Exhibit 10.21
OPERATING AND PROTOCOL AGREEMENT
OF
STATMON - EBI SOLUTIONS, LLC
A NEVADA LIMITED LIABILITY COMPANY
This Operating Agreement of Statmon - eBI Solutions, a Nevada limited
liability company, (the "Company"), dated as of June 10, 2002 (the "Agreement")
has been entered into by Statmon Technologies Corporation ("Statmon") and eBI
Solutions LLC ("eBI") as all the original members.
WITNESSETH
WHEREAS, the Parties have formed the Company as a Nevada limited liability
company pursuant to Title 7, Chapter 86 of the Nevada Revised Statute (the
"Act"); and
WHEREAS, the Parties desire to enter into this Agreement, utilizing the
executed Deal Point Memorandum ("DPM") attached as Exhibit I as a basis, in
order to state the terms and conditions of the ongoing operation and management
of the Company.
WHEREAS, the Parties agree that this Agreement, once executed, will
supersede the executed DPM.
NOW, THEREFORE, in consideration of the promises and the agreements herein
contained and intending to be legally bound hereby, the Parties hereby agree as
follows:
1.0 FORMATION
1.1 Formation; Name; Office. The Parties have formed the Company as
of June 10, 2002 under and pursuant to the Act to be conducted under the name
"Statmon - eBI Solutions, LLC". The business office of the Company is located at
000 X. Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000. The Company may
subsequently change its name or business address to such name or place as the
Manager(s) may determine, or as the Member(s) may subsequently designate.
1.2 Purposes. The purpose for which the Company was formed was to
provide professional services to implement software systems and develop software
solutions, and to take all actions and related functions in connection therewith
in form of a Joint Venture between Statmon Technologies Corporation and eBI
Solutions LLC. The Manager(s) may designate additional or expanded business
purposes in the future.
1.3 Duration. The term of existence of the Company commenced on June
10, 2002 and ends on December 31, 2052, unless the term is extended by amendment
to the Agreement and the Certificate, unless the Company is earlier dissolved in
accordance with either the terms of this Agreement or the Act (the "Term").
1.4 Resident Agent. The registered agent and registered office of
the Company will be as designated in the Certificate of Formation of the Company
(the "Certificate") or any amendment thereof. The resident agent may be changed
from time to time by the Manager(s). Any such change will be made in accordance
with the procedural requirements of the Act. If the resident agent ever resigns,
then the Manager(s) will promptly appoint a successor.
1.5 Number of Managers. The number of Managers of the Company from
the inception of the company to on or about February 15, 2004 was two (2). From
and after said time and on an ongoing basis the number of managers will be one
(1). The manager is and will be Xxxxxxxx Xxxxxx, CEO of Statmon.
1.6 Statmon will bear the cost of forming the Company.
2.0 CLASSES OF MEMBERSHIP INTERESTS, CAPITAL CONTRIBUTIONS, LIABILITY
AND AUTHORITY
2.1 Class A and Class B Membership Interests. There are two classes
of Membership Interests: Class A Membership Interest and Class B Membership
Interest. Class A Membership Interest comprises 100% of the total membership
interest of the Company. Class B Membership Interest comprises 0% of the total
membership interest of the Company. Class A shares have voting rights and
preference over Class B shares for distributions and allocations. Class B shares
are non-participating and non-voting. From the inception of the company to on or
about February 15, 2004, Membership interests were as follows: Statmon
Technologies Corporation 51%, comprised of 100% class A shares and eBI
Solutions LLC 49%, comprised of 100% Class A Shares. Thereafter and for
consideration received by eBI, Statmon became the owner and now owns 100% of the
Membership interests in the company comprised of 100% of the Class A Shares.
When and if the Company has revenues in excess of $250,000 per quarter and/or
Statmon's shares are actively traded on NASDAQ or equivalent public market, the
parties agree to negotiate to reconstruct the Company.
2.2 Member's Liability. Except as otherwise provided in this
Agreement, the liability of the Member(s), as such, will be limited to the
amount of Capital Contributions it has made or is obligated to make in
accordance with, and subject to, the provisions of this Article 2.0.
2.3 Interest. Except as otherwise provided herein, no Member will
receive any interest on his capital contributions to the Company.
2.4 Uses of Capital Contribution. Any funds received by the Company
hereof will be utilized by the Company for Company purposes as determined by the
Manager(s).
2.5 Withdrawal of Capital. No Member will have the right to withdraw
any part of his capital contributions prior to the liquidation and termination
of the Company pursuant to Article 9.0 hereof, unless such withdrawal is
provided for in this Agreement.
2.6 Source of Distributions. No Member, Manager or other Related
Party (as defined in Section 11.1 of this Agreement) will be personally liable
for the return of the capital contributions of any other Member, or any portion
thereof, it being expressly understood that any such return will be made solely
from the Company's assets.
2.7 Contribution of Property. The Company may accept contributions
of property, goods or services other than cash, valued at fair market value by
the Manager(s), for the property, goods or services contributed. Such
contributions will be referred to as "Capital Contributions."
2.8 Loans. Statmon has loaned and/or may loan the Company working
capital on a monthly, or as required, basis. All advances and loans from Statmon
shall be the subject of blanket Promissory Notes as agreed by the parties. For
amounts in excess of $100,000, a specific Promissory Note is to be issued and
secured by a perfected UCC security interest over the Company's accounts
receivable. The term of each Promissory Note shall not exceed 12 months from the
date of the first advance secured by the Promissory Note.
2.9 Guaranties. It is contemplated the Member(s) may be required to
guarantee third party indebtedness, for loans to the Company, or equipment
leases, real property leases or other contracts.
3.0 TITLE TO THE PROPERTY OF THE COMPANY
Title to any and all property, real, personal or mixed, owned by, or
leased to, the Company will he held in the name of the Company, or in the name
of any nominee which the Manager(s) may, in his sole and absolute discretion,
designate.
4.0 MANAGEMENT OF THE COMPANY; POWERS AND DUTIES OF THE MANAGERS;
CONFLICTS OF INTEREST; COMPENSATION OF MEMBER AND THE MANAGERS, REIMBURSEMENT OF
EXPENSES
4.1 Management of Business.
(a) Except as otherwise provided in this Agreement, the
management of the Company and all decisions concerning the business affairs of
the Company will be made by the Manager(s). Only the Manager(s) will have the
authority to bind the Company subject to Section 4.1(b) herein. Matters outside
the ordinary course will require the consent of the Member(s) only as
specifically stated herein. The Manager(s) may be changed at any time, and from
time-to-time, by the Member(s).
(b) If at any time there are no Managers, any decision
delegated herein to the Managers, will be decided by the sole member or a
majority vote among the remaining Members as the case may be.
4.2. General Powers and Duties of Managers. Except as otherwise
specifically provided in this Agreement, the Manager(s) will devote such time
and attention to the business affairs of the Company, and have the power, in his
sole and absolute discretion, to do all things they may deem reasonably
necessary or-convenient to carry out the business and affairs of the Company (as
described in Article 1.0), including, without limitation, except for provisions
and additions as stated in sections 4.7 - 4.15 below:
(a) To sell, convey, mortgage, grant a security interest in,
pledge, lease, exchange or otherwise dispose or encumber the assets or any other
real, personal or mixed property;
(b) To borrow money, incur liabilities and other obligations
either on a secured or unsecured basis;
(c) To commence, prosecute or defend any proceeding in the
Company's name;
(d) To participate with others in partnerships, limited
liability companies, joint ventures and other associations and strategic
alliances;
(e) To deposit, withdraw, invest, pay, retain and distribute
the Company's funds in any manner not inconsistent with the provisions of this
Agreement;
(f) To bring, defend and settle actions at law or at equity;
(g) To enter into and carry out contracts and agreements and
any or all documents and instruments and do and perform all such other things as
may be necessary in furtherance of the Company's purposes or appropriate to the
conduct of the Company's activities;
(h) To cause the lease, mortgage or pledge of the assets or
business of the Company;
(i) To cause the Company to convert, by sale, merger,
reorganization, consolidation or otherwise, to any other type of business
entity;
(j) To execute and file the Articles and any other certificate
or other instrument which may be required to be filed by the Company to transact
business under the laws of the State of Nevada, California, or any other
foreign, federal or state government where the Company may transact business or
any amendments thereto;
(k) To execute, acknowledge and deliver any and all
instruments, and take any and all actions, which may be deemed necessary or
desirable to effect any of the foregoing or any of the other provisions of this
Agreement; and
(l) To admit new Members or create new Membership classes.
4.3 Conflicts of Interest. The fact that a Manager, a Member or any
other Related Party is directly or indirectly interested in or connected with
any person, firm or corporation employed by the Company or from whom the Company
may buy property or services, will not prohibit the Manager(s) from employing,
purchasing from, selling to, or otherwise dealing with, such person, firm or
corporation, if the compensation, price or fee charged to, or received by, the
Company therefor is comparable and competitive with the compensation, price or
fee that would be paid to or paid by an unaffiliated person, firm or
corporation.
4.4 Compensation of Member and the Managers.
Members or Managers will NOT be entitled to a salary and other
compensation for such Member's services to the Company, as every manager or
member is NOT expected to be a full-time employee of the Company and contribute
directly by being active in the Company's business activities. It is further the
agreement among the parties hereto that Members will receive the distributions
provided for in Article 8.0 of this Agreement in full and complete satisfaction
of such Member's contributions to the Company.
4.5 Reimbursement of Expenses. The Company will reimburse the
Manager(s) for reasonable business expenses incurred in connection with any
activities conducted on behalf of the Company. All expenses advanced by the
Manager(s) prior to formation of the Company, will be reimbursed from Capital
Contributions.
4.6 Limitation on Power of Managers. Notwithstanding any other
provision of this Agreement, the Manager(s) will not have the authority to cause
the Company to engage in the following transactions without first obtaining the
approval of the Member or Members.
(a) To materially alter the authorized business of the
Company.
(b) To dissolve, wind-up and terminate the Company's business.
(c) To merge the Company into another entity, substantially
reorganize the Company, or sell or convey all of its assets in a single business
transaction, or related series of transactions.
(d) To create new Membership Classes.
4.7 eBI will provide exclusive management and consulting services to
the Company. As compensation therefore, eBI will retain the operating profits of
the company. This arrangement will remain in effect until the company has
revenues in excess of $250,000 per quarter or Statmon's shares of common stock
are actively traded on NASDAQ or equivalent public market or June 30, 2004,
whichever comes first. Thereafter, refer to the provisions of sections 4.11 and
4.12 below.
4.8 Periodic management meetings between the parties will be held at
mutually convenient times and agreed upon locations.
4.9 eBI shall retain the right to do business after dissolution of
the Company with clients introduced by eBI, its agents or affiliates (except
Statmon), similarly, Statmon shall retain the right to do business after
dissolution of the Company with clients introduced by Statmon, its agents or
affiliates (except eBI). eBI shall have the right to do business with new
clients acquired by the Company after February 7, 2004 if it so chooses.
However, this will only be done if there is a good business reason to do so and
not as a general policy and if eBI notifies Statmon in advance and in writing of
the specific arrangement.
4.10 Statmon and eBI have set up a joint bank account for the
Company at Bank of America. eBI's manager operates this account on a daily
basis.
4.11 Within-three years of the formation of the Company(June 2002)
the parties agree to negotiate in good faith to work out a purchase structure
whereby eBI would be merged into the Statmon group.
4.12 If the parties do not work out a purchase structure as forth in
4.11 prior to June 30, 2005, Statmon agrees to either dissolve the Company or
change its name so as not to include the name "eBI Solutions". In addition, in
that event, eBI shall have the right to convert all customer accounts introduced
through eBI or its agents or affiliates (other than Statmon) to customers of
eBI.
4.13 Statmon's accounting department and eBI will jointly handle the
accounts payable, accounting and administration of the Company and will produce
monthly inter-company management accounting reports two business days before
month end.
4.14 The Company will be charged the agreed amount of $500 per month
for the use of office space and agreed upon infrastructure provided by Statmon
for so long as the Company operates from Statmon's offices.
4.15 All client contracts, invoices and accounts receivable with
reference to the business of the Company will be done by and through the
Company.
4.16 Liability and errors and omissions insurance for the Company
will be by a blanket policy or policies provided by Statmon, unless agreed to
otherwise between the parties.
4.17 All of the Company's employees may participate in Statmon's
health plan or eBI Solutions, LLC health plan, as agreed to by the parties.
5.0 MEETINGS AND VOTING OF MEMBERS
5.1 Meetings. Member Meetings may be called at any time by the
Manager(s) or by the Member(s). No annual or regular meetings are required to be
held. Upon receipt of a written request either in person or by certified mail
that a meeting is to be held and stating the purposes of the meeting, the
Manager(s) will provide the Member or Members, within ten (10) days after
receipt of said request, written notice (either in person or by certified mail)
of the meeting and the purposes of such meeting. No meeting will be held less
than five (5) nor more than sixty (60) days after notice thereof; provided,
however, that the Member or Members may waive the notice requirements herein set
forth.
5.2 Action by Written Consent Without a Meeting. Any action required
or permitted to be taken at an annual or special meeting of the Member(s) may be
taken without a meeting, with ten (10) days prior written notice, and without a
vote, if consents in writing, setting forth the action so taken, are signed by
the Member(s) having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all Membership
Interests entitled to vote on the action were present and voted and such
consents are delivered to the office of the Company in the manner required by
the Act. Every written consent will bear the date and signature of the Member(s)
who signs the consent.
6.0 ACCOUNTING PROVISIONS
6.1 Fiscal and Taxable Year. The fiscal and taxable year of the
Company will be March 31, unless the Manager(s), in his sole and absolute
discretion, designates a different fiscal or taxable year.
6.2 Books and Accounts.
(a) Complete and accurate books and accounts will be kept and
maintained for the Company at the Company's principal place of business or at
such other place as the Manager(s) will select. Such books and accounts will be
kept for fiscal and tax purposes on the cash or accrual basis, as the Manager(s)
will determine, and will include a separate account for the Member or Members.
The names and addresses of the Member or Members will be maintained as part of
the books and records of the Company. The Members or Members' duly authorized
representative, at such Members' own expense and upon delivering advance written
notice to the Company of a proper business purpose, will at all reasonable times
have access to, and may inspect and make copies of, such books and accounts and
any other records of the Company.
(b) All funds received by the Company will be deposited in the
name of the Company in such bank account or accounts as the Manager(s) may
designate from time to time, and withdrawals there from will be made upon the
signature of the Manager(s) or upon such other signature or signatures on behalf
of the Company as the Manager(s) may designate from time to time or as otherwise
provided herein (see section 4.10).
6.3 Financial Reports.
(a) The Manager(s) will endeavor to cause the Company to
provide the Member or Members on a monthly basis, financial statements including
a balance sheet and the related statements of income and changes in Company
capital and changes in financial position for the prior year.
(b) The Manager(s) will endeavor to cause to be prepared after
the end of each taxable year of the Company and filed, on or before their
respective due dates (as the same may be extended), all federal and state income
tax returns of the Company for such taxable year and will take all action as may
be necessary to permit the Company's regular accountants to prepare and timely
file such returns. Form 1065 (Schedule K-1) will be sent to the Member or
Members after the end of each taxable year on or about June 15 (or later if the
proper extension is filed), reflecting each Members' pro rata share of income,
loss, credit and deductions for such taxable year.
6.4 Tax Elections. Any elections required or permitted to be made by
the Company under the Internal Revenue Code of 1986, as amended (the "Code"),
will be made by the Manager(s) in such manner as the Manager(s) will determine.
In the event of an audit of the Company by the Internal Revenue Service, the
Manager(s) will designate the "tax matters partner" pursuant to Section
6231(a)(7) of the Code, and such tax matters partner will comply with all of his
obligations as such under the Code and the regulations promulgated there under.
6.5 Expenses. To the extent practicable, all expenses of the Company
will be billed directly to, and be paid by, the Company.
7.0 ADMISSION OF SUBSTITUTE MEMBER; TRANSFER BY A MEMBER; DISABILITY OF A
MEMBER OR THE MANAGERS; CONTINUATION OF THE COMPANY
7.1 Admission of Substitute Member. Upon the prior written consent
(which consent may be granted or withheld for any reason or no reason) of the
Manager(s), the Manager(s) will admit to the Company as a substitute member any
person or entity who will have acquired all or any portion of the Membership
Interest of the Member(s) pursuant to a written assignment, provided the
provisions of this Article 7.0 will have been complied with.
7.2 Transfer of a Member's Interest. Except as provided in Section
2.8 hereto:
(a) A Member may not, without the prior written consent of the
Manager(s) or of all Members, sell, transfer, assign or permit, voluntarily or
involuntarily, any security interest, pledge, mortgage, lien, charge,
encumbrance, adverse interest, preferential arrangement or restriction of any
kind (collectively, an "Encumbrance") upon, all or any portion of such Member's
Membership Interest in the Company. Any such purported transfer, assignment or
other disposition or Encumbrance of Member's Membership Interest (hereinafter
collectively referred to as a "Transfer") without such consent will be void and
will not bind the Company. If the Manager(s) has consented to the Transfer,
such Transfer may be made only if: (i) the provisions of Section 7.3 of this
Agreement do not otherwise prohibit the Transfer; (ii) a duly executed and
acknowledged counterpart of the instrument effecting such Transfer in form and
substance satisfactory to the Manager(s) will have been delivered to the
Manager(s), and the transferor will have indicated such intention of effecting
such Transfer; (iii) the transferee will have expressly agreed to be bound by
the terms of this Agreement and to assume all of the obligations of the Member
hereunder; (iv) the transferor and the transferee will have executed or
delivered such other instruments as Manager(s) may deem necessary or desirable
to effectuate such Transfer, including, without limitation, an opinion of
counsel that the Transfer complies with, or is exempt from, the registration
provisions of the Securities Act of 1933, as amended ("Securities Act") and any
applicable securities or "Blue Sky" law of any state or other jurisdiction; and
(v) the transferor or transferee will have paid all reasonable expenses and
legal fees relating to the Transfer including, without limitation, submission of
required legal counsel opinion and of preparing, filing and executing any
amendment to the Articles necessary to effect admission of the transferee as a
Member.
(b) Any transferee of a Member's Membership Interest in the
Company who received the consent of the Manager(s) or all members to the
Transfer and who is not admitted to the Company as a substitute Member pursuant
to Section 7.1 of this Agreement will be entitled to receive, to the extent
transferred, the distributions to which the transferor Member would be entitled,
but will have no right to participate in the management and affairs of the
Company, exercise any voting or other rights of a Member or be entitled to
become a Member.
(c) Notwithstanding Section 7.2(a) and (b) a Member who
desires to transfer his interest ("Transferring Member") to a Non-Member, will
be required to give to each remaining Member of the Company the right to
purchase their pro-rata share of the transferring Member's Membership Interest
on such terms, conditions and rights as the proposed transfer is to be made to
the Non-Member for a period of thirty (30) days from written notice to Member of
the proposed transfer and all relevant terms. If less than all Members exercise
their right of first refusal to purchase the transferring Member's Membership
Interest, the Members who elect to purchase their pro-rata share may purchase
any additional percentage up to one hundred percent (100%) of the Transferring
Member's Membership Interest in accordance with same terms, rights, and
conditions as the proposed transfer is to be made to the Non-Member.
7.3 Further Limitations on Transfers of Member's Interests. In no
event may a Transfer be made if the Transfer would result in: (i) the
termination of the Company as a limited liability company for federal income tax
purposes pursuant to Section 708(b)(1)(B) of the Code; or (ii) the dissolution
of the Company pursuant to the Act; and, if so attempted, the Transfer will be
void and will not bind the Company. In making the determination whether a
Transfer will result in such a termination, the Managers may require the
transferee to furnish at such transferee's expense an opinion of counsel passing
on this issue. In no event may a Transfer be made to (and no substitute Member
will be admitted to the Company who is) a person below the age of twenty-one
(21) years (or the local age of majority, if higher) or a person who has been
adjudged to be insane or incompetent, and any purported Transfer to any such
person will be void and will not bind the Company. As a condition of recognizing
a Transfer, the Managers may require such proof of age of the transferee as the
Managers may deem necessary.
7.4 Disability of a Member or a Manager. Upon the removal,
disability, withdrawal, or bankruptcy of a Manager (each of the foregoing being
herein called a "Disabling Event"), the Company will be dissolved; unless within
ninety (90) days after the occurrence of a Disabling Event a majority of the
remaining Managers if any, or all Members consent to continue the business of
the Company pursuant to Section 7.5 of this Agreement and to the appointment of
a replacement Manager. The former Manager, or his estate or successors, will
retain his Membership Interest, if any.
7.5 Continuation of the Company. If the Company is continued
following a Disabling Event, any substitute Managers will assume and will be
bound by the provisions of this Agreement and will sign as a party to this
Agreement, as the same may have been amended from time to time. For the purposes
of this Agreement, unless the context otherwise requires. Any substitute
Manager, upon compliance with the provisions of this Article 7.0 and such
individual's or entity's admission as a Manager, will be included within the
meaning of the term "Managers".
8.0 DISTRIBUTIONS AND ALLOCATIONS
8.1 Definitions. As used in this Agreement, the following terms have
the following meanings:
(a) "Capital Account" means as to each Member the amount of
his cash capital contributions once made, plus his share of Net Profits (as such
term is defined in this Section 8.1) allocated to him pursuant to this
Agreement, less distributions to him (other than payments described in Code
Sections 707(a) and 707(c)) and also less (1) his share of Nonrecourse
Deductions and Net Losses (as such terms are defined in this Section 8.1)
allocated to him pursuant to this Agreement, and (2) his share of Company
expenditures which are neither deductible nor properly chargeable to Capital
Accounts under Code Section 705(a)(2)(B) or are treated as, such expenditures
under Treasury Regulation ss. 1.704-1(b)(2)(iv)(i), subject, however, to such
further or different adjustments as may be required pursuant to Section 704 of
the Code, or any successor provision, and any regulation promulgated thereunder,
so as to cause the allocations prescribed hereunder to be respected for tax
purposes. In the event any property other than cash is contributed to or
distributed by the Company, the adjustments to Capital Accounts required by
Treasury Regulation ss. 1.704-1(b)(2)(iv)(d), (e), (f) and (g) and ss.
1.704-1(b)(4)(i) will be made.
(b) "Company Minimum Gain" means the amount determined
pursuant to Regulation Section 1.704-2(d).
(c) "Member Nonrecourse Debt" has the meaning ascribed to it
in Regulation Section 1.704-2(b)(4).
(d) "Member Nonrecourse Debt Minimum Gain" means the minimum
gain attributable to "Member Nonrecourse Debt", as determined in accordance with
Regulation Section 1.704-2(i)(3).
(e) "Net Cash Flow" means all cash receipts of the Company
(including capital contributions), and the fair market value of any property
received in connection therewith, in any fiscal year from whatever source
derived less payment of all of the Company's expenses (including, without
limitation, payment of all salaries, bonuses and other benefits to which the
Company's Member or employees are entitled and unincorporated business taxes and
such reserves as the Managers, in their sole and absolute discretion, will
decide to establish for future expenses of operating the Company expanding its
business or creating new locations or franchises in the discretion of the
Managers, or liabilities in connection therewith and such other amounts retained
for investment or reinvestment or as may be required by any regulatory authority
or organization to which the company or its business is subject.
(f) "Net Profits" or "Net Losses" means the Company's annual
taxable income or loss for federal income tax purposes, respectively, determined
without regard to taxable income or loss increased by tax exempt income and
decreased by expenses attributable to such tax exempt income which are not
deductible for federal income tax purposes.
(g) "Nonrecourse Deductions" has the meaning set forth in
Regulation ss. 1.704-2(b)(1).
(h) "Regulation" means the income tax regulations promulgated
from time to time by the U.S. Department of the Treasury.
8.2 Distributions of Net Cash Flow. Except as otherwise required by
this Agreement or by law, distributions of Net Cash Flow will be made quarterly,
or more frequently as the Managers determine. Net Cash Flow will be distributed
to the Members according to the terms and conditions in appendix C pro-rata in
accordance with their respective Membership Interest.
8.3 Allocation of Net Profits and Net Losses. After taking into
account allocations under Section 8.2, Net Profits and Net Losses will be
allocated to the Members owning Class A and Class B shares as follows:
(a) Net Profits will be allocated to the Members as follows:
(i) First, to each Member having negative Capital
Account balances up to an amount necessary to increase such negative Capital
Account balances to zero; and
(ii) Next, to each Member in an amount equal to the
aggregate distributions made to such Member pursuant to Section 8.2 reduced by
amounts previously allocated to such Member pursuant to this Section 8.3(a)(ii)
and
(iii) Thereafter, to the Member pro-rata in accordance
with their respective Membership Interest.
(b) Net Losses will be allocated as follows:
(i) First, to the Member having positive Capital Account
balances up to an amount necessary to reduce such positive Capital Account
balances to zero; and
(ii) The balance among the Members in accordance with
their respective Membership Interests.
8.4 Allocation of Nonrecourse Deductions. Nonrecourse Deductions for
each Fiscal Year will be allocated to the Members in accordance with their
respective Percentages of Membership Interest.
8.5 No Return of Distributions. No Member will have any obligation
to refund to the Company any amount that will have been distributed to such
Member pursuant to this Agreement, subject, however, to the rights of any third
party creditor under law.
8.6 Allocations between Assignor and Assignee Member. In the case of
a Transfer, the assignor and assignee will each be entitled to receive
distributions of Net Cash Flow and allocations of Net Profits or Net Losses and
Nonrecourse Deductions as follows:
(a) Unless the assignor and assignee agree to the contrary and
will so provide in the instrument effecting the Transfer, distributions will be
made to the person owning the Member's Membership Interest on the date of the
distribution; and
(b) Net Profits or Net Losses and Nonrecourse Deductions will
be allocated by the number of days of the fiscal year each person held the
Member's Membership Interest.
8.7 Tax Credits. Any Company tax credits will be allocated among the
Member in proportion to their respective Percentages of Membership Interest.
8.8 Deficit Capital Accounts. Except as otherwise provided herein or
under the Act, no Member will be required at any time to make up any deficit in
his Capital Account.
8.9 Further Allocation Rules. Anything herein to the contrary
notwithstanding:
(a) An item of Company tax loss or deduction will not be
allocated to a Member to the extent that as of the end of any taxable year a
deficit balance in such Member's Capital Account would be created or increased
(after adding to such Capital Account balance such Member's share of Company
Minimum Gain and Member Nonrecourse Debt Minimum Gain as provided in Regulation
Sections 1.704-2(g)(1) and 1.704-2(i)(5), respectively) and subtracting the
items referred to in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
Any amount that cannot be allocated to one Member by reason of this Section
8.9(a) will be allocated to the Member whose Capital Accounts, as determined in
accordance with the foregoing rules, are positive. Additionally, if in any
taxable year any Member unexpectedly receives any adjustment, allocation or
distribution described in Regulation Section 1.704(b)(2)(ii)(d)(4), (5) or (6)
such that had such unexpected adjustment, allocation or distribution been known
at the time of the determinations made under this Section 8.9(a), such Member
would not have been entitled to the allocation under this Agreement, such Member
will be allocated items of income and gain in an amount and manner sufficient to
eliminate any deficit balance from such Member's Capital Account (after
adjustment as provided above) as quickly as possible. The preceding sentence is
intended to satisfy the qualified income offset provisions of the regulations
referenced therein.
(b) Company tax losses and Nonrecourse Deductions that are
attributable to Member Nonrecourse Debt will be allocated to the Member that
bears the economic risk of loss for such debt. Further allocations and any
determinations required in order to make further allocations will be made in
accordance with Regulation Section 1.704-2. Except as otherwise required by
Regulation Section 1.704-2, all other Nonrecourse Deductions will be allocated
among the Member in accordance with their respective Percentage of Membership
Interest.
I If there is a net decrease in Company Minimum Gain during
any Company taxable year, each Member will be allocated before any other
allocation is made under Code Section 704(b) (for such taxable year, and, if
necessary, for subsequent years), items of Company income and gain in proportion
to, and to the extent of such Member's share of the net decrease in Company
Minimum Gain during such year (as determined in accordance with Regulation
Sections 1.704-2(g)(2) and 1.704-2(j)(2)). This paragraph will not apply to the
extent no minimum gain charge back is required pursuant to Regulation Section
1.704-2(f).
(d) If there is a net decrease in Member Nonrecourse Debt
Minimum Gain during any Company taxable year, each Member with a share of such
member Nonrecourse Debt Minimum Gain at the beginning of such taxable year will
be allocated, after any allocation pursuant to Section 8.9I hereof but before
any other allocation is made under Code Section 704(b) (for such taxable year
and, if necessary, for subsequent years), items of Company income and gain in
proportion to, and to the extent of, such Member's share of the net decrease in
such Member Nonrecourse Debt Minimum Gain (as determined in accordance with
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)). This paragraph will not
apply to the extent no minimum gain chargeback is required pursuant to
Regulation Section 1.704-2(i)(4).
(e) Notwithstanding the allocations provided for in Article
8.0, the Member agrees that the Managers are authorized to make such special
allocations of items of income, gain, loss or deduction as may be necessary to
eliminate the effects of any special allocations or adjustments to the capital
accounts of the Member pursuant to Section 704(b) of the Code and any
regulations promulgated thereunder ("Regulatory Allocations") which are applied
to the Company by the Managers but which Regulatory Allocations might cause
distributions to the Member to differ from those provided for in this Agreement
without the authority of the Managers to make the special allocations of income,
gain, loss or deduction provided for hereby.
(f) If any Member contributes any property to the Company (i)
gain or loss with respect to such property on the sale or other taxable
disposition of such property and (ii) depreciation or cost recovery deductions
allowable with respect to such property will be allocated to the Member as
required in Section 704I of the Code and the Capital Account of the Member will
be adjusted in order to properly reflect the allocation under Code Section 704I.
To the extent required pursuant to Treasury Regulation Section 1.704-1(b)
(2)(iv), the Company gain or loss with respect to a member for whom the
provisions of Code Section 734(b) or 743(b) are applicable, will be allocated in
accordance with such provisions.
(g) Each item of income, gain, loss or deduction which is
specially allocated under this Section 8.9, will not be taken into account for
purposes of Net Profits and Net Losses allocated under Section 8.3.
9.0 LIQUIDATION AND TERMINATION OF THE COMPANY
9.1 General. Upon the termination of the Company (unless the Company
is continued pursuant to the provisions hereof including but not limited to
Sections 7.4 and 7.5 hereof), the Company will be liquidated in accordance with
this Article 9.0 and the Act. The liquidation will be conducted and supervised
by the Manager(s), or if there is no Manager, by a person who will be designated
for such purpose by the Majority in Capital Interest of the Members (the
Managers or other person for such purpose so designated being herein referred to
as the "Liquidating Agent"). The Liquidating Agent will have all of the rights
and powers with respect to the assets and liabilities of the Company in
connection with the liquidation and termination of the Company that the Managers
would have with respect to the assets and liabilities of the Company during the
term of the Company. Without limiting the foregoing, the Liquidating Agent is
hereby expressly authorized and empowered to execute and deliver any and all
documents necessary or desirable to effectuate the liquidation and termination
of the Company and the transfer of any asset or liability of the Company. The
Liquidating Agent will have the right from time to time, by revocable powers of
attorney, to delegate to one (1) or more persons any or all of such rights and
powers and such authority and power to execute and deliver documents, and, in
connection therewith, to fix the reasonable compensation of each such person,
which compensation will be charged as an expense of liquidation. The Liquidating
Agent is also expressly authorized to distribute the Company's property to the
Member subject to liens.
9.2 Statements on Termination. Each Member will be furnished with a
statement prepared by the Company's regular accountants setting forth the assets
and liabilities of the Company as of the date of complete liquidation, and each
Member's share thereof. Upon compliance with the distribution plan set forth in
Section 9.3 below, the Member will cease to be such, and the Liquidating Agent
will execute, acknowledge and cause to be filed where appropriate under law a
Certificate of Termination of the Company.
9.3 Priority on Liquidation. The Liquidating Agent will, to the
extent feasible, liquidate the assets of the Company as promptly as will be
practicable. To the extent the proceeds are sufficient therefore, as the
Liquidating Agent will deem appropriate, the proceeds of such liquidation will
be applied in the following order of priority:
(a) To pay the costs and expenses of the liquidation and
termination;
(b) To pay the matured or fixed debts and liabilities of the
Company;
(c) To establish any reserve that the Liquidating Agent may
deem necessary for any contingent, unmatured or unforeseen liability of the
Company; and
(d) The balance, if any, will be distributed to the Member in
accordance with the Member's positive Capital Account balances.
9.4 Distribution of Non-Liquid Assets. If the Liquidating Agent
determines that it is not practicable to liquidate all of the assets of the
Company, then the Liquidating Agent will cause the fair market value of the
assets not so liquidated to be determined by appraisal by an independent
appraiser. [In connection with such appraisal, the Capital Accounts will be
adjusted to reflect such appraisal]. Such assets, as so appraised, will be
retained or distributed by the Liquidating Agent as follows:
(a) The Liquidating Agent will retain assets having a fair
market value equal to the amount, if any, by which the net proceeds of
liquidated assets are insufficient to satisfy liability debts and liabilities of
the Company (other than any debt or liability for which neither the Company nor
the Member is personally liable), to pay the costs and expenses of the
dissolution and liquidation, and to establish reserves, all subject to the
provisions of Section 9.3 hereof. The foregoing will not be construed, however,
to prohibit the Liquidating Agent from distributing, pursuant to Section 9.4(b)
below, property subject to liens at the value of the Company's equity therein.
(b) The remaining assets (including receivables, if any, will
be distributed to the Member by way of undivided interests therein in such
proportions as will be equal to the respective amounts to which each Member is
entitled pursuant to Section 9.3(d) hereof. If, in the judgment of the
Liquidating Agent it will not be practicable to distribute to each Member an
undivided share of each asset, the Liquidating Agent may allocate and distribute
specific assets to one or more Members as tenants-in-common as the Liquidating
Agent will determine to be fair and equitable, taking into consideration,
inter alia, the basis for tax purposes of each asset distributed.
(c) Nothing contained in this Article 9.0 or else where in
this Agreement is intended to cause any in-kind distributions to be treated as
sales for value.
9.5 Orderly Liquidation. A reasonable time will be allowed for the
orderly liquidation of the assets of the Company and the discharge of
liabilities to creditors so as to minimize the fees normally attendant upon a
liquidation.
9.6 Deficit Upon Liquidation. Except as otherwise provided herein,
upon liquidation no Member will be liable to the Company for any deficit in his
Capital Account, nor will such deficit be deemed an asset of the Company.
Nothing herein will limit the liability of a Member under the Act.
9.7 Power of Attorney.
(a) Each Member irrevocably constitutes and appoints the
Liquidating Agent with full power of substitution, the true and lawful attorney
of such Member to execute, acknowledge, swear to and file any document that may
be required to effectuate the liquidation or termination of the Company. It is
expressly acknowledged by each Member that the foregoing power of attorney is
coupled with an interest and will survive the disability of such Member.
(b) A power of attorney similar to that contained in this
Section 9.7 hereof will be one of the instruments that the Company may require a
successor Member to execute, acknowledge and swear to pursuant to Section 7.2
hereof.
(c) Upon the liquidation or termination of the Company, the
Member, at the request of the Liquidating Agent, will execute, acknowledge and
swear to and deliver a new power of attorney, similar to that described in this
Section 9.7, in favor of the Liquidating Agent.
10.0 INDEMNIFICATION OF THE MANAGERS, MEMBER AND AFFILIATES
10.1 Claims. Except as otherwise provided in this Article 10.0, the
Company, or its receiver or trustee, will pay all judgments and claims asserted
by anyone (a "Claimant") against, and will indemnify and hold harmless, each
Manager, and each Member, and each shareholder, director, officer, partner,
Managers, member, employee, agent, representative and other retained persons of
Managers and each Member or any direct or indirect affiliate of any of the
foregoing (collectively the "Related Parties" and individually a "Related
Party") from and against, any liability or damage to a Claimant, incurred by
reason of any act performed or omitted to be performed by any Related Party in
connection with the business of the Company, including, without limitation,
reasonable attorneys' fees and disbursements incurred by any Related Party in
connection with the defense of any action based on any such act or omission. If
a claim for indemnification (other than for expenses incurred in a successful
defense) is asserted against the Company by any Related Party and the Managers
are uncertain whether such indemnification is permitted by law, then the Company
will, unless, in the opinion of its counsel, the matter has been settled by
controlling precedent in favor of such indemnification, submit to a court of
competent jurisdiction the question whether such indemnification by the Company
is not against public policy, which final adjudication will be binding on all
parties.
10.2 Procedure. Upon a Related Party's discovery of any claim by a
third party which, if sustained, would be subject to indemnification pursuant to
Section 10.1 of this Agreement, the Related Party will give prompt notice to the
company of such claim, provided, however, that the failure of the Related Party
to so promptly notify the Company of such claim will not relieve the Company of
any indemnification obligation under this Agreement unless the Company will have
been substantially prejudiced thereby. Unless the Related Party will, in its
sole discretion, agree in writing to assume and control the defense of any
action for which indemnification may be sought, the Company will assume and
control such defense, in which event the Related Party will have the right to
retain its own counsel in each jurisdiction for which the Related Party
determines counsel is required, at the expense of the Company. If the Company
fails or refuses to undertake the defense within fifteen (15) days after
receiving notice that a claim has been made, the Related Party will have the
right (but not the obligation) to assume the defense of such claim in such
manner as it deems appropriate until the Company will, with the consent of the
Related Party, assume control of such defense, and the Company will indemnify
the Related Party pursuant to Section 10.1 of this Agreement from and against
the costs and expenses of such defense. The party hereto handling the defense of
an action will keep the other party hereto fully informed at all times of the
status of the claim. Neither the Company nor the Related Party, when handling
the defense of a claim for which indemnification may be sought by the Related
Party, will settle such claim without the consent of the other party (which
consent will not be unreasonably withheld or delayed) unless such settlement
will: (i) impose no additional liability or obligation upon such party (or his
employees, agents and representatives or any direct or indirect affiliate of any
of the foregoing) whose consent would otherwise be required; and (ii) where the
Company is handling the defense and settlement of the claim, provide the Related
Party with a general release with respect to the subject claim.
10.3 Member's Claims. Except as otherwise provided in this Article
10.0, in any action by an owner of a Membership Interest against a Related
Party, including a Company derivative suit, the Company will indemnify and hold
harmless each Related Party from and against any liability or damage incurred by
any of them, including, without limitation, reasonable attorneys' fees and
disbursements incurred in defense of such action, if: (i) the Related Party is
successful in such action; or (ii) in the opinion of the Company's counsel, the
matter has been settled by controlling precedent in favor of such
indemnification, and if the matter has not been settled by such controlling
precedent, the Company will submit to a court of appropriate jurisdiction the
question whether such indemnification by the Company is not against public
policy, which final adjudication will be binding on all parties.
10.4 Expenses. In any matter with respect to which any Related Party
may be entitled to indemnification from the Company pursuant to this Article
10.0, the Company will, to the extent not prohibited by applicable law, advance
to the Related Party, pending the final disposition of such matter, all costs
and expenses which the Related Party may incur in such matter, including,
without limitation, all attorneys' fees and disbursements, court costs and fees
and disbursements of accountants, other experts and consultants.
10.5 Limitations on Indemnification. Notwithstanding Sections 10.1,
10.3 or 10.4 of this Agreement, no Related Party will be entitled to
indemnification from any liability for fraud, bad faith, willful neglect or
gross negligence. Under no circumstances will any Related Party be personally
liable in respect of any indemnification obligation set forth in this Article
10.0 including Section 10.5.
10.6 Manager's Liability to Company and Member. A Manager will not
be liable to the Company or to the Member for any act or omission or breach of
duty unless a judgment or other final adjudication adverse to the Manager
establishes that the Manager's acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that the Manager
personally gained a financial profit or other advantage to which the Manager was
not legally entitled.
11.0 POWER OF ATTORNEY
11.1 General. In connection with a liquidation, each Member
irrevocably constitutes and appoints the Manager(s) and the Liquidating Agent,
or any one of them, with full power of substitution, the true and lawful
attorney of such Member to execute, acknowledge, swear to and file any of the
following:
(a) Any amendment to the Articles pursuant to the Act;
(b) Any certificate or other instrument (i) that may be
required to be filed by the Company under the laws of the United States, the
State of California or any other state in which any of the Member reside or in
which the Company engages in business or (ii) which the Managers deem advisable
to file;
(c) Any amendments to the certificates or other instruments
referred to in paragraphs (a) and (b) of this Section 11.1;
(d) Any document that may be required to effectuate the
dissolution and liquidation of the Company; and
(e) Any amendment to this Agreement or the foregoing
certificates, instruments or documents necessary to effect any change permitted
under Section 12.8 of this Agreement or to reflect any change in the ownership
of interests in the Company, or otherwise as expressly provided in this
Agreement.
It is expressly acknowledged by each Member that the foregoing power
of attorney is coupled with an interest and will survive the disability of such
Member or a Transfer by such Member, provided, however, that if such Member
makes a Transfer of all of such Member's Membership Interest and the transferee
will, in accordance with the provisions of Article 7.0 of this Agreement, become
a substitute Member, such power of attorney will survive the Transfer only for
the purpose of executing, acknowledging, swearing to and filing any and all
instruments necessary to effectuate such substitution.
Each Member hereby agrees to execute concurrently herewith or upon
five (5) days, prior written notice, a special power of attorney containing the
substantive provisions of this Agreement in form satisfactory to the Manager(s).
11.2 Substitute Member. A power of attorney similar to that
contained in Section 11.1 of this Agreement will be one of the instruments that
the Managers may require a substitute Member to execute, acknowledge and swear
to pursuant to Section 7.2 of this Agreement.
11.3 Additional Power of Attorney. Upon the admission of successor
Managers or upon the dissolution and liquidation of the Company, the Member, at
the request of the Managers or any of such successor Managers or the Liquidating
Agent, will execute, acknowledge and swear to and deliver a new power of
attorney, similar to that described in Section 11.1 of this Agreement, in favor
of any such successors or the Liquidating Agent.
12.0 MISCELLANEOUS PROVISIONS
12.1 Governing Law; Consent to Jurisdiction. This Agreement is
governed by, and construed in accordance with, the laws and decisions of the
State of California, without regard to conflict of law rules applied in such
State. All actions and proceedings arising out of, or relating to, this
Agreement will be heard and determined in any state or federal court sitting in
Los Angeles, California. The undersigned, by execution and delivery of this
Agreement, expressly and irrevocably consent and submit to the personal
jurisdiction of any of such courts in any such action or proceeding. The
undersigned further irrevocably consent to the service of any complaint,
summons, notice or other process relating to any such action or proceeding by
delivery thereof to such party by hand or by certified mail, delivered or
addressed as set forth in Section 13.4 of this Agreement. The undersigned hereby
expressly and irrevocably waive any claim or defense in any such action or
proceeding based on any alleged lack of personal jurisdiction, improper venue or
forum Non conveniens or any similar basis.
12.2 Investment Intent. Each Member represents that such Member has
acquired such Member's Membership Interest for such Member's own account, for
investment and not with a view to the distribution or resale thereof and
understands that: (i) such Member's Membership Interest has not been registered
under the Securities Act or any applicable securities or "Blue Sky" law of any
state or other jurisdiction; and (ii) a Transfer may not be made unless the
transferring Member's Membership Interest is registered under such laws or any
exemption from such registration is available, and such member complies with the
applicable provisions of this Agreement.
12.3 Oral Modification. This Agreement constitutes the entire
understanding among the parties hereto. No waiver or modification of the
provisions of this Agreement will be valid unless it is in writing and signed by
the party to be charged and then only to the extent therein set forth. Should
there be any inconsistency between the language of their agreement and Exhibit
I, this agreement shall prevail.
12.4 Notices. All notices, demands, solicitations of consent or
approval, consents and other communications permitted or required to be given
hereunder will be in writing and will be deemed given when deposited in the
United States mail, and sent either in registered or certified form, return
receipt requested, postage prepaid, addressed as follows: If intended for: (i)
the Company, to its principal place of business; (ii) any Member, to the address
of such Member set forth on the signature page hereto or otherwise as designated
by notice by such Member in the manner provided above; or (iii) to the Managers,
to the address set forth in the signature page hereto or otherwise as designated
by notice by the Managers in the manner provided above.
12.5 Captions. The captions used in this Agreement are intended for
convenience of reference only, will not constitute any part of this Agreement
and will not modify or affect in any manner the meaning or interpretation of any
of the provisions of this Agreement.
12.6 Pronouns. All pronouns and any variation thereof will be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
12.7 Execution. This Agreement may be executed in counterparts, and
as so executed will constitute one agreement binding on the Company, the Manager
or Managers and the Member or Members.
12.8 Amendments. This Agreement may be amended only by the written
consent of the Managers and a Majority of the Members; provided, however, that
the unanimous consent of the Managers and Member will be required for any
amendment to this Agreement which has the effect of (i) changing any Member's
distributions; or (ii) changing any Member's allocation of Net Profits or Net
Losses.
12.9 Binding Effect. Except as otherwise provided herein, this
Agreement will be binding upon and will inure to the benefit of the respective
heirs, executors, administrators, legal representatives, and permitted
successors and assignors of the parties hereto.
12.10 Separability. In case any one or more of the provisions
contained in this Agreement or any application thereof is deemed invalid,
illegal or unenforceable in any respect, such affected provisions will be
construed and deemed rewritten so as to be enforceable to the maximum extent
permitted by law, thereby implementing to the maximum extent possible, the
intent of the parties hereto, and the validity, legality and enforceability of
the remaining provisions contained in this Agreement will not in any way be
affected or impaired thereby.
12.11 Further Assurances. The Member and the Managers will execute
and deliver such further instruments and documents and do such further acts and
things as may be required to carry out the intent and purposes of this
Agreement. Required filings relative to this agreement, if any, will be done
promptly.
12.12 No Third Party Beneficiaries. Except as is otherwise
specifically provided for in this Agreement or as may otherwise be specifically
agreed in writing by all of the Members and the Managers, the provisions of this
Agreement are not intended to be for the benefit of any creditor or other person
(other than a Related Party, a Member or the Managers in such Related Party's,
Member's or Managers' capacity as a Related Party, Member or Managers,
respectively) to whom any debts, liabilities, or obligations are owed by (or who
otherwise has any claim against) the Company or any of the Members, the Managers
or any Related Party; and no such creditor or other person will obtain any
benefit from such provisions or will, by reason of any such foregoing provision,
make any claim in respect of any debt, liability, or obligation against the
Company, any of the Members, the Managers or any Related Party.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Agreement on August __,
2004 effective as of June 30, 2002.
MEMBERS
Address: eBI Solutions, LLC
0000 X. Xxxxxxxx Xxx. Xxxxx 000
Xxxxxxx, XX 00000
/s/ Xxxxxxx Xxxxx
---------------------------------------
By: Xxxxxxx Xxxxx
Title: Manager, eBI Solutions LLC
Original Member only
Address: Statmon Technologies Corp.
000 X. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
/s/ Xxxxxxxx X. Xxxxxx
---------------------------------------
By: Xxxxxxxx X. Xxxxxx
Title: Chairman & CEO, Statmon
Technologies Present and
original Member
MANAGERS
Address: Xxxxxxx Xxxxx
0000 X. Xxxxxxxx Xxx. Xxxxx 000
Xxxxxxx, XX 00000
/s/ Xxxxxxx Xxxxx
---------------------------------------
Xxxxxxx Xxxxx, original Manager only
Address: Xxxxxxxx X. Xxxxxx
000 X. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
/s/ Xxxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxxx X. Xxxxxx,
present and original Manger
EXHIBIT I
Executed Deal Point Memorandum
attached
DEAL POINT MEMORANDUM
STATMON TECHNOLOGIES CORP. & eBI SOLUTIONS, LLC
dba
STATMON - eBI SOLUTIONS
1. Statmon Technologies Corp. ("Statmon") and eBI Solutions, LLC ("eBI") have
formed a joint venture known as "Statmon - eBI Solutions" ("SeBI").
2. Statmon formed a new Nevada Limited Liability Corporation (June 2002) as a
subsidiary named "Statmon - eBI Solutions, LLC". The original filing
stated Statmon owned 51% of the Membership interests and eBI owned 49% of
the Membership interests. As agreed between the members on or about
February 15, 2004 and for consideration received, Statmon now owns 100% of
the Membership interests (change to be filed with the appropriate State
agency) until the SeBI venture has revenues in excess of $250,000 per
quarter and or Statmon's shares of Common Stock are actively trading on
the NASDAQ SC or equivalent public market at which point the parties will
negotiate to restructure the joint venture.
3. Initially, Statmon and eBI managed SeBI jointly. On or about February 15,
2004, the members have agreed that Xxxxxxxx Xxxxxx, CEO of Statmon., would
be the manager, as per an Operating Agreement (to be mutually agreed upon
by the Parties hereto). Statmon Technologies and eBI Solutions agree that
the operating agreement as well as any filings pertaining to the ownership
of Statmon-eBI Solutions will be completed by 7/31/2004.
4. eBI Solutions LLC has contracted with SeBI to provide exclusive management
and consulting services.
5. eBI introduced clients to be owned by eBI, Statmon introduced clients to
be owned by Statmon. eBI Solutions retains the right to do business with
clients introduced to SeBI Solutions by eBI Solutions, its agents or
affiliates (except Statmon Technologies Corp) as eBI Solutions, LLC after
the dissolving of SeBI Solutions.
eBI Solutions has the right to do business with certain new clients
(acquired after 2/15/2004) directly and not through the SeBI Joint
Venture entity if it so chooses. This will only be done if there is a
business reason to do so, not as a general policy. eBI Solutions must
notify STC of any such arrangements.
6. Statmon and eBI have set up a joint bank account at Bank America. eBI's
manager operates the account on a daily basis.
7. Statmon accounting department and eBI jointly handle the accounts payable,
accounting and administration of SeBI and produce monthly inter-company
management accounting reports two business days after month end. Monthly
facility charges will apply as long as SeBI operates out of the Statmon
offices.
8. Periodic management meetings between the parties will be held.
9. Statmon to loan SeBI working capital on a monthly, or as required, basis.
The monthly injection not to exceed the approved line item budget and
adjusted if cash flow is behind schedule. This includes consulting fee
income to the principals in the budget.
10. All advances and loans between the parties to be by way of blanket
promissory notes as agreed between the parties. For amounts in excess of
$100,000 a specific Promissory Note to be issued and secured by a
perfected UCC filed security interest over the SeBI accounts receivables
or STC accounts receivable. The term of the Promissory Note not to exceed
12 months from the date of the first advance.
11. Within 3 years of formation (June 2002), the parties agree to negotiate in
good faith to work out a purchase structure where eBI would be merged into
the Statmon group.
12. If the parties do not agree to work out a purchase structure (see 11
above) prior to June 30, 2005, STC agrees to either dissolve the joint
venture or change the name of the legal entity, not to include the name
"eBI Solutions". In addition, eBI has the right to convert all customer
accounts of SeBI to become customers of eBI.
Agreed Between the Parties:
/s/ Xxxxxxxx Xxxxxx /s/ Xxxxxxx Xxxxx
--------------------------------- --------------------------------
Statmon Technologies Corp. eBI Solutions LLC
Dated:7/8/04 Dated:7/8/04
