code Section 752); and
(iii) All
items
of LLC income and gain (including income and gain exempt from tax) allocated
to
such Member pursuant to Article IV or other provisions of this
Agreement.
3.5.2 Decreases.
The
Capital Account of a Member shall be decreased by:
(i) The
amount of cash distributed to such Member;
(ii) The
agreed fair market value of all actual and deemed distributions of property
made
to such Member pursuant to this Agreement (net of liabilities secured by
such
distributed property that the Member is deemed to assume or take subject
to
under Code Section 752); and
(iii) All
items
of LLC deduction and loss allocated to such Member pursuant to Article IV
or other provisions of this Agreement.
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3.6 SPECIAL
RULES WITH RESPECT TO CAPITAL ACCOUNTS.
3.6.1 Time
of Adjustment for Capital Contributions.
For
purposes of computing the balance in a Member's Capital Account, no credit
shall
be given for any Capital Contribution which such Member is to make until
such
contribution is actually made.
3.6.2 Intent
to Comply with Treasury Regulations.
The
provisions of Section 3.5 and this Section 3.6 and the other provisions of
this
Agreement relating to the maintenance of Capital Accounts are intended to
comply
with Regulations Section 1.704-1(b), and shall be interpreted and applied
in a
manner consistent therewith. To the extent such provisions are inconsistent
with
such Regulations Section or are incomplete with respect thereto, the Capital
Accounts shall be maintained in such manner as is required to comply with
such
Regulations Section.
3.7 TRANSFEREE'S
CAPITAL ACCOUNT. In
the
event a Member or the holder of an Economic Interest transfers an Interest
in
accordance with the terms of this Agreement, the transferee shall succeed
to the
Capital Account of the transferor to the extent it relates to the transferred
Interest.
ARTICLE IV.
ALLOCATION
OF PROFITS AND LOSSES
4.1 ALLOCATION
OF NET PROFITS AND NET LOSSES. Except
as
otherwise provided in this Article IV, Net Profits and Net Losses in each
fiscal
year of the LLC shall be allocated among the Members as follows:
4.1.1 Net
Profits.
After
giving effect to any special or other overriding allocations set forth in
this
Article IV, Net Profits shall be allocated among the Members as
follows:
(i) first,
in
proportion to and up to the amounts of Net Losses allocated for previous
fiscal
years of the LLC pursuant to Section 4.1.2(ii) and not previously affected
by
allocations pursuant to this Section 4.1.1(i);
(ii) second,
in proportion to and up to the amounts of Net Losses allocated for previous
fiscal years of the LLC pursuant to Section 4.1.2(i) and not previously affected
by allocations pursuant to this Section 4.1.1(ii); and
(iii) thereafter,
to the Members in accordance with their respective Percentage
Interests.
4.1.2 Allocation
of Net Losses.
After
giving effect to any special or other overriding allocations set forth in
this
Article IV, Net Losses shall be allocated among the Members as
follows:
(i) first,
in
proportion and to the extent of the Members’ positive adjusted Capital Accounts;
and
8
(ii) thereafter,
to the Members in accordance with their respective Percentage
Interests.
4.2 RESIDUAL
ALLOCATIONS. Except
as
otherwise provided in this Agreement, all items of LLC income, gain, loss,
deduction and any other allocations not otherwise provided for shall be divided
among the Members in the same proportions as they share Net Profits or Net
Losses, as the case may be, for the applicable fiscal year of the
LLC.
4.3 QUALIFIED
INCOME OFFSET. If
any
Member unexpectedly receives any adjustments, allocation or distributions
described in clauses (4), (5) or (6) of Regulations Section
1.704-1(b)(2)(ii)(d), items of LLC income
shall be specially allocated to such Member in an amount and manner sufficient
to eliminate the Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible. This Section 4.3 is
intended to constitute a “qualified income offset” within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(d)(3).
4.4 MINIMUM
GAIN CHARGEBACK. If
there
is a net decrease in LLC Minimum Gain during a fiscal year, each Member will
be
allocated, before any other allocation under this Article IV, items of
income and gain for such fiscal year (and, if necessary, subsequent years)
in
proportion to and to the extent of an amount equal to such Member's share
of the
net decrease in LLC Minimum Gain determined in accordance with Regulations
Section 1.704-2(g)(2). This Section 4.4 is intended to comply with, and
shall be interpreted consistently with, the “minimum gain chargeback” provisions
of Regulations Section 1.704-2(f).
4.5 MEMBER
NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Article IV, but except Section 4.4, if
there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable
to
a Member Nonrecourse Debt during any fiscal year of the LLC, each Member
who has
a share of the Member Nonrecourse Debt Minimum Gain attributable to such
Member
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(5), shall be specially allocated items of LLC income and gain
for
such year (and, if necessary, subsequent years) in an amount equal such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). 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 Regulations Section 1.704-2(i)(4). This Section 4.5 is
intended to comply with a minimum gain chargeback requirement of that Section
of
the Regulations and shall be interpreted consistently therewith.
4.6 MEMBER
NONRECOURSE DEDUCTIONS. Any
Member Nonrecourse Deductions for any fiscal year of the LLC or other period
shall be specially allocated to the Member who bears (or is deemed to bear)
the
economic risk of loss with respect to the Member Nonrecourse Debt to which
such
Member Nonrecourse Deductions are attributable in accordance with Regulations
Section 1.704-2(i)(2).
4.7 SPECIAL
ALLOCATIONS. Any
special allocations of items of Net Profits pursuant to Sections 4.4, 4.5
and 4.6 shall be taken into account in computing subsequent allocations of
Net
Profits pursuant to Section 4.1, so that the net amount of any items so
allocated and the gain, loss and any other item allocated to each Member
pursuant to Section 4.1 shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Member pursuant to the
provisions of this Article IV if such special allocations had not
occurred.
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4.8 FEES
TO MEMBERS OR AFFILIATES. Notwithstanding
the provisions of Section 4.1, in the event that any fees, interest or
other amounts paid to any Member or any Affiliate thereof pursuant to this
Agreement or any other agreement between the LLC and any Member or Affiliate
thereof providing for the payment of such amount, and deducted by the LLC
in
reliance on Section 707(a) and/or 707(c) of the Code, are disallowed as
deductions to the LLC on its federal income tax return and are treated as
LLC
distributions, then:
(i) the
Net
Profits or Net Losses, as the case may be, for the fiscal year of the LLC
in
which such fees, interest, or other amounts were paid shall be increased
or
decreased, as the case may be, by the amount of such fees, interest or other
amounts that are treated as LLC distributions; and
(ii) there
shall be allocated to the Member to which (or to whose Affiliate) such fees,
interest or other amounts were paid, prior to the allocations pursuant to
Section 4.1, an amount of gross income for such fiscal year equal to the
amount
of such fees, interest or other amounts that are treated as LLC
distributions.
4.9 SECTION
704(c) ALLOCATION.
Any
item
of income, gain, loss and deduction with respect to any property (other than
cash) that has been contributed by a Member to the capital of the LLC and which
is required or permitted to be allocated to such Member for income tax purposes
under Section 704(c) of the Code so as to take into account the variation
between the tax basis of such property and its fair market value at the time
of
its contribution shall be allocated to such Member solely for income tax
purposes in the manner so required or permitted.
ARTICLE V.
DISTRIBUTIONS
5.1 AVAILABLE
CASH FLOW. Available
Cash Flow shall be distributed, from time to time and from any source, as
soon
as reasonably possible following receipt thereof, in accordance with the
following priority and agreements:
5.1.1 First,
Eighty/Twenty
(80/20) to
Member
Ibgui until such Member has received an amount equal to his initial Capital
Contribution ($525,000); and
5.1.2 Thereafter,
to the Members, each in the ratio that their respective Percentage Interests
bear to the aggregate of the Percentage Interests of all Members.
For
purposes of allocations of Net Profits pursuant to Section 4.1.1, Available
Cash Flow attributable to a specific fiscal year of the LLC shall be deemed
distributed as of the end of such fiscal year.
10
5.2 LIQUIDATING
DISTRIBUTIONS. If
the
LLC is liquidated, the assets of the LLC shall be distributed to the Members
in
accordance with the balances in their respective Capital Accounts, after
giving
effect to all Capital Contributions, distributions and allocations for all
periods. Distributions to the Members pursuant to this Section 5.2 shall be
made in accordance with Section 1.704-1(b)(2)(ii)(b)(2) of the
Regulations.
ARTICLE VI.
RIGHTS,
DUTIES, OBLIGATIONS AND
COMPENSATION
OF MANAGER AND OFFICERS
6.1 MANAGER. The
LLC
shall be managed by Emvelco Corp. Either the Members or the Manager may elect
to
increase or decrease the authorized number of Manager(s). A Manager need
not be
a Member or an individual.
6.1.1 Duties
of the Manager.
The
Manager shall function collectively as the general manager and chief executive
officer of the LLC and have, subject to the control of the Members, general
supervision, direction and control of the business of the LLC. Each Manager
shall have such rights, duties and powers as are specified in this Agreement,
or
conferred upon the Manager by a Vote of the Members. Should the LLC at any
time
have only one Manager, the term “Manager” as used in this Agreement shall mean
the Person who alone has the powers and duties specified in this Section
6.1.1.
6.1.2 Execution
of Documents.
To the
extent practicable, the Manager shall operate the business and affairs of
the
LLC in consultation with one another, but notwithstanding the provisions
of this
Section 6.1, and except as set forth in Section 6.2 hereof, any
Manager acting alone may execute any contract, deed, lease, agreement or
other
instrument on behalf of the LLC, and the execution thereof by a Manager shall
be
conclusive evidence in favor of every Person relying thereon or claiming
thereunder that such contract, deed, lease, agreement or other instrument,
when
executed and delivered by such Manager, was duly authorized by the Members
and/or the Manager, as appropriate; provided, however, that any action by
the
Manager with respect to the matters set forth in Section 6.2 hereof shall
be authorized by the Manager in the manner set forth in this
Section 6.1.
6.1.3 Election.
Each
Manager shall hold office until such Manager’s successor has been elected by a
Vote of the Members and has qualified, unless such Manager earlier resigns
or is
removed or otherwise disqualified to serve. In voting for a Manager, each
Member
shall have a number of votes equal to such Member’s Percentage Interest in the
LLC. The candidate for a Manager position who receives the most Member votes
cast with respect to such position shall succeed thereto.
6.1.4 Subordinate
Officers.
The
Members may appoint a secretary, a chief financial officer and such other
officers as the business of the LLC may require, each of whom shall hold
office
for such period, have such authority and perform such duties as are provided
in
this Agreement, or as the Members may determine.
11
6.1.5 Removal
and Resignation.
Any
Manager or other officer of the LLC may be removed, with or without cause,
by a
Vote of the Members. Any Manager or other officer of the LLC may resign at
any
time without prejudice to any rights of the LLC under any contract to which
the
Manager or other officer of the LLC is a party, by giving written notice
to the
Members or to the Manager, as applicable. Any such resignation shall take
effect
at the date of the receipt of such notice or at any later time specified
therein
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
6.1.6 Vacancies.
A
vacancy among the Managers or in any office because of death, resignation,
removal, disqualification or any other cause shall be filled by a Vote of
the
Members through the appointment of a successor Manager or officer who shall
hold
office for the unexpired term.
6.1.7 Meetings.
Any
meetings of the Manager shall be held at the principal office of the LLC,
unless
some other place is designated in the notice of the meeting. Any Manager
may
participate in a meeting through use of a conference telephone or similar
communication equipment so long as all Managers participating in such a meeting
can hear one another. Accurate minutes of any meeting of the Manager shall
be
maintained by the officer designated by the Manager for that
purpose.
6.1.8 Regular
Meetings.
Meetings
of the Manager shall not be required. Regular meetings of the Manager may
be
held immediately following the adjournment of any annual meeting of the Members
at which the Manager are elected. No notice need be given of such regular
meetings.
6.1.9 Special
Meetings.
Special
meetings of the Manager for any purpose may be called at any time by any
Manager. At least 48 hours notice of the time and place of a special meeting
of
the Manager shall be delivered personally to the Manager or personally
communicated to them by an officer of the LLC by telephone, telegraph or
facsimile. If the notice is sent to a Manager by letter, it shall be addressed
to such Manager at his, her or its last known business address as it is shown
in
the records of the LLC. In case such notice is mailed, it shall be deposited
in
the United States mail, first-class postage, prepaid, in the place in which
the
principal office of the LLC is located at least four days prior to the time
of
the holding of the meeting. Such mailing, telegraphing, telephoning or delivery
as above provided shall be considered due, legal and personal notice to such
Manager.
6.1.10 Meetings
Without Notice.
Notice
of a meeting need not be given to any Manager who signs a waiver of notice,
a
consent to holding the meeting or an approval of the minutes thereof, whether
before or after the meeting, or who attends the meeting without protesting,
prior thereto or at its commencement, the lack of notice to such Manager.
All
such waivers, consents and approvals shall be filed with the LLC’s records or
made a part of the minutes of the meeting.
6.1.11 Written
Consent in Lieu of Meetings.
Any
action required or permitted to be taken by the Manager may be taken without
a
meeting and will have the same force and effect as if taken by a vote of
the
Manager at a meeting properly called and noticed, if authorized by a writing
signed individually or collectively by all, but not less than all, of the
Manager. Any such consent shall be filed with the records of the
LLC.
12
6.1.12 Quorum.
A
majority of the total number of incumbent Manager shall be necessary to
constitute a quorum for the transaction of business at any meeting of the
Manager, and except as
otherwise provided in this Agreement or by the Statute, the action of a majority
of the Manager present at any meeting at which there is a quorum, when duly
assembled, is valid. A meeting at which a quorum is initially present may
continue to transact business, notwithstanding the withdrawal of Manager,
if any
action taken is approved by a majority of the required quorum for such
meeting.
6.2 LIMITATIONS
ON RIGHTS AND POWERS. Except
by
a Vote of the Members which is evidenced in writing, neither the Manager
nor any
officers of the LLC shall have the authority to:
(i) Enter
into or commit to any agreement, contract, commitment or obligation on behalf
of
the LLC obligating any Member or Principal to fund additional capital, to
make
or guarantee a loan or to increase its personal liability either to the LLC
or
to third parties;
(ii) Permit
the LLC's funds to be commingled with the funds of any other
Person;
(iii) Do
any
act in contravention of this Agreement;
(iv) Do
any
act which would make it impossible to carry on the business of the
LLC;
(v) Confess
a
judgment against the LLC;
or
(vi) Sell,
exchange or otherwise dispose of all or substantially all of the assets of
the
LLC, whether in a single transaction or in a series of related transactions,
or
merge the LLC with or into any other limited liability company, limited
partnership, corporation or other entity.
6.3 COMPENSATION
OF MANAGER. The
LLC
shall pay to the Manager such salary and other benefits as shall be approved
from time to time by a Vote of the Members. The LLC shall reimburse the Manager
for any expense paid by a Manager that properly is to be borne by the
LLC.
ARTICLE VII.
MEMBERS;
MEMBERS' MEETINGS
7.1 PLACE
OF MEETINGS;
MANAGER TO PRESIDE. Meetings
of the Members shall be held at the principal office of the LLC or at such
other
location as may be reasonably designated by the Manager.
The
Manager shall preside at all meetings of the Members.
13
7.2 ANNUAL
MEETINGS OF MEMBERS. Annual
meetings of the Members shall not be required. An annual meeting of the Members
may be held at such date, time and place within or without the State of Nevada
(or California) as the Manager may determine from time to time. At any annual
meeting, the Members may elect the Manager and transact such other business
as
may be properly brought before the meeting.
Notwithstanding the foregoing, the Manager shall not be under any obligation
to
convene an annual meeting of the Members unless requested to do so in writing
by
a Majority in Interest of the Members.
7.3 SPECIAL
MEETINGS. Special
meetings of the Members may be called at any time by any Manager or by one
or
more Members holding in the aggregate more than 10% of the Percentage Interests.
Upon receipt of a written request, which request may be mailed or delivered
personally to the Manager, from any Person entitled to call a special meeting
of
Members, the Manager shall cause notice to be given to the Members that a
meeting will be held at a time requested by the Person or Persons calling the
meeting, which time for the meeting shall be not less than 10 nor more than
sixty 60 days after the receipt of such request. If such notice is not given
within 20 days after delivery of such request to the Manager, the Persons
calling the meeting may give notice thereof in the manner provided by this
Agreement.
7.4 NOTICE
OF MEETINGS. Except
as
provided in Section 7.3 with respect to special meetings, notice of meetings
shall be given by the Manager to the Members in writing not less than 10 nor
more than 60 days before the date of the meeting. Notices for regular and
special meetings shall be given personally, by mail or by
facsimile, and shall be sent to each Member's last known business address
appearing on the books of the LLC. Such notice shall be deemed given at the
time
it is delivered personally, deposited in the mail or sent by facsimile. Notice
of any meeting of Members shall specify the place, the day and the hour of
the
meeting, and (i) in case of a special meeting, the general nature of the
business to be transacted, or (ii) in the case of an annual meeting, those
matters which the Manager, at the date of mailing, intend to present for action
by the Members.
7.5 VALIDATION
OF MEMBERS' MEETINGS. Business
transacted at a meeting of Members which was not called or noticed pursuant
to
the provisions of Section 7.3 or 7.4 shall be valid as though transacted at
a meeting duly held after regular call and notice, if Members holding in the
aggregate more than 50% of the Percentage Interests are present, and if, either
before or after the meeting, each of the Members entitled to vote but not
present (whether in person or by proxy, as that term is used in the Statute)
at
the meeting signs a written waiver of notice, a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the records of the LLC. Attendance at a meeting
shall constitute a waiver of notice, unless an objection is made at the
beginning of the meeting that it was not duly called or convened.
7.6 ACTIONS
WITHOUT A MEETING. Any
action which may be taken at any annual or special meeting of Members may be
taken without a meeting and without prior notice if a consent in writing,
setting forth the action so taken, shall be signed by Members holding in the
aggregate the number of votes equal to or greater than the number
of
votes required to approve such action at a meeting of the Members. Notwithstanding
the foregoing, unless the consents of all of the Members have been given in
writing, notice of any approval of (i) an amendment to this Agreement or
the Articles of Organization, (ii) a dissolution of the LLC pursuant to
clause (ii) of Section 9.1 hereof or (iii) a merger of the LLC as
provided in Section 17551 of the Statute shall be given at least
10 days
before the consummation of any such action to each Member whose consent was
not
so obtained. Any Member giving a written consent may revoke the consent by
a
writing received by the LLC prior to the time that written consents of Members
required to authorize the proposed action have been filed with the LLC. Any
such
revocation shall be effective upon its receipt by the LLC.
14
7.7 REQUIRED
VOTE. Unless
otherwise expressly set forth in this Agreement or required by the terms of
the
Statute, Code or applicable Regulations thereunder, the affirmative vote of
at
least a Majority in Interest of the Members (a “Vote”), wherein each Member
casts a number of votes equal to the Member's Percentage Interest in the
LLC,
shall
constitute the approval of the Members.
7.8 QUORUM
AND EFFECT OF VOTE. A
Majority in Interest of the Members shall constitute a quorum at all meetings
of
the Members for the transaction of business, and a Vote of the Members shall
be
required to approve any action, unless a greater vote is required or a lesser
vote is provided for by this
Agreement or by the Statute. Each Member shall have a number of votes equal
to
the Percentage Interest held by such Member, provided that if, pursuant to
the
Statute or the terms of this Agreement, a Member
is
not entitled to vote on a specific matter, then such Member's number of votes
and Percentage Interest shall not be considered for purposes of determining
whether a quorum is present, or whether approval by Vote of the Members has
been
obtained in respect of such specific matter.
7.9 COMPENSATION
OF MEMBERS. Except
as
expressly permitted by this Agreement or any other duly authorized and approved
written agreement, the LLC shall pay no compensation to any Member or any
Principal of any Member for their services to the LLC.
ARTICLE VIII.
RESTRICTIONS
ON TRANSFER OF LLC
INTERESTS;
ADMISSION OF NEW MEMBERS
8.1 TRANSFER
OR ASSIGNMENT OF INTERESTS. No
transfer, sale, hypothecation, pledge, encumbrance, assignment or other
disposition (each of the foregoing, a “Transfer”) of a Member’s Interest, or any
part thereof, will be valid without the consent of a Majority in Interest of
the
Members. Any Transfer of an Interest, including an involuntary Transfer, which
does not satisfy the requirements of this Section 8.1 shall be subject to
the provisions of Section 8.3 hereof; provided, however, that any Transfer
by a Member to a trust or other entity wholly owned by or established for the
benefit of such Member, or to a parent, spouse, sibling or descendant of such
Member or to a trust established exclusively for the benefit of one or more
of
such Persons (any such Transfer, a “Permitted Transfer”), shall not require
consent pursuant to this Section 8.1.
8.2. RIGHT
OF FIRST REFUSAL UPON SALE. Other
than with respect to Permitted Transfers, in the event that any Member receives
a bona fide offer for the purchase and sale of all or any portion of such
Member’s Interest, the Member shall first offer to sell such Interest or portion
thereof to the other Members and to the LLC in accordance with the provisions
of
this Section 8.2.
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8.2.1 Notice
of Offer to Sell. Promptly
following the receipt of an offer to purchase all or any portion of his, her
or
its Interest, a Member shall deliver a written notice (the “Sale Notice”) to the
LLC and the other Members stating (i) such Member’s bona fide intention to sell
his, her or its Interest, (ii) the name and address of the proposed transferee,
(iii) the Interest or portion thereof to be sold and (iv) the purchase price
and
terms of payment upon which the Member proposes to sell such
Interest.
8.2.2 Right
of First Refusal.
Within
90 days after receipt of the Sale Notice, the LLC and the Members electing
to
purchase the Interest subject to the Sale Notice shall have the first right
to
purchase or obtain such Interest upon the price and terms of payment designated
in the Sale Notice. If the Sale Notice provides for the payment of non-cash
consideration, the LLC and the purchasing Members each may elect to pay the
consideration in cash equal to the good faith estimate of the present fair
market value of the non-cash consideration offered, as determined by the Manager
or, in the absence of an agreement among the Manager as to such value, by a
nationally recognized firm of appraisers jointly selected by the
Manager.
8.2.3 Election
to Exercise Right of First Refusal. Within
30
days after receipt of the Sale Notice, each non-selling Member shall notify
the
Manager in writing of his, her or its desire to purchase a portion of the
Interest subject to the Sale Notice. The failure of any Member to so notify
the
Manager within the applicable period shall constitute an election on the part
of
that Member not to purchase any portion of the Interest subject to the Sale
Notice. Each Member so electing to purchase shall be entitled to purchase a
portion of such Interest in the same proportion that the Percentage Interest
of
such Member bears to the aggregate of the Percentage Interest of all of the
Members electing to so purchase the Interest subject to the Sale Notice. In
the
event any Member elects to purchase none or less than all of his, her or its
pro
rata share of such Interest, then the other Members can elect to purchase more
than their pro rata share. If such Members fail to purchase the entire Interest
subject to the Sale Notice, the LLC may purchase any remaining share of such
Interest.
8.2.4 Lapse
of Right of First Refusal. If
the
LLC or the other Members elect not to purchase or obtain all of the Interest
subject to the Sale Notice, then the selling Member may sell the Interest
described in the Sale Notice to the proposed transferee, provided such sale
(i)
is completed within 30 days after the expiration of the LLC’s and the other
Members' right to purchase such Interest, (ii) is made on terms no less
favorable to the selling Member than as designated in the Sale Notice and (iii)
the requirements of Section 8.1 have been met. If such Interest is not so
sold, the selling Member must give notice in accordance with this
Section 8.2. prior to any subsequent sale of such Member’s
Interest.
8.3 BUYOUT
OPTION.
8.3.1 Buyout
Notice.
Any
Member (a “Remaining Member”) or its designated Affiliate shall have the right
(the “Buyout Option”) to purchase all, but not less than all, of the LLC
Interest of any other Member (a “Departing Member”) in the event the Departing
Member Transfers any portion of such Member’s LLC Interest other than as
permitted pursuant to Section 8.1 hereof (a “Buyout Event”). Within 30 days
of receipt of notice of a Buyout Event, the Remaining Member shall give written
notice (the “Buyout Notice”) to the Departing Member of the Remaining Member’s
desire to purchase the Departing Member’s LLC Interest. In the event that there
is more than one Remaining Member at the time a Buyout Event occurs, the
Remaining Members shall be entitled to exercise the Buyout Option pro rata
in
accordance with their respective Percentage Interests.
16
8.3.2 Purchase
Price of the Departing Member’s LLC Interest.
The
purchase price of the Departing Member’s LLC Interest shall be the Fair Market
Value thereof. For purposes hereof, the “Fair Market Value” of such Interest
shall be such value as is mutually agreed upon among the Members (which term
shall include, for purposes of this Section 8.3.2, the Departing Member’s
legal representatives); provided, however, that in the event that such Persons
are unable to agree upon a Fair Market Value within 30 days of the date of
the
Buyout Notice, the Fair Market Value shall be determined by an independent
appraiser affiliated with a nationally recognized firm of accountants,
appraisers or investment bankers and selected by the Manager in the exercise
of
their reasonable discretion. The appraiser shall render a written report setting
forth its determination of Fair Market Value as promptly as possible, and the
Transfer incident to the exercise of the Buyout Option shall be made within
15
days after such determination has been made. In making such determination,
the
appraiser shall value the LLC as a going concern and shall take into
consideration (i) the transferability and liquidity of the Departing Member’s
Interest, (ii) the fact that additional capital may be required, from time
to
time, in connection with the business of the LLC and (iii) the economic risk
and
liability associated with the ownership of such Interest. Absent manifest error,
the appraiser’s determination of Fair Market Value shall be final and binding on
all parties. The fees and expenses of any appraiser shall be paid by the
LLC.
8.3.3 Exercise
Terms.
The
Buyout Notice shall specify the date on which the Transfer pursuant to an
exercise of the Buyout Option shall be consummated, which date shall be no
earlier than 30 days nor later than 90 days from the date of the Buyout Notice,
unless otherwise agreed by the Remaining Member and the Departing Member. Except
as may be otherwise agreed by the Remaining Member and the Departing Member,
the
Remaining Member shall pay at least 20% of the purchase price for the Departing
Member’s LLC Interest in cash, with the balance of the purchase price payable
pursuant to a promissory note bearing interest at 110% of the then current
applicable federal rate for mid-term obligations (as determined pursuant to
Section 7872 of the Code). Such note shall be payable in equal installments
of principal and interest over a period not to exceed five years. Any such
promissory note may be prepaid at any time without premium or penalty. The
Departing Member’s LLC Interest shall be transferred free and clear of all liens
and encumbrances and, except as otherwise provided, the Departing Member shall
be released at the closing from any guarantees, obligations, liabilities or
similar undertakings to third parties given by such Member on behalf of the
LLC.
8.3.4 Further
Cooperation.
On the
closing of the purchase and sale of the Departing Member’s LLC Interest pursuant
to an exercise of the Buyout Option, each Member shall execute, acknowledge
and
deliver to each other Member such instruments, and take such actions, as each
Member may reasonably request in order to effect the purchase and sale of the
LLC Interest pursuant to the terms and conditions of this
Section 8.3.
17
8.3.5 LLC
Option.
In the
event the Remaining Member elects not to exercise any of its rights under this
Section 8.3, the LLC, at its election, may assume such rights.
8.4 VOID
TRANSFERS. If
the
Manager determine in its sole discretion that any Transfer would cause the
termination of the LLC under the Code, then such Transfer shall be null and
void.
8.5 SUBSTITUTION
OF MEMBERS. A
transferee of an Interest shall become a substitute Member, provided that
(i) the Transfer was valid under Section 8.1 hereof and not voided by
the Manager pursuant to Section 8.4 hereof, (ii) the transferee has
become a party to this Agreement and (iii) the transferee pays any
reasonable expenses in connection with his, her or its admission as a Member.
A
transferee who becomes a substituted Member has, to the extent transferred,
all
of the rights, powers and duties of a Member under this Agreement and the
Statute.
8.6 ADMISSION
OF NEW MEMBERS. A
new
Member may be admitted into the LLC only upon the consent of a Majority in
Interest of the Members. The
amount of Capital Contribution, if any, which must be made by a new Member
shall
be determined by the Vote of all existing Members.
A new
Member shall not be deemed admitted into the LLC until the Capital Contribution
required of such Person shall have been made and such Person has become a party
to this Agreement and made any and all investment representations deemed
necessary or advisable by the Manager in its sole discretion.
8.7 SUBSEQUENT
TRANSFERS SUBJECT TO TERMS OF AGREEMENT. After
the
consummation of any Transfer of any part of an LLC Interest, the Interest or
portion thereof 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 hereof.
8.8 PURCHASE
TERMS VARIED BY AGREEMENT. Provided
that the restrictions set forth in this Agreement have been satisfied, nothing
contained herein is intended to prohibit Members from agreeing upon other terms
and conditions for the purchase by the LLC or any other Member of the Interest
(or any portion thereof) of any Member desiring to retire, withdraw or
resign.
8.9 SPOUSAL
CONSENT. Each
Member who is married as of the date hereof or who subsequently becomes married
shall obtain his or her spouse’s signature to a spousal consent.
ARTICLE IX.
TERMINATION
AND DISSOLUTION
9.1 DISSOLUTION. The
LLC
shall be dissolved upon the occurrence of any of the following
events:
(i) When
the
Period of Duration of the LLC expires;
18
(ii) The
written approval by a Majority in Interest of the Members to dissolve the
LLC;
(iii) The
sale
of all or substantially all of the assets of the LLC and the distribution to
the
Members of the proceeds thereof;
or
(iv) Except
as
otherwise set forth in this Agreement, any other event causing a dissolution
of
the LLC under the Statute.
9.2 DISASSOCIATION
EVENT. The
occurrence of a Disassociation Event shall not constitute a dissolution or
termination of the LLC.
9.3 STATEMENT
OF INTENT TO DISSOLVE. As
soon
as possible after the occurrence of any of the events specified in
Section 9.1 above, the LLC shall execute a Statement of Intent to Dissolve
in such form as prescribed by the Nevada Secretary of State.
9.4 CONDUCT
OF BUSINESS. Upon
the
occurrence of any event specified in Section 9.1, the LLC shall continue
solely for the purpose of winding up its affairs in an orderly manner,
liquidating its assets and satisfying the claims of its creditors. The Manager
who has not wrongfully dissolved the LLC or, if none, the Members, shall be
responsible for overseeing the winding up and liquidation of the LLC, shall
take
full account of the assets and liabilities of the LLC, shall cause its assets
to
be either sold or distributed, and shall cause the proceeds therefrom, to the
extent sufficient therefor, to be applied and distributed as provided in this
Section 9.4. The Persons winding up the affairs of the LLC shall give
written notice of the commencement of winding up by mail to all known creditors
and claimants whose addresses appear on the records of the LLC. The Manager
or Manager
winding up the affairs of the LLC shall be entitled to reasonable compensation
for such services.
9.5 DISTRIBUTION
OF NET PROCEEDS. The
Members shall continue to divide Net Profits and Net Losses and Available Cash
Flow during the winding-up period in the same manner and the same priorities
as
provided for in Articles IV and V hereof. The proceeds from the liquidation
of Property shall be applied in the following order:
(i) To
creditors other than Members in the order of priority provided by
law;
then
(ii) To
creditors who are Members in order of priority, except amounts owed to Members
on account of their Capital Contributions;
then
(iii) To
the
Members as provided in Section 5.2 hereof.
Where
the
distribution pursuant to this Section 9.5 consists both of cash (or cash
equivalents) and non-cash assets, the cash (or cash equivalents) shall first
be
distributed, in a descending order, to fully satisfy each category starting
with
the most preferred category set forth above. In the case of non-cash assets,
the
distribution values are to be based on the fair market value thereof as
determined in good faith by the liquidator, and the shortest maturity portion
of
such non-cash assets (e.g., notes or other indebtedness) shall, to the extent
such non-cash assets are readily divisible, be distributed, in a descending
order, to fully satisfy each category above, starting with the most preferred
category.
19
ARTICLE X.
BOOKS,
RECORDS, REPORTS AND BANK ACCOUNTS
10.1 MAINTENANCE
OF BOOKS AND RECORDS. The
Manager shall cause the books and records of the LLC to be maintained in
accordance with generally accepted accounting principles, and shall give reports
to the Members in accordance with prudent business practices and the Statute.
There shall be kept at the principal office of the LLC, as well as at the office
of record of the LLC specified in Section 2.3, if different, the following
LLC documents:
(i) A
current
list in alphabetical order of the full name and last known business or residence
address of each Member and holder of an Economic Interest in the LLC, together
with the Capital Contributions, Percentage Interest and share in Net Profits
and
Net Losses of each Member and holder of an Economic Interest;
(ii) A
current
list of the full name and business or residence address of each
Manager;
(iii) A
copy of
the Articles of Organization and any amendments thereto, together with any
powers of attorney pursuant to which the Articles of Organization and any
amendments thereto were executed;
(iv) Copies
of
the LLC's federal, state and local income tax or information returns and
reports, if any, for the six most recent fiscal years of the LLC;
(v) A
copy of
this Agreement and any amendments thereto, together with any powers of attorney
pursuant to which this Agreement and any amendments thereto were
executed;
(vi) Copies
of
the financial statements of the LLC, if any, for the six most recent fiscal
years of the LLC;
(vii) The
LLC's
books and records as they relate to the internal affairs of the LLC for at
least
the current and past four fiscal years of the LLC;
(viii) Originals
or copies of all minutes, actions by written consent, consents to action and
waivers of notice to Members and Member Votes, actions and consents;
and
(ix) Any
other
information required to be maintained by the LLC pursuant to the
Statute.
10.2 ANNUAL
ACCOUNTING. Within
120 days after the close of each fiscal year of the LLC, the LLC shall
(i) cause to be prepared and submitted to each Member a balance sheet and
income statement for the preceding fiscal year (or portion thereof) in
conformity with generally accepted accounting principles and (ii) provide
to the Members all information necessary for them to complete federal and state
tax returns.
20
10.3 INSPECTION
AND AUDIT RIGHTS. Each
Member and each holder of an Economic Interest in the LLC who is not a Member
has the right upon reasonable request, for purposes reasonably related to the
interest of that Person, to inspect and copy during normal business hours any
of
the XXX xxxxx and records required to be maintained in accordance with
Section 10.1. Such right may be exercised by the Person or by that Person's
agent or attorney. The determination of the Manager as to adjustments to the
financial reports, books, records and returns of the LLC, in the absence of
fraud or gross negligence,
shall be final and binding upon the LLC and all of the Members.
In
addition, upon the request of a Member or a holder of an Economic Interest,
for
purposes reasonably related to the interest of that Person, the Manager shall
promptly deliver to the Member or holder of an Economic Interest, at the expense
of the LLC, a copy of this Agreement and a copy of the information listed in
paragraphs (i), (ii) and (iv) of Section 10.1 of this Agreement.
10.4 BANK
ACCOUNTS; FISCAL YEAR AND ACCOUNTING METHOD. The
bank
accounts of the LLC shall be maintained in such banking institutions as the
Manager shall determine. The
fiscal year and accounting method of the LLC shall be as determined by the
Manager in their reasonable discretion and in accordance with, to the extent
applicable, the Code.
10.5 TAX
MATTERS. One
of
the Manager who is also a Member, or in the event no Manager is a Member, a
Member or an officer of a corporate Member, shall be designated as “Tax Matters
Partner” (as defined in Code section 6231), to represent the LLC (at the LLC's
expense) in connection with all examinations of the LLC's affairs by tax
authorities, including resulting judicial and administrative proceedings, and
to
expend LLC funds for professional services and costs associated therewith.
In
its capacity as Tax Matters Partner, the designated Person shall oversee the
LLC
tax affairs in the overall best interests of the LLC. The
Manager shall designate the initial Tax Matters Partner, who shall serve in
such
capacity until such time as the Members designate another Tax Matters
Partner.
10.6 INCOME
TAX ELECTIONS. The
Tax
Matters Partner designated pursuant to Section 10.5 shall have the
authority on behalf of the LLC to make all elections permitted under the Code
and all other tax-related statutes and regulations, including elections of
methods of depreciation and elections under
Section
754 of the Code. The decision to make or not to make an election shall be at
the
Tax Matters Partner’s sole and absolute discretion.
The
Members hereby acknowledge that they are aware of the income tax consequences
of
the allocations made by this Agreement and hereby agree to be bound by the
provisions of this Agreement in reporting their shares of the LLC income and
loss for income tax purposes.
21
ARTICLE XI.
INDEMNIFICATION
OF MEMBERS,
MANAGER
AND THEIR AFFILIATES
11.1 INDEMNIFICATION
OF MEMBERS AND THEIR PRINCIPALS. The
LLC
shall indemnify and hold harmless the Members, the Manager, their Affiliates
and
their respective officers, directors, employees, agents and Principals
(individually, an “Indemnitee”) from and against any and all losses, claims,
demands, costs, damages, liabilities, joint and several, expenses of any nature
(including reasonable attorneys' fees and disbursements),
judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative
or investigative, in which the Indemnitee was involved or may be involved,
or
threatened to be involved, as a party or otherwise, arising out of or incidental
to the business of the LLC, regardless of whether the Indemnitee continues
to be
a Member, an Affiliate, or an officer, director, employee, agent or Principal
of
the Member at the time any such liability or expense is paid or incurred, to
the
fullest extent permitted by the Statute and all other applicable
laws.
11.2 EXPENSES. Expenses
incurred by an Indemnitee in defending any claim, demand, action, suit or
proceeding subject to Section 11.1 shall, from time to time, be advanced by
the LLC prior to the final disposition of such claim, demand, action, suit
or
proceeding upon receipt by the LLC of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that such Person
is
not entitled to be indemnified as authorized in Section 11.1.
11.3 INDEMNIFICATION
RIGHTS NON-EXCLUSIVE. The
indemnification provided by Section 11.1 shall be in addition to any other
rights to which those indemnified may be entitled under any agreement or vote
of
the Members, as a matter of law or equity or otherwise, both as to action in
the
Indemnitee’s capacity as a Member, as an Affiliate or as an officer, director,
employee, agent or Principal of a Member and as to any action in another
capacity, and shall continue as to an Indemnitee who has ceased to serve in
such
capacity and shall inure to the benefit of the heirs, successors, assigns,
representatives and administrators of the Indemnitee.
11.4 ERRORS
AND OMISSIONS INSURANCE. The
LLC
may purchase and maintain insurance, at the LLC's 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 LLC and/or the Members'
acts or omissions as the Members of the LLC regardless of whether the LLC
would
have the
power to indemnify such Person against such liability under the provisions
of
this Agreement or under applicable law.
11.5 ASSETS
OF THE LLC. Any
indemnification under Section 11.1 shall be satisfied solely out of the
assets of the LLC. No Member shall be subject to personal liability
or required
to fund or to cause to be funded any obligation by reason of these
indemnification provisions.
22
ARTICLE XII.
ISSUANCE
OF LLC CERTIFICATES
12.1 ISSUANCE
OF LLC CERTIFICATES. Upon
or
at any time after the execution of this Agreement and the payment of the Capital
Contributions by the Members, the Manager may elect to cause the LLC to issue
one or more LLC Certificates in the form of Exhibit B hereto (each, an “LLC
Certificate”) in the name of each Member certifying that the Person named
therein is the record holder of the LLC Interests set forth therein. For
purposes of this Agreement, the term “record holder” shall mean the person whose
name appears on Exhibit A as the Member owning the LLC Interest at
issue.
12.2 TRANSFER
OF LLC INTERESTS. An
LLC
Interest which is transferred in accordance with the terms of this Agreement
shall be transferable on the books of the LLC by the record holder thereof
in
person or by such record holder's duly authorized attorney, but, except as
provided in Section 12.3 hereof with respect to lost, stolen or destroyed
certificates, in the event an LLC Certificate has been issued, no transfer
of an
LLC Interest shall be entered until the previously issued LLC Certificate
representing such LLC Interest shall have been surrendered to the LLC and
canceled and a replacement LLC Certificate issued to the assignee of such LLC
Interest in accordance with such procedures as the Manager may establish. In
the
event of a Transfer of less than all of a Member’s LLC Interests and if LLC
Certificates have been issued, the Manager shall issue to the transferring
Member a new LLC Certificate representing the LLC Interests not being
transferred. Except as otherwise required by law, the LLC shall be entitled
to
treat the record holder of an LLC Certificate on its books as the owner thereof
for all purposes regardless of any notice or knowledge to the
contrary.
12.3 LOST,
STOLEN OR DESTROYED CERTIFICATES. The
LLC
shall issue a new LLC Certificate in place of any LLC Certificate previously
issued if the record holder of the LLC Certificate:
(i) makes
proof by affidavit, in form and substance satisfactory to the Manager, that
a
previously issued LLC Certificate has been lost, destroyed or
stolen;
(ii) requests
the issuance of a new LLC Certificate before the LLC has notice that the LLC
Certificate has been acquired by a purchaser for value in good faith and without
notice of an adverse claim;
(iii) indemnifies
the LLC against any claim that may be made on account of the alleged loss,
destruction or theft of the LLC Certificate; and
(iv) satisfies
any other reasonable requirements imposed by the Manager.
If
a
Member fails to notify the LLC within a reasonable time after it has notice
of
the loss, destruction or theft of an LLC Certificate, and a transfer of the
LLC
Interest represented by the LLC Certificate is registered before receiving
such
notification, the LLC shall have no liability with respect to any claim against
the LLC for such transfer or for a new LLC Certificate.
23
ARTICLE XIII.
AMENDMENTS
13.1 AMENDMENT,
ETC. OF OPERATING AGREEMENT. This
Agreement may be adopted, altered, amended or repealed and a new operating
agreement may be adopted by a Majority in Interest of the Members; provided,
however, that no provision of this Agreement which requires the vote of a
greater percentage than a Majority in Interest of the Members may be amended
without the affirmative vote of such greater percentage.
13.2 AMENDMENT
OF ARTICLES OF ORGANIZATION. Notwithstanding
any provision to the contrary in the Articles of Organization or this Agreement,
in no event shall the Articles of Organization be amended without the
affirmative vote of a Majority in Interest of the Members.
ARTICLE
XIV.
REPRESENTATIONS
AND ACKNOWLEDGMENTS
14.1 INVESTMENT
REPRESENTATIONS. Each
Member hereby represents and warrants to the Manager, the other Members and
the
LLC that such Member is acquiring his, her or its Interest hereunder for such
Member’s own account, for investment only, not for the benefit of any other
Person and not for resale to any other Person or for future distribution, and
that he, she or it relied solely on the advice of such Member’s personal tax,
investment or other advisors in making such Member’s investment
decision.
14.2 NO
REPRESENTATIONS BY LLC. Each
Member acknowledges that the Manager have not made and hereby make no
representations or warranties other than those set forth in this Agreement,
and
that neither any Manager, agent or employee of the LLC or of any Manager or
any
other Person has at any time expressly or implicitly represented, guaranteed
or
warranted to such Member that he, she or it may freely transfer such Person’s
Interests, that a percentage of profit and/or amount or type of consideration
will be realized as a result of an investment in the Interest, that past
performance or experience on the part of the Manager or their Affiliates or
any
other Person in any way indicates the predictable results of the ownership
of
any Interests or of the overall LLC business, that any cash distributions from
LLC operations or otherwise will be made to the Members by any specific date
or
will be made at all, or that any specific tax benefits will accrue as a result
of an investment in the LLC.
14.3 RISK
FACTORS. Each
Member acknowledges that he/it has read and reviewed the Risk Factors associated
with an investment in the LLC, attached hereto as Exhibit D, and incorporated
herein by this reference,
ARTICLE XV.
MISCELLANEOUS
PROVISIONS
15.1 COUNTERPARTS. This
Agreement may be executed in several counterparts, and all counterparts so
executed shall constitute one Agreement, binding on all of the parties hereto,
notwithstanding that all of the parties are not signatory to the original or
the
same counterpart.
24
15.2 SURVIVAL
OF RIGHTS. This
Agreement shall be binding upon, and, as to permitted or accepted successors,
transferees and assigns, inure to the benefit of the Members and the LLC and
their respective heirs, legatees, legal representatives, successors, transferees
and assigns,
in all cases whether by the laws of descent and distribution, merger, reverse
merger, consolidation, sale of assets, other sale, operation of law or
otherwise.
15.3 SEVERABILITY. In
the
event any Section, or any sentence within any Section, is declared by a court
of
competent jurisdiction to be void or unenforceable, such sentence or Section
shall be deemed severed from the remainder of this Agreement and the balance
of
this Agreement shall remain in full force and effect.
15.4 NOTIFICATION
OR NOTICES. Except
as
otherwise provided in Articles VI and VII with respect to notices given for
purposes of meetings of Manager and meetings of Members, any notice or other
communication required or permitted hereunder shall be in writing and shall
be
deemed to have been given if personally delivered, transmitted by facsimile
(with mechanical confirmation of transmission), or deposited in the United
States mail, registered or certified, postage prepaid, addressed to the parties'
addresses set forth on Exhibit A hereto, unless the same shall have been changed
by notice in accordance herewith. Notices given in the manner provided for
in
this Section 15.4 shall be deemed effective on the third day following
deposit in the mail or on the day of transmission or delivery if given by
facsimile or by hand.
15.5 GOVERNING
LAW. This
Agreement shall be governed and construed in accordance with the internal laws
of the State of Nevada.
15.6 FURTHER
ACTIONS. Each
of
the Members agrees to execute, acknowledge and deliver such additional
documents, and take such further actions, as may reasonably be required from
time to time to carry out each of the provisions and the intent of this
Agreement, and every agreement or document relating hereto or entered into
in
connection herewith.
15.7 ARBITRATION
OF DISPUTES. Any
controversy or claim arising out of or relating to this Agreement or the breach
thereof shall be submitted to binding, non-appealable arbitration administered
by the American Arbitration Association in accordance with its Commercial
Arbitration Rules. Such controversy or claim shall be heard by a single
arbitrator (the “Arbitrator”). The award shall be made within six months of
selection of the Arbitrator. Judgment on the award may be entered in any court
having jurisdiction and the parties hereby consent to the jurisdiction of the
Superior Court for Los Angeles County, California, and of the United States
District Court for the Central District of California, for injunctive relief,
specific performance or other relief in aid of any proceedings hereunder, but
not otherwise. The arbitration shall be held in Los Angeles, California or
as
otherwise mutually agreed by the parties hereto. The Arbitrator shall determine
issues of arbitrability but may not limit, expand or otherwise modify the terms
of this Agreement nor have any authority to award punitive or other damages
in
excess of compensatory damages and each party irrevocably waives any claim
thereto. The Arbitrator shall
permit, to the extent reasonably necessary, one document production request,
and
one follow-up request, and one deposition of the principals involved in a
controversy or claim submitted to arbitration hereunder. The parties, their
representatives, other participants and the Arbitrator shall hold the existence,
content and result of the arbitration in confidence except as disclosure is
required by law or as is reasonably necessary to defend claims or procedural
rights of the party making the disclosure.
25
15.8 THIRD
PARTY BENEFICIARIES. There
are
no third party beneficiaries of this Agreement except (i) Affiliates and
Principals of the Members and (ii) any other Persons as may be entitled to
the
benefits of Article XI hereof.
15.9 PARTITION. The
Members agree that the Property that the LLC may own or have an interest in
is
not suitable for partition. Each of the Members hereby irrevocably waives any
and all rights that it may have to maintain any action for partition of any
Property the LLC may at any time have an interest in.
15.10 ENTIRE
AGREEMENT. This
Agreement and the Articles of Organization constitute the entire agreement
of
the Members with respect to, and supersedes all prior written and oral
agreements, understandings and negotiations with respect to, the subject matter
hereof.
15.11 WAIVER. No
failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute a waiver of any such
breach or any other covenant, duty, agreement or condition.
15.12 ATTORNEYS'
FEES. In
the
event of any litigation, arbitration or other dispute arising as a result of
or
by reason of this Agreement, the prevailing party in any such litigation,
arbitration or other dispute shall be entitled to, in addition to any other
damages assessed, its reasonable attorneys' fees, and all other costs and
expenses incurred in connection with settling or resolving such dispute. The
attorneys' fees which the prevailing party is entitled to recover shall include
fees for prosecuting or defending any appeal and shall be awarded for any
supplemental proceedings until the final judgment is satisfied in full. In
addition to the foregoing award of attorneys' fees to the prevailing party,
the
prevailing party in any lawsuit or arbitration procedure on this Agreement
shall
be entitled to its reasonable attorneys' fees incurred in any
post
judgment proceedings to collect or enforce the judgment. This attorneys' fees
provision is separate and several and shall survive the merger of this Agreement
into any judgment.
15.13 CONFIDENTIALITY. Each
Member for itself and on behalf of its Affiliates agrees to keep the provisions
of this Agreement and all schedules, exhibits and appendices hereto in
confidence, except pursuant to the requirements of applicable law, and shall
not
publish or otherwise disclose the same at any time without the prior written
consent of all the Members.
IN
WITNESS WHEREOF, the parties hereto have hereunto executed this Agreement as
of
the date first written above.
26
|
A Delaware Corporation
|
|
|
By:
|
/s/XXXXX
XXXXX
|
|
Xxxxx
Xxxxx, Chief Executive Officer
|
|
|
/s/XXXXX
XXXXX
|
|
|
Xxxxx
Xxxxx
|
27
EXHIBIT
A
INITIAL
MEMBER NAMES AND ADDRESSES; INITIAL
CAPITAL
CONTRIBUTIONS AND PERCENTAGE INTERESTS
(As
of June 30, 2008)
|
Member's name
|
|
Member's address
|
|
Member's capital
contribution
|
|
Member's
percentage interest
|
||||
|
00000
Xxxxxxxx Xxxx. Xxxxx 0000 Xxx Xxxxxxx, XX 00000
|
525,000
Emvelco Corp. Shares + Warrants & Term Assignment
|
50
|
% | |||||||
|
XXXXX
XXXXX
|
$
|
525,000
|
50
|
%
|
||||||
|
|
TOTALS:
|
ASSETS
+ $525,000
|
100
|
%
|
||||||
EXHIBIT
B
(FACE
OF CERTIFICATE)
THE
LLC
INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF
ANY STATE. SUCH LLC INTERESTS MAY NOT BE SOLD OR TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION FROM REGISTRATION OR
QUALIFICATION IS AVAILABLE. THE AGREEMENT (AS DEFINED BELOW) PROVIDES FOR
FURTHER RESTRICTIONS ON TRANSFER OF THE LLC INTERESTS REPRESENTED
HEREBY.
CERTIFICATE
FOR LLC INTEREST
IN
VORTEX
OCEAN ONE, LLC
|
Certificate
No. ______________
|
________
Percentage Interest
|
The
undersigned, as
a
Manager of VORTEX OCEAN ONE, LLC, a Nevada limited liability company (the
“LLC”), hereby certifies that ___________________________ is the holder of an
LLC Interest representing a _______ percent (__%) Percentage Interest, as those
terms are defined in the Operating Agreement of the LLC, dated as of
________________, as amended and restated from time to time (the “Agreement”)
(copies of which are on file at the principal office of the LLC).
This
Certificate is not negotiable or transferable except by operation of law, or
as
otherwise provided in the Agreement, and any such transfer will be valid only
upon delivery of this Certificate, together with a duly executed assignment
in
the form set forth on the reverse hereof (or otherwise acceptable to the Manager
and sufficient to convey an interest in an LLC pursuant to the Nevada Revised
Statutes, as it may be amended and in effect from time to time, or any successor
statute thereto) to the Manager of the LLC.
| Dated: |
|
.
|
VORTEX OCEAN ONE,
LLC
|
|
|
By:
|
||||
|
Its:
Manager
|
||||
(REVERSE
OF CERTIFICATE)
ASSIGNMENT
OF LLC INTEREST
IN
VORTEX
OCEAN ONE, LLC
FOR
VALUE
RECEIVED, the undersigned (“Assignor”) hereby assigns, conveys, sells and
transfers unto
|
(“Assignee”)
|
|
(Please
insert Social Security
|
(Please
print or typewrite name and
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or
other identifying number of Assignee)
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address
of Assignee)
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all
rights and interest of Assignor in ______ percent of the LLC Interest evidenced
hereby and directs that all future distributions and allocations with respect
to
such specified assigned LLC Interest be paid or allocated by the LLC to such
Assignee. The Assignor hereby irrevocably constitutes and appoints each Manager
as Assignor's attorney-in-fact with full power of substitution in the premises
to transfer the same on the books of the LLC.
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Dated:
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Signature
of Assignor
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| Note: |
The
signature to any assignment must correspond with the name as written
upon
the face of this Certificate, in every particular, without alteration
or
enlargement or any change whatever. If the assignment is executed
by an
attorney, executor, administrator, trustee or guardian, the person
executing the assignment must give such person's full title in such
capacity, and proper evidence of authority to act in such capacity,
if not
on file with the LLC or its transfer agent, must be forwarded with
this
Certificate.
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The
undersigned, a Manager of the LLC, hereby consents to this Assignment pursuant
to Section 8.1 of the Agreement.
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Dated:
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,
LLC
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Its: Manager
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THE
LLC
INTERESTS EVIDENCED HEREBY ARE SUBJECT TO ALL TERMS AND CONDITIONS OF THE
AGREEMENT AND UNLESS AND UNTIL ADMITTED TO THE LLC AS A MEMBER, NO ASSIGNEE
SHALL BE ENTITLED TO ANY OF THE RIGHTS, POWERS OR PRIVILEGES OF THE ASSIGNOR,
EXCEPT THAT ASSIGNEE SHALL BE ENTITLED TO THE DISTRIBUTIONS PAID AND ALLOCATIONS
MADE WITH RESPECT TO SUCH INTERESTS AS DIRECTED BY THE ASSIGNOR
ABOVE.
