Exhibit 2.13
OPERATING AGREEMENT OF
BrowseSafe
LIMITED LIABILITY COMPANY
AN INDIANA LIMITED LIABUJTY COMPANY
EFFECTIVE AS OF
MARCH 26, 1998
Definitions
1.01. Definitions. The following terms used in this Operating Agreement
shall have the following meanings (unless otherwise expressly provided herein):
a. "Articles of Organization" shall mean the Articles of Organization of
BrowseSafe, L.L.C. as filed with the Secretary of State of Indiana as the same
may be amended from time to time.
b. "Capital Account" as of any given date shall mean the Capital
Contribution to the Company by a Member as adjusted up to the date in question
pursuant to Article VIII.
c. "Capital Contribution" shall mean any contribution to the capital of
the Company in cash or property by a Member whenever made. "Initial Capital
Contribution" shall mean the initial contribution to the capital of the Company
pursuant to this Operating Agreement.
d. "Capital Interest" shall mean the proportion that a Member's positive
Capital Account bears to the aggregate positive Capital Accounts of all Members
whose Capital Accounts have positive balances as may be adjusted from time to
time.
e. Company shall refer to BrowseSafe Limited Liability Company.
f. "Deficit Capital Account" shall mean with respect to any Member, the
deficit balance, it' any, in such Member's Capital Account as of the end of the
taxable year, after giving effect to the following adjustments:
i. Credit to such Capital Account any amount which such Member is
obligated to restore under Treas Reg. Sec. 1.704-1(B)(2)(ii)(c), as well
as any addition thereto pursuant to the next to last sentence of Treas.
Reg. Sec. 1 .704-2(g)(1) and (i)(5), after taking into account
thereunder any changes during such year in partnership minimum gain (as
determined in accordance with Treas. Reg. Sec. 1.704-2(d)) and in the
minimum gain attributable to any partner nonrecourse debt (as determined
under Treas. Reg. Sec. 1.704-2(i)(3); and
ii. Debit to such Capital Account the items described in Treas.
Reg. Sec. 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
iii. This definition of Deficit Capital Account is intended to
comply with the provision of Treas. Reg. Sec. 1.704-1(b)(2)(ii)(d) and
1.704-2, and will be interpreted consistently with those provisions.
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g. "Distribution Cash" means all cash revenues, and funds received by
the Company from Company operations, less the sum of the following to the extent
paid or set aside by the Company:
i. All principal and interest payments on indebtedness of the
Company and all other sums paid to lenders;
ii. All cash expenditures incurred incident to the normal
operation of the Company's business;
iii. Such Reserves as the Managers deem reasonably necessary to
the proper operation of the Company's business.
h. "Economic Interest" shall mean a Member's or Economic Interest
Owner's share of one of more of the Company's Net Profits, Net Losses, and
distributions of the Company's assets pursuant to this Operating Agreement and
the Indiana Act, but shall not include any right to participate in the
management or affairs of the Company, including the right to vote on, consent
to, or otherwise participate in any decision of the Members or Managers.
i. "Economic Interest Owner" shall mean the owner of an Economic
Interest who is not a Member.
j. "Entity" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association, or any foreign trust, or foreign business
organization.
k. "Fiscal Year" shall mean the Company's fiscal year, which shall be
the calendar year.
l. "IRC" shall mean the Internal Revenue Code of 1986 or corresponding
provisions of subsequent superseding federal revenue laws.
m. "Gifting Member" shall mean any member or Economic Interest Owner who
gifts, bequeaths, or otherwise transfers for no consideration (by operation of
law or otherwise, except for bankruptcy) all or any part of its Membership
Interest or Economic Interest.
n. "Majority Interest" shall mean one or more Interests of Members which
taken together exceed 50 per cent of the aggregate of all Capital Interests.
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o. "Manager" shall mean one or more managers. Specifically, "Manager"
shall mean Xxxx X. Xxxxx, or any other persons that succeed him in that
capacity. References to the Manager in the singular or as him, her, it, itself,
or other like references shall also, when the context so requires, be deemed to
include the plural or the masculine or feminine reference, as the case may be.
p. "Member" shall mean each of the parties who executes a counterpart of
this Operating Agreement as a Member and each of the parties who may hereafter
become Members, To the extent a Manager has purchased Membership Interests in
the Company, he will have all the rights of a Member with respect to such
Membership Interests, and the term `Member" as used in this Operating Agreement
shall include a Manager to the extent he has purchased such Membership Interests
in the Company. If a Person is a Member immediately before the purchase or other
acquisition by such Person of an Economic Interest, that Person shall have all
the rights of a Member with respect to the purchased or otherwise acquired
Membership Interest or Economic Interest, as the case may be. "Voting Member"
shall mean only those four individuals listed specifically in Section 9.01, by
name, and they may be designated as Initial Members.
q. "Membership Interest" shall mean a Member's entire interest in the
Company including the Member's Economic Interest and the right to participate in
the management of the business and affairs of the Company, including the right
to vote on, consent to, or otherwise participate in any decision or action of or
by the Members granted pursuant to this Operating Agreement and the Indiana Act.
r. "Net Profits" and "Net Losses" shall mean the income, gain, loss,
deductions, and credits of the Company in the aggregate or separately stated, as
appropriate, determined in accordance with generally accepted accounting
principles employed under the ___________ method of accounting at the close of
each fiscal year on the Company's information tax return filed for federal
income tax purposes.
s. "Operating Agreement" shall mean this Operating Agreement as
originally executed and as amended from time to time.
t. "Persons" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors, and assigns of the
"Person" when the context so permits.
u. "Reserves" shall mean, for any fiscal period, funds set aside or
amounts allocated during such period to reserves that shall be maintained in
amounts deemed sufficient by the Managers for working capital and to pay taxes,
insurance, debt service, or other costs or expenses incident to the ownership or
operation of the Company's business.
v. "Selling Member" shall mean any Member or Economic Interest Owner
which sells, assigns, or otherwise transfers for consideration all or any
portion of its Membership Interest or Economic Interest.
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w. "Indiana Act" shall mean the Indiana Limited Liability Company Act,
I.C. 23-18-1-1, et seq.
x. "Transferring Member" shall collectively mean a Selling Member and a
Gifting Member.
y. "Treasury Regulations" shall include proposed, temporary, and final
regulations promulgated under the IRC in effect as of the dare of filing the
Articles of Organization and the corresponding sections of any regulations
subsequently issued that amend or supersede those regulations.
ARTICLE II
Formation of Company
2.01 Formation. On March 26, 1998, Xxxxx Xxxxx organized an Indiana
Limited Liability Company by executing and delivering articles of organization
to the Indiana Secretary of State in accordance with and pursuant to the Indiana
Act.
2.02 Name. The name of the Company is BrowseSafe Limited Liability
Company.
2.03 Principal Place of Business. The principal place of business of the
Company within the State of Indiana shall be Indianapolis. The Company may
locate its places of business and registered office at any other place or places
as the Manager may from time to time deem advisable.
2.04 Registered Office and Registration Agent. The Company's initial
registered office shall be at the office of its registered agent at 000 X. 0xx
Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000, and the name of its initial
registered agent at such address shall be Xxxx X. Xxxxx. The registered office
and registered agent may be changed from time to time by filing the address of
the new registered office and/or the name of the new registered agent with the
Indiana Secretary of State pursuant to the Indiana Act.
2.05 Term. The term of the Company shall be perpetual from the date of
filing of Articles of Organization with the Secretary of State of the State of
Indiana, unless the Company is earlier dissolved in accordance with either the
provisions of this Operating Agreement or the Indiana Act.
ARTICLE III
Business of Company
3.01 Permitted Businesses. The business of the Company shall be:
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a. To accomplish any lawful business whatsoever, or which shall at any
time appear conducive to or expedient for the protection of benefit of the
Company and its assets.
b. To exercise all other powers necessary to or reasonably connected
with the Company's business that may be legally exercised by limited liability
companies under the Indiana Act.
c. To engage in all activities necessary, customary, convenient, or
incident to any of the foregoing.
ARTICLE IV
Names and Addresses of Members
The names and business addresses of the initial Members are as follows:
Name Address
---- -------
Xxxx X. Xxxxx 000 X. 0xx Xxxxxx, Xxx. 000, Xxxxxxxxxxxx, Xxxxxxx 00000
J. Xxxxxxxx Xxxx 000 X, 0xx Xxxxxx, Xxx. 000, Xxxxxxxxxxxx, Xxxxxxx 00000
Xxxxxxx Xxxxxxxx 000 X. 0xx Xxxxxx, Xxx. 000, Xxxxxxxxxxxx, Xxxxxxx 00000
Xxx X'Xxxxx 000 X. 0xx Xxxxxx, Xxx. 000, Xxxxxxxxxxxx, Xxxxxxx 00000
ARTICLE V
Rights and Duties of Managers
5.01 Management. The business and affairs of the Company shall be
managed by its Managers. The Managers shall direct, manage, and control the
business of the Company to the best of their ability. Except for situations in
which the approval of the Members is expressly required by this Operating
Agreement or by nonwaivable provisions of applicable law, the Managers shall
have full and complete authority, power, and discretion to manage and control
the business, affairs, and properties of the Company, to make all decisions
regarding those matters and to perform any and all other acts or activities
customary or incident to the management of the Company's business. At any time
when there is more than one Manager, any one Manager may take any action
permitted to be taken by the Managers, unless the approval of more than one of
the Managers is expressly required pursuant to this Operating Agreement or the
Act.
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5.02 Number, Tenure, and Qualifications. The Company shall initially
have one Manager. The number of Managers of the Company shall be fixed from time
to time by the majority vote of Voting Members, but in no instance shall there
be less than one Manager. Each Manager shall hold office until the next annual
meeting of Members or until a successor shall have been elected and qualified.
Managers shall be elected by the majority vote of Voting Members. Managers need
not be residents of the State of Indiana or Members of the Company;
5.03 Certain Powers of Manager. Without limiting the generality of
section 5.01 above, the Managers shall have power and authority, on behalf of
the Company;
a. To acquire property from any Person as the Managers may determine.
The fact that a Manager or a Member is directly or indirectly affiliated or
connected with any such person shall not prohibit the Managers from dealing with
that Person;
b. To borrow money for the Company from banks, or other lending
institutions, the Managers, Members, or affiliates of the Managers or Members on
such terms as agreed by a majority vote of Voting Members, and in connection
therewith, to hypothecate, encumber, and grant security interests in the assets
of the Company to secure repayment of the borrowed sums. No debt shall be
contracted or liability incurred by or on behalf of the Company except by the
Managers, as agreed to by a majority vote of the Voting Members, or by agents or
employees of the Company expressly authorized to contract such debt or incur
such liability by such affirmative vote;
c. To purchase liability and other insurance to protect the Company's
property and business;
d. To hold and own any Company real and/or personal properties in the
name of the company;
e. To invest any Company funds temporarily (by way of example but not
limitation) in time deposits, short-term governmental obligations, commercial
paper, or other investments;
f. Upon the majority vote of the Voting Members, to sell or otherwise
dispose of all or substantially all of the assets of the Company as part of a
single transaction or plan so long as the disposition is not in violation of or
a cause of a default under any other agreement to which the Company may be
bound, provided, however, that the affirmative vote of the Members shall not be
required with respect to any sale of disposition of the Company's assets in the
ordinary course of the Company's business;
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g. To execute on behalf of the Company all instruments and documents,
including checks; drafts; notes and other negotiable instruments; mortgages, or
deeds of trust; security agreements; financing statements; documents providing
for the acquisition, mortgage or disposition of the Company's property;
assignments; bills of sale; leases; partnership agreements; and any other
instruments or documents necessary, in the opinion of the Managers, to the
business of the Company, save that at least two Voting Members signatures are
required on any checks or drafts over $10,000.00, drawn from any BrowseSafe
account;
h. To employ accountants, legal counsel, managing agents, or other
experts to perform services for the Company and to compensate them from Company
funds;
i. To enter into any and all other agreements on behalf of the Company,
with any other Person for any purpose, in such forms as the Managers may
approve; and
j. To do and perform all other acts as may be necessary or appropriate
to the conduct of the Company's business.
k. Unless authorized to do so by this Operating Agreement or by a
Manager or Managers of the Company, no attorney-in-fact, employee, or other
agent of the Company shall have any power or authority to bind the Company in
any way, to pledge its credit or to render it liable pecuniarily for any
purpose. No Member shall have any power or authority to bind the Company unless
the Member has been authorized by the Managers to act as an agent of the Company
in accordance wit the previous sentence.
5.04 Liability for Certain Acs. The Managers shall perform their
Managerial duties in good faith, in a manner they reasonably believe to be in
the best interests of the Company, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances. A Manager who
so performs the duties of Manager shall not have any liability by reason of
being or having been a Manager of the Company. A Manager does not, in any way,
guarantee the return of the Members' or Economic Interest Owner's Capital
Contributions or a profit for the Members or Economic Interest Owners from the
operations of the Company. A Manager shall not be liable to the Company or to
any member for any loss or damage sustained by the Company or any Member, or
Economic Interest Owner, unless the loss or damage shall have been the result of
fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by the
Manager.
5.05 Managers Have No Exclusive Duty to Company. The Managers shall not
be required to manage the Company as their sole and exclusive function and they
may have other business interests and may engage in other activities in addition
to those relating to the Company. Neither the Company nor any member shall have
any right, by virtue of this Operating Agreement, to share or participate in
such other investments or activities of the Managers or to the income of
proceeds derived therefrom. The Managers shall incur no liability to the Company
or to any of the Members as a result of engaging in any other business or
venture.
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5.06 Bank Accounts. The Managers may from time to time open bank
accounts in the name of the Company, and at least two Voting Members will be
required to be signatories on any checks or drafts exceeding $10,000.00, drawn
thereon.
5.07 Indemnity of the Managers, Employees, and Other Agents. To the
maximum extent permitted under the Indiana Act, the Company shall indemnify the
Managers and make advances for expenses. The Company shall indemnify its
employees and other agents who are not Managers to the fullest extent permitted
by law, provided that the indemnification in any given situation is approved by
a majority of Voting Members,
5.08 Resignation. Any Manager of the Company may resign at any time by
giving written notice to the Members of the Company. The resignation of any
Manager shall take effect upon receipt of that notice or at such later time as
shall be specified in the notice; and, unless otherwise specified in the notice,
the acceptance of the resignation shall not be necessary to make it effective.
The resignation of a Manager who is also a Member shall not affect the Manager's
rights as a Member and shall not constitute a withdrawal of a Member.
5.09 Removal. At any meeting called expressly for that purpose, all or
any lesser number of Managers may be removed at any time, with or without cause,
by the majority vote of Voting Members. The removal of a Manager who is also a
Member shall not affect the Manager's rights as a Member and shall not
constitute a withdrawal of a Member.
5.10 Vacancies. Any vacancy occurring for any reason in the number of
Managers of the Company may be filled by the affirmative vote of a majority of
the remaining Managers then in office, provided that if there are no remaining
Managers, the vacancy(ies) shall be filled by the majority vote of Voting
Members.
a. Any Manager's position to be filled by reason of any increase in the
number of Managers shall be filled by the affirmative vote of a majority of the
Managers then in office or by an election at an annual meeting or at a special
meeting of Members called for that purpose or by the Members' unanimous written
consent.
b. A Manager elected to fill a vacancy shall be elected for the
unexpired term of the Manager's predecessor in office and shall hold office
until the expiration of that term and until the Manager's successor shall be
elected and shall quality or until the Manager's earlier death, resignation, or
removal.
c. A Manager chosen to fill a position resulting from an increase in the
number of Managers shall hold office until the next annual meeting of Members
and until a successor shall be elected and shall qualify, or until the Manager's
earlier death, resignation, or removal.
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5.11 Salaries. The salaries and other compensation of the Managers shall
be fixed from time to time by an affirmative vote of the Voting Members, shall
not exceed 15% of the previous year's annual income (or estimated income in the
first year of the Company's existence) and no Manager shall be prevented from
receiving that salary because the Manager is also a Member of the Company.
ARTICLE VI
Rights and Obligations of Members
6.01 Limitation of Liability. Each Member's liability shall be limited
as set forth in this Operating Agreement, the Indiana Act, and other applicable
law.
6.02 Company Debt Liability. A Member will not be personally liable for
any debts or losses of the Company beyond the Member's respective Capital
Contributions and any obligation of the Member under section 8.01 or 8.02 below
to make Capital Contributions, except as provided in section 6.07 below or as
otherwise required by law.
6.03 List of Members. Upon written request of any Member, the Manager
shall provide a list showing the names, addresses, and Membership Interests and
Economic Interests of all Members.
6.04 Approval of Sale of All Assets. The Members shall have the right,
by a two thirds vote of Voting Members, to approve the sale, exchange, or other
disposition of all or substantially all, of the Company's assets (other than in
the ordinary course of the Company's business) which is to occur as part of a
single transaction or plan.
6.05 Company Books. In accordance with section 9.09 below, the Managers
shall maintain and preserve, during the term of the Company, and for five (5)
years thereafter, all accounts, books, and other relevant Company Documents.
Upon reasonable request, each Member and Economic Interest Owner shall have the
right, during ordinary business hours, to inspect and copy those Company
documents at the requesting Member's and Economic Interest Owner's expense.
6.06 Priority and Return of Capital. Except as may be expressly provided
in Article IX, no Member or Economic Interest Owner shall have priority over any
other Member or Economic Interest Owner, either for the return of Capital
Contributions or for Net Profits, Net Losses, or distributions; provided that
this section shall not apply to loans (as distinguished from Capital
Contributions) which a Member has made to the Company.
6.07 Liability of a Member to the Company. A Member who rightfully
receives the return in whole or in part of its contribution (as defined in
section IC. 23-18-1 of the Indiana Act) is nevertheless liable to the Company
only to the extent now or hereafter provided by the Indiana Act.
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a. A Member who receives a distribution made by the Company which is
either in violation of this Operating Agreement, or made when the Company's
liabilities exceed its assets (after giving effect to the distribution) is
liable to the Company for a period of six years after the distribution for the
amount of the distribution.
6.08 Salaries. The salaries and other compensation of the Members shall
be fixed from time to time by an affirmative vote of the Voting Members, and
shall not exceed 20% of the previous year's annual income (or estimated income
in the first year of the Company's existence).
ARTICLE VII
Meetings of Members
7.01 Annual Meeting. The annual meeting of the members shall be held on
the third Tuesday In April or at such other time as shall be determined by
resolution of the Members, commencing with the year 1998, for the purpose of the
transaction of such business as may come before the meeting.
7.02 Special Meetings. Special meetings of the Members, for any purpose
or purposes, unless otherwise prescribed by statute, may be called by a Manager
or by any Voting Member.
7.03 Place of Meetings. The members may designate any place, either
within or outside the State of Indiana, as the place of meeting for any meeting
of Members. If no designation it' made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Company in the State of Indiana.
7.04 Notice of Meetings. Except as provided in section 7.05 below,
written notice stating the place, day, and hour of the meeting and the purpose
or purposes for which the meeting is called shall be delivered no fewer than 10
nor more than 50 days before the date of the meeting, either personally or by
mail, by or at the direction of the Managers or person calling the meeting, to
each Member entitled to vote at the meeting. If mailed, the notice shall be
deemed to be delivered two calendar days after being deposited in the United
States mail, addressed to the Member at the Member's address as it appears on
the books of the Company, with postage thereon prepaid.
7.05 Meeting of All Members. If all of the Members shall meet at any
time and place, either within or outside of the State of Indiana, and consent to
the holding of a meeting at that time and place, the meeting shall be valid
without call or notice, and at the meeting lawful action may be taken.
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7.06 Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment of the
meeting, or Members entitled to receive payment of any distribution, or to make
a determination of Members for any other purpose, the date on which notice of
the meeting is mailed or the date on which the resolution declaring the
distribution is adopted, as the case may be, shall be the record date for the
determination of Members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this section, the
determination shall apply to any adjournment of the meeting.
7.07 Quorum. Three Fourths (75%) of Voting Members represented in person
or by proxy, shall constitute a quorum at any meeting of Members. In the absence
of a quorum at any meeting of Members, a majority of the Voting Members so
represented may adjourn the meeting from time to time for a period not to exceed
60 days without further notice. However, if the adjournment is for more than 60
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Member of
record entitled to vote at the meeting. At an 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 noticed.
7.09 Proxies. At all meetings of members a Voting Member may vote in
person or by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. The proxy shall be filed with the Managers of the Company
before or at the time of the meeting. No proxy shall be valid after 11 months
from the date of its execution, unless otherwise provided in the proxy.
7.10 Action by Members Without a Meeting. Action required or permitted
to be taken at a meeting of Members may be taken without a meeting if the action
is evidenced by one or more written consents describing the action taken, signed
by each Member entitled to vote, and delivered to the Managers of the Company
for inclusion in the minutes or for filing with the Company records. Action
taken under this section is effective when all Members entitled to vote have
signed the consent, unless the consent specifies a different effective date. The
record date for determining Members entitled to take action without meeting
shall be the date the first Member signs a written consent.
7.11 Waiver of Notice. When any notice is required to be given to any
member, a waiver of the notice in writing signed by the person entitled to the
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of the notice.
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ARTICLE VIII
Contributions to the Company
and Capital Accounts
8.01 Members' Capital Contributions. Each Member shall contribute such
amount as is set forth in appended Exhibit A as its share of the Initial Capital
Contribution. Exhibit A may be amended from time to time as new Members pay
their Initial Capital Contributions, and said amended Exhibit A's will be
attached to the prior Exhibit A, and signed by all Voting members, to be
effective.
8.02 Additional Contributions. Each Voting Member shall be required to
make such additional Capital Contributions as shall be determined by the Consent
of all Voting Members to be necessary to meet the expenses of the Company.
Upon learning of any such determination, the Manager shall give written notice
to each Member of the amount of required additional contribution, and each
Member shall deliver to the Company its pro rata share thereof (in proportion to
the respective Interest of the Member on the date such notice is given) no later
than 30 days following the date such notice is given None of the terms,
covenants, obligations or rights contained in this section 8.02 is or shall be
deemed to be for the benefit of any person or entity other than the Members and
the Company, and no such third person shall under any circumstances have any
right to compel any actions or payments by the Manager and/or the Members.
8.03 Capital Accounts. A separate Capital Account will be maintained for
each Member.
a. Each Member's Capital Account will be increased by:
i. The amount of money contributed by the Member to the Company;
ii. The fair market value of property contributed by the Member
to the Company (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject
to under IRC Section 752);
iii. Allocations to the member of Net Profits and Net losses; and
iv. Allocations to the Member of income described in IRC Sec.
705(a)(1)(B).
b. Each member's Capital Account will be decreased by:
i. The amount of money distributed to the Member by the Company;
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ii. The fair market value of property distributed to the Member
by the Company (net of liabilities secured by such distributed
property that such Member is considered to assume or take subject
to under IRC Sec. 752;
iii. Allocations to the Member of expenditures described in IRC
705(a)(2)(B); and
iv. Allocations to the account of the member of Company loss and
deduction as set forth in the relevant Treasury Regulations,
taking into account adjustments to reflect book value.
c. In the event of a permitted sale or exchange of a Membership Interest
or an Economic Interest in the Company, the Capital Account of the transferor
shall become the Capital Account of the transferee to the extent it relates to
the transferred Membership Interest or Economic Interest in accordance with
Treas. Reg. I .704-1(b)(2)(iv).
d. The manner in which Capital Accounts are to be maintained pursuant to
this section 8.03 is intended to comply with the requirements of IRC Sec. 704(b)
and the Treasury Regulations promulgated thereunder. If in the opinion of the
Company's accountants the manner in which Capital Accounts are to be maintained
pursuant to the preceding provisions of this section 8.03 should be modified to
comply with IRC Sec. 704(b) and the Treasury Regulations thereunder, then
notwithstanding anything to the contrary contained in the preceding provisions
of this section 8.03, the method in which Capital Accounts are maintained shall
be so modified; provided, however, that any change in the manner of maintaining
Capital Accounts shall not materially alter the economic agreement between or
among the Members.
e. Upon liquidation of the Company (or any Member's Membership Interest
or Economic Interest Owner's Economic Interest), liquidating distributions will
be made in accordance with the positive Capital Account balances of the Members
and Economic Interest Owners, as determined after taking into account all
Capital Account adjustments for the Company's taxable year during which the
liquidation occurs. Liquidations proceeds will be paid within 60 days of the end
of the taxable year (or, if later, within 120 days after the date of the
liquidation). The Company may offset damages for breach of this Operating
Agreement by a Member or Economic Interest Owner whose interest is liquidated
(either upon the withdrawal of the Member or the liquidation of the Company)
against the amount otherwise distributable to the Member.
f. Except as otherwise required in the Indiana Act (and subject to
sections 8.01 and 8.02 above), no Member or Economic Interest Owner shall have
any liability to restore all or any portion of a deficit balance in the Member's
or Economic Interest Owner's Capital Account.
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8.04 Withdrawal or Reduction of Member' Contributions to Capital. A
Member shall not receive out of the Company's property any part of its Capital
Contribution until all liabilities of the Company, except liabilities to Members
on account of their Capital Contributions, have been paid or there remains
property of the Company sufficient to pay them.
a. A Member, irrespective of the nature of its Capital Contribution, has
only the right to demand and receive cash in return for its Capital
Contribution.
ARTICLE IX
Allocations, Income Tax, Distributions,
Elections, and Reports
9.01 Allocations of Profits and Losses from Operations. The Net Profits
and Net Losses of the Company for each fiscal year will be allocated as follows,
and distributed on an annual basis, within two weeks after April 15th:
Member Allocation
------ ----------
Xxxx X. Xxxxx 30%
J. Xxxxxxxx Xxxx 15%
Xxxxxxx Xxxxxxxx 15%
Xxx X'Xxxxx 15%
The Investors (individually, allocated at 1% for
every $20,000 invested), as identified in
Exhibit A, attached hereto, and as amended from
time to time, pursuant to Section 8.01: 25% (cumulative)
If less than $500,000 is contributed by the Investors collectively, then the
remaining percentage of ownership (and Profits or Losses) shall be split
proportionately between the four Initial Members, according to the Allocation
shown, or if more than $500,000 is contributed by the Investors, then the
Allocation shown to the Initial Members shall be reduced proportionately along
the same ratios shown in the Allocation above:
Until the Net Profits allocated to the Investors have been paid for three
consecutive years after the year in which all of their Initial Capital
Contributions were cumulatively paid back, subject to the buyout limitation
described below, at which point the Allocations will change from thence forward
to:
Member Allocation
------ ----------
Xxxx X. Xxxxx 40%
J. Xxxxxxxx Xxxx 20%
Xxxxxxx Xxxxxxxx 20%
Xxx X'Xxxxx 20%
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a. Buyout Limitation: In the event that the Company is sold in its
entirety, the amount paid to each of the Investors as their individual
allocation of the buy-out profits, shall not exceed Five (5) times their
individual Initial Capital Contributions but this clause shall not be
interpreted to require the return of any previous profit distributions that
might have exceeded Five (5) times the initial Investment amount.
9.02 Special Allocations to Capital Accounts. No allocations of loss,
deduction, and/or expenditures described in IRC 705(a)(2)(B) shall be charged to
the Capital Accounts of any Member if such allocation would cause such Member to
have a Deficit Capital Account. The amount of the loss, deduction, and/or IRC
705(a)(2)(B) expenditure which would have caused a Member to have a Deficit
Capital Account shall instead be charged to the Capital Account of any Members
which would not have a Deficit Capital Account as a result of the allocation, in
proportion to their respective Capital Contributions, or, if no such Members
exist, then to the Members in accordance with their interests in Company profits
pursuant to section 9.01 above.
a. Notwithstanding any other provision of this section 9.02, if there is
a net decrease in the Company's minimum gain as defined in Treas. Reg.
1.704-2(d) during a taxable year of the Company, the Capital Accounts of each
Member shall be allocated items of income (including gross income) and gain for
such year (and if necessary for subsequent years) equal to that Member's share
of the net decrease in Company minimum gain. This section 9.02(d) is intended to
comply with the minimum gain chargeback requirement of Treas. Reg. 1.704-2 and
shall be interpreted consistently therewith. If in any taxable year that the
Company has a net decrease in the Company's minimum gain, if the minimum gain
chargeback requirement would cause a distortion in the economic arrangement
among the Members and it is not expected that the Company will have sufficient
other Income to correct that distortion, the Managers may in their discretion
(and shall, if requested to do so by a member) seek to have the IRS waive the
minimum gain chargeback requirement in accordance with Treas. Reg.
1.704-2(f)(4).
b. Items of Company loss, deduction, and expenditures described in IRC
705(a)(2)(B) which are attributable to any nonrecourse debt of the Company and
are characterized as partner (Member) nonrecourse deductions under Treas. Reg.
1.704-2 (i) shall be allocated to the Members' Capital Accounts in accordance
with said Treas. Reg. 1.704-2(i).
c. Beginning in the first taxable year in which there are allocations of
"nonrecourse deductions" (as described in Treas. Reg. 1.704-2(b) those
deductions shall be allocated to the Members in accordance with, and as a part
of, the allocations of Company profit or loss for that period.
d. In accordance with IRC Sec. 704(c)(1)(A) and Treas. Reg.
1.704-1(b)(2)(i), (iv), if a Member contributes property with a fair market
value that differs from its adjusted basis at the time of contribution, income,
gain, loss, and deductions for the property shall, solely for federal income tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of the property to the Company and its fair market
value at the time of contribution.
16
e. Pursuant to IRC Sec. 704(c)(1)(B), if any contributed property is
distributed by the Company other than to the contributing Member within five
years of being contributed, then, except as provided in IRC Sec. 704(c)(2), the
contributing Member shall be treated as recognizing gain or loss from the sale
of the property in an amount equal to the gain or loss that would have been
allocated to the Member under IRC Sec. 704(c)(1)(A) if the property had been
sold at its fair market value at the time of the distribution.
f. In the case of any distribution by the Company to a Member or
Economic Interest Owner, the Member & Economic Interest Owner shall be treated
as recognizing gain in an amount equal to the lesser of:
i. The excess (if any) of the fair market value of the property
(other than money) received in the distribution over the adjusted
basis of the Member's Membership Interest or Economic Interest
Owner's Economic Interest in the Company immediately before the
distribution reduced (but not below zero) by the amount of money
received in the distribution; or
ii. The Net Precontribution Gain (as defined in IRC Sec. 737(b)
of the Member or Economic Interest Owner. The Net Precontribution
Gain means the net gain (if any) which would have been recognized
by the distributee Member or Economic Interest Owner under IRC
Sec. 704(c)(1)(B) of all property which had been contributed to
the Company within five years of the distribution, and is held by
the Company immediately before the distribution, had been
distributed by the Company to another Member, or Economic
Interest Owner. If any portion of the property distributed
consists of property which had been contributed by the
distributee Member or Economic Interest Owner to the Company,
then the property shall not be taken into account under this
section 9.02(f) and shall not be taken into account in
determining the amount of the Net Precontribution Gain.
If the property distributed consists of an interest in an entity,
the preceding sentence shall not apply to the extent that the
value of the interest is attributable to the property contributed
to the entity after such interest had been contributed to the
Company.
g. In connection with a Capital Contribution of money of other property
(other than a de minimis amount) by a new or existing member or Economic
Interest Owner as consideration for an Economic Interest Or Membership Interest,
or in connection with the liquidation of the Company or a distribution of money
or other property (other than a de minimis amount) by the Company to a retiring
Member or Economic Interest Owner as consideration for an Economic Interest or
Membership Interest, the Capital Accounts of the Members shall be
17
adjusted to reflect a revaluation of Company property (including intangible
assets) in accordance with Treas. Reg. 1.704-1(b)(2)(iv)(f). If under Treas.
Reg. 1.704-1(b)(2)(iv)(f), Company property that has been revalued is properly
reflected in the Capital Accounts and on the books of the Company at a book
value that differs from the adjusted tax basis of the property, then
depreciation, depletion, amortization and gain or loss with respect to such
property shall be shared among the Members in a manner that takes account of the
variation between the adjusted tax basis of such property and its book value, in
the same manner as variations between the adjusted tax basis and fair market
value of property contributed to the Company taken into account in determining
the Member's shares of tax items under IRC Sec. 704(c)
h. All recapture of income tax deductions resulting from sale or
disposition of Company property shall be allocated to the Member or Members to
whom the deduction that gave rise to the recapture was allocated hereunder to
the extent that the Member is allocated any gain from the sale of other
disposition of the property.
i. Any credit or charge to the Capital Accounts or the Members pursuant
to sections 9.02(a),(b), and/or (c), shall be taken into account in computing
subsequent allocations of profits and losses pursuant to section 9.01 above, so
that the net amount of any items charged or credited to Capital Accounts
pursuant to sections 9.01 and 9.02 shall to the extent possible, be equal to the
net amount that would have been allocated to the Capital Account of each Member
pursuant to the provisions of this Article IX if the special allocations
required by sections 9.02(a)(b), and/or (c), had not occurred.
9.03 Distributions. Except as provided in section 8.03(d) above, all
distributions of cash or other property shall be made to the Members pursuant to
the Allocation then applicable under section 9.01 herein.
Except as provided in section 9.04, all distributions of Distributable
Cash and property shall be made at such time as determined by the Manager. All
amounts withheld pursuant to the IRC or any provisions of state or local tax law
for any payment or distribution to the Members from the Company shall be treated
as amounts distributed to the relevant Member or Members pursuant to this
section 9.03.
9.04 Limitation Upon Distributions. No distribution shall be declared
and paid unless, after distribution is made, the assets of the Company are in
excess of all liabilities of the Company, except liabilities to Members on
account of their contributions.
9.05 Accounting Principles. The profits and losses of the Company shall
be determined in accordance with accounting principles applied on a consistent
basis using the ___ method of accounting. It is intended that the Company will
elect those accounting methods that provide the Company with the greatest tax
benefits.
9.06 Interest on and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to return of its Capital
Contribution, except as otherwise specifically provided for in this Operating
Agreement.
18
9.07 Loans to Company. Nothing in this Operating Agreement shall prevent
any Member from making secured or unsecured loans to the Company by agreement
with the Company.
9.08 Accounting Period. The Company's accounting period shall be the
calendar year.
9.09 Records, Audits, and Reports. At the expense of the Company, the
Manager shall maintain records and accounts of all operations and expenditures
of the Company. At a minimum the Company shall keep at its principal place of
business the following records:
a. A current list of the full name and last known business, residence,
or mailing address of each Member, Economic Interest Owner, and Manager, both
past and present;
b. A copy of the Articles of Organization of the Company and all
amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;
c. Copies of the Company's federal, state, and local income tax returns
and reports, if any, for the four most recent years;
d. Copies of the Company's currently effective written Operating
Agreement, copies of any writings permitted or required with respect to a
Member's obligation to contribute cash, property, or services, and copies of any
financial statements of the Company for the three most recent years;
e. Minutes of every annual meeting, special meeting, and court-ordered
meeting;
f. Any written consents obtained from Members for actions taken by
Members without a meeting.
9.10 Returns and Other Elections. The Manager shall cause the
preparation and timely filing of all tax returns required to be filed by the
Company pursuant to the IRC and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business. Copies of
those returns, or pertinent information from the returns, shall be furnished to
the Members within a reasonable time after the end of the Company's fiscal year.
a. All elections permitted to be made by the Company under federal or
state laws shall be made by the Manager after consultation with all of the
Members.
ARTICLE X
Transferability
10.01 General. Except as otherwise specifically provided in this
Operating Agreement, neither a Member nor an Economic Interest Owner shall have
the right to:
19
a. Sell, assign, transfer, exchange or otherwise transfer for
consideration, (collectively, "sell") all or any part of its Membership Interest
or Economic Interest;
b. Gift, bequeath or otherwise transfer for no consideration (whether or
not by operation of law, except in the case of bankruptcy) all or part of its
Membership Interest or Economic Interest.
10.02 Right of First Refusal. If a Selling Member desires to sell all or
any portion of its Membership Interest or Economic Interest in the Company to a
third-party purchaser, the Selling Member shall obtain from such third-party
purchaser a bona fide written offer to purchase the interest, stating the terms
and conditions upon which the purchase is to be made and the consideration
offered therefor. The Selling Member shall give written notification to the
remaining Members, by certified mail or personal delivery, of its intention to
so transfer the interest, furnishing to the remaining Members a copy of the
aforesaid written offer to purchase the interest.
a. The remaining Members, and each of them shall, on a basis pro rata to
their Capital Interest or on a basis pro rats to the Capital Interests of those
remaining Members exercising their right of first refusal, have the right to
exercise a right of first refusal to purchase all (but not less than all) of the
interest proposed to be sold by the Selling Member upon the same terms and
conditions as stated in the aforesaid written offer to purchase by giving
written notification to the Selling Member, by certified mail or personal
delivery, of their intention to do so within (10) days after receiving written
notice from the Selling Member. The failure of all the remaining members (or any
one or more of them) to so notify the Selling Member of their desire to exercise
this right of first refusal within said ten-(10) day period shall result in the
termination of the right of the first refusal and the Selling Member shall be
entitled to consummate the sale of its interest in the Company, or such portion
of its interest, if any, with respect to which the right of first refusal has
not been exercised, to the third-party purchaser.
b. If the remaining Members (or any one or more of the remaining
members) give written notice to the Selling Member of their desire to exercise
this right of first refusal and to purchase all the Selling Member's interest in
the Company that the Selling Member desires to sell upon the same terms and
conditions as are stated in the aforesaid written offer to purchase, the
remaining Members shall have the right to designate the time, date, and place of
closing, provided that the date of closing shall be within ten (10) days after
receipt of written notification from the Selling Member of the third-party offer
to purchase.
c. In the event of either the purchase of the Selling Member's interest
in the Company by a third-party purchaser or the gift of an interest in the
Company (including an Economic Interest), and as a condition to recognizing one
or more of the effectiveness and binding nature of any such sale or gift and
(subject to section 10.03 below) substitution of a new Member as against the
Company or otherwise the remaining Members may require the Selling Member or
Gifting Member and the proposed purchaser, donee or successor-in-interest, as
the case may be, to execute, acknowledge, and deliver to the remaining Members
such
20
instruments of transfer, assignment, and assumption and such other certificates,
representations, and documents, and to perform all the other acts that the
remaining Members may deem necessary or desirable to:
i. Constitute such purchaser, as a Member, donee or
successor-in-interest as such;
ii. Confirm that the person desiring to acquire an interest or
interests in the Company, or to be admitted a Member, has
accepted, assumed, and agreed to be subject and bound by all of
the terms, obligations and conditions of the Operating Agreement,
as the same may have been further amended (whether such Person is
to be admitted as a new Member or will merely be an Economic
Interest Owner);
iii. Preserve the Company after the completion of such sale,
transfer, assignment, or substitution under the laws of each
jurisdiction in which the Company is qualified, organized, or
does business;
iv. Maintain the status of the Company as a partnership for
federal tax purposes; and
v. Assure compliance with any applicable state and federal laws
including securities laws and regulations.
d. Any sale or gift of a Membership Interest or Economic Interest or
admission of a Member in compliance with this Article X shall be deemed
effective as of the last day of the calendar month in which the remaining
Members' consent thereto was given, or, if no such consent was required pursuant
to section 10.02(e) below, then on such date that the donee or successor
interest complies with.
The Selling Member agrees, upon request of the remaining Members, to
execute such certificates or other documents and perform such other acts as may
be reasonably requested by the remaining Members from time to time in connection
with such sale, transfer, assignment, or substitution. The Selling Member hereby
indemnifies the Company and the remaining Members against any and all loss,
damages, or expense (including, without limitation, tax liabilities or loss of
tax benefits) arising directly or indirectly from any transfer or purported
transfer in violation of this Article X.
e. Subject to section 10.03(c) below, a Transferring Member may gift all
or any portion of its Membership Interest and Economic Interest (without regard
to section 10.02(a) and (b) above) provided that the donee or to the
successor-in-interest (collectively, "donee") complies with section 10.02(c) and
further provided that the donee is either the Gifting Member's spouse, former
spouse or lineal descendant (including adopted children). In the event of the
gift of all or any portion of a Gifting Member's Membership Interest or Economic
Interest to one or more
21
donees who are under 25 years of age, one or more trusts shall be established to
hold the gifted interest(s) for the benefit of such donee(s) until all of the
donee(s) reach the age of at least 25 years.
10.03 Transferee Not Member in Absence of Unanimous Consent.
Notwithstanding anything contained in this Operating Agreement to the contrary
(including, without limitation, sections 10.02 above, if all of the remaining
members do not approve by unanimous written consent of the proposed sale or gift
of the Transferring Member's Membership Interest or Economic Interest to a
transferee & donee which is not a Member immediately before the sale or gift,
the proposed transferee or donee shall have no right to participate in the
management of the business and affairs of the Company or to become a Member, The
transferee or donee shall be merely an Economic Interest Owner. No transfer of a
Member's interest in the Company (including any transfer of the Economic
Interest or any other transfer that has not been approved by unanimous written
consent of the Members) shall be effective unless and until written notice
(including the name and addresses of the proposed transferee or donee and the
date of such transfer) has been provided to the Company and the nontransferring
Member(s).
a. Upon and contemporaneously with any sale or gift of a Transferring
Member's Economic Interest in the Company which does not at the same time
transfer the balance of the rights associated with the Economic Interest
transferred by the Transferring Member (including, without limitation, the
rights of the Transferring Member to participate in the management of the
business and affairs of the Company), the Company shall purchase from the
Transferring Member and the Transferring Member shall sell to the Company for a
purchase price of $100, all remaining rights and interests retained by the
Transferring Member that immediately before the sale or gift were associated
with the transferred Economic Interest.
b. The restrictions on transfer contained in this section 10.03 are
intended to comply (and shall be interpreted consistently) with the restrictions
on transfer set forth in the Indiana Act.
ARTICLE XI
Additional Members
11.01 Admission to Membership. From the date of the formation of the
Company, any Person or Entity acceptable to the Members by their unanimous vote
may become a Member in this Company either by the issuance by the Company of
Membership Interests for such consideration as the Members by their unanimous
votes shall determine, or as a transferee of a Member's Membership Interest or
any portion thereof, subject to the terms and conditions of this Operating
Agreement.
22
11.02 Financial Adjustments. No new Members shall be entitled to any
retroactive allocation of losses, income, or expense deductions incurred by the
Company. The Managers may, as their option, at the time a Member is admitted,
close the Company books (as though the Company's tax year had ended) or make pro
rata allocations of loss, income, and expense deductions to a new member for
that portion of the Company's tax year in which a member was admitted In
accordance with the provisions of IRC Sec. 706(d) and the Treasury Regulations
promulgated thereunder.
ARTICLE XII
Dissolution and Termination
12.01 Dissolution.
a. The Company shall be dissolved upon the occurrence of any of three
events:
i. By the unanimous written agreement of all Members; or
ii. Upon the death, retirement, resignation, expulsion,
bankruptcy, or dissolution of a Member or occurrence of any other
event which terminates the continued membership of a Member in
the Company (a `Withdrawal Event"), unless the business of the
Company is continued by the consent of all the remaining Members
within 90 days after the Withdrawal Event and there are at least
two remaining members. Each of the Members hereby agrees that
within 60 days after the occurrence of a Withdrawal Event other
than the bankruptcy of BrowseSafe (and provided that there are
then at least two remaining Members of the Company), they will
promptly consent, in writing, to continue the business of the
Company.
Each of the Members further agrees promptly to consent, in
writing, to continue the business of the Company upon a sale or
gift either of a Member's entire Economic Interest to which all
of the remaining members do not consent within 45 days after the
occurrence of such a sale or gift or upon a sale or gift of a
Transferring Member's entire Membership Interest. The consents
shall be mailed or hand delivered to the principal place of
business of the Company set forth In section 2.03 above (or to
such other address designated by the Manager) no later than 80
days after each Withdrawal Event or transfer by a Member of its
entire Economic Interest or Membership Interest. The sole remedy
for breach of a Member's obligation to consent to continue the
business of the Company under this section shall be money damages
(and not specific performance).
23
b. Notwithstanding anything to the contrary in this Operating Agreement,
if three fourths (75%) of the Voting Members vote to dissolve the Company at a
meeting of the Company pursuant to Article VII, then all of the members shall
agree in writing to dissolve the Company as soon as possible (but in any event
not more than 10 days) thereafter.
c. As soon as possible following the occurrence of any of the events
specified in this section 12.01 effecting the dissolution of the Company, the
appropriate representative of the Company shall execute a statement of intent to
dissolve In such form as shall be prescribed by the Indiana Secretary of State
and file same with the Indiana Secretary of State's office.
d. If a Member who is an individual dies or a court of competent
jurisdiction adjudges him to be incompetent to manage the Member's person or
property, the Members executor, administrator, guardian, conservator, or other
legal representative may exercise all of the Member's rights for the purpose of
settling the Member's estate or administering his property.
e. Except as expressly permitted in this Operating Agreement, a Member
shall not voluntarily resign and take any other voluntary action that directly
causes a Withdrawal Event. Unless otherwise approved by the Voting Members, a
Member who resigns (a "Resigning Member") or whose Membership Interest is
otherwise terminated by virtue of a Withdrawal Event, regardless of whether the
Withdrawal Event was the result of a voluntary act by the Member, shall not be
entitled to receive any distributions to which the Member would have been
entitled had the Member remained a Member. Except as otherwise expressly
provided in this Operating Agreement, a Resigning Member shall become an
Economic Interest Owner. Damages for breach of this section 12.0 1(e) shall be
monetary damages only (and not specific performance), and the damages may be
offset against distributions by the Company to which the Resigning Member would
otherwise be entitled.
12.02 Effect of Filing of Dissolving Statement. Upon the filing with the
Indiana Secretary of State of a statement of intent to dissolve, the Company
shall cease to carry on its business, except insofar as may be necessary for the
winding up of its business, but its separate existence shall continue until a
certificate of dissolution has been issued by the Secretary of State or until a
decree dissolving the Company has been entered by a court of competent
jurisdiction.
12.03 Winding Up, Liquidation, and Distribution of Assets. Upon
dissolution, an accounting shall be made by the Company's independent
accountants of the accounts of the Company and the Company's assets,
liabilities, and operations, from the date of the last previous accounting until
the date of the dissolution. The Managers shall immediately proceed to wind up
the affairs of the Company. If the Company is dissolved and its affairs are to
be would up, the Managers shall:
a. Sell or otherwise liquidate all of the Company's assets as promptly
as practicable (except to the extent the Manager(s) may determine to distribute
any assets to the Members in kind);
24
b. Allocate any profit or loss resulting from such sales to the Members'
and Economic Interest Owners' Capital Accountants in accordance with Article IX
above;
c. Discharge all liabilities of the Company, including liabilities to
Members and Economic Interest Owners who are creditors, to the extent otherwise
permitted by law, other than liabilities to Members and Economic Interest owners
for distributions, and establish such Reserves as may be reasonably necessary to
provide for contingencies or liabilities of the Company (for purposes of
determining the Capital Accounts of the Members and Economic Interest Owners,
the amounts of such Reserves shall be deemed to be an expense of the Company);
d. Distribute the remaining assets in the following order;
i. If any assets of the Company are to be distributed in kind,
the net fair marker value of those assets as of the date of
dissolution shall be determined by independent appraisal or by
agreement of the Members. Those assets shall be deemed to have
been sold as of the date of dissolution for their fair market
value, and the Capital Accounts of the Members and Economic
Interest Owners shall be adjusted pursuant to the provisions of
Article IX and section 8.03 of the Operating Agreement to reflect
such deemed sale.
ii. The positive balance (if any) of each Member's and Economic
Interest Owner's Capital Account (as determined after taking into
account all Capital Account adjustments for the Company's taxable
year during which the liquidation occurs) shall be distributed to
the Members, either in cash or in kind, as determined by the
Managers, with any assets distributed in kind being valued for
this purpose at their fair market value as determined pursuant to
section 12.03(b)(i). Any such distributions to the Members in
respect of their Capital Accounts shall be made in accordance
with the time requirements set forth in Treas. Reg.
l.704-1(b)(2)(ii(b)(2).
e. Notwithstanding anything to the contrary in this Operating Agreement,
upon a liquidation within the meaning of Treas. Reg. 1.704-1 (b)(2)(ii)(g), if
any Member has a Deficit Capital Account (after giving effect to all
contributions, distributions, allocations, and other Capital Account adjustments
for all taxable years, including the year during which such liquidation occurs),
the Member shall have no obligation to make any Capital Contribution, and the
negative balance of the Member's Capital Account shall not be considered a debt
owed by the Member to the Company or to any other Person for any purpose
whatsoever.
f. Upon completion of the winding up, liquidation, and distribution of
assets, the Company shall be deemed terminated.
25
g. The Managers shall comply with any applicable requirements of
applicable law pertaining to the winding up of the affairs of the Company and
the final distribution of its assets.
12.04 Articles of Dissolution. When all debts, liabilities, and
obligations have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
the Members, articles of dissolution shall be executed in duplicate and verified
by the person signing the articles, which articles shall set forth the
information required by the Indiana Act. Duplicate originals of the articles of
dissolution shall be delivered to the Indiana Secretary of State.
12.05 Certificate of Dissolution. Upon the issuance of the certificate
of dissolution, the existence of the Company shall cease, except for the purpose
of suits, other proceedings, and appropriate action as provided in the Indiana
Act. The Manager shall have authority to distribute any Company property
discovered after dissolution, convey real estate, and take such other action as
may be necessary on behalf of and in the name of the Company.
12.06 Return of Contribution Nonrecourse to Other Members. Except as
provided by law or as expressly provided in this Operating Agreement, upon
dissolution, each Member shall look solely to the assets of the Company for the
return of its Capital Contributions. If the Company property remaining after the
payment or discharge of the debts and liabilities of the Company is insufficient
to return the cash contribution of one or more Members, the Members shall have
no recourse against any other Member.
ARTICLE XIII
Miscellaneous Provisions
13.01 Notices. Any notice, demand, or communications required or
permitted to be given by any provision of this Operating Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
personally to the party or so an executive officer of the party to whom the same
is directed or, if sent by registered or certified mail, postage and charges
prepaid, addressed to the Member's and/or Company's address, as appropriate,
which is set forth in this Operating Agreement. Except as otherwise provided in
this Operating Agreement, any such notice shall be deemed to be given three
business days after the date on which the same was deposited in a regularly
maintained receptacle for the deposit of United States mail, addressed and sent
as aforesaid.
13.02 Books of Accounts and Records. Proper and complete records and
books of account shall be kept or shall be caused to be kept by the Managers in
which shall be entered fully and accurately all transactions and other matters
relating so the Company's business in the detail and completeness customary and
usual for businesses of the type engaged in by the Company. The books and
records shall be maintained as provided in section 9.09 above. The books and
records shall at all times be maintained at the principal executive office of
the Company and
26
shall be open to the reasonable inspection and examination of the Members,
Economic Interest Owners, or their duly authorized representatives during
reasonable business hours.
13.03 Application of Indiana Law. This Operating Agreement, and the
application of Interpretation hereof, shall be governed exclusively by its terms
and by the laws of the State of Indiana, and specifically the Indiana Act.
13.04 Waiver of Action for Participation. Each Member and Economic
Interest Owner irrevocably waives during the term of the Company any right that
it may have to maintain any action for partition with respect to the property of
the Company.
13.05 Amendments. This Operating Agreement may not be amended except by
the unanimous written agreement of all of the Voting Members.
13.06 Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holding, designations,
powers of attorney, and other instruments necessary to comply with any laws,
rules, or regulations.
13.07 Construction. Whenever the singular number is used in this
Operating Agreement and when required by the context, the same shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter genders and vice versa.
13.08 Headings. The headings in this Operating Agreement are for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent, or intent of this Operating Agreement or any of its
provisions.
13.09 Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, that would have
originally constituted a violation, from having the effect of an original
violation.
13.10 Right's and Remedies Cumulative. The rights and remedies provided
by this Operating Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive the right to use any or all
other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance, or otherwise.
13.11 Severability. If any provision of this Operating Agreement or its
application to any person or circumstance shall be invalid, illegal, or
unenforceable to any extent, the remainder of this Operating Agreement and its
applications shall not be affected and shall be enforceable to the fullest
extent permitted by law.
27
13.12 Heirs, Successors, and Assigns. Each and all of the covenants,
terms, provisions, and agreements contained in this Operating Agreement shall be
binding upon and inure to the benefit of the parties hereto and, to the extent
permitted by this Operating Agreement, their respective heirs, legal
representatives, successors, and assigns.
13.13 Creditors. None of the provisions of thin Operating Agreement
shall be for the benefit of or enforceable by any creditors of the Company.
13.14 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
13.15 Rule Against Perpetuities. The parties to this Operating Agreement
intend that the Rule against Perpetuities (and any similar rule of law) not
apply to any provisions of this Operating Agreement. However, notwithstanding
anything to the contrary in this Operating Agreement, If any provision in this
Operating Agreement would be invalid or unenforceable because of the Rule
against Perpetuities or any similar rule of law but for this section 13.15, the
parties to this Operating Agreement hereby agree that any future interest which
is created pursuant to said provision shall cease if it is not vested within 21
years after the death of the survivor of the group composed of Xxxx Xxxxx,
Xxxxxxxx Xxxx, Xxxx Xxxxxxxx, and Xxx 0'Brien (all who are currently Members)
and their issue who are living on the date of this Operating Agreement and their
issue, if any, who are living on the effective date of this Operating Agreement.
13.16 Investment Representations. The parties to this Operating
Agreement agree as follows with respect to investment representation.
a. The undersigned Members and Economic Interest Owners, if any,
understand:
i. That the Membership Interests and Economic Interest evidenced
by this Operating Agreement have not been registered under the
Securities Act of 1933, 15 U.S.C. 15b et. seq., the Indiana
Securities Act or any other state securities laws (the
"Securities Acts") because the Company is issuing these
Membership Interests and Economic Interests in reliance upon the
exemptions from the registrations requirements of the Securities
Acts providing for issuance of securities not involving a public
offering;
ii. That the Company has relied upon the fact that the Membership
Interests and Economic Interests are to be held by each Member
for investment; and
28
iii. That exemption from registration under the Securities Acts
would not be available if the Membership Interests and Economic
Interests were acquired by a Member with a view to distribution.
b. Accordingly, each Member and Economic Interest Owner hereby confirms
to the Company that the Member and Economic Interest Owner is acquiring the
Membership Interests and Economic Interests for the Member's and Economic
Interest Owner's own account, for investment and not a view to the resale or
distribution.
i. Each Member and Economic Interest Owner agrees not to
transfer, sell, or offer for sale any portion of the Membership
Interests or Economic Interests unless there is an effective
registration or other qualification relating thereto under the
Securities Act of 1933 and under any applicable state securities
laws or unless the holder of Membership Interests or Economic
Interests delivers to the Company an opinion of counsel,
satisfactory to the Company, that the registration or other
qualification under the Securities Act of 1933 and applicable
state securities laws is not required in connection with the
transfer, offer, or sale.
ii. Each Member and Economic Interest Owner understands that the
Company is under no obligation to register the Membership
Interests or Economic Interests or to assist the Member or
Economic Interest Owner in complying with any exemption from
registration under the Acts if the Member or Economic Interest
Owner should at a later date wish to dispose of the Membership
Interest or Economic Interest.
iii. Furthermore, each Member realizes that the Membership
Interests and Economic Interests are unlikely to qualify for
disposition under Rule 144, 17 C.F.R. 230.144 (1992), of the
Securities and Exchange Commission unless the Member is not an
"affiliate" of the Company and the Membership Interest or
Economic Interest has been beneficially owned and fully paid for
by the Member or Economic Interest Owner for at least three
years.
c. Before acquiring the Membership Interests and Economic Interests,
each Member and Economic Interest Owner has investigated the Company and its
business and has had made available to each Member and Economic Owner all
information necessary for the Member or Economic Owner to make an informed
decision to acquire the Membership Interest or Economic Interest. Each Member
and Economic Interest Owner considers itself to be a person possessing
experience and sophistication as an investor adequate for the evaluation of the
merits and risks of the Member's or Economic Interest Owner's investment in the
Membership Interest or Economic Interest.
29
CERTIFICATE
The undersigned hereby agree, acknowledge, and certify that the
foregoing Operating Agreement, consisting of 30 pages, including the Attached
Exhibit A, constitutes the Operating Agreement of BrowseSafe Limited Liability
Company adopted by the Voting Members of the Company:
INITIAL MEMBERS: DATE:
---------------- -----
/s/ Xxxx Xxxxx 3/26/98
--------------------------- ---------------
/s/ J. Xxxxxxxx Xxxx 3/26/98
--------------------------- ---------------
/s/ Xxx X'Xxxxx 3/26/98
--------------------------- ---------------
/s/Xxxxxxx Xxxxxxxx 3/26/98
--------------------------- ---------------
30
EXHIBIT A
Members Initial Capital Contribution
------- ----------------------------
---------------------------------- ------------------------
Initial Member
---------------------------------- ------------------------
Initial Member
---------------------------------- ------------------------
Initial Member
---------------------------------- ------------------------
Initial Member
---------------------------------- ------------------------
Investor Member
---------------------------------- ------------------------
Investor Member
---------------------------------- ------------------------
Investor Member
---------------------------------- ------------------------
Investor Member
---------------------------------- ------------------------
Investor Member
---------------------------------- ------------------------
Investor Member
We, the Voting Members, as of _________ day of _____________, 19_____, attest
that the above Investors are Members of BrowseSafe LLC, pursuant to the terms of
this Operating Agreement, and according to their Initial Contribution shown
above, and are entitled to the rights provided under the Operating Agreement.
X X
------------------------------ -------------------------------
X X
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