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EXHIBIT 3.2
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OPERATING AGREEMENT
OF
ASI GROUP, L.L.C.
This Agreement is entered into and shall be effective as of the 19th
day of October, 1998, by and among the persons executing this Agreement as
Members, on the following terms and conditions.
SECTION 1
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DEFINITIONS
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For purposes of this Agreement, unless the context clearly indicates
otherwise, (i) all of the capitalized words in this Agreement shall have the
meanings set forth in the Appendix and (ii) all non-capitalized words defined in
the Act shall have the meanings set forth therein.
SECTION 2
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FORMATION
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2.1 ORGANIZATION. The Members have authorized the formation of the
Company as a Nevada Limited Liability Company pursuant to the provisions of the
Act and have filed Articles of Organization with the Secretary of State of the
State of Nevada.
2.2 AGENT. The Agent for service of process upon the Company is
Corporation Trust Company of Nevada whose address in the State of Nevada is Xxx
Xxxx Xxxxx Xxxxxx, Xxxx, Xxxxxx 00000. The Members may, from time to time,
change the Agent by filing appropriate documents with the Nevada Secretary of
State. If the registered agent ceases to act as such for any reason the Members
shall promptly designate a replacement Agent. The Members shall promptly file
with the Nevada Secretary of State the documents required by the Act with
respect to any change of the registered Agent or his address. If the Members
shall fail to designate a replacement registered agent or if the Members or the
Agent fail to file the appropriate notice of a change of agent or his address,
any Member may designate a replacement Agent or file a notice of change of agent
or his address.
2.3 PRINCIPAL OFFICE. The principal office of the Company shall be
located at: 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000.
2.4 PURPOSES. Except as provided by the Act, the Company may pursue any
purpose or purposes for which individuals may lawfully associate themselves.
2.5 TITLE TO PROPERTY. Title to all property contributed to or
otherwise acquired by the Company shall be held in the name of the Company.
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2.6 TERM. The term of the Company shall be thirty (30) years from the
date of filing of the Articles with the Secretary of State of Nevada unless the
Company is earlier dissolved pursuant to the provisions of Section 13.
SECTION 3
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ACCOUNTING AND RECORDS
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3.1 RECORDS TO BE MAINTAINED. The Company shall maintain the following
records at its principal office:
(a) A current list of the full names, in alphabetical order, and
last known business or residence address of each Member;
(b) The Certificate Register;
(d) Copies of the Articles, all amendments thereto, and executed
copies of any powers of attorney pursuant to which the
Articles or the amendments have been executed;
(e) Copies of this Agreement, all amendments hereto, and executed
copies of any powers of attorney pursuant to which this
Agreement and such amendments have been executed;
(f) Copies of the Company's federal, state, and local income tax
returns and reports, for the three (3) most recent years;
(g) Copies of any financial statements of the Company for the
three (3) most recent years; and
(f) Any other agreements or documents required by the Act or this
Agreement.
3.2 ACCOUNTS. The Company shall maintain at its principal office
appropriate books and records, kept in accordance with generally accepted
accounting principles on the cash method of accounting, and a record of the
Capital Account for each Member and Assignee in accordance with Section 7 of
this Agreement. Each Member shall have the right to inspect and copy any books
and records of the Company during normal business hours.
3.3 ANNUAL REPORTS. As soon and as often as reasonably practical, but
in no event later than forty-five (45) days after the end of each Fiscal Year,
the Company shall cause to be prepared and furnished to each Member:
(a) The information necessary for the preparation by such Member
its Federal, state and other income tax returns;
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(b) The amount in the Capital Account of such Member as of the
last day of such Fiscal Year;
(c) An income statement and balance sheet for the Company as of
the last day of such Fiscal Year, which shall be prepared by a
certified public accountant if timely requested in writing by
any Member; and
(d) Such other reports as the Company deems reasonably necessary
for the Members to be advised of the current status of the
Company and its business.
SECTION 4
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MANAGEMENT
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4.1 MANAGEMENT. Control of the Company and all of its affairs shall be
in the Members. Except as otherwise provided in this Agreement, Company business
decisions may be made by any of the Members acting on behalf of the Company,
subject to the terms and conditions hereof.
4.2 MAJORITY VOTE. No Members shall have the authority to do any of the
following on behalf of the Company to the extent not consistent with the then
approved annual budget for the Company without the Majority Vote of the Members
as set forth in Section 5.7 hereof:
(a) Make, execute, or deliver any contract to sell, dispose, trade
or exchange any of the Company's property, execute any note or
mortgage or encumber any Company property;
(b) Make, execute or deliver a lease, as lessor or lessee, of
property;
(c) Make, execute or deliver any contract for the purchase of any
services, supplies and/or other property in an amount greater
than One Hundred Thousand Dollars ($100.00); or
(d) Make, execute, or deliver on behalf of the Company any bond,
mortgage, guarantee, indemnity bond, surety bond, or
accommodation paper or accommodation endorsement.
4.3 UNANIMOUS VOTE. No Members shall have the authority to do any of
the following on behalf of the Company without the unanimous Vote of the
Members:
(a) Make, execute, or deliver any general assignments for the
benefit of creditors;
(b) Dispose of the good will of the Company;
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(c) Do any act which would make it impossible to carry on the
business of the Company;
(d) Confess a judgment against the Company; or
(e) Assign, transfer, pledge, compromise, or release any claim of
the Company except for full payment, or arbitrate, or consent
to the arbitration of any of its disputes or controversies
except as required by law.
4.4 OTHER BUSINESS INTERESTS OF MEMBERS. Each Member may have other
business interests and may engage in any other business, trade, or employment
and shall not be obligated to devote more time and attention to the conduct of
the business of the Company than shall be required for the supervision of the
ownership, operation and management of the Company's business property.
SECTION 5
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MEMBERS
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5.1 LIABILITY OF MEMBERS. No Member shall be liable as such for the
liabilities of the Company. The failure of the Company to observe any
formalities or requirements relating to the exercise of its powers or management
of its business or affairs under this Agreement or the Act shall not be grounds
for imposing personal liability on the Members for liabilities of the Company.
5.2 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to each other Member that (a) the Member is acquiring the Units for the
Member's own account as an investment and without an intent to distribute the
Units, and (b) the Member acknowledges that the Units have not been registered
under the Securities Act of 1933, as amended, or any state securities laws, and
may not be resold or transferred by the Member without appropriate registration
or the availability of an exemption from such requirements.
5.3 CONFLICTS OF INTEREST.
(a) A Member shall be entitled to enter into transactions that
may be considered to be competitive with the business of the Company provided
such Member fully discloses the material terms of such transaction to the other
Members and the Company prior to entering into any such transaction. Neither the
Company nor any Member shall have any right by virtue of this Agreement to share
or participate in such other transactions. Notwithstanding the foregoing,
Members shall account to the Company and hold as trustee for it any property,
profit, or benefit derived by the Member, without the consent of the other
Members, in the conduct and winding up of the Company business or from a use or
appropriation by the Member of Company property including information developed
exclusively for the Company and opportunities expressly offered to the Company.
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(b) A Member does not violate a duty or obligation to the
Company merely because the Member's conduct furthers the Member's own interest.
A Member may lend money to and transact other business with the Company. The
rights and obligations of a Member who lends money to or transacts business with
the Company are the same as those of a person who is not a Member, subject to
other applicable law. No transaction with the Company shall be voidable solely
because a Member, including a Managing Member, has a direct or indirect interest
in the transaction if either the transaction is fair to the Company or
disinterested Members, holding in the aggregate more than fifty percent (50%) of
the Units held by all disinterested Members, knowing the material facts of the
transaction and the Member's interest, authorize or ratify the transaction.
5.4 MEETINGS OF MEMBERS. The Members shall meet annually on the first
Monday of each May or at such other time as shall be determined by resolution of
the Members, commencing with the year of 1999 for the purpose of transacting
such business as may come before the meeting; provided, however, the failure to
hold an annual meeting shall not be grounds for dissolution of the Company.
Special meetings of the Members, for any purpose or purposes, may be called by
any Member or Members holding at least twenty-five percent (25%) of the
outstanding Units. The Members may designate, by Majority Vote, any place,
either within or outside the State of Nevada, as the place of any meeting of the
Members. If no designation is made the place of meeting shall be the principal
office of the Company. Members may participate in any annual or special meeting
through the use of any means of communication by which all of the Members may
simultaneously hear each other during the meeting. A Member participating in a
meeting by this means is deemed to be present in person at the meeting.
5.5 NOTICE AND RECORD DATE OF MEETINGS. Except as otherwise provided
herein, written notice stating the place, day and hour of a meeting and the
purpose or purposes for which the meeting is called shall be delivered not less
than ten (10) nor more than fifty (50) days before the date of the meeting,
either personally or by mail, to each Member entitled to Vote at such meeting.
If mailed, such notice shall be deemed to be delivered two calendar days after
being deposited in the United States mail, addressed to the Member at his
address as it appears on the books of the Company, with postage thereon prepaid.
Members may waive prior notice by attending the meeting or by executing a
written waiver of notice before or after the meeting. The date on which notice
of the meeting is mailed shall be the record date for such determination of
Members entitled to notice of or to Vote at any meeting of Members.
5.6 QUORUM. The Members owning a Majority of the Units in the Company
represented in person or by proxy, shall constitute a quorum at any meeting of
Members.
5.7 VOTING. The Members shall have one Vote for each Unit owned by them
with respect to all matters relating to the affairs of the Company. A Member may
Vote in person or by a proxy executed in writing by the Member or by a duly
authorized attorney-in-fact. Such proxy shall be filed with the Member acting as
Chairman of the meeting, before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
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5.8 ACTION BY MEMBERS WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of Members may be taken without a meeting if
the action is evidenced by one or more written consents describing the action
taken, signed by the Members approving such action and delivered to the
custodian of the Company's records for filing with the Company records. Unless
an action requires unanimous approval, the written consent will be effective
upon approval by Members holding the number of Units necessary to approve the
action. Any action taken hereunder is effective when the Members holding the
number of necessary Units have signed the consent, unless the consent specifies
a different effective date. The record date for determining Members entitled to
take action without a meeting shall be the date the first Member signs a written
consent.
5.9 WITHDRAWAL OF MEMBER. Each of the Members covenants not to withdraw
as a Member or borrow against its Capital Account without the prior written
consent of all of the other Members.
SECTION 6
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CERTIFICATES OF OWNERSHIP
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6.1 CERTIFICATES. Certificates of Ownership representing Units in the
Company will be in the form determined by the Members. Certificates of Ownership
must be signed by all Members. All Certificates of Ownership must be
consecutively numbered or otherwise identified. The name and address of the
person to whom the Certificates of Ownership are issued, with the Capital
Contribution and the number of Units it represents, must be entered in the
Certificate Register of the Company. In case of a lost, destroyed or mutilated
Certificate, a new one may be issued on the terms and indemnity to the Company
as the Members may prescribe.
6.2 CERTIFICATE REGISTER. Any and all changes in Members or their
amount of capital contribution must be formalized by filing notice of the same
with the Secretary of State by amendment of the Articles. The most recent filing
of the Articles, as amended, will be deemed the Certificate of Register.
SECTION 7
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CONTRIBUTIONS AND COMMITMENTS
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7.1 INITIAL CAPITAL CONTRIBUTIONS. Each Member shall make initial
capital contributions in cash in the amounts, and no later than the dates, set
forth opposite that Member's name on Exhibit A. No Member shall be entitled to
make any additional Capital Contributions.
7.2 INTEREST; RETURN OF CAPITAL. No interest shall accrue on any
Capital Contribution and no Member shall have the right to withdraw or be repaid
any Capital Contribution except as provided in this Agreement. If a Member or
Assignee is entitled to receive a return of a Capital Contribution, the Member
or Assignee, as the case may be, shall not have the right to receive anything
but cash in return of such Member's or Assignee's Capital Contribution.
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SECTION 8
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ALLOCATIONS AND DISTRIBUTIONS
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8.1 ALLOCATIONS OF PROFITS. After giving effect to the Regulatory and
Curative Allocations, Profits shall be allocated as follows:
(a) First, if any Member or Assignee has a deficit balance in his
capital Account, then Profits shall be allocated in proportion
to the deficit balances of their Capital Accounts until the
Capital Accounts of all Members and Assignees have been
increased to zero.
(b) Second, Profits shall be allocated so that the Capital
Accounts of the Members and Assignees are proportionate to
their Unit ownership.
(c) Thereafter, Profits shall be allocated in proportion to the
Unit ownership.
8.2 ALLOCATION OF LOSSES. After giving effect to the Regulatory and
Curative Allocations, Losses shall be allocated as follows:
(a) First, Losses shall be allocated among Members and Assignees
with a positive balance in their Capital Accounts so that all
the Capital Accounts are proportionate to the Unit ownership.
(b) Second, Losses shall be allocated among the Members and
Assignees with a positive balance in their Capital Accounts in
proportion to their Unit ownership until all Capital Accounts
have been reduced to zero.
(c) Third, Losses shall be allocated among the Members and
Assignees so that the deficit balance of their Capital
Accounts are proportionate to their Unit ownership.
(d) Thereafter, Losses shall be allocated in proportion to the
Unit ownership.
(e) Notwithstanding Section 8.2(c) and (d), losses shall not be
allocated to a Member or Assignee to the extent that such
allocation would cause such Member or Assignee to have an
Adjusted Capital Account Deficit or would increase such
Person's Adjusted Capital Account Deficit. Losses that are not
allocated to a Member or Assignee by reason of the limitation
in this Subsection shall be allocated to the Members or
Assignees to whom this limitation does not apply in proportion
to their Units.
8.3 DISTRIBUTIONS. Distributions may be declared from time to time by a
Majority Vote of the Members. Distributions in anticipation of a Dissolution
Event or subsequent to a
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Dissolution Event shall be made as provided in Section 13.3. All other
Distributions shall be made in proportion to Unit ownership.
8.4 ALLOCATIONS AND DISTRIBUTIONS TO NEW MEMBERS AND ASSIGNEES. If
Units are transferred or if additional Units are issued to a new Member during
any Fiscal Year, Profits and Losses, for the Fiscal Year shall be allocated to
the Assignee or the new or Substitute Member in accordance with Section 706(d)
of the Code, using any conventions permitted by law and selected by the other
Members. All Distributions on or before the date of a Transfer shall be made to
the transferor, and all Distributions thereafter shall be made to the
transferee. If a Transfer does not comply with the provisions of Section 10 of
this Agreement, then any Distributions shall be allocated to the Person who
attempted to make the Transfer.
SECTION 9
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TAXES
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9.1 METHOD OF ACCOUNTING FOR TAX PURPOSES. The records of the Company
shall be maintained on the cash method of accounting for federal income tax
purposes.
9.2 TAX MATTERS MEMBER. Xxxxx X. Xxxxxx shall initially be designated
as the "tax matters partner" of the Company pursuant to Section 6231(a)(7) of
the Code. Xx. Xxxxxx shall take such actions as are necessary to cause each
other Member and Assignee to become a "notice partner" within the meaning of
Section 6223 of the Code. Xx. Xxxxxx shall not take any action contemplated by
Sections 6223 through 6229 of the Code without the approval by a Majority Vote
of the Members.
SECTION 10
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TRANSFER OF UNITS
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10.1 PROHIBITION OF TRANSFER. Each Member acknowledges and agrees that
each, in his/her capacity as a Member, each Member has unique knowledge, skills,
expertise and talents which can be useful and beneficial to the Company and are
vital to the success of the Company. Therefore, notwithstanding anything to the
contrary contained herein, no Member shall have the right to sell, assign or
transfer all or any portion of its Units to any person (other than to a Member
or an Affiliate of a Member as provided herein) until the third anniversary
hereof.
10.2 REQUIRED TRANSFER.
(a) RIGHT OF FIRST REFUSAL. Subject to SECTION 10.1, a Member or
Assignee desiring to sell all or any portion of his Units to a Person other than
another Member shall first obtain from such Person a bona fide written offer to
purchase the Units, stating the terms and conditions upon which the purchase is
to be made and the consideration offered (the "Offer"). The recipient of the
Offer (the "Offeree") must notify the remaining Members of his intention to
sell, furnishing a copy of the Offer to those Members.
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(b) The remaining Members on a basis pro rata to the Unit ownership of
those remaining Members exercising their right of first refusal, each have the
right to purchase all (but not less than all) of the Units proposed to be sold
upon the same terms and conditions stated in the Offer by notifying the Offeree
of their intention to do so within thirty (30) days after notice from the
Offeree. If none of the remaining Members notify the Offeree of an intention to
exercise this right of first refusal within the thirty (30) day period, the
right of first refusal regarding the Offer terminates and the Offeree shall be
entitled to sell his Units, provided that the sale is (i) on substantially the
same terms as the Offer and (ii) consummated within forty-five (45) days of the
expiration of the right of first refusal. If one or more of the remaining
Members give written notice to the Offeree of their intention to exercise this
right of first refusal and to purchase all of the Offeree's Units on the terms
and conditions stated in the offer, the remaining Members shall have the right
to designate the time, date and place of closing, provided that the date of
closing shall be within forty-five (45) days after receipt of the notification
from the Offeree.
(c) Any purported Transfer of Units subject to this SECTION 10.2 and
not in compliance with this SECTION 10.2 shall be null and void.
10.3 EFFECTIVE DATE OF TRANSFER. A Transfer of Units hereunder shall
not be effective until the latest to occur of the following to the extent
applicable:
(a) Any proposed Transfer that is a sale to a third party subject
to SECTION 10.2 shall not be effective unless and until the
requirements of SECTION 10.2 have been satisfied.
(b) Any proposed Transfer of Units which is not subject to SECTION
10.2, shall not be effective unless and until notice
(including the name and address of the proposed transferee and
the date of the proposed Transfer) has been provided to the
Company and the other Members.
(c) No Transfer of Units shall be effective unless and until the
transferee has complied with SECTION 10.4.
(d) Any transfer of Units shall be deemed effective as of the last
day of the calendar month in which the last of the conditions
specified in this SECTION 10.3 is satisfied.
10.3 EFFECTIVE DATE OF TRANSFER. A Transfer of Units hereunder shall
not be effective until the latest to occur of the following to the extent
applicable:
(a) Any proposed Transfer that is a sale to a third party subject
to Section 10.2 shall not be effective unless and until the
requirements of Section 10.2 have been satisfied.
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(b) Any proposed Transfer of Units which is not subject to Section
10.2, shall not be effective unless and until notice
(including the name and address of the proposed transferee and
the date of the proposed Transfer) has been provided to the
Company and the other Members.
(c) No Transfer of Units shall be effective unless and until the
transferee has complied with Section 10.4.
(d) Any transfer of Units shall be deemed effective as of the last
day of the calendar month in which the last of the conditions
specified in this Section 10.3 is satisfied.
10.4 REQUIREMENTS FOR EFFECTIVENESS OF TRANSFER. As a condition to
recognizing the effectiveness of any proposed Transfer of Units, the remaining
Members may require the transferor and/or the proposed transferee, to execute
instruments of transfer, assignment and assumption and other documents, and to
perform all other acts which the remaining members may deem necessary or
desirable to:
(a) Constitute such transferee, as an Assignee or a Substitute
Member;
(b) Confirm that the Person acquiring Units, or being admitted as
a Member, has agreed to be subject to and bound by this
Agreement, as it may be further amended, regardless of whether
the Person is to be admitted as a Substitute Member or will
merely be an Assignee;
(c) Preserve the Company's status under the laws of each
jurisdiction in which the Company is qualified, organized or
does business after the Transfer;
(d) Maintain the Company's classification as a partnership for
federal income tax purposes; and
(e) Assure compliance with any applicable state and federal laws
including securities laws and regulations.
10.5 ADMISSION OF A TRANSFEREE AS A MEMBER. A transferee of Units shall
be admitted as a Member with respect thereto if the transferee (a) complies with
Section 10.3 and (b) is (i) a Member, (ii) a Related Person with respect to the
Transferring Member, or (iii) unanimously approved as a Substitute Member by the
non-transferring Members.
10.6 TRANSFER TO A PERSON NOT ADMITTED AS A MEMBER. Notwithstanding
anything contained in this Agreement to the contrary, any transferee of Units
shall be an Assignee and have no right to participate in the management of the
business and affairs of the Company. Upon the Transfer of all of a Member's
Units to an Assignee who is not admitted as a Member, the Company shall purchase
from the transferring Member, and the transferring Member shall sell to
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the Company for a purchase price of $100.00, all remaining rights and interests
retained by the transferring Member associated with the transferred Units.
10.7 ACKNOWLEDGMENT. Each Member hereby acknowledges the reasonableness
of the prohibition contained in this Section 10 in view of the purposes of the
Company and the relationship of the Member.
SECTION 11
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ADDITIONAL MEMBERS
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The Members, by their unanimous consent, may make a Person a Member by
the Company issuing Units for such consideration as the Members by unanimous
consent determine. In such event, Exhibit A to this Agreement shall be amended
to reflect the issuance of Additional Units and the New Members shall execute
such documents as shall be required to reflect their acquisition of Units in the
Company and their agreement to be bound by the terms of the Articles and this
Agreement.
SECTION 12
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DISSOCIATION OF A MEMBER
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12.1 DISSOCIATION. A Person ceases to be a Member upon the happening of
any of the following events:
(a) The withdrawal of a Member (unless all of the other Members
have consented to the withdrawal, the withdrawing Member will
be liable for damages pursuant to Section 5.9);
(b) A Member becoming a Bankrupt Member;
(c) In the case of a Member who is a natural person, the
adjudication of incompetency or death of the Member;
(d) In the case of a Member who is acting as a Member by virtue of
being a trustee of a trust, the termination of the trust (but
not merely the substitution of a new trustee);
(e) In the case of a Member that is an organization other than a
corporation, the dissolution and commencement of winding up of
the separate organization;
(f) In the case of a Member that is a corporation, the filing of a
certificate of dissolution, or its equivalent, for the
corporation or the revocation of its charter if not reinstated
within ninety (90) days; or
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(g) In the case of a Member that is an estate, the distribution by
the fiduciary of the estate's Units.
12.2 RIGHTS OF DISSOCIATION MEMBER. In the event any Member dissociates
prior to the dissolution and winding up of the Company:
(a) If the Dissociation causes a dissolution and winding up of the
Company under Section 13 of this Agreement, the Member shall
be entitled to participate in the winding up of the Company to
the same extent as any other Member, except that any
Distributions to which the Member would have been entitled
shall be reduced by the damages sustained by the Company as a
result of the dissolution and winding up; and
(b) If the Dissociation does not cause a dissolution and winding
up of the Company under Section 13 of this Agreement, the
dissociated Person shall have no right to compel a liquidation
of his Units and he shall thereafter hold Units as an
Assignee. In such event, first the Company and then the
remaining Members shall have the option to purchase and upon
the exercise of the option, the dissociated Person (or its or
his estate or legal representative as the case may be) shall
be required to sell all and not less than all of the Units
owned by such Person (or its or his estate or legal
representative as the case may be). The remaining Members
shall have the right to purchase such Units which the Company
does not elect to purchase.
(i) The Company and the Members shall exercise their
respective options to purchase by sending written
notice to that effect within ninety (90) days after
the date of the Dissociation. If the Company does not
exercise its right of purchase within sixty (60) days
of the start of such option period, the Members shall
then have the balance of such option period to
exercise their purchase rights.
(ii) Within thirty (30) days of the expiration of the
option periods as specified above, the closing
related to the purchase of such dissociated Person's
Units shall occur. At the time of the closing, the
Company or the remaining Members shall purchase such
dissociated Person's Units by delivering twenty
percent (20%) of the purchase price for said Units in
cash or check to the dissociated Person (or its or
his estate or legal representative as the case may
be), and the balance shall be evidence by the
promissory note of the respective purchaser of
purchasers. Such promissory note shall provide for
four (4) equal annual installments of principal, plus
accrued simple interest on the outstanding principal
balance at an annual rate of interest equal to the
prime rate, and all installments of principal plus
accrued interest shall be paid on the fifth (5th)
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anniversary date of the initial down payment to such
dissociated Person (or its or his estate or legal
representative as the case may be). Each promissory
note may be prepaid in whole or in part without
premium or penalty. At the time of the closing, the
dissociated Member (or its or his estate or legal
representative as the case may be) shall execute and
deliver to the purchaser all such instruments as
shall be necessary to transfer title to the Units,
free of all liens, charges or encumbrances, except as
specifically contemplated hereby.
(iii) The purchase price for Units in the event of the
dissociation of a Member shall be the fair market
value of such Units as of the last business day of
the month immediately preceding the month in which
the Dissociation occurs. Such fair market value shall
be determined by the Company's certified public
accountant. In computing such fair market value, the
accountant shall consider amount other factors the
following:
(A) the fair market value of all assets (rather
than their respective depreciated values as
shown on the books and records of the
Company).
(B) all taxes and assessments, including federal
and state income taxes, which shall be
considered liabilities; and
(C) all other actual or contingent liabilities.
SECTION 13
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DISSOLUTION AND WINDING UP
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13.1 DISSOLUTION. Subject to the provisions of the Act, the Company
shall be dissolved and its affairs wound up, upon the first to occur of the
following events:
(a) The expiration of the term of existence of the Company set
forth in the Articles and this Agreement;
(b) The unanimous written consent of all of the Members;
(c) The Dissociation of any Member, unless the business of the
Company is continued with the unanimous written consent of the
remaining Members within seventy-five (75) days after
Dissociation;
(d) At any time that there cease to be two (2) or more Members;
and
(e) Upon entry of a decree of judicial dissolution.
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Upon the occurrence of any Event of Dissolution, a certificate of
dissolution containing the information required by the Act shall be delivered to
the Nevada Secretary of State for filing.
13.2 WINDING UP. Upon dissolution, the Members shall wind up all of the
Company's affairs and proceed to liquidate all of the Company's assets as
promptly as is consistent with obtaining their fair value. The Company's
property and cash shall be distributed:
(a) First, to creditors, including Members who are creditors, to
the extent permitted by law, in satisfaction of liabilities of
the Company;
(b) Then Members and Assignees in accordance with positive Capital
Account balances taking into account all Capital Account
adjustments for the Company's taxable year in which the
liquidation occurs. Liquidation proceeds shall be paid within
sixty (60) days of the end of the Company's taxable year or,
if later, within ninety (90) days after the date of
liquidation. Such Distributions shall be in cash or property
(which need not be distributed proportionately) or partly in
both, as determined by a Majority of the Members.
The winding up of the Company shall be completed when all debts,
liabilities, and obligations of the Company have been paid and discharged or
reasonably adequate provision therefor has been made, and all of the remaining
property and assets of the Company have been distributed to the Members. Except
as otherwise provided herein, no dissolution or termination of the Company shall
relieve, release, or discharge any Member, or any of his or its successors,
assigns, heirs or legal representatives, from any previous breach or default of
any obligations theretofore incurred or accrued under any provision of this
Agreement, and any and all such liabilities, claims, demands, or causes of
action arising from any such breaches or defaults shall survive such dissolution
and termination. Each Member shall look solely to the assets of the Company for
the return of its or his Capital Account. If the Company's property remaining
after the payment or discharge of the debts and liabilities of the Company is
insufficient to return the Capital Account of each Member, such Member shall
have no recourse against any other Member.
SECTION 14
----------
INDEMNIFICATION
---------------
14.1 GENERAL. (a) The Company shall indemnify the Members and its and
their agents for all costs, losses, liabilities, and damages paid or accrued by
such Member, or agent in connection with the business of the Company, to the
fullest extent provided or allowed by the laws of the state of Nevada.
(b) The Company shall indemnify any Person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(excluding actions by or in the right of the
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Company) and whether formal or informal, by reason of the fact that the Person
is or was a Member of the Company, who, while a Member of the Company, is or was
serving at the request of the Company as a director, officer, partner, member,
trustee, employee or agent of another corporation, partnership, limited
liability company, joint venture, trust, business association, employee benefit
plan or other enterprise, whether for profit or not, against expenses (including
counsel fees), judgments, settlements, penalties and fines (including excise
taxes assessed with respect to employee benefit plans) actually or reasonably
incurred in accordance with such action, suit or proceeding, if the Person acted
in good faith and in a manner reasonably believed by the Person to have been, in
the case of conduct taken as a Member, in the best interest of the Company and
in all other cases, not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, either the Person had no
reasonable cause to believe such conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the Person did not meet the prescribed standard of conduct. The Company may
also, with the consent of a Majority of the Members, indemnify any Assignee or
employee or agent of the Company who is not a Member in the manner and to the
extent that it shall indemnify Members pursuant to this Section.
14.2 AUTHORIZATION. To the extent that a Member has been successful in
the defense of any action, suit or proceeding referred to in Section 14.1, on
the merits or otherwise, or in the defense of any claim, issue or other matter
therein, the Company shall indemnify such Person against expenses (including
counsel fees) actually and reasonably incurred by the Person. Any other
indemnification under Section 14.1 shall be made by the Company only as
authorized in the specific case, upon a determination that indemnification of
the Member, employee or agent is permissible in the circumstances because the
Person has met the applicable standard of conduct. Such determination may be
made by either: (a) a Majority of the Members who are not at the time parties to
such action, suit or proceeding; or (b) a written opinion authored by
independent legal counsel.
14.3 RELIANCE ON INFORMATION. For purposes of any determination under
Section 14.1, a Person shall be deemed to have acted in good faith and to have
otherwise met the applicable standard of conduct set forth in Section 14.1 if
the action is based on information, opinions, reports, or statements, including
financial statements and other financial data, if prepared or presented by (a)
one or more Members, officers or employees of the Company or another enterprise
whom the Person reasonably believes to be reliable and competent in the matters
presented; (b) legal counsel, public accountants, appraisers or other Persons as
to matters reasonably believed to be within the Person's professional or expert
competence; or (c) the board of directors or other governing body of another
entity, employee benefit plan or other enterprise of which such Person is or was
serving at the request of the Company as a director, officer, partner, member,
trustee, employee or agent. The provisions of this Section 14.3 shall not be
deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth in
Section 14.1.
14.4 ADVANCEMENT OF EXPENSES. Expenses incurred in connection with any
civil or criminal action, suit or proceeding may be paid for or reimbursed by
the Company in advance of
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the final disposition of the action, suit or proceeding, as authorized in the
specific case in the same manner described in Section 14.2, upon receipt of a
written affirmation of the Member, employee or agent's good faith belief that
such Person has met the standard of conduct described in Section 14.1 and upon
receipt of a written undertaking by or on behalf of the Person to repay such
amount if it shall ultimately be determined that the Person did not meet the
standard of conduct, and a determination is made that the facts then known to
those making the determination shall not preclude indemnification under this
Section.
14.5 NON-EXCLUSIVE PROVISIONS; VESTING. The indemnification provided by
this Section is not exclusive of any other rights to which a Person seeking
indemnification may be entitled. The right of any Person to indemnification
under this Section shall vest at the time of occurrence or performance of any
event, act or omission giving rise to any action, suit or proceeding of the
nature referred to in Section 14.1 and, once vested, shall not later be impaired
as a result of any amendment, repeal, alteration or other modification of any or
all of these provisions.
14.6 DEFINITIONS. For purposes of this Section, serving an employee
benefit plan at the request of the Company shall include any service as a
director, officer, employee or agent of an entity which imposes duties on, or
involves services by such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries. A Person who acted
in good faith and in a manner reasonably believed to be in the best interests of
the participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interest of the Company"
referred to in this Section. For purposes of this Section, "party" includes any
individual who is or was a plaintiff, defendant or respondent in any action,
suit or proceeding, or who is threatened to be made a named defendant or
respondent in any action, suit or proceeding.
SECTION 15
----------
MISCELLANEOUS PROVISIONS
------------------------
15.1 ENTIRE AGREEMENT. This Agreement and the Articles represent the
entire agreement among all the Members.
15.2 AMENDMENT OR MODIFICATION OF THIS AGREEMENT. This Agreement may be
amended or modified from time to time only by a written instrument approved by a
Majority Vote of the Members, except that any amendment that would (i) increase
the amount of Capital Contributions required of a Member or accelerate the dates
for payment of any required Capital Contribution, (ii) impose an additional
liability on any Member, or (iii) modify Section 8.5, 13.3 or this Section 15.2,
shall require the unanimous consent of the Members.
15.3 NO PARTNERSHIP INTENDED FOR NON-TAX PURPOSES. The Members have
formed the Company pursuant to the Act, and expressly do not intend to form a
partnership or a limited partnership. The Members do not intend to be partners
one to another, or partners as to any third party. To the extent any Member, by
word or action, represents to another person that any other Member is a partner
or that the Company is a partnership, the Member making such wrongful
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representation shall be liable to any other Member who incurs personal liability
by reason of such wrongful representation.
15.4 RIGHTS OF CREDITORS AND THIRD PARTIES UNDER THIS AGREEMENT. This
Agreement is entered into among the Members for the exclusive benefit of the
Company, its Members, and their successors and assignees. This Agreement is
expressly not intended for the benefit of any creditor of the Company or any
other Person. Except and only to the extent provided by applicable statute, no
creditor or third party shall have any rights under this Agreement or any
agreement between the Company and any Member with respect to any Capital
Contribution or otherwise.
15.5 NOTICE. All notices required or permitted by this Agreement shall
be in writing. Notice to the Company shall be given to its principal office or
personally delivered to the custodian of the Company's records. Notice to a
Member or Assignee shall be given or personally delivered to the Member or
Assignee at the address on Exhibit A as amended from time to time unless such
Member or Assignee has notified the Company in writing of a different address.
15.6 SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision of this Agreement is illegal or invalid for
any reason, the illegality or invalidity shall not affect the legality or
validity of the remainder of this Agreement.
15.7 WAIVER OF ACTION FOR PARTITION. Each Member irrevocably waives
during the term of the Company any right that he or she may have to maintain any
action for partition with respect to the property of the Company.
15.8 NUMBER AND GENDER. All provisions and references to gender shall
be deemed to refer to masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
15.9 BINDING EFFECT. Except as otherwise provided in this Agreement,
every covenant, term and provision of this agreement shall be binding upon and
inure to the benefit of the Members and their respective heirs, legatees, legal
representatives, successors and assigns.
15.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all such parties executed the same
document. All such counterparts shall constitute one agreement.
15.11 NEVADA LAW CONTROLLING. The laws of the State of Nevada,
including the Act, shall govern the validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the parties
hereto.
15.12 REPRESENTATION. Each party hereby represents and covenants that
each has had the opportunity to consult with their independent attorney(s)
and/or tax advisors prior to the execution of this Agreement.
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SECTION 16
----------
ARBITRATION
-----------
Any dispute arising out of, relating to this Agreement, a breach
hereof, or the operation of the business of the Company, shall be settled by
arbitration in Las Vegas, Nevada, in accordance with the rules of the American
Arbitration Association then existing, provided the discovery as provided for
under the Nevada Rules of Civil Procedure shall be available to all parties to
the arbitration. This Agreement to arbitrate shall be specifically enforceable
and the arbitration award shall be final and judgment may be entered upon it in
any court having jurisdiction over the subject matter of the dispute.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
-------------------------------
Xxxxx X. Xxxxxx
SUNBELT COMMUNICATIONS COMPANY
By
------------------------------
Name: Xxxxx Xxxx Xxxxxx
Title: President
-------------------------------
Perry Xxxxx Xxxxxx
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INITIAL CAPITAL NUMBER OF UNITS OF
--------------- ------------------
MEMBER CONTRIBUTIONS AND VALUE INTEREST
------ ----------------------- --------
Xxxxx X. Xxxxxx $1,200,000 48
Sunbelt Communications $1,200,000 48
Company
Perry Xxxxx Xxxxxx $100,000 4
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APPENDIX
--------
"Act" means the Nevada Statutes, Chapter 86, Sections 86.011-86.571, as
amended from time to time.
"Adjusted Capital Account Deficit" of a Member or Assignee means the
deficit balance, if any, in a Capital Account as of the end of the relevant
Fiscal Year, after giving effect to the following adjustments:
(i) Increase such Capital Account by any amounts which such Person
is obligated to restore to the Company pursuant to Section
1.704-1(b)(2)(ii)(c) of the Regulations or is deemed to be
obligated to restore pursuant to the next to the last sentence
of Section 1.704-2(g)(1) of the Regulations or the next to the
last sentence of Section 1.704-2(i)(5) of the Regulations;
(ii) Decrease such Capital Account by the amount of the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6) of
the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
"Agent" means the agent designated by the Company from time to time for
service of process pursuant to Section 86.231 of the Act.
"Agreement" means this Operating Agreement as amended from time to
time.
"Articles" means the Articles of Organization of the Company as
properly adopted and amended from time to time by the Members and filed with the
Nevada Secretary of State pursuant to the Act.
"Assignee" means an assignee of units who is not a Member at the time
of the assignment and is not admitted as a Substitute Member.
"Bankrupt Member" means a Member who: (i) has become the subject of a
decree or order for relief under any bankruptcy, insolvency or similar law
affecting creditors' rights now existing or hereafter in effect; or (ii) has
initiated, either in an original proceeding or by way of answer in any state
insolvency or receivership proceeding, an action for liquidation, arrangement,
composition, readjustment, dissolution, or similar relief.
"Capital Account" means the amount of cash and fair market value of
services or property (net of any liabilities secured by contributed property
that the Company is considered to assume or take subject to under Section 752 of
the Code) that a Member or Assignee has
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contributed to the Company as Capital Contributions pursuant to Section 7
hereof, adjusted as follows:
(i) The Capital Account shall be increased by all Profits
allocated to such Person pursuant to Section 8 hereof.
(ii) The Capital Account shall be decreased by (a) the amount of
cash and the fair market value of all property distributed to
such Person by the Company (net of liabilities securing such
distributed property that such Person is considered to assume
or take subject to under Section 752 of the Code) and (b) all
Losses allocated to such Person pursuant to Section 8 hereof.
(iii) The Capital Account shall be credited in the case of an
increase or debited in the case of a decrease to reflect such
Person's allocable share of any adjustment to the adjusted
basis of Company assets pursuant to Section 734(b) of the Code
to the extent provided by Section 1.704-1(b)(2)(iv)(m) of the
Regulations.
(iv) The Capital Account shall be adjusted in any other manner
required by Section 1.704-1(b)(2)(iv) of the Regulations or
otherwise, in order to be deemed properly maintained for
federal income tax purposes.
(v) Capital Accounts shall not bear interest.
(vi) The transferee of Units shall succeed to the Capital Account
attributable to the Units transferred.
"Capital Contribution" means any contribution of cash, property or
services to the Company made by or on behalf of a Member or Assignee pursuant to
Section 7 hereof.
"Certificate Register" means the records required to be maintained by
the Company pursuant to Section 6 regarding Unit ownership.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" means the limited liability company organized pursuant to the
Articles and this Agreement, and any successor limited liability company.
"Company Minimum Gain" means the aggregate amounts of gain which would
be realized by the Company if it disposed of all property subject to Nonrecourse
Liabilities in full satisfaction of such liabilities. Such amounts shall be
calculated as described in Section 1.704-2(d)(1) of the Regulations.
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"Curative Allocations" means the following allocations of income, gain,
loss or deduction. To the extent possible, 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
Section. Therefore, notwithstanding any other provision of Section 8 (other than
the Regulatory Allocations), such offsetting allocations of income, gain, loss
or deduction in whatever manner the Members determine appropriate so that, after
such offsetting allocations are made, each Capital Account balance is, to the
extent possible, equal to the Capital Account balance such Person would have had
if the Regulatory Allocations were not part of this Agreement. In exercising
their discretion hereunder, the Members shall take into account future
Regulatory Allocations that, although not yet made, are likely to offset other
Regulatory Allocations previously made.
"Distribution" means a transfer of cash or property to a Member or
Assignee on account of Units as described in Section 8 hereof.
"Dissociation" means any action which causes a Person to cease being a
Member as described in Section 12 hereof.
"Dissolution Event" means an event, the occurrence of which will result
in the dissolution of the Company under Section 13 hereof.
"Fiscal Year" means the taxable year of the Company.
"Majority Vote" means, at any given time, Members voting affirmatively
on a matter holding in the aggregate more than fifty-one percent (51%) of the
outstanding Units held by such Members voting thereon.
"Member" means any Person who has signed this Agreement as a Member or
who is hereafter admitted as a Member of the Company pursuant to this Agreement.
"Member Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"Member Nonrecourse Debt 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 Section 1.704-2(i)(3) of the Regulations.
"Member Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(i)(1) and (2) of the Regulations.
"Nonrecourse Liability" means any Company Liability (or portion
thereof) for which no Member or Assignee bears the economic risk of loss as
determined in accordance with Sections 1.704,-2(b)(3) and 1.752-1(a)(2) of the
Regulations (without regard to whether those Sections apply to such liability).
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"Person" means a natural person, trust, estate, partnership, limited
liability company or any incorporated or unincorporated organization,
association, or entity.
"Proceeding" means any judicial or administrative trial, hearing or
other activity, civil, criminal or investigative, the result of which may be
that a court, arbitrator, or governmental agency may enter a judgment, order,
decree, or other determination which, if not appealed and reversed, would be
binding upon the Company, a Member or other person subject to the jurisdiction
of such court, arbitrator, or governmental agency.
"Profits" and "Losses" for any Fiscal Year means the net income or net
loss of the Company for such Fiscal Year or fraction thereof, as determined for
federal income tax purposes in accordance with the accounting method used by the
Company for federal income tax purposes adjusted as follows:
(i) Tax-exempt income as described in Section 705(a)(1)(B) of the
Code realized by the Company during such fiscal year shall be
taken into account as if it income;
(ii) Expenditures of the Company described in Section 705(a)(2)(B)
of the Code for such year, including items treated under
Section 1.704-1(b)(2)(iv)(i) of the Regulations as items
described in Section 705(a)(2)(B) of the Code, shall be taken
into account as if they were deductible items;
(iii) Items that are specially allocated shall not be taken into
account;
(iv) With respect to property (other than money) which has been
contributed to the capital of the Company, Profit and Loss
shall be computed in accordance with the provisions of Section
1.704-1(b)(2)(iv)(g) of the Regulations by computing
depreciation, amortization, gain or loss upon the fair market
value of such property on the books of the Company;
(v) With respect to any property of the Company which has been
revalued as required or permitted by the Regulations under
Section 704(b) of the Code, Profit or Loss shall be determined
based upon the fair market value of such property as
determined in such revaluation;
(vi) The difference between the adjusted basis for federal income
tax purposes and the fair market value of any asset of the
Company shall be treated as gain or loss from the disposition
of such asset in the event (i) any new or existing Member
acquires an additional interest in the Company in exchange for
a contribution to capital of the Company; or (ii) such asset
of the Company is distributed to a Member pursuant to
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Section 8.3 or as consideration for a reduction of such
Member's interest in the Company or in liquidation of such
interest as defined in Section 1.704-l(b)(2)(ii)(g) of the
Regulations; and
(vii) Interest paid on loans made to the Company by a Member and
salaries, fees and other compensation paid to any Member shall
be deducted in computing Profit and Loss.
"Property" means real or personal, tangible or intangible, including
money and any legal or equitable interest in such property, but excluding
services and promises to perform services in the future.
"Regulations" except where the context indicates otherwise, means the
permanent, temporary, proposed, or proposed and temporary regulations of
Department of the Treasury under the Code as such regulations may be changed
from time to time.
"Regulatory Allocations" means the following allocations of income,
gain, loss and deductions which shall be made in the following order:
(a) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section
1.704-2(f) of the Regulations, if there is a net decrease in Company Minimum
Gain during any Fiscal Year, each Member and Assignee shall be specially
allocated items of income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to such Person's share of the net
decrease in Company Minimum Gain, determined in accordance with Section
1.704-2(g) of the Regulations. Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member and Assignee pursuant thereto. The items to be so allocated shall
be determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the
Regulations. This Section is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(f) of the Regulations and shall be interpreted
consistently therewith.
(b) MEMBER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-1(i)(4) of the Regulations, if there is a net decrease in Member
Nonrecourse Debt Minimum Gain during any Fiscal Year, each Member and Assignee
who has a share of the Member Nonrecourse Debt Minimum Gain, determined in
accordance with Section 1.704-2(i)(5) of the Regulations, shall be specially
allocated items of Company income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such Person's share of
the net decrease in Member Nonrecourse Debt Minimum Gain, determined in
accordance with Section 1.704-2(i)(4) of the Regulations. Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member and Assignee pursuant thereto. The items
to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4)
and 1.704-2(j)(2) of the Regulations. This definition is intended to comply with
the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the
Regulations and shall be interpreted consistently therewith.
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(c) QUALIFIED INCOME OFFSET. If any Member or Assignee receives any
adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations that causes such Person
to have an Adjusted Capital Account Deficit as of the end of any Fiscal Year or
increases such Person's Adjusted Capital Account Deficit, gross income and gain
shall be allocated to such Member or Assignee, in an amount and manner
sufficient to eliminate such deficit as quickly as possible in accordance with
Section 1.704-1(b)(2)(ii)(d) of the Regulations. Any such allocation of gross
income or gain pursuant to this paragraph shall be in proportion to the amounts
of the Adjusted Capital Account Deficits. This definition is intended to
constitute a "qualified income offset" within the meaning of Section
1.704-1(b)(2)(ii)(d) of the Regulations.
(d) NON-RECOURSE DEDUCTIONS. Nonrecourse Deductions for any Fiscal Year
shall be specially allocated in proportion to Unit ownership.
(e) MEMBER NONRECOURSE DEDUCTIONS. Member Nonrecourse Deductions for
any Fiscal Year shall be specially allocated to the Members or Assignees who
bear the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member Nonrecourse Deductions are attributable in accordance with
Section 1.704-2(i)(1) of the Regulations.
(f) TAX ALLOCATIONS. For income tax purposes, any item of income, gain,
deduction, or loss with respect to any property (other than money) that has been
contributed by a Member or Assignee to the capital of the Company and which is
required to be allocated to Members and Assignees for income tax purposes under
Section 704(c) of the Code so as to take into account the variation between the
tax basis of such property and its fair market value at the time of its
contribution, shall be allocated to the Members and Assignees for income tax
purposes in the manner required by Section 1.704-1(b)(2)(iv)(g) of the
Regulations. If the Capital Accounts are required to be adjusted pursuant to
Section 1.704-1(b)(2)(iv)(f) or (g) of the Regulations with respect to a
revaluation of any asset of the Company, subsequent allocations of income, gain,
loss, and deduction, including without limitation depreciation or deductions for
cost recovery with respect to such asset, shall take account of any variation
between the then existing adjusted basis of such asset for federal income tax
purposes and the fair market value of such asset as required by Section
1.704-1(b)(2)(iv)(g) of the Regulations.
"Related Person" means a Person having a relationship to a Member that
is described in Section 1.752-4(b) of the Regulations, provided that trustees
shall be treated as Related Persons only if the only beneficiaries thereof are
Members or members of the families thereof as defined in Code Section 267(c)(4).
"Substitute Member" means an Assignee who is admitted as a Member.
"Transfer" means any transference of Units, sale, gift, assignment,
pledge, granting of a security interest or other disposition, including any
disposition by operation of law.
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"Unit" means a fractional share of the membership interest of a Member
or an Assignee in the Company, the numerator of which is one (1) and the
denominator of which is the total number of Units outstanding from time to time.
As of the date of this Agreement, the Company has 100 Units outstanding. The
number of Units initially issued to each Member in exchange for their Initial
Capital Contribution is set forth on Exhibit A which shall be amended in the
event that the Company issues additional units or acquires any outstanding
Units.
"Vote" means each Member's voting rights as provided for in Section 5.7
of this Agreement.
