LIMITED LIABILITY COMPANY AGREEMENT OF
Exhibit 4.1
LIMITED LIABILITY COMPANY AGREEMENT
OF
THIS LIMITED LIABILITY COMPANY AGREEMENT OF 35, LLC (this “Agreement”) is made as of September 3, 2008 by IndieShares Management, LLC (as the Manager (as defined below) and Common Member (as defined below)). Additional Members (as defined below) may be added to this Agreement by becoming a party to a Subscription Agreement (as defined below), purchasing Class A Shares (as defined below), and upon 35 meeting the minimum raise requirement. The parties hereto agree as follows:
1. | DEFINITIONS. The following terms shall have the following meanings in this Agreement: |
1.1. | The term “Affiliate” means, when used with reference to the Manager or 35: |
(a) | the principals of companies affiliated with Manager or 35; |
(b) | persons directly or indirectly controlling, controlled by or under common control with such companies, including LLCs; |
(c) | any persons owning or controlling ten percent (10%) or more of the outstanding units of such company, including LLCs; and |
(d) | any successor-in-interest following a merger or similar transfer when such successor-in-interest is owned by the same persons who own such company or LLC; and |
1.2. | The term “Agreement” means this Limited Liability Company Agreement of 35, LLC, as originally executed and as amended from time to time. |
1.3. | The term “Articles” means the Certificate of Formation with the Washington State Secretary of State for the purpose of forming 35, in the form prescribed by the LLC Act and the Washington Secretary of State. |
1.4. | The term “Board Of Directors” means the board of directors of 35 (Xxx X. Xxxxxxxx, Xxxxx Xxxxx, and Xxxxxx Xxxxxxx) who collectively own 100% of the outstanding units of Manager. |
1.5. | The term “Capital Contribution” means the total amount of cash and the fair market value of any other assets contributed (or deemed contributed to 35 by a Member, net of liabilities assumed by 35 or to which the assets are subject, as further described in Paragraph 9. |
1.6. | The term “Capital Account” means the account to be maintained by 35 for each Member in accordance with the provisions of this Agreement and the Code. It is intended that the Capital Accounts of all Members shall be maintained in compliance with the applicable provisions of the Code. |
1.7. | The term “Class A Shares” means the class of limited liability company units held by Members of 35 as further described in Paragraph 11. |
1.8. | The term “Code” means the Internal Revenue Code of 1986, as amended (or any corresponding provision or provisions of any succeeding law). |
1.9. | The term “Common Member” means that class of shareholder owning the Common Share. The Manager will be the sole Common Member. |
1.10. | The term “Common Share” means the class of Share held by the Manager of 35 as further described in Paragraph 11. |
1.11. | The term “Depreciation” means, for each taxable year, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset of 35 for such taxable year, or as otherwise determined using any reasonable method selected by the Manager. |
1.12. | The term “Director” means the individual directors comprising the Board Of Directors. |
1.13. | The term “Distributable Cash” means all cash funds derived from 35 attributable to the operations of 35, including proceeds of insurance to compensate for covered losses, less the sum of: |
(a) | debt service; |
(b) | current operating expenditures; |
(c) | capital improvements and replacements, as determined by Manager; and |
(d) | a reasonable reserve for the operation of the business of 35, as determined by the Manager; |
provided, however, that in no event shall Distributable Cash be less than each Member’s respective tax liability associated with a Net Profit allocation in a given year.
1.14. | The term “Economic Interest” means a person’s right to share in the Net Profits, Net Losses or similar items, and to receive distributions of Distributable Cash from 35, but does not include any other rights of a Member. |
1.15. | The term, “Film” means the motion picture “35”. |
1.16. | The term “LLC Act” means the limited liability company laws of the state of Washington, specifically RCW 25.15, as now in effect and as hereafter amended or revised. |
1.17. | The term “Manager” means IndieShares Management, LLC. The Manager is also the sole Common Member. |
1.18. | The term “Member” means a person who: |
(a) | has been admitted to 35 as a Member after the purchase of Class A Shares, and in accordance with this Agreement; and |
(b) | has not resigned, withdrawn, or been expelled as a Member. |
The term “Member” does not include the Manager, except to the extent the Manager or its members purchase Class A Shares.
1.19. | The terms “Net Profits” and “Net Losses” mean, for each taxable year of 35, 35’s income, gain, loss, deductions, and credits, in the aggregate or separately stated, as appropriate, determined in accordance with standard accounting principles. |
1.20. | The term “Production Management Fee” means $300,000 out of the offering proceeds to be paid by 35 immediately to Manager upon the successful capitalization of 35. Since the subject offering is “all or none”, Manager shall only be paid such fee if all of the Class A Shares are sold and the offering proceeds are released, upon receipt of a letter of permission from the Washington Department of Financial Institutions, from 35’s impound account. |
1.21. | The term “Subscription Agreement” means the agreement executed by Members pursuant to which they agree to make their Capital Contributions, acquire Class A Shares, agree to be bound to this Agreement, and are admitted as Members of 35. |
1.22. | The term “35” means 35, LLC, a Washington limited liability company. |
2. | FORMATION. |
The Manager formed 35 as a limited liability company pursuant to the provisions of the LLC Act by filing the Certificate of Formation with the Washington State Secretary of State on May 7, 2008. The rights, duties, and liabilities of the Members and the Common Member shall be as provided in the LLC Act, except as otherwise expressly stated in this Agreement.
3. | NAME. |
The name of the company shall be 35, LLC (“35”).
4. | COMMENCEMENT; ADMISSION OF MEMBERS; NO MEETINGS; OFFICERS. |
4.1. | 35 commenced its existence upon the filing of the Articles with the Washington State Secretary of State. 35 shall continue its existence until it is dissolved pursuant to the provisions of the LLC Act and this Agreement. |
4.2. | Each Member shall be admitted into 35 as a Member for tax, book, accounting, and other applicable purposes on the first business day following the day during which the Member’s subscription for Class A Shares is accepted by the Manager, unless the Manager in its discretion selects a different admission policy that is reasonable and consistent with applicable law and regulation. As soon as practicable after the execution of this Agreement with respect to each new Member, the Manager shall make available an electronic unit certificate to each Member representing the newly admitted Member’s Class A Shares acknowledging his status as a Member. |
4.3. | There is no regulatory requirement that 35 hold Member meetings and therefore Manager opts out of any such meetings and the Members hereby agree and acknowledge that 35 does not need to hold any such Member meetings (including annual meetings). |
4.4. | The Manager will be solely responsible for appointing officers of 35. Initially, 35 will not have any officers. |
5. | STATUTORY AGENT FOR SERVICE OF PROCESS; PRINCIPAL OFFICE. |
5.1. | The initial statutory agent for the service of process and the initial principal office shall be Corporation Service Company 0000 Xxxxxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000. The Manager may, from time to time, change the statutory agent or registered office through appropriate filings with the Washington State Secretary of State. In the event the statutory agent ceases to act as such for any reason or the registered office shall change, the Manager shall promptly designate a replacement statutory agent or file a notice of change of address, as the case may be, in accordance with the LLC Act. |
5.2. | The principal office of 35 shall be at 0000 X 00xx Xxxxxx Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000 or such other place as the Manager may from time to time designate. |
6. | TERM. |
35 shall have perpetual existence, unless it is dissolved in accordance with the provisions of this Agreement or the terms of the LLC Act.
7. | PURPOSES. 35 has been formed for the following purposes: |
7.1. | To accomplish any lawful purpose whatsoever or which shall at any time appear conducive to or expedient for the protection or benefit of 35 and its assets, including but not limited to the production of the Film. |
7.2. | To exercise all other powers necessary to or reasonably connected with 35’s business which may be legally exercised by limited liability companies under the LLC Act. |
7.3. | To engage in all activities necessary, customary, convenient, or incident to any of the foregoing. . |
8. | POWERS, RIGHTS AND DUTIES OF THE BOARD OF DIRECTORS AND MANAGER. |
8.1. | The Company shall have a Board of Directors, which shall have the power to form the committees and perform the duties described in Section 8.3. Such committees shall have the powers granted to them in their charters and such charters shall be approved by the Manager. The term “Board of Directors” is used for convenience only and is not intended by the parties to confer to the Board Of Directors any additional power or authority other than that expressly and specifically conferred pursuant to and in accordance with the terms of this Agreement. The Board of Directors of 35 — Xxx X. Xxxxxxxx, Xxxxx Xxxxx, and Xxxxxx Xxxxxxx — collectively own 100% of the outstanding units of Manager. |
8.2. | The Board of Directors is not compensated in exchange for their service on the Board Of Directors and will not be reimbursed for expenses in connection with attendance at Board of Directors or any committee meetings. |
8.3. | The Board of Directors plans to form an audit committee, a corporate governance committee, and a compensation committee and to adopt charters (approved by the Manager) relative to these committees, and the Members hereby agree to such actions. Until such committees are formed, the Board of Directors will perform the duties of the audit committee, the corporate governance committee, and the compensation committee, which means that members of the Board of Directors, who are the officers of Manager, will be involved in these matters. |
8.4. | Subject to the provisions of Paragraph 8.6 and the other applicable provisions of this Agreement, the Manager shall have the full, exclusive and complete authority and discretion in the management and control of the business of 35 for the purposes stated herein and shall have the right to make any and all decisions affecting the business of 35. Subject to the provisions of this Agreement, the Manager, including any of its officers, on behalf of 35, shall have full and exclusive authority to execute and acknowledge any and all contracts, agreements, licenses and other documents, and to make withdrawals from 35’s checking, savings and similar accounts. Without limiting the generality of the foregoing, the Manager shall have the following rights and powers which it may exercise at the cost, expense and risk of 35: |
(a) | To expend the capital and income of 35, if any, in the furtherance of 35’s business, including, but not limited to, financing, developing, |
producing, licensing, selling, distributing and exhibiting the Film, which includes, but is not limited to, causing 35 to pay compensation to, and to reimburse expenses incurred by, third parties providing services to 35; |
(b) | To cause 35 to incur borrowings, whether secured or unsecured by 35’s assets, without the consent of the Members, and to execute and deliver all documents and instruments in connection with the financing, development, production, editing, filming, licensing, distribution and exhibition of the Film; |
(c) | To cause 35 to pledge and sell some or all of the assets of 35 on such terms and conditions as determined by the Manager without the consent of the Members, and to execute and deliver assignments, licenses, and other transfers and conveyances in connection with 35’s properties and operations; |
(d) | To execute and deliver promissory notes, checks, drafts, and other negotiable instruments on behalf of 35; |
(e) | To hire or engage on behalf of 35 such employees, independent contractors and personnel as the Manager deems necessary or appropriate in order to conduct 35’s business and participate in Film, including but not limited to Affiliates of 35; |
(f) | To employ such attorneys, accountants and other persons, subject to the terms otherwise stated herein, as the Manager deems necessary or advisable to carry out the purposes of 35; |
(g) | To purchase from or through others, contracts of liability, casualty and other insurance which the Manager deems advisable, appropriate, convenient or beneficial to 35; |
(h) | To invest 35’s funds in government securities, certificates of deposit, banker’s acceptances or similar investments; |
(i) | To enter into such agreements and contracts with such parties and to give such receipts, releases and discharges with respect to all of the foregoing and any matters incident thereto as the Manager deems advisable, appropriate or convenient; |
(j) | To delegate or assign all or any of its duties, rights, or obligations hereunder, and in furtherance of any such delegation, to appoint, employ, or contract with any person deemed in its discretion necessary or desirable for the transaction of the business of 35, including persons, firms or entities (i) which employ or are affiliated with or subject to the control of the Manager, and (ii) in which it has a proprietary interest. Such persons may, under the supervision of |
the Manager, (i) administer the day-to-day operations of 35, (ii) serve as 35’s advisors and consultants in connection with policy decisions made by the Manager, (iii) act as consultants, accountants, correspondents, attorneys, brokers, escrow agents, or in any other capacity deemed by the Manager necessary or desirable, (iv) perform or assist in the performance of administrative or managerial functions necessary for the management of 35, and (v) perform such other acts or services for 35 as the Manager in its sole and absolute discretion may approve; |
(k) | To admit new Members into 35 on such terms and conditions as determined by the Manager in its sole discretion; and |
(l) | To execute and deliver any and all other instruments to carry out the purposes hereof. |
8.5. | Only Members will have voting rights, one vote per Class A Share. Set forth below in (a) through (d) of this Section 8.5 are the only matters which 35 or the Manager are required to submit to a vote of the Class A Shares. All other actions and matters and are left to the Manager’s discretion. The following matters will require a simple majority in interest approval by the Class A Shares: |
(a) | Amendments to 35’s Certificate of Formation; |
(b) | The approval of a merger of 35 into another entity; |
(c) | Any additional sales of equity securities of in 35; |
(d) | Selling all of 35’s assets (other than as a part of a film distribution arrangement). |
In the event a Member vote is required, 35 will solicit electronic proxies from the Members.
8.6. | The Manager shall possess and may enjoy and exercise all of the rights and powers of members and managers as provided by the LLC Act, except to the extent any of such rights may be limited or restricted by the express provisions of this Agreement. The Manager shall devote such time to 35 and its business as shall be necessary to conduct 35’s business, to operate and manage 35 in an efficient manner and to carry out the Manager’s responsibilities as herein provided. The Manager shall have the right to elect or appoint officers of 35. |
8.7. | No Member shall have any right, power or authority to: |
(a) | Do any act in contravention of this Agreement without first obtaining the written consent thereto of the Manager. |
(b) | Do any act which would (i) make it impossible to carry on the ordinary business of 35, or (ii) change the nature of 35’s business, without first obtaining the written consent thereto of the Manager. |
(c) | Confess a judgment against 35, without first obtaining the written consent thereto of the Manager. |
(d) | Possess 35’s property, or assign 35’s right in such property, for other than a company purpose without first obtaining the written consent thereto of the Manager. |
(e) | Amend this Agreement without first obtaining the written consent thereto of the Manager. |
8.8. | Any person not a party to this Agreement who shall deal with 35 shall be entitled to rely conclusively upon the power and authority of the Manager as set forth herein. |
8.9. | 35 shall reimburse the Manager for all out-of-pocket expenses and all direct and indirect disbursements to third parties made and obligations incurred on behalf of 35 to third parties, including items such as 35’s legal expenses and other costs and expenses incurred in the operation of 35’s business. None of 35’s Affiliates will earn compensation for their services to 35. Notwithstanding the foregoing, Manager shall be paid, (i) the Production Management Fee, which equals $300,000 out of the offering proceeds to be paid by 35 immediately to Manager upon the successful capitalization of 35. Since the subject offering is “all or none”, Manager shall only be paid such fee if all of the Class A Shares are sold and the offering proceeds are released, upon receipt of a letter of permission from the Washington Department of Financial Institutions, from 35’s impound account. The Manager will earn the Production Management Fee by (1) managing the day-to-day activities related to production of the Film, such as (a) disbursement of production funds to third parties, (b) daily review of Film project deliverables and milestones, (c) approving any changes to the shooting schedule or budget, (d) engaging and contracting with necessary third parties in addition to the production company (e.g., graphic artists or web developers), (e) managing third parties to ensure company’s contractual requirements are met, and (f) negotiating contract amendments or resolving disputes with third parties; (2) corresponding with Members providing updates on the progress of the Film project, (3) marketing of the Film for eventual sale or distribution; (4) drafting and negotiation of sale or distribution terms and conditions; (5) distribution of proceeds from sale or distribution Members. , and (ii) Manager’s contingent compensation in the form of its share of the Net Profits. Affiliates shall not earn compensation for services in connection with 35’s business and Film. |
8.10. | Any consent, approval or decision to be made by the Manager under this Agreement for 35 must be approved by a majority of the individual officers comprising the Manager. |
9. | CAPITAL CONTRIBUTIONS. |
9.1. | The Common Member, also the Manager, may but shall not be obligated to contribute capital to 35 other than an initial Capital Contribution of $10.00 in cash made upon the formation of 35. Any Capital Contributions made by the Common Member for the purchase of Class A Shares (not including the initial $10.00 cash Capital Contribution) and by the other Members pursuant to Section 9.2 hereof shall be referred to as the “Capital Contributions.” |
9.2. | The aggregate Capital Contribution that 35 will accept shall be determined by the Manager. The price per Class A Share is $10.00. Concurrently with the execution and delivery to the Manager of the Subscription Agreement, each Member shall deliver in cash to the Manager the amount of his respective Capital Contribution, all as set forth on the Subscription Agreement for each such Member. |
9.3. | Subject to the provisions of Paragraph 13.3 below, no Member shall be personally liable for any obligations or debts of 35 or any of its losses beyond the total amount the Member has agreed to contribute to the capital of 35 and to the Member’s share, if any, of the undistributed Distributable Cash attributable to the Member. Except as provided in this Paragraph 9, and in Paragraph 13.3 below, no Member shall have any obligation to make additional Capital Contributions to 35. |
9.4. | Except as specifically provided in this Agreement, no Common Member or Member shall be entitled to interest on his Capital Contributions. |
10. | ADVANCES. |
10.1. | If any funds are required by 35 for the operation of its business in excess of the Capital Contributions made by the Members required pursuant to Section 9 above and loans obtained from third parties, then any Member and Manager shall have the right, but not the obligation, upon the approval of the Manager, to advance such funds (the “Advances”) to 35. |
10.2. | If Manager or any Member makes an Advance pursuant to Section 10.1 above, such Advance shall constitute an unsecured loan to 35. |
10.3. | The terms and conditions of an Advance by Manager shall be determined by the Manager pursuant to its best business judgment. The Advance shall be evidenced by a promissory note and shall be repaid to the Manager or Member making the Advance pursuant to Section 12 of this Agreement. |
10.4. | If any Member or Manager lends money to 35 for any purpose, whether as an Advance or otherwise, in connection with such loan the Member or Manager shall be deemed an unsecured creditor of 35, and not a Member, for the purpose of determining his right and priority to the payment of interest on and the repayment of the principal of such loan. |
11. | OWNERSHIP; DISTRIBUTIONS BY THE COMPANY. |
11.1. | The ownership of 35 shall be in the form of a Common Share and Class A Shares , each such class of shares having the rights and preferences as described herein. The total shares that 35 shall be authorized to issue is 350,001, comprised of 1 Common Share and 350,000 Class A Shares. The holder of the Common Share shall be referred to herein as the Common Member, and such entity is also the Manager, and the holders of Class A Shares shall be referred to herein as the Members. 35 may issue authorized shares at such times, in such amounts, and to such purchasers as determined by the Manager and as further described in a Subscription Agreement. |
11.2. | Subject to all of the provisions of this Agreement, Distributable Cash shall be distributed to the Common Member and Members at such times and in such amounts as are determined in the sole and absolute discretion of the Manager. |
11.3. | Distributable Cash and Net Profits, if any, shall be distributed as follows: |
(a) | One hundred percent (100%) of the Distributable Cash to the Members, pro rata in accordance with their respective holdings, until the Members have received their Class A Priority Return (as defined in Section 11(d) below), then |
(b) | Fifty percent (50%) of the Net Profits, if any, to the Members pro rata in accordance with their respective holdings, and |
(c) | Fifty percent (50%) of the Net Profits to the Common Member. |
(d) | Class A Priority Return: For purposes of this Agreement, the term Class A Priority Return shall mean that amount equal to the aggregate capital contributions made by all of the Members, plus five percent (5%). For example, if the Members have collectively contributed $3,500,000.00 of capital to 35, the first $3,675,000.00 of Distributable Cash would be allocated to the Members (pro-rata amongst the Class); once the Class A Priority Return was met, every dollar of Net Profit would be allocated 50% to the Members and 50% to the Common Member. |
11.4. | Regulatory Allocations. The allocations set forth in this Agreement are intended to comply with the economic arrangements of the Members. Nothing in this Agreement or specifically in this Section 11 is intended to contravene the Code or the regulations thereto. The Manager is hereby authorized without notice to the Members to amend this Paragraph 11 to comply with the Code including the regulations promulgated thereunder. |
12. | RIGHTS AND OBLIGATIONS OF THE MEMBERS. |
12.1. | Except as expressly provided in this Agreement to the contrary, the Members shall take no part in the operation, management or control of 35’s business. |
12.2. | The Members shall have no power to sign for or to bind 35 to any agreements or arrangements. All authority to act on behalf of 35 is vested in the Manager. Any Member who takes any action to bind 35 in contravention of this Agreement shall indemnify 35 for any costs, expenses, claims or liabilities incurred by 35 as a result of the unauthorized action of such Member. Without limiting the foregoing, the exercise by a Member of any rights granted by this Agreement, or serving as a third-party contractor, consultant or surety of 35, shall not be deemed to be taking part in the execution, management or control of 35’s business. |
12.3. | Subject to the provisions of Paragraph 12.2 of this Agreement, Members shall not be personally liable for any obligations or debts of 35 or any of its losses beyond the total amount the Members have agreed to contribute to the capital of 35 and to the Members’ share, if any, of the undistributed Distributable Cash attributable to the Members. |
13. | ADDITIONAL MANAGERS; WITHDRAWAL; REMOVAL. |
13.1. | Persons may be admitted to 35 as additional or substitute Managers with the consent of the Manager only, and without the consent of any Member. |
13.2. | The Manager shall have the right to withdraw or resign from 35 upon 90 days prior written notice to the Members. |
14. | INSURANCE. |
35 may procure liability insurance (or shall be designated as an additional insured, if appropriate) which will protect it from liability to others because of personal injury (including death) and property damage which may arise from operations under this Agreement, and such other insurance as is customary, desirable or required for the conduct of 35’s business, as determined by the Manager in its sole discretion.
15. | FISCAL YEAR, BOOKS AND RECORDS AND BANK ACCOUNTS. |
15.1. | 35, for accounting and income tax purposes, shall operate on a fiscal year ending September 30 and shall utilize such accounting principles and income tax elections and determinations as shall be determined by the Manager. The Manager shall serve as the “Tax Matters Partner” for 35. |
15.2. | As required by the Securities Exchange Act of 1934, as amended, the books and records of, and other information pertaining to, 35 shall be made electronically available to any Member at 35’s website. |
15.3. | All funds of 35 shall be deposited in a separate bank account or accounts as shall be determined by the Manager and the Manager shall be entitled to sign on all such accounts. |
15.4. | The Manager shall maintain the books and records for 35. |
16. | REPORTS BY 35. |
16.1. | The Manager shall make electronically available to the Members all information required by federal and state regulations for preparation of the Members’ federal and state income tax returns within sixty (60) days after the end of 35’s fiscal year. |
16.2. | The Manager shall make electronically available to the Members a balance sheet and an income statement prepared by the Manager as soon as is reasonably practicable after the end of each fiscal year of 35. |
17. | RESTRICTIONS ON TRANSFER; ASSIGNEES. |
17.1. | Except as provided in Section 17.3, below, and notwithstanding anything to the contrary contained in the LLC Act, the Members shall not sell, transfer, assign, pledge, hypothecate, encumber, subject to a security interest or otherwise dispose (“Transfer”) of their Class A Shares, or any part thereof. |
17.2. | Notwithstanding anything contained in Paragraph 17.1 to the contrary, a Member’s Class A Shares, or a portion thereof, may be Transferred to persons or entities entitled thereto pursuant and limited to any operation of law; provided, however, the transferee in such case shall only become an Economic Interest holder with respect to such Class A Shares transferred, and shall in no event become a Member. It shall be the sole responsibility of the Economic Interest holder to contact the Manager, via 35’s website, so that 35’s records may be updated accordingly. |
17.3. | A Manager shall have a right to assign its interest in Net Profits, Net Losses and Distributable Cash without the consent of any Member. |
18. | INDEMNIFICATION AND LIABILITY OF MANAGER. |
18.1. | 35, its receiver or its trustee, shall indemnify, save harmless and pay all judgments and claims against (a) the Manager from any liability or damage incurred by reason of any act performed or omitted to be performed by it in connection with the business of 35, except as provided in Section 18.3 of this Agreement or (b) the Members for any act performed by them which is expressly permitted by this Agreement, including attorneys’ fees and costs incurred by them in connection with the defense of any action based on any such act or omission, which attorneys’ fees and costs may be paid as incurred, including all such liabilities under federal and state securities laws as permitted by law. All judgments against 35 and its Members on which any Member is entitled to indemnification must first be satisfied from 35 assets before the Member in question is responsible for such obligations. |
18.2. | In the event of any action by a Member against the Manager, including a company derivative suit, 35 will indemnify, save harmless and pay all expenses of the Manager, including attorneys’ fees and costs incurred in the defense of such action. |
18.3. | The Manager shall not be relieved from any liability for any acts or omissions resulting from a material breach of its obligations hereunder or from bad faith. Indemnification to which the Manager is entitled under this Section 18 shall be recoverable out of the assets of 35 but not from the Members. |
18.4. | The Manager shall not be liable to the Members or to 35 for any loss resulting from errors made by the Manager in the reasonable exercise of business judgment, unless such errors result from a material breach of this Agreement or bad faith by the Manager. |
19. | DISSOLUTION AND LIQUIDATION. |
19.1. | 35 shall be dissolved upon the earlier of: |
(a) | Failing to meet 35’s minimum capital requirements by the close of the offering. This is an all or none offering, meaning that if all of the Class A Shares are not sold within 90 days after commencement of the offering, sales of Class A Shares shall cease and all subscriptions funds will be promptly returned, less applicable payment processing charges; provided, however, that 35 may choose to extend the offering for up to an additional 60 days (the “Offering Period”). For clarity, the Offering Period shall commence upon the sale of the Class A Shares, not upon the prospectus being declared effective. |
(b) | The bankruptcy or dissolution of the Manager or any other event which, pursuant to the LLC Act and unless otherwise provided in this Agreement, results in the Manager ceasing to be the Manager. |
(c) | An election to dissolve 35 made in writing by the Manager. |
(d) | The sale, exchange or other disposition of all or substantially all of the assets of 35; provided, however, that if 35 receives a purchase money note upon such sale, 35 shall continue in existence until such note is satisfied, sold or otherwise conveyed. |
(e) | The entry of a judgment of dissolution under the LLC Act. |
(f) | Acquisition by a single person of all outstanding Shares in 35. |
19.2. | Upon the dissolution of 35, the Manager (which term, for the purpose of this |
Section 19.2, shall include the trustees, receivers or other persons required by law to wind-up the affairs of 35) shall wind up the affairs of 35 as provided in the LLC Act. 35 shall engage in no further business thereafter other than that necessary to wind up the business in accordance with the LLC Act and distribute the assets in accordance with this Agreement. The Members shall continue to allocate Net Profits and Net Losses during the winding up period in the same manner as such amounts were divided before dissolution. The parties responsible for winding up shall be entitled to reasonable compensation for their services in connection therewith, which compensation shall be considered an expense of 35. The Manager may, from time to time and at any time, have the assets or any one or more of them appraised at the expense of 35 for distribution in kind, subject to existing liens and encumbrances. |
19.3. | From and after the dissolution of 35, the proceeds from the liquidation of 35’s property and from the operation of 35’s business shall, in accordance with Section 11 of this Agreement, be applied and distributed in the following order; |
(a) | First, to creditors, including (to the extent permitted by law) Members who are creditors, in satisfaction of liabilities of 35 other than liabilities for distributions to Members under Section 11 of this Agreement. |
(b) | Second, to Members that have not yet received their full allocation and distribution of their Class A Priority Return, to Members, pro-rata, up to, but not more than, that amount necessary to satisfy the Class A Priority Return. |
(c) | Third, any remaining assets shall be distributed to the Members and Manager as follows: fifty percent (50%) to the Members pro-rata in accordance with their respective Class A Share holdings, and fifty percent (50%) to the Manager in its capacity as the Common Share Holder. |
19.4. | In the event of a winding up and liquidation of 35, the Manager shall have the right, in its sole discretion and determination, to purchase any assets of 35 (including the Film, or any part thereof, produced by 35 and any rights thereto or associated therewith), provided that the Manager pays 35 the fair market value of any such assets, as determined below and such sale is approved by a simple majority of the voting Class A Shares. |
19.5. | Fair market value will be determined on the basis of, and will be equal to, the amount which would be obtained between an informed and willing buyer under no compulsion to buy and an informed and willing seller under no compulsion to sell. Manager will bid the Film assets to those who might desire to purchase the assets. This in no way means that there will be such interested parties. It is entirely possible that the Film’s assets are worthless and that the fair market value of such assets is zero. |
19.6. | Subject to this Section 19, the business and affairs of 35 shall be wound up in the manner provided in the LLC Act. |
19.7. | As soon as practicable after the dissolution of 35, a final statement of its assets and liabilities shall be prepared by 35 and electronically made available to the Members. |
19.8. | As soon as possible after any of the events specified in this Section 19 affecting the dissolution of 35 occurs, the Manager shall file a written notice of winding up with the Washington Secretary of State signed on behalf of 35 containing such information as is required by the LLC Act. |
19.9. | Provided all of the known property and assets of 35 have been applied and distributed pursuant to the LLC Act and this Agreement, written articles of termination shall be signed on behalf of 35 by the Manager. The Manager shall file the articles of termination with the Washington Secretary of State containing such information as is required by the LLC Act. |
20. | INVESTMENT REPRESENTATIONS. |
Each Member, by executing a copy of this Agreement, hereby represents and warrants to each other Member and 35 as follows:
20.1. | The Class A Shares are being acquired for his own account for investment. |
20.2. | The Member has been fully advised of the facts respecting the organization and business of 35 and has been given the opportunity to consult his legal counsel with respect to 35. |
21. | SPECIAL AND LIMITED POWER OF ATTORNEY. |
Each Member hereby grants to the Manager a special and limited power of attorney, as set forth below:
21.1. | The Manager acting alone shall at all times during the term of 35 have a special and limited power of attorney as the attorney-in-fact for each Member, with power and authority to act in the name and on the behalf of each such Member to execute, acknowledge, and swear to in the execution, acknowledgment and filing of documents, which shall include by way of illustration but not of limitation the following: |
(a) | The Articles, this Agreement and any amendments to the foregoing which, under the laws of the State of Washington or the laws of any other state, are required to be executed or filed or which the Manager shall deem it advisable to have executed or to file: |
(b) | Any other instrument or document which may be required to be executed or filed by 35 under the laws of any state or by any governmental agency or which the Manager shall deem it advisable to have executed or to file; and |
(c) | Any instrument or document which may be required to effect the continuation of 35 or the dissolution and termination of 35 (provided such continuation, admission or dissolution and termination are in accordance with the terms of the Articles and this Agreement), or to reflect any reductions in amount of contributions of Members. |
21.2. | The special and limited power of attorney of the Manager: |
(a) | Is a special power of attorney coupled with an interest, is irrevocable, shall survive the death of the granting Member, and is limited to those matters herein set forth; |
(b) | May be exercised by the Manager acting alone for each of the Members by the signature of the Manager acting as attorney-in-fact for all of the Members, together with a list of all Members executing such instrument by their attorney-in-fact; and |
(c) | Shall survive a Transfer by a Member of all or any portion of his Class A Shares. |
22. | MISCELLANEOUS. |
22.1. | Notices. Any notice, request, demand, instruction or other document to be given hereunder or pursuant hereto to any party shall be in writing and delivered by email. Notices so emailed shall be deemed to have been given twenty four (24) hours after sending. The addresses and addressees, for the purpose of this Section 22.1, may be changed by giving written notice of such change in the manner herein provided for giving notice. Unless and until such written notice is received, the last address and addressee stated by written notice, or as provided herein if no written notice of change has been sent or received, shall be deemed to continue in effect for all purposes hereunder. |
22.2. | Binding Effect. This Agreement shall be binding upon all of the Members and their executors, administrators, successors and permitted assignees. |
22.3. | Regulations and Laws. Nothing contained in this Agreement shall be construed to require the commission of any act contrary to law. If there is a conflict between any provision of this Agreement and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the after shall prevail, but in such event the provisions of this Agreement affected shall be curtailed and limited only to the extent necessary to bring it within the requirement of the law. This Agreement is made under and shall be construed pursuant to the laws of the State of Washington. |
22.4. | Attorneys’ Fees. In the event of any action for breach of or to enforce or declare rights under any provision of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and costs, to be paid by the losing party. |
22.5. | Counterparts. This Agreement may be executed in several counterparts, including electronic forms, and all so executed shall constitute one agreement, binding upon all of the parties hereto, notwithstanding that all of the parties are not signatories to the original or the same counterparts. |
22.6. | No Other Agreement. The entire agreement of the parties with respect to 35 is contained and referred to herein. |
22.7. | Headings. The Section headings of the various provisions hereof are intended solely for convenience of reference and shall not in any manner amplify, limit or modify, or otherwise be used in the interpretation of, any of said provisions. |
22.8. | Competitive Activities. Nothing herein contained shall preclude any Manager or Member from owning, purchasing, selling, or otherwise dealing in any manner with any property or engaging in any business whatsoever without notice to any other Manager or Member, without participation of any other Manager or Member, and without liability to any other Manager or Member. It is understood that any Manager or Member may now or hereafter engage in any business or possess any property of any type, whether or not such business or such property competes with the business or property of 35. Each Manager and Member hereby waives any right which he may have against others who may capitalize on or take advantage of information learned as a result of an association with 35. |
22.9. | Gender and Tense. As used in this Agreement, the masculine, feminine or neuter gender, and the singular or plural number, shall be deemed to include the others whenever the context so indicates. |
22.10. | Remedies. If any party to this Agreement shall fail to observe or perform any term, covenant, condition or other obligation on his part to be observed or performed pursuant to this Agreement or in connection with this Agreement (the ‘Defaulting Party”), any other party to this Agreement, in addition to and not in lieu or in limitation of, any of his other remedies under this Agreement, under any statute or at law, shall be entitled to apply to, and obtain from, any court of equity having jurisdiction over the Defaulting Party: |
(a) | An injunction, temporary restraining order and any other prohibitory decree to prevent any further such failure to observe or perform on the part of the Defaulting Party; and |
(b) | A decree for specific performance of any such term, covenant, condition or other obligation. |
22.11. | Waiver. The waiver by one party of the performance of any covenant, condition or promise shall not invalidate this Agreement nor shall it be considered a waiver by such party of any other covenant, condition or promise hereunder. The waiver by any party of the time for performing any act shall not constitute a waiver of the time for performing any other act or an identical act required to be performed at a later time. The exercise of any remedy shall not exclude other consistent remedies. |
22.12. | No Third-Party Benefit. Nothing contained in this Agreement shall be deemed to confer any right or benefit on any person or entity who is not a party to this Agreement. |
22.13. | Section 754 Election. The Manager may, in its sole and absolute discretion, make the election provided for in Section 754 of the Code. |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
“MANAGER” | ||
INDIESHARES MANAGEMENT, LLC | ||
By: | /s/ XXX X. XXXXXXXX | |
Name: | Xxx X Xxxxxxxx, President | |
Address for Manager: | ||
0000 X 00xx Xxxxxx | ||
Xxxxx 000 | ||
Xxxxxxx, Xxxxxxxxxx 00000 |
“MEMBERS” | ||
By: |
| |
IndieShares Management, LLC, as Attorney-in-Fact for all of the Members who have executed Subscription Agreements |