EXHIBIT 10.01
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OPERATING AGREEMENT
dated October 1, 1998
among
XXXXX XXXXXXXXX
Managing Member
and
XXXXXX XXXXXXXXX
XXXXX XXXX
Members
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OPERATING AGREEMENT
OF
TECHSTORE LLC
AGREEMENT, made October 1, 1998, among XXXXX XXXXXXXXX, having
an address at 00 XXXXXXXXXX XXXX., XXXXX 000, XXXXXX, XX 00000 ("Managing
Member"), and XXXXXX XXXXXXXXX, having an address at 00 XXXXXXXXXX XXXX., XXXXX
000, XXXXXX, XX 00000, and XXXXX XXXX, having an address at 00 XXXXXXXXXX XXXX.,
XXXXX 000, XXXXXX, XX 00000 (collectively hereinafter referred to as "Members").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to form a limited liability
company pursuant to the laws of the State of California for the purposes
hereinafter set forth, and to establish their respective rights and obligations
in Connection with the limited liability Company;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other valuable consideration, the receipt and sufficiency
hereby are acknowledged, the Managing Member and Members agree as follows:
1. FORMATION
The parties hereby confirm that they have formed a limited
liability company (the "Limited Liability Company") pursuant to the provisions
of the California Xxxxxxx-Xxxxxx Limited Liability Company Act, for the purposes
and the period and upon the terms and conditions hereinafter set forth. The
parties have caused to be filed the Articles Of Organization of the Limited
Liability Company, and shall execute, acknowledge, swear to and file any other
documents required under applicable law.
2. NAME
The name of the Limited Liability Company shall be TECHSTORE
LLC, and all business of the Limited Liability Company shall be conducted under
said name, or such other name as the Members from time to time may determine.
3. PURPOSES
The purposes of the Limited Liability Company are to engage in
any lawful activity; and to incur indebtedness, secured and unsecured; to enter
into and perform contracts and agreements of any kind necessary to, in
connection with or incidental to the business of the Limited Liability Company;
and to carry on any other activities necessary to, in connection with or
incidental to the foregoing, as the Managing Member in his discretion may deem
desirable.
4. PLACE OF BUSINESS
The principal place of business and specified office of the
Limited Liability Company at which the records required to be maintained by the
Limited Liability Company under the California Xxxxxxx-Xxxxxx Limited Liability
Company Act are to be kept shall be at 00 XXXXXXXXXX XXXX., XXXXX 000, XXXXXX,
XX 00000, or at such other or additional places of business within or outside of
the State of California as the Managing Member from time to time may designate.
The Managing Member shall notify the other Members of any change of the
principal place of business and specified office.
The Limited Liability Company hereby designates XXXXX
XXXXXXXXX, whose post office address is 0000 XXXXXX XXXXXX XXXX, XXXXXX, XX
00000, as the Registered Agent of the Limited Liability Company for service or
process. The registered office and Registered Agent may be changed from time to
time by the Managing Member by filing the prescribed forms with the appropriate
governmental authorities.
5. TERM
The term of the Limited Liability Company shall commence on
the filing the Articles Of Organization of the Limited Liability Company, and
shall continue until the occurrence of an event hereinafter set forth which
causes the termination of the Limited Liability Company.
6. CAPITAL CONTRIBUTIONS
Except as specifically provided in this Agreement or required
by law, no Member shall have the right to withdraw or reduce his contributions
to the capital of the Limited Liability Company until the termination of the
Limited Liability Company. No Member shall have the right to demand and receive
any distribution from the Limited Liability Company in any form other than cash,
regardless of the nature of such Member's capital contribution. No Member shall
be paid interest on capital contributions to the Limited Liability Company.
The liability of any Member for the losses, debts, liabilities
and obligations of the Limited Liability Company shall be limited to paying: the
capital contribution of such Member when due under this Agreement; such Member's
share of any undistributed assets of the Limited Liability Company; and (only if
and to the extent at any time required by applicable law) any amounts previously
distributed to such Member by the Limited Liability Company.
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7. LOAN AND ADVANCES BY MEMBERS
If any Member shall loan or advance any fluids to the Limited
Liability Company in excess of the capital contribution of such Member
prescribed herein, such loan or advance shall not be deemed a capital
contribution to the Limited Liability Company and shall not in any respect
increase such Member's interest in the Limited Liability Company.
8. ALLOCATIONS AND DISTRIBUTIONS
As used in this Agreement, the terms "net profits" and "net
losses" shall mean the profits or losses of the Limited Liability Company from
the conduct of the Limited Liability Company's business, after all expenses
incurred in connection therewith have been paid or provided for. The net profits
or net losses of the Limited Liability Company shall be determined by the
Limited Liability Company's accountants in accordance with generally accepted
accounting principles applied in deterring the income, gains, expenses,
deductions or losses, as the case may be, reported by the Limited Liability
Company for Federal income tax purposes.
The term "cash receipts" shall mean all cash receipts of the
Limited Liability Company from whatever source derived, including without
limitation capital contributions made by the Members; the proceeds of any sale,
exchange, or other disposition of all or any part of the assets of the Limited
Liability Company; the proceeds of any loan to the Limited Liability Company;
the proceeds of any insurance policy payable to the Limited Liability Company;
and the proceeds from the liquidation of the assets of the Limited Liability
Company following a termination of the Limited Liability Company.
The "capital account" for each Member shall mean the account
established, determined and maintained for such Member in accordance with
Section 7O4(b) of the Internal Revenue Code and Treasury Regulation Section
l.704-l(b)(2)(iv). The capital account for each Member shall be INCREASED BY (1)
the amount of money contributed by such Member to the Limited Liability Company,
(2) the fair market value of property contributed by such Member to the Limited
Liability Company (net of liabilities secured by such contributed property that
the Limited Liability Company is considered to assume or take subject to under
Section 752 of the Internal Revenue Code), and (3) allocations to such Member of
Limited Liability Company income and gain (or items thereof), including income
and gain exempt from tax and income and gain described in Trea. Reg. Section
1.704-1(b)(2)(iv)(g), but excluding income and gain described in subsection
(b)(4)(i) of said Regulation, and shall be DECREASED BY (4) the amount of money
distributed to such Member by the Limited Liability Company, (5) the fair market
value of property distributed to such Member by the Limited Liability Company
(net of liabilities secured by such distributed property that such Member is
considered to assume or take subject to under Section 752 of the Code)~ (6)
allocations to such Member of expenditures of the Limited Liability Company
described in Section 705(a)(2)(B) of the Code, and (7) allocations of Limited
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Liability Company loss and deduction (Or items thereof) including loss and
deduction described in Trea. Reg. Section 1.704-(b,)(2)(iv)(g), but excluding
items described in (6) above and loss or deduction described in subsections
(b)(4)(i) or (b)(4)(iii) of said Regulation Net profits and net losses of the
Limited Liability Company from other than capital transactions) as of the end of
any fiscal year or other period) shall be credited or charged to the capital
accounts of the Members prior to ally charge or credit to said capital accounts
for net profits and net losses of the Limited Liability Company from capital
transactions as of the end of such fiscal year or other period. The capital
account for each Member shall be otherwise adjusted in accordance with the
additional rules of Trea. Reg. Section l.7O4-l(b)(2)(iv).
The term "Members' Percentage Interests" shall mean the
percentages set forth opposite the name of each Member below:
MANAGING MEMBER PERCENTAGE INTEREST
XXXXX XXXXXXXXX -- 70 percent
OTHER MEMBERS PERCENTAGE INTEREST
MOHSEN ARMINIFARD - 15 percent
XXXXX XXXX -- 15 percent
During each fiscal year, the net profits and net losses of the
Limited Liability Company (other than from capital transactions), and each item
of income, gain, loss) deduction or credit entering into the computation
thereof, shall be credited or charged, as the case may be, to the capital
accounts of each Member in proportion to the Members' Percentage Interests, The
net profits of the Limited Liability Company from capital transactions shall be
allocated in the following order of priority: (a) to offset any negative balance
in the capital accounts of the Members in proportion to the amounts of the
negative balance in their respective capital accounts, until all negative
balances in the capital accounts have been eliminated; then (b) to the Members
in proportion to the Members' Percentage Interests, The net losses of the
Limited Liability Company from capital transactions shall be allocated in the
following order of priority: (a) to the extent that the balances in the capital
accounts of any Members are in excess of their original contributions, to such
Members in proportion to such excess balances in the capital accounts until all
such excess balances have been reduced to zero; then (b) to the Members in
proportion to the Members' Percentage Interests.
The cash receipts of the Limited Liability Company shall be
applied in the following order of priority: (a) to the payment by the Limited
Liability Company of amounts due on debts and liabilities of the Limited
Liability Company other than to any Member, and operating expenses of the
Limited Liability Company; (b) to the payment of interest and amortization due
on any loan made to the Limited Liability Company by any Member; (c) to the
establishment of cash reserves determined by the Managing Member to be necessary
or appropriate, including without limitation reserves for the operation of the
Limited Liability Company's business, taxes and contingencies; and (d) to the
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repayment of ally loans made to the Limited Liability Company by any Member.
Thereafter, the cash receipts of the Limited Liability Company shall be
distributed among the Members as hereafter provided.
The cash receipts of the Limited Liability Company shall be
distributed to the Members from time to time at such times as the Managing
Member shall determine. It is contemplated that distributions will be made if
the Managing Member deems such distributions to be prudent and feasible.
Except as otherwise provided in this Agreement or required by
law, distributions of cash receipts of the Limited Liability Company, other than
from capital transactions, shall be allocated among the Members in proportion to
the Members' Percentage Interests.
Except as otherwise provided in this Agreement or required by
law, distributions of cash receipts from capital transactions shall be allocated
in the following order of priority' (a) to the Members in proportion to their
respective capital accounts until each Member has received cash distributions
equal to any positive balance in his capital accounts; then (b) to the Members
in proportion to the Members' Percentage Interests.
SPECIAL ALLOCATIONS -- Notwithstanding the preceding
provisions of this Article 8 the following special allocations shall be made in
the following order:
(1) MINIMUM GAIN CHARGEBACK -. Except as otherwise provided in Trea.
Reg. Section 1.704.2(f), if there is a net decrease in partnership
minimum gain (within the meaning of Trea. Reg. Sections 1.704~2(b)(2)
and 1.704-2(d)) during any fiscal year, each Member shall be allocated
items of the Limited Liability Company 5 income and gain for such
fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Member's share of the net decrease in partnership minimum
gain, determined in accordance with Trea. Reg. Section 1.704-2(g).
Allocations made pursuant to the preceding 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 Trea. Reg. Sections 1.704-2(f)(6) and
l.7O4-2(j)(2). This provision is intended to comply with the minimum
gain chargeback requirement in Trea. Reg. Section 1.704-2(1) and shall
be interpreted consistently therewith.
(2) PARTNER MINIMUM GAIN CHARGEBACK -- Except as otherwise provided in
Treg. Reg. Section 1.704-2(i)(4), if there is a net decrease in partner
nonrecourse debt minimum gain attributable to a partner nonrecourse
debt during any fiscal year, each Member who has a share of the partner
nonrecourse debt minimum gain attributable to such partner nonrecourse
debt, determined in accordance with Treg. Reg. Section l.704.2(i)(5),
shall be allocated items of the Limited Liability Company's income and
gain for such fiscal year (and, if necessary, subsequent fiscal years)
in all amount equal to such Member's share of the net decrease in
partner nonrecourse debt minimum gain attributable to such partner
nonrecourse debt, determined in accordance with Treg. Reg. Section
1.704-2(i)(4). Allocations made pursuant to the preceding sentence
shall be made in proportion to the respective amounts required to be
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allocated to each Member pursuant thereto. The items to be so allocated
shall be determined in accordance with Trea. Reg. Sections
1.704-2(i)(4) and 1.704-2U)(2). As used herein, "partner nonrecourse
debt" has the meaning set forth in Treg. Reg. Section 1.704-2(b)(4). As
used herein, "partner nonrecourse debt minimum gain" shall mean an
amount, with respect to each partner nonrecourse debt, equal to the
partnership minimum gain (within the meaning of Trea. Reg. Sections
1.704-2(b)(2) and 1.704-2(d)) that would result if such partner
nonrecourse debt were treated as a nonrecourse liability (within the
meaning of Trea. Reg. Section 1.704-2(i)(3)) determined in accordance
with Trea. Reg. Section 1.704-2(i)(3). This provision is intended to
comply with the minimum gain chargeback requirement in Trea. Reg.
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(3) QUALIFIED INCOME OFFSET -- In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in
Trea. Reg. Sections 1.704-1(b(2)(ii)(4), (5) or (6), items of the
Limited Liability Company's income and gain shall be allocated to such
Member's amount and manner sufficient to eliminate, to the extent
required by the Regulations, any adjusted capital account deficit in
such Member's capital account, as quietly as possible, provided that an
allocation pursuant to this provision shall be made only if and to the
extent that such Member would have an adjusted capital account deficit
in such Member's capital account after all other allocations provided
for in this Article 8 have been tentatively made as if this provision
were not in this Agreement. As used herein, "adjusted capital account
deficit" shall mean the deficit balance, if any, in a Member's capital
account at the end of the relevant fiscal year after the following
adjustments: (i) credit to such capital account the minimum gain
chargeback which the Member is obligated to restore pursuant to the
penultimate sentences of Trea. Reg. Sections l.704-2(g)(l) and
1.704-2(i)(5); and (ii) debit to such capital account the items
described in Trea. Reg. Sections 1.704-(b)(2)(ii)(d)(4), (5) and (6).
This provision is intended to constitute a qualified income offset
within the meaning of Trea. Reg. Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
(4) GROSS INCOME ALLOCATION -- In the event any Member has a deficit
capital account at the end of any fiscal year which is in excess of the
sum of the amounts such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Trea. Reg. Sections
1.704-2(g)(1) and 1.704.2(i)(5), each such Member shall be allocated
items of the Limited Liability Company's income and gain in the amount
of such excess as quickly as possible, provided that an allocation
pursuant to this provision shall be made only if and to the extent that
such Member would have a deficit in such Member's capital account in
excess of such sum after all other allocations provided for in this
Article 8 have been tentatively made as if this provision and the
provisions of clause (3) above were not in this Agreement.
(5) NONRECOURSE DEDUCTIONS -- Nonrecourse deductions (within the
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meaning of Trea. Reg. Section l.704-2(b)(1)) for any fiscal year shall
be allocated among the Members in proportion to the Members' Percentage
Interests.
(6) PARTNER NONRECOURSE DEDUCTIONS -- Any partner nonrecourse
deductions (within the meaning of Trea. Reg Sections 1.704-2(b)(1) and
1.704-2(b)(2)) for any fiscal year shall be allocated to the Member who
bears the economic risk of loss with respect to the partner nonrecourse
debt (within the meaning of Trea. Reg. Section l.704-2(b)(4)) to which
such partner nonrecourse deductions are attributable in accordance with
Trea. Reg. Section 1.702(i)(1).
(7) OTHER MANDATORY ALLOCATIONS -- In the event Section 704(c) of the
Internal Revenue Code or the Regulations thereunder require allocations
in a manner different than that set forth above in this Article 8, the
provisions of Section 704(c) and the regulations thereunder shall
control such allocations among the Members.
It is the intention of the Members that the allocations
hereunder shall be deemed to have "substantial economic effect" within the
meaning of Section 704 of the Internal Revenue Code and Trea. Reg. Section
1.704-1. Should the provisions of this Agreement be inconsistent with or in
conflict with Section 704 of the Code or the Regulations thereunder, then
Section 704 of the Code and the Regulations shall be deemed to override the
contrary provisions hereof. If Section 704 or the Regulations at any time
require that limited liability company operating agreements contain provisions
which are not expressly set forth herein, such provisions shall be incorporated
into this Agreement by reference and shall be deemed a part of this Agreement to
the same extent as though they had been expressly set forth herein, and the
Managing Member shal1 be authorized by an instrument in writing to amend the
terms of this Agreement to add such provisions, and any such amendment shall be
retroactive to whatever extent required to create allocations with a substantial
economic effect.
9. BOOKS, RECORDS AND TAX RETURNS
At all times during the continuance of the Limited Liability
Company, the Managing Member shall keep or cause to be kept complete and
accurate records and books of account in which shall be entered each transaction
of the Limited Liability Company in accordance with generally accepted
accounting principles.
The fiscal year of the Limited Liability Company for both
accounting and income tax purposes shall be the calendar year. The Limited
Liability Company shall report its operations, net income and net losses in
accordance with the methods of accounting selected by the Managing Member.
The Managing Member may employ on behalf of the Limited
Liability Company and at the expenses of the Limited Liability Company such firm
of certified public accountants as the Managing Member in his sole discretion
deems appropriate to serve as the Limited Liability Company's accountants.
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The books of account shall be audited at the expense of the
Limited Liability Company by certified public accountants promptly after the
close of each fiscal year.
The Managing Member shall furnish to each Member, within
seventy-five days after the end of each fiscal year, an annual report of the
Limited Liability Company (certified by the certified public accountants of the
Limited Liability Company) which shall include a balance as of the end of such
fiscal year; a profit and loss statement of the Limited Liability Company for
such fiscal year; a statement of the balance in the capital account of such
Member; and the amount of such Member's share of the Limited Liability Company's
income, gain, losses, deductions and other relevant items for Federal income tax
purposes.
The Managing Member shall prepare or cause to be prepared all
Federal, State and local income tax and information returns for the Limited
Liability Company, and shall cause such tax and information returns to be filed
timely with the appropriate governmental authorities. Within seventy-five days
after the end of each fiscal year, the Managing Member shall forward to each
person who was a Member during the preceding fiscal year a true copy of the
Limited Liability Company's information return filed with the Internal Revenue
Service for the preceding fiscal year. The Managing Member shall not be liable
to any Member if any taxing authority disallows or adjusts any deductions or
credits in the Limited Liability Company's income tax or information returns.
All elections required or permitted to be made by the Limited
Liability Company under the Internal Revenue Code, and the designation of a tax
matters partner pursuant to Section 6231 (a)(7) of the Internal Revenue Code for
all purposes permitted or required by the Code, shall be made by the Managing
Member. The tax matters partner shall take such action as may be necessary to
cause each other Member to become a notice member within the meaning of Section
6223 of the Code. The tax matters partner may not take any action contemplated
by Sections 6222 through 6232 of the Code without the consent of the Managing
Member.
All such record, books of account, tax and information
returns, and reports and statements, together with executed copies of this
Agreement, shall at all times be maintained at the principal place of business
of the Limited Liability Company, and shall be open to the inspection and
exemption of the Members or their duly authorized representatives during regular
business hours. Each Member, or a duly authorized representative of such Member,
may make copies of the Limited Liability Company's books of account and records
at the expense of such Member. Any Member, at the expense of such Member, may
conduct an audit of the Limited Liability Company's books of account and
records.
The Managing Member shall furnish to each Member, promptly
upon request a current list of the names and addresses of all of the Managing
Member and other Members of the Limited Liability Company, and any other persons
or entities having any financial interest in the Limited Liability Company.
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The cost of preparing all of the aforesaid records, books,
returns and other items shall be borne by the Limited Liability Company. Upon
request of the Managing Member, the Members shall pay to the Limited Liability
Company, in proportion to the Members' Percentage Interests, the cost of
preparing same, not to exceed in the aggregate $2,000 for each fiscal year.
10. BANK ACCOUNTS
All funds of the Limited Liability Company shall be deposited
in the Limited Liability Company's name in such bank account or accounts as
shall be designated by the Managing Member. Withdrawals from any such bank
accounts shall be made only in the regular course of business of the Limited
Liability Company and shall be made upon such signature or signatures as the
Managing Member from time to time may designate.
11. MANAGEMENT OF THE LIMITED LIABILITY COMPANY
The Members hereby designate BEJAN ARMINIFARD, having an
address at 00 XXXXXXXXXX, XXXX., XXXXX 000, XXXXXX, XX 00000 to serve as
Managing Member for the Limited Liability Company.
The business and affairs of the Limited Liability Company all
be conducted and managed by the Managing Member of the Limited Liability Company
in accordance with this Agreement and the laws of California.
At any time there is more than one Managing Member, any
difference arising as to any matter within the authority of Managing Members
shall be decided by a majority in number of the Managing Members.
If at any time the Managing Members do not own, in the
aggregate, at least 20 percent of the Members' Percentage Interests, all of the
Members shall be Managing Members until such time as the Members duly elect
Managing Members who do own at least 20 percent of the Members' Percentage
Interests.
The Managing Member shall have responsibility for the
day-to-day management of the business and affairs of the Limited Liability
Company and shall devote such time and attention as the Managing Member deems
necessary to the conduct and management of the business and affairs of the
Limited Liability Company.
The Managing Member hereby is given sole power and authority
to execute instruments on behalf of the Limited Liability Company and to
otherwise bind the Limited Liability Company, Unless authorized by the Managing
Member, no other person shall have the power or authority to execute instruments
on behalf of the Limited Liability Company and to otherwise bind the Limited
Liability Company. No person, firm or corporation dealing with the Limited
Liability Company shall be required to investigate the authority of the Managing
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Member or to secure the approval of or consummation by the Members of any act of
the Managing Member in connection with the business or affairs of the Limited
Liability Company.
No Member, other than the Managing Member or his designees,
shall have the authority, or shall take any action as a Member, to bind the
Limited Liability Company.
Except as provided elsewhere in this Agreement, or by
nonwaivable provisions of applicable law, the Managing Member shall possess and
enjoy all rights and powers necessary or appropriate for the conduct and
management of the business and affairs of the Limited Liability Company and
hereby is authorized to make all decisions relating to the business and affairs
of the Limited Liability Company. The Managing Member may make decisions
relating to. the purchase, sale, exchange, lease, transfer, encumbrance or other
acquisition or disposition of any property) for cash, other property, or on
terms; the borrowing of money and the obtaining of loans. secured and unsecured,
for the Limited Liability Company and in connection therewith the issuance of
notes, debentures and other debt securities and the securing of the same by
assigning for security purposes, pledging or hypothecating all or part of assets
of the Limited Liability Company; the expenditure of the capital and receipts of
the Limited Liability Company in furtherance of the business of the Limited
Liability Company; the purchase of equipment, supplies and services as the
Managing Member deems appropriate; the lending or advancing of money to third
parties in connection with the business of the Limited Liability Company; the
investment of funds of the Limited Liability Company in interest-bearing bank
deposits) governmental obligations, institutional and insured short-term debt
securities and short-term commercial paper, pending disbursement of the Limited
Liability Company's funds or to provide a source from which to meet
contingencies; the purchase of hazard, liability and other insurance which the
Managing Member may deem necessary or proper; the employment of attorneys,
accountants, brokers, consultants and other persons, firms and corporations to
render services to the Limited Liability Company as the Managing Member may deem
necessary or proper; the enforcement, compromise and settlement of any rights or
claims in favor of or against the Limited Liability Company or any nominee of
the Limited Liability Company; and the taking of all other actions and the
execution and delivery of any and all other instruments and agreements as the
Managing Member may deem appropriate to carry out the intents and purposes of
this Agreement.
The Managing Member may employ on behalf of the Limited
Liability Company, on such terms and for such compensation as the Managing
Member may determine, any persons, firms or corporations, including accountants
and attorneys, as the Managing Member, in his sole judgment shall deem desirable
for the business and affairs of the Limited Liability Company. Any such person,
firm or corporation may also be employed by the Managing Member in connection
with any other business of the Managing Member. The fact that any Member, or a
member of his family or any affiliate of a Member, is directly or indirectly
interested in or connected with any person, firm or corporation employed by the
Limited Liability Company or from whom the Limited Liability Company may buy
merchandise or services, shall not prohibit the Managing Member from employing
or dealing with such person, firm or corporation on behalf of the Limited
Liability Company upon reasonable terms and conditions.
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The Managing Member shall be reimbursed by the Limited
Liability Company for all direct out-of-pocket expenses incurred by the Managing
Member on behalf of the Limited Liability Company in connection with the
performance of his duties hereunder, including without 'imitation amounts
payable by the Managing Member for office, accounting, bookkeeping and other
services, materials, facilities and professional and legal services rendered or
furnished to the Limited Liability Company.
Except as expressly provided in this Agreement, no fees,
salary or other compensation shall be paid to the Managing Member for the
rendition of services to the Limited Liability Company.
A Managing Member's duty of care in the discharge of the
Managing Member's duties to the Limited Liability Company and the Members
limited to refraining from engaging in grossly negligent conduct2 intentional
misconduct, or a violation of law. In discharging the duties of a Managing
Member, the Managing Member shall be fully protected in relying in good faith
upon the records of the Limited Liability Company and upon such information,
opinions, reports or statements by other Managing Members, Members, agents or
other persons as to matters the Managing Member reasonably believes are within
such person's professional or expert competence, including without limitation
information, opinions, reports or statements as to the value or amount of the
assets, liabilities, profits or losses of the Limited Liability Company or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
To the extent of the Limited Liability Company's assets, and
to the extent permitted by law, the Limited Liability Company shall indemnity
and hold each Managing Member harmless from and against all liability, claim,
loss, damage or expense, including reasonable attorneys' fees, incurred by the
Managing Member by reason of any act or omission of the Managing Member made in
good faith on behalf of the Limited Liability Company.
Except as expressly provided elsewhere in this Agreement, any
decisions which are to be made by the Members, rather than the Managing Member,
shall be made by the affirmative vote or consent of Members holding a majority
of the Members' Percentage Interests.
12. ASSIGNMENT OF INTERESTS
Except as otherwise provided in this Agreement, no Member or
other person holding any interest in the Limited Liability Company may assign,
pledge, hypothecate, transfer or otherwise dispose of all or any part of his
interest in the Limited Liability Company, including without limitation the
capital, profits or distributions of the Limited Liability Company without the
prior Written consent of the other Members in each instance.
A Member may assign all or any part of such Member's interest
in the allocations and distributions of the Limited Liability Company to any of
the following (collectively the "permitted assignees") any person, corporation,
partnership or other entity as to which the Limited Liability Company has given
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consent to the assignment of such interest in the allocations and distributions
of the Limited Liability Company by the unanimous vote or consent of the
Members. An assignment to a permitted assignee shall only entitle the permitted
assignee to the allocations and distributions to which the assigned interest is
entitled, unless such permitted assignee applies for admission to the Limited
Liability Company and is admitted to the Limited Liability Company as a Member
in accordance with this Agreement.
An assignment, pledge, hypothecation, transfer or other
disposition of all or any part of the interest of a Member in the Limited
Liability Company or other person holding any interest in the Limited Liability
Company in violation of the provisions hereof shall be null and void for all
purposes.
No assignment, transfer or other disposition of all or any
part of the interest of any Member permuted under this Agreement shall be
binding upon the Limited Liability Company unless and until a duly executed and
acknowledged counterpart of such assignment or instrument of transfer, in form
and substance satisfactory to the Managing Member, has been delivered to the
Limited Liability Company.
No assignment or other disposition of any interest of any
Member may be made if such assignment or disposition, alone or when combined
with other transactions, would result in the termination of the Limited
Liability Company within the meaning of Section 708 of the Internal Revenue Code
or under any other relevant section of the Code or any successor statute. No
assignment or other disposition of any interest of any Member may be made
without an opinion of counsel satisfactory to the Managing Member that such
assignment or disposition is subject to an effective registration number, or
exempt from the registration requirements of, the applicable State and Federal
securities laws. No interest in the Limited Liability Company may be assigned or
given to any person below the age of 21 years or to a person who has been
adjudged to be insane or incompetent.
Anything herein contained to the contrary, the Managing Member
and the Limited Liability Company shall be entitled to treat the record holder
of the interest of a Member as the absolute owner thereof; and shall incur no
liability by reason of distributions made in good faith to such record holder,
unless and until there has been delivered to the Managing Member the assignment
or other instrument of transfer and such other evidence as may be reasonably
required by tile Managing Member to establish to the satisfaction of the
Managing Member that an interest has been assigned or transferred in accordance
with this Agreement.
13. ADMISSION OF NEW MEMBERS
The Managing Member may admit new Members (or transferees of
any interests of existing Members) into the Limited Liability Company by the
unanimous Vote or consent of the Managing Members.
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As a condition to the admission of a new Member, such Member
shall execute and acknowledge such instruments, in form and substance
satisfactory to the Managing Member, as the Managing Member may deem necessary
or desirable to effectuate such admission and to confirm the agreement of such
Member to be bound by all of the terms, covenants and conditions of this
Agreement, as the same may have been amended. Such new Member shall pay all
reasonable expenses in connection with such admission, including without
limitation reasonable attorneys' fees and the cost of the preparation, filing or
publication of any amendment to this Agreement or the Articles Of Organization)
which the Managing Member may deem necessary or desirable in connection with
such admission.
No new Member shall be entitled to any retroactive allocation
of income, losses, or expense deductions of the Limited Liability Company. The
Managing Member may make pro rata allocations of income, losses or expense
deductions to a new Member for that portion of the tax year in which the Member
was admitted in accordance with Section 706(d) or the Internal Revenue Code and
regulations thereunder.
In no event shall a new Member be entitled to the Limited
Liability Company if such admission would be in violation of applicable Federal
or State securities laws or would adversely affect the treatment of the Limited
Liability Company as a partnership for income tax purposes.
14. WITHDRAWAL EVENTS REGARDING MEMBERS AND
ELECTION TO CONTINUE THE LIMITED LIABILITY COMPANY
In the event of the death, retirement, withdrawal, expulsion,
or dissolution of a Managing Member, or an event of bankruptcy or insolvency, as
hereinafter defined, with respect to a Managing Member, or the occurrence of any
other event which terminates the continued membership of a Managing Member in
the Limited Liability Company pursuant to the laws of California (each of the
foregoing being hereinafter referred to as a "Withdrawal Event"), the Limited
Liability Company shall terminate sixty days after notice to the Members of such
Withdrawal Event unless the business of the Limited Liability Company is
continued as hereinafter provided.
Notwithstanding a Withdrawal Event with respect to a Managing
Member, the Limited Liability Company shall not terminate, irrespective of
applicable laws if within aforesaid sixty day period the remaining Members, by
the unanimous vote or Consent of the Members (other than the Managing Member who
caused the Withdrawal Event), shall elect to continue the business of the
Limited Liability Company.
If, after Withdrawal Event, there is only one remaining
Member, such Member may designate a second Member and give the second Member
such share of the interest of the remaining Member as the remaining Member may
designate, and thereafter the two Members may elect to continue the business of
the Limited Liability Company as aforesaid.
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In the event of a Withdrawal Event with respect to any
Managing Member, any successor in interest to such Managing Member (including
without limitation any executor, administrator, heir, committee, guardian, or
other representative or successor) shall not become entitled to any rights or
interest of such Managing Member in the Limited Liability Company, other than
the allocations and distributions to which such Managing Member is entitled,
unless such successor in interest is admitted as a Member in accordance with
this Agreement.
An "event of bankruptcy or insolvency" with respect to a
Member shall occur if such Member applies for or Consents to the appointment of
a receiver, trustee or liquidator of all or a substantial part of his assets; or
makes a general assignment for the benefit of creditors; or is adjudicated a
bankrupt or an insolvent; or files a voluntary petition in bankruptcy or a
petition or an answer seeking an arrangement with creditors or to take advantage
of any bankruptcy, insolvency, readjustment of debt or similar law or statute,
or an answer admitting the material allegations of a petition filed against him
in any bankruptcy, insolvency, readjustment of debt or similar proceedings; or
takes any action for the purpose of effecting any of the foregoing; or an order,
judgement or decree shall be entered, with or without the application, approval
or consent of such Member, by any court of competent jurisdiction, approving a
petition for or appointing a receiver or trustee of all or a substantial part of
the assets of such Member, and such order, judgment or decree shall continue
unstayed and in effect for thirty days.
15. DISSOLUTION AND LIQUIDATION
The Limited Liability Company shall terminate upon the
occurrence of any of the following: the expiration of the period fixed for the
duration of the Limited Liability Company pursuant to Article 5, as the same may
be extended by the Members; the election by the Members to dissolve the Limited
Liability Company made by the unanimous vote or consent of the Members; the
occurrence of a Withdrawal Event with respect to a Member and the failure of the
remaining Members to elect to continue the business of the Limited Liability
Company as provided for in Article 14 above; or any other event which pursuant
to this Agreement shall cause a termination of the Limited Liability Company.
The liquidation of the Limited Liability Company shall be
conducted and supervised by the Managing Member or if there be none then by a
person designated for such purposes by the affirmative vote or Consent 0(pound)
Members holding a majority of the Members' Percentage Interests (the
"Liquidating Agent"). The Liquidating Agent hereby is authorized and empowered
to execute any and all documents and to take any and all actions necessary or
desirable to effectuate the dissolution and liquidation of the Limited Liability
Company m accordance with this Agreement.
Promptly after the termination of the Limited Liability
Company, the Liquidating Agent shall cause to be prepared and furnished to the
Members a statement setting forth the assets and liabilities of the Limited
Liability Company as of the date of termination. The Liquidating Agent, to the
extent practicable, shall liquidate the assets of the Limited Liability Company
as promptly as possible, but in an orderly and businesslike manner so as not to
involve undue sacrifice.
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The proceeds of sale and all other assets of the Limited
Liability Company shall be applied and distributed in the following order of
priority.' (a) to the payment of the expenses of liquidation and the debts and
liabilities of the Limited Liability Company, other than debts and liabilities
to Members; (b) to the payment of debts and liabilities to Members; (c) to the
setting up of any reserves which the Liquidating Agent may deem necessary or
desirable for any contingent or unforeseen liabilities or obligations of the
Limited Liability Company, which reserves shall be paid over to an
attorney-at-law admitted to practice in the State of California as escrowee, to
be held for a period of two years for the purpose of payment of the aforesaid
liabilities and obligations, at the expiration of two year period the balance of
such reserves shall be distributed as hereinafter provided; (d) to the Member in
proportion to their respective capital accounts until each Member has received
cash distribution equal to any positive balance in his capital account, in
accordance with the rules and requirements of Trea. Reg. Section
1.704-1(b)(2)(ii)(b); and (e) to the Members in proportion to the Members'
Percentage Interests.
The liquidation shall be complete within the period required
by Trea. Reg. Section 1.704-1 (b)(2)(ii)(b).
If the Liquidating Agent shall determine that it is not
practicable to liquidate all of the assets of the Limited Liability Company, the
Liquidating Agent may retain assets having a fair market value equal to the
amount by which the net proceeds of liquidated assets are insufficient to
satisfy the debts and liabilities referred to above. If, in the absolute
judgement of the Liquidating Agent, it is not feasible to distribute to each
Member his proportionate share of each asset, the Liquidating Agent may allocate
and distribute specific assets to one or more Member in such manner as the
Liquidating Agent shall determine to be fair and equitable, taking into
consideration the basis for tax purposes of each asset.
Upon compliance with the distribution plan, the Members shall
cease to be such, and the Managing Member shall execute, acknowledge and cause
to be filed such certificates and other instruments as may be necessary or
appropriate to evidence the dissolution and termination of the Limited Liability
Company.
16. REPRESENTATIONS OF MEMBERS
Each of the Members represents, warrants and agrees that the
Member is acquiring the interest in the Limited Liability Company for the
Member's own account as an investment and not with a view to the sale or
distribution thereof; the Member, if an individual, is over the age of 21, or if
the Member is an organization, such organization is duly organized, validly
existing and in good standing under the laws of its State of organization and
that it has full power and authority to execute and perform its obligations
under this Agreement; and the Member shall not dispose of such interest or any
part thereof in any manner which would constitute a violation of the Securities
Act of 1933, the Rules and Regulations of the Securities and Exchange
Commission, or any applicable laws, rules or regulations of any State or other
governmental authorities, as the same may be amended.
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17. NOTICES
All notices, demands, requests or other communications which
any of the parties to this Agreement may desire or be required to give hereunder
shall be in writing and shall be deemed to have been properly given if sent
registered or certified mail, return receipt requested, addressed as follows:
(a) if to the Limited Liability Company, to the Limited Liability Company c/o
the Managing Member at his address first above written or to such other address
or addresses as may be designated by the Limited Liability Company or the
Managing Member by notice to the Members pursuant to this Article 17; (b) if to
the Managing Member, to the Managing Member at his address first above written
or to such other address or addresses as may be designated by the Managing
Member by notice to the Limited Liability Company and the Members pursuant to
this Article 17; and (e) if to any Member, to the address of said Member first
above written, or to such other address as may be designated by said Member by
notice to the Limited Liability Company and the other Members pursuant to this
Article 17. Each Member shall keep the Limited Liability Company and the other
Members informed of such Member's current address.
18. POWER OF ATTORNEY
Each Member agrees to execute, acknowledge, swear to, deliver,
file, record and publish such further certificates, instruments and documents,
and do all such other acts and things as may be required by law, or as may, in
the opinion of the Managing Member, be necessary or desirable to carry out the
intents and purposes of this Agreement.
Each Member, whether a signatory hereto or a subsequently
admitted Member, hereby irrevocably constitutes and appoints the Managing Member
(including any successor Managing Member) the true and lawful attorney-in-fact
of such Member, and empower and authorize such attorney-in-fact, in the name,
place and stead of each Member, to execute, acknowledge, swear to and file the
Articles Of Organization and any amendments thereto, and any other certificates,
instruments and documents which may be required to be executed or filed under
laws of any State or of the United States, or which the Managing Member shall
deem advisable to execute or file, including without limitation all instruments
which may be required to effectuate the formation, continuation, termination,
distribution or liquidation of the Limited Liability Company.
It is expressly acknowledged by each Member that the foregoing
power of attorney is coupled with an interest and shall survive any assignment
by such Member of such Member interest in the Limited Liability Company;
provided, however, that if such Member shall assign all of his interest in the
Limited Liability Company and the assignee shall become a substituted Member in
accordance with this Agreement, then such power of attorney shall survive such
assignment only for the purpose of enabling the Managing Member to execute,
acknowledge, swear to and file all instruments necessary or appropriate to
effectuate such substitution.
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A power of attorney shall be one of the instruments which the
Managing Member may require a new Member to execute and acknowledge; however,
the power of attorney in this Agreement shall be binding upon any new Member
even in the absence of such separate power of attorney.
Upon the election of any new Managing Member, each Member at
the request of the Managing Member shall execute and acknowledge a new power of
attorney as provided above expressly in favor of such new Managing Member;
however, the power of attorney provided above shall inure to the benefit of each
new Managing Member even in the absence of such new confirmatory power of
attorney.
19. AMENDMENTS
This Agreement may not be altered, amended, changed,
supplemented, waived or modified in any respect or particular unless the same
shall be in writing and agreed to by the unanimous vote or consent of the
Members. No amendment may be made to Articles 6, 8, 12 and 15 hereof, insofar as
said Articles apply to the financial interests of the Members, except by the
vote or consent of all of the Members. No amendment of any provision of this
Agreement relating to the voting requirements of the Members on any specific
subject shall be made without the affirmative vote or consent of at least the
number or percentage of Members required to Vote on such subject.
20. MISCELLANEOUS
This Agreement and the rights and liabilities of the parties
hereunder shall be governed by and determined in accordance with the laws of the
State of California Every provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be invalid or unenforceable,
such invalidity or unenforceability shall not affect the other provisions of
this Agreement, which shall remain in full force and effect.
The captions in this Agreement are for convenience only and
are not to be considered in construing this Agreement. All pronouns shall be
deemed to be the masculine, feminine, neuter, singular or plural as the identity
of the person or persons may require. References to a person or persons shall
include partnerships, corporations, limited liability companies, unincorporated
associations, trusts, estates and other types of entities. The Managing Member
and the Members collectively are referred to herein as the Members. Any one of
the Members is referred to herein as a Member. References to the Internal
Revenue Code shall mean the Internal Revenue Code of 1986, as amended, and any
successor or superseding Federal revenue statute.
This Agreement, and any amendments hereto may be executed in
counterparts all of which taken together shall constitute one agreement.
This Agreement sets forth the entire agreement of the parties
hereto with respect to the subject matter hereof. It is the intention of the
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Members that this Agreement shall be the sole source of agreement of the
parties, and, except to the extent a provision of this Agreement provides for
the incorporation of Federal income tax rules or is expressly prohibited or
ineffective under the California Xxxxxxx-Xxxxxx Limited Liability Company Act,
this Agreement shall govern even when inconsistent with, or different from, the
provisions of any applicable law or rule. To the extent any provision of this
Agreement is prohibited or otherwise ineffective under the California
Xxxxxxx-Xxxxxx Limited Liability Company Act, such provision shall be considered
to be ineffective to the smallest degree possible in order to make this
Agreement effective under the California Xxxxxxx-Xxxxxx Limited Liability
Company Act. If the California Xxxxxxx-Xxxxxx Limited Liability Company Act is
subsequently amended or interpreted in such a way to make any prevision of this
Agreement that was formerly invalid valid, such provision shall be considered to
be valid from the effective date of such interpretation or amendment.
Subject to the limitations on transferability contained
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, executors, administrators,
successors and assigns.
No provision of this Agreement is intended to be for the
benefit of or enforceable by any third party.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
IN THE PRESENCE OF:
/s/ XXXXX XXXXXXXXX
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XXXXX XXXXXXXXX
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IN THE PRESENCE OF:
/s/ XXXXXX XXXXXXXXX
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XXXXXX XXXXXXXXX
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/s/ XXXXX XXXX
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XXXXX XXXX
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