OPERATING AGREEMENT FOR SUNWIN USA LLC
Exhibit 10.2
FOR
SUNWIN
USA LLC
Units
in Sunwin USA LLC (the “Company”) have not been registered with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, or the
state securities laws of any state. Without such registration, Units
may not be sold, pledged, hypothecated, or otherwise transferred by a Member at
any time whatsoever, except upon delivery to the Company of an opinion of
counsel satisfactory to the Company that registration is not required for such
transfer and/or the submission to the Company of such other evidence as may be
satisfactory to the Company to the effect that any such transfer will not
violate the Securities Act of 1933, as amended, and/or applicable state
securities laws, and/or any rule or regulation promulgated
thereunder. In addition, any sale or other transfer of Units is
subject to certain restrictions that are set forth in this
Agreement.
This is
an Operating Agreement effective as of _________, 2009 among the Company and
those persons and entities identified on Annex A
hereto and any Person who subsequently becomes a member of the Company, as
reflected on the Company’s records (each a “Member” and, collectively, the
“Members”).
ARTICLE
1
FORMATION
The
Members formed the Company pursuant to the Delaware Limited Liability Company
Act, effective as of the filing of the Company’s Certificate of Formation with
the Delaware Secretary of State. A duly authorized officer of the
Company shall from time to time execute or cause to be executed all such
certificates or other documents or cause to be done all such filing, recording,
publishing or other acts as may be necessary or appropriate to comply with the
requirements for the formation and operation of a limited liability company
under the Act. The rights and duties of the Manager, officers and
Members shall be as provided in the Act, except as modified by this
Agreement. The Company shall also be qualified to do business in such
other states as the Manager from time to time deems appropriate.
ARTICLE
2
NAME AND
OFFICE
The
business of the Company will be conducted under the name ”Sunwin USA LLC,” or
such other assumed or changed names as the Manager may approve from time to
time; provided, however, that the Company shall provide notice of any such
assumed or changed names to the Members as promptly as practicable after such
change. The original principal office of the Company will be located
at ________________, or such other place as the Manager may from time to time
determine.
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ARTICLE
3
DEFINITIONS
3.1 Definitions. The
following terms and phrases used in this Agreement shall have the following
meanings:
“Act” shall mean the Delaware
Limited Liability Company Act, as it may be amended from time to time, and any
successor thereto.
“Affiliate” shall mean, with
respect to a specific Person (a) any other Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
the control of a Person or a group of Persons that control the specified Person;
(b) any other Person of which the Member or other specified Person is an officer
or partner or is the beneficial owner of 10% or more of any class of equity
security or interest; (c) any trust or estate in which the specified Person or
an Affiliate of the specified Person has a beneficial interest or as to which
the specified Person serves as a trustee or in another fiduciary capacity; and
(d) any spouse, ancestor, descendant, brother or sister of the specified Person
and any spouse of any of the aforementioned individuals; and (e) any member,
shareholder, director, officer, Manager or other individual that is a member of
key management of such specified Person. The term “control” means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership, by contract
or otherwise.
“Agreement” shall mean this
Operating Agreement, as amended, modified or supplemented from time to
time.
“Bankruptcy” shall be deemed to
have occurred with respect to any Person, at the time the Person: (a)
makes an assignment for the benefit of creditors; (b) files a voluntary petition
in bankruptcy; (c) is adjudicated bankrupt or insolvent; (d) files a petition or
answer seeking for the Person any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Law; (e)
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against such Person in any proceeding of this
nature; (f) seeks, consents to, or acquiesces in the appointment of a trustee,
receiver, or liquidator of such Person or of all or any substantial part of such
Person’s property; or (g) if within 120 days after the commencement of any
proceeding against such Person seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Law, the
proceeding has not been dismissed, or if within 120 days after the appointment
without such Person’s consent or acquiescence of a trustee, receiver, or
liquidator of such Person, or of all or any substantial part of such Person’s
properties, the appointment is not vacated or stayed or within 120 days after
the expiration of any stay, the appointment is not vacated.
“Business Day” shall mean a day
other than a Saturday, a Sunday, or a holiday on which national banking
associations are required or permitted by Law to be closed in
Delaware.
“Capital Account” shall mean
the individual account maintained, during any period in which there is more than
one Member, for each Member by the Company, calculated pursuant to Section
7.4.
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“Capital Contribution” shall
mean the money and the fair market value of property (net of liabilities assumed
by the Company or to which the property is subject) contributed to the Company
by a Member, and as maintained in the Company’s records. The Company
shall maintain records that set forth the agreed upon fair market value of each
of the assets (other than cash) contributed to the capital of the Company as
determined by the contributing Member and the Company.
“Covered Person” shall mean any
Member, acting in its capacity as a Member under this Agreement, any Affiliate
of a Member acting in its capacity as a direct or indirect owner of a Member or
any officer, director, shareholder, partner, member, employee, representative,
agent or Manager of the Company, a Member, or their respective Affiliates, in
each case, acting in connection with this Agreement. The term
“Covered Person” shall not include any Member or Affiliate of a Member or any
officer, director, shareholder, partner, member, employee, representative, agent
or Manager of the Company, a Member, or their respective Affiliates, in any case
acting in connection with any contract or agreement with the Company other than
this Agreement.
“Disability” shall mean an
individual’s inability (as determined by a physician appointed by the Company)
due to accident or physical or mental illness, to adequately and fully perform
the duties that the individual was performing for the Company when the
disability began. If at any time the physician appointed by the
Company makes a determination with respect to an individual’s disability, that
determination shall be final, conclusive, and binding upon the Company, the
individual suffering the Disability and his successors in interest.
“Dispose,” “Disposing” or “Disposition” shall mean
(a) with respect to any asset (including Units or any portion thereof), a
sale, assignment, transfer, conveyance, gift, exchange or other disposition of
such asset, whether such disposition be voluntary, involuntary or by operation
of law, including the following: (i) in the case of an asset
owned by an individual, a transfer of such asset upon the death of its owner,
whether by will, intestate succession or otherwise; (ii) in the case of an
asset owned by a Person (other than an individual), (A) a merger,
combination or consolidation or similar reorganization of such Person,
(B) a distribution of such asset in connection with the dissolution,
liquidation, winding up or termination of such Person (unless, in the case of
dissolution, such Person’s business is continued without the commencement of
liquidation or winding up); and (iii) a disposition in connection with, or
in lieu of, a foreclosure of an Encumbrance on such asset, but such terms shall
not include the creation of such an Encumbrance; and (b) with respect to
Units only, any Disposition of an equity interest or other ownership interest in
a Person that, directly or indirectly, owns Units; provided, however, that the
immediately preceding clause (b) shall not apply to any Disposition for so long
as the transferee in such Disposition has no, and does not exercise any,
decision-making authority with respect to the Company.
“Economic Risk of Loss” shall
mean “economic risk of loss” as described in Treas. Reg.
§ 1.752-2.
“Encumber,” “Encumbering” or “Encumbrance” shall mean the
creation or existence of a security interest, lien, pledge, charge, mortgage,
deed of trust, or other encumbrance, whether such encumbrance be voluntary,
involuntary or by operation of law.
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“Governmental Authority” shall
mean any federal, state, county, municipal or local government or regulatory
department, body, political subdivision, commission, instrumentality, agency,
ministry, court, judicial or administrative body, taxing authority or other
authority having jurisdiction over the Company or the Member, as the case may
be.
“Gross Negligence” shall mean
the gross negligence of a Person pursuant to Delaware Law.
“Inactive Member” shall mean a
Member that has no right to (a) interfere, vote or otherwise participate in the
management or administration of the Company’s business or affairs,
(b) vote, interfere or otherwise participate in any matter subject to the
vote, approval or consent of the Members, (c) inspect the Company’s books of
account or records, or (d) request any information or an accounting of the
Company’s transactions.
“Incapacity” or “Incapacitated” shall mean the
adjudicated incompetency or death of an individual, or dissolution of the entity
comprising any Member, and shall also include the death of an individual Member
when that Member has transferred all or any part of such Member’s Units to an
entity with an extended life (e.g., corporation or
trust).
“IRC” shall mean the Internal
Revenue Code of 1986, as amended, modified or rescinded from time to time, or
any similar provision of succeeding Law.
“Law” shall mean (a) any law,
legislation, statute, act, rule, ordinance, decree, treaty, regulation, order,
judgment or other similar legal requirement, or (b) any legally binding
announcement, directive or published practice or interpretation thereof enacted,
issued or promulgated by any Governmental Authority.
“Manager” shall mean the Person
appointed to manage the business and affairs of the Company pursuant to Section
13.1.
“Member Nonrecourse Debt” shall
mean “partner nonrecourse debt” as defined in Treas. Reg.
§ 1.704-2(b)(4).
“Member Nonrecourse Debt Minimum
Gain” shall mean the sum of each Member’s share of the “minimum gain”
attributed to a “partner nonrecourse debt” as those terms are used in Treas.
Reg. § 1.704-2(i)(2).
“Member Nonrecourse Deductions”
shall mean “partner nonrecourse deductions” as defined in Treas. Reg.
§ 1.704-2(i)(2).
“Minimum Gain” shall mean
“partnership minimum gain” as defined in Treas. Reg.
§ 1.704-2(b)(2).
“Net Cash Flow” shall mean for
any fiscal year, (a) the sum of (i) all cash receipts of the Company
from any sources for such period other than Capital Contributions or loan
proceeds, and (ii) any funds released by the Board of Managers from
previously established reserves (referred to in (b)(ii) below) less (b) the sum
of (i) all cash expenditures of the Company for such period not funded by
Capital Contributions or loan proceeds and not paid out of
previously
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established
reserves (referred to in (b)(ii) below) and (ii) a reasonable reserve for
future expenditures as determined by the Board of Managers.
“Net Profits” shall mean the
Company’s Taxable Income minus the Company’s Tax Losses for the applicable
period.
“Person” shall mean an
individual, corporation, partnership, limited liability company, joint stock
company, trust, association, unincorporated entity, or any division
thereof.
“Prime Rate” shall mean the
prime rate as published in The
Wall Street Journal from time to time.
“Taxable Income” and “Tax Losses,” shall mean, for
each fiscal year, or portion thereof, of the Company during which there is more
than one (1) Member, the Company’s taxable income or loss for such fiscal year,
or portion thereof, determined in accordance with IRC § 703(a), with
the following adjustments:
(a) All
items of income, gain, loss, deduction, or credit required to be stated
separately pursuant to IRC § 703(a)(1) shall be included in computing Taxable
Income and Tax Losses;
(b) Any
income of the Company exempt from federal income tax and not otherwise taken
into account in computing Taxable Income and Tax Losses shall be included in
computing such Taxable Income and Tax Losses;
(c) Any
expenditures of the Company described in IRC § 705(a)(2)(B) (or treated as such
pursuant to Treas. Reg. § 1.704-1(b)(2)(iv)(i)) and not otherwise taken
into account in computing Taxable Income or Tax Losses, shall be subtracted from
Taxable Income or Tax Losses;
(d) Gain
or loss resulting from any taxable disposition of Company assets shall be
computed by reference to the adjusted book value of the assets disposed of,
notwithstanding the fact that the adjusted book value differs from the adjusted
basis of the assets for federal income tax purposes;
(e) Items
of depreciation, amortization or other cost recovery with respect to Company
property having a book value that differs from its adjusted basis for tax
purposes shall be computed by references to such property’s book value in
accordance with Treas. Reg. §704-1 (b)(2)(iv)(g); and
(f) Notwithstanding
any other provision of this definition, any items which are specially allocated
pursuant to the Regulatory Allocations (as defined in Section 9.5) shall not be
taken into account in computing Taxable Income and Tax Losses.
“Units” shall mean the units of
ownership in the Company set forth in records maintained by the Company, which
shall be amended to reflect any additional or transferee Members and any changes
in the Members’ Units. Except as otherwise provided in this Agreement
or by non
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waivable
provisions of the Act, each Unit shall entitle the owner thereof to one vote on
each matter on which Members are entitled to vote pursuant to the terms of this
Agreement.
“Willful Misconduct” shall mean
action taken or not taken by a Person or by a director, officer, Manager,
▇▇▇▇▇▇▇ or other employee or agent of the Person, which action is knowingly or
intentionally taken or not taken: (a) with intent that injury or
damage would result therefrom, or (b) with actual knowledge at the time of
taking or not taking such action that such action taken or not taken is or would
be a material default under this Agreement, or with conscious indifference to
the consequences thereof, or in knowing violation of any Law. Without
limiting the foregoing definition in any way, Willful Misconduct does not
include any act or failure to act which is involuntary, accidental,
unintentional or negligent, based on any theory of negligence, or which is
required in order to comply with any Law.
3.2 Additional
Terms. Other capitalized terms used in this Agreement but not
defined in Section 3.1 above shall have the meanings ascribed to them wherever
such terms first appear in this Agreement; or, if no meanings are so ascribed,
the meanings customarily associated with such terms in the Company’s
industry.
3.3 Rules of
Interpretation.
(a) The
singular includes the plural and the plural includes the singular.
(b) A
reference to the masculine gender shall be deemed to be a reference to the
feminine gender and vice versa.
(c) The
word “or” is not exclusive.
(d) A
reference to a Person includes its permitted successors and permitted
assigns.
(e) The
words “include,” “includes” and “including” are not limiting.
(f) The
words “hereof,” “herein” and “hereunder” and words of similar import when used
in any document shall refer to such document as a whole and not to any
particular provision of such document.
(g) The
term “day” shall mean calendar day. Whenever an event or action is to
be performed by a particular date or a period ends on a particular date, and the
date in questions falls on a day which is not a Business Day, the event or
action shall be performed, or the period shall end, on the next succeeding
Business Day.
(h) All
references in this Agreement to any Law shall be to such Law as amended,
supplemented, modified and replaced from time to time.
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ARTICLE
4
BUSINESS OF THE COMPANY AND
FEDERAL INCOME TAX STATUS
The
business the Company shall be authorized to conduct shall be any and all
activities that limited liability companies are authorized to conduct under the
Laws of the State of Delaware and approved by the Manager in accordance with the
terms of this Agreement. The Members agree that, for any period
during which there is more than one Member, the Company shall be treated as a
partnership for federal, state and local income tax purposes, and the Members
agree not to take any position or make any election, in a tax return or
otherwise, inconsistent with such treatment; provided, however, the filing of
federal, state and local tax returns shall not be construed to create, and the
Members intend that the Company not be, a partnership (other than for tax
purposes) among the Members. In the event there is only one Member,
the Company shall be treated as a disregarded entity for federal, state and
local income tax purposes or in such other manner as may be required based on
elections under the IRC made by the Company at the direction of the
Managers.
ARTICLE
5
THE MEMBER AND MEMBERSHIP
INTERESTS
5.1 Initial
Members. The names and business addresses of, and the Units
held by, the Members are set forth on Annex
A.
5.2 Additional
Members. The Company may admit additional Members, as opposed
to substituted Members (which shall be admitted in accordance with ARTICLE 14),
from time to time, by decision of the Members in accordance with the terms of
this Agreement, upon the terms and for the consideration determined by decision
of the Members in accordance with the terms of this Agreement, and such
additional Members shall have all the rights of a Member that was admitted, in
accordance with this Agreement, as a substituted Member. The
Company’s records shall be amended to reflect any changes in the Company’s
membership. A prerequisite to admission to membership in the Company
shall be the written agreement by the additional Member to be bound by the terms
of this Agreement.
5.3 No Liability of
Member. Except as otherwise required by law, no Member will be
liable beyond the Member’s Capital Contributions for any debts, losses or any
liability of the Company or of its employees or agents. Except as
otherwise specifically provided in this Agreement, no Member, after admission to
the Company, shall be obligated to contribute additional funds or property, or
loan money, to the Company. Nothing in this Section 5.3 shall be
interpreted or applied to alter the explicit terms of this Agreement or the Act,
including without limitation, the limitations set forth in this Agreement and
the Act on a Member’s obligation to contribute towards the liabilities of the
Company or other Members.
5.4 Title to
Property. All real and personal property owned by the Company
shall be owned by the Company as an entity and no Member shall have any
ownership interest in such property in its individual name or right, and each
Member’s interest in the Company shall be personal property for all
purposes. Except as otherwise provided in this Agreement,
the
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Company
shall hold all of its real and personal property in the name of the Company and
not in the name of any Member.
5.5 Removal of
Members. Except as otherwise provided in this Agreement, no
Member shall be removed from membership in the Company without such Member’s
consent.
5.6 Certificates and Preemptive
Rights. Units of the Company shall be evidenced by
certificates, which shall be signed by an officer or manager of the
Company. No Member or other Person shall have any preemptive or
similar rights with respect to the Units.
5.7 Units as
Securities. Each Unit of the Company shall be treated as a
"Security" governed by Article 8 of the Delaware Uniform Commercial
Code.
5.8 Fiduciary Duties of
Members. To the fullest extent permitted by Law, each Member
(the “Waiving Member”) hereby agrees to (a) waive any fiduciary duties or
personal liability that any other Member may have to the Company or such Waiving
Member, whether such duties or liability would otherwise arise in such other
Member’s capacity as a Member, Manager or officer, and (b) eliminate any
personal liability any other Member may have to the Company or such Waiving
Member.
ARTICLE
6
TERM
The term
of the Company began at the time and date the Company’s Certificate of Formation
was filed with the Delaware Secretary of State, and shall continue until
dissolution in accordance with the terms of this Agreement.
ARTICLE
7
CAPITAL AND
CONTRIBUTIONS
7.1 Initial
Contribution. The Company has converted from a Florida
corporation to become a Delaware limited liability company. Sunwin
International Nutraceutical, Inc.’s (“Sunwin International”) initial Capital
Contribution is that capital in the Company at the time of its
conversion. Wild Flavors, Inc.’s (“WILD”) initial Capital
Contribution consists of certain services set forth on Annex B attached hereto
over a period of two years commencing as of February 5, 2008 (the “Services”)
that it will provide to the Company, which the Members have agreed are worth
$1,000,000.00. In the event WILD fails to provide the Services, WILD
shall forfeit a number of Units it owns in proportion to the value of the
Services it failed to provide.
7.2 Additional Capital
Contributions. If the Members determine (the “ACC
Determination Date”) that the Company requires additional capital (“Additional
Capital Contribution”), then the Company shall request in writing that
the Additional Capital Contribution be made (the “ACC Request”) and WILD shall
have the initial option to make and provide such Additional Capital Contribution
to the Company. If WILD does not, or will not, make all of the
determined Additional Capital Contribution within 10 days of the ACC
Determination Date, then Sunwin International shall have the option and the
opportunity to make and provide a capital contribution to the Company in the
maximum amount such that WILD’s capital contribution and Sunwin International’s
capital contribution in the aggregate are equal to
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the
Additional Capital Contribution set forth in the ACC Request. If, and
only if, Sunwin International and WILD do not in the aggregate provide the
entire amount of the determined and requested Additional Capital Contribution
within 25 days of the ACC Determination Date, then the such parties shall seek
one or more third parties to make and provide capital contributions to the
Company in the maximum amount such that WILD’s capital contribution, Sunwin
International’s capital contribution and all capital contributions made by
parties other than such parties in the aggregate are equal to the Additional
Capital Contribution set forth in the ACC Request. The Members hereby
agree that the value of each Unit of the Company to be received by the parties
making a capital contribution to the Company pursuant to an ACC Request shall be
$222.22 per Unit. The Members further agree to amend this Agreement,
to the extent necessary as a result of satisfaction of the investment of the
Additional Capital Contribution and in a form acceptable to the Manager, within
10 days after the Company’s receipt of such Additional Capital
Contribution.
7.3 Interest on
Capital. No Member shall be paid interest on any Capital
Contribution or any Capital Account.
7.4 Capital Accounts. The
Members agree that this Section 7.4 shall apply only in the event that there is
more than one Member. A separate Capital Account shall be maintained
by the Company for each Member in accordance with Treas. Reg. §
1.704-1(b)(2)(iv). There shall be credited to each Member’s Capital
Account: (a) the amount of money contributed by such Member to the
Company; (b) the fair market value of property contributed by such Member to the
Company (net of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under IRC § 752); and
(c) allocations to such Member of Taxable Income. Each Member’s
Capital Account shall be decreased by: (x) the amount of money
distributed to such Member by the Company; (y) the fair market value of
property distributed to such Member by the Company (net of liabilities secured
by such distributed property that such Member is considered to assume or take
subject to IRC § 752); and (z) allocations to such Member
of Tax Losses.
7.5 Revaluation of Company
Property. The Members agree that if there shall occur, during
any period in which there shall be more than one Member, (a) an acquisition of
Units in the Company for more than a de minimis Capital Contribution, or (b) a
distribution (other than a de minimis distribution) to a Member in redemption of
all or part of a Member’s Units, then the Company shall revalue the assets of
the Company at their then fair market value and adjust the Capital Accounts in
the same manner as provided in Section 16.1 in the case of a property
distribution. If there is a revaluation pursuant to this Section 7.5,
then Capital Accounts shall thereafter be adjusted for allocations of
depreciation (cost recovery) and gain or loss in accordance with the provisions
of Treas. Reg. §§ 1.704-1(b)(2)(iv)(f) and (g), and the Members’ distributive
shares of depreciation (cost recovery) and gain or loss shall thereafter be
computed in accordance with the principles of IRC § 704(c) and the regulations
promulgated thereunder using the traditional method with curative allocations
within the meaning of Treas. Reg. § 1.704-3(c).
7.6 Withdrawal and Return of
Capital. Except as expressly provided in this Agreement,
including Section 8.1 with respect to distributions of Net Cash Flow and
Section 8.2 with respect to distributions of other property, no Member
shall be entitled to withdraw any part
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of such
Member’s Capital Contribution or Capital Account, if any, or to receive any
distribution from the Company.
ARTICLE
8
DISTRIBUTIONS
8.1 Distributions to the
Members. Unless otherwise determined by the Members in
accordance with this Agreement, the Company’s Net Cash Flow shall be distributed
by the Company to the Members. Distributions of Net Cash Flow, other
than distributions upon liquidation of the Company or in liquidation of all or a
portion of a Member’s Units, shall be made among the Members pro rata in
accordance with their Units, and shall be made quarterly or more often as
determined by the Manager, to the extent possible, on or prior to the date the
Members are required to make estimated tax payments for the previous
quarter.
8.2 Distribution of Other
Property. The Members shall determine (a) whether any
distributions, other than distributions of Net Cash Flow, shall be made; and
(b) the timing of such distributions, if any. Distributions of
property to the Members, other than distributions upon liquidation of the
Company or in liquidation of all or a portion of a Member’s Units, shall be made
among the Members pro rata in accordance with their Units. Any
property, other than cash, distributed to a Member for any reason whatsoever
shall be valued, and Capital Accounts, if any, shall be adjusted, in accordance
with Section 16.1.
8.3 Order of
Distributions. Notwithstanding the previous provisions of this
ARTICLE 8, the Members acknowledge and agree that any distributions to the
Members in accordance with a sale of all or substantially all of the Company’s
assets shall be made in accordance with Section 16.1.
ARTICLE
9
ALLOCATION OF PROFITS AND
LOSSES FOR TAX PURPOSES
The
Members agree that the provisions of this ARTICLE 9 shall apply only in the
event that there is more than one Member:
9.1 Allocations to the Members
Generally. Taxable Income and Tax Losses shall be allocated
among the Members in accordance with their Units.
9.2 Limitation on
Losses. Notwithstanding the general allocation of Taxable
Income and Tax Losses described in Section 9.1, no Member shall be
allocated Tax Losses in excess of the aggregate of such Member’s positive
Capital Account balance and such Member’s share of the Company’s Minimum Gain,
and Member Nonrecourse Debt Minimum Gain, until such time as no Member has a
positive Capital Account balance, whereupon subsequent allocations of Tax Losses
shall again be allocated among the Members pro rata in accordance with
their Units. Furthermore, no Member shall be allocated Tax Losses
where it is reasonably anticipated that such Member’s Capital Account shall be
negative at the end of the fiscal year in which the Tax Losses arise or at the
end of the subsequent fiscal year, as a result of distributions of Net Cash Flow
during such periods, until such time as no Member would have a positive Capital
Account balance after such reasonably anticipated distributions of Net Cash
Flow, whereupon subsequent
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allocations
of Tax Losses shall again be allocated among the Members pro rata in
accordance with their Units. Tax Losses not allocated to a Member as
a result of this Section 9.2 shall be reallocated among those Members with
positive Capital Account balances pro rata in accordance with their
Units.
9.3 Qualified Income
Offset. If a Member receives any adjustment, allocation, or
distribution described in Treas. Reg. §§ 1.704-1(b)(2)(ii)(d)(4), (5), or (6),
then items of Taxable Income shall be specially allocated to such Member in an
amount and manner sufficient to eliminate the deficit balance in such Member’s
Capital Account as quickly as possible. It is the intention of the
Members that this provision constitute a “qualified income offset” within the
meaning of Treas. Reg. § 1.704-1(b)(2)(ii)(d), and this provision shall be so
construed.
9.4 Minimum Gain
Chargeback. If there is a net decrease in the Company’s
Minimum Gain or Member Nonrecourse Debt Minimum Gain during any fiscal year of
the Company, each Member shall be specially allocated, before any other
allocations under this ARTICLE 9, items of income and gain for such fiscal year
(and subsequent fiscal years, if necessary) in an amount equal to such Member’s
share (determined in accordance with Treas. Reg. §§ 1.704-2(g) and
1.704-2(i)(5), as applicable) of the net decrease in the Company’s Minimum Gain
or Member Nonrecourse Debt Minimum Gain, as applicable, for such fiscal year,
provided, however, that no such allocation shall be required if any of the
exceptions set forth in Treas. Reg. § 1.704-2(f) apply. It is the
intention of the Members that this provision constitute a “minimum gain
chargeback” within the meaning of Treas. Reg. §§ 1.704-2(f) and 1.704-2(i)(4),
and this provision shall be so construed. Notwithstanding anything in this
Agreement to the contrary, the Company’s Member Nonrecourse Deductions shall be
allocated solely to the Member who has the Economic Risk of Loss with respect to
the Member Nonrecourse Debt related thereto in accordance with the provisions of
Treas. Reg. § 1.704-2(i)(1).
9.5 Curative
Allocations. The allocations set forth in Sections 9.2 through
9.4 (the “Regulatory Allocations”) are intended to comply with certain
requirements of Treas. Reg. §§ 1.704-1(b) and 1.704-2. It is the
intent of the Members that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Taxable Income or Tax Losses pursuant to this
Section 9.5. Therefore, notwithstanding any other provision of this
ARTICLE 9 (other than the Regulatory Allocations), the Company’s designated
officer shall make such offsetting special allocations of Taxable Income and Tax
Losses in whatever manner the Members determine appropriate so that, after such
offsetting allocations are made, each Member’s Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Member would have
had if the Regulatory Allocations were not part of the Agreement and all Taxable
Income and Tax Losses were allocated pursuant to Section 9.1.
9.6 No Restoration of Deficit
Capital Accounts. No Member shall be required under any
circumstances (either during the period of the Company’s operation or upon the
Company’s dissolution and termination) to restore a deficit in such Member’s
Capital Account or, except as explicitly provided in this Agreement, otherwise
make any contribution of cash or property to the Company without such Member’s
consent, which may be withheld in such Member’s sole and absolute
discretion.
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9.7 Contributed
Property. In accordance with the rules of IRC § 704(c) and the
Treasury Regulations promulgated thereunder, items of income, gain, loss, and
deduction with respect to any property contributed to the capital of the Company
shall, solely for tax purposes, be allocated among the Members 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 fair market value at the time of
contribution.
9.8 Division Among
Members. If there is a change in a Member’s ownership of Units
during a fiscal year of the Company, any allocations pursuant to this ARTICLE 9
shall be made so as to take into account the varying interests of the Members
during the period to which the allocation relates, using the interim closing of
the books method for determining such allocations, or upon the unanimous
agreement of the Members (including any former Member affected by such
allocations), using any method for determining such allocations that is provided
in IRC § 706(d) and the Treasury Regulations promulgated
thereunder.
ARTICLE
10
BOOKS OF ACCOUNT, RECORDS
AND REPORTS
10.1 Responsibility for Books of
Account and Records. Proper and complete books of account and records
shall be kept by or at the direction of the Manager, or by such officer to whom
such duties may be delegated by the Manager, in which shall be entered fully and
accurately all transactions and other matters relative to the Company’s business
as are usually entered into books of account and records maintained by persons
engaged in businesses of a like character including, without limitation, a
Capital Account for each Member for any period in which there is more than one
Member. The Company’s books of account and records shall be prepared
in accordance with generally accepted accounting principles, consistently
applied, and shall be kept on the accrual basis, except in circumstances in
which the Members determine that another basis of accounting will be in the best
interests of the Company. The Company shall, at all times, maintain
those items referred to in §18-305 of the Act. A Member may examine
or copy such items or any other books or records of the Company, upon a
reasonable written request.
10.2 Reports to the
Members. As soon as practicable in the particular case, the
Manager, or such officer to whom such duties may be delegated by the Manager,
shall deliver or cause to be delivered the following reports to each
Member:
(a) Within
20 days after the end of each fiscal quarter, such information concerning the
Company as shall be necessary for the preparation by Sunwin of reports on Form
10-Q and Form 10-K it files with the Securities and Exchange Commission and at
the end of each fiscal year end, such information concerning the Company as
shall be necessary for the preparation by a Member of such Member’s income tax
or other tax returns; and
(b) Other
information as shall be reasonably necessary for the Members to be advised of
the results of the Company’s operations.
10.3 Additional
Reports. The Manager, or such officer to whom such duties may
be delegated by the Manager, may, prepare or cause to be prepared, and deliver
or cause to be
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delivered
to the Members from time to time during each fiscal year, in connection with
distributions or otherwise, unaudited statements showing the results of the
Company’s operations to the date of that unaudited statement.
ARTICLE
11
FISCAL
YEAR
The
fiscal year of the Company shall end on April 30 of each calendar
year.
ARTICLE
12
THE COMPANY’S
FUNDS
The
Company’s funds shall be deposited in such bank account(s), or invested in such
interest-bearing or non-interest-bearing investments, as shall be designated by
the Manager. All withdrawals from any such bank account(s) shall be
made by an authorized officer. The Company’s funds shall be held in
the name of the Company and shall not be commingled with those of any other
Person.
ARTICLE
13
MANAGEMENT OF THE
COMPANY
13.1 Rights and Duties of the
Manager.
(a) The
business and affairs of the Company shall be managed by its Manager in
accordance with this Agreement. The Manager shall constitute the
“manager” of the Company as contemplated under the Act. Except for
situations in which the approval of the Member is expressly required in this
Agreement or by nonwaivable provisions of the Act, all powers of the Company
shall be exercised by or under the authority of, and the business and affairs of
the Company shall be managed under the direction of, the Manager.
(b) The
Company will have one manager, which will be WILD Flavors, Inc. WILD
shall continue as Manager of the Company for so long as the distribution
agreement dated February 5, 2009, among Sunwin International Nutraceuticals,
Inc., the Company, and WILD remains in effect. For so long as WILD is
the Manager, no increase in the number of Managers shall be approved by the
Members nor shall any action be taken by the Members that would in any way
terminate, limit, or restrict the Manager’s authority and rights under this
Agreement without the prior written approval of WILD.
(c) The
Manager may resign at any time by delivering written notice to the
Company. A resignation shall be effective when the notice is
delivered unless the notice specifies a later effective date. A
Manager shall be deemed to have resigned effective upon the Incapacity or
Disability of such Manager.
(d) Except
as the Members and the Manager may unanimously otherwise agree, the Manager
shall not be entitled to compensation from the Company for its services as
Manager, provided, however, that nothing in this subsection shall be deemed to
prevent the Manager from being compensated for additional services pursuant to
Section 13.3, below.
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(e) To
the extent not prohibited by this Agreement or by nonwaivable provisions of the
Act or other federal, state or local laws, the Members hereby (i) agree and
acknowledge that any Member or Manager of the Company, as applicable, who has a
direct or indirect interest in a transaction involving the Company shall be
entitled to vote on such transaction, regardless of such interest; and
(ii) waives any objection it may have to the right of a Manager
or Member to vote on a transaction involving the Company in which such Manager
or Member has an interest.
(f) The
Manager shall not have the authority to make, alter, amend or rescind this
Agreement. For so long as WILD is the Manager, the Members shall not
make, alter, amend or rescind this Agreement without the prior written approval
of the Manager.
(g) Neither
the Manager nor, for so long as WILD is the Manager, the Members shall undertake
the following without the prior written approval of the other:
(i) causing
the Company to dissolve or sell all or substantially all of its
assets;
(ii) causing
the Company to enter into any merger, consolidation, joint venture or similar
transaction with any Person; or
(iii) making,
altering, amending or rescinding the Company’s Certificate of
Formation.
13.2 No Exclusive
Duty. The Manager is not required to manage the Company as the
Manager’s exclusive function and the Manager may have other business interests
and may engage in other activities in addition to those relating to the
Company. Neither the Company nor any Member will have any right, by
virtue of this Agreement to share in such other investments or activities of the
Manager or to the income or proceeds derived therefrom. The Manager
will not incur any liability to the Company or to any Member as a result of
engaging in any other business or venture.
13.3 Additional
Services. To the extent that the Manager determines that it
would be in the best interests of the Company for other services, in addition to
management services, to be provided by the Manager to the Company, the Manager
shall have the authority to cause such services to be provided to the Company
and shall be compensated for such services at third-party, arms’-length
rates. In no event, however, shall Manager be entitled to charge the
Company for any services during the two year period commencing on the date of
this Agreement as such services are included in the Services as that term is
defined in this Agreement.
13.4 Transactions with
Company. The Manager may, at its option, purchase stevia
products from the Company for the Manager’s own purposes. The Members
agree that the price to be charged to the Manager for such product shall not be
greater than the price paid by the Company for such product plus five
percent.
13.5 Indemnification. The
Company will indemnify the Manager to the full extent permitted under the
Act. The Company may, to such extent and in such manner as is
determined
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by the
Manager, but in no extent greater than is permitted under the Act, indemnify its
employees and other agents permitted to be indemnified by the Act.
13.6 Officers. The
Company shall have such officers and assistant officers as the Manager may from
time to time deem necessary, all of whom shall be appointed by the Manager or
appointed by an officer or officers authorized by the Manager to make such an
appointment. The Manager has the authority and power to delegate all
or any portion of its powers to any of the Company’s officers or assistant
officers. In addition, the Manager may assign titles to such officers
and, unless the Manager decides otherwise, the assignment of such title shall
constitute the delegation to such officer of the authority and duties that are
normally associated with that office. Any number of titles may be
held by the same individual. All officers of the Company shall have
such authority and perform such duties in the management of the Company as the
Manager may otherwise assign to them.
13.7 Members.
(a) No
Member shall have the power or authority to bind the Company unless such Member
has been authorized in writing by the Manager to act as an agent of the
Company.
(b) Meetings
of the Members shall be held at such times and places as are set by Members
holding a majority of the outstanding Units entitled to
vote. Meetings of the Members may be called by any Member or Members
owning 25% of the Units upon at least 10 calendar days’ prior written
notice to the Members. The notice for a meeting shall state the
purpose or purposes of such meeting and shall provide the time, date and place
of such meeting, which shall be during normal business hours, on a Business Day
and at the Company’s principal office unless the Members holding a majority of
the outstanding Units entitled to vote consent to a different time, date and/or
location. A Member may waive any notice required by this Agreement
before or after the date and time stated in the notice. The waiver
shall be in writing and be delivered to the Company for inclusion in the minutes
or filing with the Company’s records. Attendance at a meeting shall
constitute a waiver of any objection as to lack of notice or defective notice of
the meeting, unless the Member at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting. Meetings
may be held by any means of communication by which all the Members participating
may simultaneously hear each other during the meeting.
(c) A
quorum of the Members shall consist of Members holding a majority of the
outstanding Units having voting rights. If a quorum is present when a
vote is taken, which shall be a prerequisite to the taking of any action of the
Members at a meeting, then the affirmative vote of a majority (or such greater
percentage as is required by this Agreement or nonwaivable provision of the Act)
of the Units held by Members in attendance at the meeting and having voting
rights shall be the act of the Members.
(d) Actions
of the Members may be taken by written action executed by Members owning Units
constituting a majority (or such greater percentage as is required by this
Agreement or nonwaivable provisions of the Act) of the votes held by Members
having voting rights, which writing will be filed with or entered upon the
records of the Company.
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ARTICLE
14
RESTRICTIONS ON DISPOSITIONS
AND ENCUMBRANCES OF UNITS
14.1 Bankruptcy;
Incapacity.
(a) Upon
the Bankruptcy or Incapacity of any Member, that Member shall be (i) deemed to
be an Inactive Member, and (ii) promptly provide notice of such occurrence to
the Company and the other Members, and all acts, consents and decisions with
respect to the Company shall thereafter be made by the other
Members. The Inactive Member shall, nonetheless, be entitled to
receive such Member’s share of any distributions.
(b) For
180 days from and after the date the Company and the other Members receive
written notice that a Member has become an Inactive Member pursuant to Section
14.1(a), the other Members shall have an irrevocable option, pro rata in
accordance with the relative ownership of Units of Members exercising their
option or in such other proportions to which such Members may agree (including
through redemption of the Units by the Company) to purchase all or any portion
of the Inactive Member’s Units. If any Member elects to purchase all
or any portion of the Inactive Member’s Units, the Member shall notify the
Inactive Member of such party’s intention to do so within such time period, and
such Units shall be purchased by the other Members exercising their option in
proportion to their respective Units at that time or in such other proportion as
such Members may mutually agree. The purchase price of an Inactive
Member’s Units purchased pursuant to this Section 14.1 shall be the
Contract Price as defined by Section 14.8, and shall be payable at the time
and in the manner specified in Section 14.9. If the other
Members purchase less than all of the Inactive Member’s Units, then the Inactive
Member shall remain as such.
14.2 Injunctive
Relief. The Members agree that a breach of the provisions of
this ARTICLE 14 may cause the Company irreparable harm for which monetary
damages (or other remedies at law) are inadequate in view of (a) the
complexities and uncertainties in measuring the actual damages that would be
sustained by reason of the failure of a Member to comply with such provisions,
and (b) the uniqueness of the Company’s business and the relationship among
the Members. Accordingly, the Members consent in advance to the entry
of an order for injunctive relief or directing specific performance as a remedy
for any breach of the provisions of this 04.
14.3 Restrictions on
Dispositions.
(a) No
Member shall Dispose of all or any part of such Member’s Units, except in
compliance with this Agreement. Except as otherwise provided in this
Agreement, a Member may Dispose of all or any portion of its Units only with the
consent of Members owning a majority of the Units entitled to
vote. The Disposition of any Member’s Units, in whole or in part,
whether or not in compliance with this Agreement shall not release the Member
making such Disposition from such Member’s obligations under this Agreement
unless the transferee of such Units is approved as a substituted Member by
Members holding a majority of Units entitled to vote, and the transferee, in
writing assumes the obligations of the Member making such
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Disposition
and acknowledges and agrees to be bound by this Agreement. Any Member
who attempts to Dispose of such Member’s Units in violation of this Agreement,
whether by operation of law or otherwise, shall be deemed to have become an
Inactive Member and shall further be deemed to have granted the Company and the
remaining Members the option to purchase such Member’s Units at 75% of the
Contract Price, subject to the terms (other than the purchase price) of Section
14.1(b). The approved Disposition pursuant to this Section 14.3 shall
confer upon the transferee the right to become a substituted Member, in the
following manner and subject to the following conditions (any or all of which
may be waived by the consent of Members holding a majority of the Units entitled
to vote):
(i) Each
Disposition shall be effective as of the day that the Members approve the
Disposition;
(ii) No
Disposition will be effective if the Disposition would, in the opinion of
counsel to the Company (or other counsel acceptable to the Members), contravene
the then applicable rules of any Governmental Authority;
(iii) No
Disposition to a minor or incompetent shall be effective in any respect, except
that this limitation shall not apply to a Disposition in trust for the benefit
of a minor, or in custodianship under the Uniform Transfers to Minors Act or
similar legislation;
(iv) Each
transferee that is not a previously approved Member shall, in writing, ratify
and agree to be bound by the terms of this Agreement;
(v) The
Manager shall have received a copy of the instrument pursuant to which the
Disposition is effected;
(vi) The
Manager shall have received an instrument, executed by the Member making the
Disposition and the transferee, containing the following information,
commitments and agreements, to the extent they are not contained in the
instrument described in Section 14.3(a)(v):
(A) The
notice address of the transferee;
(B) After
giving effect to the Disposition, the commitments of the new Member to make
Capital Contributions, if any, to the Company in accordance with this Agreement;
and
(C) Representations
and warranties by the Member making the Disposition and the transferee that the
Disposition and admission are being made in accordance with all applicable Laws;
and
(vii) A
favorable opinion of legal counsel reasonably acceptable to the Members, to the
effect that the Disposition and admission (A) are being made pursuant to a
valid exemption from registration under the Securities Act of 1933 and
applicable state securities laws and in accordance with those laws, and
(B) in the event there is more than one (1) Member, would not result in the
Company being considered to have been terminated within the meaning of the
IRC.
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(b) Except
as otherwise provided in this Agreement, the transferee of Units who is not
approved as a substituted Member by Members holding a majority of the
outstanding Units entitled to vote shall be deemed to be an Inactive
Member. Such Disposition merely entitles the transferee to receive
the share of any distributions to which the Member making the Disposition would
otherwise be entitled and the transferee shall have only those rights specified
in the Act (as limited by this Agreement), and the Member making the Disposition
shall remain liable for such Member’s obligations, if any, under this
Agreement.
14.4 Payment of
Expenses. The Member effecting a Disposition or Encumbrance
shall pay, or reimburse the Company for, all costs and expenses incurred by the
Company in connection with the Disposition or Encumbrance, on or before the 10th
day after receipt by that Person of the Company’s invoice for the amount
due.
14.5 Encumbrance of
Units. A Member may not Encumber all or any portion of its
Units without the consent of Members holding a majority of the outstanding Units
entitled to vote; provided, however, that this Section 14.5 shall not apply to
Encumbrances by a Member in favor of one or more lenders providing financing to
the Company, provided that the terms of the instruments creating such
Encumbrance by a Member are acceptable to Members holding a majority of the
outstanding Units entitled to vote and the transferee acknowledges and agrees
that the Encumbrance and the rights acquired by it are subject in all respects
to this Agreement. Any attempted Encumbrance by a Member of all or a
portion of such Member’s Units, other than in accordance with this Section 14.5,
shall be, and is hereby declared, null and void ab initio.
14.6 Right of First
Refusal. If a bona fide offer in writing, signed by the
offeror, shall have been made to a Member for the purchase of some or all of
such Member’s Units (the “Offeree Member”), and such Member desires to accept
the offer, then a true copy of such offer shall be forwarded to the other
Members. Unless the offeror is an Affiliate, the other Members shall
have the option, pro rata in accordance with the relative ownership of Units of
Members exercising their option or in such other proportion to which such
Members may agree (including through redemption of the Units by the Company), to
be exercised by written notice to such effect to the Offeree Member within 30
days after receipt of the offer by the other Members, to purchase all or any
portion of the Offeree Member’s Units on the same terms and conditions as are
contained in the offer. Such notice of acceptance shall set the
closing date for the consummation of the transaction, which shall not be for a
date beyond 30 days from the date of mailing of such acceptance by the Members
exercising their options, or beyond the date of closing set forth in the offer,
whichever date is later, and shall also set forth the time and place of closing,
which shall be at the Company’s principal place of business and shall occur
during usual business hours. If the other Members do not send a
notice of acceptance to the Offeree Member within the prescribed time, are not
ready, willing, and able to consummate the purchase on the closing date, or the
offeror is an Affiliate, then the Offeree Member shall have the right to sell
its Units to the offeror, provided that, if the offeror is not an Affiliate, the
Disposition is (a) consummated within 60 days after expiration of the 30-day
period and (b) is made strictly in accordance with the terms of the offer and on
no more favorable terms to the offeror. The Disposition of Units
pursuant to this Section 14.6 shall not entitle the transferee to become a
substituted Member unless the Disposition is approved pursuant to Section
14.3.
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14.7 Assignees/Transferees Bound
by This Agreement. Any assignee or Person admitted to the
Company as a substituted Member shall be subject to and bound by all provisions
of this Agreement as if originally a party to this Agreement.
14.8 Contract
Price.
(a) The
“Contract Price” shall equal the fair market value of the Units that are the
subject of the Disposition as of the date of the event triggering the
Disposition. The fair market value shall be determined by agreement
of the Members, on the one hand, and the Member Disposing of the Units, on the
other hand, within 30 days after the event triggering the
Disposition. If the Members cannot determine the fair market value of
the Units that are the subject of the Disposition, then an appraiser that shall
be selected in accordance with Section 14.8(b) shall determine the fair
market value of such Units, taking into account the terms of this Agreement and
restrictions on such Units as set forth in this Agreement and the
Act.
(b) If
the appraisal of Units is required pursuant to Section 14.8(a), then an
appraiser shall be selected by agreement of the Members, on the one hand, and
the Member Disposing of the Units, on the other hand, or, if no appraiser can be
agreed upon by such parties, or such parties do not appoint an appraiser, then
the Company’s regularly employed accounting firm shall select the
appraiser. The cost of the appraiser shall be split between the
Member making the Disposition of Units being appraised and the
Company. The decision of the appraiser shall be final and binding
upon the Members and the Company.
14.9 Time and Manner of
Payment.
(a) Any
Units Disposed of to the Company or the other Members pursuant to
this ARTICLE 14, other than pursuant to Section 14.6 (provided that the
terms of the offer include payment terms), shall be paid for, at the purchaser’s
option, either (i) all in cash at the time the Units are Disposed, or
(ii) by a down payment computed in accordance with Section 14.9(b) and
delivery of a promissory note signed by the purchaser(s) for the balance of the
applicable purchase price. The closing on the Disposition of any
Units shall occur within 30 days after determination of the Contract Price,
unless otherwise specified in this Agreement or in that option or
offer.
(b) If
the purchaser(s) elect(s) the second option in Section 14.9(a), then such
purchaser(s) shall pay as a down payment 20% of the applicable purchase
price. The remaining unpaid portion of the purchase price shall be
represented by a promissory note of such purchaser(s), in such form as shall be
reasonably acceptable to the Member making the Disposition, and providing for
four equal annual installments of the remaining unpaid portion of the purchase
price, with each installment due on the anniversary of the Disposition of the
Units. That promissory note shall provide for the payment of interest
with each payment of principal on the unpaid portion of that promissory note
from time to time, at the Prime Rate, as adjusted each January 1 and July 1,
compounded semi-annually.
14.10 Rights of a Disassociated
Member. The rights and obligations of a disassociated Member
under this ARTICLE 14 are in lieu of any rights that such Member might have
under the Act. Except as otherwise provided in this Agreement, no
occurrence of an event of
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disassociation
of a Member under the Act shall cause a disassociation of such Member from the
Company.
14.11 Dispositions to
Affiliates. Notwithstanding any provision of this Agreement to
the contrary, any Member shall be entitled to Dispose of all, or any portion, of
such Member’s Units to an Affiliate free of any restrictions or requirements in
this ARTICLE 14 (including, without limitation, the requirement that the
Affiliate be approved as a substituted Member by the Members holding a majority
of the outstanding Units entitled to vote) so long as the Affiliate and the
Disposition satisfy all the obligations and conditions of a transferee and a
Disposition, as applicable, under Section 14.3.
ARTICLE
15
TERMINATION OF THE
COMPANY
15.1 Dissolution of the
Company. The occurrence of any one of the following events, as
provided below, shall cause a dissolution of the Company:
(a) Subject
the provisions of Section 13(g), above, and to winding up and termination of the
Company pursuant to ARTICLE 16, the approval of the Members of the sale or other
disposition of all or substantially all of the assets of the Company;
or
(b) Subject
the provisions of Section 13(g), above, and to winding up and termination of the
Company pursuant to ARTICLE 16, the approval of the Members of the dissolution
of the Company.
Except as
provided in this ARTICLE 15, no event of disassociation of a Member or a Manager
under the Act or event of dissolution under the Act shall cause a dissolution of
the Company.
ARTICLE
16
WINDING UP; LIQUIDATING
DISTRIBUTIONS; TERMINATION
16.1 Winding
Up and Liquidating Distributions.
(a) Upon
dissolution of the Company, the Manager will proceed to liquidate and wind up
the business of the Company. Upon the winding up of the Company, the
business of the Company may be continued in order to maximize the Company’s
value as a going concern for eventual sale. If there is more than one
Member at the time the Company is dissolved and liquidated, the Members shall
continue to share profits and losses during the period of liquidation in
accordance with ARTICLE 9. The Manager, in lieu of selling all or any
of the Company assets, may convey the assets in kind to the
Members. If the Company’s assets are distributed to the Members, then
all such assets shall be valued at their then fair market value as determined by
the Members and, in the event such dissolution occurs at a time when there is
more than one Member, the difference, if any, of such fair market value over (or
under) the adjusted basis of such assets to the Company shall be credited (or
charged) to the Capital Accounts of the Members in accordance with ARTICLE
9. Fair market value shall be used for purposes of determining the
amount of any distribution to a Member pursuant to this Section
16.1. If the Members are unable to agree on the fair market value of
any Company asset, then the fair market
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value
shall be determined by a qualified independent appraiser selected by the Members
or, if no appraiser can be agreed upon by the Members, then selected by the
Company’s regularly employed accounting firm. The Company assets and
the proceeds of any liquidation sale will be applied and distributed at the
closing of any sale in the following order of priority:
(b) To
the payment of all debts and liabilities of the Company and all expenses of
liquidation;
(c) To
the setting up of such reserves as the Manager may deem necessary for any
contingent liabilities of the Company. Any reserves will be deposited
with an escrow, to be applied to the discharge of any contingent liabilities,
and, at the expiration of whatever period the Manager may deem advisable, the
balance will be distributed as provided in clause (c) below; and
(d) The
balance, if any, will be distributed to the Members in accordance with their
Units.
16.2 Termination. Upon
complete liquidation of the Company and distribution of all Company funds, the
Company shall terminate.
ARTICLE
17
LIABILITY AND
INDEMNIFICATION
17.1 Limited
Liability.
(a) Except
as otherwise provided by the Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Covered Person shall
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Covered Person. No Member shall
be liable for the debts or liabilities of any other Member.
(b) Except
as otherwise expressly required by Law, a Member, in its capacity as Member,
shall have no liability in excess of (i) the amount of its Capital
Contribution, (ii) its share of any assets and undistributed profits of the
Company, (iii) its obligation to make other payments expressly provided for
in this Agreement, and (iv) the amount of any distributions wrongfully
distributed to it.
(c) No
Member shall be liable for the return of all or any portion of the Capital
Contribution of any other Member.
(d) Except
as otherwise expressly provided herein, no Member shall have any priority over
any other Member as to the return of its Capital Contribution or as to
compensation by way of income.
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17.2 Exculpation and
Indemnification.
(a) The
doing of any act or the failure to do any act by any Covered Person, the effect
of which may cause or result in loss or damage to the Company, if done or
omitted to be done in good faith reliance upon advice of independent legal
counsel or accountants employed by or on behalf of the Company, or if done or
omitted to be done in good faith and in a manner reasonably believed to be
within the scope of the authority granted by this Agreement and in or not
opposed to the best interests of the Company, shall not subject any such Person
to any liability to the Company or the Members; provided, however, that the
foregoing shall not relieve any Person of liability hereunder if it shall have
been determined by a court of competent jurisdiction that such Person committed
an act or omission that constitutes fraud, Gross Negligence or Willful
Misconduct.
(b) To
the fullest extent permitted by Law, the Company shall indemnify each Covered
Person and shall save and hold each Covered Person harmless from and in respect
of all: (i) fees, costs and expenses incurred in connection with
or resulting from any claim, action or demand against the Covered Person
(including any claim, action or demand arising under common law or statute),
including attorneys’ fees, which arises out of or in any way relates to the
Company, its properties, business or affairs, or which arises by reason of any
of them being a Covered Person; and (ii) such claims, actions and demands
and any losses or damages resulting therefrom (including all claims, actions and
demands arising under common law or statute), including amounts paid in
settlement or compromise of any such claim, action or demand; provided that this
indemnity shall not extend to conduct by any Covered Person, if it shall have
been determined by a court of competent jurisdiction that such Person committed
an act of fraud, Gross Negligence or Willful Misconduct.
(c) The
foregoing right of indemnification shall be in addition to any rights to which
any Member or Covered Person may otherwise be entitled (under the Act or
otherwise), shall continue as to a Covered Person who has ceased to serve in
such capacity, and shall inure to the benefit of the executors, administrators,
personal representatives, successors or assigns of each such
Person.
(d) A
Covered Person shall not be denied indemnification in whole or in part under
this Section 17.2 because the Covered Person had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
17.3 Expenses.
(a) To
the fullest extent permitted by applicable law, the Company shall pay the
expenses incurred by any Covered Persons acting on behalf of the Company in
defending a civil or criminal action, suit or proceeding against the Company or
any Covered Person, upon receipt of an undertaking by such Person to repay such
payment if such Person shall be determined not to be entitled to indemnification
therefor as provided herein. Any right of indemnity granted under
this ARTICLE 17 may be satisfied only out of the assets of the Company, and
no Member shall personally be liable with respect to any such claim for
indemnification.
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(b) The
Company shall cause to be paid all expenses of the Company which may include,
but shall not be limited to: (i) all costs of borrowed money;
(ii) legal, audit, accounting, brokerage, and other fees; (iii) fees
and expenses paid to independent contractors; (iv) the cost of any
insurance obtained in connection with the business of the Company;
(v) expenses of revising, amending, converting, modifying or terminating
this Agreement or the existence of the Company; (vi) expenses in connection
with distributions made by the Company to, and communications and bookkeeping
and clerical work necessary in maintaining relations with, Members; and
(vii) costs of any accounting, statistical or bookkeeping services and
equipment necessary for the maintenance of the books and records of the
Company.
17.4 Insurance. The
Manager shall have the power on behalf of the Company to purchase and maintain
insurance and it shall cause the Company to purchase and maintain, in reasonable
amounts on behalf of the Manager and the Company’s officers against any
liability which the Manager or officers may incur in their capacities as such,
whether or not the Company has the power to indemnify them against such
liability.
17.5 Nature of
Rights. The rights set forth in this ARTICLE 17 are
contractual in nature and may not be revised as applied to prior actions of a
Covered Person by a subsequent amendment to this Agreement without such Covered
Person’s prior written approval.
ARTICLE
18
MISCELLANEOUS
18.1 Notices. All
notices, approvals, consents and demands required or permitted under this
Agreement shall be in writing and sent by hand delivery, facsimile, overnight
mail, certified mail or registered mail, postage prepaid, to the Members at the
appropriate address as shown from time to time on the records of the Company and
to the Company and the Manager at their respective principal office addresses,
and shall be deemed given when delivered by hand delivery, transmitted by
facsimile or mailed by overnight, certified or registered mail. The
Members may specify a different address by notifying the Company in writing of
the different address.
18.2 Governing
Law. This Agreement and the rights of the parties to this
Agreement shall be governed by and interpreted in accordance with the Laws of
the State of Delaware, without regard to or application of its conflict of laws
principles.
18.3 Benefit and Binding
Effect. Except as otherwise specifically provided in this
Agreement, this Agreement shall be binding upon and shall inure to the benefit
of the parties to this Agreement, and their legal representatives, heirs,
administrators, executors, successors and permitted assigns.
18.4 Headings. The
headings contained in this Agreement are inserted only as a matter of
convenience, and in no way define, limit or extend the scope or intent of this
Agreement or any provision of this Agreement.
18.5 Partial
Enforceability. If any provision of this Agreement, or the
application of any provision to any Person or circumstance shall be held
invalid, illegal or unenforceable, then the remainder of this Agreement, or the
application of that provision to Persons or circumstances
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other
than those with respect to which it is held invalid, illegal or unenforceable,
shall not be affected thereby.
18.6 Entire
Agreement. This Agreement constitutes the entire agreement
with respect to the subject matter hereof and supersedes any prior or
contemporaneous oral or written agreement or understanding with respect to the
subject matter hereof.
18.7 Enforcement. In
the event of a breach or threatened breach by a Member of any of the provisions
of this Agreement, the Company or the Manager shall be entitled to obtain a
temporary restraining order and temporary and permanent injunctive relief
without the necessity of proving actual damages by reason of such breach or
threatened breach, and to the extent permissible under the applicable statutes
and rules of procedure, a temporary injunction or restraining order may be
granted immediately upon the commencement of any such suit and without
notice. Nothing in this Agreement may be construed as prohibiting the
Company or the Manager from pursuing any other remedy or remedies, including
without limitation, the recovery of damages. The Company and the
Manager shall have the right to set off any such damages against any amounts
otherwise payable by it to such Member under this Agreement or
otherwise. Each Member further covenants and agrees to indemnify and
hold the Company and the Manager harmless from and against all costs and
expenses, including legal or other professional fees and expenses incurred by
the Company or the Manager in connection with or arising out of any proceeding
instituted by the Company or the Manager against the Member to enforce the terms
and provisions of this Agreement if the Company or the Manager is successful in
whole or in part in such proceeding.
18.8 No
Waiver. No waiver by any party to this Agreement at any time
of a breach by any other party of any provision of this Agreement to be
performed by such other party shall be deemed a waiver of any similar or
dissimilar provisions of this Agreement at the same or any prior or subsequent
time.
18.9 Amendments. Any
amendments, modifications, renewals, alterations or replacements of or to this
Agreement shall be in writing and signed by the
Members.
18.10 Counterparts. This
Agreement may be executed in several counterparts, each of which when so
executed and delivered shall be deemed an original but all of which together
shall constitute one and the same instrument. A Member shall be bound
by this Agreement upon such Member’s execution of this Agreement or a
counterpart thereof or such Member’s execution of a document referring to this
Agreement and indicating such Member’s intention to be bound by this Agreement
and any amendments hereto.
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IN
WITNESS WHEREOF, the Members have executed this Agreement effective as of the
date first set forth above.
MEMBERS:
By:_______________________________________
Its:_______________________________________
WILD FLAVORS, INC.
By:_______________________________________
Its:_______________________________________
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ANNEX
A
OF
SUNWIN
USA LLC
|
Member
Name and Address
|
Units
of Membership
|
|
Attention: ▇▇▇▇▇▇▇▇
▇▇▇, CEO
▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
|
5,500
|
|
WILD
Flavors, Inc.
Attention: Chief
Operating Officer
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
|
4,500
|
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