LIMITED
LIABILITY COMPANY
AGREEMENT
OF
ABC
CAPITAL LLC,
a
Delaware Series Limited Liability Company
ABC
CAPITAL LLC
Table
of Contents
RECITALS
ARTICLE
I
DEFINITIONS
Section
1.01 - Definitions
Section 1.02 - Headings
ARTICLE
II
FORMATION
OF COMPANY
Section
2.01 - Formation and Series Creation
Section
2.02 - Name
Section
Section
2.04 - Registered Office and Registered Agent
Section
2.05 - Term
ARTICLE
III
BUSINESS
OF COMPANY
Section
3.01 - Business of Company
ARTICLE
IV
NAMES
AND ADDRESSES OF MEMBERS
Section
4.01 - Members
Section
4.02 - Presidents and Executive Vice Presidents
Section 4.03 - Manager
ARTICLE
V
RIGHTS
AND DUTIES OF MEMBERS & MANAGERS
Section
5.01 - Management
Section
5.02 - Certain Powers of Managers
Section
5.03 - Liability for Certain Acts
Section
5.04 - Managers Have No Exclusive Duty to Company or Series
Section
5.05 - Bank Accounts
Section
5.06 - Indemnity of the Managers, Employees and Other Agents
Section
5.07 - Salaries
Section
5.08 - Resignation
Section
5.09 - Removal
Section
5.10 - Vacancies
ARTICLE
VI
RIGHTS
AND OBLIGATIONS OF MEMBERS
Section
6.01 - Limitation of Liability
Section
6.02 - List of Members
Section
6.03 - Company Books
Section
6.04 - Priority and Return of Capital
Section
6.05 - Liability of a Member to the Company
ARTICLE
VII
MEETINGS
OF MEMBERS
Section
7.01 - Meetings
Section
7.02 - Place of Meetings
Section
7.03 - Notice of Meetings
Section
7.04 - Meeting of All [Voting] Members
Section
7.05 - Record Date
Section
7.06 - Quorum
Section
7.07 - Manner of Acting
Section
7.08 - Proxies
Section
7.09 - Action by Members Without a Meeting
Section
7.10 - Waiver of Notice
ARTICLE
VIII
CONTRIBUTIONS
TO THE COMPANY AND CAPITAL ACCOUNTS
Section
8.01 - Members’ Capital Contributions
Section
8.02 - Additional Contributions or Loans
Section
8.03 - Capital Accounts
Section
8.04 - Withdrawal or Reduction of Members’ Contributions to Capital
Section
8.05 - Units Generally
Section
8.06 - Voting Units
Section
8.07 – Series Ownership
Section
8.08 – Transfers Restricted
Section
8.09 – Transfers Defined
Section
8.10 – Transfers not an Event of Dissolution
Section
8.11 – Voluntary Transfer, Mandatory Offer to Company
Section
8.12 – Purchase Price
Section
8.13 – Payment Terms and Conditions
Section
8.14 – Involuntary Transfer, Option to Purchase by Company
Section 8.15 – Permitted Transfers
Section 8.16 – Percentage Limitation
on Transfers
Section 8.17 – Costs and Expenses of
Transfers
Section 8.18 – Admission of
Transferee
ARTICLE
IX
ALLOCATIONS
AND DISTRIBUTIONS
Section
9.01 - Profits and Losses
Section
9.02 - Allocation Rules
Section
9.03 - Tax Allocations; §704(c) of the Code
Section
9.04 - Distributable Cash
Section
9.05 - Distribution Rules
Section
9.06 - Limitation upon Distributions
Section
9.07 - Accounting Method
Section
9.08 - Interest on and Return of Capital Contributions
Section
9.09 - Loans to Company
Section
9.10 - Records, Audits and Reports
Section
9.11 - Returns and Other Elections
Section
9.12 - Tax Matters Partner
Section 9.13 - Right to Make § 754
Election
Section 9.14 - Tax Classification
ARTICLE
X
TRANSFERABILITY
Section
10.01 – Transfer
ARTICLE
XI
ISSUANCE
AND TRANSFER OF MEMBERSHIP INTERESTS
Section
11.01 - Additional Members and Assignees
Section
11.02 - Retroactive Allocations
ARTICLE
XII
TERMINATION OF SERIES;
DISSOLUTION AND TERMINATION OF
THE COMPANY
Section
12.01 - Dissolution of the Company
Section 12.02 - Termination of a
Series
Section 12.03 - Winding Up,
Liquidation and Distribution of Assets of a
Series Upon Termination of Such Series
Section
12.04 - Winding Up Liquidation and Distribution of Assets of the
Company Upon Dissolution of the Company
Section 12.05 - Certificate of
Cancellation
Section
12.06 - Effect of Filing Certificate of Cancellation
Section
12.07 - Returns of Contributions Nonrecourse to Other Members
ARTICLE
XIII
MISCELLANEOUS
PROVISIONS
Section
13.01 - Notices
Section
13.02 - Binding Effect
Section
13.03 - Remedies for Breach
Section
13.04 - Governing Law
Section
13.05 - Waiver of Action for Partition
Section
13.06 - Amendments
Section
13.07 - Execution of Additional Instruments
Section
13.08 - Construction
Section
13.09 - Waivers
Section
13.10 - Rights and Remedies Cumulative
Section
13.11 - Severability
Section 13.12 - Creditors
Section 13.13 - Counterparts
Section
13.14 – Integration
Section
13.15 – Arbitration
EXHIBIT
A Members and Interests in Each
Series
EXHIBIT
B.1 –B.56 Form of Separate Series
Agreement
EXHIBIT
C Agreement to Terminate Series
OF
ABC CAPITAL LLC
THIS
LIMITED LIABILITY COMPANY AGREEMENT is made and entered into, and is effective
as of this 1st day of November, 2015, by and between MEMBER ONE, as a Member of
the Company (as defined below), and MEMBER TWO, as a Member of the Company, and
each other Person (as defined below) who is admitted to the Company as a member
of the Company. Promptly after the formation of the Company, the Company shall
be added as a party to the Agreement.
RECITALS
WHEREAS,
the parties hereto desire to form a limited liability company pursuant to the
Delaware Limited Liability Company Act by filing a Certificate of Formation of
the Company with the office of the Secretary of State of the State of Delaware
and entering into this Agreement; and
WHEREAS,
it is intended by the parties hereto that each property acquired by the Company
shall be a separate series with respect to the Members of the Company and that
the debts, liabilities and obligations incurred, contracted for or otherwise
existing with respect to a particular series of the Company will be enforceable
against the assets of such series only, and not against the assets of the
Company generally or any other series thereof, and none of the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to the Company generally or any other series thereof
shall be enforceable against the assets of such series; and
NOW,
THEREFORE, in consideration of the mutual promises and obligations contained
herein, the parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 - Definitions:
The
following terms used in this Agreement shall have the following meanings:
“Act”
shall mean the Delaware Limited Liability Company Act, 6
“Agreement”
shall mean this Limited Liability Company Agreement, as amended, modified,
supplemented or restated from time to time.
“Capital
Account” shall mean, with respect to any Series and with respect to any Member,
the capital account maintained for such Member that is associated with such
Series in accordance with the provisions of Section 8.03. A separate Capital
Account shall be maintained for each Member's interest in each Series.
“Capital
Contribution” shall mean, with respect to any Member, any contribution to the
Company with respect to a Series in cash or other property (at such other
property's initial Gross Asset Value) by such Member whenever made. “Initial
Capital Contribution” shall mean, with respect to any Member, the initial
contribution to the Company by such Member with respect to a Series pursuant to
this Agreement.
“Certificate
of Formation” shall mean the Certificate of Formation of the Company and any
and all amendments thereto and restatements thereof filed on behalf of the
Company with the office of the Secretary of State of the State of
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, or
any superseding federal tax law. A reference herein to a specific Code Section
refers, not only to such specific Section, but also to any corresponding
provision of any superseding federal tax statute, as such specific Section or
such corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
“Company”
shall refer to ABC CAPITAL LLC, formed and continued under and pursuant
to the Act and this Agreement.
“Depreciation”
shall mean, with respect to a Series, and for each Fiscal Year or other period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset associated with such Series for
such Fiscal Year or other period; provided, however, that if the Gross Asset
Value of an asset associated with such Series differs from its adjusted basis
for federal income-tax purposes at the beginning of such Fiscal Year or other
period, Depreciation shall be an amount that bears the same ratio to such
beginning Gross Asset Value as the federal income-tax depreciation,
amortization or other cost recovery deduction with respect to such asset for
such Fiscal Year or other period bears to such beginning adjusted tax basis;
and provided further, that if the federal income-tax depreciation,
amortization or other cost recovery deduction for such Fiscal Year or other
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by Members
associated with such Series holding a Majority Interest in such Series.
“Distributable
Cash” shall mean, with respect to a Series, all cash, revenues and funds
received by the Company with respect to such Series from such Series'
operations, less the sum of the following to the extent paid or set aside by
the Company with respect to such Series: (i) all principal and interest
payments on indebtedness of the Company with respect to such Series and all
other sums paid to lenders with respect to such Series; (ii) all cash
expenditures incurred in the normal operation of the Company’s business with
respect to such Series; and (iii) such Reserves as the Members associated with
such Series deem reasonably necessary for the proper operation of the Company's
business with respect to such Series.
“Entity”
shall mean any general partnership, limited partnership, limited liability
company, corporation, joint venture, trust, business trust, cooperative,
association, foreign trust or foreign business organization or other legal
entity.
“Fiscal
Year” shall mean (i) the period commencing upon the formation of the Company
and ending on December 31, 2015, (ii) any subsequent twelve (12) month period
commencing on January 1 and ending on December 31, or (iii) any portion of the
period described in Clause (ii) of this sentence for which the Company is
required to allocate Profits, Losses and other items of Company income, gain,
loss or deduction pursuant to Article IX hereof.
“Gross
Asset Value” shall mean, with respect to any asset associated with a Series,
such asset's adjusted basis for federal income-tax purposes, except as follows:
(i) the initial Gross Asset Value of any
asset contributed by a Member to the Company with respect to a Series shall be
the gross fair market value of such asset, as agreed to by Members associated
with such Series holding a Majority Interest in such Series;
(ii) the Gross Asset Value
of all Company assets associated with a Series shall be adjusted to equal their
respective gross fair market values, as determined by Members associated with
such Series holding a Majority Interest in such Series, as of the following
times: (a) the acquisition of an additional interest in the Company with
respect to such Series by any new or existing Member in exchange for more than
a de minimis Capital Contribution; (b) the distribution by the Company
with respect to such Series to a Member of more than a de minimis amount
of Company assets associated with such Series as consideration for an interest
in the Company; and (c) the liquidation of the Company within the meaning of
Treasury Regulation §1.704-1(b)(2)(ii)(g); provided, however, that adjustments
pursuant to Clause (a) and Clause (b) of this sentence shall be made only if
Members associated with such Series holding a Majority Interest in such Series
reasonably determine that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Members in such Series; and
(iii) the Gross Asset Value
of any Company asset associated with a Series that is distributed to any Member
shall be the gross fair market value of such asset on the date of distribution,
as determined by Members associated with such Series holding a Majority
Interest in such Series.
If the Gross Asset Value
of an asset has been determined or adjusted pursuant to Paragraph (i) or
Paragraph (ii) above, such Gross Asset Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
“Majority
Interest” shall mean, with respect to a Series or the Company as applicable,
the vote of Membership Interests of one or more Members that in the aggregate
exceed 50% of all VOTING Percentage Interests owned by Members associated with
respect to such Series or the Company as applicable. Except as otherwise
provided, non voting Members shall have no voting rights.
“Member” shall include: (i) MEMBER ONE and MEMBER
TWO each in his/her/its capacity as a member of the Company not associated with
any Series; (ii) MEMBER ONE and MEMBER TWO,
each in his/her/its capacity as a member of the Company associated with a
Series (as such Series may, from time to time, be created in accordance with
the terms of this Agreement), and (iii) Persons later
admitted as Members of the Company, who shall be admitted in accordance with
this Agreement. Members of the Company shall at all times be Members of the
Company until the Company is dissolved, wound up and terminated in accordance
with the Act and this Agreement, notwithstanding the fact that there may or may
not be any Series at any particular point in time. Upon being admitted as a
Member of the Company, unless otherwise specified in any Separate Series
Agreement, such Member shall also be considered admitted as a Member of each
individual Series and shall hold the same Percentage Interest in such Series as
it holds in the Company. Upon being
admitted as a Member of any Separate Series Agreement, unless otherwise
specified such Separate Series Agreement, such Member shall not be considered
admitted as a Member of the Company and each other Series and shall not
hold the same Percentage Interest in the Company and each other Series as it holds in such Separate Series Agreement. The Company
shall be controlled by a simple majority of Member(s) holding more than 50% of
the Voting units in the Company who have the powers to make any decision not in
violation of this agreement including but not limited to appointment and
removal of Company manager(s).
“Membership
Interest” shall mean a Member’s entire limited liability company interest in
the Company with respect to a Series.
“Percentage
Interest” shall mean, for any Member associated with a Series, such Member’s
Percentage Interest in such Series as set forth on Exhibit A attached hereto,
as such Percentage Interests may be changed from time to time.
“Person”
or “Persons” shall mean any individual or Entity, their heirs, executors,
administrators, legal representatives, successors, and assigns of such
individual or Entity where the context so permits.
“Profits”
and “Losses” shall mean, with respect to a Series, and for each Fiscal Year, an
amount equal to the Company’s taxable income or loss associated with such
Series for such Fiscal Year, determined in accordance with §703(a) of the Code
(but including in taxable income or loss, for this purpose, all items of
income, gain, loss or deduction associated with such Series that are required
to be stated separately pursuant to §703(a)(1) of the Code), with the following
adjustments:
i) any income of the Company associated with
such Series that is exempt from federal income tax and not otherwise taken into
account in computing Profits or Losses pursuant to this definition shall be
added to such taxable income or loss;
ii) any expenditures of the Company associated
with such Series that are described in §705(a)(2)(B) of the Code (or treated as
expenditures described in §705(a)(2)(B) of the Code pursuant to Treasury
Regulation §1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall be subtracted
from such taxable income or loss;
iii) in the event the Gross Asset Value of any
Company asset associated with such Series is adjusted in accordance with
Paragraph (ii) or Paragraph (iii) of the definition of “Gross Asset Value”
above, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or
Losses;
iv) gain or loss resulting from any disposition of
any asset of the Company associated with such Series with respect to which gain
or loss is recognized for federal income-tax purposes shall be computed by
reference to the Gross Asset Value of the asset disposed of, notwithstanding
that the adjusted tax basis of such asset differs from its Gross Asset Value;
and
v) in lieu of the depreciation, amortization and
other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation associated with
such Series for such Fiscal Year or other period, computed in accordance with
the definition of “Depreciation” above.
“Reserves” shall mean, with respect
to a Series, funds set aside or amounts allocated to reserves that shall be
maintained in amounts deemed sufficient by the Members associated with such
Series for working capital and to pay taxes, insurance, debt service or other
costs or expenses incident to the ownership or operation of the business of the
Company with respect to such Series, or incident to the liquidation of such
Series pursuant to Section 12.03.
“Separate Property” shall mean the
respective properties specified in the respective Separate Series Agreements.
“Separate Series Agreement” shall
have the meaning set forth in Section 2.01.
“Series” shall mean a designated
series of Members, Managers or Limited Liability Company Interests established
in accordance with this Agreement and 6 Del.C. § 18-215 having separate
rights, powers or duties with respect to Separate Property or obligations or
profits and losses associated with Separate Property or obligations and, to the
extent provided in this Agreement or a Separate Series. Unless otherwise agreed
to in writing by the Members, each real estate interest acquired by the
Company, directly or held by a nominee or otherwise, shall be a separate series
and Separate Property with respect to the Members and Managers (hereafter “New
Series”).
“Tax Matters Partner” shall have the
meaning set forth in Section 9.12.
“Treasury Regulations” shall mean
the income-tax regulations, including temporary regulations, promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of superseding regulations).
Section
1.02 - Headings:
The headings and subheadings in this
Agreement are included for convenience and identification only and are in no
way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision hereof.
ARTICLE
II
Section
2.01 - Formation and Series Creation:
(a) The
Members hereby authorize the Manager(s) to execute and deliver a Certificate of
Formation to the Delaware Secretary of State in accordance with and pursuant to
the Act and to execute and deliver any documents necessary to register the
Company as a foreign limited liability company.
(b) The
Members hereby agree to form the Company as a limited liability company under
and pursuant to the provisions of the Act and agree that the rights, duties and
liabilities of the Members shall be as provided in the Act, except as otherwise
provided herein.
(c) Upon
their execution of this Agreement, without the need for the consent or other
action of any Person or the need for a Separate Series Agreement, those Persons
whose names appear on the signature page shall be admitted as Members of the
Company not associated with any Series. In their capacities as Members not
associated with any Series, such persons shall not make any Capital
Contribution to the Company and shall have no Membership Interest (hereafter
“Founders”). The Founders may, however, subsequently also become Members
associated with one or more Series and, in those separate capacities, acquire
Membership Interests associated with such Series and be required to make
Capital Contributions to the Company with respect to any such Series, all in
accordance with the terms of this Agreement. The Founders, in their capacities
as Members not associated with a Series, shall not acquire assets for or incur
liabilities or other obligations with respect to the Company. The Company may
acquire assets and incur liabilities or other obligations only to the extent
that they are by the Company with respect to a Series and not with respect to
the Company generally.
(d) As
established from time to time in accordance with this Agreement, there may be
designated additional Series having separate rights, powers or duties with
respect to Separate Property or obligations or profits and losses associated
with Separate Property or obligations and, to the extent provided in this
Agreement and a Separate Series Agreement, and may have a separate business
purpose or investment objective. A Member may be a member of one or more
Series.
(e) Without
the need for the consent of any Person, the Founders may establish one or more
additional Series as they may jointly determine in their sole discretion. The
terms of each additional Series shall be as set forth in this Agreement and a
separate agreement establishing such Series (a “Separate Series Agreement”)
substantially in the form of Exhibit B attached hereto. A Separate Series
Agreement must be executed by the Founders as Members associated with such
Series. To the extent that a Separate Series Agreement conflicts with this
Agreement, this Agreement shall control.
(f) No
debt, liability or obligation of a Series shall be a debt, liability or
obligation of any other Series. The debts, liabilities and obligations
incurred, contracted for or otherwise existing with respect to a Series shall
be enforceable against the assets of such Series only and not against any other
assets of the Company generally or any other Series and none of the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to the Company generally or any other Series shall be
enforceable against the assets of such Series. Separate and distinct records
shall be maintained for each and every Series, and assets associated with any
such Series shall be accounted for separately from the other assets of the
Company, or any other Series of the Company. The Certificate of Formation shall
contain notice of the limitation of liabilities of a Series as to other Series
in conformity with §18-215 of the Act.
(g) The Founders shall be deemed admitted as
Members of the Company associated with a newly created Series, upon their
execution of a counterpart signature page to the relevant Separate Series
Agreement.
(h) Exhibit
A attached hereto shall be updated from time to time as is necessary to reflect
accurately the information contained therein, including, without limitation,
the establishment of additional Series and the admission of additional Members
to the Company associated with such Series. Any revision to Exhibit A attached
hereto made in accordance with this Agreement shall not be deemed an amendment
to this Agreement. Any reference in this Agreement to Exhibit A attached hereto
shall be deemed to be a reference to Exhibit A as amended and in effect from
time to time.
Section
2.02 - Name:
The name of the Company shall be ABC
CAPITAL LLC (a Delaware Series LLC). The business of the Company may be
conducted upon compliance with all applicable laws under any other name
designated by the Founders.
Section
The principal place of business of
the Company shall be c/o ADDRESS ONE. The Company may locate its places
of business and registered office at any other place or places as the Manager
or Managers may from time to time deem advisable.
Section
2.04 - Registered Office and Registered Agent:
The Company’s registered office in
the State of Delaware shall be at the office of its registered agent: 1201
Orange Street, Suite 600, Wilmington, Delaware, 19801, and the Company‘s
registered agent in the State of Delaware shall be Agents and Corporations,
Inc. At any time, the registered office and registered agent of the Company may
be changed by filing the address of the new registered office and/or the name
of the new registered agent with the Secretary of State of the State of
Section
2.05 - Term:
The Company shall have perpetual
existence unless the Company is earlier dissolved in accordance with the
provisions of this Agreement.
ARTICLE
III
BUSINESS
OF COMPANY
Section
3.01 - Business of Company:
The business of the Company and of
each Series shall be:
(a) To
purchase assets and businesses, including real estate for investment,
liquidation and resale and/or to liquidate as agent assets and businesses;
(b) To
transact any and all lawful business for which a limited liability company may
be formed under the Act; and
(c) To
transact all business necessary, appropriate, advisable, convenient or
incidental to any of the foregoing provisions.
The Company and each Series shall
have the power to do any or all of the acts necessary, appropriate, advisable,
incidental or convenient to or for the furtherance of the purposes and business
described herein and for the protection or benefit of the Company and such
Series. The Company and each Series shall have any or all of the powers that
may be exercised on behalf of the Company or such Series by any Person.
ARTICLE
IV
NAMES
AND ADDRESSES
Section
4.01 - Members:
The respective names and addresses
of the Members of each Series are set forth on Exhibit A attached hereto.
Section
4.02 – Chief Executive Officer:
The duly elected and qualified
persons holding the office of Manager shall be vested with the authority to act
as and on behalf of the Company.
Section
4.03 - Managers:
The LLC manager shall appointed
with the following titles and with the following authority. The majority in
interest of the Voting Members have delegated their power and authority to the
following President, Secretary and/or Treasurer as officers of the Company, all
of whom could be the same person and who could be a Member of the Company and
will have the power and authority provided herein, unless otherwise specified
by a majority in interest of the Voting Members:
1. MANAGER
ONE, President
2. MANAGER
TWO, Treasurer and Secretary
(a)
President. The President shall be the chief executive officer of
the Company, shall preside at all meetings of the Members, shall have general
and active management of the business of the Company, and shall execute bonds,
mortgages, loans, leases and contracts for the Company, and is authorized to
open and sign bank accounts and to authorize other officers or persons to open
and sign such accounts. If the President is unable or unavailable to serve, the
Vice President shall assume the role of President until such time that the
President is available or able to serve.
(b.) Secretary. The Secretary shall record
all the proceedings of the meetings of the Members and notice of all meetings
of the Members, and shall perform such other duties as may be prescribed by the
President, under whose supervision he shall be.
(c.) Treasurer. The Treasurer shall have
the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the Company
and shall deposit all moneys and other valuable effects in the name and to the
credit of the Company in such depositories as may be designated by the
President. The Treasurer shall disburse the funds of the Company as may be
ordered by the President taking proper vouchers for such disbursements, and
shall render to the President an account of all his transactions as Treasurer
and of the financial condition of the Company.
The foregoing officers shall serve
until their respective successors are chosen by a majority in interest of the
Members or a majority in interest of the Members remove one or more of the
officers so that a majority in interest of the Members may resume exercising
the power and authority previously delegated to such officer or officers.
The respective names and addresses
of the Manager or Managers of each Series are set forth on its separate series
agreement and shall be called and have the authority accorded by the above
definitions. The Manager or Managers of each Series shall serve until each of
his or her successor is elected.
ARTICLE
V
RIGHTS
AND DUTIES OF MEMBERS AND MANAGERS
Section
5.01 - Management:
The business and affairs of a Series
shall be vested in the Voting Members of that Series in accordance with this
Agreement. The business and affairs of the Company shall be vested in the
Voting Members of the Company. Notwithstanding the foregoing, the management of
the Company or a Series may be vested in one or more Managers who shall be
chosen in the manner provided for herein. A Manager need not be a Member. Only
Voting Members or Managers associated with a Series shall direct, manage and
control the business and affairs of such Series. All Managers shall have the
right to vote on a per capita basis as to the management and conduct of the
business of the Company or Series. Except as otherwise herein set forth, a
majority of the Managers shall control.
Section
5.02 - Certain Powers of Managers:
(a) Without
limiting the generality of Section 5.01, upon the affirmative vote of Managers
associated with a Series, the Managers associated with such Series shall have
power and authority, on behalf of such Series:
(i) To
acquire property from any Person as the Managers associated with such Series
may determine, whether or not such Person is directly or indirectly affiliated
or connected with any Member;
(ii) To
borrow money for such Series from banks, other lending institutions, any Voting
Member (associated with such Series or otherwise), or affiliates of any Voting
Member (associated with such Series or otherwise), on such terms as the
Managers associated with such Series deem appropriate, and in connection
therewith, to hypothecate, encumber and grant security interests in the assets
of such Series to secure repayment of the borrowed sums. No debt shall be
contracted or liability incurred by or on behalf of any Series except by the
Managers associated with such Series, or, to the extent permitted under the Act
and this Agreement, by agents or employees associated with such Series or the
Managers associated with such Series expressly authorized by the Managers
associated with such Series to contract such debt or incur such liability;
(iii) To purchase liability and other insurance to protect the
property and business or the Company or Series;
(iv) To
hold and own such real and personal properties in the name of the Company or
such Series, as appropriate;
(v) To
invest funds of such Series in time deposits, short-term governmental
obligations, commercial paper or other investments;
(vi) Upon
the affirmative vote of Managers associated with such Series to sell or
otherwise dispose of all or substantially all of the assets of such Series as
part of a single transaction or plan as long as such disposition is not in
violation of or a cause of a default under any other agreement to which such
Series or the Company may be bound;
(vii) To execute on behalf of such Series all instruments and
documents, including, without limitation, checks; drafts; notes and other
negotiable instruments; mortgages or deeds of trust; security agreements;
financing statements; documents providing for the acquisition, mortgage or
disposition of such Series’ property; assignments; bills of sale; leases; and
any other instruments or documents necessary, appropriate, convenient,
advisable or incidental to the business of such Series;
(viii) To employ accountants, legal counsel, managing agents or other
experts to perform services for the Company with respect to such Series;
(ix) To
pay, collect, compromise, litigate, arbitrate, or otherwise adjust or settle
any and all other claims or demands of or against such Series or to hold such
proceeds against the payment of contingent liabilities;
(x) To
enter into any and all other agreements on behalf of the Company with respect
to such Series, as appropriate; and
(xi) To
do and perform all other acts as may be necessary, appropriate, convenient,
advisable or incidental to the conduct of such Series’ business.
(b) The
majority vote of all of the Voting Members associated with each Series shall be
required for the Company to merge or consolidate with or into, or convert into,
another Entity. Unless authorized to do so by this Agreement or by the Managers
associated with a Series, no attorney-in-fact, employee or other agent of the
Company or such Series shall have any power or authority to bind the Company or
such Series in any way, to pledge the Company’s or such Series’ credit or to
render the Company or such Series liable for any purpose. No Managers
associated with a Series shall have any power or authority to bind the Company
or such Series unless such Managers shall have been authorized by the Voting
Members associated with such Series to act as an agent of the Company with
respect to such Series.
Section
5.03 - Liability for Certain Acts:
Each Manager associated with a
Series shall perform his or her duties as a Manager of the Company associated
with such Series in good faith, in a manner he or she reasonably believes to be
in the best interests of the Company and such Series, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances. A Manager associated with a Series shall not be liable to the
Company, such Series, or to any other Voting Member for any loss or damage
sustained by the Company, such Series or such Voting Member, unless the loss or
damage shall have been the result of fraud, deceit, gross negligence, willful
misconduct or a wrongful taking by the Manager.
Section
5.04 - Managers Have No Exclusive Duty to Company or Series:
Any Manager may engage in or possess
an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Company or any Series, and the Company, any Series and the Members shall have
no rights by virtue of this Agreement or any Separate Series Agreement in and
to such independent ventures or the income or profits derived therefrom, and
the pursuit of any such venture, even if competitive with the business of the
Company or any Series, shall not be deemed wrongful or improper. No Manager
shall be obligated to present any particular investment opportunity to the
Company or any Series even if such opportunity is of a character that, if presented
to the Company or such Series, could be taken by the Company or such Series,
and any Manager shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment opportunity.
Section
5.05 - Bank Accounts:
The Managers associated with a
Series may from time to time open bank accounts in the name of the Company or
such Series, (or in the name of a nominee) as appropriate, and the Managers
associated with such Series shall be the only signatories thereon, unless the
Managers associated with such Series determine otherwise.
Section
5.06 - Indemnity of the Managers, Employees and Other Agents:
(a) To
the fullest extent permitted by applicable law, if the Manager(s) associated
with a Series approve, a Manager associated with such Series, any officers,
directors, shareholders, partners, members, employees, representatives or
agents of such Manager, or their respective affiliates, or any employee or
agent of such Series (each, a “Covered Person”) shall be entitled to
indemnification from such Series for any loss, damage or claim incurred by such
Covered Person by reason of any act or omission performed or omitted by such
Covered Person in good faith on behalf of the Company or such Series and in a
manner reasonably believed to be within the scope of authority conferred on
such Covered Person by this Agreement and any Separate Series Agreement, except
that no Covered Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Covered Person by reason of fraud, deceit,
gross negligence, willful misconduct or a wrongful taking with respect to such
acts or omissions; provided, however, that any indemnity under
this Section 5.06 shall be provided out of and to the extent of the assets of
the such Series only, and no Covered Person or any other Series shall have any
personal liability on account thereof.
(b) To
the fullest extent permitted by applicable law, if the Manager(s) associated
with a Series approve, expenses (including legal fees) incurred by a
Covered Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by such Series prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
such Series of an undertaking by or on behalf of the Covered Person to repay
such amount if it shall be determined that the Covered Person is not entitled
to be indemnified as authorized in this Section 5.06.
(c) A
Series may purchase and maintain insurance, to the extent and in such amounts
as the Managers associated with such Series shall deem reasonable, on behalf of
Covered Persons and such other Persons as the Managers associated with such
Series shall determine, against any liability that may be asserted against or
expenses that may be incurred by any such Person in connection with the
activities of such Series or such indemnities, regardless of whether such
Series would have the power to indemnify such Person against such liability
under the provisions of this Agreement. A Series may enter into indemnity
contracts with Covered Persons and such other Persons as the Managers
associated with such Series shall determine and adopt written procedures
pursuant to which arrangements are made for the advancement of expenses and the
funding of obligations under this Section 5.06 and containing such other
procedures regarding indemnification as are appropriate.
Section
5.07 - Salaries:
The salaries and other compensation
of the Managers associated with a Series shall be fixed from time to time by an
affirmative vote of Voting Members associated with such Series holding at least
a Majority Interest of such Series.
Section
5.08 - Resignation:
Any Manager of the Company may resign
at any time by giving written notice to the Members of the Company. Any Manager
of a Series may resign at any time by giving written notice to the Members of
the Series. The resignation of any Manager shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective. The resignation of a Manager who is also
a Member shall not affect the Manager’s rights as a Member and shall not
constitute a withdrawal of a Member.
Section
5.09 - Removal:
At a meeting called expressly for
that purpose, all or any lesser number of Managers of a Series may be removed
at any time, with or without cause, by the decision of the Voting Members
owning more than fifty percent (50%) of the Percentage Interests in the Series.
At a meeting called expressly for that purpose, all or any lesser number of
Managers of the Company, but not applicable to the Series Managers, may be
removed at any time, with or without cause, by the decision of the Voting
Members owning more than fifty percent (50%) of the Percentage Interests in the
Company. The removal of a Manager who is also a Member shall not affect the
Manager’s rights as a Member and shall not constitute a withdrawal of a Member
unless the removal was for cause. In such a case, the Member shall be deemed to
have withdrawn from the Series. Cause shall mean proven embezzlement,
intoxication or illegal drug use which materially interferes with job
performance, absenteeism in excess of two times normal Company policy, wrongful
disclosure of Company’s confidential information, conflict of interest, gross
insubordination, or conviction of a felony adversely affecting the ability of
the Manager to carry on his or her normal duties. In such a removal of
Membership, the Member shall be entitled to the value of his or her interest as
determined in Section 8.12.
Section
5.10 - Vacancies:
Any vacancy occurring for any reason
in the number of Managers of the Company may be filled by the affirmative vote
of a majority of the remaining Managers then in office, provided that if there
are no remaining Managers, the vacancy(ies) shall be filled by the affirmative
vote of the Voting Members owning more than fifty percent (50%) of the
Percentage Interests in the Company. Any vacancy occurring for any reason in
the number of Managers of a Series may be filled by the affirmative vote of a
majority of the remaining Managers then in office of said Series, provided that
if there are no remaining Managers, the vacancy(ies) shall be filled by the
affirmative vote of the Voting Members of such Series owning more than fifty
percent (50%) of the Percentage Interests in the Series. Any Manager’s position
to be filled by reason of an increase in the number of Managers shall be filled
by the affirmative vote of a majority of the Managers then in office or by an
election at a special meeting of Voting Members called for that purpose or by
the Voting Members’ majority written consent. A Manager elected to fill a
vacancy shall be elected for the unexpired term of his or her predecessor in
office and shall hold office until expiration of such term and until his or her
successor shall be elected and shall qualify or until his or her earlier death,
resignation or removal. A Manager chosen to fill a position resulting from an
increase in the number of Managers shall hold office until his or her successor
shall be elected and shall qualify, or until his or her earlier death,
resignation or removal.
ARTICLE
VI
RIGHTS
AND OBLIGATIONS OF MEMBERS
Section
6.01 - Limitation of Liability:
Except as otherwise provided in this
Agreement or the Act, the debts, obligations and liabilities of the Company or
a Series, whether arising in contract, torts or otherwise, shall be solely the
debts, obligations and liabilities of the Company or such Series, as the case
may be, and no Member or Manager shall be obligated personally for any such
debt, obligation or liability of the Company or such Series solely by reason of
being a Member or Manager. Each Member shall nevertheless be liable for its
obligations to make Capital Contributions pursuant to Sections 8.01 and 8.02.
Section
6.02 - List of Members:
Upon the written request of any
Member associated with a Series for any purpose reasonably related to such
Member’s interest in the Company with respect to such Series, the Members
associated with such Series shall provide to such Member a list showing the
names, addresses and Membership Interests of all Members associated with such
Series.
Section
6.03 - Company Books:
The Managers associated with a
Series shall maintain and preserve, during the existence of such Series, the
accounts, books and other relevant Series documents described in Section 9.10. Notwithstanding
anything in this Agreement to the contrary, separate and distinct records shall
be maintained for each and every Series, and the assets associated with each
Series shall be held and accounted for separately from the other assets of the
Company or of any other Series. Upon reasonable written request, each Member
associated with a Series shall have the right, at a time during ordinary
business hours, as reasonably determined by the Managers associated with such
Series, to inspect and copy, at the requesting Member’s expense, the books and
records of such Series for any purpose reasonably related to such Member’s
interest with respect to such Series.
Section
6.04 - Priority and Return of Capital:
Except as may be expressly provided
in Article IX, no Member associated with a Series shall have priority over any
other Member associated with such Series, either as to the return of Capital
Contributions or as to Profits, Losses or distributions; provided that this
Section 6.04 shall not apply to loans made to the Company by a Member with
respect to a Series.
Section
6.05 - Liability of a Member to the Company:
A Member who receives a distribution
from the Company with respect to a Series is liable to the Company with respect
to such Series or to others only to the extent provided by the Act and other
applicable law.
ARTICLE
VII
MEETINGS
OF VOTING MEMBERS
Section
7.01 - Meetings:
Meetings of the Voting Members
associated with a Series, for any purpose or purposes, may be called by any
Voting Member(s) associated with such Series holding at least 25% of the
Percentage Interests of such Series, but there shall be no requirement that
there be an annual meeting.
Section
7.02 - Place of Meetings:
The Voting Members may designate any
place, either within or outside the State of
Section
7.03 - Notice of Meetings:
Except as provided in Section 7.04,
written notice stating the place, day and hour of the meeting and the purpose
or purposes for which the meeting is called shall be delivered not less than
five nor more than thirty days before the date of the meeting, either
personally or by mail, by or at the direction of the Managers or person calling
the meeting, to each Voting 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
Section
7.04 - Meeting of All Voting Members:
If all the Voting Members associated
with a Series shall meet at any time and place, either within or outside the
State of Delaware, or participate in a teleconference meeting, and consent to
the holding of a meeting at such time and place or by teleconference, such
meeting shall be valid without call or notice, and at such meeting lawful
action may be taken.
Section
7.05 - Record Date:
For the purpose of determining
Voting Members entitled to notice of or to vote at any meeting of Voting
Members or any adjournment thereof, or Members entitled to receive payment of
any distribution, or in order to make a determination of Members for any other
purpose, the day immediately prior to the date on which notice of the meeting
is mailed or the day immediately prior to the date on which the resolution
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 7.05, such determination shall apply to any adjournment thereof.
Section
7.06 - Quorum:
Voting Members associated with a
Series holding at least two-thirds of all Percentage Interests of such Series,
represented in person or by proxy, shall constitute a quorum at any meeting of Voting
Members associated with such Series. In the absence of a quorum at any such
meeting, Voting Members associated with such Series holding a majority of the
Percentage Interests so represented may adjourn the meeting from time to time
for a period not to exceed sixty days without further notice. However, if the
adjournment is for more than sixty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Voting Member associated with such Series of
record entitled to vote at the meeting. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. The Voting
Members associated with such Series present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
during such meeting of that number of Percentage Interests whose absence would
cause less than a quorum.
Section
7.07 - Manner of Acting:
If a quorum is present, the
affirmative vote of Voting Members associated with a Series holding a Majority
Interest in such Series shall be the act of the Voting Members associated with
such Series, unless the vote of a greater or lesser proportion or number is otherwise
required by the Act or expressly by this Agreement. Only Voting Members
associated with a Series may vote or consent upon any matter, and their vote or
consent, as the case may be, shall be counted in the determination of whether
the matter was approved by the Voting Members associated with such Series.
Section
7.08 - Proxies:
At all meetings of Voting Members
associated with a Series, a Voting Member associated with such Series may vote
in person or by proxy executed in writing by the Voting Member or by a duly
authorized attorney-in-fact. Such proxy shall be filed with the Voting Members
associated with such Series 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. A proxy may only be given verbally during a
meeting taking place by teleconferencing and shall expire at the termination of
said teleconference.
Section
7.09 - Action by Members Without a Meeting:
Action required or permitted to be
taken at a meeting of Voting Members associated with a Series may be taken
without a meeting and without prior notice if consents, whether oral or
written, of Managers associated with such Series are received representing the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all Voting Members of such Series were present and
voted.
Section
7.10 - Waiver of Notice:
When any notice is required to be
given to any Voting Member, a waiver thereof in writing signed by the Voting
Member entitled to such notice, whether before, at, or after the time stated
therein, or the participation in a teleconference meeting, shall be equivalent
to the giving of such notice.
ARTICLE
VIII
CONTRIBUTIONS
TO THE COMPANY AND CAPITAL ACCOUNTS
Section
8.01 - Members’ Capital Contributions:
Each Member associated with a Series
shall contribute to such Series the amount as is set forth in Exhibit A
attached hereto as its Initial Capital Contribution to the Company with respect
to such Series.
Section
8.02 - Additional Contributions or Loans:
A Member associated with a Series
shall be required to make such additional Capital Contributions or loans to the
Company with respect to such Series as shall be determined by Voting Members
associated with such Series owning a Majority Interest of such Series from time
to time to be reasonably necessary to meet the expenses and obligations of such
Series. After the making of any such determination, the Voting Members
associated with such Series shall give written notice to each Member associated
with such Series of the aggregate amount of required additional Capital
Contributions or loan, and each Member associated with such Series shall
deliver to the Company its pro rata share thereof (in proportion to the
respective Percentage Interest of the Member in such Series on the date such
notice is given) no later than thirty (30) days following the date such notice
is given. None of the terms, covenants, obligations or rights contained in this
Section 8.02 is or shall be deemed to be for the benefit of any Person other
than the Members associated with such Series and the Company with respect to
such Series, and, to the fullest extent permitted by law, no third party,
including creditors of the Company or of any Series, shall under any
circumstances have any right to compel any actions or payments by the Members.
Section
8.03 - Capital Accounts:
(a) An
individual Capital Account with respect to a Series shall be established and
maintained for each Member associated with such Series. The original Capital
Account established for any Member associated with such Series who acquires an
interest in such Series by virtue of an assignment in accordance with the terms
of this Agreement shall be in the same amount as, and shall replace, the
Capital Account of the assignor of such interest, and, for purposes of this
Agreement, such Member shall be deemed to have made the Capital Contributions
with respect to such Series made by the assignor of such interest (or made by
such assignor’s predecessor in interest). To the extent such Member acquires
less than the entire interest in such Series of the assignor of the interest so
acquired by such Member, the original Capital Account of such Member with
respect to such Series and its Capital Contributions shall be in proportion to
the interest it acquires, and the Capital Account of the assignor who retains a
partial interest in such Series, and the amount of its Capital Contributions,
shall be reduced in proportion to the interest he or it retains.
(b) The
Capital Account with respect to a Series of each Member associated with such
Series shall be maintained in accordance with the following provisions:
(i) to
such Member’s Capital Account with respect to such Series there shall be
credited such Member’s Capital Contributions with respect to such Series, such
Member’s distributive share of Profits with respect to such Series and the
amount of any Company liabilities with respect to such Series that are assumed
by such Member or that are secured by any Company assets associated with such
Series that are distributed to such Member;
(ii) to
such Member’s Capital Account with respect to such Series there shall be
debited the amount of cash and the Gross Asset Value of any other Company
assets associated with such Series that are distributed to such Member pursuant
to any provision of this Agreement, such Member’s distributive share of Losses
with respect to such Series and the amount of any liabilities of such Member
that are assumed by the Company with respect to such Series or that are secured
by any property contributed by such Member to the Company with respect to such
Series; and
(iii) in determining the amount of any liability for purposes of
this Subsection (b), §752(c) of the Code and any other applicable
provisions of the Code and the Treasury Regulations shall be taken into
account.
(c) Upon
the dissolution and complete liquidation of the Company, the separate Capital
Accounts of each Member associated with more than one Series shall be combined
into a single Capital Account of such Member.
Section
8.04 - Withdrawal or Reduction of Members’ Contributions to Capital:
(a) A
Member associated with a Series shall not receive from the property of such
Series any part of its Capital Contribution with respect to such Series until
all liabilities of such Series (except liabilities to Members associated with
such Series on account of their Capital Contributions to the Company with
respect to such Series) have been satisfied (whether by payment or reasonable
provision for payment thereof).
(b)
A Member, irrespective of the nature of its
Capital Contributions with respect to a Series, has only the right to demand
and receive cash in return for such Capital Contributions.
Section
8.05 – Company Interests:
(a) Subject to the other provisions of the
Agreement (including those governing Members’ respective rights to receive
allocations of Net Profits and Net Losses and distributions of cash or other
property, and to buy or sell interests), each interest shall have the rights,
and be subject to the obligations, identical to those of each other interest of
the same class and/or Series.
(b) The
aggregate number of Interests that the Company shall have authority to issue is
Three Thousand Units (3000) consisting of One Thousand Five Hundred (1500)
Voting Units and One Thousand Five Hundred (1500) Non-Voting Units. The
Non-Voting interest holders although members, shall be passive, shall not have
any power to vote, except as otherwise provided in this Agreement or by law,
and shall only obtain a purely economic interest in the Company and/or the
particular Series.
Initial
Unit Allocation:
1.
MEMBER ONE: 500 (Five
Hundred) VOTING Units (50% Ownership)
2.
MEMBER TWO: 500 (Five Hundred) VOTING
Units (50% Ownership)
3.
Unallocated: 500 (Five
Hundred) VOTING Units
4.
Unallocated: 1500 (One
Thousand Five Hundred) NON-VOTING Units
(c) Each Member’s holdings of Units shall be
evidenced by this agreement and may additionally be a certificate in the form
approved by the Manager.
Section 8.06
- Voting Units:
(a) Subject
to the other provisions of this Agreement (including those governing
the
Members’ respective rights to receive allocations of Net Profits and Net Losses
and to buy or sell Units), each Voting Unit with respect to a Series shall have
the rights, and be subject to the obligations, identical to those of each other
Voting Unit.
(b) The
holders of Voting Units shall be entitled to one vote for each Voting Unit held
at all meetings of Voting Members (and written actions in lieu of meetings),
with no right to cumulative voting.
(a) All Membership Interests in the Series shall be denominated in
Three Hundred Units, One Hundred Fifty Voting Units and One Hundred Fifty
Non-Voting Units, where the aggregate of issued Units shall comprise one
hundred percent ownership in the series. Each Voting Unit shall have the
rights, and be subject to the obligations, identical to those of each other
Non-Voting Unit of the same Series with the exception that only the Voting
Units may exercise the right to Vote. Each.
(b) Majority
vote of Voting Units controls the series governance.
Section 8.08 Transfers Restricted.
No Member (Series or Company) shall transfer all or any part of his Company
interest, except as provided in this Article VIII of this Agreement. In the
event that a Member or a transferee of a Member violates any of the provisions
of this Article VIII of this Agreement, such transfer shall be null and void
and of no force or effect.
Section 8.09 "Transfer"
Defined. The term "transfer" shall mean and include any
distribution, sale, transfer, assignment, gift, creation of an encumbrance,
pledge, hypothecation, grant of a security interest, lien or other disposition,
either with or without consideration, whether voluntary or involuntary, by
operation of law or otherwise, including, without limitation, transfers
incident to divorce or separation and all executions of legal process attaching
to or affecting in any way the Company interest of a Member or a Member's
beneficial interest therein. In addition to the foregoing, the following events
shall be deemed transfers within the meaning of Article VIII of this Agreement
which shall be subject to the terms and conditions imposed upon transfers:
(a). In the case of a Member
who is a natural person, his death or the entry by a court of competent
jurisdiction adjudicating him incompetent to manage his person or his property;
(b). In the case of a Member
that is a trust, the termination of the trust;
(c). In the case of a Member
that is a partnership, the dissolution and commencement of winding up of the
partnership;
(d). In the case of a Member
that is an estate, the distribution by the fiduciary of the estate's entire
interest in the Company; and
(e). 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.
Section 8.10 Transfer Not an
Event of Dissolution. Except as otherwise provided in Article X of this
Agreement, the transfer by a Member (Series or Company) of his Company interest
shall not cause the dissolution or termination of the Company and the business
of the Company may be continued thereafter by and for the benefit of the
remaining Members.
Section 8.11 Voluntary Transfer;
Mandatory Offer to Company. No Member (Series or Company) may voluntarily
transfer all or any part of his Company interest, without first complying with
the terms of this Sub Article:
a. Offer for
b. Acceptance of
Offer. For a period of thirty (30) days after delivery of said written
notice to the Company and all the Members, or until rejected by the Company,
whichever occurs first, the Transferring Member may not transfer the Company
interest proposed for sale to anyone other than the Company in accordance with
the terms hereof. In the event the Company does not elect or rejects to
purchase such Company interest within such thirty (30) day period, then all the
Members shall be entitled to elect to purchase such Company interest either
prorata among themselves or as they otherwise mutually agree in writing within
fifteen (15) days thereafter. If the Company elects or subsequently the Members
elect to purchase the Company interest proposed for sale, the Company or
Members shall elect to do so by giving written notice of acceptance to the
Transferring Member, within the aforesaid periods, and in the event of such
election, such sale shall close at the Company's principal place of business
within one hundred and twenty (120) days after the Transferring Member gave
written notice to the Company at the address provided in Sub Article 2.03 of
this Agreement.
c. Purchase Price and
Payment Terms. The purchase price for the Company interest proposed for
sale pursuant to Sub Article 8.11(a) of this Agreement shall be determined in
accordance with Sub Article 8.12 of this Agreement and the terms and conditions
for the payment of such purchase price shall be determined in accordance with Sub
Article 8.13 of this Agreement.
d. Right of First
Refusal. In the event that the Company or Members do not elect to purchase
the entire Company interest proposed for sale by the Transferring Member as
provided in Sub Article 8.11(a) of this Agreement, the Transferring Member may
thereupon solicit offers from any other person (hereinafter referred to as the
"third party") to purchase the entire Company interest proposed for
sale within sixty (60) days thereafter, subject to the Company's and Members'
right of first refusal as set forth herein. No offer to purchase a Company
interest proposed for sale shall be valid unless it is bona fide, in writing
and signed by the third party and the Transferring Member (hereinafter referred
to as the "third party offer"). In the event the Transferring Member
obtains a third party offer to purchase the Company interest proposed for sale,
the Transferring Member shall deliver the third party offer to the Company and
all the Members and shall reoffer the Company interest proposed for sale to the
Company and subsequently to all the Members on the same terms and conditions as
contained in the third party offer. The offer to the Company and the Members
and the acceptance of such offer by the Company or the Members shall be done as
provided in Sub Article 8.11(b) of this Agreement. In the event the Company or
the Members accepts the Transferring Member's offer to purchase the Company
interest proposed for sale in accordance with the terms and conditions
contained in the third party offer, then settlement on the purchase of the
Company interest proposed for sale shall be held in accordance with the terms
and conditions of the third party offer. If the Company or the Members do not
accept the third party offer, the Transferring Member shall be free to sell the
Company interest proposed for sale to the third party, but only in accordance
with the exact same terms and conditions set forth in the third party offer. In
the event the aforesaid sixty (60) day period expires or any of the terms or
conditions of the third party offer is changed either by the Transferring
Member and/or the third party, the Company and all the Members shall again be
offered the right to purchase the Company interest proposed for sale as
aforesaid.
e. Purchase of Entire
Interest. In no event shall the Transferring Member be required to transfer
less than the entire Company interest proposed for sale to the Company and the
Members under this Sub Article 8.11 of this Agreement; it being understood that
the Company must purchase the entire Company interest proposed for sale or
waive its rights under this Sub Article 8.11 of this Agreement.
Section 8.12 Purchase Price. The
purchase price for a Company interest proposed for sale in accordance with this
Article VIII of this Agreement shall be determined as follows:
a. Capital Account
Value. The Transferring Member's capital account shall be valued as per the
books of account of the Company as of the Valuation Date and there shall be
added to or subtracted from such amount the Transferring Member's proportionate
share of the Company's net profits or net losses for the period up to and
including the Valuation Date.
b. Adjustments to
Capital Account. The amount determined in Sub Article 8.12(a) of this
Agreement shall then be adjusted up or down to reflect the Transferring
Member's proportionate share of the difference between the fair market value of
the Company's real property, stocks, securities and equity interests in other
entities, if any, and the book value of such Company property on the Valuation
Date. If the parties cannot agree with respect to the fair market value of such
Company property, the matter shall be settled by arbitration in the manner
provided in Sub Article 12.15 of this Agreement, with one (1) arbitrator to be
selected by the Members other than the Transferring Member, one (1) arbitrator
to be selected by the Transferring Member or his personal representative, as
the case may be, and the third arbitrator, who shall be a person who is experienced
in the appraisal of property of the kind being valued, shall be selected by the
first two (2) arbitrators. The decision of the arbitrators as to the fair
market value of such property shall be final and binding upon the parties. If
the arbitrators cannot agree on the fair market value of such property, then
the decision of the third arbitrator (i.e., the one selected by the first two
(2) arbitrators) shall control.
c. Valuation Date.
The term "Valuation Date" as used in this Sub Article 8.12 of this
Agreement refers to the last day of the calendar month immediately preceding
the date the Company interest proposed for sale is offered for sale by the
Transferring Member to the Company and the Members as provided in Sub Article
8.11(a) of this Agreement.
d. Third Party Offer.
Notwithstanding anything contained in this Sub Article 8.12 of this Agreement
to the contrary, if the purchase of the Company interest proposed for sale is
the result of an exercise of a right of first refusal by the Company as
provided in Sub Article 8.11 of this Agreement, then the purchase price shall
be the price set forth in the third party offer.
Section 8.13 Payment Terms and
Conditions. The payment of the purchase price provided for in Sub Article
8.12 of this Agreement shall be paid by the Company to the Transferring Member
as follows:
a.
Cash Payment. Ten percent (10%) of the purchase price provided for in
Sub Article 8.11 of this Agreement shall be paid in cash, certified check,
attorneys' check or other immediately available funds on the settlement date.
b. Promissory Note.
The balance of the purchase price provided for in Sub Article 8.12 of this
Agreement shall be paid in the form of a promissory note for said sum (the
"Promissory Note"), to be amortized with equal monthly payments of
principal and interest over a term of five (5) years. The first payment on the
Promissory Note shall be made on the first day of the second calendar month
immediately following the settlement date, and payments of principal and
interest shall continue on the first day of each calendar month thereafter for
an additional fifty nine (59) calendar months, when the entire unpaid balance
of principal, together with all accrued and unpaid interest thereon, shall be
fully due and payable. The interest to be paid on the Promissory Note shall be
fixed at the lowest simple interest rate specified under Article 483 (or any
successor Articles) of the Internal Revenue Code of 1986, as amended, required
to be charged in order to avoid the imposition of "unstated interest.” At
the end of each calendar year during the term of the Promissory Note, the rate
of interest to be paid on the Promissory Note shall be adjusted for the new
calendar year to be fixed at the lowest simple interest rate specified under
Article 483 (or any successor Articles) of the Internal Revenue Code of 1986,
as amended, required to be charged in order to avoid the imposition of
"unstated interest.” All or any part of the Promissory Note may be prepaid
at any time, and from time to time, without penalty.
c. Additional
Provisions for Promissory Note. In addition to the provisions set forth in
Sub Article 8.13(b) of this Agreement, the Promissory Note shall also provide
for the following: (i) if the maker of the Promissory Note is the Company, a
provision requiring the joint and several personal guaranty of all of the
Members other than the Transferring Member; (ii) if the maker of the Promissory
Note are the Members, a provision requiring the guaranty of the Company; (iii) a
provision for the Confession of Judgment against the maker of the Promissory
Note and the Guarantor(s); (iv) a provision requiring the payment of the entire
unpaid principal balance of the Promissory Note, and all accrued and unpaid
interest thereon, in the event there is a sale or exchange of substantially all
of the Company property or substantially all of the Company interests of the
Members, as the case may be; and (v) a provision requiring the payment of a
five (5%) percent late penalty for any payment more than fifteen (15) days
overdue.
d. Security for
Promissory Note. The Promissory Note or the Guaranty, whichever is made by
the Company, shall be secured by (i) a mortgage on the real property of the
Company, if any, subordinate only to mortgage liens outstanding at the time of
the purchase of the Company interest proposed for sale and/or (ii) a security
interest in the personal property of the Company, if any, subordinate only to
security interests outstanding at the time of the purchase of the Company
interest proposed for sale, as the case may be. The aforesaid mortgage lien
and/or security interest shall be equal in priority to any lien previously
placed on such property as a result of a prior purchase of a Company interest
proposed for sale under this Agreement, except that the Company shall not be
required to grant a mortgage lien and/or security interest to any Transferring
Member if that would cause a default under any existing mortgage, loan
agreement, or security agreement to which the Company is a party or promissory
note of which the Company is the maker. The Company shall take all reasonable
steps necessary to secure the approvals of all other parties to such
instruments to permit it to mortgage its real property or grant a security
interest in its personal property without causing a default under such
instruments.
e. Third Party Offer.
Notwithstanding anything contained in this Sub Article 8.13 of this Agreement
to the contrary, if the purchase of the Company interest proposed for sale is
the result of an exercise of a right of first refusal by the Company as
provided in Sub Article 8.11 of this Agreement, then the terms for the payment
of the purchase price shall be those set forth in the third party offer.
Section 8.14 Involuntary Transfer;
Option to Purchase by Company. In the event that a Member
discontinues being employed by the Company or Member's (hereinafter referred to
as the "Transferring Member") interest is transferred other than as
provided in Sub Article 8.11 of this Agreement (hereinafter referred to as the
"Event of Transfer"), the Company shall have the option for a period
of six (6) months after the date of the Event of Transfer to purchase all or
any part of the Company interest owned at any time during such six (6) month
period by the Transferring Member. In the event the Company does not elect to
exercise its option within such six (6) month period, then all the Members
shall be entitled to exercise such option either prorata among themselves or as
they otherwise mutually agree in writing within an additional six (6) month
period. The purchase price for the Transferring Member's Company interest shall
be determined in the same manner as set forth in Sub Article 8.12 of this
Agreement, except that the "Valuation Date" shall be the last day of
the calendar month immediately preceding the date the Company exercises its
option or the Members exercise their option to purchase the Transferring
Member's Company interest, and the terms and conditions for payment of this
purchase price shall be determined in the same manner as set forth in Sub
Article 8.13 of this Agreement.
Section 8.15 Permitted Transfers.
Notwithstanding anything contained in this Agreement to the contrary, a Member
shall have the right to transfer all or any part of his Company interest to
another Member or to a transferee that bears one of the following relationships
to the transferring Member: a spouse, a lineal descendant or a trust created
for the exclusive benefit of the transferring Member, the transferring Member's
spouse and/or the transferring Member's lineal descendant(s).
Section 8.16 Percentage of
Limitations or Transfers. Notwithstanding any other provision of this
Agreement to the contrary, the Company shall not be required to recognize any
transfer of a Company interest if the transfer, when considered with other
transfers of Company interests made within the period of twelve (12)
consecutive calendar months prior thereto, would constitute a sale or exchange
of fifty percent (50%) or more of the total Company interest and result in the
tax termination of the Company under Article 708(b) of the Internal Revenue
Code of 1986, as amended.
Section 8.17 Costs and Expenses
of Transfer. The Transferring Member shall pay all costs and expenses
incurred by the Company in connection with any transfer of a Company interest
pursuant to this Article VIII of this Agreement and/or another person's
becoming a Member of the Company or an assignee of a Member of the Company,
including, but not limited to, all filing, recording and publishing costs and
reasonable attorneys' fees and disbursements.
Section 8.18 Admission of
Transferee. No Transferee other than one who is already a Member shall be
admitted as a Member without the Majority Vote in interest of all Members of he
Company or the Series, as applicable.
ARTICLE
IX
Section
9.01 - Profits and Losses:
(a) Subject
to the allocation rules of Section 9.02, Profits with respect to any Series for
any Fiscal Year shall be allocated among the Members associated with such
Series in proportion to such Members’ Percentage Interests in such Series.
(b) Subject
to the allocation rules of Section 9.02, Losses with respect to any Series for
any Fiscal Year shall be allocated among the Members associated with such
Series in proportion to such Members’ Percentage Interests in such Series.
Section
9.02 - Allocation Rules:
(a) In
the event Members are admitted to a Series pursuant to this Agreement on
different dates, the Profits (or Losses) allocated to the Members associated
with such Series for each Fiscal Year during which such Members are so admitted
shall be allocated among the Members associated with such Series in proportion
to the Percentage Interest each such Member holds from time to time during such
Fiscal Year in accordance with §706 of the Code, using any convention permitted
by law and selected by Members holding a Majority Interest in such Series.
(b) For
purposes of determining the Profits, Losses or any other items with respect to
any Series allocable to any period, Profits, Losses and any such other items
shall be determined on a daily, monthly, quarterly or other basis, as
determined by Members holding a Majority Interest in such Series using any
method that is permissible under §706 of the Code and the Treasury Regulations
thereunder.
(c) Except
as otherwise provided in this Agreement, all items of Company income, gain,
loss, deduction and any other allocations with respect to a Series not otherwise
provided for herein shall be divided among the Members associated with such
Series in the same proportions as they share Profits and Losses with respect
to such Series for the Fiscal Year in question.
(d) The Members are aware of the income-tax consequences
of the allocations made by this Article IX and hereby agree to be bound by the
provisions of this Article IX in reporting their shares of Company income
and loss for income-tax purposes.
Section
9.03 - Tax Allocations; §704(c) of the Code:
(a) In
accordance with §704(c) of the Code and the Treasury Regulations thereunder,
income, gain, loss and deduction with respect to any property contributed to
the capital of the Company with respect to any Series shall, solely for
income-tax purposes, be allocated among the Members associated with such Series
so as to take account of any variation between the adjusted basis of such
property to the Company for federal income-tax purposes and its initial Gross
Asset Value (computed in accordance with Section 1.01 hereof).
(b) In
the event the Gross Asset Value of any Company asset associated with a Series
is adjusted pursuant to Paragraph (ii) of the definition of “Gross Asset Value”
contained in Section 1.01 hereof, subsequent allocations of income, gain, loss
and deduction with respect to such asset and such Series shall take account of
any variation between the adjusted basis of such asset for federal income-tax
purposes and its Gross Asset Value in the same manner as under §704(c) of the
Code and the Treasury Regulations thereunder.
(c) Any
elections or other decisions relating to allocations with respect to a Series
under this Section 9.03 including the selection of any allocation method
permitted under Treasury Regulation §1.704-3, shall be made by Members holding
a Majority Interest in such Series in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
9.03 are solely for purposes of federal, state and local taxes and shall not affect,
or in any way be taken into account in computing, any Member’s Capital Account
with respect to any Series or share of Profits, Losses, other items or
distributions pursuant to any provision of this Agreement.
Section
9.04 - Distributable Cash:
Except as otherwise provided in
Article XII hereof (relating to the dissolution of the Company), any
distribution of the Distributable Cash of any Series during any Fiscal Year
shall (a) be made to the Members associated with such Series in proportion to
such Members’ respective Percentage Interests in such Series, or (b) may be
made to the Members associated with such Series in proportion to such Member’s
respective Percentage Interest in such Series, as from time to time determined
by Members holding a Majority Interest in such Series as hereinafter provided.
Section
9.05 - Distribution Rules:
(a) All distributions with respect to a
Series pursuant to Section 9.04 shall be at such times and in such amounts as
shall be determined by Voting Members associated with such Series holding a
Majority Interest in such Series; provided, however, that the Voting Members
shall use their best efforts to cause the Company to distribute to the Members
an amount of Distributable Cash as shall be sufficient to enable the Members to
fund their federal and state income-tax liabilities attributable to their
respective distributive shares of the taxable income of the Company.
(b) All
amounts withheld pursuant to the Code or any provision of any state or local
tax law with respect to any payment, distribution or allocation to the Company
or the Members shall be treated as amounts distributed to the Members pursuant
to this Article IX for all purposes of this Agreement. The Members are
authorized to withhold from distributions, or with respect to allocations, to
the Members and to pay over to any federal, state or local government any
amounts required to be so withheld pursuant to the Code or any provision of any
other federal, state or local law and shall allocate such amounts to those
Members with respect to which such amounts were withheld.
Section
9.06 - Limitation upon Distributions:
(a) Notwithstanding
any provision to the contrary contained in this Agreement, the Company with
respect to a Series shall not make any distribution to any Person on account of
its interest in the Company with respect to such Series if such distribution
would violate §18-215 or §18-607 of the Act or other applicable law.
(b) The
Voting Members associated with a Series may base a determination that a
distribution or return of contribution may be made under Section 9.06(a) in
good-faith reliance upon a balance sheet and profit and loss statement of the
Company with respect to such Series represented to be correct by the Person
having charge of its books of account or certified by an independent public or
certified public accountant or firm of accountants to fairly reflect the
financial condition of the Company and such Series.
Section
9.07 - Accounting Method:
For both financial and tax-reporting
purposes and for purposes of determining Profits and Losses, the books and
records of the Company with respect to each Series shall be kept on the accrual
method of accounting in a consistent manner and shall reflect all Company
transactions with respect to such Series and be appropriate and adequate for
the Company’s business.
Section
9.08 - Interest on and Return of Capital Contributions:
No Member shall be entitled to
interest on its Capital Contributions or to return of its Capital Contributions.
Section
9.09 - Loans to Company:
Nothing in this Agreement shall
prevent any Member from making secured or unsecured loans to the Company or to
any Series by agreement with the Company or such Series, as the case may be.
Section
9.10 - Records, Audits and Reports:
At the expense of the
relevant Series, the Managers associated with such Series shall maintain
separate and distinct records and accounts of the operations and expenditures
of such Series. At a minimum, each Series shall keep at the principal place of
business of the Company the following records:
(a) True
and full information regarding the status of the business and financial
condition of such Series and the Company;
(b) Promptly
after becoming available, a copy of the Company’s federal, state and local
income tax returns for each year;
(c) The
current list of the name and last known business, residence or mailing address
of each Member associated with such Series;
(d) A
copy of this Agreement, Separate Series Agreements and the Certificate of
Formation, together with executed copies of any written powers of attorney
pursuant to which this Agreement, Separate Series Agreements and the
Certificate of Formation have been executed;
(e) True
and full information regarding the amount of cash and a description and
statement of the Gross Asset Value of any other property or services
contributed by each Member to the Company with respect to such Series and which
each Member associated with such Series has agreed to contribute in the future,
and the date on which each became a Member;
(f) Minutes
of every meeting held, if any;
(g) Any
written consents obtained from Voting Members associated with such Series for
actions taken by such Voting Members without a meeting; and
(h) Unless
contained in the Certificate of Formation or this Agreement, a writing prepared
by the Voting Members associated with such Series setting out the following:
(i) The
times at which or events on the happening of which any additional contributions
agreed to be made by each Member associated with such Series are to be made;
and
(ii) Any
right of a Member associated with such Series to receive distributions that
include a return of all or any part of the Member’s contributions.
Section
9.11 - Returns and Other Elections:
The Managers shall cause the
preparation and timely filing of all tax returns required to be filed by the
Company pursuant to the Code and all other tax returns deemed necessary
and required in each jurisdiction in which the Company does business. Copies of
such returns, or pertinent information therefrom, shall be furnished to the
Members within a reasonable time after the end of the Company’s Fiscal Year. All
elections permitted to be made by the Company under federal or state laws shall
be made by the Managers in their sole discretion.
Section
9.12 - Tax Matters Partner:
(a) MANAGER TWO is hereby designated
as the initial “Tax Matters Partner” of the Company for purposes of §6231(a)(7)
of the Code and shall have the power to manage and control, on behalf of the
Company, any administrative proceeding at the Company level with the Internal
Revenue Service relating to the determination of any item of Company income,
gain, loss, deduction or credit for federal income-tax purposes. The “Tax Matters
Partner is not required nor implied to have an ownership interest in the
Company or any Series.
(b) The Tax Matters Partner shall, within ten
(10) days of the receipt of any notice from the Internal Revenue Service in any
administrative proceeding at the Company level relating to the determination of
any Company item of income, gain, loss, deduction or credit, mail a copy of
such notice to each Member.
(c) The
Voting Members may at any time hereafter by a vote of Voting Members holding a
Majority Interest in each Series designate a new Tax Matters Partner.
Section
9.13 - Right to Make §754 Election:
By a vote of Voting Members
holding a Majority Interest in each Series, the Voting Members may make or
revoke, on behalf of the Company, an election in accordance with §754 of the
Code, so as to adjust the basis of Company property in the case of a
distribution of property within the meaning of §734 of the Code, and in the
case of a transfer of a Company interest within the meaning of §743 of the Code.
Each of the Voting Members shall supply the information necessary to give
effect to such an election.
In the case of a transfer of a
Membership interest on the death of a Member of a Series or of the Company, the
basis of the Series’ property or Company’s property shall be adjusted in the
manner provided in Code §743 and the Series or the Company shall
file such information as may be required by the Regulations to report a Code
§754 election. In any other case to which the elections under Code §734 and Code
§743 may apply, the Managers shall make such determination from time to time.
Section
9.14 - Tax Classification:
It is the intention of the parties
hereto that the Company be classified as a partnership, and not as an
association taxable as a corporation, for federal income-tax purposes, and the
provisions of this Agreement shall be interpreted in a manner consistent with
such intention. No election shall be filed with the Internal Revenue Service
(or the tax authorities of any State) to have the Company taxable other than as
a partnership for income-tax purposes without the prior consent of all Voting
and Non-Voting Members.
ARTICLE
X
TRANSFERABILITY
Section
10.01 - Transfer:
Except as
provided below, to the fullest extent permitted by law, a Person may not
assign, distribute, hypothecate, pledge, recognize, sell or transfer any
Membership Interest in a Series or the Company to any other Person, except with
the express written consent of all Members associated with such Series or the
Company, as the case may be. A transferee may be admitted as a Member of any
Series or the Company only upon compliance with Section 11.01. Unless otherwise
specified in a Separate Series Agreement, if any Member of a Series or the
Company assigns all or any part of its Membership Interest in such Series or
the Company to a transferee, such Member shall also assign, at the same time,
to such transferee, the same proportion of its Membership Interests in the
Company and in each other Series with respect to which such Member is
associated, unless otherwise indicated.
A Member may, without consent,
transfer its interest in the Company to a revocable trust for the primary
benefit of the Member’s family, of which the transferor is the Donor and a
Trustee thereof; and may transfer its interest in the Company upon death by
Will to a Member of the transferor’s family or to any trust in which the
transferor’s family as defined herein are the primary beneficiaries. The
transferor’s family shall mean the Member’s then current spouse and the
Member’s lineal descendants. Any transfer, other than a transfer permitted
under this Section, shall be considered an assignment of the Member’s interest.
ARTICLE
XI
ISSUANCE
AND TRANSFERS OF MEMBERSHIP INTERESTS
Section
11.01 - Additional Members and Assignees:
(a) In
addition to the admission to the Company of Members pursuant to Section 2.01,
by the majority vote of the Members of a Series, a Person may be admitted to
the Company as a Member associated with such Series either (i) by the issuance
by the Series of Membership Interests for such consideration as the Members
associated with such Series by their majority votes shall determine, or (ii) as
a transferee of a Member’s Membership Interest or any portion thereof, subject
to the terms and conditions of this Agreement. A Person who is either issued a
Membership Interest for a Series or who receives by transfer a Membership
Interest for a Series and who has received the majority vote of the Members
associated with such Series pursuant to this Section 11.01 shall be admitted to
the Company as a Member associated with such Series upon its execution of a
counterpart to this Agreement and a counterpart to a Separate Series Agreement
for such Series.
(b) Any
Person receiving a Membership Interest in a Series pursuant to Section 10.01
that is not admitted as a Member associated with such Series pursuant to this
Section 11.01 (whether by failing to receive a majority vote with respect to
such admission, by failing to execute a counterpart to this Agreement and a
counterpart to a Separate Series Agreement or otherwise) shall be deemed to be
a mere assignee of a Membership Interest associated with such Series. Unless
otherwise admitted to the Company as a Member pursuant to this Agreement, an assignee
of a Membership Interest has no voting or other management rights with respect
to the Company or any Series.
Section
11.02 - Retroactive Allocations:
No additional Members
or assignees of Membership Interests shall be entitled to any retroactive
allocation of the Company’s income, gains, losses, deductions, credits or other
items; provided that, subject to the restrictions of §706(d) of the Code,
additional Members and assignees of Membership Interests shall be entitled to
their respective shares of the Company’s income, gains, losses, deductions,
credits and other items arising under contracts entered into before the
effective date of the issuance or transfer of Membership Interests to the
extent that such income, gains, losses, deductions, credits and other items
arise after such effective date. To the extent consistent with §706(d) of the
Code and Treasury Regulations promulgated thereunder, the Company’s books may
be closed at the time Membership Interests are issued or transferred (as though
the Company’s taxable year had ended) or the Company may credit to additional
Members and assignees of Membership Interests pro rata allocations of the
Company’s income, gains, losses, deductions, credits and items for that portion
of the Company’s Fiscal Year after the effective date of the issuance or
transfer of the Membership Interests.
ARTICLE
XII
TERMINATION
OF SERIES;
DISSOLUTION
AND TERMINATION OF THE COMPANY
Section
12.01 - Dissolution of the Company:
(a) The
Company shall be dissolved upon the occurrence of either of the following
events:
(i) by the majority written agreement of
all Members; or
(ii) upon the entry of decree of judicial
dissolution under §18-802 of the Act.
(b) The
death, retirement, resignation, expulsion, bankruptcy or dissolution of any
Member or the occurrence of any event that terminates the continued membership
of any Member in the Company shall not in and of itself cause a dissolution of
the Company.
(c) If
a Member who is an individual dies or a court of competent jurisdiction
adjudges him to be incompetent to manage his person or his property, the
Member’s executor, administrator, guardian, conservator, or other legal
representative may exercise all of the Member’s rights for the purpose of
settling his estate or administering his property. If a Member is an Entity and
is dissolved or terminated, the powers of that Member may be exercised by its
legal representative or successor.
Section
12.02 - Termination of a Series:
(a) A
Series shall be terminated upon the occurrence of any of the following events:
(i) upon
the dissolution of the Company;
(ii) by the majority written agreement of all Members associated
with such Series substantially in the form of Exhibit C attached hereto;
(iii) at the time in which there are no Members associated with such
Series; or
(iv) upon the entry of a decree of judicial
termination under §18-215 of the Act.
(b) Other
than in connection with a transfer of Membership Interests in accordance with
this Agreement, a Member associated with a Series shall not take any voluntary
action (including, without limitation, resignation) that directly causes it to
cease to be a Member of the Company associated with such Series. Unless
otherwise approved by Members associated with a Series owning a Majority
Interest of such Series, a Member who ceases to be a Member associated with
such Series (a “Resigning Member”), regardless of whether such termination was
the result of a voluntary act by such Member, shall not be entitled to receive
any distributions from the Company with respect to such Series in excess of
those distributions to which such Member would have been entitled had such
Member remained a Member associated with such Series. Except as otherwise
expressly provided herein, a Resigning Member shall immediately become an
assignee associated with such Series. Damages for breach of this Section
12.02(b) shall be monetary damages only (and not specific performance), and
such damages may be offset against distributions by the Company with respect to
such Series to which the Resigning Member would otherwise be entitled.
(c) The
termination and winding up of a Series shall not cause a dissolution of the
Company (even if there are no remaining Series) or the termination of any other
Series. The termination of a Series shall not affect the limitation on
liabilities of such Series or any other Series provided by this Agreement and
the Act.
Section
12.03 - Winding Up, Liquidation and Distribution of Assets of a Series Upon
Termination of Such Series:
(a) Upon
termination of a Series, an accounting shall be made of the accounts of the
Company with respect to such Series and of the assets, liabilities and
operations associated with such Series, from the date of the last previous
accounting until the date of such termination. The Managers associated with
such Series shall immediately proceed to wind up the affairs of such Series.
(b) If
a Series is terminated and its affairs are to be wound up, the Managers
associated with such Series shall:
(i) Sell
or otherwise liquidate all of the assets of such Series as promptly as
practicable (except to the extent such Managers may determine to distribute any
assets to the Members in kind);
(ii) Allocate any Profits or Losses resulting
from such sales to the respective Capital Accounts of the Members associated
with such Series in accordance with Article IX hereof;
(iii) Satisfy (whether by payment or reasonable
provision for payment thereof) all liabilities of the Company with respect to
such Series, including liabilities to Members who are creditors, to the extent
otherwise permitted by law, other than liabilities to Members for distributions
(for purposes of determining the Capital Accounts of the Members associated
with such Series, the amounts of any Reserves created in connection with the
liquidation of such Series shall be deemed to be an expense of the Company with
respect to such Series); and
(iv) Distribute the remaining assets of such
Series to the Members associated with such Series in accordance with their
Capital Account balances after giving effect to all contributions,
distributions, and allocations for all periods.
(c) Notwithstanding anything to the contrary
in this Agreement, if upon the termination and liquidation of any Series, any
Member associated with such Series has a deficit balance in his, her or its
Capital Account associated with such Series (after giving effect to all
contributions, distributions, allocations and other Capital Account adjustments
for all taxable years, including the year during which such termination and
liquidation occurs), such Member shall have no obligation to make any Capital
Contribution, or otherwise restore the deficit balance in such Members’‘
Capital Account associated with such Series, and such deficit Capital Account
balance shall not be considered a debt owed by such Member to the Company with
respect to such Series or otherwise, to any other Member or to any other Person
for any purpose whatsoever.
(d) The
Members associated with a Series shall comply with all requirements of
applicable law pertaining to the winding up of the affairs of the Company with
respect to such Series and the final distribution of its assets.
Section
12.04 - Winding Up, Liquidation and Distribution of Assets of the Company Upon
Dissolution of the Company:
Upon the dissolution of the Company
pursuant to Section 12.01, the Company shall be wound up by winding up each
Series in the manner contemplated by Section 12.03, except that, for purposes
of Section 12.03(b)(iv), the separate Capital Accounts of each Member
associated with more than one Series shall be combined into a single Capital
Account of such Member.
Section
12.05 - Certificate of Cancellation:
If a dissolution of the Company
occurs and all debts, liabilities and obligations of the Company, whether or
not associated with any Series, have been satisfied (whether by payment or
reasonable provision for payment) and all of the remaining property and assets
of the Company, whether or not associated with any Series, have been
distributed, a certificate of cancellation as required by the Act shall be
jointly executed and filed by the members of the Company, as authorized
persons, within the meaning of the Act, with the Delaware Secretary of State.
Section
12.06 - Effect of Filing Certificate of Cancellation:
Upon the filing of a certificate of
cancellation with the Delaware Secretary of State, pursuant to Section 12.05,
the existence of the Company shall cease.
Section
12.07 - Returns of Contributions Nonrecourse to Other Members:
Except as otherwise provided by
applicable laws, upon termination of a Series, each Member associated with such
Series shall look solely to the assets of such Series for the return of its
Capital Contributions made with respect to such Series, and if the assets of
such Series remaining after payment of or due provision for the debts and
liabilities of the Company with respect to such Series are insufficient to
return such Capital Contributions, such Members shall have no recourse against
any other Series, the Company or any other Member, except as otherwise provided
by law.
ARTICLE
XIII
MISCELLANEOUS
PROVISIONS
Section
13.01 - Notices:
All notices provided for by this
Agreement shall be made in writing and deemed received (i) upon the actual
delivery of the notice into the hands of the party entitled thereto, or (ii)
upon the mailing of the notice in the U.S. mail at the last known address of
the party entitled thereto, certified mail, return receipt requested.
Section
13.02 - Binding Effect:
This Agreement is binding upon and
inures to the benefit of the Members, and, to the extent permitted by this
Agreement, their respective legal representatives, successors and assigns.
Section
13.03 - Remedies for Breach:
The Membership Interests are unique
chattels, and each party to this Agreement shall have the remedies that are
available to it for the violation of any of the terms of this Agreement,
including, but not limited to, the equitable remedy of specific performance
(except as otherwise provided by this Agreement).
Section
13.04 - Governing Law:
This Agreement, and the rights of
the parties hereunder, shall be construed pursuant to the laws of the State of
Section
13.05 - Waiver of Action for Partition:
Each Member irrevocably waives
during the term of the Company any right that it may have to maintain any
action for partition with respect to the property of the Company or any Series.
Section
13.06 - Amendments:
This Agreement may not be amended
except in writing by the majority vote of all Percentage Interests owned by
Members associated with each Series. Any amendment changing the Percentage
Interest needed under this Section 13.06 to amend this Agreement requires the
majority vote of the Members.
Section
13.07 - Execution of Additional Instruments:
Each Member hereby agrees to execute
such other and further statements of interest and holdings, designations and
other instruments necessary to comply with any laws, rules or regulations.
Section
13.08 - Construction:
Whenever the singular number is used
in this Agreement and when required by the context, the same shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter genders and vice versa.
Section
13.09 - Waivers:
The failure of any party hereto to
seek redress for default of or to insist upon the strict performance of any
covenant or condition of this Agreement shall not prevent a subsequent act,
which would have originally constituted a default, from having the effect of an
original default.
Section
13.10 - Rights and Remedies Cumulative:
The rights and remedies provided by
this Agreement are cumulative, and the use of any right or remedy by any party
hereto shall not preclude or waive the right to use any other remedy. Said
rights and remedies are given in addition to any other legal rights the parties
hereto may have.
Section
13.11 - Severability:
If any provision or term of this
Agreement is found to be invalid, void or unenforceable, the remainder of the
provisions of this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. It is the intent of the parties
hereto for the terms and conditions of this Agreement to be interpreted to the
greatest extent possible so as to remain valid and enforceable, and any
provision or term of this Agreement found by a court to be invalid, void or
unenforceable, shall be rewritten by the court pursuant to this intent.
Section
13.12 - Creditors:
None of the provisions of this
Agreement shall be for the benefit of or enforceable by any creditors of (i)
the Company, (ii) any Series of the Company, (iii) any Member, or (iv) any
Manager.
Section
13.13 - Counterparts:
This Agreement may be signed in
multiple counterparts, all of which should be deemed an original and shall
constitute one instrument.
Section
13.14 - Integration:
This Agreement constitutes the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto.
Any dispute, claim, controversy
arising out of or in connection with or relating to this Agreement whether legal
or equitable or any breach or alleged breach hereof shall, upon the request of
any party involved, be submitted to and settled by three (3) arbitrators in the
principal place of business, pursuant to the Commercial Arbitration Rules of
the American Arbitration Association, but not subject to its jurisdiction. The
decision of the arbitrators shall be final and binding. Judgment may be entered
in any court of record in the appropriate jurisdiction upon the decision of the
arbitrators. The cost of the arbitration shall be shared equally by the parties
to the arbitration. Each of the parties shall pay their own attorneys' fees
incurred in connection with the arbitration.
IN WITNESS WHEREOF, the parties
hereto have caused their signatures, or the signatures of their duly authorized
representatives, and seals to be set forth below as of the day and year first
above written.
MEMBERS:
_________________________ _______________________________(SEAL)
Witness MEMBER
ONE
Member
and Founder
_________________________ _______________________________
(SEAL)
Witness MEMBER
TWO
Member
and Founder
EXHIBIT
A: List of Series & Members
ABC
CAPITAL LLC
Name of Series |
Members |
Property
Location |
Initial
Capital Contribution (if
any) |
Subsequent
Capital Contribution (if
any) |
Percentage
Interest in such Series |
Series 1 |
MEMBER
ONE, MEMBER
TWO |
c/o
ADDRESS ONE |
1.
2.
|
1.
2.
|
1.
50%
2. 50% |
Series 2 |
MEMBER
ONE, MEMBER
TWO |
c/o
ADDRESS ONE |
1. 2.
|
1. 2.
|
1.
50% 2. 50% |
EXHIBIT
B.1
SEPARATE
SERIES AGREEMENT
THIS SEPARATE SERIES
AGREEMENT, dated as of November 1, 2015 (this “Separate Series Agreement”), is
entered into by and between MEMBER ONE and MEMBER TWO, associated with the
newly created Series identified below (the “New Series”); and MEMBER ONE and
MEMBER TWO, as members of the Company. Capitalized terms used herein and not
otherwise defined are used as defined in the Limited Liability Company Agreement
of the Company, dated and effective as of November 1, 2015 (as amended from
time to time, the “LLC Agreement”).
RECITALS
WHEREAS, the parties hereto
have heretofore formed a limited liability company pursuant to the Delaware
Limited Liability Company Act by filing a Certificate of Formation of the
Company with the office of the Secretary of the State of Delaware and by
entering into the LLC Agreement; and
WHEREAS, it is intended by the
parties hereto to create an additional Series with respect to Separate Property
in the form of the New Series with such Separate Property having an address
care of:
ADDRESS
ONE.
WHEREAS, it is intended by the
parties hereto that the debts, liabilities and obligations incurred, contracted
for or otherwise existing with respect to the New Series and Separate Property
be enforceable against the assets of the New Series and Separate Property only,
and not against the assets of the Company generally or any other series
thereof; and
NOW THEREFORE, in
consideration of the mutual promises and obligations contained herein, the
parties, intending to be legally bound, hereby agree as follows:
1. New Series. In accordance with
Section 2.01 of the LLC Agreement, the Founders hereby create the New Series,
which shall be a “Series” for purposes of the LLC Agreement. The purpose of
this Series shall be limited to business in the state/territory of Alabama.
2. Name of New Series. The name of the New Series
created by this Separate Series Agreement shall be: Series 1.
3. Agreement to be Bound. Each of the undersigned agree
to be bound by the terms and provisions of the LLC Agreement.
4. Headings. The headings in this Separate Series
Agreement are included for convenience and identification only and are in no
way intended to describe, interpret, define or limit the scope, extent, or
intent of this Separate Series Agreement or any provision hereof.
5. Severability. The invalidity or unenforceability of
any particular provision of this Separate Series Agreement shall not affect the
other provisions hereof, and this Separate Series Agreement shall be construed
in all respects as if such invalid or unenforceable provision was omitted.
6. Integration. This Separate Series Agreement and the
LLC Agreement constitute the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersede all prior agreements and
understandings pertaining thereto.
7. Counterparts. This Separate Series Agreement may be
executed in any number of counterparts with the same effect as if all parties
had signed the same document. All counterparts shall be construed together and
shall constitute one instrument.
8. Governing Law. This Separate Series Agreement and the
rights of the parties hereunder shall be interpreted in accordance with the
laws of the State of
9. Managers. The names and addresses of the Manager(s) of
this Series is/are:
MANAGER ONE,
President
MANAGER TWO,
Secretary and Treasurer
The Manager(s)
shall serve until his/her/their successors are elected. The title of the
manager will be “President.”
10. Members. The members of this series shall be the
following individuals with the following number of units: Three Hundred (300)
total authorized units to this series of which One Hundred Fifty (150) shall be
Voting Units and One Hundred Fifty (150) shall be Non-Voting Units. The series
units represent interests only in the series and not in ABC CAPITAL LLC.
Majority voting controls all decisions not otherwise stated to be controlled
otherwise.
MEMBER
ONE 50%:
Fifty Voting Units
MEMBER
TWO 50%: Fifty
Voting Units
Unallocated
Fifty Voting Units
Unallocated One
Hundred Fifty Non-Voting Units
IN WITNESS WHEREOF, the
parties hereto have executed, setting their hands and seals this Separate
Series Agreement as of the date first-above stated.
MEMBERS
ASSOCIATED WITH MEMBERS
ASSOCIATED WITH
COMPANY: NEW
SERIES:
______________________(SEAL) _______________________(SEAL)
MEMBER
ONE, Member MEMBER
ONE, Member
______________________(SEAL) _______________________(SEAL)
MEMBER TWO, Member MEMBER
TWO, Member
EXHIBIT
C
AGREEMENT
TO TERMINATE SERIES
THIS AGREEMENT TO TERMINATE
SERIES, dated as of ___________ __, 20__ (the “Termination Agreement”), is
entered into by and between ________________________, as a member of ABC
CAPITAL LLC (“the “Company”) associated with the Terminated Series (as defined
below) and ___________________, as a member of the Company associated with the
Terminated Series. Capitalized terms used herein and not otherwise defined are
used as defined in the Limited Liability Company Agreement of the Company,
dated and effective as of _________ __, 20__ (as amended from time to time, the
“LLC Agreement”), by and between _____ and ______.
RECITALS
WHEREAS, the parties hereto
have heretofore formed a limited liability company pursuant to the Delaware
Limited Liability Company Act by filing a Certificate of Formation of the
Company with the office of the Secretary of State of the State of Delaware and
by entering into the LLC Agreement; and
WHEREAS, it is intended by the
parties hereto to terminate a Series of the Company; and
NOW THEREFORE, in
consideration of the mutual promises and obligations contained herein, the
parties, intending to be legally bound, hereby agree as follows:
1. Terminating Series. In accordance with Section 12.02
of the LLC Agreement, _____ and ______ hereby agree to terminate the Series
known as _______________ (the “Terminated Series”).
2. Winding up of Series. The affairs of the Terminating
Series shall be wound up in accordance with Section 12.03 of the LLC Agreement.
3. Company Continues Without Dissolution.
Notwithstanding the fact that the Terminated Series has been terminated under
this Termination Agreement, unless otherwise dissolved in accordance with
Section 12.01 of the LLC Agreement, the Company shall continue without
dissolution.
4. Headings. The headings in this Termination Agreement
are included for convenience and identification only and are in no way intended
to describe, interpret, define or limit the scope, extent, or intent of this
Termination Agreement or any provision hereof.
5. Severability. The invalidity or unenforceability of
any particular provision of this Termination Agreement shall not affect the
other provisions hereof, and this Termination Agreement shall be construed in
all respects as if such invalid or unenforceable provision was omitted.
6. Integration. This Termination Agreement and the LLC
Agreement constitute the entire agreement among the parties hereto pertaining
to the subject matter hereof and supersede all prior agreements and
understandings pertaining thereto.
7. Counterparts. This Termination Agreement may be
executed in any number of counterparts with the same effect as if all parties
had signed the same document. All counterparts shall be construed together and
shall constitute one instrument.
8. Governing Law. This Termination Agreement and the
rights of the parties hereunder shall be interpreted in accordance with the
laws of the State of
IN WITNESS WHEREOF, the
parties hereto have executed this Termination Agreement as of the date
first-above stated.
MEMBERS
OF TERMINATED SERIES:
_______________________,
as
Member
_______________________,
as
Member