Exhibit 10.6
PRESTIGE FINE JEWELRY,LLC
Operating Agreement
This Operating Agreement (this "Agreement") is entered into this 12th day
of February, 1998, by and among Play Co. Capital Corp. ("Playco"), with an
address at 000X Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx 00000 and XXXX
XXXXXXXXXX with an address at 00-00 00xx Xxxxxx, Xxxx Xxxxxx Xxxx, Xxx Xxxx
00000 ("Kochisarli").
Explanatory Statement
All prior operating agreements, if any, with respect to
Prestige Fine Jewelry are hereby amended to reflect a change in the ownership
structure to replace member Xxxxxxx XxXxxxxx, and transfer Xx. XxXxxxxx=s 50%
owner in the company with and to Play Co. Capital Corp. as of the date hereof,
in accordance with the assignment dated February 12, 1998; and
The Parties wish to continue to operate the limited liability
company in accordance with the terms and subject to the conditions set forth in
this Agreement, as amended.
NOW, THEREFORE, for good and valuable consideration, the
parties, intending legally to be bound, agree as follows:
Article I
Defined Terms
The Following capitalized terms shall have the meanings specified in this
Article I. Other terms are defined in the text of this Agreement; and,
throughout this Agreement, those terms shall have the meanings respectively
ascribed to them.
"Adjusted Capital Balance" means, as of any day, a Member=s total Capital
Contributions less all amounts actually distributed to the Member pursuant to
this Agreement. If any Interest is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Adjusted Capital Balance of
the transferor to the extent the Adjusted Capital Balance related to the
Interest transferred.
"Agreement" means this Operating Agreement, as amended from time to time.
"Capital Account" means the account to be maintained by the Company for
each Member in accordance with the following provisions:
Member's Capital Account shall be credited with the Member's Capital
Contributions, the amount of any Company liabilities assumed by the Member (or
which are secured by Company property distributed to the Member), and the
Member's distributive share of Profit; and
Member's Capital Account shall be debited with the amount of money and the
fair market value of any Company property distributed to the Member, the amount
of any liabilities of the Member assumed by the Company (or which are secured by
property contributed by the Member to the Company), and the Member=s
distributive share of Loss.
If any Interest is transferred pursuant to the terms of this agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
the Capital Account is attributable to the transferred Interest.
"Capital Contribution" means the total amount of cash and the fair market
value of any other assets contributed to the Company by a Member, net of
liabilities assumed or to which the assets are subject.
"Cash Flow" means all cash funds derived from operations of the Company,
without reduction for any non-cash charges, but less cash funds used to pay
current operating expenses and to pay or establish reasonable reserves for
future expenses, debt payments, capital improvements, and replacements as
determined by the Managers.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision of any succeeding law.
"Company" means the limited liability company formed in accordance with
this Agreement.
"Involuntary Withdrawal" means, with respect to any Member, the occurrence
of any of the following events;
the Member makes and assignment for the benefit of creditors;
the Member files a voluntary petition of bankruptcy;
the Member is adjudged bankrupt or insolvent or there is entered against
the Member an order for relief in any bankruptcy or insolvency proceeding;
the Member files a petition seeking for the Member any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any statute, law, or regulation;
the Member seeks, consents to, or acquiesces in the appointment of a
trustee for, receiver for, or liquidation of the Member or of all or any
substantial part of the Member=s properties;
the Member files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the Member in any
proceeding described in Subsections (i) through (v);
any proceeding against the Member seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation, continues for one hundred twenty (120) days after
the commencement thereof, or the appointment of a trustee, receiver, or
liquidator for the Member or all or any substantial part of the Member=s
properties without the Member=s agreement or acquiescence, which appointment is
not vacated or stayed for one hundred twenty (120) days or, if the appointment
is stayed, for one hundred twenty (120) days after the expiration of the stay
during which period the appointment is not vacated; and
the Member=s death, incapacity, or adjudication by a court of competent
jurisdictions as incompetent to manage the Member=s person or property.
"Interest" means all of the rights of a Member in the Company, including a
Member=s: (i) Percentage of the Profit and Loss of the Company, (ii) right to
inspect the Company=s books and records; and (iii) right to vote on matter which
are reserved to the Members hereunder and under the Law.
"Law" means the Delaware Limited Liability Company Law, as amended from
time to time.
"Manager" shall mean a manager of the company, whose rights, powers and
duties are specified in Article V hereof.
"Member" means each Person signing this Agreement and any Person who
subsequently is admitted as a member of the Company.
"Percentage" means, as to a Member, the percentage set forth after the
Member=s name on Exhibit A, as amended from time to time.
"Person" means and includes an individual, corporation, partnership,
association, limited liability company, trust, estate, or other entity.
"Profit" and "Loss" means, for each taxable year of the Company (or other
period for which Profit or Loss must be computed), the Company=s taxable income
or loss determined in accordance with Code Section 703(a).
"Regulation" means the income tax regulations, including any temporary
regulations, from time to time promulgated under the Code.
"Transfer" means, when used as a noun, any sale, hypothecation, pledge,
assignment, attachment, or other transfer, and, when used as a verb, means to
sell, hypothecate, pledge, assign, or otherwise transfer.
"Voluntary Withdrawal" means a Member=s disassociation with the Company by
means other than a Transfer or an Involuntary Withdrawal.
Article II
Formation and Name: Office; Purpose; Term
2.1 Organization. The parties hereby agree to cause to be formed a limited
liability company pursuant to the Law and the provisions of this Agreement.
2.2 Name of the Company. The name of the Company shall be PRESTIGE FINE
JEWELRY, LLC. The Company may do business under that name and under any other
name or names which the members select.
2.3 Purpose. The purposes of the Company shall be to:
Engage in the business of selling gold and other jewelry.
Own, acquire, manage, develop, operate, buy, sell, exchange,
finance, refinance, and otherwise deal with real estate, personal property, and
any type of business, as the Managers may from time to time deem to be in the
best interests of the Company;
Acquire, own, buy, sell, invest in, trade, manage, finance,
refinance, exchange, or otherwise dispose of debt and equity securities,
partnership interests, CDs, mutual funds, commodities, and any and all
investments whatsoever, that the Managers may from time to time deem to be in
the best interests of the Company; and
Engage in such other activities as are related or incidental
to the foregoing purposes.
2.4 Term. The term of the Company shall begin upon the filing of Articles
of Organization with the Delaware Department of State and shall continue for 40
years from the date hereof unless its existence is sooner terminated pursuant to
this Agreement.
2.5 Members. The name, present mailing address, taxpayer identification
number, and Percentage of each Member are set forth on Exhibit A.
Article III
Members; Capital; Capital Accounts
3.1 Initial Capital Contributions. Upon the execution of this Agreement,
the Members shell contribute to the Company cash in the amounts respectively set
forth on Exhibit A as initial contributions.
3.2 Additional Capital Contributions
3.2.1 If the Managers determine at any time or from time to time that the
Company requires additional Capital Contributions, then they shall cause the
Company to give notice to each Member of (i) the total amount of additional
Capital Contributions required, (ii) the reason the additional Capital
Contribution is required, (iii) each Member=s proportionate interest of the
total additional Capital Contribution (determined in accordance with this
Section), and (iv) the date each Member=s additional Capital Contribution is due
and payable, which date shall be no less than fifteen (15) days after the notice
has been given. A Member=s share of the total additional Capital Contribution
shall be equal to the product obtained by multiplying the Member=s Percentage
and the total additional Capital Contribution required.
3.2.2 Except as provided in Section 3.2.1, no Member shall be required to
contribute any additional capital to the company, and no Member shall have any
personal liability for any obligation of the Company.
3.3 No Interest on Capital Contributions. Members shall not be paid
interest on their Capital Contributions.
3.4 Return of Capital Contributions. Except as otherwise provided in this
Agreement, no Member shall have the right to receive any return of any Capital
Contribution.
3.5 Form of Return of Capital. If a Member is entitled to receive a return
of a Capital Contribution, the Member shall not have the right to receive
anything but cash in return of the Member=s Capital Contribution.
3.6 Capital Accounts. A separate Capital Account shall be maintained for
each Member.
3.7 Loans. No Member may, without the consent of the Managers, make or
cause a loan to be made to the Company.
Article IV
Profit, Loss, and Distributions
4.1 Distributions of Cash Flow and Allocations of Profit or Loss.
4.1.1 For any taxable year of the Company, Profit or Loss shall be
allocated to the Members in proportion to their Percentages.
4.1.2 Cash Flow. Cash Flow for each taxable year of the company shall be
distributed to the members in proportion to their allocations of Profit as
described in Section 4.1.1, above, when determined to be appropriate by the
Managers.
4.2 Liquidation and Dissolution
4.2.1 If the Company is liquidated, the assets of the Company shall be
distributed to the members in accordance with their Capital Accounts.
4.2.2 No Member shall be obligated to restore a negative Capital Account
unless and to the extent that the failure to do so would result in the failure
of the allocation of Profit described in Section 4.1, above, to have
Asubstantial economic effect@ under the Code and Regulations.
4.3 General
4.3.1 Except as otherwise provided in this Agreement, the timing and amount
of all distributions shall be determined by decision of the Managers.
4.3.2 If any assets of the Company are distributed in kind to the Members,
those assets shall be valued on the basis of their fair market value, and any
Member entitled to any interest in those assets shall receive that interest as a
tenant-in-common with all other Members so entitled. Unless the Managers deem it
impractical or uneconomical, the fair market value of the assets shall be
determined by an independent appraiser who shall be selected by the Managers.
The Profit or Loss for each unsold asset shall be determined as if the asset had
been sold at its fair market value, and the Profit or Loss shall be allocated as
provided in Section 4.2 and shall be properly credited or charged to the Capital
Accounts of the Members prior to the distribution of the assets in liquidation.
4.3.3 All Profit and Loss shall be allocated, and all distributions shall
be made to the Persons shown on the records of the Company to have been Members
as of the last day of the taxable year for which the allocation or distribution
is to be made. Notwithstanding the foregoing, unless the Company=s taxable year
is separated into segments, if there is a Transfer or an Involuntary Withdrawal
during the taxable year, the Profit and Loss shall be allocated between the
original Member and the successor on the basis of the number of days each was a
Member during the taxable year; provided, however, the Company=s taxable year
shall be segregated into two or more segments in order to account for Profit,
Loss, or to any other extraordinary nonrecurring items of the Company.
Article V
Management by Managers; Rights, Powers, and Duties
5.1 Management
5.1.1 Member Management. Except as expressly provided otherwise by Law or
this Operating Agreement, the powers of the Company shall be exercised by or
under the authority of, and the business and affairs of the Company shall be
managed by, one or more Managers.
5.1.2 General Powers. The Managers shall have full, exclusive, and complete
discretion , power, and authority, subject to the requirements of applicable
law, to manage, control, administer, and operate the business and affairs of the
Company for the purposes herein stated, and to make all decisions affecting such
business and affairs, including, without limitation, for Company purposes, the
power to:
5.1.1.1 Acquire by purchase, lease, or otherwise, any real or personal
property, tangible or intangible;
5.1.1.2 construct, operate, maintain, finance, and improve, and to own,
sell, convey, assign, mortgage, or lease any real estate and any personal
property;
5.1.1.3 sell, dispose, trade, or exchange Company assets in the ordinary
course of the Company=s business;
5.1.1.4 enter into agreements and contracts and to give receipts, releases,
and discharges;
5.1.1.5 purchase liability and other insurance to protect the Company=s
properties and business and to protect the Managers against liability for their
acts and omissions;
5.1.1.6 borrow money for and on behalf of the Company;
5.1.1.7 execute or modify leases with respect to any part or all of the
assets of the Company;
5.1.1.8 prepay, in whole or in part, refinance, amend, modify, or extend
any mortgages or deeds of trust which may affect any asset of the Company and in
connection therewith to execute for and on behalf of the Company any extensions,
renewals, or modifications of such mortgages or deeds of trust.
5.1.1.9 Execute any and all other instruments and documents which may be
necessary to carry out the intent and purpose of this Agreement, including, but
not limited to, documents whose operation and effect extend beyond the term of
the Company;
5.1.1.10 enter into any kind of activity necessary to, in connection with,
or incidental to, the accomplishment of the purposes of the company; and
5.1.1.11 invest and reinvest Company reserves.
5.1.2 All cash, checks and instruments for the payment of monies shall be
deposited in the Company=s bank account(s). Checks drawn upon such account(s)
may be signed by any one of the Managers.
5.1.3 Election Etc. of Managers
5.1.4.1 The Members hereby unanimously elect the following persons as the
initial Managers of the Company, to serve until the first annual meeting of the
Members and until their respective successors shall be duly elected and
qualified:
NAME: Play Co. Capital Corp.
NAME: Xxxx Xxxxxxxxxx
5.1.5
5.1.5.1 The Members shall elect one or more Persons as Managers at each
annual meeting of the Company to serve until the next annual meeting of the
Company and until their respective successors are duly elected and qualified. In
addition, if any Person resigns or otherwise vacates the office of Manager, the
Members shall elect a replacement Manager to serve the remaining term of such
office, unless one or more other Persons then serve as Managers and the Members
determine not to fill such vacancy. A Person may be removed as a Manager by the
Members with or without cause at any time. A Manager may, but shall not be
required to, be elected from among the Members. Notwithstanding any of the
foregoing provisions, the rights of the Members to elect and remove Managers
shall be subject to the restrictions set forth in Section 5.1.6 hereof.
5.1.6 Voting Agreement. For so long as NAME and NAME (the AFounding
Members@) are Members and have not consented otherwise in writing, each Member
agrees at all times to vote his or her entire Membership Interest (whether in
the election or Managers or in any vote to remove a Manager) so as to cause the
Founding Members, or such Person(s) whom they designate, to be Managers of the
Company. If any Founding Member ceases to be a Member, and the other Founding
Member continues as a Member, each Member hereby agrees at all times to vote his
or her entire Membership Interest (whether in the election of Managers or in any
vote to remove a Manager) so as to cause the Founding Member who continues to be
a Member, and his or her designee, if any, to be a Manager of the Company. At
such time as all of the Founding Members have ceased to be Members, the
covenants contained in this Section shall terminate.
5.1.7 Action by Managers. Unless otherwise expressly provided by the Law or
the terms of this Operating Agreement, the unanimous vote, approval or consent
of the Managers, shall be necessary and sufficient for the Managers to take any
action on behalf of the Company that the Managers are authorized to take
pursuant to Law, the Articles or this Operating Agreement;
5.1.8 Execution of Documents and Other Actions. The Managers may delegate
to one or more of their number the authority to execute any documents or take
any other actions deemed necessary or desirable in furtherance of any action
that they have authorized on behalf of the Company as provided in Section 5.1.7
hereof.
5.1.9 Single Manager. If at any time there is only one Person serving as a
Manager, such Manager shall be entitled to exercise all powers of the Managers
set forth in this Section, and all references in this Section and otherwise in
this Operating Agreement to AManagers@ shall be deemed to refer to such single
Manager.
5.1.10 Reliance by Other Persons. Any Person dealing with the Company,
other than a Member, may rely on the authority of a particular Manager or
Managers in taking any action in the name of the company, if such Manager or
Managers provide to such Persona copy of the applicable provision of this
Operating Agreement and/or the resolution or written consent of the Managers or
Members granting such authority, certified in writing by such Manager or
Managers to be genuine and correct and not to have been revoked, superseded or
otherwise amended.
5.1.11 Manager=s Expenses and Fees. A Manager shall be entitled, but not
required, to receive a reasonable salary for services rendered on behalf of the
company or in his or her capacity as a Manager. The amount of such salary shall
be determined by the Managers and consented to by the Members, which consent
shall not be unreasonably withheld. The Company shall reimburse any Manager for
reasonable out-of-pocket expenses that were or are incurred by the Manager on
behalf of the company with respect to the start-up or operation of the Company,
the on-going conduct of the Company=s business, or the dissolution and winding
up of the Company.
5.1.12 Indemnification. The Company shall indemnify each Manager to the
full extent permitted by the Law. The foregoing rights of indemnification shall
not be exclusive of any other rights to which the Managers may be entitled. The
Managers may, upon the approval of the Members, take such action as is necessary
to carry out these indemnification provisions and may adopt, approve and amend
from time to time such resolutions or contracts implementing such provisions or
such further indemnification arrangements as may be permitted by law.
5.1.13 Liability of Managers. So long as the Managers act in good faith
with respect to the conduct of the business and affairs of the Company, no
Manager shall be liable of accountable to the Company or to any of the Members,
in damages or otherwise, for any error or judgment, for any mistake of fact or
of law, or for any other act or thing that he or she may do or refrain from
doing in connection with the business and affairs of the Company, except for
willful misconduct or gross negligence.
Article VI
Member; Meeting; Rights, Duties and Powers
6.1 Management. The Members shall not be entitled to participate in the
day-to-day affairs and management of the Company, but instead, the Members=
right to vote or otherwise participate with respect to matters relating to the
Company shall be limited to those matters as to which the express terms of the
Law or this Operating Agreement vest in the Members the right to so vote or
otherwise participate.
6.2 Actions Requiring Approval of Members. Notwithstanding any other
provision of this Operating Agreement, the approval of the Members shall be
required in order for any of the following actions to be taken on behalf of the
Company:
Amending the Articles of this Operating Agreement in any
manner that materially alters the preferences, privileges or relative rights of
the Members.
Electing the Managers as provided in Article V hereof.
Taking any action which would make it impossible to carry on
the ordinary business of the Company.
Confessing a judgment against the Company in excess of $5,000.
Filing or consenting to filing a petition for or against the
Company under any federal or state bankruptcy, insolvency or reorganization act.
Loaning Company funds in excess of $25,000 or for a term in
excess of one year to any Member.
6.3 Meetings of and Voting by Members.
6.3.1 A meeting of the Members may be called at any time by Members holding
at least fifty percent (50%) of the Percentages then held by Members. Meetings
of Members shall be held at the Company=s principal place of business. Not less
than ten (10) nor more than sixty (60) days before each meeting, the Person
calling the meeting shall give written notice of the meeting to each Member
entitled to vote at the meeting. The notice shall state the place, date, hour,
and purpose of the meeting. Notwithstanding the foregoing provisions, each
Member who is entitled to notice waives notice if before or after the meeting
the Member signs a waiver of the notice which is filed with the records of
Members= meeting, or is present at the meeting in person or by proxy without
objecting to the lack of notice. Unless this Agreement provides otherwise, at a
meeting of Members, the presence in person or by proxy of all of the Members
shall constitute a quorum. A Member may vote either in person or by written
proxy signed by the Member or by the Member=s duly authorized attorney in fact.
6.3.2 Except as otherwise provided in this Agreement, the affirmative vote
of all of the Members shall be required to approve any matter to be decided by
the Members under this Agreement.
6.3.3 In lieu of holding a meeting, the Members may vote or otherwise take
action by a written instrument indicating the unanimous consent of Members.
6.3.4 Annual Meeting. The annual meeting of the Members shall be held on
the ___ of each year at or at such other time as shall be determined by the
Managers for the purpose of the transaction of such business as may come
properly before the meeting.
6.3.5 Special Meetings. Special meetings of the Members, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the Mangers,
and shall be called by the Managers at the request of any two Members, or such
lesser number of Members as are Members of the Company.
6.3.6 Conduct of Meetings. All meetings of the Members shall be presided
over by a chairperson of the meeting, who shall be a Manager, or a Member
designed by the Managers. The chairperson of any meeting of the Members shall
determine the order of business and the procedure at the meeting, including
regulation of the manner of voting and the conduct of discussion, and shall
appoint a secretary of such meeting to take minutes thereof.
6.3.7 Participation by Telephone or Similar Communications. Members may
participate and hold a meeting by means of conference telephone or similar
communications equipment by means of which all Members participating can hear
and be heard, and such participation shall constitute attendance and presence in
person at such meeting.
Article VII
Transfer of Interests and Withdrawal of Members
7.1 Death of a Member. In the event of the death of a Member, the legal
representative of his or her estate shall be required to sell all of the
decedent=s Interests in the Company and said legal representative shall be
deemed to have offered said Interest as of the date of the decedent=s death, in
accordance with the following offers:
7.1.1 First Option: First to the Company, which agrees to give notice in
wiring of the portion of such Interest the Company will purchase within thirty
(30) days of the date of the decedent=s death.
7.1.2 Second Option: In the event the Company does not purchase all of such
Interest, then the remaining Member(s) shall either (1) elect to purchase all
the remaining Interest of the deceased Member in accordance with the terms
hereof, or (2) elect to liquidate the Company. Said election shall be pro-rata
to the remaining Members= respective Interests in the Company, but any portion
of any Interest not accepted for purchase by one Member may be accepted by the
remaining Member(s). Notice of the election of option (1) or (2), as the case
may be, shall be made, in writing, within ten (10) days after the expiration of
the first option, and failure to send notice of such election by the remaining
Member (s) shall be deemed to be an election by said remaining Member(s) to
liquidate the Company. The election by the remaining Member(s) to liquidate the
Company shall not, however, affect the obligation of the Company to pay over
forthwith the proceeds of insurance on the life of the deceased Member to the
deceased Member=s estate (or the designated beneficiary of the deceased Member)
in accordance with this Agreement. The Company shall pay to the estate of the
deceased Member, from the first proceeds of liquidation (after deducting or
paying all liabilities of the Company), a sum equal to the purchase price for
the deceased member= Interest (as hereinafter provided), less all insurance
proceeds received by such estate from life insurance policies owned by the
Company.
7.1.3 Purchase Price. The purchase price for a deceased Member=s Interest
shall be as determined in accordance with Section 7.4 hereof.
7.1.4 Closing. The closing of the purchase and sale of a deceased Member=s
Interest (the AClosing@) shall be held at the office of the attorney for the
Company on a data and time to be mutually agreed upon, but no later than ten
(10) days after i) the determination of the purchase price, or ii) the
appointment of a legal representative for the decedent=s estate, whichever is
later.
7.1.5 Life Insurance
(i) In order to provide the Company with funds to purchase the
Interest of a deceased Member, the Company may obtain life insurance
policies on the lives of one or more of the Members as described in
Schedule 7.1.5 annexed hereto and made a part hereof. The Company shall be
the owner of the policies, shall pay the premiums thereon, and shall be the
beneficiary thereof. The policies shall be subject to the terms and
provisions of this Agreement and shall not be assigned or otherwise
disposed of during the term of the Agreement, except as hereinafter
provided. Notwithstanding the failure to describe such policies in the
annexed Schedule, all such policies shall be subject to this Agreement, and
the proceeds thereof shall be disbursed in accordance with the terms
hereof.
(ii) The Company shall promptly collect the proceeds of the policies
of life insurance on the life of a deceased Member and shall hold same as a
Trustee, separate and apart from its other assets, solely for the purpose
of purchasing the deceased Member=s Interest and, as such Trustee, shall
turn over the same to the legal representative of the estate of the
deceased Member immediately upon his or her appointment, as payment on
account for the deceased Member=s Interest. In the event the purchase price
for the deceased Member=s Interest, as hereinafter determined, does not
exceed the net proceeds of the insurance policies described in the
subsection (i), above, then and in such event, the legal representatives of
the deceased Member shall retain the amount received from the Company as
payment in the full for the deceased Member=s Interest. In the event the
purchase price exceeds the net proceeds of the insurance policies described
in subsection (i), above, actually collected by the Company, then and in
such event, the balance of the purchase price shall be paid as hereinafter
provided. It is the express intention of the parties hereto that the amount
of insurance proceeds collected by the Company on the deceased Member=s
life shall at all times constitute the minimum purchase price to be paid by
the Company for the Interest of the deceased Member.
7.1.6. Default. If either the Company or the surviving Member 9s) default
in payment after acceptance of the offer to sell described above, and said
default in payment continues for a period of ten 910) days after notice in
writing thereof form the legal representative of the deceased Member to the
Company and the surviving Member (s), then, and in such event, the Company shall
be liquidated and dissolved forthwith, all salaries of all Managers shall
immediately cease, the purchase price of the deceased Member=s Interest shall be
paid out of the first proceeds of liquidation after payment in full of the
liabilities of the Company, and the accepting party or parties shall remain
liable for any resulting deficiency and shall be required to pay the difference
between the purchase price and the net amount realized by the deceased Member=s
estate from the liquidation of the Company.
7.2. Lifetime Sale of Interest.
7.2.1. Restriction on Sale. No Member shall sell, transfer, pledge,
hypothecate, assign or in any way dispose of all or any portion of (or interest
in ) his or her Interest except by sale to the Company or the other Member(s),
as hereinafter provided.
7.2.2. Offer. In the event a Member desires to dispose of his or her
Interest, he shall offer, in writing, all of his or her Interest to the Company
and the other Member (s) at the purchase price set forth herein. The company
shall have the first option to purchase as many of its Interest as it can
legally purchase. If the Company fails to indicate acceptance of the offer in
writing within ten (10) days from the receipt of the offer, then the remaining
Member(s) shall have the option to purchase the remaining balance of said
Interest, pro-rata to their Interests in the Company. The remaining Member (s),
if they desire to purchase the Interest as offered, shall indicate their
acceptance in writing to the selling Member within twenty (20) days after the
receipt of the original offer.
7.2.3. Purchase Price. The purchase price shall be as set forth in Section
7.5 of this Agreement.
7.2.4. Closing. The Closing of a purchase and sale under this Section 7.2
shall be held no later than sixty (60) sell was made, and shall take place at
the office of the attorney for the Company at a time to be mutually agreed upon
between the parties, to be held within said sixty (60) day period. At the
Closing, the seller shall have the option to purchase any and all life insurance
policies owned by the Company on his or her life, at a price equal to the then
cash surrender value of such policies or the sum of TEN ($10.00) DOLLARS,
whichever is greater.
7.2.5. Payment. Payment for a selling Member=s Interest under this Section
7.2 shall be made pursuant to and under the terms and conditions of Section 7.8
of this Agreement.
7.2.6. Failure to Purchase. In the event the Company and/or the remaining
Member(s) fail or refuse to purchase all of the selling Member=s Interest, as
hereinabove provided, and such failure or refusal continues for a period of
twenty (20) days after the original written notice of offer to sell, then and
dissolved forthwith, that all salaries of all Managers shall immediately cease,
and the net proceeds of liquidation shall be distributed to each Member,
pro-rata in accordance with his or her interest in the Company.
7.2.7. Default. If either the Company or the remaining Member (s) default
in payments after acceptance of the offer described in this Section 7.2, and
said default in payment continues for a period of ten (1) days after notice in
writing thereof from the Seller, then the Company shall be liquidated and
dissolved forthwith, the purchase price for the selling Member=s Interest shall
be paid out of the first proceeds of liquidation after deducting or paying all
liabilities of the Company, and the accepting party or parties shall remain
liable for any resulting deficiency and shall be required to pay the difference
between the purchase price and the amount realized by the selling Member after
liquidation of the Company.
7.3. The Members agree to meet not less often than every twelve 912) months
in order to fix an evaluation of the Interest of the Company, which evaluation
shall be entered on Schedule 7.3 annexed hereto and made a part hereof, dated
and initialed by all of the Members. Said meeting shall be held within sixty
(60) days after the Certified Public Accountant retained by the Company renders
a financial statement for the Company prepared in accordance with generally
accepted accounting principles covering its fiscal year then ended.
7.4. The purchase price of a deceased Member=s Interest shall be the
greater of the following:
(i) The amount of the life insurance proceeds, if any, collected by
the Company on the life of the decedent pursuant to this Agreement; or
(ii) Decedent=s pro-rata Interest of the last evaluation in Schedule
7.3 aforementioned, if the death of the Member occurs within the twelve
(12) month period following the date such evaluation has been made; or
(iii) If no evaluation has been made within a twelve (12) month period
prior to the death of the Member, the book value of the Interest to be sold
as of the end of the month in which the death occurred.
7.5. the purchase price of a selling Member=s Interest shall be the selling
Member=s pro-rata Interest of the last evaluation in Schedule 7.3
aforementioned, or, if no evaluation has been made within the twelve-month
period prior to the effective date of the offer, the book value of the Interest
to be sold, as of the end of the month in which the offer to sell was made.
7.6. For purposes of this Agreement, the book value shall be as determined
by the Certified Public Accountant regularly retained by the Company, in
accordance with generally accepted accounting principles, consistently applied,
computed in accordance with the provisions of Section 7.7 of this Agreement, and
calculated as of the end of the month during which said death or offer occurred,
and presented in the form of a certified report to all parties within forty-five
(45) days after the end of the month in which death occurred or offer was made.
7.7. In determining book value of the Company, the following rules shall
apply:
7.7.1 Good-will, trade names, trademarks and other intangible assets shall
be deemed of no value unless acquired for a valuable consideration, in which
even their value shall be the cost of acquisition.
7.7.2. Merchandise inventory shall be taken in the presence of a
representative of the selling Member, and shall be valued at the lower of cost
or market.
7.7.3. Furniture, fixtures and other equipment shall be valued at the book
value thereof as of the date of calculation.
7.7.4. Cash in bank or on hand shall be taken at face value and all
negotiable securities owned the Company shall be taken at market value.
7.7.5. Accounts receivable shall be taken at their net value after allowing
for all customary discounts and reasonable reserves in the light of actual prior
experience and practice.
7.7.6. All other assets, if any, customarily mentioned in the books of
account of the Company shall be taken at their appraisal value.
7.7.7. There shall be deducted from the aggregate of the foregoing assets
of the Company all liabilities as of the date of calculation (except
subordinated loans due to a Member), including, but not limited to, any and all
accrued wages, vacation pay (whether or not accrued), commissions and bonuses to
salesmen, employees or others.
7.7.8. There shall also be deducted all taxes of every kind, nature and
description, whether imposed by Federal, State or Municipal authorities, which
then shall be due and payable or which thereafter may become payable by the
Company for any periods prior to the date of calculation.
7.7.9. Appropriate reserves shall be created to reflect bad debts and any
accrued or contingent tax or other liabilities as the accountant for the Company
may determine to be necessary.
7.7.10. The proceeds of any life or disability insurance policies collected
upon the death or disability of the Member whose Interest are being evaluated
shall not be deemed an asset of the Company and life insurance policies owned by
the Company on the lives of the Members shall be valued as an asset at no more
than their cash surrender value.
7.7.11. In the event any of the parties to a sale of an Interest objects to
the determination of the book value found by the accountant, as herein provided,
the objecting party shall notify the other parties hereto of such objection
within ten (1) days after the receipt of the determination of book value. In the
event of an objection, the objecting party shall designate his or her own
accountant at this or her own cost and expense to determine book value in
accordance with the terms of this Agreement. If the accountant so designated by
the objecting party and the accountant for the Company do not agree upon the
book value with fifteen (15) days after objection, the dispute shall be referred
to arbitration in accordance with the terms and provisions of this Agreement,
and the actual book value, as found by the arbitrators, shall be final and
binding upon all parties hereto.
7.8. Deferred Payment. The purchase price for the Interest of a selling
Member, or the balance, if any, of the purchase price for the Interest of a
deceased Member, as the case may be, shall be paid in thirty-six (36) equal,
consecutive monthly installments, which installments shall bear interest at the
minimum rate required to avoid the imputation of interest under the Code, the
first such installment to be payable on the first day of the month next
following the date of the Closing. At the Closing, the legal representative of
the deceased Member or the selling Member, as the case may be, shall deliver an
executed standard form General Release in favor of the Company and the remaining
Member(s), to the Company.
7.9. Additional Items at Closing.
7.9.1. At the Closing, the legal representative of a deceased Member shall
be required to deliver an appropriate tax waiver and Certificate of Letters
Testamentary or Letters of Administration to the attorney for the purchasers.
7.9.2. At the Closing, all credit cards and corporate property of the
selling or deceased Member shall be delivered to the Company. The seller shall
agree to indemnify the company against any unknown and/or unauthorized charges
on such cards or property.
7.9.3. Any loans owed to the Company by the deceased or selling Member
shall be paid to the Company out of the first monies received in respect of the
purchase price for the Interest hereunder, and any loans owed to the deceased or
selling Member by the Company not evidenced by a promissory not shall repaid to
the deceased or selling Member in thirty-six (36) equal consecutive monthly
installments simultaneously with the payments for the Interest under Section
7.8.
7.10. During the period of which all or any part of the purchase price
remains unpaid, the Company shall not increase the remuneration, either directly
or indirectly, of the officers or directors, or take any action outside the
usual normal course of its regular customary business without first obtaining
the consent of the legal representative of the deceased Member or the selling
Member, as the case may be.
7.11. In the event of the permanent disability of a Member, as determined
by the Managers upon competent medical advice, for a period of six months
following the commencement of said disability, such Member shall be deemed to
have offered his or her Interest for sale under the same terms and conditions as
set forth in Section 7.1 of this Agreement as of the effective date of such
disability. During the period of said Member=s disability, actions of the
Managers shall not require the concurrence of said disabled Member.
Article VIII
Dissolution, Liquidation, and Termination of the Company
8.1. Events of Dissolution. The Company shall be dissolved upon the
happening of any of the following events:
8.1.1. when the period fixed for its duration in Section 2.4 has expired;
8.1.2. upon the unanimous written agreement of the Members; or
8.1.3. the occurrence of an Involuntary Withdrawal, unless all remaining
Members, within ninety (90) days after the occurrence of the Involuntary
Withdrawal, elect to continue the business of the Company pursuant to the terms
of this Agreement.
8.2. Procedure for Winding Up and Dissolution. If the Company is dissolved,
the Members shall wind up its affairs. On winding up the Company, the assets of
the Company shall be distributed, first, to creditors of the Company, including
Members who are creditors, in satisfaction of the liabilities of the Company,
and then to the Members in accordance with this Agreement.
Article IX
Books, Records, Accounting, and Tax Elections
9.1 Books and Records.
9.1.1 The Managers shall keep or cause to be kept complete and accurate
books and records of the Company and supporting documentation of the
transactions with respect to the Company=s business. The records shall include,
but not be limited to:
a current alphabetized list of names and addresses of all of the
Members, as well as the contribution and the Percentage of profits and
losses of each Member or information from which such Interest can be
readily derived;
if the firm is managed by a Manager or Managers, a current
alphabetized list of the names and addresses of the Managers;
a copy of the articles of organization and all amendments thereto or
restatements thereof, together with executed copies of any powers of
attorney pursuant to which any certificate or amendment has been executed;
a copy of the operating agreement and any amendments thereto and any
amended and restated operating agreement; and
a copy of the limited liability company=s federal, state, and local
income tax or information return and reports, if any, for the three most
recent fiscal years.
9.1.2 The books and records shall be maintained in accordance with sound
accounting practices and shall be available at the Company=s principal office
for examination by any Member of the Member=s duly authorized representative at
any and all reasonable times during normal business hours.
9.1.3 Each Member shall reimburse the Company for all costs and expenses
incurred by the Company in connection with the Member=s inspection and copying
of the Company=s books and records.
9.2 Annual Account Period. The annual accounting period of the Company
shall be its taxable year. The Company=s taxable year shall be the calendar
year.
9.3 Tax Matters Member. Playco shall be the Company=s Tax Matters Member
(ATax Matters Member@). The Tax Matters Member shall have a all powers and
responsibilities provided in Code Section 6221, et seq. The Tax Matters Member
shall keep all Members informed of all notices from government taxing
authorities which may come to the attention of the Tax Matters Member. The
Company shall pay and be responsible for all reasonable third party costs and
expenses incurred by the Tax Matters Member in performing those duties. A Member
shall be responsible for any costs incurred by the Member with respect to any
tax audit or tax-related administrative or judicial proceeding against any
Member, even though it relates to the Company. The Tax Matters Member shall not
compromise any dispute with the Internal Revenue Service without the approval of
the Members.
9.4 Tax Elections. The Managers shall have the authority to make all
Company elections permitted under the Code, including, without limitation,
elections of methods of depreciation and elections under Code Section 754.
9.5 Title to Company Property.
9.5.1 All real and personal property acquired by the Company shall be
acquired and held by the Company in its name.
9.5.2 The Managers may direct that legal title to all or any portion of the
Company=s property be acquired or held in a name other than the Company=s name.
Without limiting the foregoing, the Members may cause title to be acquired and
held in its name or in the names of trustees, nominees, or straw parties for the
Company. It is expressly understood and agreed that the manner of holding title
to the Company=s property (or any pert thereof) is solely for the convenience of
the Company and all of that property shall be treated as Company property.
Article X
General Provisions
10.1. Assurances. Each Member shall execute all certificates and other
documents and shall do all such filing, recording, publishing, and other acts as
the Members deem appropriate to comply with the requirements of law for the
formation and operation of the Company and to comply with any laws, rules, and
regulations relating to the acquisition, operation, or holding of the property
of the Company.
10.2. Notifications. Any notice, demand, consent, election, offer,
approval, request, or other communication (collectively a Anotice@) required or
permitted under this Agreement must be in writing and either delivered
personally or sent by certified or registered mail, postage prepaid, return
receipt requested or by facsimile transmission, provided receipt is actually
acknowledged by the member or member=s agent. Any notice to be given hereunder
by the Company shall be given by any Member. A notice must be addressed to a
Member at the Member=s last known address on the records of the Company. A
notice to the Company must be addressed to the Company=s principal office. A
Notice delivered personally will be deemed given only when acknowledged in
writing by the person to whom it is delivered. A notice that is sent by mail
will be deemed given three (3) business days after it is mailed. Any party may
designate, by notice to all of the others, substitute addresses or addressees
for notices; and, thereafter, notices are to be directed to those substitute
addresses or addressees. A notice sent by facsimile is deemed given when receipt
is acknowledged.
10.3. Specific Performance. The parties recognize that irreparable injury
will result from a breach of any provision of this Agreement and that money
damages will be inadequate to fully remedy the injury. Accordingly, in the event
of a breach or threatened breach of one or more of the provisions of this
Agreement, any party who may be injured (in addition to any other remedies which
may be available to that party) shall be entitled to one or more preliminary or
permanent orders (i) restraining and enjoining any act which would constitute a
breach or (ii) compelling the performance of any obligation which, if not
performed, would constitute a breach.
10.4 Complete Agreement. This Agreement constitutes the complete and
exclusive statement of the agreement among the Members with respect to the
subject matter thereof. It supersedes all prior written and oral statements,
including any prior representation, statement, condition, or warranty. Except as
expressly provided otherwise herein, this Agreement may not be amended without
the written consent of the Members holding 80% or more of the Percentages then
held by Members.
(a) Any controversy arising out of or relating to this Agreement shall
be settled by arbitration in New York pursuant to the rules of the American
Arbitration Association, and judgment may be entered in any Court having
jurisdiction.
(b) The parties consent to the jurisdiction of the Supreme Court of
the State of New York, and of the United States District Court for the
Southern District of New York, for all purposes in connection with
arbitration, including the entry of judgment on any award; and consent that
any process, notice, motion or other application to either of said courts,
and any papers in connection with arbitration, may be served by registered
or certified mail, return receipt requested, by personal service, or in
such other manner as may be permissible under the rules of the applicable
court or arbitration tribunal, provided a reasonable time for appearance is
allowed.
( c) The arbitrators shall have no power to alter or modify any
express provision of this Agreement, or to render an award which has the
effect of altering or modifying any express provision hereof, provided,
however, that any application for reformation of this Agreement shall be
made to the arbitrators and not to any Court, and the arbitrators shall be
empowered to determine whether valid grounds for reformation exist.
(d) Any arbitration proceeding must be instituted within one year
after the claimed breach occurred, and a party=s failure to institute
arbitration proceedings within such period shall constitute an absolute bar
to the institution of any proceedings by said party and waiver of such
claimed breach. Notwithstanding any law or rule to the contrary, the
determination of whether said on-year period has expired shall be made by
the Court and shall not be within the jurisdiction of the arbitrators.
10.6. Article and Section Titles. The headings herein are inserted as a
matter of convenience only and do not define, limit, or describe the scope of
this Agreement of the intent of the provisions hereof.
10.7. Binding Provisions. This Agreement is binding upon, and inures to the
benefit of the parties hereto and their respective heirs, executors,
administrators, personal and legal representatives, successors, and permitted
assigns.
10.8. Exclusive Jurisdiction and Venue. Any suit involving any dispute or
matter arising under this Agreement may only be brought in a United States
District Court located in the State of New York or any New York State Court
having jurisdiction over the subject matter of the dispute or matter. All
Members hereby consent to the exercise of personal jurisdiction by any such
court with respect to any such proceeding.
10.9. Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the identity of the Person
may in the context require.
10.10. Separability of Provisions. Each provision of this Agreement shall
be considered separable; and if, for any reason, any provision or provisions
herein are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or affect those portions of
this Agreement which are valid.
10.11. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of
which, when taken together, constitute one and the same document. The signature
of any party to any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth hereinabove.
WITNESS OR ATTEST MEMBERS:
Play Co. Capital Corp.
/s/Xxxxxx Xxxxxxxx /s/ Xxxxxxx XxXxxxxx
By: Xxxxxxx XxXxxxxx, President
/s/ Xxxxxx Xxxxxxxx /s/Xxxx Xxxxxxxxxx
XXXX XXXXXXXXXX
