LIMITED LIABILITY COMPANY AGREEMENT OF JAVO DISPENSER, LLC a Delaware limited liability company July 8, 2005
OF
JAVO
DISPENSER, LLC
a
Delaware limited liability company
July
8, 2005
Section |
Page |
1 .
ORGANIZATION
|
1
|
1.1
Formation.
|
|
1.2
Name.
|
|
1.3
Principal Office or Offices; Other Offices.
|
|
1.4
Purpose and Business.
|
1
|
1.5
Term.
|
1
|
1.6
Registered Office and Registered Agent.
|
1
|
1.7
Other Required Filings.
|
1
|
1.8
Fiscal Year and Accounting Methods.
|
2
|
1.9
Organizational Expenses of the Company.
|
2
|
1.10
Partnership Status.
|
2
|
1.11
Limit on Borrowing.
|
2
|
2. MANAGEMENT
|
2
|
2.1
Management by the Managers.
|
2
|
2.2
Limitations on Power of the Manager
|
3
|
2.3
Election and Removal of Manager
|
4
|
2.4
Performance of Duties and Liabilities of Manager
|
5
|
2.5
Limited Liability of Manager.
|
6
|
2.6
Reimbursement of Expenses of Manager.
|
6
|
2.7
Waiver of Conflict of Interests.
|
6
|
3. MEMBERS
|
6
|
3.1
Limited Liability of Members.
|
6
|
3.2
Limitations on Rights of Members.
|
6
|
3.3
Members are not Agents.
|
6
|
3.4
Action by Members
|
7
|
3.5
Tax Matters Member.
|
7
|
3.6
Admission and Withdrawal of Members
|
7
|
3.7
No Transfer of Interest Separate from Units.
|
8
|
3.8
Consistent Tax Reporting.
|
8
|
3.9
Representations and Warranties of Members.
|
8
|
Section |
Page
|
3.10
Acknowledgment of Counsel; Members' Consent.
|
9
|
3.11
Power of Attorney
|
10
|
4. UNITS
|
10
|
4.1
Authorized Units.
|
10
|
4.2
Common Units.
|
11
|
4.3
Issuance of Units
|
11
|
4.4
Recapitalizations.
|
12
|
4.5
Transfer of Units
|
12
|
4.6
Permitted Transfers.
|
13
|
4.7
Rights of First Refusal
|
13
|
5. CAPITAL
|
15
|
5.1
Initial Capital Contributions.
|
15
|
5.2
Additional Capital Contributions.
|
15
|
5.3
Capital Accounts.
|
15
|
5.4
Gross Asset Value of Company Assets.
|
16
|
5.5
Authority to Enforce Capital Contributions.
|
17
|
5.6
No Interest; No Return.
|
17
|
5.7
No Obligation to Restore Capital Account Deficit.
|
17
|
6. DISTRIBUTIONS
|
18
|
6.1
Distributions in General.
|
18
|
6.2
Priority of Distributions
|
18
|
6.3
Distributions In Kind.
|
18
|
6.4
Distributions to Pay Taxes.
|
18
|
6.5
Taxes of Members Paid or Withheld.
|
18
|
7. ALLOCATIONS
|
19
|
7.1
General Allocations.
|
19
|
7.2
Regulatory Allocations.
|
19
|
7.3
Tax Allocations
|
21
|
7.4
Other Allocation Rules
|
21
|
7.5
Consent to Allocations.
|
22
|
ii
Section |
Page
|
7.6
Computation of Net Income and Net Loss.
|
22
|
8. DISSOLUTION
AND TERMINATION
|
23
|
8.1
Events Causing Dissolution.
|
23
|
8.2
Liquidator.
|
23
|
8.3
Certificate of Dissolution.
|
23
|
8.4
Winding Up of the Company.
|
23
|
8.5
Termination.
|
24
|
9. INDEMNIFICATION
|
24
|
9.1
General.
|
24
|
9.2
Advancement of Expenses.
|
24
|
9.3
Non-Exclusivity.
|
24
|
9.4
Interested Transactions.
|
24
|
9.5
Curative Payments.
|
25
|
10. BOOKS
AND RECORDS
|
25
|
10.1
Maintenance of Books and Records.
|
25
|
10.2
Inspections and Reports
|
26
|
11. MISCELLANEOUS
|
26
|
11.1
Amendment.
|
26
|
11.2
Notices
|
26
|
11.3
Counterparts.
|
27
|
11.4
Severability.
|
27
|
11.5
Binding on Successors.
|
27
|
11.6
Captions.
|
27
|
11.7
Terms and Usage.
|
27
|
11.8
Application of the Act.
|
27
|
11.9
Choice of Law.
|
27
|
11.10
Entire Agreement.
|
27
|
11.11
Waiver.
|
28
|
11.12
Further Assurances.
|
28
|
11.13
Attorney's Fees.
|
28
|
iii
Section |
Page
|
11.14
Probate Confirmation.
|
28
|
11.15
Remedies and Jurisdiction.
|
28
|
12. DEFINITIONS.
|
28
|
12.1
Act.
|
28
|
12.2
Adjusted Capital Account Deficit.
|
28
|
12.3
Adjustment Date.
|
29
|
12.4
Affiliate.
|
29
|
12.5
Agreement.
|
29
|
12.6
Capital Account.
|
29
|
12.7
Capital Contribution.
|
29
|
12.8
Certificate.
|
29
|
12.9
Code.
|
29
|
12.10
Common Unit.
|
30
|
12.11
Company.
|
30
|
12.12
Company Minimum Gain.
|
30
|
12.13
Control.
|
30
|
12.14
Depreciation.
|
30
|
12.15
Economic Risk of Loss.
|
30
|
12.16
Fiscal Period.
|
30
|
12.17
Fiscal Year.
|
30
|
12.18
Gross Asset Value.
|
30
|
12.19
GAAP.
|
30
|
12.20
Indemnitee.
|
31
|
12.21
IRS.
|
31
|
12.22
Liquidator.
|
31
|
12.23
Majority Vote.
|
31
|
12.24
Manager or Manager.
|
31
|
12.25
Member.
|
31
|
12.26
Member Minimum Gain.
|
31
|
12.27
Member Nonrecourse Debt.
|
31
|
iv
Section |
Page
|
12.28
Member Nonrecourse Deductions.
|
31
|
12.29
New Units.
|
31
|
12.30
Net Income or Net Loss.
|
31
|
12.31
Nonrecourse Deductions.
|
31
|
12.32
Nonrecourse Liability.
|
31
|
12.33
Permitted Transfer.
|
31
|
12.34
Person.
|
31
|
12.35
Proportionate or Proportionately.
|
32
|
12.36
Purchaser.
|
32
|
12.37
Recapitalization.
|
32
|
12.38
Regulations.
|
32
|
12.39
Regulatory Allocations.
|
32
|
12.40
SEC.
|
32
|
12.41
Securities Act.
|
32
|
12.42
Supermajority Vote.
|
32
|
12.43
Transfer.
|
32
|
12.44
Unit.
|
32
|
12.45
Unitholders.
|
32
|
EXHIBIT
A SCHEDULE OF UNITS
|
34
|
CONSENT
OF SPOUSE
|
35
|
v
OF
JAVO
DISPENSER, LLC
a
Delaware limited liability company
This
LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of JAVO DISPENSER, LLC, a
Delaware limited liability company (the "Company") is made and entered into as
of July 8, 2005 ("Effective Date") by and among each of the persons listed on
the attached Exhibit A, as may be amended or supplemented from time to time in
accordance with this Agreement (each, a "Member," and collectively, the
"Members"). Capitalized words used herein have the meanings provided in Section
12 hereof.
1. ORGANIZATION
1.1
Formation.
The Company has been formed as a Delaware limited liability company by
the
execution and filing of the Certificate with the Delaware Secretary of State in
accordance with the Act.
1.2
Name.
The name of the Company on the date of execution of this Agreement is
JAVO DISPENSER,
LLC. The Company's business may be conducted under its name or under one or more
fictitious names deemed advisable by the Manager.
1.3
Principal Office or
Offices; Other Offices. The principal office of the Company is
located
at 000 X Xxxxxxxxx Xxxxx, Xxxxx, Xxxxxxxxxx 00000, or such other place as the
Manager may from time to time designate by notice to the Members. The Company
may maintain another principal executive office and additional offices or places
of business at such other place or places within or outside the State of
Delaware from time to time as the Manager may deem advisable.
1.4
Purpose
and Business. The purpose of the Company is to engage, as determined from
time to
time by the Manager, in any lawful business activity in which a Delaware limited
liability company may engage, except that the Company shall not engage in the
banking business, the business of issuing policies of insurance and assuming
insurance risks, or the trust company business.
1.5
Term.
The term and existence of the Company commenced upon the filing of the
Certificate
with the Delaware Secretary of State and shall continue in perpetuity until
terminated pursuant to this Agreement.
1.6
Registered Office
and Registered Agent. The address of the initial registered office of
the
Company in the State of Delaware and the initial registered agent for service of
process on the Company in the State of Delaware at such registered office is as
provided in the Certificate. The registered office and registered agent may be
changed from time to time by the Manager by causing the filing with the Delaware
Secretary of State of the address of the new registered office and/or the name
of the new registered agent in accordance with the Act.
1.7
Other
Required Filings. The Manager shall cause to be filed an annual tax
statement, provided
by the Company's registered agent in Delaware, pursuant to Section 18-1 107(d)
of the Act with the Delaware Secretary of State on or before the first day of
June of each year, and as soon as practicable after any change in the
information that shall have been required to be contained in such tax statement.
The Manager shall also cause to be filed, recorded or published such
certificates and documents as may be required by the Act or other applicable law
in connection with the use of fictitious business names by the Company, the
qualification of the Company to do business in one or more States, the
continuance of the business and affairs of the Company in the ordinary course of
business of the Company, and for the due performance by the Company of the terms
and conditions of this Agreement.
1.8
Fiscal
Year and Accounting Methods. The Fiscal Year of the Company shall be the
calendar
year, unless the Manager determines that some other Fiscal Year would be more
appropriate and obtains the consent, if necessary, of the IRS to use that other
Fiscal Year as its taxable year. The financial books and records of the Company
shall be kept in accordance with GAAP, and the tax books and records of the
Company shall be kept on the basis of United States federal income tax
accounting principles using the accrual method of accounting.
1.9
Organizational
Expenses of the Company. The Company shall pay the expenses and
costs of
formation and organization of the Company (including legal, accounting and
filing fees and costs), and promptly reimburse the Manager and Members of the
Company the expenses incurred, or caused to be incurred, by each such Manager or
Member on behalf of the Company or in its name with respect to the formation and
organization of the Company (including legal, accounting and filing fees and
costs).
1.10
Partnership Status.
The Members intend, unless there is only one Member, that the
Company
be treated for federal, state and local income tax purposes as a partnership. No
election shall be executed or filed on behalf of the Company by any Manager or
Member of the Company or any other Person to treat the Company as other than a
partnership without prior unanimous written approval by the Members. Whenever
possible, this Agreement shall be construed in a manner consistent with the
classification of the Company for federal, state and local income tax purposes
as a partnership, unless there is only one Member.
1.11
Limit
on Borrowing. The outstanding borrowing associated with guaranties made
by Members
shall not exceed in the aggregate original principal amount of $2,000,000, which
shall initially be the maximum amount of borrowing. A different limit may be
established from time to time by a Supermajority Vote of the
Members.
2.
MANAGEMENT
2.1
Management by the
Managers. Management of the Company shall be vested in the Manager.
Subject to the requirements of approval of Members to the extent that such
approval is expressly required by the Act or any provision of this Agreement,
the Manager 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 exercise any and all of the powers
of the Company, on behalf of the Company, at Company expense and without Member
approval, including without limitation the authority, power and discretion to
cause the Company to exercise, or to exercise on behalf of the Company or in its
name, any and all of the powers of a limited liability company set forth in
Section 18-402 of the Act from time to time, whether independently or
successively in any combination, including but not limited to the
following:
(a) Make
contracts and guarantees, incur liabilities, act as surety, and borrow
money;
(b) Sell,
lease, exchange, transfer, convey, mortgage, pledge, and otherwise dispose of
all or any part of the property and assets of the Company;
2
(c) Purchase,
take, receive, lease, or otherwise acquire, own, hold, improve, renovate, alter,
rebuild, demolish, replace, and use or otherwise deal in and with any interest
in real or personal property, wherever located, or acquire options to do
so;
(d) Issue
notes, bonds, and other obligations and secure any of them by mortgage or deed
of trust or security interest of any or all of the assets of the
Company;
(e) Xxx
on, defend,' or compromise any and all claims or liabilities in favor of or
against the Company; submit any or all such claims or liabilities to
arbitration; confess a judgment against the Company in connection with any
litigation in which the Company is involved; and complain or defend any action,
arbitration, or proceeding, whether judicial, administrative, or otherwise, in
the name of the Company ;
(f) Appoint
and remove all agents, and employees of the Company, prescribe the powers
and duties for them consistent with this Agreement and applicable law, and fix
their compensation;
(g) Retain
legal counsel, auditors, and other professionals in connection with the Company
business and to pay therefor such remuneration as the Manager may
determine;
(h) Take
all actions, make all filings, registrations, applications, give such consents,
and do all other things as the Manager may deem necessary or appropriate to
constitute the Company a limited liability company in good standing in each
jurisdiction wherever the Company may do business and any other jurisdiction as
the Manager deems appropriate;
(i) Issue
Units in exchange for Capital Contributions; and
(j) Admit
one or more Persons as Members, and supplement or amend such Addendum to reflect
the issuance of Units by the Company and admission of Members to the
Company.
2.2
Limitations on Power of the Manager
(a) Actions Requiring Approval of
Members. Notwithstanding any other provisions
of this Agreement to the contrary, the Manager shall not have authority
hereunder to take, or to cause the Company to take, any of the following actions
or to engage, or to cause the Company to engage, in any of the transactions
specified below without the prior written approval by Majority Vote of the
Members with respect to which such action or transaction is
undertaken:
(i)
The sale, exchange or other disposition of all, or
substantially all, of the assets of
the Company occurring as part of a single transaction or plan, or in multiple
transactions over a twelve month period, except in the orderly liquidation and
winding up of the business of the Company upon its duly authorized
dissolution;
(ii) The
merger of the Company with another limited liability company, corporation,
partnership or other business entity; provided in no event shall a Member be
required to become a general partner in a merger with a partnership without his
express written consent, unless the agreement of merger provides each Member
with the dissenter's rights described in the Act;
(iii)
Transactions between the Company and the Manager or one or more of
the
Manager's Affiliates, or transactions in which the Manager or one or more of the
Manager's Affiliates, has a material financial interest, with the exception of
transactions contemplated under the Master Equipment
Lease Agreement between Javo Beverage Company, Inc., an Delaware corporation
("Javo") and the Company entered into on the Effective Date and any other
transactions contemplated in this Agreement;
3
(iv)
The filing of a voluntary bankruptcy petition on behalf of the
Company;
(v)
The dissolution of the Company;
(vi) The
amendment of the Certificate; or
(vii) The
amendment of this Agreement, other than an amendment merely to reflect
the issuance of Units or the admission of the transferees thereof as Members and
withdrawal of the transferors thereof as Members.
(b)
Prohibited Actions.
Except as expressly set forth in this Agreement, the Manager
shall not have any authority hereunder to:
(i)
Employ, or permit any Person to employ, the funds or assets of the
Company
(other than pursuant to an act taken in good faith and required by this
Agreement) in any manner except as intended in good faith for the exclusive
benefit of the Company;
(ii)
Perform any action (other than an act required by this Agreement or any
act taken
in good faith) which would, at the time such act occurred, subject the Members,
as such, to liability in any jurisdiction;
(iii) Possess
Company property in a capacity other than on behalf, or in the name, of
the Company;
(iv) Assign
the rights of the Company in any property for other than a Company
purpose or commingle Company funds with those of any other Person;
(v) Take
any action (other than an act required by this Agreement) that would
make it reasonably impracticable to carry on the ordinary business of the
Company;
(vi) Take
any action (other than any act taken in the good faith based belief that it
is required by this Agreement) in contravention of the express provisions of
this Agreement.
2.3
Election and Removal of Manager
(a)
Number.
There shall be one (1) Manager.
(b)
Tenure.
The Manager shall hold office until the Manager resigns or is removed
and a
successor has been elected and qualified.
(c)
Election and
Qualification of Manager. The Manager shall be elected by the
Members.
The person who receives a plurality of the votes shall be elected as Manager.
The Manager need not be a Member, a resident of the State of Delaware, or a
citizen of the United States. Initially, the Manager shall be Xxxxxxx
Xxxxxxxx.
(d)
Resignation.
The Manager may resign at any time by giving written notice to
the
Members. The resignation of the Manager who is also a Member or has any other
relationship with the
Company shall not affect the Manager's rights as a Member, shall not constitute
a withdrawal of that Member and shall not constitute the termination of any such
relationship.
4
(e)
Removal. The
Manager may be removed at any time with or without cause by a Majority
Vote of the Members. The removal of a Manager who is also a Member, or
associated with a Member, shall not affect the Manager's or such associate's
rights as a Member and shall not constitute a withdrawal of that
Member.
2.4
Performance of Duties and Liabilities of Manager
(a)
Standard of Care;
Reliance on Information. The Manager shall not be liable to the
Company or to any Member for any loss or damage sustained by the Company or any
Member, unless the loss or damage shall have been the result of fraud, gross
negligence, reckless or intentional misconduct, or a knowing violation of law by
the Manager. In performing the duties of the Manager, the Manager shall be
entitled to rely on information, opinions, reports, or statements, including
financial statements and other financial data, of the following persons or
groups: (a) employees or other agents of the Company; or (b) any attorney,
independent accountant, or other person as to matters which the Manager
reasonably believes to be within such person's professional or expert
competence, as to matters within its designated authority.
(b)
Payment of
Manager.The Manager shall be paid such reasonable compensation
as determined from time to time by the Members and approved by Majority Vote of
the Members.
(c)
Devotion of Time.
The Manager is not obligated to devote all of its time or business
efforts to the affairs of the Company. The Manager shall devote whatever time,
effort, and skill as the Manager deems appropriate for the operation of the
Company.
(d)
Signing Authority of
Manager. The Manager is authorized to endorse checks, drafts,
and other evidences of indebtedness made payable to the order of the Company, to
sign all checks, drafts, promissory notes, deeds of trust or other instruments
obligating the Company to pay money, and to sign all other contracts,
agreements, deeds, obligations and other instruments on behalf of the Company.
The signature of the Manager alone is sufficient for such instrument to be
binding on the Company. The Manager shall have the power to execute bonds,
mortgages and other contracts except where required or permitted by law to be
otherwise signed and executed, and the signing and execution thereof may be
expressly delegated by the Manager to some other agent of the
Company.
(e)
Duties and Powers of
the Manager. The Manager shall record, or cause to be recorded,
all the resolutions of the Manager or Members in a book to be kept for that
purpose, and shall perform like duties for the standing committees when
required. The Manager shall give, or cause to be given, notice of any meetings
of the Members or Manager and shall have custody of the seal, if any, and have
authority to affix the same to any instrument requiring it, and when so affixed
it may be attested by his signature. The Manager may give general authority to
any other officer to affix the seal of the Company, if any, and to attest the
affixing by his signature. The Manager shall keep, or cause to be kept, at the
principal executive office or at the office of the Company's transfer agent or
registrar, as determined by resolution of the Manager, a register, or a
duplicate register, showing the names of all Members and their addresses, and
the number of Units held by each. The Manager shall also keep, or cause to be
kept, all documents described in Section 11.1
and such other documents as may be required under the Act and deliver
documents to the Members to the extent required by Section 1 1.2 or the Act. The
Manager shall be responsible for financial management and control, financial
reporting to the lenders, investors and regulatory agencies, and tax planning,
tax compliance and tax reporting. The Manager
shall also be responsible for personnel policies and administration. The Manager
shall keep and maintain, or cause to be kept and maintained, adequate and
correct books and records of accounts of the properties and business
transactions of the Company, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, and interests. The books of
account shall at all reasonable times be open to inspection by the Manager. The
Manager or agent expressly authorized shall have, Chief Financial Officer shall
have the custody of the funds and securities of the Company, and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
Company, and shall deposit all moneys and other valuable effects in the name and
to the credit of the Company with such depositories as may be designated by the
Manager. The Chief Financial Officer shall disburse the funds of the Company as
may be ordered by the Manager, taking proper vouchers for such disbursements,
and shall render to the president and the Manager, or when Members so require,
at a meeting of the Members, an account of all of his transactions as Chief
Financial Officer and of the financial condition of the Company. The Chief
Financial Officer shall perform such other duties and shall have such other
responsibility and authority as may be prescribed elsewhere in this Agreement or
from time to time by the Manager. The Chief Financial Officer shall have the
general duties, powers and responsibility of a chief financial officer of a
corporation, and shall be the chief financial and accounting officer of the
Company.
5
2.5
Limited Liability of
Manager. No person who is the Manager of the Company shall be
personally
liable under any judgment of a court, or in any other manner, for any debt,
obligation, or liability of the Company, whether that liability or obligation
arises in contract, tort, or otherwise, by reason of being the Manager of the
Company.
2.6
Reimbursement of
Expenses of Manager. The Manager of the Company shall be reimbursed
for the reasonable expenses incurred by the Manager on behalf of the Company or
in its name with respect to the business and affairs of the Company to the
extent such expenses are approved in writing by the Manager or incurred pursuant
to the express terms and provisions of the Act or this Agreement.
2.7
Waiver of Conflict
of Interests. Each of the Members acknowledges and consents to
and
waives the conflict of interests of the Manager in that the Manager is an
employee and an executive officer of Javo. The Members hereby consent, as a
condition to becoming a Member, that the Members' sole remedy shall be removal
of the Manager with or without cause and replacement by a vote of the
Members.
3.
MEMBERS
3.1
Limited
Liability of Members. No Member shall be liable under any judgment of a
court, or
in any other manner, for any debt, obligation or liability of the Company,
whether that liability or obligation arises in contract, tort, or otherwise, by
reason of being a Member of the Company; provided, however, that Members may be
required under Section I 7253(e) of the Act to return certain distributions if
they shall have had actual knowledge of facts indicating the impropriety of the
distribution.
3.2
Limitations on Rights of
Members. No Member shall
have the right or power to (a) withdraw
or reduce its Capital Contribution, except as a result of the dissolution of the
Company or as otherwise expressly provided in this Agreement or required by law,
(b) bring an action for partition against or affecting the Company, (c) demand
or receive in any distribution property of any kind other than money, or (d)
withdraw, resign or retire as a Member or member of the Company except pursuant
to Section 4.6.
6
3.3
Members
are not Agents. Pursuant to the Certificate and Section 3.1, the
management of the
Company is vested in the Manager. No Member, acting solely in the capacity of a
Member or holder of Units, is an agent of the Company nor can any Member in such
capacity bind, or execute any instrument on behalf of, the Company.
3.4
Action by Members
(a)
Voting
Rights. Any action or approval of the Members shall require a Majority
Vote of
the Members, other than the election of Manager or replacement Manager which
shall require the vote set forth in Section 3.3, and other than any action or
approval which this Agreement expressly provides requires a Supermajority Vote
of the Members.
(b)
Meetings. If
and when the Manager shall determine, meetings of Members may
be called
and when called shall be governed by Section 17104 of the Act; provided,
however, that this reference to Section 17104 or any other provision of this
Agreement shall not be interpreted to require that meetings of the Members be
held, it being the intent of the Members that meetings of the Members are not
required.
(c)
Action
Without Meeting. Any action with respect to which the Members are
entitled
to vote may be taken without a meeting of the Members and without prior notice,
if a consent in writing, setting forth the action so taken, is signed by Members
holding not less than a Majority Vote or such other requisite vote that would be
necessary to authorize or take such action at a meeting at which all Members
entitled to vote thereon were present and voted and such written consent is
delivered to the Secretary of the Company for retention with the books and
records of the Company. Each Member shall be notified of any action so taken
within thirty (30) days of its approval.
3.5
Tax
Matters Member. If required by Section 623I(a)(7) of the Code, the
Manager shall appoint a
Member to serve as the tax matters partner in accordance with such Section (the
"Tax Matters Member"), and in connection therewith and in addition to all the
powers given thereunder, the Tax Matters Member shall have all other powers
needed to fully perform hereunder including, without limitation, the power to
retain all
attorneys and accountants of his choice. The designation made pursuant to
this paragraph is hereby expressly consented to by each Member as an express
condition to becoming a Member.
3.6
Admission and Withdrawal of Members
(a)
Admission of a
Member. Upon the Transfer or issuance of Units in compliance with the
conditions set forth in Section 5, a transferee or recipient of Units shall be
deemed admitted to the Company as a substitute or additional Member without need
for further action of any Person. A transferee admitted as a Member shall enjoy
the same rights, and be subject to the same obligations, as the transferor of
the Units that were Transferred to the transferee; provided, however, that such
transferor shall not be relieved of any obligation or liability hereunder
arising prior to the consummation of such Transfer but shall be relieved of all
future obligations with respect to the Units so Transferred, and such transferee
shall not be entitled to the receipt of any distribution with a record date
preceding the date such Units were Transferred to the transferee. As promptly as
practicable after the admission of any Person as a Member, the books and records
of the Company shall be changed to reflect such admission of such substitute or
additional Member. Anything herein to the contrary notwithstanding, the Company
shall be entitled to treat the transferor of Units as the absolute owner thereof
in all respects, and shall incur no liability for allocations of Net Income or
Net Loss, or distributions of money or property or transmittal of reports and
notices which are made in good faith to such transferor, until such time as the
conditions set forth in Section 4 or 5, as applicable, have been satisfied and
the effective date of the Transfer has passed.
7
(b)
Withdrawal of a Member.
If a Member shall Transfer all (but not less than all) of its remaining Units in
compliance with the provisions of this Agreement, such Member shall thereupon
automatically be withdrawn from the Company and cease to be a Member of the
Company, the entire membership interest of such Member in the Company shall
automatically terminate, and the withdrawn Member shall not be entitled to any
payment from the Company for its Units or to any distributions from the Company
other than distributions with a record date preceding the effective date of such
Transfer.
3.7 No Transfer of Interest` Separate
from Units. No Member shall assign an economic or membership
interest in the Company, or otherwise Transfer all or any portion of such
Member's economic, membership, voting, information or other rights as a Member,
separately from a Transfer of the Units representing such rights and the
admission of the transferee of such Units as a Member pursuant to Section 4.6,
nor shall any Member obligate itself to act on behalf of or upon the direction
of any Person with regard to the Member's right to require any information from
the Company or obtain accountings of the Company's activities, to inspect the
Company's books and records, or to vote on any matter upon which a Member is
entitled to vote pursuant to either this Agreement or any applicable law. No
Person who is assigned an economic or membership interest in the Company, or is
otherwise Transferred all or any portion of a Member's economic, membership,
voting, information or other rights as a Member, shall have any right to receive
distributions, to vote, to receive information, to review the books and records
of the Company or have any other rights with respect to the Company other than
the rights to which such Person is entitled pursuant to their ownership of Units
that are Transferred or issued to such Person in compliance with the provisions
of this Agreement. Any Transfer or attempted Transfer of any interest or rights
in the Company in violation of this Agreement, or any obligation to act on
behalf of or upon the direction of another Person with respect to any of a
Member's rights as a Member in violation of this Agreement, shall be null and
void and of no effect.
3.8
Consistent Tax
Reporting. Each of the Members acknowledge and are aware of the
income
tax consequences of the manner in which allocations are to be made under this
Agreement and hereby agree to be bound by the provisions of this Agreement and
the allocations made by the Manager from time to time pursuant thereto in
reporting their Units of Net Income, Net Loss and other items of income, gain,
loss, deduction and credit for federal, state and local income tax purposes
consistently therewith.
3.9
Representations and
Warranties of Members. Each Member hereby represents, warrants
and covenants to the Company that, as of the date hereof:
(a) Investment. Representation. The
Member has acquired or is acquiring his, Units in
good faith for his own account, for investment purposes only and not with a view
to or for the distribution, resale, subdivision, fractionalization or
disposition thereof, and the Member has no present interest of selling or
otherwise distributing such Units. The Member is or will be the sole party in
interest in his Units
and as such is or will be vested with all legal and equitable rights in such
Units.
(b) Sophistication of the Member.
The Member either has a preexisting personal or
business relationship with the Company or any of its Manager or, by reason of
his business or financial experience or the business or financial experience of
his professional advisors, who are unaffiliated with and not compensated by the
Company, directly or indirectly, has the capacity to protect his or
her own interests in connection with this investment. The Member is able to bear
the economic risk of an investment in his Units and can afford to sustain a
total loss on such investment. The nature and amount of the Member's investment
in such Units is consistent with his investment objectives, abilities and
resources.
8
(c) No Public Market. The Member
understands that there is no public market for his Units
and there is no assurance that there will be such a market in the future. The
Member has been advised that his Units have not been registered under the
Securities Act, and that said Units must be held indefinitely unless it is
subsequently registered under the Securities Act, or an exemption from such
registration is available, and understands that the Company is under no
obligation to register said Units or to comply with any exemption from such
registration requirement. In addition, the Member understands that the
transferability of his Units is and will be further restricted by this Agreement
which, among other things, requires that any sale or assignment or other
Transfer of his Units will be subject to certain terms and conditions. Thus, the
Member realizes that he cannot expect to be able to liquidate his investment in
the Company readily, or at all, in the case of an emergency.
(d) Member's Receipt of Information.
The Member has been given the opportunity
to ask questions of, and receive answers from the Manager of the Company
concerning the terms and conditions of its investment in the Company and to
obtain additional information necessary to verify the accuracy of the
information provided by the Company and all other information as the Member
desired in order to evaluate his investment in
the Company.
3.10 Acknowledgment of
Counsel; Members' Consent. Each of the Members acknowledge that The Xxxxx
Law Firm, LLP (the
"Firm") drafted this Agreement on behalf of, and has acted as legal counsel to,
both Javo and the Company, not as legal counsel to any of the Members
individually and not as to Javo individually. Each Member is also aware that the
Firm's representation of Javo with respect to this Agreement or the Master Lease
between Javo and the Company may create a certain conflict between the interests
of Javo and the interests of the Company or its Members. The Company, Javo and
each Member has been informed that they may consult and should only rely on
their own separate counsel in fully reviewing and evaluating this Agreement,
including Members' obtaining tax advice on any subject relevant to the Members.
Each Member acknowledges that:
(a)
The Member's interests in the Agreement may conflict with those of the
Company
and the other Members, including with respect to how the Members will share
profits and losses between themselves;
(b) The
Member is aware that the Firm represents the Company, and that the Firm
has
represented Javo with respect to the Master Lease between Javo and the Company
and with respect to other previous matters;
(c) The
Member hereby acknowledges receiving a full disclosure of the facts causing
those
actual or potential conflicts of interest;
(d) The
Member has been advised by the Company to seek independent counsel of
the
Member's choosing, and has had an adequate opportunity to do so, regarding the
issue of actual and potential conflict of interests that may exist or may arise
in the future among itself, the Company, the other Members, and
Javo;
(e)
The Member has retained independent counsel, or has had adequate
opportunity to do so
and has knowingly and voluntarily waived its right to do so, and has in either
case waived any conflict of interest arising out of the Firm's representation of
the Company and the Firm's prior, concurrent, and future representation of
Javo;
(f)
The Member has been advised by the Company that, and is aware that, this Agreement
will have material tax consequences;
9
(g) The
Member has been advised by the Company to seek independent counsel of
its
choosing regarding this Agreement and its tax consequences, has had an adequate
opportunity to do so, and has done so or has voluntarily waived such
right;
(h) The
Member is aware that it remains able to engage independent counsel of its
own
choosing to vigorously assert any right on the Member's behalf at any time;
and
(i)
The Member consents to the representation of the Company by the Firm under
these
circumstances.
3.11
Power of Attorney
(a) Each
Member hereby irrevocably constitutes and appoints the Manager, and any
Liquidator,
and each of those acting singly, in each case with full power of substitution,
as its true and lawful agent and attorney-in-fact, with full power and authority
in its name, place and stead to:
(i)
execute, swear to, acknowledge, deliver, file and record in the appropriate
public offices (a) all certificates, documents and other instruments (including,
without limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the Manager or any Liquidator deems appropriate or
necessary to form, qualify or continue the existence or qualification of the
Company as a limited liability company in the State of Delaware and in all other
jurisdictions in which the Company may conduct business or own property; (b) all
instruments that the Manager or any Liquidator deems appropriate or necessary to
reflect any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments or
documents that the Manager or any Liquidator deems appropriate or necessary to
reflect the dissolution and liquidation of the Company pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
(d) all instruments relating to the admission, withdrawal, removal or
substitution of any Member or the Capital Contribution of any Member; and (e)
all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of Units;
and
(ii)
execute, swear to, acknowledge and file all ballots, consents, approvals,
waivers,
certificates and other instruments appropriate or necessary, in the sole and
absolute discretion of the Manager or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action which
is expressly made or given by the Members hereunder.
(b) Nothing
contained in this Section 3.11 shall be construed as authorizing the
Manager
or any Liquidator to amend this Agreement except in accordance with Section 12.1
or as may be otherwise expressly provided for in this Agreement.
(c)
The foregoing power of attorney is hereby declared to be irrevocable and a
special
power coupled with an interest, in recognition of the fact that each of the
Members will be relying upon the power of the Manager to act as contemplated by
this Agreement, and it shall survive and not be affected by the subsequent
incapacity of any Member and the Transfer of all or any portion
of such Member's Units and shall extend to such Member's heirs, successors,
assigns and personal representatives. Each such Member hereby agrees to be bound
by any representation made by the Manager or any Liquidator, acting in good
faith pursuant to such power of attorney; and each such Member hereby waives any
and all defenses which may be available to contest, negate or disaffirm the
action of the Manager or any Liquidator, taken in good faith under such power of
attorney. Each Member shall execute and deliver to the Manager or any
Liquidator, within 15 days after
receipt of the Manager's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the Manager
or the Liquidator, as the case may be, deems necessary to effectuate this
Agreement and the purposes of the Company.
10
4.
UNITS
4.1
Authorized Units.
The ownership and membership interests of the Company shall be
represented
by and divided into Units. The total number of Units authorized to be issued by
the Company is three thousand (3,000) and the maximum amount issuable at this
time is three thousand (3,000) Units. The total number of Units authorized to be
issued may only be changed by a Supermajority Vote. Any Units that are
purchased, redeemed or otherwise acquired by the Company or that otherwise cease
to be outstanding shall be canceled and restored to the status of authorized but
unissued Units unless otherwise provided.
4.2
Common Units. All
Units of the Company shall be designated as Common Units. For so long
as it remains outstanding, each outstanding Common Unit shall entitle and
obligate the holder thereof to the rights, powers, duties and obligations set
forth below:
(a) Allocations and Distributions.
Each Common Unit
shall entitle the holder thereof
to a Proportionate share of the Net Income and Net Loss allocated to the
Unitholders, and a Proportionate share of the distributions made to the
Unitholders.
(b) Voting Rights. Members holding
Common Units shall have the right to one (1) vote for
each outstanding Common Unit held by such Member and shall be entitled to notice
of any Member's meeting and shall be entitled to vote upon such matters and in
such manner as provided in this Agreement.
(c)
Other Rights and
Obligations. Each outstanding Common Unit shall entitle
and
obligate the holder thereof to such other rights and obligations of Members as
set forth in this Agreement.
4.3
Issuance of Units
(a) Authority to Issue Units. Subject to
the conditions set forth in Section 5.3(b) and the
Preemptive Rights set forth in Section 4.3(c), the Manager may issue Units from
time to time to such Persons in exchange for such Capital Contributions and upon
such terms and conditions as the Manager may determine in its
discretion.
(b) Conditions to the Issuance of Units.
The Company shall not issue Units to any Person,
and no issuance of Units shall be effective, unless:
(i) The
Capital Contribution per Unit to be made by such Person is not less than the
greater of (A) the fair market value per Unit as of the date of such issuance,
or (B) the sum of the Capital Accounts of all existing Unitholders (determined
after adjustment of the Capital Accounts of the Members pursuant to Section
6.4(b)), divided by the number of outstanding Units prior to such
issuance;
(ii) Such
Person, if not a Member prior to such issuance, shall execute and deliver
to the Company a counterpart to this Agreement, or a written agreement to be
bound by the terms and conditions of this Agreement;
(iii) Such
issuance, and the admission of such Person as a Member, shall not require
registration under the Securities Act, shall not otherwise violate any federal
or state securities laws or
regulations applicable to the Company, and shall not cause the Company to be
treated as a "publicly traded partnership" under Section 7704 of the Code, in
each case in the determination of the Manager.
11
(c)
Preemptive Rights.
In the event that the Company proposes to undertake an issuance
of New Units, it shall give to each of the Unitholders written notice of the
proposed issuance, describing the New Units and setting forth the number of New
Units that the Company proposes to issue and the price and other terms and
conditions upon which the Company proposes to issue the New Units ("Issuance
Notice"). Upon receipt of such Issuance Notice, each of the Unitholders shall
have the right, but not the obligation, to purchase New Units at the price and
on the other terms and conditions specified in the Issuance Notice, exercisable
by delivery of notice to the Company ("Preemption Notice") within twenty (20)
calendar days from the date of receipt of the Issuance Notice setting forth the
number of New Units that the Unitholder, individually from the other
Unitholders, elects to purchase. Such Unitholder's right to purchase New Units
shall terminate if the Unitholder does not exercise such right (by delivery of
the Preemption Notice) within the required time period. If any Unitholder elects
to purchase New Units, then each such Unitholder shall purchase a number of the
New Units equal to the lesser of (i) the number of New Units that the Unitholder
elected to purchase, or (ii) the Unitholder's Proportionate share of the New
Units. However, if there are New Units left unpurchased by Unitholders after the
application of the previous sentence, then each Unitholder that elected to
purchase more New Units than were allocated to the Unitholder under the previous
sentence (an "excess election amount") shall additionally be obligated to
purchase a number of New Units equal to (i) the number of New Units not
allocated to any Unitholder under the previous sentence, multiplied by (ii) the
ratio of the Unitholder's excess election amount to the aggregate excess
election amount of all Unitholders. If existing Unitholders do not elect to
purchase all of the New Units that the Company proposes to issue, the Company
may issue any excess New Units to any other Person or Persons upon the terms and
conditions specified in the Issuance Notice and subject to the conditions and
limitations of this Agreement.
4.4
Recapitalizations.
The Company may make a distribution of Units with respect to outstanding
Units, effect a subdivision or combination of Units, or take a like action
(each, a "Recapitalization"); provided, however, that the Company shall not
effect any Recapitalization unless the respective voting rights and interests in
Net Income and Net Loss and distributions of the Members immediately after the
Recapitalization are the same as their respective voting rights and interests in
Net Income and Net Loss and distributions immediately before the
Recapitalization.
4.5
Transfer of Units
(a)
Conditions to the
Transfer of Units. No Member shall Transfer all or any portion
of its Units to any Person, and no such Transfer shall be effective,
unless:
(i) The
Transfer is either a Permitted Transfer pursuant to Section 4.6, a Transfer
pursuant to Section 4.7, or a Transfer pursuant to Section 4.8;
(ii) Such
Person, if not a Member prior to such Transfer, shall execute and deliver
to the Company a counterpart to this Agreement, or a written agreement to be
bound by the terms and conditions of this Agreement and to make all of the
representations, warranties, approvals and acknowledgements of a Member
hereunder, or (in the case of a Transfer by operation of law) such Person shall
by operation of law be bound by the obligations of the transferor Member under
this Agreement and be deemed to make the representations, warranties, approvals
and acknowledgements made by the transferor Member under this
Agreement;
(iii)
Such Transfer, and the admission of such Person as a Member, shall not
require
registration under the Securities Act, shall not otherwise violate any federal
or state securities laws or
regulations applicable to the Company, and shall not cause the Company to be
treated as a "publicly traded partnership" under Section 7704 of the Code, in
each case in the determination of the Manager.
12
(b) No
Transfer of Units shall be effective, and no transferee of Units shall be
admitted
as a Member hereunder or acquire any rights hereunder, including any voting
rights or rights to receive distributions or allocations in respect of the
transferred or issued Units, as applicable, unless the conditions set forth
above are satisfied prior to or concurrent with such Transfer. Any Transfer or
attempted Transfer of Units in violation of this Agreement shall be null and
void and of no effect.
(c) Each
Member acknowledges the reasonableness of the restrictions on Transfer
imposed
by this Agreement in view of the purposes of the Company, its status as a
limited liability company and the relationship of its Members. The Transfer
restrictions contained herein are expressly consented to by each Member as an
express condition of becoming a Member.
4.6
Permitted Transfers.
Subject to the conditions of Section 4.5, a Member shall be permitted
to make a Transfer (a "Permitted Transfer") of Units without the application of
Sections 4.7 if the Transfer is to:
(a) his
spouse or issue,
(b) a
trust for the sole benefit of such Member and/or his spouse or issue, but only
if the
Member retains sole voting control over any Transferred Units,
(c) any
individual or entity directly or indirectly holding one hundred percent
(100%) of
the value and voting power of the securities or other interests of the Member,
or
(d) any
entity of which the Member holds, directly or indirectly, one hundred percent
(100%) of
the value and voting power of the securities or other interests of such
entity.
Such
Transferred Units shall remain subject to all of the terms and conditions
contained in this Agreement and no further Transfer of such Units shall be
permitted unless such Transfer complies with all of the terms and conditions
contained in this Agreement. In the event of a Permitted Transfer of Units to a
trust, at such time that the Transferring Member dies, loses sole voting control
over such Units or such Units become no longer subject to such trust, the
Company and non-Transferring Members shall have the rights provided in Sections
4.7 with respect to all such Units, unless concurrent with
such event such Units are returned to the transferring Member. In the event of a
Transfer to a trust, all notices
required by this Agreement shall be given to both the Transferring Member and to
the trustee or the successor trustee of such trust.
4.7
Rights of First Refusal
(a)
Company's Right of
First Refusal. If a Unitholder ("Offering Unitholder") shall
decide to sell or otherwise Transfer all or any portion of such Unitholder's
Units ("Offered Units") pursuant to a bona fide offer, the Offering Unitholder
shall give written notice to the Company (the "Offer Notice") setting forth such
Offering Unitholder's desire to make such Transfer, the number of Units proposed
to be Transferred by the Offering Unitholder, and the price and other terms and
conditions upon which the Offering Unitholder proposes to Transfer the Offered
Units. Upon receipt of the Offer Notice, the Company shall have the right, but
not the obligation, to elect to purchase any or all of the Offered Units on the
same terms and conditions as set forth in the Offer Notice, exercisable by
delivery of notice to the Offering Unitholder (the "Exercise Notice") within
twenty (20) calendar days from the date of receipt of the Offer Notice setting
forth the number of Offered Units that the Company elects to
purchase.
13
The
Company's right to purchase Offered Units shall terminate if the Company does
not exercise such right by delivery of the Exercise Notice within the required
time period. If the Company elects to purchase all of the Offered Units, then
the Offering Unitholder shall sell the Offered Units to the Company pursuant to
Section 4.7(c).
(b) Unitholders' Right
of First Refusal. If the Company elects to purchase some but not
all of the Offered Units, determines not to exercise its right to purchase
Offered Units or does not exercise its right to purchase any of the Offered
Units within the required time period, the Company shall notify the Unitholders
other than the Offering Unitholder (the "Remaining Unitholders") in writing of
such fact within five (5) calendar days of the Company's election to purchase
some but not all of the Offered Units, the Company's determination not to
exercise its right to purchase Offered Units, or the expiration of the Company's
right to purchase Offered Units, as applicable (the "Unitholder Offer Notice").
The Unitholder Offer Notice shall also include a copy of, or set forth all of
the information contained in, the Offer Notice. Upon delivery of the Unitholder
Offer Notice, each Remaining Unitholder shall have the right, but not the
obligation, to elect to purchase Offered Units that the Company did not elect to
purchase (the "Remaining Offered Units") on the same terms and conditions as set
forth in the Offer Notice, exercisable by delivery of notice to the Offering
Unitholder and to the Company (the "Unitholder Exercise Notice") within twenty
(20) calendar days from the date of delivery of the Unitholder Offer Notice
setting forth the number of Remaining Offered Units that the Remaining
Unitholder elects to purchase. On the date that is twenty (20) calendar days
after delivery of the Unitholder Offer Notice, the right of each Remaining
Unitholder to purchase Remaining Offered Units shall terminate if such Remaining
Unitholder has not exercised such right by delivery of a Unitholder Exercise
Notice, and the Company shall determine if the Remaining Unitholders together
have elected to purchase all of the Remaining Offered Units. If not, then the
right of the Company and of the Remaining Unitholders to purchase any of the
Offered Units shall terminate, and the Offering Unitholder shall be permitted to
Transfer all
of the Offered Units pursuant to Section 4.7(d). If so, then
the Offering Unitholder shall sell all of the Offered Units to the Company and
the Remaining Unitholders pursuant to Section 4.7(c), and each Remaining
Unitholder shall purchase a number of the Remaining Offered Units equal to the
lesser of (i) the number of Remaining Offered Units that the Unitholder elected
to purchase, or (ii) the number of Remaining Offered Units allocated to such
Unitholder Proportionately among the Remaining Unitholders (determined as if all
of the Units held by either the Offering Unitholder or the Remaining Unitholders
not electing to purchase were not outstanding). However, if there are Remaining
Offered Units left unpurchased after the application of the previous sentence,
then each Remaining Unitholder that elected to purchase more Remaining Offered
Units than were allocated to the Unitholder under the previous sentence (an
"excess election amount") shall additionally be obligated to purchase a number
of Remaining Offered Units equal to (i) the number of Remaining Offered Units
not allocated to any Remaining Unitholder under the previous sentence,
multiplied by (ii) the ratio of the Unitholder's excess election amount to the
aggregate excess election amount of all Remaining Unitholders.
(c) Purchase by the
Company and/or Remaining Unitholders. If the Company and/or
one or more Unitholders (collectively the "Purchasers") have elected to purchase
all of the Offered Units, the closing of the purchase and sale shall occur at
the offices of the Company at 10:00 a.m. on the fourteenth (14th) calendar day
following the delivery by the Company of the Exercise Notice electing to
purchase all of the Offered Units, or the determination by the Company that the
Remaining Unitholders had elected to purchase all of the Remaining Offered
Units, as the case may be, or at such other time and place as may be mutually
agreed to in writing by the Purchasers and the Offering Unitholder (the
"Closing"). At the Closing, the Offering Unitholder shall deliver to the
Purchasers a
certificate or certificates (if applicable) representing its Units duly
endorsed for transfer, and the Purchasers shall each deliver to the Offering
Unitholder cash (or a certified or cashier's check) for the amount of the cash
consideration and any other consideration to be paid by such Purchaser for the
Units it has elected to purchase. The Offering Unitholder and the Purchasers
shall each execute and deliver such other documents
as may reasonably be requested by any of the parties mentioned above in
connection with the transactions contemplated in this Agreement. The Purchasers
shall have the right, but not the obligation, to purchase the Offered Units for
cash consideration whether or not part or all of the consideration specified in
the Offer Notice is other than cash. If part or all of the consideration to be
paid for the Offered Units as stated in the Company Offer Notice is other than
cash, the price stated in the Offer Notice shall be deemed to be the sum of the
cash consideration, if any, specified in the Offer Notice plus the fair market
value of the non-cash,
consideration specified in the Offer Notice. If the Offering Unitholder and the
Purchasers are unable to agree upon the fair market value of the non-cash
consideration, the fair market value shall be determined in good faith by the
Manager, which determination shall be conclusive and binding upon all of the
parties.
14
(d)
Failure
to Exercise Right of First Refusal. In the event the Company and/or
the
Remaining Unitholders shall fail to tender the required consideration at the
Closing, or in the event that the Company and/or the Remaining Unitholders do
not elect to purchase all of the Offered Units within the time periods specified
above, then all of the Offered Units may be Transferred by the Offering
Unitholder at any time within eighty (80) calendar days from the date of the
Closing, or the date of expiration of the Remaining Unitholders' rights to
purchase, as applicable, to the person and for the consideration and upon the
terms and conditions specified in the Offer Notice. Any Transfer of the Offered
Units after the end of the eighty (80) day period or any change in the terms of
the Transfer from the terms set forth in the original Offer Notice shall require
a new notice of intent to transfer delivered to the Company and shall give rise
anew to the rights provided in the preceding paragraphs.
5.
CAPITAL
5.1
Initial
Capital Contributions. At the time of their respective execution of this
Agreement,
each Member or Unitholder has severally and not jointly agreed to guaranty a
Proportionate amount of the obligation for money to be borrowed by the Company
from First Regional Bank, or any future lender to the Company (each a "Lender"),
up the amount as set forth in the Capital Contribution column opposite its name
on Exhibit A to this Agreement, which is based on 150% of the maximum amount to
be borrowed. The guaranty of the obligation shall be considered an immediate
Capital Contribution to the Company and shall be evidenced by such further
instruments and documents as may be requested by the Company or its Lender. In
exchange for the Capital Contribution, each Unitholder has been issued the
number of Units set forth opposite its name on Exhibit A to this Agreement equal
to the amount of such Capital Contribution divided by $1,000.00. Each of the
Members and the Company hereby agree that the amount of the Capital Contribution
set forth opposite the name of each Unitholder is the fair market value of the
total Capital Contribution made by such Unitholder as of the date of the
execution by such Unitholder of this Agreement. The Company and each Member and
Unitholder shall be deemed a third-party beneficiary of the guaranties of all
the other Members or Unitholders. Accordingly, to the extent a Member or
Unitholder shall make a payment on account of its guaranty that exceeds the
lesser of (a) the Proportionate amount due under all such guaranties or (b) the
amount of the Capital Contribution of the Member or Unitholder in Exhibit A, the
paying Member or Unitholder shall have a right to claim and recover contribution
from all other Members or Unitholders who have paid less than the lesser of (a)
their Proportionate share of the obligation and (b) their Capital Contribution.
Furthermore, the Company shall treat as a creditor any Member or Unitholder to
the extent its payments under the guarantees exceed the lesser of (a) its
Proportionate amount of the obligations or (b) the amount of the Capital
Contribution of the Member or Unitholder in Exhibit A.
5.2
Additional Capital
Contributions.Except as required
by law or expressly contemplated
or permitted by this Agreement pursuant to the issuance of Units, no Member
shall be required or permitted to make any Capital Contributions or loans to the
Company.
15
5.3
Capital Accounts.
A separate Capita] Account shall be established and maintained for
each
Member on the Company's books and records in accordance with the
following:
(a) To
each Member's Capital Account, there shall be added such Member's Capital
Contributions,
such Member's allocable share of Net Income and any items of income or gain
specially allocated to such Member, and the amount of any Company liabilities
assumed by such Member or that are secured by any property distributed to such
Member.
(b) From
each Member's Capital Account, there shall be subtracted the amount of
cash and
the Gross Asset Value of any property distributed to such Member pursuant to any
provision of this Agreement, such Member's allocable share of Net Loss and any
items of loss or deductions specially allocated to such Member, and the amount
of any liabilities of such Member assumed by the Company or that are secured by
any property contributed by such Member to the Company.
(c) In
the event any Units are Transferred in accordance with the terms of this
Agreement,
the transferee shall succeed to the Capital Account of the transferor to the
extent that it relates to the transferred Units.
(d) In
determining the principal amount of any liability for purposes of
subsections (a) and
(b) above there shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.
(e)
The provisions of this Agreement relating to the maintenance of Capital
Accounts
are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2, and
shall be interpreted and applied in a manner consistent with such Regulations.
If the Manager shall determine that it is prudent to modify the manner in which
the Capital Accounts are maintained in order to comply with such Regulations,
the Manager may make such modification; provided that such modification will not
have a material effect on the amounts distributable to any Member pursuant to
Section 8.4 upon the dissolution of the Company. The Manager shall also make (i)
any adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Members and the amount of Company capital reflected
on the Company's balance sheet, as computed for book purposes, in accordance
with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) any appropriate
modifications upon the occurrence of unanticipated events that might otherwise
cause this Agreement not to comply with Regulations Section 1.704-1(b) or
Section 1.704-2. The foregoing provisions are not intended to prevent the
Company from maintaining such books and records as may be necessary to prepare
financial statements on the basis of GAAP.
5.4
Gross Asset Value of
Company Assets. The Gross Asset value of any asset of the Company
shall be the asset's adjusted basis for federal income tax purposes, except as
follows:
(a) The
initial Gross Asset Value of any asset contributed by a Member to the
Company
shall be the gross fair market value of such asset at the time of contribution,
as reasonably determined by the Manager, provided that the initial Gross Asset
Values of assets contributed to the Company pursuant to Section 5.1 shall be as
agreed to by such Member and the Company as set forth on Exhibit A with respect
to that Member;
(b) The
Gross Asset Values of all Company assets shall be adjusted to equal their
respective
gross fair market values (taking Code Section 7701(g) into account), as
reasonably determined by the Manager immediately prior to the following
times:
16
(i) the
acquisition of an additional interest in the Company by a new or existing
Member in exchange for more than a de minimis Capital Contribution, if the
Manager reasonably determines that such adjustment is necessary or appropriate
to reflect the relative economic interests of the Members in the
Company;
(ii) the
distribution by the Company to a Member of more than a de minimis amount of
Company property as consideration for an interest in the Company, if the Manager
reasonably determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Members in the
Company;
(iii) the
liquidation of the Company within the meaning of Regulations Section
1.704-1(b) (2)(ii)(g); and
(iv) such
other times as the Manager shall reasonably determine necessary or advisable
in order to comply with Regulations Sections 1.704-1(b) and
1.704-2.
(c) The
Gross Asset Value of any Company asset distributed to a Member shall be
adjusted
to equal the gross fair market value (taking Code Section 7701(g) into account)
of such asset on the date of distribution as reasonably determined by the
Manager.
(d) At
the election of the Manager, the Gross Asset Values of Company assets shall
be
increased (or decreased) to reflect any adjustments to the adjusted tax basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) as provided in
Section 5.4(e); provided, however, that Gross Asset Values shall not be adjusted
pursuant to this subsection (d) to the extent that the Manager reasonably
determines that an adjustment pursuant to subsection (b) above is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this subsection (d).
(e)
If the Gross Asset Value of a Company asset has been determined or
adjusted pursuant
to subsection (a), subsection (b) or subsection (d) above, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Net Income and Net
Loss.
5.5
Authority to Enforce
Capital Contributions. Only the Company (and no third party creditor,
either in its own right or as a successor-in-interest of the Company, and
including a trustee, receiver or other representative of the Company or Member)
shall be entitled to enforce any obligation to make Capital Contributions. The
Members intend and agree that any obligation of the Members to make Capital
Contributions constitutes an agreement to make financial accommodations to and
for the benefit of the other Members and the Company. If any Person fails to
make in full a Capital Contribution that such Person agreed to make in exchange
for the issuance of Units prior to or concurrent with the issuance of such Units
or at such other time as agreed to by such Person and the Company, then such
Person shall have no membership interest or economic interest in the Company
relating to or represented by such Units, and such Units shall not be considered
to be outstanding, until such Capital Contribution is made in full.
5.6
No Interest; No Return.
Except as provided herein or required by law, no Member shall
be
entitled to interest on its Capital Contributions or on its Capital Account, and
no Member may withdraw any portion of the capital of the Company and no Member
shall have any right to
demand or receive the return of its Capital Contributions from the
Company.
17
5.7
No
Obligation to Restore Capital Account Deficit. No Member shall be
obligated to restore
the amount of any deficit Capital Account balance, and no Member shall have any
liability to the Company, to any other Member, to the creditors of the Company
or to any other Person on account of any deficit Capital Account
balance.
6.
DISTRIBUTIONS
6.1
Distributions in
General. Money or other property of the Company may be distributed
to the
Members in such amounts and at such times as determined by the Manager in its
discretion, and when distributed shall be distributed among the Members as
provided in Section 6.2, except as otherwise provided in this Agreement. The
Manager shall establish a record date with respect to each distribution that is
on or before the date the distribution is made, and each distribution shall be
distributed according to the ownership of Units as of the record date of such
distribution. If the Manager does not specify a record date for a distribution,
the record date shall be the date of the action or resolution of the Manager
authorizing the distribution.
6.2
Priority of Distributions
(a) Distributions in
General. Any distribution other than a distribution upon dissolution
of the Company shall be made Proportionately to the Unitholders.
(b) Distribution upon
Dissolution. Any distribution made on or after the dissolution
of the Company shall be distributed in accordance with Section 8.4
hereof.
6.3
Distributions In
Kind. The Manager may distribute assets in kind to the Members,
provided
that if such distribution in kind is made together with a distribution of money,
such assets shall, to the extent possible and except as hereinafter provided, be
distributed among the Members Proportionately, and provided further that no
Member may be compelled to accept a distribution of assets in kind except (a)
upon a dissolution of the Company or (b) when no Member is receiving a
distribution of money. Such distribution in kind shall be treated as if it were
a sale of such assets, and any gain or loss on such deemed sale shall be
included in the Net Income or Net Loss of the Company for the Fiscal Period in
which such distribution occurs. To the extent assets are distributed to the
Members, the Manager shall make a determination of the fair market value of such
property at the time of such distribution. No right is given to any Member to
demand or receive property other than money.
6.4
Distributions to Pay
Taxes. The Company may, but shall not be obligated to, distribute
Proportionately
to the Unitholders within thirty (30) calendar days after the end of each
quarter of each Fiscal Year an amount of cash equal to the product of (a) the
sum of the highest federal income tax rate and the highest state income tax rate
applicable to any Unitholder for such Fiscal Year, multiplied by (b) the taxable
income of
the Company for such quarter of such Fiscal Year for federal income tax
purposes. The sum of the highest federal income tax rate and the highest state
income tax rate shall be initially presumed to be fifty
percent (50%).
6.5
Taxes
of Members Paid or Withheld. Each Member hereby authorizes the Company to
withhold
from or pay on behalf of or with respect to such Member any amount of federal,
state, local or foreign taxes that the Manager reasonably determines that the
Company is required to withhold or pay with respect to any amount distributable
or allocable to such Member pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Company pursuant to
Code Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446, or
Section 18805 or Section 26131 of the California Revenue and Taxation Code or
Title 30 of the Delaware Code. Any amounts withheld from a distribution to a
Member pursuant to this paragraph shall be treated as having been distributed
to such Member for all purposes under this Agreement. Any subsequent
distribution of an amount previously withheld from a distribution to such Member
and not paid to a taxing authority on behalf of or with respect to such Member
shall not be treated as an additional amount distributed. Any amount paid on
behalf of or with respect to a Member and not withheld from a distribution to
such Member shall constitute an amount that is due and payable by the Member to
the Company within 15 days after notice from the Manager that such payment must
be made.
18
7.
ALLOCATIONS
7.1
General
Allocations.
Net
Income and Net Loss shall be determined with respect to each Fiscal
Period as of the end of the last day of each such Fiscal Period and shall be
allocated at such time to the Members for purposes of adjusting the Capital
Accounts of the Members as provided in this Section 7.1 after giving effect to
the allocations under Section 7.2.
(a) Net Income.
Net
Income of the Company for a Fiscal Period shall be allocated Proportionately
to the Unitholders.
(b) Net Loss.
Net
Loss of the Company for any Fiscal Period shall be allocated Proportionately
to the Unitholders.
7.2
Regulatory
Allocations. Notwithstanding the allocations made pursuant to Section
7.1, items of
income, gain, loss, deduction. or credit of the Company shall be allocated for
purposes of adjusting the Capital Accounts of the Members as and to the extent
required by this Section 7.2.
(a) Minimum Gain
Chargeback. Except as otherwise provided in Regulations Section
1.704-2(f), if there is a net decrease in Company Minimum Gain during any Fiscal
Period, then each Member shall be specially allocated items of Company income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to such Member's share of the net decrease in Company Minimum Gain during such
Fiscal Period as determined under Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto, and the items
to be allocated shall be determined in accordance with Regulations Section
1.704-2(0(6) and 1.704-2(j)(2). This paragraph is intended to qualify as a
"minimum gain chargeback" within the meaning of Regulations Section I.704- 2(f)
and shall be interpreted consistent therewith.
(b) Member Minimum Xxxx
Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(0(4) or in paragraph (a) above, if there is a net decrease in
Member Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal
Period, then each Member that has a share of the Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company
income and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Member's share of the net decrease in Member Minimum Gain
attributable to the Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). This paragraph is intended to qualify as a
"chargeback of partner nonrecourse debt minimum gain" within the meaning of
Regulations Section 1.704-2(i) and shall be interpreted consistent
therewith.
(c)
Member
Nonrecourse Deductions. Any
Member Nonrecourse Deductions for
any
Fiscal Period shall be specially allocated to the Member or Members who bear the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable, as determined in accordance with
Regulations Section 1.704-2(0. If more than one Member bears the economic risk
of loss with respect to a
Member Nonrecourse Debt, any Member Nonrecourse Deductions
with respect to such Member Nonrecourse Debt shall be specially allocated among
such Members in accordance with the ratios in which the Members share the
economic risk of loss for such Member Nonrecourse Debt.
19
(d) Qualified Income Offset. If
any Member unexpectedly receives an adjustment, allocation,
or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6), then items of Company income and gain (consisting of a pro rata portion of
each item of income and gain of the Company) shall be specially allocated, in
accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Member in an
amount and manner sufficient to eliminate, to the extent required by such
Regulations, the Adjusted Capital Account Deficit of such Member as quickly as
possible, provided that an allocation pursuant to this paragraph shall be made
only if and only to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided in this Agreement have been tentatively made as if
this paragraph were not in the Agreement. This paragraph is intended to qualify
as a "qualified income offset" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
(e) Code Section 754 Adjustment. To the
extent an adjustment to the adjusted tax asis of
any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Treasury Regulations Section 1.704- 1(b)(2)(iv)(m)(4), to be taken into account
in determining Capital Accounts as a result of a distribution to a Member in
complete liquidation of his interest, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis) and such gain or loss shall be specifically allocated to the Members in
accordance with their interests in the Company in the event Treasury Regulations
Section 1.704- 1(b)(2)(iv)(m)(2) applies, or the Members to whom such
distribution was made in the event that Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(f)
Limitation on Allocation of Net Loss. If the allocation of Net Loss to a
Member
would create or increase an Adjusted Capital Account Deficit, there shall be
allocated to such Member only that amount of Net Loss as will not create or
increase an Adjusted Capital Account Deficit. The Net Loss that would, absent
the application of the preceding sentence, otherwise be allocated to such Member
shall be specially allocated to the other Members in the manner that such Net
Loss would generally allocated if the Units of such Member were not outstanding,
subject to the limitation of this paragraph.
(g)
Curative Allocations. The allocations set forth in paragraphs (a) through
(f) above (the "Regulatory Allocations") are intended to comply with certain
regulatory requirements, including the requirements of Regulations Sections
1.704-1(b) and 1.704-2. To the maximum extent possible without violating the
requirements giving rise to the Regulatory Allocations, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss, or deduction
pursuant to this paragraph, so that the net amount of Company income, gain,
loss, deduction and credit allocated to each Member shall be equal to the net
amount of Company income, gain, loss, deduction and credit that would have been
allocated to each such Member if the Regulatory Allocations had not occurred.
Therefore, notwithstanding any other provision of this Section 7 (other than the
Regulatory Allocations), the Manager shall be authorized to make
such offsetting special allocations of Company income, gain, loss, deduction or
credit in whatever manner they determine appropriate so that, after such
offsetting allocations are made, each Member's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Member would have
had if the Regulatory Allocations were not part of the Agreement and all Company
items were allocated pursuant to Section 7.1. In exercising their discretion
under this paragraph, the Manager shall take into account
future Regulatory Allocations under paragraphs (a) and (b) above that, although
not yet made, are likely to offset Regulatory Allocations made under paragraphs
(c) and (d) above.
20
7.3
Tax Allocations
(a) General. For purposes of determining the
distributive Units of the Members of ompany
income, gain, loss, deduction or credit for federal, state, or local income tax
purposes, (i) an allocation to a Member of a share of Net Income or Net Loss for
purposes of adjusting its Capital Account shall be treated as an allocation of
the same share of each item of income, gain, loss, deduction or credit that is
taken into account in computing Net Income or Net Loss, except as otherwise
provided in this Section 7.3, and (ii) any items of income, gain, loss,
deduction or credit of the Company not taken into account in computing Net
Income or Net Loss shall be allocated among the Members in the same manner as
the correlative items of "book" income, gain, loss, deduction or credit are allocated for purposes of
adjusting Capital Accounts. Allocations pursuant to this Section 7.3 are solely
for purposes of federal, state, and local income taxes and shall not affect, or in any way be
taken into account in computing or adjusting, any Member's Capital
Account.
(b) Code Section 704(c) Allocations.
Items of income, gain, loss, deduction and credit
with respect to any property contributed to the capital of the Company with a
Gross Asset Value that varies from its adjusted tax basis in the hands of the
contributing Member immediately preceding the date of contribution shall be
allocated among the Members for federal, state and local income tax purposes so
as to take into account the variation between the adjusted tax basis of the
property and its initial Gross Asset Value using any method permitted under
Regulations Section 1.704-3 as selected by the Manager. In the event the Gross
Asset Value of any Company
asset is adjusted pursuant to Section 5.4(b), subsequent allocations of income,
gain, loss deduction and credit with respect to such asset shall take into
account any variation between the adjusted basis of such asset for federal
income tax purposes and its Gross Asset Value in the same manner as under Code
Section 704(c) using any method permitted under Regulations Section 1.704-3 as
selected by the Manager.
(c)
Recapture. In the
event that the Company has taxable gain that is characterized as
ordinary income under the recapture provisions of the Code, each Member's
distributive share of taxable gain from the sale of Company assets (to the
extent possible) shall include a proportionate share of this recapture income
equal to that Member's proportionate share of the prior cumulative depreciation
deductions with respect to the assets that gave rise to the recapture
income.
7.4
Other Allocation Rules
(a) Varying
Interests. In the event that Units are issued, Transferred,
converted or redeemed
during a Fiscal Period, Net Income, Net Loss, each item thereof and all other
items of income, gain, loss, deduction and credit shall be allocated among the
Members taking into account their varying ownership of Units during the Fiscal
Period in accordance with Code Section 706(d), using the "interim closing of the
books" method, the "daily proration" method, a monthly proration method or any
other method permissible under Code Section 706(d), as selected and applied in
the discretion of the Manager.
(b) Excess
Nonrecourse Liabilities. The "excess nonrecourse liabilities" of
the Company
within the meaning of Regulations Section 1.752-3(a)(3) shall be allocated
Proportionately among the Unitholders, which is the manner in which it is reasonably expected that the
deductions attributable to those nonrecourse liabilities will be allocated.
(c)
Treatment of Distributions.
Distributions to a Member shall be treated as having
been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse
Debt only if and to
the extent that the distribution (a) causes or increases an Adjusted Capital
Account Deficit for the Member and (b) is directly
attributable to the proceeds of a Nonrecourse Liability or a Member Nonrecourse
Debt under the methods prescribed under Regulations Section 1.163-8T for
allocating debt proceeds among expenditures (applying those rules to the Company
as if it were an individual).
21
(d) Tax Elections. The Manager
shall, without further consent of the Members being
required (except as specifically required by Section 1 or any other provision
hereof), have the authority to determine the method of depreciation to be
utilized by the Company for federal, state and local income tax purposes and to
make any and all elections for federal, state, and local tax purposes including,
without limitation, any election, if permitted by applicable law, to adjust the
basis of Company property pursuant to Code Sections 754, 734(b) and 743(b), or
comparable provisions of state or local law, in connection with transfers of
interests in the Company and Company distributions.
(e) Changes in Tax Law. In the
event that (a) any modifications are made to the Code or
any Regulations, (b) any changes occur in any case law applying or interpreting
the Code or any Regulations, (c) the IRS changes or clarifies the manner in
which it applies or interprets the Code or any Regulations or any case law
applying or interpreting the Code or any Regulations or (d) the IRS adjusts the
reporting of any of the transactions or allocations contemplated by this
Agreement which, in each case, in the opinion of an independent tax counsel,
requires allocations of items of income, gain, loss, deduction or credit or
reporting of any of the transactions contemplated by this Agreement in a manner
different from the allocations or reporting set forth in this Agreement, the
Manager is hereby authorized to make new allocations or report any such
transactions (as the case may be) in reliance on the opinion of such independent
tax counsel, and such new allocations and reporting shall be deemed to be made
pursuant to the fiduciary duty of the Manager to the Company and the other
Members, and no such new allocation or reporting shall give rise to any claim or
cause of action by any Member.
7.5
Consent to Allocations.
The Members acknowledge and are aware of the federal, state and local
income tax consequences of the provisions, hereinabove set forth, by which Net
Income, Net Loss and each item of income, gain, loss, deduction and credit of
the Company are allocated and treated and hereby agree to be bound by those
provisions, and the allocations made pursuant thereto, in reporting each item of
income, gain, loss, deduction and credit for federal, state and local income tax
purposes. The Members hereby expressly consent to such provisions as an express
condition of becoming a Member.
7.6
Computation of Net
Income and Net Loss. The Net Income and Net Loss of the Company
for each Fiscal Period shall be equal to the Company's taxable income or loss
for such Fiscal Period, determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any
income of the Company that is exempt from federal income tax and not
otherwise
taken into account in computing Net Income (or Net Loss) pursuant to this
Section 7.6 shall be added to (or subtracted from, as the case may be) such
taxable income (or loss);
(b) Any
expenditure of the Company described in Code Section 705(a)(2)(b) or
treated
as a Code Section 705(a)(2)(b) expenditure pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net
Income (or Net Loss) pursuant to this Section 7.6 shall be subtracted from (or
added to, as the case may be) such taxable income (or loss);
(c)
In the event that the Gross Asset Value of any Company asset is adjusted
pursuant
to Section 5.4(b) or (c), the amount of such adjustment shall be taken into
account as gain (if the adjustment increases the Gross Asset Value of the asset)
or loss (if the adjustment
decreases the Gross
Asset
Value of the asset) from the disposition of such asset for purposes of computing
Net Income or Net Loss;
22
(d) Gain
or loss resulting from any disposition of any Company asset with respect to
which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such asset differs from its Gross Asset
Value;
(e) In
lieu of the depreciation, amortization and other cost recovery deductions that
would
otherwise be taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Period;
(f)
To the extent that an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member's interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
(g)
Notwithstanding any other provision of this Section 7.6, any item allocated
pursuant
to Section 7.2 hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Company income, gain, loss or deduction
available to be allocated pursuant to Section 7.2 hereof shall be determined by
applying rules analogous to those set forth in this Section 7.6.
8.
DISSOLUTION AND TERMINATION
8.1
Events
Causing Dissolution. The Company shall he dissolved and its affairs shall
be wound up
upon the earliest to occur of the following events (a "Dissolution
Event"):
(a) A
Majority Vote of the Members in favor of dissolution of the Company;
or
(b) Entry
of a decree of judicial dissolution of the Company. The
foregoing events shall be the only events that shall cause the dissolution of
the Company.
8.2
Liquidator.
The winding up of the Company shall be conducted by the Manager,
excluding
any Manager who has wrongfully dissolved the Company, or if there are no the
Manager remaining then by a Person designated by a Majority Vote of the Members
(in each case, the "Liquidator").
8.3
Certificate of
Dissolution. As soon as practicable following the occurrence of a
Dissolution
Event, the Liquidator shall execute a Certificate of Dissolution in such form as
shall be prescribed by the Delaware Secretary of State and file such certificate
as required by the Act.
8.4
Winding
Up of the Company. Upon a Dissolution Event, the Liquidator shall take
full account
of the Company's assets and liabilities, liquidate the assets as promptly as is
consistent with obtaining their fair value, or to the extent the assets cannot
be sold or the Members otherwise unanimously agree in writing, value and
distribute the asset in kind, and apply and distribute the proceeds or assets in
the following order:
23
(a) To
the payment, or adequate provision for payment, of the creditors of the
Company
(including Members who are creditors of the Company);
(b) To
the creation of any reserves which the Liquidator deems reasonably necessary
for any
contingent or unforeseen liabilities or obligations of the Company;
and
(c)
To the Members with positive Capital Account balances in proportion to their
positive
Capital Account balances.
8.5
Termination. After
dissolution pursuant to Section 8.1, the Company shall continue to
exist for
the purpose of winding up its affairs, prosecuting and defending actions by or
against it in order to collect and discharge obligations, disposing of and
conveying its property, and collecting and dividing assets. At any time after
dissolution of the Company, any Member with approval by a Majority Vote of the
Members may file a certificate of revival with the Delaware Secretary of State
in accordance with Section 18-1109 of the Delaware Limited Liability Companies
Act, in which case the Company shall be treated as if it had never dissolved.
Absent the filing of a certificate of revival, upon the completion of the
winding up of the affairs of the Company, the Liquidator shall cause to be filed
in the office of the Delaware Secretary of State a certificate of cancellation
of Certificate of Formation in accordance with the Act, and the existence of the
Company shall cease as of the date of filing of such certificate subject to the
conditions specified in Section 18-203 of the Act.
9.
INDEMNIFICATION
9.1
General. The
Company, its receiver or its trustee, shall indemnify, defend and save
harmless
each of the Managers of the Company, and former Managers and the Members and the
former Members (each, an "Indemnitee") from any and all liability, loss or
damage incurred by such Indemnitee by reason of any act performed or omitted to
be performed by such Indemnitee in connection with the business of the Company,
including any and all costs, claims, damages, demands, expenses, fines,
judgments and amounts expended in the settlements of any claims of liability,
loss or damage; provided that if the liability, loss or damage arises out of any
action or inaction of an Indemnitee the action or inaction must not have
constituted fraud, gross negligence or willful malfeasance by such Indemnitee;
and, provided further, that the indemnification shall be recoverable only from
the assets of the Company and not any assets of the Members. The Company may,
however, purchase and pay for that insurance, including extended coverage
liability and casualty and worker's compensation, as would be customary for any
person engaging in a similar business, and name the Indemnitees as additional or
primary insured parties. To
the extent that the law hereafter changes to allow for broader indemnification,
this Agreement shall be deemed modified to provide such
indemnification.
9.2
Advancement of
Expenses. The Company shall pay or advance all expenses incurred by
an
Indemnitee in connection with the investigation, defense, settlement or appeal
of any civil or criminal action or proceeding referenced in Section 9.1 hereof.
The Indemnitee shall repay such amounts paid or advanced only if, and to the
extent that, it shall ultimately be determined that such Indemnitee is
prohibited by law from being indemnified by the Company as authorized hereby.
The payments and advances to be made hereunder shall be paid by the Company to
the Indemnitee within ten (10) days following delivery of a written request
therefor by the Indemnitee to the Company.
9.3
Non-Exclusivity.
The indemnification provided by this Section 9 shall be in
addition to any other
rights to which an Indemnitee may be entitled under any agreement, as a matter
of law or equity or otherwise, and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
24
9.4
Interested
Transactions. No Indemnitee shall be denied indemnification, in whole or
in part,
under this Section 9 by reason of the fact that the Indemnitee had an interest
in the transaction that was previously disclosed to all Members or the Manager
with respect to which the indemnification applies to the extent that the
transaction was otherwise permitted by law or the terms of this
Agreement.
9.5
Curative
Payments. The Company agrees that it shall pay Lender all amounts for
which it
becomes liable to Lender in the manner provided for payment thereof in the
credit agreements between Company and Lender, as amended from time to time
("Loan Agreement"). If any Unitholder (a "Defaulting Unitholder") fails to pay
his Proportionate amount of any obligation or liability for which the
Unitholders become jointly liable pursuant to the Loan Agreement or any
guaranties thereof, and, as a result, the Company or any or all of the other
Unitholders (the "non-defaulting Unitholders") make the payment that should have
been made by the Defaulting Unitholder (a "Curative Payment"), then the
Defaulting Unitholder shall reimburse the Company or the Unitholders that made
the Curative Payment on his or her behalf not later than five (5) business days
after written demand is made therefor by the Company or any of the
non-defaulting Unitholders on the Defaulting Unitholder, together with interest
thereon, accruing at the maximum rate permitted by law from the date such
payment should have been made by the Defaulting Unitholder. If such
reimbursement does not occur within such time period, and the Curative Payment
was made by the Company and/or any non-defaulting Unitholders, then the Company
and/or any of the Unitholders shall be entitled to exercise all rights and
remedies that are available at law to recover from the Defaulting Unitholder the
Curative Payment and any interest that has accrued thereon and, in addition and
without limiting any of such rights or remedies, the Company is hereby
authorized to withhold from cash distributions that would otherwise be payable
to the Defaulting Unitholder by the Company the amount of the Curative Payment,
plus the interest accrued thereon, and to reimburse the non-defaulting
Unitholders for (i) the amount of any Curative Payment they made on behalf of
the Defaulting Unitholder, and (ii) if the Company made the Curative Payment, or
any portion thereof on behalf of the Defaulting Unitholder, the amount of any
cash distributions that the non-defaulting Unitholders would have received from
the Company had the Company not had to make the Curative Payment. Any such
distributions that are so withheld shall be deemed to have been paid to and
received by the Defaulting Unitholder and then paid by the Defaulting Unitholder
to the Company or such non- defaulting Unitholders (as the case may be) and
shall not be deemed to constitute, for any purpose, a reallocation of cash
distributions among the Unitholders.
10.
BOOKS AND RECORDS
10.1
Maintenance of Books
and Records. The Secretary shall maintain at the Company's principal
office, or such other place as shall be designated by the Manager, the following
documents:
(a) A
current list, and all past lists, setting forth the full name and last known
business
or residence address of each Member, in alphabetical order, together with the
Capital Contribution made by each Member and the number of Units held by each
Member;
(b) A
current list, and all past lists, setting forth the full name and last known
business
or residence address of the Manager;
(c) A
copy of the Certificate and all amendments thereto, together with executed
copies of
any power of attorney pursuant to which the Certificate, or any amendments
thereto, shall have been executed;
(d) Copies
of the Company's federal, state and local income tax or information returns
and reports for the six (6) most recent taxable years or, if those returns and
statements were not prepared, copies of the information and statements provided
to, or which should have been provided to, the
Members, if any. in order to enable them to prepare their federal, state, and
local tax returns for those years;
25
(e)
Copies of the Company's financial statements, if any,
for the six (6) most recent Fiscal
Years and the interim period thereafter;
(f)
Copies of this Agreement and all amendments or supplements thereto,
and copies of any written such operating agreement's, amendments or supplements
no longer in effect, together with executed copies of any power-of-attorney
pursuant to which this Agreement, or any amendments or supplements thereto,
shall have been executed;
(g) The
books and records of the Company as they relate to the internal affairs of the
Company
for at least the current and past four (4) Fiscal Years, including a book of the
minutes of all meetings of the Members or the Manager, all resolutions and
actions by written consent of the Members or the Manager and any other writings
prepared pursuant to a requirement of this Agreement; and
(h) Upon
request of any tax assessor to make such documents available, a true copy
of
business records relevant to the amount, cost, and value of all property that
the Company owns, claims, possesses or controls within the county of such tax
assessor.
10.2
Inspections and Reports
(a)
Upon the request of a Member in writing with
a stated purpose reasonably related to the
interest of the Member
as a Member, the Company shall promptly deliver to the requesting Member, at the
expense of the Company, a copy of the information required to be maintained by
the Company pursuant to Sections 10.1(a), (b), (c), (d) and (f) to the extent
requested by the requesting Member; provided, however, the Manager shall have
the discretion to keep confidential any such information to the extent to which
the Manager believes in good faith that disclosure could compromise the
protection of confidential information of the Company, its customers, vendors or
any Persons to whom the Company believes in good faith that it owes an
obligation to maintain such confidentiality.
(b) Each
Member and Manager has the right, upon reasonable request and for purposes
reasonably related to the interest of that person as a Member or Manager, to
inspect and copy during normal business hours any of the records required to be
maintained by Section 10.1,
and to obtain from the Company, promptly after its becoming available, a
copy of the Company's federal, state, and local income tax or information
returns for each Fiscal Year.
(c)
The Company shall deliver to each Member within 90 days after the end of each
Fiscal
Year the information required by law for the Member to complete his or her
federal, state and local income tax or information returns.
11.
MISCELLANEOUS
11.1
Amendment.
Subject to any further approval expressly required by this Agreement,
this Agreement
may be amended by the Manager in the Manager's discretion; provided, however,
that this Agreement may not be amended without the unanimous consent of each and
every Member for any amendment that would affect (i) the limited liability of a
Member, affect the status of the Company as a partnership (except as expressly
provided in this Agreement) or disregarded entity (except as expressly provided
in this Agreement) for federal or State income tax purposes, (ii) the amount of
Net Income or Net Loss allocable to the Members, or (iii) the amount or relative
priority of distributions to and among the Members.
26
11.2
Notices. Unless otherwise specifically provided in this Agreement, all
notices and demands
required to be given hereunder shall be deemed to be duly given at the time of
delivery if such notice or demand is personally delivered, or forty-eight (48)
hours after mailing if such notice or demand is deposited with the United States
Postal Service, postage prepaid, for mailing via certified or registered mail,
return receipt requested, to the Secretary of the Company at the principal
office of the Company or to a Member at the address set forth below the name of
the Member on Exhibit A attached hereto. Such addresses may only be changed by
such addressee giving written notice of such change of address to all of the
other parties hereto.
11.3
Counterparts.
This Agreement may be executed in one or more counterparts and all, so
executed,
shall constitute one Agreement, binding on all of the Members or Unitholders who
so execute, notwithstanding that all of the Members are not signatories to the
same original or the same counterpart. A signed original in counterpart can be
delivered or stored electronically, and such copies shall be considered
enforceable to the full extent of the originals and as if they were an
originally signed Agreement.
11.4
Severability. If
any provision of this Agreement is declared by a court of competent jurisdiction
to be void or unenforceable, such provision shall be deemed severed from the
remainder of this Agreement and the balance of this Agreement shall remain in
effect.
113
Binding on Successors.
This Agreement shall be binding upon and shall inure to the benefit
of the Members and their successors and permitted assigns.
11.6
Captions.
Paragraph titles or captions contained in this Agreement are inserted
only as a matter of
convenient reference. The titles and captions in no way define, limit, extend,
or describe the scope or intent of this Agreement nor any provision
hereof.
11.7
Terms and Usage.
Whenever required by the context, any pronoun shall include the
corresponding
masculine, feminine and neuter forms, and the singular shall include the plural,
and vice versa. All references herein to Sections or Exhibits shall be deemed to
refer to Sections of or Exhibits to this Agreement unless the context shall
otherwise require. All Exhibits attached hereto shall be deemed incorporated
herein by reference as if set forth in full herein. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." All accounting terms not defined herein shall have the meanings
determined by GAAP. The words "hereof," "herein" and "hereunder" and words of
similar import shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement. References to a Person are also to its permitted successors and
permitted assigns. Unless otherwise expressly provided herein, any agreement,
instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes. As
used in this Agreement, the vote, approval, or consent of, and the exercise of
discretion by, the Members shall be obtained, received or conducted in the
manner specified in Section 3.4, and the vote, approval, or consent of, and the
exercise of discretion by, the Manager shall be obtained, received or conducted
in the manner specified in Section 2.1.
11.8
Application of the Act.
Except as provided in this Agreement or the Certificate, the rights
and obligations of the Members and Manager shall be as provided in the Act and
the business and affairs of the Company shall be governed by the Act. In the
event of a conflict between the provisions of this Agreement or the Certificate
and the provisions of the Act, the provisions of this Agreement or the
Certificate shall prevail over the provisions of the Act unless the Act provides
that a written operating agreement
or Certificate of organization may not vary the provision or provisions of the
Act that are in conflict with this Agreement or the Certificate.
27
11.9
Choice
of Law. This Agreement shall be governed by and construed under the laws
of the State
of Delaware as if this Agreement were executed in and to be performed entirely
within the State of Delaware and as if all the Members and Manager reside in
Delaware.
11.10
Entire Agreement. There are no representations, agreements, arrangements
or understandings, oral or written, between and among the Members relating to
the subject matter of this Agreement that are not fully expressed herein, and
this Agreement constitutes the entire understanding among the Members relating
to the subject matter of this Agreement and supersedes any prior written or oral
agreements between them respecting the subject matter contained
herein.
11.11
Waiver. No waiver of any breach or default of this Agreement by any
party hereto shall be considered to be a waiver of any other breach of default
of this Agreement.
11.12
Further Assurances. Each party hereto agrees to perform any further acts
and to execute and deliver any further documents which may be reasonably
necessary to carry out the provisions of this Agreement.
11.13
Attorney's Fees. In the event a dispute arises with respect to this
Agreement, the party prevailing in such dispute shall be entitled to recover all
expenses, including, without limitation, reasonable attorneys' fees and
expenses, incurred in ascertaining such party's rights, in preparing to enforce,
or in enforcing such party's rights under this Agreement, whether or not it was
necessary for such party to institute suit.
11.14
Probate Confirmation. If the Units of a Deceased Member or spouse are a
part of his or her probate estate, the personal representative of the Deceased
Member or Deceased Spouse shall apply for and obtain any necessary court
approval or confirmation of the purchase and sale of the Units, and any fees or
expenses incurred in connection therewith shall be borne by the
estate.
11.15
Remedies and Jurisdiction. Any and all disputes, complaints,
controversies, claims and grievances arising under, out of or in connection
with, or in any manner related to this Agreement, shall be submitted for
resolution to a state Superior Court sitting in San Diego County, California.
Each Member hereby consents to the personal jurisdiction of the courts of the
State of California, and agrees that all actions brought under this Agreement
shall be brought in Superior Court sitting in San Diego County, California. The
parties acknowledge that this Agreement is to be performed in material part in
the location of the Company's principal office, currently in Vista,
California.
12.
DEFINITIONS.
The following definitions shall for all purposes be applied to the terms
used in this
Agreement, unless clearly indicated to the contrary. The following definitions
shall apply equally to both the singular and plural forms of the terms
defined.
12.1
"Act"
means the Delaware Limited Liability Act, Delaware Code Section 18-101 or
any successor
statute, as amended from time to time.
12.2
"Adjusted Capital
Account Deficit" means, with respect to any Member, the deficit
alance in
such Member's Capital Account, if any, as of the end of the relevant Fiscal
Year, after giving effect to the following adjustments:
28
(a) Increase
such balance by any amounts that such Member is obligated to contribute
pursuant to this Agreement, the outstanding principal balance of any promissory
note (of which such Member is the maker) contributed to the Company by such
Member (other than a promissory note that is readily tradable on an established
securities market), and the amount of any unconditional obligation of such
Member (whether imposed by this Agreement or by state or local law) to make
subsequent contributions to the Company (other than pursuant to a promissory
note of which such Member is the maker), to the extent such Member is treated
under Regulations Section 1.704-1(b)(ii)(c) as obligated to restore such
amounts;
(b) Increase
such balance by such Member's share of Company Minimum Gain at the end
of such Fiscal Year, as determined pursuant to Regulations Section 1.704-2(g)( I
), and such Member's share of the Member Minimum Gain for all Member Nonrecourse
Debts, as determined pursuant to Regulations Section 1.704-2(i);
(c)
Decrease such balance by the adjustments described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4)
relating to depletion allowances with respect to oil and gas properties of the
Company;
(d)
Decrease such balance by the allocations of loss and deduction
that, as of the end of such
Fiscal Year, reasonably are expected to be made to such Member pursuant to Code
Section 704(e)(2) relating to interests created by gift, Code Section 706(d)
relating to changes in interest during a Fiscal Year, and Regulations Section
1.751-1(b)(2)(ii) relating to distributions of unrealized receivables or
substantially appreciated inventory items; and
(e)
Decrease such balance by the distributions that, as of the end of such
Fiscal Year, reasonably
are expected to be made to such Member to the extent they exceed offsetting
increases to such Member's Capital Account balance that reasonably are expected
to occur during (or prior to) the Fiscal Years in which such distributions
reasonably are expected to be made, as determined pursuant to Regulations
Section 1.704-1(b)(2)(ii)(d)(6).
The
foregoing definition of "Adjusted Capital Account Deficit" is intended to comply
with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
12.3
"Adjustment Date"
means (a) the last day of each Fiscal Year, (b) the day before the
date of
admission of any Member, (c) the day before the date a Member ceases to be a
Member except as a result of a Transfer of such Member's remaining Units, or (d)
any other date determined by the Manager as appropriate for the closing of the
Company's books.
12.4
"Affiliate"
means, with respect to any Person, any Person directly or indirectly
Controlling
or Controlled by or under common Control with such Person.
12.5
"Agreement" means this Limited Liability Company Operating Agreement of
JAVO DISPENSER, LLC, as it may be amended, supplemented or restated from time to
time.
12.6
"Capital Account"
means, with respect to any Member, the capital account established
and
maintained for such Member on the Company's books and records in accordance with
the provisions of Section 3.
12.7
"Capital
Contribution" means, with respect to any Member, the amount guarantied by
such
Member to or for the Company.
29
12.8
"Certificate" means the Certificate of Formation of JAVO
DISPENSER, LLC, filed with the Delaware Secretary of State under Section 18-201
of the Act.
12.9
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
12.10
"Common Unit" means a Share specified as a Common Unit by the Manager at
the time it is issued.
12.11
"Company" means the limited liability company formed upon the filing of
the Certificate pursuant to the Act and this Agreement and, if the context
permits, any successor to such company.
12.12
"Company Minimum Gain" has the meaning set forth in Regulations Section
1.7042(b)(2) for the phrase "partnership minimum gain," and the amount of
Company Minimum Gain, as well as any net increase or decrease in Company Minimum
Gain, for a Fiscal Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
12.13
"Control" means, when used with respect to any Person, the possession
directly or indirectly of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have correlative meanings.
12.14
"Depreciation" means, for each Fiscal Year or other applicable period, an
amount equal to the federal income tax depreciation, amortization or other cost
recovery deduction allowable with respect to an asset for such Fiscal Year or
other period, except that, if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
period, Depreciation shall be in an amount that hears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that, if the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the
Manager.
12.15
"Economic Risk of Loss" means the "economic risk of loss" within the
meaning of Section 1.752-2 of the Treasury Regulations.
12.16
"Fiscal Period" means the period beginning on the day following any
Adjustment Date (or for the purposes of the first Fiscal Period, beginning on
the date of formation of the Company) and ending on the next succeeding
Adjustment Date.
12.17
"Fiscal Year" means the fiscal year and taxable year of the Company for
financial reporting and tax purposes determined pursuant to Section
1.
12.18
"Gross Asset Value" means, with respect to any asset, the value
determined in accordance with Section 5.4.
12.19
"GAAP"
means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Manager and the American
Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Manager
(or agencies with similar functions of comparable stature and authority within
the accounting profession), or in such other statements by such entity as may be
in general use by significant segments of the United States accounting
profession, which are applicable to the facts and circumstances on the date of
determination.
30
12.20 "Indemnitee"
has the meaning set forth in Section 9.1
12.21 "IRS" means
the Internal Revenue Service of the United States.
12.22 "Liquidator"
means the Manager, or any Person elected by a Majority Vote of the
Members to be responsible for overseeing the winding up and dissolution of the
Company pursuant to Section 8.
12.23 "Majority Vote"
of the Members means approval by the affirmative vote or written consent
of one or more Members holding in the aggregate more than fifty percent (50%) of
the votes afforded with respect to all outstanding Units eligible to vote on the
matter.
12.24 "Manager" or
"Manager" means the
Manager of the Company formed pursuant to Section 2 and empowered to manage the
business and affairs of the Company pursuant to the Certificate and Section
2.
12.25 "Member"
means a member of the Company holding one or more Units.
12.26 "Member Minimum
Gain" means an amount, with respect to each Member Nonrecourse Debt,
equal to the Company Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a Nonrecourse Liability, determined in accordance with
Regulations Section 1.7042(i) with respect to "partner nonrecourse debt
minimum gain."
12.27 "Member Nonrecourse
Debt" has the meaning set forth in Regulations Section 1.7042(b)(4)
for the phrase "partner nonrecourse debt."
12.28 "Member Nonrecourse
Deductions" has the meaning set forth in Regulations Section
1.704-2(i)(2) for the phrase "partner nonrecourse deductions," and the amount of
Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a
Fiscal Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(i)(2).
12.29 "New Units"
means any Units proposed to be issued by the Company after the date of
this Agreement, other than (a) Units issued in connection with a bona fide
business acquisition by the Company, whether by merger, consolidation, purchase
of assets, purchase or exchange of stock or other equity interests in another
business entity or otherwise approved by the Manager, to the extent that such
Units or the proceeds from the issuance of such Units are used to finance such
business acquisition, or (b) Units issued in a Recapitalization.
12.30 "Net Income" or
"Net Loss" means, with respect to each Fiscal Year of the Company, the
amount calculated in accordance with Section 5.10 for such Fiscal
Year.
12.31 "Nonrecourse
Deductions" has the meaning set forth in Regulations Section 1.704-2(b)
(1), and the amount of Nonrecourse Deductions for a Fiscal Year shall be
determined in accordance with the rules of Regulations Section
1.704-2(c).
31
12.32 "Nonrecourse
Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2). 12.33 "Permitted
Transfer" has the meaning set forth in Section 4.6.
12.34 "Person"
means an individual, partnership, limited partnership, trust, estate,
association, corporation. limited liability company, or other entity, whether
domestic or foreign.
12.35 "Proportionate"
or "Proportionately"
means in proportion to the number of Units held by Unitholders (i.e.
according to the ratio of the number of Units held by each Member to the total
number of Units that are outstanding). For instance, a distribution to be made
Proportionately to the Unitholders would be made to each Member holding Units in
an amount equal to (i) the number of Units held by such Member, divided by (ii)
the total number of Units outstanding on the record date of such distribution,
multiplied by (iii) the total amount of the allocation made to the
Unitholders.
12.36 "Purchasers"
has the meaning set forth in Section 4.7(c). 12.37 "Recapitalization" has
the meaning set forth in Section 4.4.
12.38 "Regulations"
means the income tax regulations promulgated under the Code, whether such
regulations are in proposed, temporary or final form, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
12.39 "Regulatory
Allocations" means the allocations set forth in Section 7.2(a) through
(g). 12.40 "SEC" means
the Securities and Exchange Commission of the United States.
12.41 "Securities Act"
means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
12.42 "Supermajority
Vote" of the Members means approval by the affirmative vote or written
consent of one or more Members holding in the aggregate more than seventy-five
percent (75%) of the votes afforded with respect to all outstanding Units
eligible to vote on the matter.
12.43 "Transfer"
means, with respect to any property or right, any sale, assignment,
bequest, conveyance, devise, encumbrance, exchange, gift (outright or in trust),
hypothecation, mortgage, pledge, transfer or other disposition or act of
alienation, whether directly or indirectly or through one or more steps in a
series of interrelated or interdependent transactions, whether voluntary or
involuntary or by operation of law, of (a) such property or right, (b) an option
to acquire such property or right, or (c) stock, partnership interests,
membership interests or other interests (whether equity or otherwise) in the holder of such property or
right that together comprise fifty percent (50%) or more of the value or voting
power of all securities of such holder (other than stock, partnership,
membership or other interests listed for trading on a national stock exchange or
listed on the NASDAQ National Market). The terms "Transferred" and
"Transferring" have correlative meanings.
12.44 "Unit" means
a unit of ownership of the Company, a membership interest in the Company issued
pursuant to Section 4 and conferring upon the holder thereof all the rights and
benefits as provided in this Agreement, and any and all rights and benefits to
which a member of the Company is entitled under the Act to the extent not in
conflict with this Agreement, together with all obligations of Members to comply
with the terms and provisions of this Agreement and the Act.
32
12.45 "Unitholders" means,
individually and collectively, a Member holding one or more Units.
33
EXHIBIT
A
SCHEDULE
OF UNITS
Member
|
Capital
Contribution*
|
Number
of
Common
Units
|
Proportionate
Interest
|
|||||||||
Xxxxxxx
X. Xxxxx
|
$ | 525,000.00 | 525 | 17.50 | % | |||||||
Xxxxxx
Xxxxxx
|
$ | 525,000.00 | 525 | 17.50 | % | |||||||
Xxxxx
X. Xxxxx
|
$ | 300,000.00 | 300 | 10.00 | % | |||||||
Xxxxx
X. Xxxxx
|
$ | 300,000.00 | 300 | 10.00 | % | |||||||
Xxxxxx
Xxxx
|
$ | 300,000.00 | 300 | 10.00 | % | |||||||
Xxxxx
Xxxxxxx
|
$ | 300,000.00 | 300 | 10.00 | % | |||||||
Xxxx
Cable
|
$ | 300,000.00 | 300 | 10.00 | % | |||||||
Xxx
Xxxxxxx
|
$ | 300,000.00 | 300 | 10.00 | % | |||||||
Xxxxxxx
X. Xxxxxxx
|
$ | 150,000.00 | 150 | 5.00 | % | |||||||
TOTALS:
|
$ | 3,000,000.00 | 3,000 | 100.00 | % |
* Capital
Contribution for this schedule is the total amount of the Member's loan
guarantee which is 150% of the several portion of the $2,000,000 which the
Member has agreed to guarantee.
CONSENT
OF SPOUSE
I am the
spouse of . I acknowledge that I have read the foregoing Agreement and that
I know its contents. I am aware that by its provisions, my spouse agrees, among
other things, to the imposition of certain restrictions on the transfer of Units
in JAVO DISPENSER, LLC, a Delaware limited liability company, including my
community interest therein (if any), which rights and restrictions may survive
my spouse's death. I hereby consent to such rights and restrictions, approve of
the provisions of the Agreement, and agree that I will bequeath any interest
which I may have in such Units or any portion thereof, including my community
interest, if any, or permit any such interest to be purchased, only in a manner
consistent with the provisions of the foregoing Agreement. I direct that any
residuary clause in my Will shall not be deemed to apply to my community
interest (if any) in such Interest except to the extent consistent with the
provisions of the foregoing Agreement.
I also
acknowledge that I have been advised to obtain independent counsel to represent
my interests with respect to the foregoing Agreement but that I have declined to
do so and I hereby expressly waive my right to such independent
counsel.
Date:
July , 2005
[Signature
Above]
[Print
Name Above]
|
IN
WITNESS WHEREOF, the parties have signed this Agreement in one or more
counterparts on the date first above written.
MEMBERS
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx, an individual
/s/ Xxxxxx Xxxxxx
Xxxxxx
Xxxxxx, an individual
/s/ Xxxxx X. Xxxxxxx
Xxxxx
X. Xxxxxxx, an individual
/s/ Xxxxx X. Xxxxx
Xxxxx
X. Xxxxx, an individual
/s/ Xxxxxx Xxxx
Xxxxxx
Xxxx, an individual
/s/ Xxxxx Xxxxxxx
Xxxxx
Xxxxxxx, an individual
/s/ Xxxx Cable
Xxxx
Cable, an individual
/s/ Xxx Xxxxxxx
Xxx
Xxxxxxx, an individual
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx
X. Xxxxxxx, an individual
JAVO
DISPENSER, LLC
By: /s/
Xxxxxxx
Xxxxxxxx
Name:
Xxxxxxx
Xxxxxxxx
Title:
Manager
|