EXHIBIT 99.1
OPERATING AGREEMENT dated July 21, 2005 of ALLIANCE AGE LLC, a limited liability
company to be formed in Delaware (the "Company"), and its two members: ALLIANCE
DISTRIBUTORS HOLDING INC. ("Alliance"), a Delaware corporation, and AGE INC.
("Age"), a Delaware corporation.
1. Formation, Ownership, Etc.
a. The sole members of the Company are Alliance and Age.
b. The members will promptly file a Delaware LLC Certificate of
Organization for the Company.
c. The offices of the Company shall be located c/o the offices of
Alliance.
d. Ownership interests in the Company shall be represented by
membership units.
e. Alliance shall be issued 65 units and Age shall be issued 35
units.
f. Alliance shall be deemed to have made a $65 in capital
contributions to date and Age shall be deemed to have made a
$35 in capital contributions to date. Except as set forth
elsewhere in this Agreement, no member is required to make any
other capital contributions. Capital accounts shall not accrue
interest.
g. Neither member is personally liable for debts or other
obligations of the Company.
2. Business of the Company; Products, Etc.
a. The business of the Company is to develop and commercialize
Age conceptualized products ("products") that will be listed
in a Schedule A that may be agreed to by the members.
b. The Company shall have sole and exclusive ownership rights to
the products.
3. Responsibilities of Age and Alliance
a. Subject to the supervision and control of the Board of
Managers and the officers of the Company
i. Age shall be responsible for product conceptualization
and product development, design and expansion of product
line extensions, sourcing third party manufacturers for
products, coordination with licensing firms, package and
collateral print support for production, and marketing
input and direction to support Alliance's sales efforts.
ii. Alliance will be responsible for efforts to sell
completed products, obtaining purchase orders and
financing of all shipments and inventory, marketing
plans, financing of purchase orders, the collection of
receivables, and overseeing production of products with
assistance from AGE.
b. Neither member guarantees that its efforts to fulfill the
mentioned responsibilities will be successful.
4. The Board of Managers may at any time terminate development and
marketing of any one or more products, in which case the Company
will sell its interest in the Product to the member that offers to
the Company the highest cash up-front price therefore or a mutually
agreeable third party license which the party with the controlling
interest will have pre-approved by both groups. It is further agreed
that such approval not to be unreasonable withheld.
5. Fees and Reimbursements:
a. Alliance shall pay to Age a $4,000 monthly retainer fee
("Monthly Fee") on the first day of each month commencing
August 2005, provided, that no fee shall be payable for any
month beginning with January 2006 if the Board of Managers
determines that no products are then proceeding towards
completion at a proper pace. The Company shall credit these
fee payments to the capital account of Alliance.
b. Neither member shall be reimbursed for any expenses, except
that Alliance shall reimburse Age for cash payments that are
pre-approved by the Board of Managers and that Age makes to
unaffiliated third parties on behalf of the Company.
c. The Company shall credit to the capital account of Alliance
any reimbursements that Alliance makes to Age, and any cash
payments that Alliance makes to unaffiliated third parties on
behalf of the Company.
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6. Management
a. The management of the Company, including the determination of
whether and when to make distributions, shall be by a Board of
Managers and by officers elected by the Board of Managers.
Officers shall the authority that commonly appertains to their
respective offices.
b. The Board of Managers shall be composed of three Managers.
Each Manager shall serve until such time as he or she resigns,
retires, dies or is replaced (by notice to the Company) by the
member that appointed such Manager.
c. Alliance shall appoint two Managers and Age shall appoint one
Manager.
d. The initial managers are Xxx Xxxxxx and Xxxxx Xxxxx who were
appointed by Alliance, and Xxxx Xxxxxxx who was appointed by
Age. The initial officers are Xxx Xxxxxx, CEO; Xxxxxxx Xxx,
CFO; and Xxxx Xxxxxxx (CTO).
e. No action may be taken at a meeting of the Board of Managers
unless all Managers are present, in person or by telephone.
Any action to be taken by the Board of Managers shall require
affirmative votes from at least a majority of Managers present
in person or by telephone at a valid meeting.
f. Any action to be taken by the Board of Managers may be taken
without a meeting if consents in writing setting forth the
action to be taken are signed by all of the Managers.
7. No member may sell or pledge its interest in the Company without the
written approval of the other.
8. The Board of Managers shall have the right to admit new members to
the Company. Upon the introduction of each new member to the
Company, this Agreement shall be deemed amended to reflect the
number of units issued to such new member and the other terms and
conditions pursuant to which such new member has been admitted to
the Company.
9. Distributions shall first be allocated among the members to reduce
and then eliminate discrepancies in the members' respective capital
accounts per each unit they then own, and then in accordance with
their units.
10. Non-Compete; Confidentiality
a. Neither member shall directly or indirectly (through its
affiliates or otherwise) compete with any aspect of the
Business or any Product or hire any person who is or was at
any time an employee of the Company, until the end of the 12th
month after such member is no longer a member.
b. This covenant shall be enforceable by decrees of specific
performance as well as by such other remedies as shall be
available, without requiring the posting of bond or any other
security.
c. Each member shall while it is a member and at all times
afterwards maintain the confidentiality of the Company's
confidential information and trade secrets, including without
limitation the terms and provisions of this agreement. If a
person ceases to be a member, he shall forthwith return to the
Company all copies of all confidential information in his
possession or control.
11. The Company shall be dissolved and liquidated as required under law
or when determined by the Board of Managers.
12. The Company shall maintain a capital account for each member in
accordance with the rules in ss. 1.704-1(b)(2)(iv) of the U.S.
Treasury Department Regulations (the "Regulations"), or any
successor rules. Capital accounts shall not accrue interest. Except
for any special allocations needed to comply with ss. 704(b) and
704(c) of the Internal Revenue Code of 1986, as amended, (the
"Code") profits and losses shall be allocated among the members in
accordance with their ownership units.
13. In the event any member unexpectedly receives any adjustments,
allocations, or distributions described in ss.
1.704-1(b)(2)(ii)(d)(4), 1.704-1 (b)(2)(ii)(d)(5), or 1.704-1
(b)(2)(ii)(d)(6) of the Regulations (or any successor rules) that
would create an Adjusted Capital Account Deficit for such member,
items of Company income and gain shall be specially allocated to
each such member in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account
Deficit of such member as quickly as possible, provided that an
allocation pursuant to this section shall be made if and only to the
extent that such member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Agreement
have been tentatively made as if this section were not in the
Agreement. For this purpose, the term "Adjusted Capital Account
Deficit" means, with respect to any member, the deficit balance, if
any, in the member's Capital Account as of the end of the relevant
fiscal year, after giving effect to the following adjustments (i)
increasing the Capital Account by any amounts that the member is
obligated to restore or is deemed to be obligated to restore
pursuant to Treas. Reg. Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1)
and 1.704-2(i)(5); and (ii) reducing the Capital Account by the
items described in Treas. Reg. Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6). The foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Treas. Reg.
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
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14. Fiscal Matters; Books and Records
a. Tax Elections.The Company shall make the following elections
on the appropriate tax returns:
i. to adopt the calendar year as the Company's fiscal year,
if permitted by the Code;
ii. if a distribution of Company property as described in
Section 734 of the Code occurs or if a transfer of any
membership Unit as described in Section 743 of the Code
occurs, on written request of any member, to elect,
pursuant to Section 754 of the Code, to adjust the basis
of Company properties;
iii. to elect to amortize the organizational expenses of the
Company ratably over a period of 60 months as permitted
by Section 709(b) of the Code; and
iv. any other election that are appropriate and in the best
interests of the members.
b. Neither the Company nor any member may make an election for
the Company to be excluded from the application of the
provisions of subchapter K of chapter 1 of subtitle A of the
Code or any similar provisions of applicable state law.
c. Xxx Xxxxxx shall be the "tax matters partner" (the "Tax
Matters member") of the Company pursuant to Section 6231(a)(7)
of the Code. Such Tax Matters member shall take such action as
may be necessary to cause each other member to become a
"notice partner" within the meaning of Section 6223 of the
Code. Such member may not take any action contemplated by
Sections 6222 through 6232 of the Code without the consent of
all members but this sentence does not authorize such member
to take any action left to the determination of an individual
member under Sections 6222 through 6232 of the Code.
15. This agreement shall be governed in accordance with the internal
laws of the state of New York. This Agreement shall be enforceable
by decrees of specific performance (without posting bond or other
security) and by such other remedies as shall be available. All
disputes hereunder shall be resolved exclusively by the state and
federal courts in New York City. Service of process shall be
effective when served as provided by law or by recognized courier.
This Agreement sets forth all agreements of the parties, and may not
be changed or terminated orally.
IN WITNESS WHEREOF, the undersigned have signed this Agreement as of the date
set forth above.
ALLIANCE DISTRIBUTORS HOLDING INC.
By
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AGE INC.
By
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