OPERATING AGREEMENT
OF
TICKETS2NITE, LLC
A NEVADA LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...............................................1
1.1 "Act"...........................................................1
1.2 "Adjusted Capital Account"......................................1
1.3 "Adjusted Capital Contribution".................................1
1.4 "Affiliate".....................................................1
1.5 "Agreement".....................................................2
1.6 "Articles"......................................................2
1.7 "Bankruptcy"....................................................2
1.8 "Bona Fide Offer"...............................................2
1.9 "Capital Account"...............................................2
1.10 "Capital Contribution"..........................................2
1.11 "Cinema Ride"...................................................2
1.12 "Code"..........................................................2
1.13 "Company".......................................................2
1.14 "Company Minimum Gain"..........................................2
1.15 "Distributable Cash"............................................3
1.16 "Distribution"..................................................3
1.17 "Economic Interest".............................................3
1.18 "Economic Risk of Loss".........................................3
1.19 "Eligible Members"..............................................3
1.20 "Fair Market Value".............................................3
1.21 "Fiscal Year"...................................................3
1.22 "Former Member".................................................3
1.23 "Former Member's Interest"......................................3
1.24 "HK Inc.".......................................................3
1.25 "HK LLC"........................................................3
1.26 "Managers"......................................................3
1.27 "Member"........................................................3
1.28 "Member Minimum Gain"...........................................4
1.29 "Member Nonrecourse Debt".......................................4
1.30 "Member Nonrecourse Deductions".................................4
1.31 "Membership Interest"...........................................4
1.32 "Membership Termination Event"..................................4
1.33 "Net Profits" and "Net Losses"..................................4
1.34 "Nevada Statute"................................................4
1.35 "Nonrecourse Deductions"........................................5
1.36 "Nonrecourse Liability".........................................5
1.37 "Offered Interest"..............................................5
1.38 "Percentage Interest"...........................................5
1.39 "Person"........................................................5
1.40 "Purchasing Member".............................................5
1.41 "Tax Credits"...................................................5
1.42 "Tax Matters Member.............................................5
1.43 "Transfer"......................................................5
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PAGE(S)
1.44 "Transferring Member"...........................................5
1.45 "Treasury Regulations"..........................................5
ARTICLE II ORGANIZATIONAL MATTERS....................................6
2.1 Name............................................................6
2.2 Term............................................................6
2.3 Office and Agent................................................6
2.4 Purpose of Company..............................................6
2.5 Intent..........................................................6
2.6 Reimbursement of Expenses of Organization.......................6
2.7 Name Change.....................................................6
ARTICLE III CAPITAL CONTRIBUTIONS.....................................7
3.1 Initial Capital Contributions...................................7
3.2 Intentionally Deleted...........................................7
3.3 Additional Capital Contributions................................7
3.4 Capital Accounts................................................7
3.5 No Priorities of Members; No Withdrawals of Capital.............8
3.6 No Interest.....................................................8
ARTICLE IV MEMBERS...................................................8
4.1 Limited Liability...............................................8
4.2 Admission of Additional Members.................................8
4.3 Withdrawal......................................................8
4.4 Members Are Not Agents..........................................8
4.5 Meetings of Members; Written Consent............................8
ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY.....................9
5.1 General Supervision and Control of Management by the Managers...9
5.2 Officers of the Company........................................10
5.3 Transactions between the Company and the Members...............10
5.4 Performance of Duties; Liability of Managers and Officers......10
5.5 Company Opportunities..........................................11
5.6 Expenses.......................................................11
5.7 Medical Insurance..............................................12
ARTICLE VI ALLOCATIONS OF NET PROFITS, NET LOSSES AND DISTRIBUTIONS.12
6.1 Minimum Gain Chargeback........................................12
6.2 Member Minimum Gain Chargeback.................................12
6.3 Qualified Income Offset........................................12
6.4 Nonrecourse Deductions.........................................12
6.5 Member Nonrecourse Deductions..................................12
6.6 Allocation of Net Profits......................................12
6.7 Allocation of Net Losses.......................................13
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PAGE(S)
6.8 Distribution of Distributable Cash by the Company..............13
6.9 Allocation of Net Profits and Losses and Distributions in Respect of
a Transferred Interest.........................................13
6.10 Tax Allocation Matters.........................................13
6.11 Order of Application...........................................13
6.12 Allocation of Liabilities......................................14
6.13 Form of Distribution...........................................14
ARTICLE VII TRANSFER OF INTERESTS....................................15
7.1 Transfer of Interests..........................................15
7.2 Right of First Offer...........................................15
ARTICLE VIII CONSEQUENCES OF MEMBERSHIP TERMINATION EVENTS............16
8.1 Dissolution of Company.........................................16
8.2 Admission or Conversion........................................16
8.3 Purchase Price.................................................16
8.4 Notice of Intent to Purchase...................................17
8.5 Election to Purchase Less Than All of the Former Member's Interest.
17
8.6 Closing of Purchase of Former Member's Interest................17
8.7 Payment of Purchase Price......................................17
ARTICLE IX ACCOUNTING, RECORDS AND REPORTING BY MEMBERS.............18
9.1 Books and Records..............................................18
9.2 Bank Accounts; Invested Funds..................................18
9.3 Tax Matters for the Company Handled by the Managers and Tax Matters
Members........................................................18
9.4 Accounting Matters.............................................18
ARTICLE X DISSOLUTION AND WINDING UP...............................18
10.1 Dissolution....................................................18
10.2 Certificate of Dissolution.....................................19
10.3 Winding Up.....................................................19
10.4 Distributions in Kind..........................................19
10.5 Order of Payment of Proceeds Upon Dissolution..................19
10.6 Compliance with Treasury Regulations...........................20
10.7 Limitations on Payments Made in Dissolution....................20
10.8 Certificate of Cancellation....................................20
10.9 Compensation for Services......................................20
ARTICLE XI INDEMNIFICATON...........................................20
11.1 Indemnification................................................20
11.2 Contract Right; Expenses.......................................21
11.3 Indemnification of Officers and Employees......................21
11.4 Insurance......................................................21
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PAGE(S)
ARTICLE XII MISCELLANEOUS............................................21
12.1 Amendments.....................................................21
12.2 Offset Privilege...............................................21
12.3 Remedies Cumulative............................................21
12.4 Notices........................................................21
12.5 Attorney's Fees................................................22
12.6 Governing Law; Jurisdiction....................................22
12.7 Complete Agreement.............................................22
12.8 Binding Effect.................................................22
12.9 Section Headings...............................................22
12.10 Interpretation.................................................22
12.11 Severability...................................................22
12.12 Multiple Counterparts..........................................22
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OPERATING AGREEMENT
OF
TICKETS2NITE, LLC
A NEVADA LIMITED LIABILITY COMPANY
This Operating Agreement is made as of September 24, 2002, by and between
Cinema Ride, Inc., a Delaware corporation ("Cinema Ride"), and Entasis LLC, a
Delaware limited liability company ("HK LLC") as successor to Tickets2Nite,
Inc., a Nevada corporation ("HK Inc.") (each, a "Member" and together, the
"Members"), with reference to the following facts:
A. The parties desire to form TICKETS2NITE, LLC (the "Company") as a
limited liability company under the laws of the State of Nevada and, to that
end, have filed Articles of Organization for the Company with the Nevada
Secretary of State.
B. The parties now desire to adopt an operating agreement to govern their
respective rights and obligations as Members of the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the receipt of which is
acknowledged, the parties agree that the following shall be the Operating
Agreement of the Company. ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms have the following
meanings:
1.1 "ACT" means the Nevada Limited Liability Company Act, codified in the
Nevada Statute Section 86.011 ET SEQ.
1.2 "ADJUSTED CAPITAL ACCOUNT" of a Member means the Capital Account of
that Member increased by the Member's share of Company Minimum Gain and Member
Minimum Gain.
1.3 "ADJUSTED CAPITAL CONTRIBUTION" of a Member means the excess of (a)
that Member's Capital Contribution to the Company, over (b) Distributions to
that Member under Section 6.8(a).
1.4 "AFFILIATE" of a Member or Manager means (i) a Person directly or
indirectly (through one or more intermediaries) controlling, controlled by or
under common control with that Member or Manager; (ii) an officer, director,
partner, member or immediate family member of that Member or Manager; or (iii) a
member of the immediate family of an officer, director, partner or member of
that Member or Manager. For these purposes "control" means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
1.5 "AGREEMENT" means this Operating Agreement of TICKETS2NITE, LLC, as
originally executed and as amended from time to time.
1.6 "ARTICLES" means the Articles of Organization of the Company, as
originally filed with the Nevada Secretary of State and as amended from time to
time.
1.7 "BANKRUPTCY" of a Member means: (i) the institution of any proceedings
under any federal or state law for the relief of debtors, including the filing
by or against that Member of a voluntary or involuntary case under the federal
bankruptcy law, which proceedings, if involuntary, are not dismissed within
sixty (60) days after their filing; (ii) an assignment of the property of that
Member for the benefit of creditors; (iii) the appointment of a receiver,
trustee or conservator of any substantial portion of the assets of that Member,
which appointment, if obtained ex parte, is not dismissed within sixty (60) days
thereafter; (iv) the seizure by a sheriff, receiver, trustee or conservator of
any substantial portion of the assets of that Member; (v) the failure by that
Member generally to pay its debts as they become due within the meaning of
Section 303(h)(1) of the United States Bankruptcy Code, as determined by the
Bankruptcy Court; or (vi) that Member's admission in writing of its inability to
pay its debts as they become due.
1.8 "BONA FIDE OFFER" means an offer in writing to a Member offering to
purchase all or any part of that Member's Membership Interest or any interest
therein and setting forth all of the material terms and conditions of the
proposed purchase from an offeror who is ready, willing and able to consummate
the purchase and who is neither the Company nor an Affiliate of that Member.
1.9 "CAPITAL ACCOUNT" of a Member means the capital account of that Member
determined from the inception of the Company strictly in accordance with the
rules set forth in Section 1.704-1(b)(2)(iv) of the Treasury Regulations.
1.10 "CAPITAL CONTRIBUTION" of a Member, at any particular time, means the
amount of money, the fair market value of any property, promissory note or other
binding obligation to contribute money or property, which that Member has
theretofore contributed to the capital of the Company. The Members hereby agree
that the fair market value of all property, promissory notes and other binding
obligations to contribute money or property contributed by each Member
concurrently with the execution hereof shall be equal to the amount set forth as
each Member's Capital Account balance on Exhibit "A" attached hereto.
1.11 "CINEMA RIDE" means Cinema Ride, Inc., a Delaware corporation, or any
permitted successor-in-interest to its entire Membership Interest.
1.12 "CODE" means the Internal Revenue Code of 1986, and as amended.
1.13 "COMPANY" means TICKETS2NITE, LLC, a Nevada limited liability company.
1.14 "COMPANY MINIMUM GAIN" with respect to any taxable year of the Company
means the "partnership minimum gain" of the Company computed strictly in
accordance with the principles of Section 1.704-2(d) of the Treasury
Regulations.
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1.15 "DISTRIBUTABLE CASH" at any time means that portion of the cash then
on hand or in bank accounts of the Company which the Managers, in their absolute
discretion, deem available for distribution to the Members, taking into account
(a) the amount of cash required for the payment of all current expenses,
liabilities and obligations of the Company (whether for expense items, capital
expenditures, improvements, retirement of indebtedness or otherwise) and (b) the
amount of cash necessary to establish prudent reserves for the payment of future
capital expenditures, improvements, retirements of indebtedness, operations and
contingencies, known or unknown, liquidated or unliquidated, including, but not
limited to, liabilities which may be incurred in litigation and liabilities
undertaken pursuant to the indemnification provisions of this Agreement.
1.16 "DISTRIBUTION" means the transfer of money or property by the Company
to one or more Members without separate consideration.
1.17 "ECONOMIC INTEREST" means a share, expressed as a percentage, of one
or more of the Company's Net Profits, Net Losses, Tax Credits, Distributable
Cash or other Distributions, but does not include any other rights of a Member,
including, without limitation, the right to vote or participate in the
management of the Company or the right to information concerning the business
and affairs of the Company. 1.18 "ECONOMIC RISK OF LOSS" means the economic risk
of loss within the meaning of Section 1.752-2 of the Treasury Regulations.
1.19 "ELIGIBLE MEMBERS" has the meaning specified in Section 7.2. 1.20
"FAIR MARKET VALUE" means, with respect to an asset, the price at which that
asset would be sold for cash payable at closing between a willing buyer and a
willing seller, each having reasonable knowledge of all relevant facts
concerning the asset and neither acting under any compulsion to buy or sell.
1.21 "FISCAL YEAR" Means the Company's fiscal year, which shall be December
31, 2002.
1.22 "FORMER MEMBER" has the meaning specified in Section 8.2.
1.23 "FORMER MEMBER'S INTEREST" has the meaning specified in Section 8.2.
1.24 "HK INC." means Tickets2Nite, Inc, a Nevada corporation.
1.25 "HK LLC" means Entasis LLC, a Delaware limited liability company or a
permitted successor-in-interest to its entire Membership Interest.
1.26 "MANAGERS" means the Managers of the Company duly selected by the
Members pursuant to Section 5.1(b).
1.27 "MEMBER" means each Person who (a) is an initial signatory to this
Agreement, has been admitted to the Company as a Member in accordance with the
Articles or this Agreement or is a transferee of a Member who has become a
Member in accordance with the provisions of this Agreement , and (b) has not
suffered a Membership Termination Event.
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1.28 "MEMBER MINIMUM GAIN" has the meaning given to the term "partner
nonrecourse debt minimum gain" in Section 1.704-2(d) of the Treasury
Regulations.
1.29 "MEMBER NONRECOURSE DEBT" means any "partner nonrecourse liability" or
"partner nonrecourse debt" under Section 1.704-2(b)(4) of the Treasury
Regulations. Subject to the foregoing, it means any Company liability to the
extent the liability is nonrecourse for purposes of Section 1.1001-2 of the
Treasury Regulations, and a Member (or related Person within the meaning of
Section 1.752-4(b) of the Treasury Regulations) bears the Economic Risk of Loss
under Section 1.752-2 of the Treasury Regulations because, for example, the
Member or related Person is the creditor or a guarantor.
1.30 "MEMBER NONRECOURSE DEDUCTIONS" means the Company deductions, losses
and Code Section 705(a)(2)(B) expenditures, as the case may be (as computed for
"book" purposes), that are treated as deductions, losses and expenditures
attributable to Member Nonrecourse Debt under Section 1.704-2(i)(2) of the
Treasury Regulations.
1.31 "MEMBERSHIP INTEREST" means a Member's total interest as a member of
the Company, including that Member's share of the Company's Net Profits, Net
Losses, Distributable Cash or other Distributions, its right to inspect the
books and records of the Company and its right, to the extent specifically
provided in this Agreement, to participate in the business, affairs and
management of the Company and to vote or grant consent with respect to matters
coming before the Company.
1.32 "MEMBERSHIP TERMINATION EVENT" with respect to any Member means one or
more of the following: the death, insanity, permanent disability, withdrawal,
resignation, expulsion, Bankruptcy, dissolution or occurrence of any other event
which terminates the continued membership of that Member in the Company, other
than a Transfer of a Member's Membership Interest which is made in accordance
with the provisions of ARTICLE VII.
1.33 "NET PROFITS" and "NET LOSSES" means, for each fiscal period, the net
income and net loss, respectively, of the Company determined strictly in
accordance with federal income tax principles (including rules governing
depreciation and amortization), except that in computing net income or net loss,
the "book" value of an asset will be substituted for its adjusted tax basis if
the two differ, and the following items shall be excluded from the computation:
(a) any gain, income, deductions or losses specially allocated under Sections
6.1, 6.2, or 6.3; (b) any Nonrecourse Deductions; and (c) any Member Nonrecourse
Deductions.
1.34 "NEVADA STATUTE" means the Nevada Revised Statute, as amended from
time to time. Any references in this Agreement to a specific provision of the
Nevada Statute shall refer to the cited provision, as the same may be
subsequently amended from time to time, as well as to any successor
provision(s).
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1.35 "NONRECOURSE DEDUCTIONS" in any fiscal period means the amount of
Company deductions that are characterized as "nonrecourse deductions" under
Treasury Regulations Section 1.704-2(b) of the Treasury Regulations.
1.36 "NONRECOURSE LIABILITY" means a liability treated as a "nonrecourse
liability" under Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Treasury
Regulations.
1.37 "OFFERED INTEREST" has the meaning specified in Section 7.2.
1.38 "PERCENTAGE INTEREST" means the percentage interest of a Member set
forth opposite the name of that Member in Exhibit A hereto, as such percentage
may be adjusted from time to time pursuant to the provisions of this Agreement.
1.39 "PERSON" means any entity, corporation, company, association, joint
venture, joint stock company, partnership, trust, limited liability company,
limited liability partnership, real estate investment trust, organization,
individual (including personal representatives, executors and heirs of a
deceased individual), nation, state, government (including agencies,
departments, bureaus, boards, divisions and instrumentalities thereof), trustee,
receiver or liquidator.
1.40 "PURCHASING MEMBER" has the meaning specified in Section 8.4. 1.41
"TAX CREDITS" means all credits against income or franchise taxes and credits
allowable to Members under state, federal or other tax statutes.
1.42 "TAX MATTERS MEMBER" means the Members appointed pursuant to the
provisions of Section 9.3 to serve as the "tax matters member" of the Company
for purposes of Sections 6221-6233 of the Code. Initially, the Tax Matters
Members shall be Cinema Ride and HK LLC.
1.43 "TRANSFER" means, with respect to a Membership Interest or any
interest therein, the sale, assignment, transfer, disposition, pledge,
hypothecation or encumbrance thereof, whether direct or indirect, voluntary,
involuntary or by operation of law, and whether or not for value, of (a) all or
any part of that Membership Interest or interest therein or (b) a controlling
interest in any Person which directly or indirectly through one or more
intermediaries holds that Membership Interest or interest therein. For these
purposes, a "controlling interest" shall not include any transfer which is
solely the transfer of an economic interest.
1.44 "TRANSFERRING MEMBER" has the meaning specified in Section 7.2.
1.45 "TREASURY REGULATIONS" means the regulations of the United States
Treasury Department pertaining to the income tax.
References in this Agreement to "Articles," "Sections," "Exhibits" and
"Schedules," shall be to the Articles, Sections, Exhibits and Schedules of this
Agreement, unless otherwise specifically provided; all Exhibits and Schedules to
this Agreement are incorporated herein by reference; any of the terms defined in
this Agreement may, unless the context otherwise requires, be used in the
singular or the plural and in any gender depending on the reference; the words
"herein", "hereof" and "hereunder" and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and except as otherwise specified in
this Agreement, all references in this Agreement (a) to any Person shall be
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deemed to include such Person's permitted heirs, personal representatives,
successors and assigns; and (b) to any agreement, any document or any other
written instrument shall be a reference to such agreement, document or
instrument together with all exhibits, schedules, attachments and appendices
thereto, and in each case as amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof; and (c) to any
law, statute or regulation shall be deemed references to such law, statute or
regulation as the same may be supplemented, amended, consolidated, superseded or
modified from time to time.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 NAME. The name of the Company shall be "TICKETS2NITE, LLC." The
business of the Company may be conducted under that name or, upon compliance
with applicable law, under any other name that the Members deem appropriate or
advisable.
2.2 TERM. The term of this Agreement shall commence upon the date of this
Agreement and shall continue for the period of duration provided in the
Articles, unless extended or sooner terminated as hereinafter provided.
2.3 OFFICE AND AGENT. The Company shall continuously maintain an office and
registered agent in the State of Nevada as required by the Act. The principal
office of the Company shall be at the Showcase Mall, 3785 Las Vegas Blvd. South,
4th Floor, Las Vegas, Nevada 89109 or at such other place as the Managers may
determine from time to time. The Company may also have such offices within and
without the State of Nevada as the Managers may from time to time determine. The
registered agent shall be as stated in the Articles or as otherwise determined
by the Managers.
2.4 PURPOSE OF COMPANY. The Company may engage in any lawful activity for
which a limited liability company may be organized under the Act; however, its
primary purpose shall be to engage in the business of selling same-day
discounted show, concert, tours, special events, sports and general
entertainment tickets and dinner discounts, other than motion simulator rides.
2.5 INTENT. It is the intent of the Members that the Company shall always
be operated in a manner consistent with its treatment as a "partnership" for
Federal and state income tax purposes. It also is the intent of the Members that
the Company not be operated or treated as a "partnership" for purposes of
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code. No Member shall take any
action inconsistent with that express intent.
2.6 REIMBURSEMENT OF EXPENSES OF ORGANIZATION. The Members hereby authorize
the Company to pay its expenses of organization and to reimburse any Person
advancing funds for that purpose.
2.7 NAME CHANGE. Promptly upon execution of this Agreement by the Members,
HK Inc. shall change its name to one which does not contain the word
"TICKETS2NITE" or any name similar to it.
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ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 INITIAL CAPITAL CONTRIBUTIONS. Concurrently herewith, each Member shall
contribute to the Company the cash amounts which are specified in Exhibit A as
that Member's initial Capital Contribution (the "Required Cash Contributions").
Additionally, HK LLC shall assign to the Company the following items and
contracts:
(a) Marketing Sponsorship Agreement dated as of July 2, 2002 by and
between the Coca-Cola Company and HK Inc.;
(b) Sublease dated as of June 28, 2002 by and between Caribbean
International Sales Corp., Inc., a Nevada corporation and HK Inc.; and
(c) All rights title and interest in and to all intellectual property,
including, without limitation, software programs, internet domain names and web
sites, relating to and including the name "TICKETS2NITE."
Cinema Ride shall also assign to the Company all show contracts and similar
agreements relating to discounted tickets. Cinema Ride also grants to the
Company a perpetual worldwide exclusive royalty-free license to use any
inventions covered by Cinema Ride's business methodology patent application
relating to discounted tickets and any and all software developed as a result of
the prior expenditures of Cinema Ride. In the event that any of the foregoing
contracts and rights set forth in this Section 3.1 cannot be assigned to the
Company, each of HK LLC and Cinema Ride, as the case may be, shall use its
reasonable best efforts to provide the Company with the economic benefits it
would have received had the items referred to herein been assigned to the
Company.
3.2 INTENTIONALLY DELETED.
3.3 ADDITIONAL CAPITAL CONTRIBUTIONS. No Member shall be required to make
any Capital Contributions not specifically referred to in Section 3.1.
3.4 CAPITAL ACCOUNTS. The Company shall establish and maintain an
individual Capital Account for each Member. The initial Capital Account of each
Member shall be as set forth opposite such Member's name on Exhibit A hereto,
and increased by: (i) any additional Capital Contributions made by such Member
and (ii) such Member's allocable shares of Net Profits for each fiscal year; and
decreased by: (i) distributions to such Member and (ii) such Member's allocable
share of the Net Losses for each fiscal year. In the event that assets of the
Company other than cash are distributed to a Member in kind, Capital Accounts
shall be adjusted for the hypothetical "book" gain or loss that would have been
realized by the Company if the distributed assets had been sold for their fair
market values in a cash sale (in order to reflect unrealized gain or loss). In
the event of the liquidation of the Company, Capital Accounts shall be adjusted
for the hypothetical "book" gain or loss that would have been realized by the
Company if all Company assets had been sold for their fair market values in a
cash sale (in order to reflect unrealized gain or loss).
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3.5 NO PRIORITIES OF MEMBERS; NO WITHDRAWALS OF CAPITAL. Except as
otherwise specified in ARTICLE VI and in the Act, no Member shall have a
priority over any other Member as to any Distribution, whether by way of return
of capital or by way of profits, or as to any allocation of Net Profits or Net
Losses. No Member shall have the right to withdraw or reduce its Capital
Contributions in the Company except as a result of the dissolution of the
Company or as otherwise provided in Section 4.3 or the Act, and no Member shall
have the right to demand or receive property other than cash in return for its
Capital Contributions.
3.6 NO INTEREST. No Member shall be entitled to receive any interest on its
Capital Contributions.
ARTICLE IV
MEMBERS
4.1 LIMITED LIABILITY. Except as required under the Act or as expressly set
forth in this Agreement, no Member shall be personally liable for any debt,
obligation or liability of the Company, whether that liability or obligation
arises in contract, tort or otherwise.
4.2 ADMISSION OF ADDITIONAL MEMBERS. Subject to compliance with applicable
law and the unanimous approval of the Managers, additional Members may be
admitted to the Company from time to time upon such terms and conditions as the
Managers may determine, and any such additional Members shall be granted
Membership Interests and may participate in the management, Distributable Cash,
Net Profits, Net Losses, Tax Credits and other Distributions of the Company on
such terms as the Managers may fix.
4.3 WITHDRAWAL. Any Member may withdraw from the Company at any time and
for any reason upon thirty (30) days prior written notice to the other Members.
Any such withdrawal shall constitute a Membership Termination Event and shall be
subject to the provisions of Section 8.1.
4.4 MEMBERS ARE NOT AGENTS. The management of the Company is vested
exclusively in the Managers. No Member, acting solely in its capacity as a
Member, may be an agent of the Company, nor may any Member, in that capacity,
bind or execute any instrument on behalf of the Company without the prior
written consent of the Managers.
4.5 MEETINGS OF MEMBERS; WRITTEN CONSENT. Meetings of the Members shall be
held at such times and places within or without the State of Nevada as the
Members may fix from time to time, but, in any event, any Member may call a
special meeting of the Members upon ten (10) days prior written notice to the
other Members. No annual, regular or special meetings of Members are required,
but if such meetings are held, they shall be conducted pursuant to the Act.
Members may participate in any meeting through the use of conference telephones
or similar communications equipment as long as all Members participating can
hear one another. A Member so participating is deemed to be present in person at
the meeting. Any action which may be taken by the Members at a meeting may also
be taken without a meeting, if a consent in writing setting forth the action so
taken is signed by Members having not less than the minimum votes that would be
necessary to authorize that action at a meeting of the Members duly called and
noticed.
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ARTICLE V
MANAGEMENT AND CONTROL OF THE COMPANY
5.1 GENERAL SUPERVISION AND CONTROL OF MANAGEMENT BY THE MANAGERS.
(a) MANAGEMENT BY MANAGERS. The business and affairs of the Company
shall be managed and controlled by Managers (the "Managers"). Except for
situations in which the approval of the Members is specifically required by the
Act, the Articles or this Agreement, the Managers shall have full complete and
exclusive authority, power and discretion to manage and control the business,
property and affairs of the Company, to make all decisions regarding those
matters, to supervise, direct and control the actions of the officers, if any,
of the Company and to perform any and all other actions customary or incident to
the management of the Company's business, property and affairs. Within the
resources available to the Company, the Managers shall control and direct the
administration of the business and affairs of the Company in accordance with
sound business practice, taking such steps as are necessary or appropriate in
their reasonable judgment to conserve and enhance the value and profitability of
the Company's business, property and affairs.
(b) ELECTION AND TERM OF MANAGERS. The Company shall have two (2)
Managers. One of the Managers shall be designated by Cinema Ride (the "Cinema
Ride Manager") and one of the Managers shall be designated by HK LLC (the "HK
LLC Manager"). Each of Cinema Ride and HK LLC shall have the right to remove the
Manager appointed by it at any time and for any reason, by written notice to the
other Member, and each Manager so appointed shall serve in the capacity until he
or she resigns or is removed by Cinema Ride or HK LLC, as applicable, in their
absolute discretion. Each replacement Manager shall be subject to the approval
of the other Member which approval shall not be unreasonably withheld. The
initial Managers shall be Xxxxx Xxxxxxx (as designated by Cinema Ride) and Xxx
Xxxxxx (as designated by HK Inc.).
(c) ADVISORY BOARD. There shall be an advisory board of the Company
(the "Advisory Board") initially consisting of one individual appointed by the
two Managers (the "Individual Advisor"). The Individual Advisor may be removed
at any time by any Manager, in its sole and absolute discretion, with or without
cause. At the request of the Managers, the Advisory Board shall provide
assistance and advice to the Managers. In the event that the Managers are unable
to agree on the selection of the Individual Manager (either initially or as
replacement), each Manager shall choose an advisor and the two advisors shall in
turn choose a third advisor, with the three advisors then acting as the Advisory
Board. Said third advisor may be removed at any time by any Manager, in its sole
and absolute discretion, with or without cause.
(d) ACTIONS BY THE MANAGERS. Subject to subparagraph (e) below, all
decisions or actions of the Company are subject to the unanimous approval of the
Managers (whether verbally or in writing, whether in person or by proxy).
(e) DISPUTE RESOLUTION. In the event that the Managers cannot reach
agreement on any operational decision of the Company, the Managers shall submit
the dispute to the Advisory Board. The Advisory Board shall make a determination
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with respect to the dispute and any such determination shall be binding on the
Managers and the Company.
5.2 OFFICERS OF THE COMPANY.
(a) APPOINTMENT OF OFFICERS. The Managers may, at their discretion,
appoint officers of the Company at any time to conduct, or to assist the
Managers in the conduct of, the day-to-day business and affairs of the Company.
The officers of the Company may include a Chairperson, a President or Chief
Executive Officer, one or more Senior Vice Presidents, one or more Vice
Presidents, a Secretary, one or more Assistant Secretaries, a Chief Financial
Officer, a Treasurer, one or more Assistant Treasurers and a Comptroller. The
officers shall serve at the pleasure of the Managers subject to all rights, if
any, of an officer under any contract of employment. Any individual may hold any
number of offices and two individuals may serve in one office as a co-officer.
If a Manager is not an individual, such Manager's officers may serve as officers
of the Company if appointed by the Managers. The officers shall exercise such
powers and perform such duties as are typically exercised by similarly titled
officers in a corporation and as shall be determined from time to time by the
Managers, but subject in all instances to the supervision and control of the
Managers. The initial Co-Chief Executive Officers shall be Xxxxx Xxxxxxx and Xxx
Xxxxxx, who shall have joint responsibility for establishing and implementing
management policies of the Company. The initial Co-Chairpersons shall be Xxxxx
Xxxxxxx and Xxx Xxxxxx.
(b) SIGNING AUTHORITY OF OFFICERS. Unless otherwise agreed by the
Managers, all checks, instruments and other documents of the Company shall be
signed by both Managers. Each Manager shall designate in writing another Person
to sign such checks, instruments and other documents on his behalf if such
Manager is not available.
(c) DAY TO DAY MANAGEMENT. Provided that the Company is meeting the
minimum targets established by the Managers from time to time, the day to day
management of the Company shall be provided by Cinema Ride or an affiliate of
Cinema Ride with all actual costs paid or reimbursed by the Company to the
extent such costs have been approved as part of the established minimum targets.
If the Company fails to meet such targets and one or both Managers elect to
remove Cinema Ride or its affiliate or Cinema Ride (or its affiliate or
successor) resigns, the Managers shall then appoint a successor who should
conduct such day to day business. In the event that the Managers fail to
establish or agree upon minimum targets, then the matter shall be submitted to
the Advisory Board.
5.3 TRANSACTIONS BETWEEN THE COMPANY AND THE MEMBERS. Notwithstanding that
it may constitute a conflict of interest, the Members and/or the Managers may,
and may cause their Affiliates to, engage in any transaction with the Company so
long as that transaction is (a) fair to the Company and (b) approved by the
Managers.
5.4 PERFORMANCE OF DUTIES; LIABILITY OF MANAGERS AND OFFICERS. Neither the
Managers nor any officer shall be liable to the Company or to any Member for any
losses or damages suffered by them, except as the result of fraud, deceit, gross
negligence, reckless or intentional misconduct or a knowing violation of law or
this Agreement by the Managers or officer or as a result of acts from which the
Managers or officer derives an improper personal benefit. The Managers and
officers, if any, shall perform their managerial duties in good faith, in a
manner they reasonably believe to be in the best interests of the Company and
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the Members. In performing their duties, the Managers and officers shall be
entitled to rely on information, opinions, reports or statements, including
financial statements and other financial data, of the following persons or
groups unless they have knowledge concerning the matter in question that would
cause such reliance to be unwarranted and provided that the Managers and
officers act in good faith and after reasonable inquiry when the need therefor
is indicated by the circumstances:
(a) one or more agents of the Company whom the Managers or officers,
as the case may be, reasonably believe to be reliable and competent in the
matters presented; or
(b) any attorney, independent accountant or other Person as to matters
which the Managers or officers, as the case may be, reasonably believe to be
within such Person's professional or expert competence.
5.5 COMPANY OPPORTUNITIES.
(a) COMPANY OPPORTUNITIES. Each Member and its Affiliates shall be
required to offer to the Company each and every opportunity it acquires after
the date of this Agreement to pursue a prospective business venture if, by its
nature, that prospective business venture is within the primary purpose of the
Company specified in Section 2.4 and if the Company would reasonably be in a
position to take up that prospective business venture in the course of its
business.
(b) COMPETING ACTIVITIES. Except for prospective business ventures
which are within the primary purpose of the Company and are, therefore, subject
to the provisions of Section 5.5(a), however:
(i) no Member shall be obligated to present any prospective
project, business venture, investment opportunity or economic advantage to the
Company or any other Members, even if the opportunity is one of the character
that, if presented to the Company or the other Members, could be taken by the
Company or the other Members, and each Member shall have the right to hold any
such prospective project, business venture, investment opportunity or economic
advantage for its own account or to recommend the same to Persons other than the
Company or the other Members; and
(ii) the Members and their respective officers, directors,
shareholders, partners, members, agents, employees and Affiliates may engage or
invest in, independently or with others, any business activity of any type or
description. Neither the Company nor the other Members shall have the right in
or to such other ventures or activities or to the income or proceeds derived
therefrom.
5.6 EXPENSES. The Company shall reimburse the Members and the Managers and
their respective Affiliates for all reasonable out-of-pocket costs and expenses
incurred by them in connection with the business and affairs of the Company, as
well as organizational expenses (including, without limitation, legal and
accounting fees and costs) incurred by them to form the Company and to prepare
the Articles and this Agreement. In particular, the Company shall reimburse Xxx
Xxxxxx and Cinema Ride for all travel expenses in connection with their visits
to Las Vegas and their cellular phone expenses, up to $2,000 per month subject
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to appropriate documentation. Any expense item or series of related expense
items in excess of $3,000 shall require the pre-approval of both Managers.
5.7 MEDICAL INSURANCE The Company shall include Xxx Xxxxxx under a group
employee medical insurance policy to be determined by Xxx Xxxxxx. Xxx Xxxxxx
shall reimburse the Company for the costs thereof attributable to insuring him.
ARTICLE VI
ALLOCATIONS OF NET PROFITS, NET LOSSES AND DISTRIBUTIONS
6.1 MINIMUM GAIN CHARGEBACK.
In the event that there is a net decrease in the Company Minimum Gain
during any taxable year, the minimum gain chargeback described in Sections
1.704-2(f) and (g) of the Treasury Regulations shall apply.
6.2 MEMBER MINIMUM GAIN CHARGEBACK. If during any taxable year there is a
net decrease in Member Minimum Gain, the partner minimum gain chargeback
described in Section 1.704-2(i)(4) of the Treasury Regulations shall apply.
6.3 QUALIFIED INCOME OFFSET. Any Member who unexpectedly receives an
adjustment, allocation or Distribution described in subparagraphs (4), (5) or
(6) of Section 1.704-1(b)(2)(ii)(D) of the Treasury Regulations, which
adjustment, allocation or distribution creates or increases a deficit balance in
that Member's Capital Account, shall be allocated items of "book" income and
gain in accordance with the provisions of the "qualified income offset" as
described in Section 1.704-1(b)(2)(ii)(D) of the Treasury Regulations.
6.4 NONRECOURSE DEDUCTIONS. Nonrecourse Deductions shall be allocated to
the Members in proportion to their Percentage Interests.
6.5 MEMBER NONRECOURSE DEDUCTIONS. Member Nonrecourse Deductions shall be
allocated to the Members as required in Section 1.704-2(i)(1) of the Treasury
Regulations in accordance with the manner in which the Members bear the burden
of an Economic Risk of Loss corresponding to the Member Nonrecourse Deductions.
6.6 ALLOCATION OF NET PROFITS. The Net Profits for each fiscal period of
the Company shall be allocated to the Members in accordance with the following
order of priority:
(a) first, to those Members with negative Adjusted Capital Accounts,
among them in proportion to the ratio of the negative balances in their Adjusted
Capital Accounts, until no Member has a negative Adjusted Capital Account;
(b) second, to those Members whose Adjusted Capital Contributions are
in excess of their Adjusted Capital Accounts, among them in accordance with the
ratio of these excesses, until all of these excesses have been eliminated; and
(c) finally, to the Members in proportion to their Percentage
Interests.
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6.7 ALLOCATION OF NET LOSSES. Net Losses for each fiscal period of the
Company shall be allocated to the Members in proportion to their Percentage
Interests.
6.8 DISTRIBUTION OF DISTRIBUTABLE CASH BY THE COMPANY. Subject to
applicable law and any limitations contained elsewhere in this Agreement, the
Managers shall cause the Company to distribute any Distributable Cash at least
monthly to the Members, which Distributions shall be in the following order of
priority:
(a) first, to the Members in proportion to their Adjusted Capital
Contributions until each Member's Adjusted Capital Contribution has been reduced
to zero; and
(b) finally, to the Members in proportion to their Percentage
Interests.
6.9 ALLOCATION OF NET PROFITS AND LOSSES AND DISTRIBUTIONS IN RESPECT OF A
TRANSFERRED INTEREST. If any Membership Interest is Transferred or is increased
or decreased by reason of the admission of a new Member or otherwise during any
Fiscal Year, each item of income, gain, loss, deduction or credit of the Company
for that Fiscal Year shall be assigned pro rata to each day in the particular
period of that Fiscal Year to which such item is attributable (i.e., the day on
or during which it is accrued or otherwise incurred) and the amount of each item
so assigned to any such day shall be allocated to the Member based upon that
Member's respective Membership Interest at the close of that day.
Notwithstanding any provision above to the contrary, gain or loss of the Company
realized in connection with a sale or other disposition of any of the assets of
the Company shall be allocated solely to the parties owning Membership Interests
as of the date that sale or other disposition occurs.
6.10 TAX ALLOCATION MATTERS.
(a) CONTRIBUTED OR REVALUED PROPERTY. Each Member's allocable share of
the taxable income or loss of the Company, depreciation, depletion, amortization
and gain or loss with respect to any contributed property, or with respect to
revalued property where the Company's property is revalued pursuant to Paragraph
(b)(2)(iv)(f) of Section 1.704-1 of the Treasury Regulations, shall be
determined in the manner (and as to revaluations, in the same manner as)
provided in Section 704(c) of the Code. The allocation shall take into account,
to the full extent required or permitted by the Code, the difference between the
adjusted basis of the property to the Member contributing it and the fair market
value of the property determined by the Managers at the time of its contribution
or revaluation, as the case may be. The Company shall apply Section 704(c)(1)(A)
by using the "traditional method" as set forth in Section 1.704-3(b) of the
Treasury Regulations.
(b) RECAPTURE ITEMS. In the event that the Company has taxable income
that is characterized as ordinary income under the recapture provisions of the
Code, each Member's distributive share of taxable gain or loss from the sale of
Company assets (to the extent possible) shall include a proportionate share of
this recapture income equal to that Member's share of prior cumulative
depreciation deductions with respect to the assets which gave rise to the
recapture income.
6.11 ORDER OF APPLICATION. To the extent that any allocation, Distribution
or adjustment specified in any of the preceding Sections of this ARTICLE VI
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affects the results of any other allocation, Distribution or adjustment required
herein, the allocations, Distributions and adjustments specified in the
following Sections shall be made in the priority listed:
(a) Section 6.8.
(b) Section 6.1.
(c) Section 6.2.
(d) Section 6.3.
(e) Section 6.4.
(f) Section 6.5.
(g) Section 6.7.
(h) Section 6.6.
(i) Section 10.5.
These provisions shall be applied as if all Distributions and allocations
were made at the end of the Company's Fiscal Year. Where any provision depends
on the Capital Account of any Member, that Capital Account shall be determined
after the operation of all preceding provisions for the Fiscal Year.
Notwithstanding the allocation provisions set forth above in Sections 6.1
through 6.7, the Members hereby agree that, upon the sale of all or
substantially all of the assets of the Company and/or the dissolution and
liquidation of the Company, the allocation provisions contained in this Article
VI and elsewhere in this Agreement shall be applied and amended by the Members
to cause to the greatest extent possible the final Capital Account balances of
the Members to be as close as possible equal to the amount that would be
distributed to each Member pursuant to Section 6.8 if the aggregate of the
proceeds from the sale of such assets and/or any liquidation proceeds were
distributed pursuant to said Section 6.8, rather than distributed pursuant to
Section 10.5(a) which Section 10.5(a) shall be the controlling provision. Such
application and amendment by Members to create such result shall include, if
necessary, special allocations of gross income and/or gross deductions for the
current accounting period. This paragraph shall control notwithstanding any
reallocation of income, loss or items thereof by the Internal Revenue Service or
any other taxing authority.
6.12 ALLOCATION OF LIABILITIES. Each Member's interest in "partnership"
profits for purposes of determining that Member's share of "excess nonrecourse
liabilities" of the Company as used in Section 1.752-3(a)(3) of the Treasury
Regulations, shall be equal to that Member's Percentage Interest.
6.13 FORM OF DISTRIBUTION. No Member, regardless of the nature of its
Capital Contribution, has the right to demand and receive any Distribution from
the Company in any form other than money. No Member may be compelled to accept
from the Company a Distribution of any asset in kind in lieu of a proportionate
Distribution of money being made to other Member(s), and except upon a
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dissolution and the winding up of the Company, no Member may be compelled to
accept a Distribution of any asset in kind.
ARTICLE VII
TRANSFER OF INTERESTS
7.1 TRANSFER OF INTERESTS. Except as permitted in Section 7.2, no Member
shall be entitled to Transfer all or any part of its Membership Interest except
with the prior written consent of all other Members, which consent may be given
or withheld, conditioned or delayed as the other Members may determine in their
sole and absolute discretion. Any attempted Transfer without such prior written
consent shall be null and void AB INITIO, and the transferee shall not become a
Member.
7.2 RIGHT OF FIRST OFFER.
(a) OFFER TO SELL; OPTION TO PURCHASE. If a Member (the "TRANSFERRING
MEMBER") desires to Transfer all or any part of its Membership Interest (the
"OFFERED INTEREST"), the Transferring Member shall give written notice to the
Company and to the other Members (the "ELIGIBLE MEMBERS"), setting forth in full
the terms of the proposed sale (the "Offer"). The Company shall then have the
right and option, for a period ending ten (10) calendar days following its
receipt of the written notice, to elect to purchase all or any part of the
Offered Interest at the purchase price and upon the terms specified in the
Offer. If the Company elects to purchase less than all of the Offered Interest,
the Eligible Members shall then have the right and option, for a period of
twenty (20) calendar days thereafter, to elect to purchase all or any part of
the Offered Interest not elected to be purchased by the Company pro rata in
accordance with the ratio of their Percentage Interests (or non pro rata if such
Members so agree), at the purchase price and upon the terms specified in the
Offer.
i) TRANSFER TO PROPOSED TRANSFEREE. If the Company and/or the
Eligible Members in the aggregate do not elect to purchase all of the Offered
Interest pursuant to this Section 7.2, the Transferring Member may Transfer all
of the Offered Interest to a third party provided that the net present value of
the purchase price for the Offerred Interest is at least 92.5% of the net
present value of the price for the Offerred Interest as set forth in the Offer,
whereupon the transferee shall take and hold the Offered Interest subject to
this Agreement and to all of the obligations and restrictions upon the
Transferring Member and shall observe and comply with this Agreement and with
all such obligations and restrictions. The Transferring Member shall have ninety
(90) calendar days after the date of the termination of the Eligible Members'
options provided above to enter into a binding agreement to sell the Offered
Interest and ninety (90) calendar days thereafter to Transfer the Offered
Interest. If no such agreement is entered into or the Transfer is not effected
within any such ninety (90) calendar day period, then the Transferring Member
shall not be entitled to Transfer the Transferred Interest and any subsequent
proposed Transfer of all or any part of the Transferring Member's Membership
Interest shall once again be subject to the provisions of this Section 7.2.
ii) NON-CASH CONSIDERATION. For these purposes, if any
consideration offered for the Offered Interest consists of rights, interests or
property other than money or an obligation to pay money, the Managers (other
than any Manager who is also the Transferring Member), or the non-Transferring
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Members if the sole Manager is the Transferring Member, shall, in good faith,
determine the Fair Market Value of that consideration in monetary terms.
ARTICLE VIII
CONSEQUENCES OF MEMBERSHIP TERMINATION EVENTS
8.1 DISSOLUTION OF COMPANY. Upon the occurrence of a Membership Termination
Event, the Company shall dissolve unless (a) all remaining Members consent in
writing within ninety (90) days of the Membership Termination Event to continue
the Company in a reconstituted form, if necessary and (b) agreement is reached
within such ninety (90) day period between the Company and the Member (or the
legal representative or other successor-in-interest of the Member) who suffered
the Membership Termination Event as to the purchase of that Member's Membership
Interest.
8.2 ADMISSION OR CONVERSION. Upon the occurrence of a Membership
Termination Event with respect to a Member under circumstances where the Company
does not dissolve, the remaining Members shall determine which one of the
following shall occur and give written notice thereof to the Member who suffered
the Membership Termination Event (the "Former Member"):
(a) the Former Member's personal representative or other
successor-in-interest shall be admitted as a Member of the Company in the place
and stead of the Former Member to the extent of the Former Member's Membership
Interest (the "Former Member's Interest"); PROVIDED HOWEVER, (a) the other
Members shall have consented in writing to such admission (the granting or
denial of which shall be in each Member's sole discretion), (b) the assignee has
executed a counterpart of this Agreement (as modified or amended from time to
time) and such other instruments as the other Members may reasonably deem
necessary or appropriate to confirm the undertaking of the assignee to be bound
by all the terms and provisions of this Agreement and (c) the assignee has
undertaken in writing to pay all expenses incurred by the Company in connection
with such assignment;
(b) the Company and/or one or more of the remaining Members and/or (if
the entire Former Member's Interest is not subscribed for purchase by the
Company and/or one or more of the remaining Members) any other Person(s)
designated by the Managers (other than any Manager affiliated with the Former
Member) shall purchase, and the Former Member or the Former Member's personal
representative or other successor-in-interest shall sell, the Former Member's
Interest or part thereof upon the terms and conditions specified in Section 8.3;
or (c) any combination of the above.
8.3 PURCHASE PRICE. If the Managers (other than any Manager affiliated with
the Former Member) elect the alternative in Section 8.2(b), the purchase price
for the Former Member's Interest shall be the Capital Account balance of the
Former Member as of the date of the Membership Termination Event, PROVIDED,
HOWEVER, that if the Former Member or the Former Member's legal representative
or other successor-in-interest deems the Capital Account balance to vary from
the fair market value of the Former Member's Interest as of the date of the
Membership Termination Event by more than ten percent (10%), it shall be
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entitled to require an appraisal by providing notice of the request for
appraisal within thirty (30) days after the determination of the Managers to
cause the Company to purchase the Former Member's Interest pursuant to Section
8.2(b). In such event, the fair market value of the Former Member's Interest as
of the date of the Membership Termination Event shall be determined by three (3)
independent appraisers, one selected by the Former Member or the Former Member's
legal representative or other successor-in-interest, one selected by the Company
and one selected by the two appraisers so named. The fair market value of the
Former Member's Interest as of the date of the Membership Termination Event
shall be deemed to be the average of the two appraisals closest in amount to
each other, and the fair market value of the Former Member's Interest as of the
date of the Membership Termination Event, as so determined, shall be the
purchase price. If the fair market value is determined to vary from the Capital
Account balance by less than ten percent (10%), the party requesting the
appraisal shall pay all expenses of all the appraisers. In all other events, the
party requesting the appraisal shall pay one-half of such expenses and the other
party shall pay one-half of such expenses.
8.4 NOTICE OF INTENT TO PURCHASE. If the Managers elect the alternative
specified at Section 8.2(b), then, within thirty (30) days after the purchase
price of the Former Members' Interest is determined, the Managers shall notify
the remaining Members of that portion, if any, of the Former Members' Interest
which the Company has elected to purchase. If the Company elects to purchase
less than all of the Former Members' Interest, each remaining Member shall
notify the Managers in writing, within ten (10) days thereafter, if that Member
desires to purchase a portion of the balance of the Former Members' Interest.
The failure of any remaining Member to so notify the Managers within such ten
(10) day period shall constitute an election on the part of that Member not to
purchase any of the balance of the Former Members' Interest. Each remaining
Member so electing to purchase (a "Purchasing Member") shall be entitled to
purchase a portion of the balance of the Former Members' Interest in the same
proportion that the Percentage Interest of the Purchasing Member bears to the
aggregate of the Percentage Interests of all of the Purchasing Members.
8.5 ELECTION TO PURCHASE LESS THAN ALL OF THE FORMER MEMBER'S INTEREST. If
any Purchasing Member elects to purchase less than all of its pro rata share of
the balance of the Former Member's Interest, then the other Purchasing Members
may elect to purchase more than their pro rata share. If the Company and the
Purchasing Members do not elect to purchase all of the Former Member's Interest,
any other Person(s) designated by the Managers may purchase the remaining share
thereof.
8.6 CLOSING OF PURCHASE OF FORMER MEMBER'S INTEREST. The closing (the
"Closing") of the sale of a Former Member's Interest shall be held no later than
sixty (60) days after the determination of the purchase price. At the Closing,
the Former Member or the Former Member's legal representative shall deliver to
the purchasers an instrument of transfer (containing warranties as to title and
the absence of encumbrances) conveying the Former Member's Interest. The Former
Member or the Former Member's legal representative and the purchasers shall do
all things and execute and deliver all papers necessary to consummate the
transaction in accordance with the provisions of this Agreement.
8.7 PAYMENT OF PURCHASE PRICE. The purchase price shall be paid as follows:
the purchasers shall pay cash at the Closing equal to one-fifth (1/5) of the
purchase price, with the balance of the purchase price to be paid in four equal
annual principal installments, plus interest, payable each year on the
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anniversary date of the Closing. The unpaid principal balance shall accrue
interest at the current applicable federal rate provided in the Code for the
month in which the initial payment is made, but the purchasers shall have the
right to prepay in full or in part at any time without penalty. The obligation
to pay the balance due shall be evidenced by a promissory note, and if purchased
by a Person other than the Company, secured by a pledge of the Membership
Interest being purchased.
ARTICLE IX
ACCOUNTING, RECORDS AND REPORTING BY MEMBERS
9.1 BOOKS AND RECORDS. The books and records of the Company shall be kept,
and the financial position and the results of its operations recorded, in
accordance with the cash method of accounting unless a different method is
required to be followed for federal income tax purposes. The books and records
of the Company shall reflect all the Company transactions and shall be
appropriate and adequate for the Company's business. Each Member and its duly
authorized representative, including, but not limited to, Cinema Ride's and HK
LLC's accountants, shall have complete access to all such books and records at
any time.
9.2 BANK ACCOUNTS; INVESTED FUNDS. All funds of the Company shall be
deposited in such account or accounts of the Company as may be determined by the
Managers and shall not be commingled with the funds of any other Person. All
withdrawals therefrom shall be made upon checks signed by such persons and in
such manner as the Managers may determine. Temporary surplus funds of the
Company may be invested in commercial paper, time deposits, short-term
government obligations or other investments determined by the Managers.
9.3 TAX MATTERS FOR THE COMPANY HANDLED BY THE MANAGERS AND TAX MATTERS
MEMBERS. The Members shall from time to time cause the Company to make such tax
elections as it deems to be in the best interests of the Company and the
Members. The Tax Matters Members shall represent the Company (at the Company's
expense) in connection with all examinations of the Company's affairs by tax
authorities, including resulting judicial and administrative proceedings, and
shall expend Company funds for professional services and costs associated
therewith. The Tax Matters Members shall oversee the Company's tax affairs in
the overall best interests of the Company. If for any reason the Tax Matters
Members can no longer serve in that capacity, the Managers may designate other
Members to be Tax Matters Members. Initially, the Tax Matters Members shall be
Xxxxx Xxxxxxx and Xxx Xxxxxx.
9.4 ACCOUNTING MATTERS. All decisions as to accounting matters shall be
made by the Managers.
ARTICLE X
DISSOLUTION AND WINDING UP
10.1 DISSOLUTION. The Company shall be dissolved, its assets disposed of
and its affairs wound up upon (and only upon) the first to occur of the
following:
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(a) the expiration of the term of the Company specified in the
Articles or any other event of dissolution specified in the Articles;
(b) the entry of a decree of judicial dissolution pursuant to Section
86.541 of the Act;
(c) the unanimous vote of the Members;
(d) the occurrence of a Membership Termination Event, if all remaining
Members fail to consent in accordance with Section 8.1 to continue the business
of the Company within ninety (90) days after the occurrence of that event or
fail to reach the agreement described in Section 8.1(b);
(e) the sale of all or substantially all of the assets of the Company;
(f) the Company's Bankruptcy; or
(g) the occurrence of an event which makes it unlawful for the
business of the Company to be continued.
10.2 CERTIFICATE OF DISSOLUTION. Upon dissolution of the Company, the
Managers shall cause Articles of Dissolution to be filed with the Nevada
Secretary of State.
10.3 WINDING UP. Upon the occurrence of any event specified in Section
10.1, the Company 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 Managers shall be responsible for overseeing the winding
up and liquidation of the Company, shall take full account of the liabilities
and assets of the Company, shall cause its assets either to be sold or
distributed, as they may determine, and shall cause the proceeds therefrom, to
the extent sufficient, to be applied and distributed as provided in Section
10.5. The Persons winding up the affairs of the Company 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 Company.
10.4 DISTRIBUTIONS IN KIND. Any non-cash asset distributed to one or more
Members shall first be valued at its fair market value to determine the Net
Profit or Net Loss that would have resulted if that asset had been sold for that
value, the Net Profit or Net Loss shall then be allocated pursuant to ARTICLE
VI, and the Members' Capital Accounts shall be adjusted to reflect those
allocations. The amount distributed and charged to the Capital Account of each
Member receiving an interest in the distributed asset shall be the fair market
value of the interest (net of any liability secured by the asset that the Member
assumes or takes subject to). The fair market value of that asset shall be
determined by the Managers.
10.5 ORDER OF PAYMENT OF PROCEEDS UPON DISSOLUTION.
(a) LIQUIDATING DISTRIBUTIONS. After determining that all known debts
and liabilities of the Company, including, without limitation, debts and
liabilities to Members who are creditors of the Company, have been paid or
adequately provided for, the remaining assets shall promptly be distributed to
the Members in accordance with their positive Capital Account balances, after
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taking into account income and loss allocations for the Company's taxable year
during which the liquidation occurs.
(b) NO LIABILITY. No Member shall have any liability to the Company,
any Member or any creditor of the Company on account of any deficit balance in
its Capital Account.
10.6 COMPLIANCE WITH TREASURY REGULATIONS. All payments to the Members upon
the winding up and dissolution of the Company shall be strictly in accordance
with the positive Capital Account balance limitation and other requirements of
Section 1.704-1(b)(2)(ii)(D) of the Treasury Regulations.
10.7 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Except as otherwise
specifically provided in this Agreement, each Member shall be entitled to look
only to the assets of the Company for the return of that Member's positive
Capital Account balance and shall have no recourse for its Capital Contributions
and/or share of Net Profits (upon dissolution or otherwise) against the Managers
or any other Member.
10.8 CERTIFICATE OF CANCELLATION. Upon completion of the winding up of the
Company's affairs, the Managers shall cause a Certificate of Cancellation to be
filed with the Nevada Secretary of State.
10.9 COMPENSATION FOR SERVICES. The Persons winding up the affairs of the
Company shall be entitled to reasonable compensation from the Company for their
services. ARTICLE XI
INDEMNIFICATON
11.1 INDEMNIFICATION. The Company shall indemnify and hold harmless each of
the Members and the Managers, and each of their respective officers, directors,
shareholders, partners, Members, trustees, beneficiaries, employees, agents,
heirs, assigns, successors-in-interest and Affiliates, (collectively,
"Indemnified Persons") from and against any and all losses, damages, liabilities
and expenses, (including costs and reasonable attorneys' fees), judgments,
fines, settlements and other amounts (collectively "Liabilities") reasonably
incurred by any such Indemnified Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil, criminal,
administrative or investigative and whether threatened, pending or completed
(collectively a "Proceeding"), in which any such Indemnified Person may be
involved or with which any such Indemnified Person may be threatened, with
respect to or arising out of any act (including any act of active negligence)
performed by the Indemnified Person or any omission or failure to act if (a) the
performance of the act or the omission or failure was done in good faith and
within the scope of the authority conferred upon the Indemnified Person by this
Agreement or by the Act, except for acts of willful misconduct, gross negligence
or reckless disregard of duty, or acts which constitute a material breach of
this Agreement or from which such Indemnified Person derived an improper
personal benefit, or (b) a court of competent jurisdiction determines upon
application that, in view of all of the circumstances, the Indemnified Person is
fairly and reasonably entitled to indemnification from the Company for such
Liabilities as such court may deem proper. The Company's indemnification
obligations hereunder shall apply not only with respect to any Proceeding
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brought by the Company or a Member but also with respect to any Proceeding
brought by a third party.
11.2 CONTRACT RIGHT; EXPENSES. The right to indemnification conferred in
this ARTICLE XI shall be a contract right and shall include the right to require
the Company to advance the expenses incurred by the Indemnified Person in
defending any such Proceeding in advance of its final disposition; PROVIDED,
HOWEVER, that, if the Act so requires, the payment of such expenses in advance
of the final disposition of a Proceeding shall be made only upon receipt by the
Company of an undertaking, by or on behalf of the indemnified Person, to repay
all amounts so advanced if it shall ultimately be determined that such Person is
not entitled to be indemnified under this ARTICLE XI or otherwise.
11.3 INDEMNIFICATION OF OFFICERS AND EMPLOYEES. The Company may, to the
extent authorized from time to time by the Managers, grant rights to
indemnification and to advancement of expenses to any officer, employee or agent
of the Company to the fullest extent of the provisions of this ARTICLE XI with
respect to the indemnification and advancement of expenses of Members of the
Company.
11.4 INSURANCE. The Company may purchase and maintain insurance on behalf
of any Person who is or was an agent of the Company against any liability
asserted against that Person and incurred by that Person in any such capacity or
arising out of that Person's status as an agent, whether or not the Company
would have the power to indemnify that Person against liability under the
provisions of Section 11.1 or under applicable law.
ARTICLE XII
MISCELLANEOUS
12.1 AMENDMENTS. No amendment to this Agreement may be made without the
unanimous approval of all Members. All amendments to this Agreement must be in
writing.
12.2 OFFSET PRIVILEGE. Any monetary obligation owing from the Company to
any Member or Manager may be offset by the Company against any monetary
obligation then owing from that Member or Manager to the Company.
12.3 REMEDIES CUMULATIVE. Except as otherwise provided herein, the remedies
under this Agreement are cumulative and shall not exclude any other remedies to
which any Person may be lawfully entitled.
12.4 NOTICES. Any notice to be given to the Company or any Member in
connection with this Agreement must be in writing and will be deemed to have
been given and received when delivered to the address specified by the party to
receive the notice by courier or other means of personal service, when received
if sent by facsimile, or three (3) days after deposit of the notice by first
class mail, postage prepaid, or certified mail, return receipt requested. Any
such notice must be given to the Company at its principal place of business, and
to any Member at the address specified in Exhibit A. Any party may, at any time
by giving five (5) days' prior written notice to the other parties, designate
any other address as the new address to which notice must be given.
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12.5 ATTORNEY'S FEES. In the event that any dispute between the Company
and/or the Members should result in litigation or arbitration, the prevailing
party in that dispute shall be entitled to recover from the other party all
reasonable fees, costs and expenses of enforcing any right of the prevailing
party, including without limitation, reasonable attorneys' fees and expenses.
12.6 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard to
any conflicts of laws principles of the State of Nevada or any other
jurisdiction that would call for the application of the law of any jurisdiction
other than the State of Nevada. Each party hereto consents to the exclusive
jurisdiction of the state and federal courts located in Las Vegas, Nevada in any
action on a claim arising out of, under or in connection with this Agreement or
the transactions contemplated by this Agreement. Each party hereto further
agrees that personal jurisdiction over it may be effected by service of process
by registered or certified mail addressed as provided in Section 12.4 and that
when so made shall be as if served upon it personally.
12.7 COMPLETE AGREEMENT. This Agreement and the Articles constitute the
complete and exclusive statement of agreement among the Members with respect to
their respective subject matters and supersede all prior written and oral
agreements or statements by and among the Members. No representation, statement,
condition or warranty not contained in this Agreement or the Articles shall be
binding on the Members or have any force or effect whatsoever. To the extent
that any provision of the Articles conflicts with any provision of this
Agreement, the Articles shall control.
12.8 BINDING EFFECT. Subject to the provisions of this Agreement relating
to Transferability, this Agreement shall be binding upon and inure to the
benefit of the Members and their respective successors and assigns.
12.9 SECTION HEADINGS. All Section headings are inserted only for
convenience of reference and are not to be considered in the
interpretation or construction of any provision of this Agreement.
12.10 INTERPRETATION. In the event any claim is made by any Member relating
to any conflict, omission or ambiguity in this Agreement, no presumption or
burden of proof or persuasion shall be implied by virtue of the fact that this
Agreement was prepared by or at the request of a particular Member or that
Member's counsel.
12.11 SEVERABILITY. If any provision of this Agreement or the application
of that provision to any person or circumstance shall be held invalid, the
remainder of this Agreement or the application of that provision to persons or
circumstances other than those to which it is held invalid shall not be
affected.
12.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, all of the Members of TICKETS2NITE, LLC, a Nevada
limited liability company, have executed this Agreement, effective as of the
date first written above.
MEMBER:
Cinema Ride, a Delaware corporation
By: /s/ XXXXX XXXXXXX
-------------------------------
Name: Xxxxx Xxxxxxx
Title: President
MEMBER:
Entasis LLC, a Delaware limited liability company
By: /s/ XXX XXXXXX
-------------------------------
Name: Xxx Xxxxxx
Title: Manager
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EXHIBIT A
CAPITAL CONTRIBUTIONS, ADDRESSES AND PERCENTAGE INTERESTS
OF MEMBERS AS OF
SEPTEMBER 24, 2002
Member's Member's Member's
Capital Percentage Capital
MEMBER'S NAME MEMBER'S ADDRESS CONTRIBUTION INTEREST ACCOUNT
Cinema Ride, Inc. 00000 Xxxxxxx Xxxxx, $200,000 1) 50% $200,000
Xxxxx 000 0)
Xxxxxx Xxxx, Xxxxxx 00000
Entasis LLC _________________ $200,000 2) 50% $200,000
_________________ 3)
1. Cinema Ride previously contributed $183,694.27 to the Company. Cinema will
contribute $16,305.73 upon execution of this Agreement.
2. In the event that Bacardi agrees to become a sponsor of the Company's
discounted show operations, HK LLC shall be entitled to receive credit against
its obligations to make the capital contribution the amount of any payment by
Bacardi made on or before the execution of this Agreement.
3. Such capital account shall be actually credited upon making the cash
contributions provided herein.
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