EXHIBIT 10.1
OPERATING AGREEMENT
OF
PHOENIX TELNET, LLC
This Operating Agreement ("Agreement"), effective as of
October 1, 2002, by and among the parties executing this
Agreement as Members, confirms the understanding of said
parties as to the matters contained herein.
The parties hereto, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledge, agree as follows:
ARTICLE I
Definitions
SECTION 1.1. As used herein, the following terms and
phrases shall have the meanings indicated:
(A) "Act" means the Delaware Limited Liability
Company Act (Title 6, Chapter 18 of the Delaware Laws), as
amended from time to time.
(B) "Capital Account" means, with respect to each
Member, the account established for each Member pursuant to
Section 6.2 herein, which will initially equal the Capital
Contributions of such Member and will be: (i) increased by
the amount of Net Profits allocated to such Member, and (ii)
reduced by the amount of Net Losses allocated to such Member
and the amount of Cash Flow distributed to such Member. The
Members' Capital Accounts will be determined and maintained
in accordance with the rules of paragraph (b)(2)(iv) of
Regulation Section 1.704-1 of the Code.
(C) "Capital Contributions" means the money or the
fair market value of the property contributed to the Company
by the Members pursuant to Section 6.1 herein.
(D) "Cash Flow" has the meaning provided in Section
7.1 herein.
(E) "Code" means the Internal Revenue Code of 1986,
as amended, or corresponding provisions of subsequent
revenue laws.
(F) "Company" means this Limited Liability Company.
(G) "Family Group" means an individual's spouse,
parents, siblings or lineal descendants, one or more trusts
for the benefit of such individual or his or her spouse,
parents, siblings or lineal descendants, or one or more
family limited partnerships or family limited liability
companies where the principal partners or members, as the
case may be, are such individual or his or her spouse,
parents, siblings or lineal descendants.
(H) "Manager(s)" means the Member or Members or any
principal or principals thereof selected by a majority vote
of the Members, at a meeting of Members duly called and held
for such purpose, to serve as the Manager or Managers of the
Company.
(I) "Members" means the persons designated as such in
this Agreement, any successor(s) to their interests as such
in the Company, and any other person who, pursuant to this
Agreement, shall become a Member. Any reference to a
"Member" shall be to any one of the then Members.
(J) "Mandatory Tax Distribution Amount" means an
amount equal to the excess of (i) 40% of the net taxable
income of the Company allocated to (or reasonably estimated
to be allocable to) a Member from the beginning of the
fiscal year through the end of each fiscal quarter
attributable to the Profits and Losses allocated to such
Member under this Agreement, over (ii) the aggregate
Mandatory Tax Distribution Amounts distributed to such
Member for all prior fiscal quarters in such fiscal year.
If a Member is allocated a net loss for federal income tax
purposes under this Agreement for any fiscal year or period
of the Company (calculated under the principles described in
clause (i) of the preceding sentence) beginning after the
effective date of this Agreement, then such net loss shall
be offset against, and shall reduce the net income allocated
(or reasonably estimated to be allocable) to, such Member
under this Agreement in subsequent fiscal quarters of the
Company (until such net loss is exhausted) for purposes of
calculating the Mandatory Tax Distribution Amount for such
Member for such subsequent fiscal quarters within the same
fiscal year.
(K) The words "Membership Interest" mean a Member's
ownership interest in the Company, as evidenced by a
certificate issued by the Company, expressed as Units, where
a "Unit" means a single unit of ownership interest in the
Company and a Member's Units bear the same relationship to
the aggregate Units as the Member's ownership interest bears
to the aggregate ownership interests in the Company.
(L) "Net Profits" and "Net Losses" mean the net
profit or net loss, respectively, of the Company determined
in accordance with Section 8.2 herein.
(M) "Person" means any natural person, corporation,
partnership, joint venture, association, limited liability
company or other business or legal entity.
(N) "Transfer" means, as a noun, any voluntary or
involuntary transfer, sale, pledge, hypothecation,
assignment or other disposition of a Membership Interest by
a Member and, as a verb, voluntarily or involuntarily to
transfer, sell, pledge, hypothecate, assign or otherwise
dispose of a Member's Membership Interest.
ARTICLE II
Organization of the Company
SECTION 2.1. (A) The purpose of the Company is to
conduct any lawful business for which limited liability
companies may be organized, including, without limitation,
providing Internet access services, long distance voice
service over the Internet and any other related
telecommunications services, and to do all things necessary
or useful in connection with the foregoing.
(B) The Company may transact business with, enter
into contracts with, have an interest in and/or employ any
Person, notwithstanding the fact that a Manager or Member
may be related to, be an Affiliate of, or have a financial
interest in such Person.
SECTION 2.2. The names and addresses of the Members,
the amounts of their initial Capital Contributions, and
their respective Membership Interests are set forth in
attached Appendix A. The Persons listed in Appendix A will
become Members in the Company: (i) upon execution of this
Agreement and payment to the Company of their respective
Initial Capital Contributions in accordance with Section 6.1
herein, in the case of initial Members; or (ii) upon
satisfaction of the applicable provisions of Article IX, in
the case of additional Members. In the event that a Member
contributes any Intellectual Property or similar intangible
property pursuant to Appendix A or any instrument
contemplated thereby, and it is subsequently determined that
the Member did not have good title to such contributed
property or it is held by a forum of competent jurisdiction
not to have validly and indefeasibly contributed such
property to the Company, then, in addition to and not in
lieu of any other rights or remedies, the Company shall
reduce or eliminate such Member's Capital Account as if such
property had never been contributed to the Company; where a
Member's entire Capital Contribution is so involved, the
Member shall be deemed never to have made its Capital
contribution and its Membership Interest shall be
extinguished.
SECTION 2.3. The Members will continue to do business
under the name of the Company until the Manager(s) changes
the name or the Company terminates. The principal address
of the Company shall be such place or places as the
Manager(s) may determine. The Manager(s) will give notice
to the Members promptly after any change in the location of
the principal office of the Company.
SECTION 2.4. The Company shall terminate on December
31, 2027; provided, however, that the Company may terminate
prior to such date as provided in this Agreement; and
provided further that the Members, by majority vote taken no
later than six months prior thereto, may elect to extend the
term of the Company an additional twenty years.
ARTICLE III
Rights and Liabilities of Members
SECTION 3.1. Each Member is entitled: (i) to receive
the financial statements and tax reporting information
referred to in Section 11.1 herein; (ii) to vote on matters
presented to Members for their vote or consent or as
provided for in this Agreement; (iii) to require a
dissolution of the Company in accordance with Article X
herein; and (iv) to have such additional rights as are
elsewhere provided in this Agreement or by mandatory
requirements of applicable law.
SECTION 3.2. Except as otherwise provided herein,
whenever any matter is presented to the Members for their
vote or consent, the matter will be considered approved or
consented to upon the affirmative vote or written consent of
a majority of the Membership Interests.
SECTION 3.3. Subject to any mandatory requirements of
applicable law, the following limitation on the Members'
rights apply:
(A) No Member, in his/its capacity as a Member,
has the right to take any part whatsoever in the management
and control of the ordinary business of the Company or sign
for or bind the Company, except as expressly provided in
this Agreement.
(B) No Member will be entitled to withdraw any
part of his/its Capital Account or to receive any
distributions from the Company, except as expressly provided
in this Agreement.
(C) No Member will have the right to require a
partition of the property or to compel any sale or appraisal
of the Company's assets or any sale of a deceased Member's
interest in the Company's assets, notwithstanding any
provision of law to the contrary, or except as expressly
provided in this Agreement
SECTION 3.4. (A) No Member will be bound by or be
personally liable for the expenses, liabilities or
obligations of the Company or of any other Member; provided
that a Member who knowingly receives a distribution or
payment made by the Company in violation of this Agreement
will be liable to the Company to the extent required by the
Act. In addition, each Member's liability for the debts of
the Company will be limited as set forth in the Act.
(B) No Member or Manager(s) (nor any officer
thereof) will be liable, responsible, or accountable as
such, in damages or otherwise, to any Member or to the
Company for any act or omission with respect to Company
matters, except for fraud, breach of fiduciary duty or
willful breach of this Agreement.
(C) The failure of the Company to observe any
formalities or requirements relating to the exercise of its
powers or the management of its business or affairs under
this Agreement will not be grounds for imposing personal
liability on any Member or Manager (or any officer thereof)
for any liabilities of the Company.
SECTION 3.5. The Members may engage in any business or
profession or possess an interest in other businesses or
professions of every nature and description, independently
or with others, other than any business providing either
long distance voice services or Internet access service
competitive with the Company. Neither the Company nor any
other Member, as such, shall have any rights in such other
businesses or the income or profits thereof.
ARTICLE IV
Meetings of Members
SECTION 4.1. (A) An annual meeting of Members shall
be held within three (3) months after the close of the
fiscal year of the Company, on such date and at the time and
place (either within or without the State of its
organization) as shall be fixed by the Manager(s). At the
annual meeting, the Members, by a majority vote, shall elect
the Manager(s), and shall transact such other business as
may properly be brought before the meeting.
(B) A special meeting of Members may be called at
any time by the Manager(s), and shall be called by the
Manager(s) at the request, in writing, of the Members
holding a majority of the Membership Interests and entitled
to vote at such meeting. Any such request shall state the
purpose or purposes of the proposed meeting. Business
transacted at any special meeting of Members shall be
confined to the purposes set forth in the notice thereof.
(C) A member will be deemed present at any meeting
of the Members if he/it participates through any form of
communications equipment that allows all other Members
participating in the meeting to communicate with such
Member.
(D) Any action required by the Act to be taken or
which may be taken at any annual or special meeting of the
Members may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth
the action so taken, is signed by the Members having not
less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at
which all Members entitled to vote thereon were present and
voted. Prompt notice of the taking of the Company action
without a meeting by less than unanimous written consent
shall be given to those Members who have not consented in
writing.
SECTION 4.2. (A) Written notice of the time, place
and purpose of every meeting of Members (and, if other than
an annual meeting, the person or persons at whose discretion
the meeting is being called) shall be given by the
Manager(s) to each Member of record entitled to vote at such
meeting, not less than ten (10) nor more than sixty (60)
days prior to the date set for the meeting. Notice shall be
given either personally or by mailing said notice by first
class mail to each Member at his address appearing on the
record book of the Company, or at such other address
supplied by him, in writing, to the Manager(s) of the
Company for the purpose of receiving notice.
(B) A written waiver of notice setting forth the
purpose of the meeting for which notice is waived, signed by
the person or persons entitled to such notice, whether
before or after the time of the meeting stated therein,
shall be deemed equivalent to the giving of such notice.
The attendance by a Member at a meeting, either in person or
by proxy, without protesting the lack of notice thereof
shall constitute a waiver of notice of such Member.
(C) All notices given with respect to an original
meeting shall extend to any and all adjournments thereof,
and such business as might have been transacted at the
original meeting may be transacted at any adjournment
thereof. No notice of any adjourned meeting need be given
if an announcement of the time and place of the adjourned
meeting is made at the original meeting.
SECTION 4.3. The holders of a majority of the
Membership Interests of the Members present in person or
represented by proxy, shall be requisite and shall
constitute a quorum at all meetings of Members, except as
otherwise provided by statute or the Certificate of
Formation. If, however, a quorum shall not be present or
represented at any meeting of Members, the Members entitled
to vote thereat, present in person or represented by proxy,
shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until
a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented,
any business may be transacted which might have been
transacted at the meeting as originally notified. When a
quorum is once present to organize a meeting, such quorum is
not deemed broken by the subsequent withdrawal of any
Members.
SECTION 4.4. Every Member entitled to vote at any
meeting shall be entitled to vote in accordance with his
Membership Interest in the Company held by him of record on
the date fixed as the record date for said meeting, and may
so vote in person or by proxy. Any Company action shall be
authorized by a majority in interest of the votes cast by
the Members entitled to vote thereon, except as may
otherwise be provided by statute, the Certificate of
Formation or this Agreement.
SECTION 4.5. Every proxy must be signed by the Member
entitled to vote or by his duly authorized attorney-in-fact,
and shall be valid only if filed with the Managers of the
Company prior to the commencement of voting on the matter in
regard to which said proxy is to be voted. No proxy shall
be valid after the expiration of eleven months from the date
of its execution, unless otherwise expressly provided in the
proxy. Every proxy shall be revocable at the pleasure of
the person executing it, except as otherwise provided by
statute. Unless the proxy, by its terms, provides for a
specific revocation date and except as otherwise provided by
statute, revocation of a proxy shall not be effective unless
and until such revocation is executed in writing by the
Member who executed such proxy, and the revocation is filed
with the Manager(s) of the Company prior to the voting of
the proxy.
SECTION 4.6. All meetings of Members shall be presided
over by the Manager(s) or, if not present, by a Member
thereby chosen by the Members at the meeting. The
Manager(s) or the person presiding at the meeting shall
appoint any person present to act as secretary of the
meeting.
SECTION 4.7. For the purpose of determining the
Members entitled to notice of or to vote at any meeting of
Members or any adjournment thereof, or to express consent or
dissent from any proposal without a meeting, or for the
purpose of determining the Members entitled to receive
payment of any distribution of Cash Flow or the allotment of
any rights, or for the purpose of any other action, the
Members may fix, in advance, a date as the record date for
any such determination of Members. Such date shall not be
more than fifty (50) nor less than ten (10) days before the
date of any meeting nor more than fifty (50) days prior to
any action taken without a meeting, the payment of any
distribution of Cash Flow or the allotment of any rights, or
any other action. When a determination of Members of record
entitled to notice of or to vote at any meeting of Members
has been made as provided in this Section 4.7, such
determination shall apply to any adjournment thereof, unless
the Members fix a new record date under this Section 4.7 for
the adjourned date.
SECTION 4.8. The Company shall be entitled to treat
the holder of record of any Membership Interest as the
holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in
such Membership Interest on the part of any other person,
whether or not it shall have express or other notice
thereof, except as otherwise provided by the Act.
ARTICLE V
Management
SECTION 5.1. Management of the Company shall be vested
in the Manager(s) of the Company. Except as otherwise
provided in this Agreement, if there is more than one
Manager, all decisions of the Managers shall be by a
majority vote of same. All Managers must be Members of the
Company or principals of the Members. The initial Manager
of the Company will be GAN & Associates, Inc. ("GAN"), which
will serve as such until a successor is elected and
qualified at the first annual meeting of the Members. The
initial Manager may be removed only by the unanimous vote or
the unanimous written consent of the Members.
SECTION 5.2. The Manager(s) shall hold office for the
term for which elected and until a successor has been
elected and qualified. A vacancy in the office of Manager
arising from any cause may be filled for the unexpired
portion of the term by a majority vote of the Members at a
meeting held for such purpose.
SECTION 5.3 Any Manager may resign at any time by
giving written notice thereof to the Members. Any such
resignation shall take effect at the time specified in said
notice or, if the time is not specified therein, upon the
receipt thereof, irrespective of whether any such
resignation shall have been accepted.
SECTION 5.4. The Manager(s) will direct, manage and
control the business and assets of the Company. Except where
specifically reserved to the Members or elsewhere provided
in this Agreement, the Manager(s) will have full and
complete authority, power and discretion to manage and
control the business, affairs, and properties of the
Company, and to perform any and all other acts of the
Company, to make all decisions regarding those matters and
to perform any all other acts or activities customary or
incident to the management of the Company's business and
assets. The Manager(s) may delegate to any officers,
employees or agents of the Company all or part of the power
and authority to conduct the business of the Company, in
accordance with this Agreement. Any power or authority not
delegated by the Members shall remain with them.
SECTION 5.5. In addition to obligations imposed by
other provisions of this Agreement, the Manager(s) is to
devote to the Company such time as is reasonably necessary
to carry out the business of the Company in order to
accomplish its purposes. The Manager(s) shall, on behalf of
the Company and at the expense of the Company:
(A) execute, acknowledge, and certify all
documents and instruments and take or cause to be taken all
actions that may be necessary or appropriate: (i) for the
continuation of the Company's valid existence as a limited
liability company under the Act and each other jurisdiction
in which such existence is necessary to protect the limited
liability of the Members; (ii) to effectuate the provisions
of this Agreement; or (iii) to enable the Company to conduct
its business in the ordinary course;
(B) manage the affairs of the Company in a
businesslike manner and will devote such part of its time to
the Company affairs as is reasonably necessary for the
conduct of the affairs.
(C) conduct the affairs of the Company in
compliance with applicable laws and in the best interests of
the Company and its business;
(D) not permit the use of Company funds or assets for
other than the benefit of the Company;
(E) cause the Company to obtain and maintain such all-
risk, public liability, workers' compensation, and other
insurance, if any, as may be available on commercially
reasonable terms and as the Manager(s) may deem necessary,
affordable or appropriate; and
(F) cause the Company to hold all Company property in
the Company name or, in the case of cash or cash
equivalents, in one or more depository accounts as to which
the Company is a beneficial owner.
SECTION 5.6. A Manager will be elected to serve as Tax
Matters Member, as such term is defined in Code Section 6231
(a)(7). The Tax Matters Member shall cause the Company to
arrange for the preparation of all necessary informational
federal income tax forms on behalf of the Company and for
the preparation and filing of any and all state and local
income and franchise tax returns required to be filed by the
Company.
SECTION 5.7. The Manager(s) or any trustee, director,
manager, member, officer or employee of the Manager(s)
serving on behalf of the Company, in the performance of its
duties, shall be fully protected in relying in good faith on
information, opinions, reports, or statements, including
financial statements, books of account, and other financial
data, if prepared or presented by: (i) one or more Members,
officers or employees of the Company; or (ii) legal counsel,
public accountants, or other persons that it reasonably
believes to have professional or expert competence.
SECTION 5.8. The compensation of the Managers(s) or
any affiliates of the Manager(s) that are employed by the
Company shall be fixed from time to time by the Manager(s).
The Company shall reimburse the Manager(s) for all expenses
actually and reasonably incurred in managing the Company.
SECTION 5.9. (A) From time to time, the Manager(s)
may appoint its officers, employees or agents, or any of the
other Members or their employees or agents, as officers of
the Company, and may delegate a portion of its authority,
duties and responsibilities to officers of the Company, and
shall have the sole and exclusive authority to appoint,
replace and remove all officers of the Company. The Company
will have a CEO, a President, a Vice President/Chief
Technology Officer ("CTO"), a Secretary, a Treasurer/ CFO,
and such other officers as the Manager(s) may, in its
discretion, deem necessary or appropriate from time to time.
The initial Manager (or officer thereof) and any subsequent
Manager(s) shall serve as the CEO of the Company.
(B) The officers or employees appointed by the
Manager(s) shall have such authority, duties and
responsibilities as are customarily incident to such offices
or as may otherwise be designated by the Manager(s) from
time to time.
(C) Each officer shall hold his or her respective
office unless and until the officer is removed by the
Manager(s), except that any officer may resign at any time
by giving written notice thereof to the Manager(s). Third
parties dealing with the Company shall be entitled to rely
conclusively upon the power and authority of the officers of
the Company, as set forth herein.
SECTION 5.10. Any person made or threatened to be made
a party to an action or proceeding, whether civil or
criminal, by reason of the fact that he, his testator or
intestate, then is or was a Manager, Member, employee or
agent of the Company, or then serves or has served on behalf
of the company in any capacity at the request of the
Company, shall be indemnified by the Company against
reasonable expenses, judgments, fines and amounts actually
and necessarily incurred in connection with the defense of
such action or proceeding or in connection with an appeal
therein, to the fullest extent permissible by the Act. Such
right of indemnification shall not be deemed exclusive of
any other rights to which such person may be entitled.
ARTICLE VI
Capital
SECTION 6.1. The Members have contributed or assigned
to the Capital of the Company, in exchange for their
Membership Interests, the cash and other property set forth
on Schedule A annexed hereto. If property has been
contributed: (i) the amount of the contribution listed on
Schedule A shall be the fair market value of such property
as determined by the Manager(s); and (ii) the property shall
be described in a footnote or supplement to Schedule A. No
interest shall be paid on any Capital Contributions.
SECTION 6.2. A Capital Account shall be established
for each Member on the books and records of the Company in
accordance with Section l.l.B above. If any assets of the
Company are distributed to the Members in kind, the Capital
Accounts of the Members shall be adjusted to reflect the
difference between the fair market value of such assets on
the date of distribution and the basis of the Company in
such assets.
SECTION 6.3. (A) Except as expressly provided in this
Agreement, no Member shall be required to make any
additional contributions to the capital of the Company.
(B) If the Manager(s), in its sole discretion,
determines that it is in the best interest of the Company to
obtain additional capital either from existing Members or
outside sources, then the Company shall give written notice
of such determination to the Members. Any Members that
desire to make such an additional Capital Contribution shall
then have a period of ten (10) days to give the Company
written notice that they elect to participate in the
contribution of additional capital to the Company. If all
of the Members elect to participate, then each Member shall
contribute an amount equal to the amount of the required
capital, multiplied by such Member's Membership Interest
stated as a percentage. Each Member electing to participate
shall contribute that Member's share of the required capital
in cash to the Company within five (5) days after that
Member's written election to make such additional Capital
Contribution, but in no event later than fifteen (15) days
after the date of the written notice from the Manager(s).
If one or more of the Members do not elect to participate or
fail to respond within the aforementioned ten (10) day
period, then each Member who has given written notice of
that Member's decision to contribute additional capital
shall be permitted to increase the amount of that Member's
additional contribution by an amount equal to the remaining
amount of additional capital needed, multiplied by a
fraction, the numerator of which is the original amount of
additional capital that such Member has agreed to contribute
and the denominator of which is the amount of the additional
capital that all participating Members have agreed to
contribute. If a deficit in the amount of additional
capital required thereafter still remains, then the Members
who have elected to participate shall be permitted to
contribute such remaining additional capital, until there is
no deficit, in such manner as such remaining contributing
Members may determine. In the event the total amount of
additional capital contributions from existing Members is
not received, the Manager(s) may seek investment from
outside sources. Members contributing additional capital to
the Company may be allocated additional Membership
Interests, as determined by the Manager(s), and the Members
hereby acknowledge that their Membership Interests may be
altered in the event that one or more Members do not
contribute additional capital or in the event capital is
contributed from outside sources. The foregoing provisions
of this Section 6.3(B) shall in no way affect the Company's
authority to admit new Members pursuant to Article X hereof.
SECTION 6.4. No Member shall be personally liable for
the return of the Capital Contribution of any other Member
or any portion thereof, it being expressly understood that
any such return shall be made solely from the Company's
assets.
SECTION 6.5. Except as otherwise provided in this
section 6.5, no Member shall be required to loan money to
the company. In the event that the Manager(s) determines
that it is in the best interest of the Company to borrow
funds from the Members for use in the operation of the
business of the Company, then the Company shall give written
notice of such determination to the Members and the Members
shall then have a period of ten (10) days to give the
Company written notice that they elect to participate in the
making of such loans to the Company. If all of the Members
elect to participate, then each Member shall lend an amount
equal to the amount of the required funds, multiplied by
such Member's Membership Interest. Each Member electing to
participate shall lend that Member's share of the required
funds in cash to the Company within five (5) days after that
Member's written election to make such loan is received by
the Company. If one or more of the Members do not elect to
participate or fail to respond within the aforementioned ten
(10) day period, then each Member who has given written
notice of that Member's decision to lend such funds to the
Company shall be permitted to increase the amount of that
Member's loan by an amount equal to the remaining amount of
required funds, multiplied by a fraction, the numerator of
which is original amount of the loan that such Member has
agreed to make and the denominator of which is the amount of
the loans that all participating Members have agreed to
make. If a deficit in the required funds thereafter still
remains, then the Company may borrow the remaining amount
from the Members who have elected to participate in such
loans, in such manner as such Members may determine. Any
loans made pursuant to this Section 6.5 shall be payable
upon demand or upon such other commercially reasonable terms
as the Manager(s) shall determine. Interest shall accrue
and shall be payable monthly on the unpaid principal balance
of any such loan at no less than the minimum rate required
to avoid the imputation of interest under Section 7872 of
the Code (whether or not Code Section 7872 applies to the
loan). Any payments made by the Company on such loans shall
be made to the Members or lenders in proportion to the
outstanding balance of the loans owed to each of them. In
making any such loan, a Member shall be treated as a general
creditor of the Company and not as a Member.
ARTICLE VII
Distributions of Cash
SECTION 7.1. Except in connection with the liquidation
of the Company, in which case all distributions will be made
in accordance with Article X hereof, and except as otherwise
provided in Section 7.2 below, the Company shall distribute
to the Members, from time to time, but no less frequently
than annually, all cash (regardless of the source thereof)
of the Company which is not required for the operation or
the reasonable working capital requirements of the Company.
(Such cash is sometimes referred to herein as "Cash Flow".)
For purposes of this Agreement, all Cash Flow allocated to
the Members shall be allocated among them in the ratio of
their respective Membership Interests at the time of such
distribution.
SECTION 7.2. (A) Except as provided in subsection (B)
below, and provided funds are available for such purposes,
as shall be determined by the Manager(s), within thirty (30)
days of the end of each fiscal quarter of the Company or as
promptly thereafter as reasonably possible, the Company
shall calculate and distribute to each Member its Mandatory
Tax Distribution Amount.
(B) If the Manager(s) determines the Company is
required to withhold taxes on behalf of a Member, each
Member hereby authorizes the Company to withhold from or pay
on behalf of or with respect to such Member any amount of
federal, state, local or foreign taxes that the Manager(s)
determines that the Company is required to withhold or pay
with respect to any amount distributable or allocable to
such Member pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the
Company pursuant to Sections 1441, 1442, 1445 or 1446 or any
other applicable sections of the Code. Any amount paid on
behalf of or with respect to a Member shall constitute a
loan by the Company to such Member, which loan shall be
repaid by such Member within fifteen (15) days after notice
from the Company that such payment must be made, unless:
(i) the Company withholds such payment from a distribution
(including Mandatory Tax Distribution Amounts) that would
otherwise be made to the Member; or (ii) the Manager(s)
determines, in its sole and absolute discretion, that such
payment may be satisfied out of the available funds of the
Company which would, but for such payment, be distributed to
the Member.
ARTICLE VIII
Profits and Losses
SECTION 8.1. The fiscal year of the Company shall be
the Calendar Year. The Company's books shall be kept in
such manner and by using such methods of accounting as the
Manager(s) may determine, and the Company's accounting
methods may be changed whenever the Manager(s) believes such
a change to be in the best interest of the Company.
SECTION 8.2. The Net Profits and Net Losses of the
Company shall be the net profits and net losses of the
Company as determined for Federal income tax purposes.
SECTION 8.3. (A) The Net Profits of the Company and
each item of income, gain, loss, deduction or credit
entering into the computation thereof, shall be allocated to
the Members in the same proportions that they share in
distributions of Cash Flow pursuant to Section 7.1 above or,
if there is no Cash Flow, that they would have shared if
there had been Cash Flow.
(B) The Net Losses of the Company (if any) shall
be allocated to the Members in the ratio in which the total
Capital Contributed by each Member, pursuant to Section 6.1
above, on the last day of each calendar month during the
year bears to the total Capital Contributed by all Members
pursuant to Section 6.1 on such date, without regard to the
number of days during such month in which such a person was
a Member.
SECTION 8.4. References herein to "Reg. Sec." are to
the regulations promulgated by the United States Treasury to
the Code. The terms "minimum gain", "minimum gain
chargeback", "qualified income offset" and "nonrecourse
deduction" are to be interpreted consistent with the
definitions of such terms in Reg. Sec. 1.704-2.
"Nonrecourse liability" means any liability with respect to
which no Member bears the risk of loss under Code Section
752. The following special allocations shall be made in the
following order:
(A) Except as otherwise set forth in Reg. Sec.
1.704-2(f), if there is a net decrease in minimum gain
during the fiscal year of the Company, each Member shall be
specially allocated items of gross income and gain for such
fiscal year (and, if necessary, subsequent fiscal years) in
an mount equal to that Member's share of the net decrease of
minimum gain determined in accordance with Reg. Sec. 1.704-
2(g). Allocations in accordance with this Section 8.4(B)
shall be made first from the disposition of Company assets
subject to nonrecourse liabilities, to the extent of the
minimum gain attributable to those assets, and thereafter
from a pro-rata portion of the Company's other items of
income and gain for the taxable year. This Section 8.4 (B)
is intended to comply with the minimum gain chargeback
requirement of Reg. Sec. 1.704-2(f).
(B) Except as otherwise set forth in Reg. Sec.
l.704-2(i)(4), if there is a net decrease in a Member's
nonrecourse liability minimum gain attributable to the
Members' nonrecourse liabilities during any fiscal year,
each Member who has a share of the Member nonrecourse
liability minimum gain attributable to Member nonrecourse
liability shall be specially allocated items of gross income
and gain for such fiscal year (and, if necessary, subsequent
fiscal years) in an amount equal to that Member's share of
the net decrease in Members' nonrecourse debt minimum gain
attributable to such Member nonrecourse debt. Allocations
pursuant to this Section shall be made first from gain
recognized from the disposition of Company assets subject to
Member nonrecourse liabilities, to the extent of Member
minimum gain attributable to those assets, and thereafter
from a pro-rata portion of the Company's other items of
income and gain for the fiscal year. This section is
intended to comply with the minimum gain chargeback
requirements of Reg. Sec. 1.704-2(i).
(C) A Member who unexpectedly receives an
adjustment, allocation or distribution described in clause
(4), (5) or (6) of Reg. Sec. 1.704-1 (b)(2)(ii)(d) will be
allocated items of income and gain in an amount and manner
sufficient to eliminate such deficit balance as quickly as
would have a deficit in his adjusted Capital Account after
all other allocations provided for in this Section 8.3 were
made, as if this paragraph were not in the agreement.
(D) Nonrecourse deductions shall be allocated
among the Members in the same proportion in which they share
the Cash Flow of the Company.
(E) Any nonrecourse deduction shall be allocated
to any Member who bears the economic risk of loss with
respect to the Member nonrecourse liability to which such
deduction is attributable.
SECTION 8.5. Any Company gain or loss realized with
respect to property, other than money, contributed to the
Company by a Member shall be shared among the Members
pursuant to Code section 704(c) and regulations to be
promulgated thereunder, so as to take account of the
difference between the Company basis and the fair market
value of the property at the time of the contribution
("built-in gain or loss"). Such built-in gain or loss shall
be allocated to the contributing Member upon the disposition
of the property.
SECTION 8.6. If any Transfer of a Membership Interest
occurs prior to the end of a fiscal year, then all
allocations of Profits and Losses attributable to the
Transferred Membership Interest for such year shall be
divided and allocated between the transferor and the
transferee by taking into account their varying interests
during such fiscal year, using any convention or method of
allocation selected by the Managers which is then permitted
under Section 706 of the Code and the regulations
promulgated thereunder. All distributions made prior to the
effective date of any such transfer shall be made to the
transferor and any such distributions made after the
effective date of such Transfer shall be made to the
transferee.
ARTICLE IX
Admission and Withdrawal of a Member
SECTION 9.1. (A) There are no restrictions on
Transfers of Membership Interests, except as provided in
this Article IX. Any purported Transfer in violation of
this Section 9.1 is void ab initio.
(B) Neither the Company nor any Member shall have
a right of first refusal to purchase the Membership Interest
of any Member, except in the event that a Member makes an
assignment for the benefit of creditors, is the subject of
an order for relief under Title 11 of the United States
Code, files a petition or answer seeking for himself any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any
statute, law or regulation, files an answer or other
pleading admitting or failing to contest the material
allegations of a petition filed against him in any
proceeding of this nature, seeks, consents to, or acquiesces
in the appointment of a trustee, receiver or liquidator for
of all or any substantial part of his properties. In such
event, the Company shall have the right to acquire and
retire such Member's Membership Interest at the price, and
upon the same terms and conditions, as the forum having
jurisdiction over such Member shall have approved for the
purchase of the Membership Interest by any other person.
(C) A Member may not Transfer its Membership
Interest where to do so would render the Company ineligible
to hold any governmental license then held by it or for
which the Company then has a pending application.
SECTION 9.2. (A) The Members, by a majority vote of
all Members of record entitled to vote, may admit new
members to the Company on such terms as may be determined by
the Manager(s), and provided that: (i) the issuance of the
additional Membership Interests and the admission of such
Person as a new Member has been approved the Manager(s);
(ii) the Company has received an instrument of joinder in a
form attached as Appendix B executed by that Person;
(iii) that Person has made any initial Capital Contribution
required by the Manager(s); and (iv) that Person has
provided such other information or agreements as the
Manager(s) may require. The Manager(s) shall establish a
Capital Account for each such new Member. The Members
acknowledge that the issuance of additional ownership
interests in the Company may result in the proportionate
dilution or reduction of a Member's percentage of ownership
interest in the Company.
SECTION 9.3. All costs and expenses incurred by the
Company in connection with the Transfer of a Member's
Membership Interest, including any filing fees and
publishing costs and the fees and disbursements of counsel,
shall be paid by the assigning Member.
SECTION 9.4. (A) Each person who becomes a Member in
the Company, by becoming a Member, shall and does hereby
ratify and agree to be bound by the terms and conditions of
this Agreement.
(B) The Members agree to sign such additional
documents as may be required in order to admit additional
Members to the Company, pursuant to Sections 9.1 and 9.2
above, as well as, among other things, to provide for the
division of profits, losses and Cash Flow among the Members.
SECTION 9.5. (A) No Member shall Transfer, in whole
or in part, its Membership Interest, except pursuant to the
terms and conditions of this Article IX. Any purported
Transfer of a Membership Interest that does not comply with
the terms and conditions of this Article IX will be null and
void and of no effect whatsoever. This Article IX shall
apply to all Transfers of Membership Interests now owned or
acquired in the future by the Members or any other holder
thereof, whether voluntary, involuntary or by operation of
law, and shall supersede in all respects all prior
agreements, either oral or written, relating to the Transfer
of Membership Interests. Except as otherwise provided in
this Section 9.5, upon any Transfer, in whole or in part, of
a Member's Membership Interest in compliance with this
Article IX, the transferee thereof will be admitted as a
Member.
(B) Unless a transferee is admitted as an
additional Member with the consent of the Manager(s), the
following shall apply to a Transfer to such transferee: (i)
the Membership Interest Transferred to the transferee will
be strictly limited to the transferor's rights to
allocations and distributions as provided by this Agreement
with respect to the Transferred Membership Interest, which
allocations and distributions may be applied (without
limiting any other legal or equitable rights of the Company)
to satisfy any debts, obligations or liabilities for damages
that the transferor or transferee of such Membership
Interest may have to the Company; (ii) neither the
transferee nor the transferor will have any rights as to the
management of the Company with respect to the Transferred
Membership Interest; and (iii) the Transferred Membership
Interest will remain subject to all of the restrictions of
this Agreement, but the transferee will have none of the
powers or rights of a Member.
(C) Notwithstanding any provision in this
Agreement to the contrary, no Transfer of any Membership
Interest may be made (i) unless the Transferring Member
provides, if required by the Company, evidence and
assurances satisfactory to the Company in its reasonable
discretion (which may include an opinion of counsel and/or
appropriate representations and warranties from the
Transferring Member and the transferee) that such Transfer
is made in compliance with all applicable securities laws
and regulations promulgated thereunder, and (ii) unless the
transferee and the Company (on behalf of itself and the
other Members) execute and deliver a written instrument of
joinder in the form of attached Appendix B, acknowledging
the receipt of a copy of the provisions and restrictions
contained in this Agreement and agreeing to comply herewith
and be bound hereby.
(D) Any transferee of a Membership Interest, by
reason of such Transfer, shall become a party to and be
bound by this Agreement. Except as otherwise provided in
this Agreement, any transferee of a Membership Interest
shall have all of the rights and obligations under this
Agreement of the Transferring Member with respect to the
Transferred Membership Interest.
SECTION 9.6. Each Member, for such Member and such
Member's heirs, representatives, successors and assigns, as
the case may be, covenants to and agrees with the Company
and the other Members that the Member shall vote its
Membership Interest over which such Person has voting
control to cause the Company and the other Members to comply
with and perform fully each of his, her, its and their
respective obligations, commitments, covenants, and
agreements contained in this Agreement, and shall take any
and all action as a Member available to the Member as a
Member of the Company as may be necessary to cause the
Company to comply with such obligations, commitments,
covenants and agreements.
ARTICLE X
Termination or Dissolution of Company
SECTION 10.1. The Company shall terminate and be
dissolved: (i) upon the expiration of the term of the
existence of the Company, as provided in Section 2.4 above;
(ii) upon an affirmative vote of the Manager(s) and a
majority in interest of the Members to terminate and
dissolve the Company; or (iii) pursuant to the provisions of
Section 10.2 below.
SECTION 10.2. Except as otherwise provided in Section
9.1(B) above or Section 10.3 below, the Company shall be
dissolved in the event any Member: (i) withdraws, resigns or
is expelled from the Company; or (ii) makes an assignment
for the benefit of creditors, is the subject of an order for
relief under Title 11 of the United States Code, files a
petition or answer seeking for himself any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law or
regulation, files an answer or other pleading admitting or
failing to contest the material allegations of a petition
filed against him in any proceeding of this nature, seeks,
consents to, or acquiesces in the appointment of a trustee,
receiver or liquidator for of all or any substantial part of
his properties.
SECTION 10.3. If the Company is to be dissolved
pursuant to Section 10.2 above, the owners of a majority
Membership Interests of the remaining Member(s) (i.e., other
than the Member which caused the dissolution, the
"Defaulting Member") may elect to reconstitute and continue
the Company upon the same conditions as are set forth in
this Agreement. Any such election to continue the Company
will not result in the creation of a new company among the
remaining Members, nor will such election require the
amendment of this Agreement or the execution of an amended
Agreement. In such event, the Capital Account of the
Defaulting Member shall be converted into an unsecured, non-
interest bearing loan to the Company, repayable as and when
distributions of Cash Flow are made (treating such loan as a
capital account solely for the purpose of calculating the
amount to be paid).
SECTION 10.4. Upon dissolution, unless the remaining
Members elect to continue the Company pursuant to Section
10.3 above, the Company shall cease to carry on its
business, except insofar as it may be necessary for the
winding up of its business, but its separate existence shall
continue until the activities set forth in Section 10.5 and
Section 10.6 below have been completed.
SECTION 10.5. Upon the termination and dissolution of
the Company, the then Manager(s), if any, or if there is no
Manager, any person elected to perform such liquidation by
the written consent of the owners of a majority in interest
of the Membership Interests, shall proceed to wind up the
affairs of and liquidate the Company.
(A) The proceeds of such liquidation shall
be applied to and distributed as follows:
(i) If any assets of the Company are to be
distributed in kind, such assets shall be
distributed on the basis of the fair market value
thereof, and any Member entitled to any interest
in such assets shall receive such interest therein
as a tenant-in-common with all other Members so
entitled. The fair market value of such assets
shall be determined by an independent appraiser,
to be selected by the Company's independent public
accountants. The amount by which the fair market
value of any property to be distributed in kind to
the Members exceeds or is less than the basis of
such property, shall, to the extent not otherwise
recognized by the Company, be taken into account
in computing Net Profits or Net Losses (and shall
be allocated among the Members in accordance with
Section 8.3 herein) for purposes of crediting or
charging the Capital Accounts of, and liquidating
distributions to, the Members under Section
10.5(A)(ii) below.
(ii) All distributions upon liquidation of
the Company shall be distributed: to each of the
Members, in proportion to the amounts of their
respective positive Capital Accounts, as such
accounts have been adjusted: (a) in accordance
with Section 6.2 herein to reflect the Net Profit
or Net Loss realized or incurred upon the sale of
the Company's property or assets and any deemed
sale pursuant to Section l0.5(A)(i) above; and (b)
in accordance with Section 8.3 herein to reflect
all Net Profits or Net Losses with respect to the
year of liquidation. No Member shall be liable to
repay the negative amount of his Capital Account.
(B) No Member shall be required to contribute any
amount to the Company solely because of a deficit balance in
that Member's Capital Account, and any such deficit balance
shall not for any purpose be considered an asset of the
Company.
(C) For purposes of the liquidation of the
Company's assets, the discharge of its liabilities and the
distributions of the remaining funds among the Members as
above described, the Manager(s) shall have the authority on
behalf of the Company to sell, convey, exchange or otherwise
transfer the assets of the Company for such consideration
and upon such terms and conditions as the Manager(s) deems
appropriate. The Manager(s) may make distributions in kind
to Members. The Manager(s) shall have the authority to
purchase any Company assets at their appraised fair market
value. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the discharge
of liabilities of the Company to creditors in order to
enable the Company to minimize normal losses during the
liquidation period.
SECTION 10.6. Each of the Members shall be furnished
with a statement, reviewed by the Company's independent
public accountants, which shall set forth the assets and
liabilities of the Company as of the date of the Company's
liquidation. Upon completion of the liquidation, the
Manager(s) shall execute and cause to be filed a Certificate
of Dissolution of the Company and any and all other
documents necessary with respect to termination of the
Company.
SECTION 10.7. Except as provided by law, upon
dissolution of the Company, each Member shall look solely to
the assets of the Company for the return of such Member's
Capital Contributions. If the Company property remaining
after the payment or discharge of the debts and liabilities
of the Company is insufficient to allow the return of the
full amount of the Capital Contributions of any of the
Members, such Member or Members shall have no recourse
against any other Member.
ARTICLE XI
Books and Reports
SECTION 11.1. The Manager(s) shall cause the Company
to maintain and preserve, at the principal office of the
Company, the following records:
(A) Complete and accurate books of account, in
which the Manager(s) shall so enter, fully and accurately,
each and every transaction of the Company. The books of
account of the Company shall be kept in accordance with
sound accounting practices and principles applied in a
consistent manner by the Company; provided, however, that
all methods of accounting and treating particular
transactions shall be in accordance with the methods of
accounting employed for Federal income tax purposes. All
determinations by the Manager(s) with respect to the
treatment of any item or its allocation for Federal, state
or local tax purposes shall be binding upon all the Members,
unless the determination is inconsistent with any express
provision of this Agreement.
(B) A current list of the full name and last
known mailing address of each Member set forth in
alphabetical order, together with the contribution and share
in profits and losses of each Member; a copy of the
Certificate of Formation of the Company and any amendments
thereto; a copy of the Company's Operating Agreement and any
amendments thereto; and a copy of the Company's federal,
state and local income tax returns for the three most recent
fiscal years.
(C) Any Member shall have the right, from time to
time, at his expense, to have his accountants and
representatives examine and/or audit the books and records
of the Company and the information referred to in this
Section 11.1, and the Manager(s) will make such books and
records and information available for such examinations
and/or audits; provided that such inspection and copying
does not unduly interfere with the operation of the
Company's business.
SECTION 11.2. No value shall be placed, for any
purpose, upon the Company name or the right to its use, or
upon the goodwill of the Company or its business. Upon
termination or dissolution of the Company (without
reconstitution thereof) as provided in Article X herein,
neither the Company name or the right to its use, nor the
goodwill of the Company, shall be considered as an asset of
the Company.
SECTION 11.3. The Manager(s) will cause to be sent to
each of the Members, within a reasonable period after the
close of each year, the following: (a) annual statements of
the Company's gross receipts and operating expenses and the
capital accounts of each Member, prepared by the Company's
independent public accountants; and (b) a report indicating
the Member's share of the Company's profit or loss for that
year and the Member's allocable share of all items of
income, gain, loss, deduction, and credit, for Federal
income tax purposes, including without limitation a copy of
Schedule K-1 to the Company's Federal income tax return for
the fiscal year most recently ended.
ARTICLE XII
Tax Elections
SECTION 12.1. In the event of a Transfer of a Member's
interest, or upon the death of a Member, or in the event of
the distribution of Company property to any party hereto,
the Company may (but need not necessarily) file an election,
in accordance with Section 754 of the Code, to cause the
basis of the Company property to be adjusted for Federal
income tax purposes, as provided by Sections 734 and 743 of
the Code.
ARTICLE XIII
Miscellaneous
SECTION 13.1. (A) To the maximum extent permitted by
the Act, the Company shall indemnify any Person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed proceeding (other than an
action by or in the right of the Company) by reason of the
fact that such Person is or was (i) a Member, Manager,
partner, officer, employee or agent of the Company or (ii)
serving at the request of the Company as a member, manager,
partner, director, trustee, officer, employee or agent of
another Person, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such Person in
connection with such proceeding.
(B) To the maximum extent permitted by the Act,
the Company shall indemnify any Person who was or is a party
or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of
the Company to procure a judgment in its favor by reason of
the fact that such Person is or was (i) a Member, Manager,
partner, officer, employee or agent of the Company or (ii)
serving at the request of the Company as a member, manager,
partner, director, trustee, officer, employee or agent of
another Person, against expenses (including attorneys' fees)
actually and reasonably incurred by such person in
connection with the defense or settlement of such action or
suit.
(C) To the maximum extent permitted by the Act,
the Company shall pay all expenses (including attorneys'
fees) actually and reasonably incurred by any person by
reason of the fact that such person is or was a Manager or
Member of the Company in defending any proceeding in advance
of the final disposition of such proceeding, upon receipt of
an undertaking by or on behalf of such person to repay such
amount if it is ultimately determined that such person is
not entitled to be indemnified by the Company as authorized
by the Act.
(D) The indemnification rights granted pursuant
to this Section 13.1 shall not be exclusive of other
indemnification rights, if any, granted to such Person and
shall inure to the benefit of the heirs, legal
representatives and successors of such Person.
(E) To the maximum extent permitted by the Act,
no repeal of or restrictive amendment of this Section
13.1 and no repeal, restrictive amendment or termination of
effectiveness of any law authorizing this Section 13.1 shall
apply to or affect adversely any right or protection of any
Person entitled to indemnification hereunder, for or with
respect to any acts or omissions of such Person occurring
prior to such repeal, amendment or termination of
effectiveness.
(F) The Company shall acquire and maintain
officers and directors liability insurance for the benefit
of those entities and individuals that from time to time
hold positions as Manager or as officer or director of the
Company or any subsidiary thereof (collectively, the
"Management Group"), indemnifying the Management Group
against personal liability for any act or omission taken in
good faith in the capacity as a member of the Management
Group.
SECTION 13.2. This Agreement is entered into among the
Company and its Members for the exclusive benefit of the
Company, its Members and their successors and assigns. This
Agreement is expressly not intended for the benefit of any
creditor of the Company or any other third party. Except
and only to the extent provided by the Act, no such creditor
or third party shall have any rights under this Agreement or
any agreement between the Company and any Manager or Member
with respect to any Capital Contribution or otherwise.
SECTION 13.3. Any notice or other communication under
this Agreement shall be in writing and shall be considered
given when mailed by registered or certified mail, return
receipt requested, or sent via recognized commercial
overnight delivery courier, to the parties at the following
addresses (or at such other address as a party shall have
previously specified by notice to the others as the address
to which notice shall be given to him):
(A) If to the Company, to it in care of the
Manager(s) at the address of the Company.
(B) If to the Manager(s), to them at the address
of the Company.
(C) If to any Member, to him at his address set
forth on the books and records of the Company.
SECTION 13.4. This Agreement and the Loan Agreement,
the Equipment Lease Agreement, Contribution Agreement,
Employment Agreement (Xxxxxxx Xxxxx) and Employment
Agreement (Xxxxxx X. Xxxxx) of even date herewith
contemplated hereby (and the other instruments contemplated
by those contemporaneous agreements) (collectively, the
Foundation Documents") contain a complete statement of all
of the arrangements among the parties with respect to the
Company; in the event of any conflict among the various
agreements, this Agreement shall control. This Agreement
cannot be changed orally or in any manner other than by a
written agreement executed by all of the Members. There are
no representations, agreements, arrangements or
understandings, oral or written, between or among the
parties relating to the subject matter of this Agreement
which are not fully expressed in this Agreement. This
Agreement may be amended by written consent of Members
collectively holding a majority of the Membership Interests.
Ministerial amendments to this instrument may be made by the
Manager(s) to amend the Company's Certificate of Formation,
to reflect distributions of capital, or to preserve the
existence of the Company or the limited liability status of
the Members throughout the term of this Agreement.
SECTION 13.5. This Agreement shall be construed
without regard to any presumption or other rule requiring
construction against the party causing this Agreement to be
drafted.
SECTION 13.6. As an additional inducement to GAN to
enter into and perform its obligations under this Agreement
and the Loan Agreement and the Equipment Lease Agreement,
Orbit E-Commerce, Inc. ("Orbit") hereby represents and
warrants for the benefit of GAN, the Company, and any
current or future subsidiaries of the Company or GAN that
all representations and warranties of Orbit set forth in any
of the Foundation Documents are true and correct. Without
limiting the foregoing, Orbit's execution, delivery and
performance of this Agreement and the other Foundation
Documents has been approved by action of Orbit's board of
directors and is (and are) binding and enforceable against
Orbit in accordance with its (and their) terms.
SECTION 13.7 This Agreement is intended to be performed
in accordance with, and only to the extent permitted by, all
applicable laws, ordinances, rules and regulations of the
jurisdiction in which the Company does business. If any
provision of this Agreement, or the application thereof to
any person or circumstance, shall for any reason and to any
extent, be invalid or unenforceable, the remainder of this
Agreement and the application of that provision to other
persons or circumstances shall not be affected, but rather
shall be enforced to the extent permitted by law.
SECTION 13.8. Anything hereinbefore in this Agreement
to the contrary notwithstanding, all references to the
property of the Company are deemed to include the profits,
losses, proceeds and Cash Flow of any property.
SECTION 13.9. Irrespective of the place of execution
or performance, this Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed
in the State of Delaware.
SECTION 13.10. The captions, headings and table of
contents in this Agreement are solely for convenience of
reference and shall not affect its interpretation.
SECTION 13.11. This Agreement may be executed in any
number of counterparts, each of which shall be an original
but all of which shall be deemed to constitute a single
document.
SECTION 13.12. Whenever the context so requires, the
male gender when used herein shall be deemed to include the
female gender, the female gender shall be deemed to include
the male gender, the singular shall be deemed to include the
plural and the plural shall be deemed to include the
singular.
WHEREFORE, the undersigned hereby agree, acknowledge,
and certify that the foregoing agreement constitutes the
Operating Agreement of Phoenix TelNet, LLC.
GAN & ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, President
ORBIT E-COMMERCE, INC.
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, President
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Chief Financial Officer
