Exhibit 3.3
OPERATING AGREEMENT
OF
China Pathfinder Fund, LLC
a Florida limited liability company
This Operating Agreement (the "Agreement") of China Pathfinder Fund, LLC, a
Florida limited liability company (the "Company"), is made as of this ___ day of
April 2004, and is by and among the Persons listed on Schedule A attached hereto
(collectively, the "Members"), who constitute all the Members of the Company as
of such date. Each of the Members hereby agrees, recites and provides as
follows:
SECTION I
DEFINITIONS
1.01 Act shall mean the Florida Limited Liability Company Act, as amended
from time to time.
1.02 Affiliate shall mean any Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified. The term "control" (including the terms
"controlling", "controlled by" and "under common control with") shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of at
least 50% of the voting securities, by contract, or otherwise.
1.03 Agreement shall mean this Operating Agreement, as it may be amended from
time to time.
1.04 Capital Account shall have the meaning provided in Section 8.04 hereof.
1.05 Capital Contribution shall mean the amount of money or other property
contributed to the Company by each Member, pursuant to the terms of this
Agreement.
1.06 Capital Transaction shall mean the refinancing or sale, exchange or
other disposition of all or any substantial part of the assets of the Company,
except for any Terminating Capital Transaction.
1.07 Cash Available for Distribution shall have the meaning provided in
Section 9.02(b).
1.08 Code shall mean the Internal Revenue Code of 1986, as amended.
1.09 Company shall mean the limited liability company governed by this
Agreement.
1.10 Company Minimum Gain shall have the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Company Minimum Gain is determined by first computing for each
nonrecourse liability of the Company any gain the Company would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Member's share of Company Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(g)(1).
1.11 Event of Bankruptcy as to any Person shall mean the filing of a petition
for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or other similar provision of law of any jurisdiction (except if such
petition is contested by such Person and has been dismissed within 90 days);
insolvency of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
its assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter
commenced by another, if such Person indicates its approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
1.12 Managers shall have the meaning provided in Section 5.01(a).
1.13 Member or Members shall mean any or all of those Persons listed on
Schedule A or any Persons who replace them as substitute Members as provided
herein, in each such Person's capacity as a Member of the Company.
1.14 Member Nonrecourse Debt Minimum Gain shall have the meaning set forth in
Regulations Section 1.704-2(i). A Member's share of Member Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
1.15 Percentage Interest as to any Member shall mean, as of the date of
computation, the number of Membership Units owned by such Member divided by the
total number of issued and outstanding Membership Units.
1.16 Person shall mean and include an individual, proprietorship, trust,
estate, partnership, joint venture, association, company, corporation or other
entity.
1.17 Regulations shall mean the Federal Income Tax Regulations issued under
the Code, as amended and as hereafter amended from time to time. Reference to
any particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any succeeding provision of the Regulations.
1.18 Sale or Refinancing Proceeds shall mean the cash proceeds from a Capital
Transaction after payment, or adequate provision for, debts of the Company and
any Company reserves; provided, however, that Sale or Refinancing Proceeds shall
not include proceeds from any Terminating Capital Transaction.
1.19 Service shall mean the Internal Revenue Service.
1.20 State shall mean the State of Florida.
1.21 Terminating Capital Transaction shall mean the sale, exchange or other
disposition of all or substantially all of the assets of the Company, after
which transaction the Company is dissolved and terminated.
1.22 Transferee shall have the meaning provided in Section 9.01(b).
1.23 Unit or Membership Unit shall mean a unit of ownership interest in the
Company, including the right of such Member to any and all the benefits to which
such Member may be entitled as provided in this Agreement and in the Act,
together with the obligations of such Member to comply with all the provisions
of this Agreement and of the Act. The initial Unit ownership of each Member is
set forth on the attached Schedule A.
SECTION II
FORMATION, NAME AND TERM
2.01 Formation. The Members hereby acknowledge the formation of the Company
as a limited liability company pursuant to the Act by virtue of Articles of
Organization filed with the Clerk of the Florida Secretary of State on or about
February __, 2004. The rights and liabilities of the Members shall be as
provided in the Act, except as otherwise provided herein.
2.02 Name, Office and Registered Agent. The name of the Company shall be
"China Pathfinder Fund, LLC". The principal office and place of business of the
Company shall be 00000 Xxxxxx Xxxxx, #000, Xxxxx, Xxxxxxx 00000. The Board of
Managers may at any time change the location of such office, provided the Board
of Managers gives notice to all Members of any such change. The name and address
of the statutory agent of the Company for purposes of the Act is Xxxxxx Xxxxxx,
00000 Xxxxxx Xxxxx, #000, Xxxxx, Xxxxxxx 00000. The statutory agent's sole duty
as such is to forward to the Company at its principal office and place of
business any notice that is served on it as statutory agent.
2.03 Governing Law. This Agreement and all questions with respect to the
rights and obligations of the Members, the construction, enforcement and
interpretation hereof, and the formation, administration and termination of the
Company shall be governed by the provisions of the Act and other applicable laws
of the State.
2.04 Term. (a) The term of the Company's existence shall be perpetual, except
that the Company shall be dissolved upon the first to occur of any of the
following events:
(i) The determination in writing of the holders of 66-2/3% of the
Membership Units to dissolve and terminate the Company;
(ii) The entry of a decree of judicial dissolution under Section
608-4991 of the Act;
(iii) The occurrence of an Event of Bankruptcy as to a Member or the
death, resignation, expulsion or dissolution of a Member or the occurrence of
any other event that terminates the membership of a Member, unless there are at
least two remaining Members, and, within 90 days of such event, the remaining
Members holding at least 66-2/3% of the remaining Membership Units agree in
writing to continue the business of the Company, in which event the Company
shall not be dissolved and the Company and the business of the Company shall be
continued; provided that if any Member is a partnership or a limited liability
company on the date of such occurrence, the dissolution of such Member as a
result of the dissolution, termination, resignation, death, incompetence,
removal or Event of Bankruptcy of a partner or member in such partnership or
limited liability company, as the case may be, shall not be an event of
dissolution of this Company if the business of such Member is continued by its
remaining partner(s) or member(s), as the case may be, either alone or with
additional partners or members and such Member and such partners or members
comply with any other applicable requirements of this Agreement; or
(iv) The passage of 30 days after the sale or other disposition of all
or substantially all of the assets of the Company (except that if the Company
receives an installment obligation as consideration for such sale, the Company
shall continue, unless sooner dissolved under the provisions of this Agreement,
until such time as such note or notes are paid in full).
(b) Upon the dissolution of the Company for any reason, the Board of
Managers shall proceed promptly to wind up the affairs of and liquidate the
Company. The Board of Managers shall have reasonable discretion to determine the
time, manner and terms of any sale or sales of Company's property pursuant to
such liquidation.
(c) In the event that the Company is dissolved and not continued as a
result of an event of termination described in Section 2.04(a)(iii), then all of
those remaining Members who desire to continue the Company or to continue
operating its business and affairs in substantially the same manner as prior to
the occurrence of such event of termination, shall have the right to form a new
limited liability company pursuant to articles of organization and an operating
agreement and such newly formed limited liability company shall have the option,
for a period of six months after such event of termination, to purchase all of
the assets of the Company and assume all the liabilities and contractual
obligations of the Company at a price equal to 90% of the then net fair market
value of such assets (such discount being granted in recognition of the fact
that no broker will be involved in such transaction). The net fair market value
of such business assets shall be determined by agreement among the Members
desiring to continue the business and the resigning Members or their
representatives. If the parties are unable to agree, the Members desiring to
continue the business shall have the right to select one appraiser, the
resigning Members shall have the right to select a second appraiser, and the two
appraisers so selected shall select a third appraiser. The three appraisers
shall appraise the assets, and determine the net fair market value of the
business, and the middle of the three appraised values shall be the value
utilized to calculate the purchase price. The purchase price shall be paid in
the form of a promissory note, bearing interest at the applicable federal rate
in effect under the Code, which promissory note shall provide for level
amortization of the balance of principal and interest over a period of ten years
based on monthly payments. Such note shall include a provision providing that
such note is subordinate to all debts of the newly formed purchasing limited
liability company to creditors other than Members of the purchasing limited
liability company.
SECTION III
BUSINESS OF THE COMPANY
The purpose of the Company is to engage in any lawful act or activity for
which limited liability companies may be organized under the Act.
SECTION IV
RIGHTS AND OBLIGATIONS OF MEMBERS
4.01 Members. The Members of the Company are those persons listed on Schedule
A attached hereto.
4.02 Voting Rights; Management Rights. Except as otherwise provided herein or
as required by law, voting power shall be vested in the Members, and all matters
requiring a vote pursuant to this Agreement or the Act shall be determined by
the vote of Members holding a majority in interest of the Membership Units.
The Members, other than any Members elected to serve as Managers or officers,
shall not take part in the management of the business nor transact any business
for the Company in their capacity as Members, nor shall they have power to sign
for or to bind the Company; provided, however, that the Members shall have the
right to approve or consent to certain matters, as provided herein.
4.03 Other Activities. Except as otherwise expressly provided herein, any
Member may engage in or possess any interest in another business or venture of
any nature and description, independently or with others, even if such
activities compete directly with the business of the Company, and neither the
Company nor any Member hereof shall have any rights in or to any such
independent ventures or the income or profits derived therefrom.
4.04 No Right to Withdraw. Except as set forth in Section X, no Member shall
have any right to voluntarily resign or otherwise withdraw from the Company
without the written consent of all the remaining Members.
4.05 Places of Meetings. All meetings of the Members shall be held at such
place, either within or without the State, as from time to time may be fixed by
the Board of Managers.
4.06 Annual Meetings. The annual meeting of the Members, for the election of
Board of Managers and transaction of such other business as may come before the
meeting, shall be held in each year on the second Tuesday in April, at 10:00
a.m., if that day is not a legal holiday. If that day is a legal holiday, the
annual meeting shall be held on the next succeeding day not a legal holiday.
4.07 Special Meetings. A special meeting of the Members for any purpose or
purposes may be called at any time by the Chairman of the Board of Managers, the
Vice-Chairman of the Board of Managers or the President, or by Members holding a
majority in interest of the Membership Units and entitled to vote with respect
to the business to be transacted at such meeting. At a special meeting no
business shall be transacted and no action shall be taken other than that stated
in the notice of the meeting.
4.08 Notice of Meetings. Written or printed notice stating the place, day and
hour of every meeting of the Members and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be mailed not less
than ten nor more than sixty days before the date of the meeting to each Member
entitled to vote at such meeting, at its address maintained in the records of
the Company by the Company's Secretary. Such further notice shall be given as
may be required by law, but meetings may be held without notice if all the
Members entitled to vote at the meeting are present in person or by proxy or if
notice is waived in writing by those not present, either before or after the
meeting.
4.09 Quorum. Any number of Members together holding at least a majority of
the Membership Units entitled to vote with respect to the business to be
transacted, who shall be present in person or represented by proxy at any
meeting duly called, shall constitute a quorum for the transaction of business.
If less than' a quorum shall be in attendance at the time for which a meeting
shall have been called, the meeting may be adjourned from time to time by a
majority of the Members present or represented by proxy without notice other
than by announcement at the meeting.
4.10 Voting. At any meeting of the Members each Member of a class entitled to
vote on any matter coming before the meeting shall, as to such matter, have a
vote, in person or by proxy, `equal to the number of Membership Units held in
its name on the date, not more than seventy days prior to such meeting, fixed by
the Board of Managers as the record date for the purpose of determining Members
entitled to vote. Every proxy shall be in writing, dated and signed by the
Member entitled to vote or its duly authorized attorney-in-fact.
SECTION V
MANAGEMENT
5.01 General Powers. The property, officers and business of the Company shall
be managed under the direction of the Board of Managers, and, except as
otherwise expressly provided by law, the Articles of Organization or this
Agreement, all of the powers of the Company shall be vested in such Board.
5.02 Number of Managers. The number of Managers constituting the Board of
Managers shall be not less than one nor more than ten, ` such number to be
designated from time to time by resolution of the Board of Managers or by
resolution of the Members.
5.03 Election and Removal of Managers; Quorum. (a) Managers shall be elected
at each annual meeting of Members to succeed those Managers whose terms have
expired and to fill any vacancies then existing.
(b) Managers shall hold their offices for terms of one year and until their
successors are elected. Any Manager may be removed from office at a meeting
called expressly for that purpose by the vote of Members holding not less than a
majority in interest of the Membership Units entitled to vote at an election of
Managers.
(c) Any vacancy occurring in the Board of Managers may be filled by the
affirmative vote of the majority of the remaining Managers though less than a
quorum of the Board, and the term of office of any Manager so elected shall
expire at the next Members' meeting at which Managers are elected.
(d) A majority of the number of Managers described in this Agreement shall
constitute a quorum for the transaction of business. The act of a majority of
Members present at a meeting at which a quorum is present shall be the act of
the Board of Managers. Less than a quorum may adjourn any meeting.
5.04 Meetings of Managers. An annual meeting of the Board of Managers shall
be held as soon as practicable after the adjournment of the annual meeting of
the Members at such place as the Board of Managers may designate. Other meetings
of the Board of Managers shall be held at places within or without the State and
at times fixed by resolution of the Board of Managers, or upon call of the
Chairman of the Board of Managers, the Vice-Chairman of the Board of Managers,
the President or any of the Managers. The Secretary or officer performing the
Secretary's duties shall give not less than twenty-four hours' notice by letter,
telegraph, telephone or facsimile (or in person) of all meetings of the Board of
Managers, provided that notice need not be given of the annual meeting or of
regular meetings held at times and places fixed by resolution of the Board of
Managers. Meetings may be held at any time without notice if all of the Managers
are present, or if those not present waive notice in writing either before or
after the meeting. The notice of meetings of the Board of Managers need not
state the purpose of the meeting.
5.05 Third Party Reliance. Third parties dealing with the Company shall be
entitled to rely conclusively upon the power and authority of the Managers or
any of them as set forth herein.
5.06 No Duty to Consult. Except as otherwise provided herein or in the Act,
the Board of Managers shall have no duty or obligation to consult with or seek
the advice of the Members in connection with the conduct of the business of the
Company.
5.07 Compensation. By resolution of the Board of Managers, Managers may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude Managers from serving the Company in other capacities and
receiving compensation for such other services.
SECTION VI
COMMITTEES
6.01 Executive Committee. The Board of Managers, by resolution adopted by a
majority of the number of Managers fixed by this Agreement, may elect an
Executive Committee which shall consist of not less than two Managers, including
the President. When the Board of Managers is not in session, the Executive
Committee shall have all power vested in the Board of Managers by law, by the
Articles of Organization, or by this Agreement, provided that the Executive
Committee shall not have power to (a) approve or recommend to the Members action
that the Act requires to be approved by Members; (b) fill vacancies on the Board
of Managers or on any of its committees; (c) adopt, amend, or repeal this
Agreement; (d) approve a plan of merger not requiring Member approval; (e)
authorize or approve a distribution, except according to a general formula or
method prescribed by the Board of Managers; or (f) admit additional Members, or
change or determine the relative rights, preferences and liabilities of a class
of Members, other than within limits specifically provided by the Board of
Managers. The Executive Committee shall report at the next regular or special
meeting of the Board of Managers all action which the Executive Committee may
have taken on behalf of the Board of Managers since the last regular or special
meeting of the Board of Managers.
6.02 Finance Committee. The Board of Managers, by resolution adopted by a
majority of the number of Managers fixed by this Agreement, may elect a Finance
Committee which shall consist of not less than two Managers. The Finance
Committee shall consider and report to the Board of Managers with respect to
plans for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board of
Managers with respect to such other matters relating to the financial affairs of
the Company as may be requested by the Board of Managers or the appropriate
officers of the Company. The Committee shall report periodically to the Board of
Managers on all action which it may have taken.
6.03 Other Committees. The Board of Managers, by resolution adopted by a
majority of the number of Managers fixed by this Agreement, may establish such
other standing or special committees of the Board of Managers as it may deem
advisable, consisting of not less than two Managers; and the members, terms and
authority of such committees shall be as set forth in the resolutions
establishing the same.
6.04 Meetings. Regular and special meetings of any Committee established
pursuant to this Section VI may be called and held subject to the same
requirements with respect to time, place and notice as are specified in this
Agreement for regular and special meetings of the Board of Managers.
6.05 Quorum and Manner of Acting. A majority of the members of any Committee
serving at the time of any meeting thereof shall constitute a quorum for the
transaction of business at such meeting. The action of a majority of those
members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
6.06 Term of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Managers or until such Committee is dissolved by the Board of Managers.
6.07 Resignation and Removal. Any member of a Committee may resign at any
time by giving written notice of his intention to do so to the President or the
Secretary of the Company, or may be removed, with or without cause, at any time
by such vote of the Board of Managers as would suffice for his election.
6.08 Vacancies. Any vacancy occurring in a Committee resulting from any cause
whatever may be filled by the affirmative vote of a majority of the number of
Managers fixed by this Agreement.
SECTION VII
OFFICERS
7.01 Election of Officers; Terms. The officers of the Company shall consist
of a President, a Secretary and a Treasurer. Other officers, including a
Chairman of the Board of Managers, one or more Vice-Presidents (whose seniority
and titles, including Executive Vice-Presidents and Senior Vice-Presidents, may
be specified by the Board of Managers), and assistant and subordinate officers,
may from time to time be elected by the Board of Managers. All officers shall
hold office until the next annual meeting of the Board of Managers and until
their successors are elected. The President shall be chosen from among the
Managers. Any two officers may be combined in the same person as the Board of
Managers may determine.
7.02 Removal of Officers; Vacancies. Any officer of the Company may be
removed summarily with or without cause, at any time, by the Board of Managers.
Vacancies may be filled by the Board of Managers.
7.03 Duties. The officers of the Company shall have such duties as generally
pertain to their offices, respectively, as well as such powers and duties as are
hereinafter provided or as from time to time shall be conferred by the Board of
Managers. The Board of Managers may require any officer to give such bond for
the faithful performance of his duties as the Board of Managers may see fit.
7.04 Duties of the President. The President shall be the chief executive
officer of the Company and shall be primarily responsible for the implementation
of policies of the Board of Managers. He shall have authority over the general
management and direction of the business and operations of the Company and its
divisions, if any, subject only to the ultimate authority of the Board of
Managers. He shall be a Manager, and except as otherwise provided in this
Agreement or in the resolutions establishing such committees, the President
shall be ex officio a member of all Committees of the Board of Managers. In the
absence of the Chairman and the Vice-Chairman of the Board of Managers, or if
there are no such officers, the President shall preside at all meetings of the
Company. He may sign and execute in the name of the Company Unit certificates,
deeds, mortgages, bonds, contracts or other instruments except in cases where
the signing and the execution thereof shall be expressly delegated by the Board
of Managers or by this Agreement to some other officer or agent of the Company
or shall be required by law otherwise to be signed or executed. In addition, he
shall perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Managers.
7.05 Duties of the Vice-Presidents. Each Vice-President, if any, shall have
such powers and duties as may from time to time be assigned to him by the
President or the Board of Managers. Any Vice-President may sign and execute in
the name of the Company Unit certificates, deeds, mortgages, bonds, contracts or
other instruments authorized by the Board of Managers, except where the signing
and execution of such documents shall be expressly delegated by the Board of
Managers or the President to some other officer or agent of the Company or shall
be required by law or otherwise to be signed or executed by some other officer
or agent.
7.06 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Company, and shall deposit all monies and securities of the Company in such
banks and depositories as shall be designated by the Board of Managers. He shall
be responsible: (a) for maintaining adequate financial accounts and records in
accordance with generally accepted accounting practices; (b) for the preparation
of appropriate operating budgets and financial statements; (c) for the
preparation and filing of all tax returns required by law; and (d) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Managers, the
Finance Committee or the President. The Treasurer may sign and execute in the
name of the Company Unit certificates, deeds, mortgages, bonds, contracts or
other instruments, except in cases where the signing and the execution thereof
shall be expressly delegated by the Board of Managers or by this Agreement to
some other officer or agent of the Company or shall be required by law or
otherwise to be signed or executed.
7.07 Duties of the Secretary. The Secretary shall act as secretary of all
meetings of the Board of Managers and Members of the Company. When requested, he
shall also act as secretary of the meetings of the committees of the Board of
Managers. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Company are duly given and served; shall have custody of all deeds, leases,
contracts and other important documents of the Company; shall have charge of the
books, records and papers of the Company relating to its organization and
management as a Company; shall see that all reports, statements and other
documents required by law (except tax returns) are properly filed; and shall in
general perform all the duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the Board of
Managers or the President.
7.08 Compensation. The Board of Managers shall have authority to fix the
compensation of all officers of the Company.
SECTION VIII
CAPITAL CONTRIBUTIONS AND
FINANCIAL OBLIGATIONS OF MEMBERS
8.01 Initial Capital Contributions. The initial Capital Contributions of each
Member are as set forth opposite such Member's name on Schedule A.
8.02 No Interest Upon Contributions. No Member shall be entitled to interest
on its Capital Contribution.
8.03 Return of Capital Contributions. No Member shall be entitled to withdraw
any part of its Capital Contribution or its Capital Account or to receive any
distribution from the Company, except as specifically provided in this
Agreement. Except as otherwise provided herein, there shall be no obligation to
return to any Member or withdrawn Member any part of such Member's Capital
Contribution to the Company for so long as the Company continues in existence.
8.04 Additional Contributions. No Member, as such, shall be liable for any of
the debts of the Company or, except as required by Section 9.05 hereof, be
required to contribute any additional capital or lend any funds to the Company,
each Member's liability being limited to its Capital Contribution plus any
distributions made to it under this Agreement.
8.05 Capital Accounts. A separate capital account (a "Capital Account") shall
be established and maintained for each Member in accordance with Regulations
Section 1.704-1(b)(2)(iv).
SECTION IX
PROFITS AND LOSSES; DISTRIBUTIONS
9.01 General Allocation of Profits and Losses. (a) Except as otherwise
provided in this Section 9.01, profits and losses of the Company will be
allocated pro rata among the Members in accordance with their respective
Percentage Interests.
(b) If a Member transfers any or all of its Membership Units to another
Person (the "Transferee"), the distributive shares of the various items
allocable among the transferor and the Transferee during such fiscal year of the
Company shall be allocated between the transferor and the Transferee based on
the date of the transfer of the interest without regard to the results of
Company activities in the respective portions of such fiscal year in which the
transfer occurred.
(c) Notwithstanding any provision to the contrary, (i) any expense of the
Company that is a "nonrecourse deduction" within the meaning of Regulations
Section 1.704-2(b)(1) shall be allocated pro rata among the Members in
accordance with their respective Percentage Interests, (ii) any expense of the
Company that is a "partner nonrecourse deduction" within the meaning of
Regulations Section 1.704-2(i)(2) shall be allocated in accordance with
Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in Company
Minimum Gain within the meaning of Regulations Section 1.704-2(0(1) for any
taxable year of the Company, items of gain and income shall be allocated among
the Members in accordance with Regulations Section 1.704-2(f) and the ordering
rules contained in Regulations Section 1.704-2(j), and (iv) if there is a net
decrease in Member Nonrecourse Debt Minimum Gain within the meaning of
Regulations Section 1.704-2(i)(4) for any taxable year of the Company, items of
gain and income shall be allocated among the Members in accordance with
Regulations Section 1.704-2(i)(4) and the ordering rules contained in
Regulations Section 1.704-2(j). A Member's "interest in partnership profits" for
purposes of determining such Member's share of the nonrecourse liabilities of
the Company within the meaning of Regulations Section 1.752-3(a)(3) shall be
such Member's Percentage Interest.
(d) "Profits" and "losses" and any items of income, gain, expense or loss
referred to in this Section 9.01 shall be determined in accordance with federal
income tax accounting principles as modified by Regulations Section
1.704-1(b)(2)(iv), except that profits and losses shall not include items of
income, gain and expense that are specially allocated pursuant to Section
9.01(c). All allocations of income, profits, gains, expenses and losses (and all
items contained therein) for federal income tax purposes shall be identical to
all allocations of such items set forth in this Section 9.01, except as
otherwise required by Section 704(c) of the Code and Section 1.704-1(b)(4) of
the Regulations.
(e) It is intended that the allocations under this Agreement shall effect an
allocation for federal income tax purposes in a manner consistent with Section
704(b) of the Code and the Regulations promulgated thereunder. If for any reason
the allocations contained in this Agreement shall conflict with the Regulations
promulgated under Section 704(b) of the Code, the Board of Managers may amend
the allocation provisions contained herein if it believes that such an amendment
is necessary to reflect allocations consistent with such Regulations.
9.02 Distribution of Cash Available for Distribution. (a) The Board of
Managers may in its sole discretion elect to distribute to the Members within 90
days following the end of each fiscal year an amount not to exceed Cash
Available for Distribution (as defined in Section 9.02(b)) for such fiscal year
(or part thereof) pro rata among the Members in accordance with their respective
Percentage Interests.
(b) For purposes of this Agreement, the term "Cash Available for
Distribution" for a fiscal year of the Company shall mean the profits and losses
of the Company (other than profits and losses arising from a Terminating Capital
Transaction), but subject to the following adjustments:
(i) In determining Cash Available for Distribution for any year, there
shall be added depreciation, amortization and other noncash charges (including
accrued but unpaid interest).
(ii) In determining Cash Available for Distribution for any year, there
shall be subtracted the following amounts:
(A) Principal payments on Company indebtedness, including indebtedness
to a Member;
(B) Working capital and contingency reserves, as determined by the
Board of Managers;
(C) Payments for capital expenditures; and
(D) Fees, interest payments on the Company's indebtedness, and other
expenses to the extent actually paid by the Company in such year, but not
reflected in the computation of profits and losses.
9.03 Distribution of Sale or Refinancing Proceeds. In addition to the annual
distribution provided for in paragraph (a) of Section 9.02, the Board of
Managers may within 90 days after a Capital Transaction make a special
distribution to Members in an amount not to exceed the cash portion of the Sale
or Refinancing Proceeds from such Capital Transaction. Such distribution shall
be allocated to the Members as provided in paragraph (a) of Section 9.02.
9.04 Distribution of Proceeds from a Terminating Capital Transaction. The net
proceeds of a Terminating Capital Transaction shall be distributed in the
following order of priority:
(a) First, towards the satisfaction of all outstanding debts and other
obligations of the Company;
(b) Second, towards repayment of outstanding loans, if any, made by Members
to the Company; and
(c) Last, to the Members with positive Capital Accounts in accordance with
their respective positive Capital Account balances.
For purposes of Section 9.04(c), the Capital Account of each Member shall be
determined after all adjustments made in accordance with Sections 9.01, 9.02 and
9.03 hereof resulting from Company operations and from all sales and
dispositions of all or any part of the Company's assets. Any distributions
pursuant to this Section 9.04 should be made by the end of the Company's taxable
year in which the liquidation occurs (or, if later, within 90 days after the
date of the liquidation). To the extent deemed advisable by the Board of
Managers, appropriate arrangements (including the use of a liquidating trust)
may be made to assure that adequate funds are available to pay any contingent
debts or obligations.
9.05 Capital Account Deficit Restoration. If any Member has a negative
balance in its Capital Account following a liquidation of the Company, as
determined after taking into account all Capital Account adjustments in
accordance with Sections 9.01, 9.02 and 9.03 hereof resulting from Company
operations and from all sales and dispositions of all or any part of the
Company's assets, such Member shall contribute to the Company an amount of cash
equal to the negative balance in its Capital Account and such cash shall be
distributed by the Company to the other Members in accordance with Section 9.04
hereof or to creditors, if any. Any contribution pursuant to the preceding
sentence shall be made by the end of the Company's taxable year in which the
liquidation occurs (or, if later, within 90 days after the date of the
liquidation).
9.06 Distribution of Debt Instruments. (a) In the event the Company sells any
of its assets and all or a portion of the sales price is paid by a promissory
note or installment contractual obligations (each, a "Debt Instrument"), all
interest and principal received by the Company with respect thereto shall be
treated as Sale or Refinancing Proceeds or if such sale occurs in conjunction
with the dissolution of the Company, as net proceeds of a Terminating Capital
Transaction, and shall be distributed in accordance with Section 9.03 or 9.04
hereof, as the case may be.
(b) In the event the Company holds a Debt Instrument as described in Section
9.06(a) and the Company either is dissolved in conjunction with the sale which
gave rise to such Debt Instrument or dissolves prior to payment in full of such
Debt Instrument, the Board of Managers shall assign such Debt Instrument to a
trustee who shall collect all sums which may become due and payable under the
Debt Instrument, who shall have the power and authority to act to enforce all
rights of the holder of such Debt Instrument and shall distribute such sums as
provided in Section 9.03 or 9.04, as applicable.
9.07 Illiquid Securities. At the time of the Company's dissolution for any
reason, the Board of Managers may determine in its sole discretion that it would
not be prudent to sell at such time certain of the Company's securities in
connection with the dissolution because of a lack of liquidity or otherwise. In
such event, any Securities not sold as part of the dissolution shall be assigned
to a trustee who shall collect all sums that may become due and payable with
respect to such securities and who shall have full power to vote and dispose of
such securities in such manner as it deems in its sole good faith business
judgment is in the best interest of the Members receiving the proceeds of the
dissolution.
SECTION X
TRANSFERS AND THE ADDITION, SUBSTITUTION AND
WITHDRAWAL OF MEMBERS
10.01 Restrictions on Transfers. Except as otherwise provided herein,
Membership Units may be assigned only as follows:
(a) Unless waived by the Board of Managers, a Membership shall not be
transferred in the absence of an opinion of counsel, satisfactory to the Board
of Managers, that the registration of the sale of the Membership Unit is not
required under the Securities Act of 1933, as amended (the "1933 Act"), or any
applicable state securities laws;
(b) Any transfer of a Membership Unit, other than to an existing Member,
shall be effective only to give the Transferee the right to receive the share of
allocations and distributions to which the transferor would otherwise be
entitled. Any Transferee, who is not a Member prior to the transfer, shall not
have the right to become a substituted Member unless the non-transferring
Members holding at least 66-2/3% of the Membership Units not subject to such
transfer, in the exercise of their sole and absolute discretion, expressly
consent thereto in writing and the Transferee agrees to be bound by all the
terms and conditions of this Agreement as then in effect. Unless and until a
Transferee is admitted as a substituted Member, the Transferee shall have no
right to exercise any of the powers, rights and privileges of a Member
hereunder. A Member who has assigned its entire interest in all of its
Membership Units shall cease to be a Member and thereafter shall have no further
powers, rights and privileges as a Member hereunder, but shall, unless otherwise
relieved of such obligations by agreement of all of the other Members or by
operation of law, remain liable for all obligations and duties incurred as a
Member. A Transferee who becomes a substitute Member is liable for any
obligations of its transferor to make or retain capital contributions as
provided in this Agreement and by the Act; provided, however, such transferor
shall not be obligated for liabilities of its Transferee unknown to it at the
time it became a Member;
(c) The Company may, in its reasonable discretion, charge a reasonable fee
to cover the additional administrative expenses incurred in connection with or
as a consequence of the transfer of its Membership Units;
(d) The Company, each Member and any other Person having business with the
Company need deal only with Members who are admitted as Members or as
substituted Members of the Company, and they shall not be required to deal with
any other Person by reason of assignment by a Member or by reason of the death
of a Member, except as otherwise provided in this Agreement. In the absence of
the substitution (as provided herein) of a Member for an assigning or a deceased
Member, any payment to a Member or to a Member's executors or administrators
shall release the Company and the Board of Managers from all liability to any
other Persons who may be interested in such payment by reason of an assignment
by, or the death of, such Member;
(e) No Person shall have a perfected lien or security interest in an
Interest unless the creation of such security interest is in accordance with the
provisions of this Agreement and the Company is notified of such security
interest and provided a copy of all documentation with respect thereto,
including financing statements, prior to execution and filing;
(f) Any transfer not in accord with this Agreement shall be void ab initio;
and
(g) Each Member agrees not to transfer all or any of its Membership Units
(or take or omit to take any action, filing, election, or other action which
could result in a deemed transfer) if such transfer (either considered alone or
in the aggregate with prior transfers by other Members) would result in the
termination of the Company for federal income tax purposes. Such a transfer is
void ab initio.
10.02 Right of First Refusal. Subject to the provisions of Section 10.03
below, in the event that any Member (the "Selling Member") desires to transfer
any of its Membership Units in accordance with Section 10.01 above, the Company
shall have the right, for a period of ten business days after the Company gives
notice to the Selling Member of receipt of the opinion described in Section
10.01 above, to purchase such Units (or designate a purchaser for such Units
subject to the consent of the non-transferring Members holding at least 66-2/3%
of the Membership Units not subject to such transfer as set forth in Section
10.01(b)) held by the Selling Member at the price at which the Selling Member
has received a good faith offer to purchase such Units. If the Company (or its
designee) shall not offer to purchase such Units within such ten-day period, the
remaining Members (the "Electing Members") shall have the right for a period of
ten business days after the expiration of the Company's option to exercise its
right of first refusal, to purchase a proportionate share of the Selling
Member's Membership Units at the price per Unit at which the Selling Member has
received a good faith offer to purchase such Units. If neither the Company (or
its designee) nor the Electing Members elect to purchase such Units within their
respective option periods, the Selling Member shall not be obligated to give the
Company or the remaining Members any further right of first refusal hereunder
with respect to the proposed sale and may proceed with such sale or sales of
such Membership Units; provided, however, that any such sale or sales shall be
effected within 90 days of the Company's election not to exercise its right of
first refusal. For purposes of this Section 10.02, a "proportionate share" shall
mean the portion that each Electing Member's Membership Units bears to the
Membership Units held by all Electing Members opting to purchase a portion of
the Selling Member's Membership Units pursuant to this Section 10.02.
10.03 Termination. The right of first refusal set forth in Section 10.02
above shall terminate and be of no further force and effect upon the election of
holders of more than 66-2/3% of the Membership Units.
10.04 New Members or Additional Capital. The Board of Managers may from time
to time (i) admit any Person to the Company as a new Member in exchange for such
Capital Contributions as the Board of Managers deems in the best interest of the
Company or (ii) accept such additional Capital Contributions from existing
Members as the Board of Managers deems in the best interest of the Company;
provided that the Board of Managers determines that the sale of such new
Membership Units is exempt from registration under the 1933 Act and all
applicable state securities laws and any such new Members expressly agree in
writing to be bound by all of the terms and conditions of this Agreement as then
in effect.
SECTION XI
INDEMNIFICATION
11.01 Definitions in this Section:
"applicant" means the Person seeking indemnification pursuant to this
Section XI.
"expenses" includes counsel fees.
"liability" means the obligation to pay a judgment, settlement, penalty,
fine, including any excise tax assessed with respect to an employee benefit
plan, or reasonable expenses incurred with respect to a proceeding.
"party" includes an individual who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
"proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal.
11.02 Liability. In any proceeding brought by or in the right of the Company
or brought by or on behalf of the Members of the Company, no Manager or officer
of the Company shall be liable to the Company or its Members for monetary
damages with respect to any transaction, occurrence or course of conduct,
whether prior or subsequent to the effective date of this Section XI, except for
liability resulting from such Person's having engaged in willful misconduct or a
knowing violation of the criminal law or any federal or state securities law.
11.03 Indemnification. The Company shall indemnify any Person who was or is a
party to any proceeding, including a proceeding brought by a Member in the right
of the Company or brought by or on behalf of the Members of the Company, by
reason of the fact that he is or was a Manager or officer of the Company, or is
or was serving at the request of the Company as a manager, director, trustee,
partner or officer of another limited liability company, corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against any liability incurred by him in connection with such proceeding unless
he engaged in willful misconduct or a knowing violation of the criminal law. A
Person is considered to be serving an employee benefit plan at the Company's
request if his duties to the Company also impose duties on, or otherwise involve
services by, him to the plan or to participants in or beneficiaries of the plan.
The Board of Managers is hereby empowered, by a majority vote of a quorum of
disinterested Managers, to enter into a contract to indemnify any Manager or
officer in respect of any proceedings arising from any act or omission, whether
occurring before or after the execution of such contract.
11.04 Applicability. The provisions of this Section XI shall be applicable to
all proceedings commenced after the adoption hereof by the Members of the
Company, arising from any act or omission, whether occurring before or after
such adoption. No amendment or repeal of this Section XI shall have any effect
on the rights provided under this Section XI with respect to any act or omission
occurring prior to such amendment or repeal. The Company promptly shall take all
such actions, and make all such determinations, as shall be necessary or
appropriate to comply with its obligation to make any indemnity under this
Section XI and shall promptly pay or reimburse all reasonable expenses,
including attorneys' fees, incurred by any such Manager or officer in connection
with such actions and determinations or proceedings of any kind arising
therefrom.
11.05 Standard of Conduct. The termination of any proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the applicant did not
meet the standard of conduct described in Sections 11.02 or 11.03.
11.06 Determination of Standard of Conduct. Any indemnification under Section
11.03 (unless ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of the
applicant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 11.03.
The determination shall be made:
(a) By the Board of Managers by a majority vote of a quorum consisting of
Managers not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under subsection (a) of this section, by
majority vote of a committee duly designated by the Board of Managers (in which
designation the Managers who are parties may participate), consisting solely of
two or more Managers not at the time parties to the proceeding;
(c) By special legal counsel:
(i) Selected by the Board of Managers or its committee in the manner
prescribed in subsection (a) or (b) of this Section 11.06; or
(ii) If a quorum of the Board of Managers cannot be obtained under
subsection (a) of this section and a committee cannot be designated under
subsection (b) of this section, selected by majority vote of the full Board of
Managers, in which selection the Managers who are parties may participate; or
(d) By the Members, but Units owned by or voted under the control of the
Managers who are at the time parties to the proceeding may not be voted on the
determination.
Any evaluation as to reasonableness of expenses shall be made in the same
manner as the determination that indemnification is appropriate, except that if
the determination is made by special legal counsel, such evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of this Section 11.06 to select counsel.
Notwithstanding the foregoing, in the event there has been a change in the
composition of a majority of the Board of Managers after the date of the alleged
act or omission with respect to which indemnification is claimed, any
determination as to indemnification and advancement of expenses with respect to
any claim for indemnification made pursuant to this Section XI shall be made by
special legal counsel agreed upon by the Board of Managers and the applicant. If
the Board of Managers and the applicant are unable to agree upon such special
legal counsel the Board of Managers and the applicant each shall select a
nominee, and the nominees shall select such special legal counsel.
11.07 Expenses.
(a) The Company shall pay for or reimburse the reasonable expenses incurred
by any applicant who is a party to a proceeding in advance of final disposition
of the proceeding or the making of any determination under Section 11.06 if the
applicant furnishes the Company:
(i)a written statement of his good faith belief that he has met the
standard of conduct described in Section 11.03; and
(ii) a written undertaking, executed personally or on his behalf, to
repay the advance if it ultimately is determined that he did not meet such
standard of conduct.
(b) The undertaking required by paragraph (ii) of subsection (a) of this
section shall be an unlimited general obligation of the applicant but need not
be secured and may be accepted without reference to financial ability to make
repayment.
(c) Authorizations of payments under this Section 11.07 shall be made by the
Persons specified in Section 11.06.
11.08 Additional Indemnities. The Board of Managers is hereby empowered, by
majority vote of a quorum consisting of disinterested Managers, to cause the
Company to indemnify or contract to indemnify any Person not specified in
Section 11.02 or 11.03 who was, is or may become a party to any proceeding, by
reason of the fact that he is or was an employee or agent of the Company, or is
or was serving at the request of the Company as a manager, director, officer,
employee or agent of another company, corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, to the same extent as if such
Person were specified as one to whom indemnification is granted in Section
11.03. The provisions of Sections 11.04 through 11.07 shall be applicable to any
indemnification provided hereafter pursuant to this Section 11.08.
11.09 Insurance. The Company may purchase and maintain insurance to indemnify
it against the whole or any portion of the liability assumed by it in accordance
with this Section XI and may also procure insurance, in such amounts as the
Board of Managers may determine, on behalf of any Person who is or was a
Manager, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a manager, director, officer, employee or agent of
another company, corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against any liability asserted against or
incurred by him in any such capacity or arising from his status as such, whether
or not the Company would have power to indemnify him against such liability
under the provisions of this Section XI.
11.10 Exclusivity. Every reference herein to managers, directors, officers,
employees or agents shall include former managers, directors, officers,
employees and agents and their respective heirs, executors and administrators.
The indemnification hereby provided and provided hereafter pursuant to the power
hereby conferred by this Section 11.10 on the Board of Managers shall not be
exclusive of any other rights to which any Person may be entitled, including any
right under policies of insurance that may be purchased and maintained by the
Company or others, with respect to claims, issues or matters in relation to
which the Company would not have the power to indemnify such person under the
provisions of this Section XI. Such rights shall not prevent or restrict the
power of the Company to make or provide for any further indemnity, or provisions
for determining entitlement to indemnity, pursuant to one or more
indemnification agreements or other arrangements (including, without limitation,
creation of trust funds or security interests funded by letters of credit or
other means) approved by the Board of Managers (whether or not any of the
Managers of the Company shall be a party to or beneficiary of any such
agreements or arrangements); provided, however, that any provision of such
agreements or other arrangements shall not be effective if and to the extent
that it is determined to be contrary to this Section 11.10 or applicable laws of
the State.
SECTION XII
MISCELLANEOUS PROVISIONS
12.01 Fixing Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment thereof, or
entitled to receive a payment of any kind, or in order to make a determination
of Members for any other proper purpose, the Board of Managers may fix in
advance a date as the record date for any such determination of Members, such
date in any case to be not more than seventy days prior to the date on which the
particular action, requiring such determination of Members, is to be taken. If
no record date is fixed for the determination of Members entitled to notice of
or to vote at a meeting of Members, or Members entitled to receive payment of a
distribution, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Managers declaring such distribution is
adopted, as the case may be, shall be the record date for such determination of
Members. When a determination of Members entitled to vote at any meeting of
Members has been made as provided in this Section 12.01, such determination
shall apply to any adjournment thereof unless the Board of Managers fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
12.02 Fiscal and Taxable Year. The fiscal year and taxable year of the
Company shall be the calendar year or such other taxable year as may be required
by Section 706(b) of the Code.
12.03 Voting of Shares Held. Unless otherwise provided by resolution of the
Board of Managers or of the Executive Committee, if any, the President may from
time to time appoint an attorney or attorneys or agent or agents of the Company,
in the name and on behalf of the Company, to cast the vote which the Company may
be entitled to cast as a member, shareholder or otherwise in any other company,
any of whose securities may be held by the Company, at meetings of the holders
of the shares or other securities of such other company, or to consent in
writing to any action by any such other company; and the President shall
instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent and may execute or cause to be executed on behalf
of the Company such written proxies, consents, waivers or other instruments as
may be necessary or proper. In lieu of such appointment the President may
himself attend any meetings of the holders of shares or other securities of any
such other company and there vote or exercise any or all power of the Company as
the holder of such shares or other securities of such other company.
12.04 Representations from Recipients. As a condition to the Company's
lending or investing funds, the Company shall require the person or entity
receiving such funds to certify to the Company in writing, in such form as the
Board of Managers shall determine, that no officer, director or employee of a
Virginia state bank that is a Member of the Company or any member of such
individual's immediate family, has any ownership interest in the person or
entity receiving the funds.
12.05 Reports. Not less frequently than annually, the Company shall prepare
and distribute to the Members a report of its activities since the prior report.
The report shall contain detailed information, financial and otherwise,
describing the Company's financial condition, its portfolio of investments, the
extent to which the Company is fulfilling its purposes as stated in its Articles
of Organization and this Agreement, and any other information the Company deems
relevant. The Company shall prepare and deliver, or cause to be prepared and
delivered, to the Members, no later than 75 days after the close of each fiscal
year, a Schedule K-i, a copy of the Company's informational tax return (IRS Form
1065), and such other reports setting forth in sufficient detail all such
information and data with respect to the transactions effected by or involving
the Company during such fiscal year as shall enable the Company and each Member
to prepare its federal, state, and local income tax returns in accordance with
the laws, rules, and regulations then prevailing.
12.06 Bank Accounts; Checks, Notes and Drafts. (a) Funds of the Company shall
be deposited in an account or accounts of a type, in form and name and in a
bank(s) or other financial institution(s) which are participants in federal
insurance programs as selected by the Board of Managers. The Board of Managers
shall arrange for the appropriate conduct of such accounts. Funds may be
withdrawn from such accounts only for bona fide and legitimate Company purposes
and may from time to time be invested in such short-term securities, money
market funds, certificates of deposit, or other liquid assets as the Board of
Managers deems appropriate.
(b) The Members acknowledge that the Board of Managers may maintain Company
funds in accounts, money market funds, certificates of deposit or other liquid
assets in excess of the insurance provided by the Federal Deposit Insurance
Corporation, or other depository insurance institutions and that the Board of
Managers shall not be accountable or liable for any loss of such funds resulting
from failure or insolvency of the depository institution.
(c) Checks, notes, drafts, and other orders for the payment of money shall
be signed by such persons as the Board of Managers from time to time may
authorize. When the Board of Managers so authorizes, however, the signature of
any such person may be a facsimile.
12.07 Books and Records. At all times during the term of the Company, the
Board of Managers shall keep, or cause to be kept, full and accurate books of
account, records and supporting documents, which shall reflect, completely,
accurately and in reasonable detail, each transaction of the Company. The books
of account shall be maintained and tax returns prepared and filed on the method
of accounting determined by the Board of Managers. The books of account,
records, and all documents and other writings of the Company shall be kept and
maintained at the principal office of the Company. Each Member or its designated
representative shall, upon reasonable notice to the Board of Managers, have
access to such financial books, records, and documents during reasonable
business hours and may inspect and make copies of any of them at its own
expense.
The Board of Managers shall cause the Company to keep at its principal office
the following:
(i) a current list of the full name and last known business address of each
Member, in alphabetical order;
(ii) a copy of the Articles of Organization and the Certificate of
Organization, and all Articles of Amendment and Certificates of Amendment
thereto;
(iii) copies of the Company's federal, state, and local income tax returns
and reports, if any, for the three most recent years; and
(iv) copies of this Agreement, as amended, and of any financial statements
of the Company for the three most recent years.
12.08 Audits. Any Member may at any time, but no more frequently than
annually, request the Company to have an independent accounting firm prepare
audited financial statements of the Company. The Member requesting an audit
shall bear the expenses of such audit.
12.09 Tax Matters Partner. Xxxxxx Xxxxxx, or such other Member as the Board
of Managers may designate from time to time, shall be the Tax Matters Partner
for the Company within the meaning of Section 6231(a)(7) of the Code. The Tax
Matters Partner shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters Partner.
In the event the Tax Matters Partner receives notice of a final partnership
adjustment under Section 6223(a)(2) of the Code, the Tax Matters Partner shall
either (i) file a court petition for judicial review of such final adjustment
within the period provided under Section 6226(a) of the Code, a copy of which
petition shall be mailed to all other Members on the date such petition is
filed, or (ii) mail a written notice to all other Members, which such period,
that describes the Tax Matters Partner's reasons for determining not to file
such a petition.
12.10 Tax Elections. The Board of Managers shall make any available elections
under the Code or any applicable state or local tax law on behalf of the
Company. If requested by a Member, the Board of Managers shall cause the Company
to make an election under Section 754 of the Code in connection with any
transfer by the Member of any of its Membership Units. No election shall be made
by the Company or any Member for the Company to be excluded from the application
of any of the provisions of Subchapter K, Chapter 1 of Subtitle A of the Code or
from any similar provisions of any state or local tax laws.
12.11 Notices. Unless otherwise provided herein, any offer, acceptance,
election, approval, consent, certification, request, waiver, notice or other
communication required or permitted to be given hereunder (hereinafter
collectively referred to as a "Notice"), shall be given by enclosing the same in
an envelope addressed to the Member to whom the Notice is to be given at the
address of such Member as set forth in the records maintained by the Company or
at such other address as any Member hereafter may designate to the Company in
accordance with the provisions of this Section 12.11, and deposited in the U.S.
Mail postage prepaid. In addition, the Board of Managers shall be sent a copy of
all such Notices, by registered or certified mail, return receipt requested. The
date at which notice shall be deemed received shall be the date of the receipt
of the copy of such notice by the Board of Managers.
12.12 Entire Agreement. This Agreement, including the Exhibits or other
documents or schedules attached hereto or incorporated herein by reference,
constitutes the entire agreement of the Members with respect to the matters
covered herein. This Agreement supersedes all prior agreements and oral
understandings among the Members with respect to such matters.
12.13 Amendment. Except as provided by law, in the Articles of Organization
or otherwise set forth herein, this Agreement may be amended or altered at any
meeting of the Board of Managers by the affirmative vote of a majority of the
number of Managers fixed by this Agreement. The Members entitled to vote in
respect of the election of Managers, however, shall have the power to rescind,
amend, alter or repeal any provision hereto and to enact provisions hereto
which, if expressly so provided, may not be amended, altered or repealed by the
Board of Managers.
12.14 Interpretation. Whenever the context may require, any noun or pronoun
used herein shall include the corresponding masculine, feminine or neuter forms.
The singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
12.15 Severability. Each provision of this Agreement shall be considered
severable and if for any reason any provision or provisions hereof are
determined to be invalid and contrary to existing or future law, such invalidity
shall not impair the operation or affect those portions of this Agreement which
are valid, and this Agreement shall remain in full force and effect and shall be
construed and enforced in all respects as if such invalid or unenforceable
provision or provisions had been omitted.
12.16 Burden and Benefit Upon Successors. Except as expressly otherwise
provided herein, this Agreement is binding upon, and inures to the benefit of,
the parties hereto and their respective heirs, executors, administrators,
personal and legal representatives, successors and assigns.
12.17 Further Assurances. Each Member hereby agrees that it shall hereafter
execute and deliver such further instruments, provide all information and take
or forbear such further acts and things as may be reasonably required or useful
to carry out the intent and purpose of this Agreement and as are not
inconsistent with the terms hereof.
12.18 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together will
constitute one instrument, binding upon all parties hereto, notwithstanding that
all of such parties may not have executed the same counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
MEMBERS:
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CBQ, Inc.
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Xxxxxx Xxxxxx
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Xxxxxxx Postal
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Xxxx Xxxx
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Xxxx Xxxxxx
SCHEDULE A
Member Percentage of Membership Interests
CBQ, Inc. 40%
Xxxx Xxxxxx 15%
Xxxxxxx Postal 15%
Xxxx Xxxx 15%
Xxxxxx Xxxxxx 15%
