EXHIBIT 10.08
MASTER AGREEMENT
THIS MASTER AGREEMENT (this "Agreement") is made and entered
as of this 30th day of July 1997 (the "Effective Date") and is by
and between Authentic Products, Inc., a Nevada corporation
("Authentic Products"), and Gridiron Marketing, LLC, a California
limited liability company ("Gridiron Marketing") (collectively
the "Parties").
R E C I T A L S
WHEREAS, pursuant to the terms and conditions set forth
herein, and in furtherance of that certain letter executed by and
between ▇▇▇▇-Son Gaming Supplies, Inc., a Nevada corporation,
("▇▇▇▇-Son Gaming Supplies") and ▇▇▇▇▇▇▇▇▇ Entertainment, Limited
Liability Company, an Ohio limited liability company
("▇▇▇▇▇▇▇▇▇"), on March 21, 1997 (the "Letter of Intent"), the
Parties desire to enter into this Agreement for the purpose of
establishing their respective rights and obligations in
connection with the development, manufacture and marketing of
Commemorative Products (as hereinafter defined);
WHEREAS, the Parties desire to enter into this Agreement for
the purpose of establishing their respective rights and
obligations and in connection with the formation of a limited
liability company, Brand One Marketing, LLC (the "Company"),
organized to pursue the development, manufacture and marketing of
Commemorative Products;
NOW, THEREFORE, in consideration of the foregoing recitals
and of the mutual covenants, conditions, undertakings,
representations and warranties hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties do
hereby covenant and agree that the Recitals are true and correct
and by this reference incorporated herein as if fully set forth,
and the Parties further agree as follows:
I. DEFINITIONS
In this Agreement, unless the context hereof clearly
requires a different definition, the following words, phrases,
and expressions shall have the respective meanings attributed to
them:
(a) "AGREEMENT" shall mean this Master Agreement dated as
of the Effective Date by and between Authentic Products and
Gridiron Marketing.
(b) "AFFILIATE" shall mean a person or entity that
directly, or indirectly through one or more intermediaries,
controls with respect to voting, or is controlled with respect to
voting by, or is under common voting control with, either
Authentic Products or Gridiron Marketing.
(c) "AUTHENTIC PRODUCTS" shall mean Authentic Products,
Inc., a Nevada corporation and a wholly-owned subsidiary of ▇▇▇▇-
Son Gaming Corporation.
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(d) "BOARD OF MANAGERS" shall mean the four (4) person
board of managers of the Company.
(e) "BRAND ONE MARKETING ARTICLES" shall mean the Articles
of Organization of the Company attached hereto as EXHIBIT B.
(f) "BREACH" is defined in Section VI.A. hereof.
(g) "BUSINESS DAY" shall mean any day other than Saturday,
Sunday or any day on which banking institutions in the State of
Nevada are authorized or obligated by law or executive order to
be closed.
(h) "COMMEMORATIVE PRODUCTS" shall mean any and all Non-
Gaming Commemorative Playing Cards and Trading Discs containing
images or graphics depicting sports franchises, sports logos,
famous persons, places or events.
(i) "COMPANY" shall mean the limited liability company
formed under the laws of the State of Nevada in accordance with
Section III.A. hereof.
(j) "▇▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇▇ Entertainment, Limited
Liability Company, an Ohio limited liability company.
(k) "DEMUR, INC." shall mean DeMur, Inc., an Ohio
corporation and manager of Gridiron Marketing and of ▇▇▇▇▇▇▇▇▇.
(l) "EFFECTIVE DATE" shall mean the date specified in the
first paragraph of this Agreement.
(m) "EVENT OF BREACH" is defined in Section VI.C. hereof.
(n) "FILING DATE" shall mean the date on which the Company
was formed.
(o) "GRIDIRON MARKETING" shall mean Gridiron Marketing,
LLC, a California limited liability company and a wholly-owned
subsidiary of ▇▇▇▇▇▇▇▇▇.
(p) "INITIAL CAPITAL CONTRIBUTION" shall mean the
contribution of $100,000.00 (U.S.) each by Authentic Products and
Gridiron Marketing to the Company upon the formation of the
Company.
(q) "LETTER OF INTENT" shall mean the letter executed by
and between Authentic Products and ▇▇▇▇▇▇▇▇▇ on March 21, 1996
attached hereto as EXHIBIT A.
(r) "NON-GAMING COMMEMORATIVE PLAYING CARDS" shall mean
playing cards that: (i) contain images or graphics depicting
sports franchises, sports logos, famous persons, places or
events; and (ii) are marketed to individuals or entities having
no gaming operations. Notwithstanding this definition, Non-
Gaming Commemorative Playing Cards shall not include: (i)
generic non-gaming playing cards; (ii) playing cards containing
the logo of ▇▇▇▇-Son; and (iii)
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playing cards sold to retail customers, including casinos, by
▇▇▇▇-Son through its own retail outlets unrelated to sports,
entertainment or travel industries.
(s) "OPERATING AGREEMENT" shall mean the Operating
Agreement of the Company attached hereto as EXHIBIT C.
(t) "▇▇▇▇-SON" shall be a collective reference to ▇▇▇▇-Son
Gaming Corporation and its wholly-owned or majority owned
subsidiaries.
(u) "▇▇▇▇-SON GAMING CORPORATION" shall mean ▇▇▇▇-Son
Gaming Corporation, a Nevada corporation.
(v) "▇▇▇▇-SON GAMING SUPPLIES" shall mean ▇▇▇▇-Son Gaming
Supplies, Inc., a Nevada corporation and a wholly-owned
subsidiary of ▇▇▇▇-Son Gaming Corporation.
(w) "REMEDY NOTICE" is defined in Section VI.B. hereof.
(x) "SAN FRANCISCO FORTY-NINERS" shall mean the San
Francisco Forty-Niners, Ltd., a limited partnership.
(y) "TERM" shall mean a period of fifty (50) years from the
Effective Date.
(z) "TRADING DISCS" shall mean any and all non-gaming chip-
like products that: (i) contain images or graphics depicting
sports franchises, sports logos, famous persons, places or events
and (ii) lack monetary denominations or markings customary in the
gaming industry.
(aa) "TRANSACTION DOCUMENTS" shall mean this Agreement, the
Brand One Marketing Articles, the Operating Agreement and any
other related document.
II. ACKNOWLEDGMENTS OF INTENT
A. BUSINESS PURPOSE OF THE COMPANY
Pursuant to Section III.A. of this Agreement, Authentic
Products and Gridiron Marketing shall form the Company for the
purposes of developing, marketing and selling Commemorative
Products to the sports, entertainment, travel, general retail and
other non-gaming markets. It is the intent of the Parties that
all opportunities for the marketing and sale of such
Commemorative Products (exclusive of the sale of generic non-
gaming playing cards, playing cards containing the logo of ▇▇▇▇-
Son and playing cards sold to retail customers, including
casinos, by ▇▇▇▇-Son through its own retail outlets unrelated to
sports, entertainment or travel industries) shall be the
exclusive opportunities of the Company and shall be pursued
exclusively through and by the Company as described in Section
V.C. of this Agreement.
B. EXCLUSIVE MARKETING RIGHTS OF THE COMPANY
For good and valuable consideration, ▇▇▇▇-Son, Authentic
Products, ▇▇▇▇▇▇▇▇▇, Gridiron Marketing and their respective
Affiliates shall and hereby grant to the Company the exclusive
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right to develop, market and sell Commemorative Products,
including Non-Gaming Commemorative Playing Cards, to the sports,
entertainment, travel, general retail and other non-gaming
markets. ▇▇▇▇-Son, Authentic Products, ▇▇▇▇▇▇▇▇▇, Gridiron
Marketing and their respective Affiliates further grant to the
Company the exclusive right to develop, market and sell
Commemorative Products to all markets outside of the gaming
industry. The exclusive rights granted to the Company herein
shall continue throughout the existence of the Company.
Notwithstanding the foregoing, the acknowledgment contained in
this Section B shall not extend to the San Francisco Forty-
Niners, Ltd., a limited partnership (the "San Francisco Forty-
Niners"), to the extent that the San Francisco Forty-Niners are
required to comply with the rules, regulations, programs and/or
policies of the National Football League or are pursuing
opportunities for football-related merchandise outside the scope
of Commemorative Products.
C. OPERATIONS OF THE COMPANY
With respect to the development, marketing and selling of
Commemorative Products, each Party acknowledges and understands
that the Company shall enter into and comply with a variety of
contracts and agreements, including, but not limited to,
contracts and agreements for the commission of artwork, the
acquisition of rights for the use and reproduction of various
images, logos and graphics, the purchase of materials, supplies
and finished products from suppliers and manufacturers, the
establishment of distribution channels, and the marketing of
Commemorative Products.
D. RELATED PARTY TRANSACTIONS
1. ARM'S LENGTH. Each Party agrees that all fees paid to,
or goods or services purchased from, entities affiliated or
associated with, or related to, any of the Parties hereto shall
be at "arm's length" and upon terms and conditions that are no
less favorable to the Company than as the same may be obtained
from non-affiliated, non-associated or non-related third parties.
2. ▇▇▇▇-SON GAMING SUPPLIES. Notwithstanding Section D.1.
of this Article II, the Company shall purchase products supplied
and manufactured by ▇▇▇▇-Son pursuant to the terms and conditions
of the standard purchase agreement and business practices
ordinarily used by ▇▇▇▇-Son in the manufacturing and shipping of
its products. With respect to the cost of such products, ▇▇▇▇-
Son shall charge its cost, as determined by generally accepted
accounting principles, under the full absorption method
consistent with the methods normally employed by ▇▇▇▇-Son for
financial reporting purposes (which is defined as all direct
costs of production plus an allocation of fixed production
overhead and indirect costs), plus fifteen percent (15%) for
handling and overhead. The cost of artwork and its preparation
for products produced by ▇▇▇▇-Son will be included in the cost of
the product, and the cost for all freight charges with respect to
shipping the products will be billed to the Company by ▇▇▇▇-Son.
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III. THE COMPANY
A. FORMATION OF THE COMPANY
Within five (5) Business Days of the Effective Date (the
"Filing Date"), Authentic Products and Gridiron Marketing shall
form the Company by filing with the Secretary of State of the
State of Nevada the Articles of Organization of the Company
("Brand One Marketing Articles"). Effective as of the Filing
Date, Authentic Products and Gridiron Marketing shall also
execute the Operating Agreement of the Company (the "Operating
Agreement"). Authentic Products and Gridiron Marketing shall be
the only initial members of the Company.
B. CAPITALIZATION OF THE COMPANY
Pursuant to the terms of the Operating Agreement, Authentic
Products and Gridiron Marketing shall each contribute $100,000.00
(U.S.) upon the formation of the Company (the "Initial Capital
Contribution"). The Initial Capital Contribution shall represent
a fifty percent (50%) ownership interest each of Authentic
Products and Gridiron Marketing in the Company. The rules
governing additional capital contributions shall be contained in
the Operating Agreement.
C. PROFITS AND LOSSES
The allocation of assets-profits and liabilities-losses of
the Company shall be governed by the Operating Agreement.
D. GOVERNANCE OF THE COMPANY
Pursuant to the terms of the Operating Agreement, the
Company shall be governed by a Board of Managers (the "Board of
Managers") consisting of four (4) persons. In accordance with
Article VI of the Operating Agreement, two (2) persons shall be
elected by Authentic Products and two (2) persons shall be
elected by Gridiron Marketing. The Board of Managers shall
appoint such officers and employ such individuals as needed to
accomplish the objectives of the Company, including a chief
executive officer, and such employees as the chief executive
officer, in consultation with the Board of Managers, shall deem
necessary.
E. TRANSFERS OF INTEREST
Pursuant to the terms of the Operating Agreement, any
transfer of interest of the Company shall be subject to a right
of first refusal exercisable by the party that is not proposing
the transfer.
IV. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF GRIDIRON MARKETING
1. DUE ORGANIZATION. Gridiron Marketing is a limited
liability company duly organized, validly existing and in good
standing under the laws of the State of California.
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2. AUTHORITY. The execution, delivery and performance of
each Transaction Document to which it is a party does not violate
the articles of organization or the operating agreement of
Gridiron Marketing, cause a limitation on its powers, or cause
the powers of its directors, officers or managers to be exceeded;
3. ADVERSE CONTRACTS, ETC. The execution and delivery of
this Agreement and the performance by Gridiron Marketing
thereunder will not: (a) result in a breach of any terms or
conditions of or constitute a default under any statute, written
indenture, contract, instrument, agreement, license or lease to
which Gridiron Marketing is a party or by which Gridiron
Marketing is bound; (b) constitute an event which would permit
any party to modify, alter, amend, cancel or otherwise affect or
terminate any such indenture, contract, instrument, agreement,
license or lease; or (c) interfere with, conflict with or violate
any judgment, injunction, decree, order, license or franchise of
any court, governmental authority, regulatory commission, board,
agency, association or administrative body.
4. GOOD FAITH. Gridiron Marketing represents and warrants
that it will use its good faith efforts to create a market and
pursue all marketing opportunities for Commemorative Products.
5. LITIGATION. There is no litigation, arbitration, claim,
governmental or other proceeding (informal or formal),
investigation pending or threatened (or any basis therefor known
to Gridiron Marketing) against or affecting Gridiron Marketing or
its Affiliates which, if determined adversely to Gridiron
Marketing, could have an adverse effect on the transactions
contemplated by the Transaction Documents or the financial
condition or operations of the Company, Authentic Products,
Gridiron Marketing and their respective Affiliates.
6. BREACH. There is no Event of Breach under this
Agreement, now existing or hereafter executed, and no event, act
or omission has occurred and is continuing which, with applicable
notice or the passage of time or either, would constitute an
Event of Breach hereunder.
B. REPRESENTATIONS AND WARRANTIES OF AUTHENTIC PRODUCTS
1. DUE INCORPORATION. Authentic Products is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Nevada.
2. AUTHORITY. The execution, delivery and performance of
each Transaction Document to which it is a party does not violate
the articles of incorporation or bylaws of Authentic Products,
cause a limitation on its powers, or cause the powers of its
directors, officers or managers to be exceeded;
3. ADVERSE CONTRACTS, ETC. The execution and delivery of
this Agreement and the performance by Authentic Products
thereunder will not: (a) result in a breach of any terms or
conditions of or constitute a default under any statute, written
indenture, contract, instrument, agreement, license or lease to
which Authentic Products is a party or by which Authentic
Products is bound; (b) constitute an event which would permit any
party to modify, alter, amend, cancel or otherwise affect or
terminate any such indenture, contract, instrument, agreement,
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license or lease; or (c) interfere with, conflict with or violate
any judgment, injunction, decree, order, license or franchise of
any court, governmental authority, regulatory commission, board,
agency, association or administrative body.
4. GOOD FAITH. Authentic Products represents and warrants
that it will use its good faith efforts to create a market and
pursue all marketing opportunities for Commemorative Products.
5. LITIGATION. There is no litigation, arbitration, claim,
governmental or other proceeding (informal or formal),
investigation pending or threatened (or any basis therefor known
to Authentic Products) against or affecting Authentic Products or
its Affiliates which, if determined adversely to Authentic
Products, could have an adverse effect on the transactions
contemplated by the Transaction Documents or the financial
condition or operations of the Company, Authentic Products,
Gridiron Marketing and their respective Affiliates.
6. BREACH. There is no Event of Breach under this
Agreement, now existing or hereafter executed, and no event, act
or omission has occurred and is continuing which, with applicable
notice or the passage of time or either, would constitute an
Event of Breach hereunder.
V. UNDERTAKINGS DURING TERM OF AGREEMENT
A. GOOD FAITH AND COOPERATION
Authentic Products and Gridiron Marketing severally warrant,
represent and undertake in favor of the other the following:
1. PERFORMANCE. The Parties will duly and punctually
perform all of their respective obligations under the Transaction
Documents;
2. DILIGENCE. The Parties will at all times act with
commercially reasonable diligence to achieve the fruition of the
transactions contemplated in the Transaction Documents;
3. COOPERATION. In all their dealings with all
governmental authorities, licensing bodies, administrative
agencies and other third parties with jurisdiction over the
Company, Authentic Products, Gridiron Marketing or any of their
respective Affiliates, the Parties will cooperate with the
aforementioned entities and will act in the best interests of the
Company except to the extent that the licenses and/or franchises
of either Authentic Products or Gridiron Marketing or any of
their respective Affiliates are jeopardized; and
4. GOOD FAITH. The Parties will deal at all times with
the other honestly and with the utmost good faith to achieve the
commercial objectives of the Company. Notwithstanding this
provision, the Parties hereby declare and agree that this
undertaking of honesty and good faith does not and shall not
create any additional fiduciary relationship between the Parties
other than those normally imposed on members of a limited
liability company as a matter of law.
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B. AUTHORITY AND DUE EXECUTION
Authentic Products and Gridiron Marketing severally warrant,
represent and undertake in favor of the other the following:
1. ENFORCEABILITY. Each Transaction Document to which it
is a party constitutes a valid and legally binding obligation to
the Party enforceable in accordance with their respective rights
subject to:
(a) any statute of limitations;
(b) any laws of bankruptcy, insolvency, liquidation,
reorganization or other laws affecting creditor's rights
generally; and
(c) any defenses of set-off or counterclaim.
2. EXECUTION AND DELIVERY. The execution and delivery of
each Transaction Document to which it is a party, and the
performance of or compliance with its obligations under each
Transaction Document to which it is a party does not violate any
law or regulation or any material agreement or arrangement to
which the Party is a party or which is binding upon it or any of
its assets;
3. BEST INTERESTS. The execution of each Transaction
Document to which it is a party is in the best commercial
interests of that Party;
4. INSOLVENCY. No event involving insolvency has
occurred, or, to the knowledge of the Party, could reasonably be
expected to occur, in relation to the Party.
5. PERMISSIONS. Each Party has obtained or effected all
material authorizations, approvals, consents, licenses, permits,
exemptions, filings, registrations, notifications and other
requirements of any state, municipal or federal governmental,
judicial, or public authority or body which must be obtained in
the jurisdiction of its incorporation and any other jurisdiction
before the entry into, or performance of its obligations under,
each Transaction Document to which it is a party and all such
permissions are in full force and effect and any conditions upon
which the permissions were given have been, and will continue to
be, complied with.
6. MAINTENANCE. Each Party will obtain and maintain in
full force and effect and comply with the conditions of all
permissions which are required after the date of this Agreement
and in connection with the performance by it of its obligations
under each Transaction Document to which it is a party.
C. OPPORTUNITY
In the event that either ▇▇▇▇-Son, Authentic Products,
▇▇▇▇▇▇▇▇▇, Gridiron Marketing or their respective Affiliates are
approached with or learn of any marketing or sales opportunity
for the development, manufacturing and marketing of Commemorative
Products or for the development, manufacturing and marketing of
Non-Gaming Commemorative Playing Cards to
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customers within the gaming industry, the relevant party shall
immediately refer the opportunity to the chief executive officer
or other appropriate officer of the Company and a report thereof
will be made to the Board of Managers. Only upon the affirmative
resolution by the Board of Managers that such opportunity is not
in the best interests of the Company may the relevant party
pursue the opportunity outside the Company. The undertaking
agreed upon by ▇▇▇▇-Son, Authentic Products, ▇▇▇▇▇▇▇▇▇, Gridiron
Marketing or their respective Affiliates in this Section C shall
not extend to the San Francisco Forty-Niners to the extent that
the San Francisco Forty-Niners are required to comply with the
rules, regulations, programs and/or policies of the National
Football League or are pursuing opportunities for football-
related merchandise outside the scope of Commemorative Products.
D. CONFIDENTIALITY
Authentic Products, Gridiron Marketing and their respective
Affiliates hereby warrant, covenant and agree that it shall hold
in strictest confidence, and shall not at any time or in any
manner, either directly or indirectly, divulge, disclose, copy or
communicate to any person, firm or corporation, any proprietary
or confidential information concerning any matter affecting or
relating to the business of the Company. The warranties,
covenants and agreements set forth in this Section IV.D. shall
not expire for any reason, shall survive the expiration or
termination of this Agreement and shall be binding upon each
party without regard to the passage of time or other events.
Notwithstanding the foregoing, this section shall not apply to
any disclosure required or deemed necessary by either party
pursuant to any federal, state or local law, and/or the rules or
regulations promulgated thereunder, to which either party is
subject.
E. EXCLUSIVITY
1. EXCLUSIVITY OF ▇▇▇▇-SON GAMING SUPPLIES. ▇▇▇▇-Son
Gaming Supplies shall be the exclusive manufacturer and supplier
of all products developed, manufactured and marketed by the
Company during the Term of this Agreement. To the extent that
▇▇▇▇-Son cannot supply the desired products to the Company, the
Board of Managers shall select the appropriate party from which
to purchase the products.
2. EXCLUSIVITY OF THE COMPANY. The Company shall have the
exclusive right to market all Commemorative Products developed,
manufactured and marketed by the Company during the Term of this
Agreement.
F. COMPLIANCE WITH GOVERNING LAWS
1. GENERALLY. Authentic Products, Gridiron Marketing and
their respective Affiliates each agree to comply with all
federal, state and local laws, ordinances, rules and regulations
(including those of any foreign country) in connection with the
Company and the performance of all of their respective
obligations under the Transaction Documents.
2. GAMING AUTHORITIES. Authentic Products, Gridiron
Marketing and their respective Affiliates understand and
acknowledge that the Parties and their respective Affiliates are
subject to various gaming, licensing and regulatory authorities.
Authentic Products and Gridiron Marketing
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shall not take any action or fail to act if it would adversely
effect or jeopardize each Party's or each Party's Affiliate's
gaming or other licenses in any jurisdiction. Authentic Products
and Gridiron Marketing agree that any breach of this covenant
would not be adequately compensible in damages and agrees that,
in the event of any breach by either party of this covenant, the
non-breaching party shall, in addition to any claim for damages
for breach of covenant to which they may be entitled, be
authorized and entitled to seek and obtain equitable relief by
way of injunction or otherwise in a court of competent
jurisdiction. Authentic Products and Gridiron Marketing have
adopted certain regulatory compliance policies and each party
agrees to provide to the other party such documentation,
information and assurances regarding himself and any employees,
brokers, agents and others that may be necessary for the
requesting party to comply with its regulatory compliance
policies.
G. INTELLECTUAL PROPERTY RIGHTS
1. INTELLECTUAL PROPERTY OF THE COMPANY. All intellectual
property developed and created by the Company, including, but not
limited to, trademarks, trade names, copyrights or licensing
rights, shall be the property of the Company.
2. INTELLECTUAL PROPERTY OF ▇▇▇▇-SON AND GRIDIRON
MARKETING. All intellectual property previously owned by either
▇▇▇▇-Son, Gridiron Marketing and their respective Affiliates,
including, but not limited to, manufacturing formulas, patents,
licensing rights, franchise rights or any other intellectual
property right, shall not become the intellectual property of the
Company and shall remain the property of the individual parties.
H. TAX AND STRUCTURE
Authentic Products and Gridiron Marketing agree, in good
faith, to seek to resolve and minimize the tax consequences of
the structure and timing of the transactions contemplated herein.
I. PRESS RELEASES
Press Releases of Authentic Products, Gridiron Marketing and
their Affiliates concerning the Company shall be submitted to the
chief executive officer of the Company for approval.
Notwithstanding the foregoing, this section shall not apply to
any disclosure required or deemed necessary by either party
pursuant to any federal, state or local law, and/or the rules or
regulations promulgated thereunder, to which either party is
subject.
VI. BREACH AND CURE PERIODS
A. BREACH
Authentic Products and Gridiron Marketing agree that any one
or more of the following shall constitute a breach ("Breach")
under this Agreement:
1. if any Party commits any breach of any representation,
warranty or covenant of this Agreement or any Transaction
Document;
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2. if a Party shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to any present or
future federal bankruptcy act or code or under any similar
federal or state law, or shall be adjudicated a bankrupt or
insolvent or shall make an assignment for the benefit of its
creditors or shall admit in writing its inability to pay its
debts generally as they become due;
3. if a petition or answer proposing the adjudication of a
Party hereto as a bankrupt or its reorganization under any
present or future federal bankruptcy act or code or any similar
federal or state law shall be filed in any court and such
petition or answer shall not be discharged or denied within
ninety (90) days after the filing thereof;
4. if a receiver, trustee or liquidator shall be appointed
in any proceeding brought against a Party and shall not be
discharged within ninety (90) days after such appointment, or if
a Party shall consent to or acquiesce in such appointment;
B. NOTICE OF BREACH
Upon a Breach, a nonbreaching Party shall have the right to
give a notice (a "Remedy Notice") to the breaching Party
requiring the remedy of the Breach, and the breaching Party shall
have a period of thirty (30) days to cure the Breach. If the
Breach cannot be cured within said thirty (30) day period by the
exercise of reasonable diligence, the period to cure the Breach
shall continue as long as the Party takes all steps that are
practical under the circumstances to begin the cure and
diligently prosecutes the cure to completion.
C. RIGHTS AND REMEDIES UPON BREACH
If a Breach is not cured pursuant to Section VI.B. above,
then an Event of Breach shall occur. Upon the occurrence of an
Event of Breach, the nonbreaching Party shall be entitled to:
1. terminate the Agreement pursuant to Section VII of this
Agreement; or
2. cure the Breach. If the nonbreaching Party cures the
Breach, the breaching Party shall reimburse the nonbreaching
Party for its expenses in curing such Breach. The nonbreaching
Party shall be entitled to interest at ten percent (10%) on its
expenses in curing the Breach. Interest shall be payable from
the dates on which the nonbreaching Party shall have incurred the
applicable expenses to the date of reimbursement.
VII. TERMINATION OF THIS AGREEMENT
This Agreement shall terminate upon the occurrence of any
one of the following:
1. upon an uncured breach pursuant to Section VI of this
Agreement.
2. upon the written notice from a court of appropriate
jurisdiction, gaming authority, governmental authority,
administrative agency, the National Football League, or any other
major licensing body, wherein this Agreement jeopardizes the
licenses or franchises of either Authentic Products, Gridiron
Marketing or their respective Affiliates, provided that Authentic
Products,
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Gridiron Marketing and their respective Affiliates have used
their good faith efforts to cure the subject matter of such
written notice within the applicable time period;
3. upon the dissolution of the Company; or
4. upon expiration of the Term.
VIII. REMEDIES UPON TERMINATION
Upon a termination of this Agreement pursuant to Section VII
of this Agreement, the nonbreaching Party shall be entitled to
exercise all remedies available to such party, whether at law or
in equity, and shall be entitled to dissolve the Company (in
accordance with the respective terms and provisions of the
Operating Agreement).
IX. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in
accordance with its Commercial Arbitration Rules. A single
arbitrator chosen by the parties to the dispute shall render the
award and, should such parties be unable to choose an arbitrator,
each party shall appoint an arbitrator who in turn together shall
select a third arbitrator to render the award. Any award
rendered pursuant to this Section IX shall be binding upon the
parties and shall not be subject to appeal in any forum or court
of law. Judgment upon the award may be entered in any court
having jurisdiction thereof.
X. NOTICES
All notices required or permitted to be given hereunder
shall be in writing and shall be deemed given (i) when delivered
in person, (ii) when sent by facsimile transmission and followed
by regular mail, (iii) the next Business Day when delivered by a
regularly scheduled overnight express carrier, and (iv) upon the
expiration of five (5) Business Days when mailed by certified or
registered mail, return receipt requested, to the applicable
Party at the following addresses:
TO: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - Chief Executive Officer
Brand One Marketing, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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TO: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ - President of DeMur, Inc.
Gridiron Marketing, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
COPY TO: ▇▇▇▇▇▇ ▇▇▇, Esq.
▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
TO: ▇▇▇▇ ▇. ▇▇▇▇ - President and Director
Authentic Products, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
COPY TO: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
XI. ADDITIONAL PROVISIONS
A. MERGER AND MODIFICATION
Each Party agrees that this Agreement contains and/or
incorporates the entire Agreement of the Parties hereto with
respect to the subject matter hereof and none of the Parties
shall be bound by anything not expressed in this writing,
including without limitation the Letter of Intent. No alteration
or other modification of this Agreement shall be effective unless
such alteration or modification shall be in writing and signed by
the Parties hereto.
B. INCORPORATION BY REFERENCE OF RECITALS, EXHIBITS AND
SCHEDULES
Each Party agrees that the Recitals, Exhibits and Schedules
referenced or specified herein are incorporated herein by this
reference as if fully set forth.
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C. HEADINGS
Each Party agrees that the subject headings of the Sections
and Subsections of this Agreement are included only for purposes
of convenience of reference, and shall not affect the
construction or interpretation of any of the provisions hereof.
D. ATTORNEYS' FEES
In the event that any action is filed in relation to this
Agreement, the unsuccessful Party to such action shall pay to the
successful Party, in addition to all other sums that either Party
may be called upon to pay, the successful Party's reasonable
attorneys' fees and costs incurred in connection with such
action.
E. NONWAIVER
Each Party agrees that this no provision of this Agreement
or the right to receive reasonable performance of any act called
for by the terms hereof shall be deemed waived by a waiver of the
breach thereof as to any particular transaction or occurrence.
Any purported waiver shall not be valid unless it is in writing
and signed by the Party to be charged thereby, and then, only to
the extent set forth in such writing.
F. BINDING EFFECT
Each Party agrees that this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors, predecessors, parents, affiliates,
subsidiaries, divisions, officers, directors, shareholders,
employees, advisors, consultants, insurers, attorneys, heirs,
executors, administrators and any persons claiming rights by,
through or under them.
G. NEUTRAL INTERPRETATION
Each Party agrees that the provisions contained herein shall
not be construed in favor of or against any party because that
party or its counsel drafted this Agreement, but shall be
construed as if all parties prepared this Agreement, and any
rules of construction to the contrary are hereby specifically
waived. The terms of this Agreement were negotiated at arm's
length by the parties hereto and their respective designated
attorneys.
H. TIME OF THE ESSENCE
Each Party agrees that time will be of the essence with
respect to all time periods set forth in the Transaction
Documents and any other document or agreement executed by the
Parties hereto (or any of them) in connection with the
development, manufacturing and marketing of Commemorative
Products.
I. FORUM SELECTION AND CHOICE OF LAW
Each Party agrees that this Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Nevada. Any action or proceeding commenced as a result of this
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Agreement shall be filed in a court in the State of Nevada which
court shall have the sole and exclusive jurisdiction over any
matter brought under, or by reason of, this Agreement.
J. GOOD FAITH EFFORTS
Should any Party to the Transaction Documents be unable to
deliver to the other Party hereto and thereto the documents or
information required by such Party to be so delivered pursuant to
the terms and provisions of the Transaction Documents, the Party
shall make every reasonable effort to expeditiously, in good
faith, achieve a fair, mutually-satisfactory practical solution
in light of the facts and circumstances of a Party's inability to
deliver the required documentation or information in order for
the timely development of Commemorative Products prior to
terminating the Transaction Documents.
K. PARTIAL INVALIDITY
Each Party agrees that if any term, condition, covenant, or
provision of this Agreement, or any application thereof, shall be
held by a court of competent jurisdiction to be invalid, void or
unenforceable, all provision, covenants, and conditions of this
Agreement and applications thereof not held invalid, void or
unenforceable shall continue in full force and effect, unless the
essence of the Agreement is thereby destroyed, and shall in no
way be affected, impaired or invalidated thereby, unless the
essence of the Agreement is thereby destroyed.
L. CONSTRUCTION
Each Party agrees that all provisions of this Agreement
shall be deemed and construed to be conditions as well as
covenants as though in words specifically expressing or importing
covenants and conditions for use in each separate provision
hereof. The language in all parts of this Agreement shall be in
all cases construed simply according to its fair meaning, and not
strictly for or against any Party. This Agreement shall be
construed without regard to any presumption or other rule
requiring construction against the Party causing the same to be
drafted.
M. COUNTERPARTS
Each Party agrees that this Agreement may be executed in two
or more counterparts and shall be deemed to have become effective
when and only when all Parties hereto have executed this
Agreement, although it shall not be necessary that any single
counterpart be signed by or on behalf of each of the Parties
hereto, and all such counterparts shall be deemed to constitute
but one and the same instrument.
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IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the Effective Date.
AUTHENTIC PRODUCTS, INC.,
a Nevada corporation
/s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
By: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Its: Chief Executive Officer and Chairman
of the Board
Gridiron Marketing, LLC,
a California limited liability company
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President of DeMur, Inc., an Ohio
corporation
IN WITNESS WHEREOF, for good and valuable consideration, the
undersigned execute this Agreement only for the purposes of
acknowledging and accepting the provisions of Section II.B. and
Section V.C. of this Agreement.
▇▇▇▇▇▇▇▇▇ ENTERTAINMENT, LIMITED LIABILITY COMPANY,
an Ohio limited liability company
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President of DeMur, Inc., an Ohio
corporation
▇▇▇▇-SON GAMING CORPORATION,
a Nevada corporation
/s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
By: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Its: Chief Executive Officer and
Chairman of the Board
-16-
EXHIBIT A
LETTER OF INTENT
-17-
[▇▇▇▇-SON GAMING SUPPLIES, INC. LETTERHEAD]
March 18, 1997
▇▇ ▇. ▇▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇▇▇ Entertainment
▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Ed:
This letter will set forth the basic terms of our agreement for
the marketing of "Trading Discs" and commemorative playing cards
pursuant to our meeting on Wednesday afternoon, January 29, 1997:
1. ▇▇▇▇-Son Gaming Supplies, Inc. (herein after referred to
as "▇▇▇▇-Son") or it's nominee and ▇▇▇▇▇▇▇▇▇ Entertainment
LL.C. (herein after referred to as "▇▇▇▇▇▇▇▇▇") or it's
nominee shall join in a business venture in a newly formed
company (herein after for purposes of this agreement
referred to as "The Trading Disc Company"). Both parties
will use their good faith efforts to create a market for,
and pursue all marketing opportunities for "Trading discs"
and commemorative playing cards outside the gaming industry.
Based on our meeting on January 29, it has been
preliminarily decided that the form of such entity shall be
a Limited Liability Company, however ▇▇▇▇-Son and ▇▇▇▇▇▇▇▇▇
agree that they shall work together to determine to use
whatever form of entity as shall be most advantageous to
both. In addition to the formation of the entity, the
parties agree that they shall enter into an operating
agreement (herein after referred to as "The Agreement")
which shall fully document the final agreement between the
parties.
2. ▇▇▇▇-Son and ▇▇▇▇▇▇▇▇▇ shall each share as equal 50%
partners in The Trading Disc Company with a 50%-50%
ownership of the assets and profits and a 50%-50% sharing of
liabilities and losses.
3. The name of the new entity shall be as determined by
agreement of both parties.
4. ▇▇▇▇-Son and ▇▇▇▇▇▇▇▇▇ shall each make an initial capital
contribution of $100,000 each to capitalize The Trading Disc
Company. Additional capital contributions, if needed, shall
be provided equally by both companies in the amount(s) and
times needed as determined by The Trading Disc Company's
Board of Directors. Should either party be unwilling or
unable to provide it's share of any additional capital
required, the parties shall
resolve such situation as agreed upon in "The Agreement".
5. The Trading Disc Company shall be governed by a Board of
Directors which ▇▇▇▇-Son would recommend be comprised of
eight (8) members, four of which shall be appointed by
▇▇▇▇▇▇▇▇▇ and four (4) of which shall be appointed by ▇▇▇▇-
Son. This would allow for sufficient expertise from both
companies to be represented on the Board. Any deadlock in
voting by the Board shall be resolved by tie-breaking
provisions to be agreed upon in "The Agreement". The Trading
Disc Company's Board of Directors shall appoint such
officers and employ such individuals as needed to accomplish
the objectives of the venture. It is anticipated that the
initial Company will employ a CEO and two or three
employees.
6. The term of the venture shall be as determined by mutual
agreement of ▇▇▇▇-Son and ▇▇▇▇▇▇▇▇▇ as well as the
provisions for termination of the venture. Conditions and
terms under which the venture shall be terminated shall be
as reflected in "The Agreement". Upon termination of the
venture The Trading Disc Company shall be liquidated, with
both parties receiving an equal 50% share of the liquidation
proceeds after payment of all outstanding liabilities. It is
recommended that any intellectual property or other assets
owned by the venture that are not converted to cash upon
termination, shall be subject to the "first right of
refusal" or other dispute resolution provisions of the buy-
sell agreement contained in "The Agreement" related to the
interests of the parties in the venture, or shall remain as
owned S0%-50% by both parties, with any later proceeds,
whether from sale, rental, licensing, or other source, to be
divided equally between the parties.
It is recommended that the termination provisions to be
agreed upon include a provision that the venture be
terminated immediately upon written notice from any gaming
or governmental authority of competent jurisdiction, the NFL
or other major licensing body, wherein this agreement
jeopardizes the licenses or franchises of either ▇▇▇▇-Son or
▇▇▇▇▇▇▇▇▇. Should any such notice be received by either
party, and provide for a cure of the stated item,
information or situation which jeopardizes the licenses or
franchises of either ▇▇▇▇-Son or ▇▇▇▇▇▇▇▇▇ within a set
period of time, the venture shall not be terminated until
both parties have exhausted their good faith efforts to cure
such item, information or situation within the time allowed.
7. Throughout the term of the venture, ▇▇▇▇-Son or it's
nominee shall be the exclusive manufacturer and supplier of
all products marketed by The Trading Disc Company. It is
recommended that any products marketed by the Company which
cannot be supplied by ▇▇▇▇-Son be purchased from mutually
agreed upon vendors. ▇▇▇▇-son shall charge to The Trading
Disc Company, for any products supplied by ▇▇▇▇-Son, it's
cost, as determined by generally accepted accounting
principles under the full absorption method consistent with
the methods normally employed by ▇▇▇▇-Son for financial
reporting purposes (which is defined as all direct costs of
production plus an allocation of fixed production overhead
and indirect costs), plus 15% for handling and overhead. All
artwork, preparation and
freight charges shall be borne by The Trading Disc Company.
8. ▇▇▇▇-Son shall grant to The Trading Disc Company the
exclusive right to market it's non-gaming chip-like products
during the term of this agreement to all markets outside the
gaming industry. ▇▇▇▇-Son shall also grant to The Trading
Disc Company the exclusive right to market non-gaming
commemorative playing cards to the sports, entertainment,
and travel industries and certain retail markets. Non-gaming
commemorative playing cards shall be defined as any playing
cards marketed with images or graphics depicting sports
franchises, famous persons, places or events to customers
who have no gaming operations. All of the following shall
not be deemed non-gaming commemorative playing cards and
shall remain the sole business opportunities of ▇▇▇▇-Son:
- Generic non-gaming playing cards.
- ▇▇▇▇-Son logo playing cards (i.e. "▇▇▇▇-Son
Brand" cards similar to those sold by ▇▇▇▇-Son's
competitors "Bee", "Bicycle", "▇▇▇▇▇" and
others, which are sold through mass market
retail outlets).
- Cards sold to retail customers by ▇▇▇▇-Son
through it's own retail outlets which are not
related to the sports, entertainment or travel
industries.
Notwithstanding the foregoing, the parties agree that should
the Trading Disc Company learn of, or develop any
opportunity for the sale of non-gaming commemorative cards
to customers within the gaming industry, the parties will
decide in good faith as to whether those particular sales
should be sold through the Trading Disc Company or directly
by ▇▇▇▇-Son.
In addition, should either party be approached, or learn of
any sales opportunity for marketing of the Company's
products outside the gaming industry, it shall first refer
that opportunity to The Trading Disc Company. Should the
joint management of The Trading Disc Company determine that
it is not in the best interests of the venture to pursue
such opportunity, then either party shall have the right to
pursue such opportunity on it's own.
9. Any entity formed or incorporated under this agreement
shall be formed or incorporated under the laws of the State
where it would be most advantageous to the venture and the
parties. Location of the Company's office(s) shall be as
determined by the parties by joint agreement.
10. It is recommended that the books and records of the
Trading Disc Company be maintained at the direction of ▇▇▇▇-
Son, with both parties having complete access to inspect,
photocopy or use such books and records as necessary at any
time.
11. It is recommended that all intellectual property
developed pursuant to this agreement
by the venture such as trademarks, trade names, copyrights
or licensing rights be the property of The Trading Disc
Company. All intellectual property previously owned by ▇▇▇▇-
Son or ▇▇▇▇▇▇▇▇▇ prior to the date of this agreement
including manufacturing formulas, patents, licensing rights,
franchise rights or any other property rights shall remain
the property of the individual parties.
12. It is recommended that the parties enter into a buy-sell
agreement regarding their interests in the venture upon
terms and conditions to be agreed upon later in "The
Agreement" including provisions for "first rights of
refusal" and resolution of disputes between the parties.
13. Both parties agree that they will cooperate fully with
terms, provisions, audits or investigations of any gaming
licensing or other governmental authorities, the NFL or
other licensing or franchising body affecting or regulating
the business(es) of The Trading Disc Company, ▇▇▇▇-Son and
it's affiliates, or ▇▇▇▇▇▇▇▇▇ or it's affiliates.
14. Both parties agree that the terms of this agreement and
all information obtained in connection with the formation
and operation of The Trading Disc Company shall be deemed
confidential, and that neither party shall disclose any
information regarding the Trading Disc Company, ▇▇▇▇▇▇▇▇▇
and/or it's affiliates and ▇▇▇▇-Son and/or it's affiliates
except to employees and others on a "need to know" basis
without the prior written consent of the other party, and
may require that confidentiality agreements be executed with
those employees and others restricting their disclosure of
any information obtained. Specifically, the parties agree
that any press releases regarding The Trading Disc Company
shall be approved by the other party prior to issuance.
Further provisions of this confidentiality clause shall be
as documented in "The Agreement". Notwithstanding the
foregoing, this provision shell not apply to any disclosure
required or deemed necessary by either party pursuant to any
federal, state or local law, and/or the rules or regulations
promulgated thereunder, to which either party is subject.
15. This letter of agreement shall be binding upon both
parties, and both parties shall use their good faith efforts
to execute any and all documents necessary to effectuate the
terms of this agreement including the operating agreement
and the entity formation documents within 30 days from the
execution of this letter of agreement. Both parties agree to
negotiate in good faith any and all other issues or
provisions not addressed herein Should the parties fail to
execute all required documents within 30 days, this
agreement shall not terminate, but shall continue in full
force and effect with both parties working diligently to
complete and execute any remaining documentation unless
notified in writing by the other party of it's intent to
terminate this agreement.
If these terms are acceptable to you and set forth the basic
terms of our agreement as discussed on January 29. 1997 and in
subsequent telephone conversations, please sign at the bottom of
this letter in the space provided below.
Yours sincerely,
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ C.P.A.
▇▇▇▇ ▇▇▇▇▇▇▇, C.P.A
Chief Financial Officer
Accepted and agreed to this 21st day of March, 1997.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇ By /s/ ▇▇ ▇▇▇▇▇▇▇▇
Its CEO Its President
▇▇▇▇-son Gaming Supplies, Inc. ▇▇▇▇▇▇▇▇▇ Entertainment, Inc.
EXHIBIT B
BRAND ONE MARKETING ARTICLES
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ARTICLES OF ORGANIZATION
OF
BRAND ONE MARKETING, LLC
A NEVADA LIMITED LIABILITY COMPANY
I, the undersigned, pursuant to the Nevada Revised Statutes
governing limited liability companies, hereby adopt the following
Articles of Organization for a limited liability company:
ARTICLE I
NAME
The name of the limited liability company is:
Brand One Marketing, LLC.
ARTICLE II
DURATION
The latest date upon which Brand One Marketing, LLC (the
"Company") will dissolve shall be December 31, 2047.
ARTICLE III
RESIDENT AGENT
The name and business address of the resident agent of this
Company is:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
ARTICLE IV
CONTINUATION
Upon the death, retirement, resignation, expulsion,
bankruptcy or dissolution of a member or the occurrence of any
other event which terminates the continued membership of a
member in this Company, not less than a majority in interest of
the remaining members may agree to continue the business of this
Company as provided in the Operating Agreement.
ARTICLE V
MANAGEMENT
This Company shall be managed by a manager or managers. The
following managers shall serve until the first annual meeting of
members or until their successors are elected and qualified:
NAME ADDRESS
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
ARTICLE VI
ORGANIZER
The name and business address of the organizer of this
Company is ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE VII
INDEMNITY
SECTION 7.01 RIGHT TO INDEMNITY. Every person who was or
is a party, or is threatened to be made party to or is involved
in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or
a person of whom he is the legal representative is or was a
manager or member of this Company, or is or was serving at the
request of this Company as a manager of another limited liability
company, or as a director,
-2-
officer or representative in a corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified and held
harmless to the fullest extent legally permissible under the laws
of the State of Nevada from time to time against all expenses,
liability and loss (including attorneys' fees, judgments, fines
and amounts paid or to be paid in settlement) reasonably incurred
or suffered by him in connection therewith. Such right of
indemnification shall be a contract right which may be enforced
in any manner desired by such person. Such right of
indemnification shall not be exclusive of any other right which
such managers, members or representatives may have or hereafter
acquire, and, without limiting the generality of such statement,
they shall be entitled to their respective rights of
indemnification under any operating agreement or other agreement,
vote of members, provision of law, or otherwise, as well as their
rights under this Article.
SECTION 7.02 EXPENSES ADVANCED. Expenses of managers and
members incurred in defending a civil or criminal action, suit or
proceeding by reason of any act or omission of such managers or
members acting as a manager or member shall be paid by the
Company as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of
any undertaking by or on behalf of the manager or member to repay
the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
Company.
SECTION 7.03 OPERATING AGREEMENT; INSURANCE. Without
limiting the application of the foregoing, the members may adopt
a provision in the Operating Agreement from time to time with
respect to indemnification, to provide at all times the fullest
indemnification permitted by the laws of the State of Nevada, and
may cause this Company to purchase and maintain insurance or make
other financial arrangements on behalf of any person who is or
was a manager or member of this Company as a member or manager of
another limited liability company, or as its representative in a
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and
incurred in any such capacity or arising out of such status, to
the fullest extent permitted by the laws of the State of Nevada,
whether or not this Company would have the power to indemnify
such person.
The indemnification and advancement of expenses provided in
this Article shall continue for a person who has ceased to be a
member, manager, employee or agent, and inures to the benefit of
the heirs, executors and administrators of such a person.
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ARTICLE VIII
RETURN OF CONTRIBUTIONS
A member may only demand cash in return for his or its
contribution to capital, but the Company may require a member to
accept cash, property, promissory notes or any combination
thereof in return for the member's contribution to capital.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st
day of July 1997.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Organizer
STATE OF NEVADA
ss.
COUNTY OF ▇▇▇▇▇
This instrument was acknowledged before me on the 31st day
of July 1997 by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
NOTARY PUBLIC in and for said
County and State
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CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF BRAND ONE MARKETING, LLC:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ does hereby certify that on
the 31st day of July 1997, it accepted the appointment as
Resident Agent of the above-entitled limited-liability company in
accordance with Section 86.231 of the Nevada Revised Statutes.
Furthermore, that the registered office in the State of
Nevada is located at 3800 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Parkway, Seventh Floor,
Las Vegas, Nevada 89109
IN WITNESS WHEREOF, I have hereunto set my hand this 31st
day of July, 1997.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Attorney
EXHIBIT C
OPERATING AGREEMENT
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OPERATING AGREEMENT
OF
BRAND ONE MARKETING, LLC
A NEVADA LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
BRAND ONE MARKETING, LLC
A NEVADA LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
PAGE
ARTICLE I. OFFICES..............................................1
SECTION A. PRINCIPAL OFFICE................................1
ARTICLE II. PURPOSE.............................................1
SECTION A. PURPOSE.........................................1
ARTICLE III. CAPITAL............................................1
SECTION A. INITIAL CAPITAL.................................1
SECTION B. CAPITAL ACCOUNTS................................1
SECTION C. FEDERAL INCOME TAX ELECTIONS....................3
SECTION D. MEMBER INTEREST OR MEMBERSHIP INTEREST..........3
SECTION E. INTEREST........................................3
SECTION F. REQUIRED ADDITIONAL CAPITAL CONTRIBUTIONS.......3
ARTICLE IV. MEMBERS.............................................4
SECTION ▇. ▇▇▇▇▇▇..........................................4
SECTION B. SALARIES TO MEMBERS.............................4
SECTION C. PURCHASES FROM MEMBERS..........................4
SECTION D. OTHER VENTURES - LICENSING......................5
SECTION E. GENERAL RESTRICTIONS............................5
SECTION F. ACTION BY THE MEMBERS; MEETINGS; QUORUM;
MAJORITY........................................6
SECTION G. ACTION BY WRITTEN CONSENT.......................6
SECTION H. PLACE OF MEETINGS OF MEMBERS....................6
SECTION I. ANNUAL MEETINGS.................................6
SECTION J. ANNUAL MEETINGS: NOTICE.........................6
SECTION K. SPECIAL MEETINGS................................7
SECTION L. WAIVER OF NOTICE................................7
SECTION M. ADJOURNED MEETINGS AND NOTICE THEREOF...........7
i
SECTION N. DELEGATION OF AUTHORITY TO MEMBERS AND MANAGERS.7
SECTION O. ADMISSION OF NEW MEMBERS........................7
SECTION P. MEMBER LOANS....................................8
SECTION Q. MAJOR DECISIONS; DEADLOCK; EVENT OF DEADLOCK....8
SECTION R. BUY-SELL PROVISION; NOTICE......................8
ARTICLE V. TRANSFER OF MEMBERS' INTERESTS.......................9
SECTION A. TRANSFER OF MEMBERS' INTERESTS..................9
SECTION B. NO TRANSFER PERMITTED UNDER CERTAIN
CIRCUMSTANCES..................................10
SECTION C. RIGHT OF FIRST REFUSAL.........................10
SECTION D. AUTHORITY OF THE COMPANY TO PURCHASE INTEREST..14
SECTION E. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS..14
SECTION F. TRANSFEREE'S MEMBER INTEREST...................14
SECTION G. SURVIVAL OF THE COMPANY........................14
ARTICLE VI. BOARD OF MANAGERS..................................15
SECTION A. ELECTION, REMOVAL, RESIGNATION AND VACANCIES...15
SECTION B. ACTIONS BY THE BOARD OF MANAGERS; MEETINGS;
QUORUM; WRITTEN CONSENT........................15
SECTION C. MANAGERS' POWERS...............................16
SECTION D. BANK ACCOUNTS..................................16
SECTION E. OFFICERS.......................................16
ARTICLE VII. PROFITS AND LOSSES................................18
SECTION A. NET PROFITS AND LOSSES.........................18
SECTION B. ALLOCATIONS OF DEDUCTIONS......................18
SECTION C. SPECIAL ALLOCATIONS............................18
SECTION D. CURATIVE ALLOCATIONS...........................19
SECTION E. FEDERAL INCOME TAX.............................20
ARTICLE VIII. DISTRIBUTIONS....................................20
SECTION A. OPERATING DISTRIBUTIONS........................20
SECTION B. PAYMENT OF MEMBER LOANS........................20
SECTION C. DISTRIBUTION ON DISSOLUTION AND LIQUIDATION....20
ARTICLE IX. ACCOUNTING AND RECORDS.............................21
SECTION A. RECORDS AND ACCOUNTING.........................21
SECTION B. ACCESS TO ACCOUNTING RECORDS...................21
SECTION C. ANNUAL TAX INFORMATION.........................21
ii
ARTICLE X. TERM................................................21
SECTION A. TERM...........................................21
ARTICLE XI. DISSOLUTION OF THE COMPANY AND TERMINATION OF A
MEMBER'S INTEREST..................................21
SECTION A. DISSOLUTION....................................21
SECTION B. DEATH OF A MEMBER; CONTINUATION................21
SECTION C. OPTION TO PURCHASE DECEASED MEMBER'S INTEREST..22
SECTION D. BANKRUPTCY, INSOLVENCY OR DISSOLUTION..........22
ARTICLE XII. TRUST MEMBERS.....................................23
SECTION A. TRUSTEE LIABILITY..............................23
SECTION B. STATUS OF SUCCESSOR TRUSTEES AS MEMBERS........23
ARTICLE XIII. INDEMNIFICATION..................................24
SECTION A. INDEMNITY......................................24
SECTION B. INDEMNITY FOR ACTIONS BY OR IN THE RIGHT OF
THE COMPANY....................................24
SECTION C. INDEMNITY IF SUCCESSFUL........................24
SECTION D. EXPENSES.......................................25
SECTION E. ADVANCE PAYMENT OF EXPENSES....................25
SECTION F. OTHER ARRANGEMENTS NOT EXCLUDED................25
ARTICLE XIV. MISCELLANEOUS PROVISIONS..........................26
SECTION A. COMPLETE AGREEMENT.............................26
SECTION B. AMENDMENTS.....................................26
SECTION C. APPLICABLE LAW.................................26
SECTION D. HEADINGS.......................................26
SECTION E. SEVERABILITY...................................26
SECTION F. EXPENSES.......................................27
SECTION G. HEIRS, SUCCESSORS AND ASSIGNS..................27
SECTION H. EXECUTION......................................27
SCHEDULE A....................................................28
iii
OPERATING AGREEMENT
OF
BRAND ONE MARKETING, LLC
A NEVADA LIMITED LIABILITY COMPANY
This Operating Agreement is made and entered into as of the
4th of August 1997, by and between the undersigned Members of
BRAND ONE MARKETING, LLC.
ARTICLE I. OFFICES
Section A. PRINCIPAL OFFICE
The principal office of BRAND ONE MARKETING, LLC (the
"Company") in the State of Nevada shall be ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇. The Members may change said
principal office at any time from one location to another in the
State of Nevada or elsewhere.
ARTICLE II. PURPOSE
Section A. PURPOSE
The purpose of the Company shall be as set forth in the
Master Agreement dated as of July 30, 1997, by and between the
Members hereof (the "Master Agreement"). Any business beyond the
business described therein shall require the unanimous written
consent of the Members.
ARTICLE III. CAPITAL
Section A. INITIAL CAPITAL
The initial capital of the Company shall be the sums of cash
or the agreed fair market value of the property or services (or
combination of cash, property and services) contributed to the
Company by the Members in such amounts or value as are set out
opposite the name of each of the Members on Schedule A attached
hereto and incorporated herein by this reference which shall be
amended from time to time by the Board of Managers (as
hereinafter defined) to reflect a current list of the names and
addresses of each current member. In the event that property is
contributed by a member as a capital contribution, such property
shall be free and clear of all liens and other interests except
as may otherwise be agreed in writing by all members.
Section B. CAPITAL ACCOUNTS
Capital Accounts shall be established on the Company's books
representing the Members' respective capital contributions to the
Company. The term "Capital Account" shall mean the capital
account maintained for such Member in accordance with the
following provisions:
1. Each Member's Capital Account shall be increased by:
(a) The amount of the Member's cash or in-kind capital
contributions to the Company pursuant to Section A of this
Article III;
(b) The fair market value of any property contributed
by the Member to the Company (net of liabilities secured by
any such contributed property that the Company is considered
to assume or take subject to for purposes of Section 752 of
the Internal Revenue Code of 1986, as amended from time to
time [the "Code"]);
(c) The amount of Net Profits (or items thereof)
allocated to the Member pursuant to Article VII; and
(d) Any other increases required by Regulations
pursuant to the Code, promulgated by the U.S. Treasury
("Regulations"). If Section 704(c) of the Code applies to
property contributed by a Member to the Company, then the
Members' Capital Accounts shall be adjusted in accordance
with Regulations Section 1.704-1(b)(2)(iv)(g).
2. Each Member's Capital Account shall be decreased by:
(a) The amount of Net Losses allocated to the Member
pursuant to Article VII;
(b) All amounts paid or distributed to the Member
pursuant to Article VIII, other than amounts required to be
treated as a payment for property or services under the
Code;
(c) The fair market value of any property distributed
in kind to the Member (net of any liabilities secured by
such distributed property that such Member is considered to
assume or take subject to for purposes of Section 752 of the
Code); and
(d) Any other decreases required by the Regulations.
Before decreasing a Member's Capital Account (as
described above) with respect to the distribution of any property
to such Member, all Members' accounts shall be adjusted to
reflect the manner in which the unrealized income, gain, loss,
and deduction inherent in such property (that has not been
previously reflected in the Members' Capital Accounts) would be
allocated among the Members if there were a taxable disposition
of such property by the Company on the date of distribution,
in accordance with Regulations Section 1.704-1(b)(2)(iv)(e).
3. In determining the amount of any liability for purposes
of Sections B.1. and B.2. of this Article III, there shall be
taken into account Code Section 752(c) and any other applicable
provisions of the Code and any Regulations promulgated
thereunder.
4. Members' Capital Accounts shall be adjusted in
accordance with, and upon the occurrence of an event described in
Regulations Section 1.704-1(b)(2)(iv)(f), including the addition
of new Members pursuant to Section O of Article IV, or the
receipt of additional capital contributions pursuant to Section F
hereof, to reflect a revaluation of the Company's assets on the
Company's books. Such adjustments to the Members' Capital
Accounts shall be made in
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accordance with Regulations Section 1.704-1(b)(2)(iv)(g) for
allocations of depreciation, depletion, amortization and gain or
loss with respect to such revalued property.
5. All provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. The Members
shall make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not
to comply with Regulations Section 1.704-1(b).
Section C. FEDERAL INCOME TAX ELECTIONS
The Company may make all elections for federal income tax
purposes, including but not limited to an election, pursuant to
Code Section 754, to adjust the basis of the Company's assets
under Code Sections 734 or 743. In the event an election
pursuant to Code Section 754 is made by the Company, upon the
adjustment to the basis of the Company's assets, the Members'
Capital Accounts shall be adjusted in accordance with the
requirements of Regulation Section 1.704-1(b)(2)(iv)(m).
Section D. MEMBER INTEREST OR MEMBERSHIP INTEREST
The "Member Interest" or "Membership Interest" of a Member
shall be the percentage ownership of the Company by said Member
as shown on Schedule A, attached hereto, as such schedule may be
modified from time-to-time. In the event of a revaluation of the
Company's assets pursuant to Section B.4 of this Article III and
an adjustment to each Member's Capital Account, the Membership
Interest of each Member shall, for purposes of this Agreement, be
adjusted to maintain the relative percentage of each Member's
respective Capital Account balance, as a percentage of the total
of all Capital Accounts, prior to such revaluation.
Section E. INTEREST
No interest shall be paid or credited to the Members on
their Capital Accounts or upon any undistributed profits left on
deposit with the Company.
Section F. REQUIRED ADDITIONAL CAPITAL CONTRIBUTIONS
At such time as the Board of Managers unanimously determines
that additional capital is required by the Company, such
additional capital contribution shall be made by the Members in
proportion to the Member Interests. If any Member should fail to
make any additional capital contribution on or before the date
such contribution is due, the other Member(s) may: (1) loan to
the Company the amount of the additional capital contribution
which was not made by the other Member(s), such Member Loan to
accrue interest at three percent (3%) above the then current
"prime rate" charged by Bank of America, Nevada; or (2) advance
to the Company the amount of the additional capital contribution
which was not made by the other Member(s) and to receive in
return for such additional capital contribution an increased
Member Interest in the amount that such additional capital
contribution bears to the total capital contributions of all
Members. In the event that any Member elects to make the
additional capital contribution under clause (2) above and
thereby obtain an additional interest in the Company, the Member
who failed to make the additional capital contribution shall have
sixty (60) calendar days to purchase the additional
-3-
Membership Interests received by the Member(s) who have made the
additional capital contribution for cash in an amount equal to
the amount of the additional capital contribution plus interest
thereon at three percent (3%) above the then current "prime rate"
charged by Bank of America, Nevada.
ARTICLE IV. MEMBERS
Section ▇. ▇▇▇▇▇▇
Subject to the provisions of this Operating Agreement, the
Articles of Organization of the Company (the "Articles of
Organization"), the Master Agreement and the provisions of the
Nevada Revised Statutes (the "NRS"), all powers shall be
exercised by or under the authority of, and the business and
affairs of the Company shall be controlled by, the Board of
Managers. Without prejudice to such general powers, but subject
to the same limitations, it is hereby expressly declared that the
Members shall have the following powers:
1. To select and remove all Managers of the Company,
subject to the restrictions in Section A of Article VI, to
prescribe such powers and duties for them as may be consistent
with this Operating Agreement, the Articles of Organization, the
Master Agreement, and the NRS, to fix their compensation, and to
require from them security for faithful service.
2. To change the principal office of this Company from one
location to another within or without the State of Nevada; to fix
and locate from time to time one or more subsidiary offices of
the Company; and to designate any place within or without the
State of Nevada for the holding of any Members' meeting or
meetings.
Section B. SALARIES TO MEMBERS
The Board of Managers shall have authority to pay to any
Member a reasonable salary for said Member's services to the
Company. It is understood that the salary paid to any Member
under the provisions of this Section shall be determined without
regard to the income of the Company and shall be considered as an
operating expense of the Company and shall be deducted as an
expense item in determining the net profits and losses of the
Company.
Section C. PURCHASES FROM MEMBERS
The Members agree that all purchases from or fees paid to
Members for services rendered to the Company shall be at "arm's
length" on terms no less favorable to the Company than would be
available from other commercially available services, except that
▇▇▇▇-Son Gaming Supplies, Inc., a Nevada corporation ("▇▇▇▇-Son
Gaming"), or its affiliates, shall be the exclusive supplier and
manufacturer of all products developed, manufactured and marketed
by the Company. The Company shall purchase all such raw
materials, components, parts and finished products supplied and
manufactured by ▇▇▇▇-Son Gaming or its affiliates pursuant to the
terms and conditions of the standard purchase agreement and
business practices ordinarily used by ▇▇▇▇-Son Gaming or its
affiliates in the manufacturing and shipping of its products.
With respect to the cost of all raw materials, components, parts
and finished products supplied and manufactured by ▇▇▇▇-Son
Gaming for the Company, ▇▇▇▇-Son Gaming shall charge its cost, as
determined by generally
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accepted accounting principles, under the full absorption method
consistent with the methods normally employed by ▇▇▇▇-Son Gaming
for financial reporting purposes (which is defined as all direct
costs of production plus an allocation of fixed production
overhead and indirect costs), plus fifteen percent (15%) for
handling and overhead. The cost of artwork and its preparation
for products produced by ▇▇▇▇-Son Gaming will be included in the
cost of the product, and the cost for all freight charges with
respect to shipping of the products will be billed to the Company
by ▇▇▇▇-Son Gaming. To the extent that ▇▇▇▇-Son Gaming cannot
supply the certain products to the Company, the Board of Managers
shall select the appropriate party from which to purchase such
products.
Section D. OTHER VENTURES - LICENSING
It is expressly agreed that the Members, or any of them, may
engage in other business ventures of every nature and
description, so long as such other business ventures are not in
competition with the Company or have been offered to and rejected
by the Board of Managers, independently or with others, and
neither the Company nor the Members shall have any rights in and
to any independent venture or activity or the income or profits
derived therefrom.
The Members also expressly agree and acknowledge that each
Member, in connection with other activities or business ventures,
is or may be subject to licensing by various governmental or
other entities which may be affected by the operation of this
Company or by any of its Members. Each Member hereby agrees to
furnish any information requested by any such governmental or
other entity and to otherwise cooperate to avoid any possible
loss of any such license.
Section E. GENERAL RESTRICTIONS
No Member or Manager, as described in Article VI hereof,
shall have the right, power or authority to do any of the
following acts without the prior written consent of all the
Members:
1. expend or use any Company money or property except upon
the account of and for the benefit of the Company;
2. borrow funds on behalf of the Company;
3. mortgage, lease, pledge, or otherwise dispose of all,
or substantially all, of the assets of the Company, other than in
the ordinary course of business;
4. pledge any of the Company's credit or property for
other than Company purposes;
5. compromise, settle, or release any debt due the Company
except upon full payment thereof or except in the ordinary course
of business;
6. assign the Company's property in trust for creditors or
on the assignee's promise to pay the debts of the Company;
7. confess a judgment against the Company, the Company's
property, or any of the Members;
-5-
8. dispose of any of the goodwill of the Company business;
9. submit a Company claim or liability to arbitration; or
10. do any other act which would make it impossible to
carry on the ordinary business of the Company.
Section F. ACTION BY THE MEMBERS; MEETINGS; QUORUM; MAJORITY
Management of the Company is vested in, and all actions of
the Members are taken by, the Members in proportion to their
Membership Interests (as defined in Section D of Article III) at
the time of the action taken. Except as specifically otherwise
provided herein, the Members shall vote to approve a matter or to
take any action by the vote of Members at a meeting, in person or
by proxy. For any meeting of Members, the presence in person or
by proxy of Members owning more than fifty percent (50%) of the
Member Interests at the time of the action taken (a "Majority")
constitutes a quorum for the transaction of business. Members
vote in proportion to their Member Interest and an action
approved at a meeting by Members owning more than fifty percent
(50%) of the total Membership Interest shall be the action of the
Members.
Section G. ACTION BY WRITTEN CONSENT
Except as otherwise provided herein, any action may be taken
by the Members without a meeting if authorized by the written
consent of Members holding at least a Majority of the total
Membership Interests. In no instance where action is authorized
by written consent shall a meeting of Members be called or
noticed. However, a copy of the action taken by written consent
must be immediately sent to all Members.
Section H. PLACE OF MEETINGS OF MEMBERS
The first meeting of the Members shall be held at the office
of the Resident Agent of the Company as set forth in the Articles
of Organization. All annual meetings and special meetings of the
Members shall be held at any place designated by the Members, or,
if no such place is designated, then at the principal office of
the Company.
Section I. ANNUAL MEETINGS
The annual meeting of the Members shall be held on the 1st
day of April of each year at the hour of 5:00 p.m. Pacific
Standard Time, beginning with the year 1998 or on such other date
and time as the Members shall specify in writing. Should said
day fall upon a Saturday, Sunday or legal holiday, then any such
annual meeting of Members shall be held at the same time and
place on the next day which is not a Saturday, Sunday or legal
holiday.
Section J. ANNUAL MEETINGS: NOTICE
Written notice of each annual meeting signed by a Manager or
by such other person or persons as the Members shall designate,
shall be given to each Member entitled to vote at the meeting,
either personally or by mail or other means of written
communication, charges prepaid, addressed to such Member at its
address appearing on the books of the Company or given by him to
the Company for the purpose of notice. If a Member gives no
address, notice shall be deemed
-6-
to have been given him if sent by mail or other means of written
communication addressed to the place where the principal office
of the Company is situated. All such notices shall be sent to
each Member entitled thereto not less than ten (10) nor more than
sixty (60) calendar days before each annual meeting, and shall
specify the place, the day and the hour of such meeting.
Section K. SPECIAL MEETINGS
Special meetings of the Members, for any purpose or purposes
whatsoever, may be called at any time by a Manager or by the
Members. Except in special cases where other express provision
is made by Chapter 86 of the NRS, notice of such special meetings
shall be given in the same manner as for annual meetings of
Members. Notices of any special meeting shall specify, in
addition to the place, day and hour of such meetings the purpose
or purposes for which the meeting is called.
Section L. WAIVER OF NOTICE
The transactions of any meeting of the Members, however
called and noticed or wherever held, shall be as valid as though
had at a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting,
each of the Members not present signs a written waiver of notice
or a consent to holding such meeting or an approval of the
minutes thereof. All such waivers, consents or approvals shall
be filed with the records or made a part of the minutes of the
meeting.
Section M. ADJOURNED MEETINGS AND NOTICE THEREOF
Any meeting of the Members, whether annual or special,
whether or not a quorum is present, may be adjourned from time-to-
time by the vote of a Majority, present in person or represented
by proxy, but in the absence of a quorum no other business may be
transacted at any such meeting. Other than by announcement at
the meeting at which such adjournment is taken, it shall not be
necessary to give any notice of an adjournment or of the business
to be transacted at an adjourned meeting. However, when any
meeting of the Members, either annual or special, is adjourned
for thirty (30) calendar days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting.
Section N. DELEGATION OF AUTHORITY TO MEMBERS AND MANAGERS
Any one or more of the Members or the Board of Managers may
at any time or times, and for such period as the Members shall
determine, be delegated the authority to determine questions
relating to specific areas of the conduct, operation, and
management of the Company. Until such direction or delegation of
authority is made, however, the Members and Managers shall have
the authority set forth in this Article IV, and in Article VI,
and that given them by the Members.
Section O. ADMISSION OF NEW MEMBERS
New Members may be admitted to membership in the Company
through the unanimous consent of the existing Members. A new
Member must agree to be bound by the terms and provisions of this
Operating Agreement, as amended, the Articles of Organization,
the Master Agreement and the NRS and upon admission the new
Member shall have all rights and duties of a Member of this
Company.
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Section P. MEMBER LOANS
The Members may from time to time approve of a loan by a
Member to the Company. Such loans ("Member Loans") shall be
repaid to the lending Member in accordance with the terms of this
Operating Agreement.
Section Q. MAJOR DECISIONS; DEADLOCK; EVENT OF DEADLOCK
1. For purposes of this Agreement, the term "Major
Decision" shall mean any action (or election not to act) by or on
behalf of the Company which may have, or which may be anticipated
to have, a material effect on the business and operation of the
Company, including, without limitation, matters materially
affecting the ownership, operation, development, construction,
financing, and sale of assets or real property owned by the
Company. Major Decisions shall include any Member Loans, any
loans in excess of One Hundred Thousand Dollars ($100,000.00) to
be obtained by or on behalf of the Company, whether secured or
unsecured, any expansions of the product line of the Company
beyond the product line currently agreed upon by the Parties, any
dispositions with respect to the intellectual property of the
Company, and any contracts (excluding contracts for sale of
merchandise or purchase agreements for merchandise to fulfill
contracts for sales entered into in the ordinary course of
business) having a value in excess of One Hundred Thousand
Dollars ($100,000.00).
2. All Major Decisions shall be subject to the prior
approval of a majority of the Managers then serving on the Board
of Managers. In the event the Board of Managers is evenly
divided with respect to a Major Decision and a majority of the
Board of Managers is unable to agree with respect to a proposed
course of action concerning such Major Decision, the Board of
Managers shall immediately call a special meeting of the Members
pursuant to Section K of this Article IV.
3. In the event the Members, pursuant to a Majority
thereof, are unable to agree as to the Major Decision at a
Special Meeting, a deadlock (the "Deadlock") shall be deemed to
exist.
4. During the fifteen (15) day period after a Deadlock is
deemed to exist, the Members shall negotiate in good faith at
such times and places as shall be deemed appropriate to resolve
the Deadlock. In the event the Members, pursuant to a Majority
thereof, are unable to agree as to the Major Decision after the
end of the fifteen (15) day period after a Deadlock, an event of
deadlock ("Event of Deadlock") shall be deemed to exist.
Section R. BUY-SELL PROVISION; NOTICE
1. OFFERING PERIOD. Upon the occurrence of an Event of
Deadlock and for a period of thirty (30) days thereafter (the
"Offering Period"), a Member (the "Offering Member") may, upon
written notice ("Offering Notice") to the remaining Member (the
"Non-Offering Member"): (a) propose a price per each one percent
(1%) of outstanding Membership Interests (the "Offering Price");
and (b) offer to purchase from the Non-Offering Member all of the
Non-Offering Member's Membership Interest, subject to the terms
of this Operating Agreement, at the Offering Price. Upon the
receipt of Offering Notice from the Offering Member, the Offering
Period shall terminate. The failure of any Member to provide
Offering Notice during the Offering Period shall result in an
event of dissolution under Article XI of this Agreement.
-8-
2. RESPONSE PERIOD. After receipt of Offering Notice, the
Non-Offering Member shall have a period of thirty (30) days (the
"Response Period") in which to unilaterally elect, by written
notice to the Offering Member ("Response Notice"), to either:
(a) purchase all of the Offering Member's Membership Interest,
subject to the terms of this Operating Agreement, at the Offering
Price; or (b) sell all of its Membership Interest to the Offering
Member, subject to the terms of this Operating Agreement, at the
Offering Price. The failure of the Non-Offering Member to
provide Response Notice to the Offering Member within the
Response Period shall constitute an acceptance of the terms of
the Offering Member's offer to purchase the Non-Offering Member's
Membership Interest made pursuant to Section R.1. of this Article
IV.
3. PAYMENT. The purchase price for the Membership
Interests sold or purchased (the "Purchase Price") under this
Section R shall be payable as follows: the purchasing Member
shall make an initial payment of twenty percent (20%) of the
Purchase Price in cash or certified same day funds and shall
deliver a promissory note for the balance of the Purchase Price
providing for terms payable in thirty-six (36) equal monthly
installments of principal and interest with interest at the prime
rate of interest charged by Bank of America Nevada plus three
percent (3%) per annum on the Closing Date (as hereinafter
defined) of the acquisition of purchase. Such promissory note
shall be secured by the Offered Interest purchased in exchange
therefor and shall be prepayable without penalty in whole or in
part at any time. The promissory note or notes shall be
unconditionally guaranteed as to payment and performance by the
controlling affiliate of the purchasing Member. Prior to the
payment in full of any such note or notes, no distributions or
other payments shall be made directly or indirectly by the
Company to the remaining Member or any person or entities
relating to the remaining Member (other than payments incurred in
the ordinary course of the Company's business) unless and to the
extent such distributions or other payments are applied toward
prepayment of such note or notes. In the sole discretion of the
purchasing Member, the purchasing member may elect to pay the
Purchase Price in full in cash or certified same day funds. For
the purposes of this Section R, the term "Closing Date" shall
mean the last day of a thirty (30) day period following the
earlier of either the receipt of Response Notice by the Offering
Member or the end of the Response Period.
4. NOTICE. All notices required or permitted to be given
under this Section R shall be in writing and shall be deemed
received: (a) when delivered in person on a Business Day; (b)
when sent by facsimile transmission on the next Business Day from
evidence of confirmation of transmission and followed promptly by
first class U.S. mail; (c) the next Business Day when delivered
by a regularly scheduled overnight express carrier; or (d) upon
the expiration of five (5) Business Days when mailed by certified
or registered mail, return receipt requested, to the Board of
Managers of the Company at the offices of the Company. For the
purposes of this section, a "Business Day" is shall mean any day
except Saturday, Sunday or legal holidays in the State of Nevada.
ARTICLE V. TRANSFER OF MEMBERS' INTERESTS
Section A. TRANSFER OF MEMBERS' INTERESTS
1. TRANSFERABILITY. The interest of each Member of this
Company is personal property. Except as otherwise provided in
this Operating Agreement, the transfer of a Member's
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interest is restricted. Except for the transfer of a Member's
interest to a parent company or wholly-owned subsidiary, the
transfer of a Member's interest shall include a gift, sale,
transfer, assignment, hypothecation, pledge, encumbrance or any
other disposition, whether voluntary or involuntary, by operation
of law or otherwise, including, without limitation, any transfer
occurring upon or by virtue of the bankruptcy or insolvency of a
Member; the appointment of a receiver, trustee or conservator or
guardian for a Member or its property; or pursuant to the Will of
a Member or the laws of descent and distribution in the event of
a Member's death; pursuant to court order in the event of
divorce, marital dissolution, legal separation or similar
proceedings; or pursuant to any loan or security agreement under
which any of the Member's interests are pledged or otherwise
serve as collateral, as well as the transfer of any such interest
in the event recourse is made to such collateral. In the case of
a Member which is a business entity, a transfer shall be deemed
to occur upon the direct or indirect transfer, conveyance or
other disposition of more than forty percent (40%) of the voting
rights or more than forty percent (40%) of the right to the
profits of the Member entity.
2. RECORDATION OF TRANSFER. A transfer of any Membership
Interest shall not be effective until it has been recorded in the
records of the Company.
3. LIMITATION ON PARTICIPATION. If the Members of the
Company who hold a Majority of the Membership Interests, other
than the Member proposing to dispose of its Membership Interest,
do not approve of a proposed transfer or assignment by unanimous
written consent, the transferee of the Member's Membership
Interest has no right to participate in the management of the
business and affairs of the Company or to become a Member. The
transferee is only entitled to receive the share of profits, or
losses, or other compensation by way of income and the return
of contributions, to which the transferring Member would
otherwise be entitled. If the transfer is approved by the other
non-transferring Members of the Company who hold a Majority of
the Membership Interests by written consent, the transferee has
all the rights and powers and is subject to all the restrictions
and liabilities of his assignor, has the right to participate in
the management of the business and affairs of the Company and
becomes a substituted Member.
Section B. NO TRANSFER PERMITTED UNDER CERTAIN CIRCUMSTANCES
Notwithstanding any other provision of this Agreement, a
member shall not transfer all or any part of its interest if such
transfer would cause the termination of the Company for federal
income tax purposes or would violate any applicable federal or
state securities laws.
Section C. RIGHT OF FIRST REFUSAL
Except as otherwise provided in this Operating Agreement or
the laws of the State of Nevada, no Member shall, during the term
of this Agreement, transfer (as defined in Section A above) all
or any portion of its Member Interest, or any interest therein,
whether now owned or hereafter acquired without first complying
with the requirements of this Operating Agreement, unless such
Member first gives the Company and, if appropriate hereunder, the
other Member(s) the opportunity to purchase or acquire all or a
portion of such Member's Interest proposed to be disposed of in
accordance with the following provisions:
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1. In the event that any Member shall receive a bona fide
written offer from any person dealing at arm's length for the
transfer of all or part of its Membership Interest (the "Proposed
Transfer") (the transferring Member shall have the obligation to
prove that an offer is bona fide) and that such Member desires to
accept such offer, or in the event that any Member shall
otherwise desire to transfer all or part of such Member's
interest, the Member shall, prior to accepting such offer, give
the Board of Managers written notice of the intention to make a
transfer. Such notice shall set forth the name of the proposed
transferee(s), the interest proposed to be disposed of (the
"Offered Interest"), the price, the terms of payment, all other
material terms of the proposed transaction and shall specify a
mailing address for purposes of any return notice hereunder. The
Company shall have the option for a period of fifteen (15)
calendar days from the actual receipt of such notice to agree to
purchase or acquire all or any portion of the Offered Interest,
on the same terms as those offered to the proposed transferee,
subject to Section C.3 of this Article V. The Company may
exercise this option to purchase only by giving written notice to
the transferring Member.
2. If the Company declines or fails to exercise its option
to purchase or acquire all or any portion of the Offered Interest
pursuant to Section C.1 of this Article V, or is legally unable
to do so, the disposing Member shall give written notice to the
other Members containing the same information as set forth in the
notice given pursuant to Section C.1 of this Article V, and
further setting forth the Offered Interest that the Company has
not agreed to purchase or acquire. The Members receiving the
notice shall in turn have fifteen (15) calendar days from the
actual receipt of such notice to agree to purchase or acquire all
or any portion of the Offered Interest that the Company has not
agreed to purchase or acquire, on the same terms and conditions
as those offered to the proposed transferee, subject to Section
C.3 of this Article V. The other Members may exercise this
option to purchase only by giving written notice to the disposing
Member. In the event that more than one person has an option to
purchase hereunder, such persons may exercise such option pro
rata in accordance with their respective holdings of Membership
Interests, and if any such person declines or fails to purchase
its pro rata portion of the Offered Interest, or any portion
thereof, the other persons having such option shall have the
right to purchase that portion pro rata in accordance with their
respective holdings of Membership Interests (or otherwise by
agreement).
3. The terms of the purchase shall be determined as
follows:
(a) In the event that a proposed transferee of any
Offered Interest has offered to acquire such Offered Interest
for a consideration consisting in whole or in part of assets
other than cash, cash equivalents or unsecured (other than by
the Offered Interest) promissory notes, then any persons
having options to purchase or acquire such Offered Interest
pursuant to Sections C.1 and C.2 of this Article V, shall be
deemed to have agreed to purchase or acquire such Offered
Interest "on the same terms as those offered to the proposed
transferee" if such persons agree to pay in a lump sum (or in
cash installments as permitted by Section C.3 (b)) an amount
per Offered Interest equal to the fair market value per
Offered Interest of such other form of consideration. The
fair market value of such other consideration shall be as
follows:
(i) If such other consideration is a freely
tradable and registered security publicly traded in the
United States in the over-the-counter market and not on
the Nasdaq National Market nor on any national
securities exchange, the closing per share bid price
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for such security on the trading day immediately
preceding the day of the closing on the purchase or
acquisition of the Offered Interests;
(ii) If such other consideration is a freely
tradable and registered security publicly traded in the
United States on the Nasdaq National Market or on a
national securities exchange, the per share closing
price for such security on the Nasdaq National Market
or on the principal stock exchange on which it is
listed on the trading day immediately preceding the day
of the closing on the purchase or acquisition of the
Offered Interests; such closing price being the last
reported sale price, or in the case no such reported
sale takes place on such day, the average of the
reported closing bid and asked prices, in either case
in the Nasdaq National Market or on the principal
national securities exchange on which the security is
then listed;
(iii) If such other consideration is an asset
(other than a security specified in clauses (i) or (ii)
above) having a readily determinable value by reference
to a generally accepted published reporting source or
service, the last sale price for such asset reported by
such source or service during the trading day
immediately preceding the day of the closing on the
purchase or acquisition of the Offered Interests; or
(iv) In all other cases, the appraised value of
such other consideration will be determined by a
qualified independent appraiser selected by the mutual
agreement of the disposing Member on the one hand and a
Majority of the other Member(s) on the other hand. In
such event, a copy of the notice of intent to make a
disposition shall be sent to each other Member at the
same time as such notice is sent to the Company. In
the event that the Members cannot mutually agree on an
appraiser within fifteen (15) calendar days after the
notice of intent to make a disposition is actually
received by the Company, each Member who holds a
Membership Interest in excess of twenty-five percent
(25%) shall appoint an Appraiser. Within five (5)
calendar days after all of the Appraisers have been
designated pursuant to the preceding sentence, the
Appraisers shall, by unanimous agreement, select one
additional independent appraiser, who, together with
the Appraisers, shall serve as a committee (the
"Appraisal Committee") to review and analyze the fair
market value of the Membership Interest at issue, and,
within ten (10) calendar days thereafter, the Appraisal
Committee shall render its written decision as to the
fair market value of such interest. The appraised
value of such other consideration shall be final and
binding on all parties hereto. All costs associated
with such an appraisal shall be paid by the disposing
Member. The time period set forth herein shall be
tolled until the Company actually receives a copy of
the Arbitration Committee's written decision, in
accordance with the notice provisions hereof, a copy of
which written decision shall accompany all notices
given by the disposing Member.
(b) In the event that a proposed transferee of any
Offered Interest has offered to acquire such Offered Interest
for a consideration consisting of cash, cash equivalents or
unsecured (other than by the Offered Interest) promissory
notes, the Company and each of the other Members shall be
permitted, at its or their option, to purchase all or any
portion of the Offered Interest in exchange for a promissory
note in the principal amount of the purchase price payable in
not more
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than thirty-six (36) equal monthly installments of principal
and interest with interest at three percent (3%) above the
prime rate of interest charged by Bank of America, Nevada on
the closing date of the acquisition or purchase (or any lower
rate offered by the proposed transferee) but in any event not
in excess of the maximum rate of interest then permitted by
applicable law. Any such note or notes shall be secured by
the Offered Interest purchased in exchange therefor and shall
be prepayable without penalty in whole or in part at any time.
In the event that the Company purchases the interests, prior
to the payment in full of any such note or notes, no
distributions or other payments shall be made directly or
indirectly by the Company to the remaining Members or any
person or entities relating to the remaining Members (other
than payments incurred in the ordinary course of the Company's
business) unless and to the extent such distributions or other
payments are applied toward prepayment of such note or notes.
4. The purchase of the Offered Interest shall be closed at
the time specified in the notice from the disposing Member as the
time set for the closing of the proposed transfer, but in no
event earlier than thirty (30) calendar days following the
exercise or expiration, as the case may be, of the last available
option to purchase.
5. If all of the Offered Interests are not purchased by
the Company or the Members, or both, pursuant to the options
provided for above, then such unpurchased portion of the Offered
Interest may, subject to this Operating Agreement and applicable
laws, be transferred through the execution of an agreement to
transfer such interests within fifteen (15) calendar days from
the date on which the last available option to purchase above
expires to the person and on the terms specified in the notice of
intention to make a disposition. Such transferee shall receive
and hold such Interest subject to all provisions and restrictions
of Section A of this Article V, except that neither the Company
nor any other Member shall be required to purchase any of such
Interest from such transferee or any subsequent transferee
pursuant to Section C of this Article V and except that no such
transferee or subsequent transferee shall have any rights to
purchase any Offered Interest pursuant to this Operating
Agreement. Any transfer of the Offered Interest after the end of
such fifteen (15) calendar day period or any material change in
the terms of the Proposed Transfer from the terms set forth in
the original notice shall require a new notice of intention to
make a transfer. Any transfer in violation of any provision of
this Agreement shall be void and ineffectual and shall not
operate to transfer any interest or title to the purported
transferee.
6. Notwithstanding any other provision hereof to the
contrary, neither the Company nor any Member will be required to
close on the purchase or acquisition of any Interest in
accordance therewith unless the representations and warranties of
the disposing Member shall be true and correct in all material
respects as of the date of such closing, and the disposing Member
shall deliver a certificate to such effect to the purchasing
parties dated as of the closing date. Any such Interest not
purchased or acquired as a result of such a breach may not be
disposed of to the otherwise proposed transferee(s).
7. All notices required or permitted to be given under
this Section C shall be in writing and shall be deemed received:
(a) when delivered in person on a Business Day; (b) when sent by
facsimile transmission on the next Business Day from evidence of
confirmation of transmission and followed promptly by first class
U.S. mail; (c) the next Business Day when delivered by a
regularly scheduled overnight express carrier; or (d) upon the
expiration of five (5) Business Days when mailed by certified or
registered mail, return receipt requested, to the Board of
Managers of
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the Company at the offices of the Company. For the purposes of
this section, a "Business Day" is shall mean any day except
Saturday, Sunday or legal holidays in the State of Nevada.
Section D. AUTHORITY OF THE COMPANY TO PURCHASE INTEREST
All rights and obligations of the Company to purchase any
Membership Interest of a Member are subject to the restrictions
set forth in the statutes of the State of Nevada, if any, and to
such other applicable restrictions as are now or may hereafter
become effective. Any redemption of such Membership Interest by
the Company shall be made only out of funds legally available
therefor.
Section E. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Each of the Members represents and warrants to the Company
and the other Members as follows:
1. Such Member will transfer good and marketable title of
its Membership Interest free and clear of all liens,
encumbrances, claims or rights of third parties of every kind and
nature whatsoever, subject to the provisions of this Agreement.
2. The Interests of the Company owned by such Member as
set forth on Schedule A hereto have been duly authorized and are
fully paid and non assessable except to the extent of a Required
Additional Capital Contribution as provided in Section F of
Article III. There are no existing options, warrants, calls or
commitments on the part of any Member relating to such Interests
of the Company which will not be terminated concurrently with the
execution of this Agreement. No voting agreements or
restrictions of any kind other than those set forth in this
Agreement affect the rights of any such Interests of the Company
or such Member.
Section F. TRANSFEREE'S MEMBER INTEREST
In the event a transferee acquires all or part of the
Interest of an existing Member or Members, the transferee's
Member Interest, for purposes of this Agreement, shall be the
Member Interest of the transferring Member or Members, with
respect to the interest acquired by the transferee.
Section G. SURVIVAL OF THE COMPANY
In the event that (a) the Company consists of only two
members and (b) the Membership Interest of one member is
purchased in its entirety by another member (the "Purchasing
Member") pursuant to the terms of this Section R of Article IV,
Section C of this Article V, Section C of Article XI and Section
D of Article XI, the Members hereby acknowledge and agree that
the Purchasing Member has the power to nominate a third-party
("Third-Party Nominee") to which the Purchasing Member may assign
or transfer all or part of the purchased Membership Interest to
the extent necessary to preserve the Company's status as a
limited liability company.
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ARTICLE VI. BOARD OF MANAGERS
Section A. ELECTION, REMOVAL, RESIGNATION AND VACANCIES
The Members agree that the business of the Company shall be
managed by four (4) Managers (the "Board of Managers"), subject
to the following:
1. The Board of Managers shall be elected annually by the
respective Members and each shall hold office until
such Manager shall resign or shall be removed or
otherwise disqualified to serve or the Manager's
successor shall be elected and qualified;
2. Each Member shall be entitled to elect the number of
Managers which is proportional to the interest in the
Company owned by that Member at the time of such
election;
3. Each Member may, at any time and for any reason, remove
and replace the Manager(s) elected by that Member
unless the Member is no longer eligible to elect that
Manager due to a change in ownership of the Company;
4. Any Manager may resign at any time by giving written
notice to the Members. Upon the receipt of such
written notice, the Member who elected that Manager
shall select the replacement unless the Member is no
longer eligible to elect that Manager due to a change
in ownership of the Company;
5. The total number of Managers serving at any time shall
be sufficient so that any Member who holds an interest
in the Company equal to fifteen percent (15%) of the
Company shall elect at least one Manager; and
6. In the event of a change in the ownership of the
Company, the Board of Managers then elected shall
continue to serve until the anniversary their election,
their resignation, their death or removal by the Member
who elected them.
Section B. ACTIONS BY THE BOARD OF MANAGERS; MEETINGS;
QUORUM; WRITTEN CONSENT
The Board of Managers may vote to approve a matter or to
take any action by the vote of Managers at a meeting, in person
or by proxy, or by the written consent of Board of Managers. For
any meeting of the Board of Managers, the presence in person or
by proxy of Managers representing more than one-half of the
Managers then serving constitutes a quorum for the transaction of
business. Each member of the Board of Managers shall have one
vote and an action approved at a meeting of the Board of Managers
by the vote of over one-half of all Managers then serving,
whether or not present at the meeting, shall constitute an action
of the Board of Managers. For any written consent, the execution
of the written consent by Managers representing more than one-
half of the Managers then serving constitutes a quorum for the
transaction of business. Each member of the Board of Managers
shall have one vote and an action approved via the written
consent of the Board of Managers having more than one-half of the
total number of votes shall constitute an action of the Board of
Managers.
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Section C. MANAGERS' POWERS
The Board of Managers shall have the following powers:
1. To elect Officers to serve on behalf of the Company.
Officers need not be Managers or Members but shall be employees.
2. To select and remove all employees, agents and
representatives of the Company, prescribe such powers and duties
for them as may be consistent with law, with this Operating
Agreement, the Articles of Organization and the Master Agreement,
fix their compensation, and require from them security for
faithful service.
3. To conduct, manage and control the affairs and business
of the Company, and to make such rules and regulations therefor
consistent with the law, with this Operating Agreement, the
Articles of Organization and the Master Agreement.
4. To change the principal office of this Company from one
location to another within the State of Nevada; to fix and locate
from time to time one or more subsidiary offices of the Company;
and to designate any place within or without the State of Nevada
for the holding of any Members' meeting or meetings.
5. To borrow money and incur indebtedness for the purpose
of the Company, and to cause to be executed and delivered
therefor, in the Company name, promissory notes, bonds, and
debentures.
6. To appoint an executive committee and other committees,
and to delegate to the executive committee any of the powers and
authority of the Board of Managers in the management of the
business and affairs of the Company. The Board of Managers, in
their discretion, may or may not be members of an executive
committee.
Section D. BANK ACCOUNTS
From time to time, the Board of Managers may designate a
person or persons, whether such person is an Officer, Manager,
Member or employee, to open and maintain one or more bank
accounts; rent safety deposit boxes or vaults; sign checks,
written directions, or other instruments to withdraw all or any
part of the funds belonging to the Company and on deposit in any
savings account or checking account; negotiate and purchase
certificates of deposit, obtain access to the Company's safety
deposit box or boxes, and, generally, sign such forms on behalf
of the Company as may be required to conduct the banking
activities of the Company.
Section E. OFFICERS
In the sole discretion of the Board of Managers, the Board
of Managers may elect Officers of the Company who, if elected,
shall hold such titles and perform such duties as the Board of
Managers may determine. To the extent not specifically modified
by the Board of Managers, the Officers shall have the following
duties and responsibilities:
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1. CHAIRMAN AND/OR CHIEF EXECUTIVE OFFICER ("CEO") - The
Chairman and/or CEO shall preside at meetings of the Members and
the Board of Managers, and shall see that all orders and
resolutions of the Board of Managers are carried into effect.
2. VICE CHAIRMAN - The Vice-Chairman shall, in the absence
or disability of the Chairman, perform the duties and exercise
the powers of the Chairman and shall perform such other duties as
the Board of Managers may from time to time prescribe.
3. PRESIDENT - The President shall be the chief operating
officer of the Company and shall have active management of the
business of the Company. The President shall execute on behalf
of the Company all instruments requiring such execution except to
the extent the signing and execution thereof shall be expressly
designated by the Board of Managers to some other officer or
agent of the corporation.
4. VICE PRESIDENT - The Vice-President shall act under the
direction of the President and in the absence or disability of
the President shall perform the duties and exercise the powers of
the President. The Vice-President shall perform such other
duties and have such other powers as the President or the Board
of Managers may from time to time prescribe. The Board of
Managers may designate one or more Executive Vice-Presidents or
may otherwise specify the order of seniority of the Vice-
Presidents. The duties and powers of the President shall descend
to the Vice-Presidents in such specified order of seniority.
5. SECRETARY - The Secretary shall act under the direction
of the President. Subject to the direction of the President, the
Secretary shall attend all meetings of the Manager and all
meetings of the Members and record the proceedings. The
Secretary shall give, or cause to be given, notice of all
meetings of the Members and special meetings of the Board of
Managers, and shall perform such other duties as may be
prescribed by the President or the Board of Managers.
6. TREASURER - The Treasurer shall act under the direction
of the President. Subject to the direction of the President, the
Treasurer shall have 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 monies and other valuable effects in the name and to
the credit of the Company in such depositories as may be
designated by the Board of Managers. The Treasurer shall disburse
the funds of the Company as may be ordered by the President or
the Board of Managers, taking proper vouchers for such
disbursements, and shall render to the President and the Board of
Managers, at their regular meetings, or when the Board of
Managers so require, an account of all transactions as Treasurer
and of the financial condition of the Company.
If required by the Board of Managers, the Treasurer shall
give the Company a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Managers for
the faithful performance of the duties of such person's office
and for the restoration to the Company, in case of such person's
death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever
kind in such person's possession or under such person's control
belonging to the Company.
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ARTICLE VII. PROFITS AND LOSSES
Section A. NET PROFITS AND LOSSES
Subject to the provisions of Section E of this Article VII,
the "Net Profits and Losses" of the Company for any Company
taxable year shall be allocated and credited to the Members'
Capital Accounts in proportion to the "Member Interest" of each
respective Member as defined in Section D of Article III. The
term "Net Profits and Losses" of the Company shall mean the net
income or loss of the Company, as determined by auditors or
accountants employed by the Company, in accordance with Section
703 of the Code, applied consistently with prior periods.
Section B. ALLOCATIONS OF DEDUCTIONS
1. COMPANY NONRECOURSE DEDUCTIONS. Except as otherwise
required by Section C and Section D of this Article VII, all
Nonrecourse Deductions of the Company for any taxable year shall
be shared by the Members in proportion to their Member Interest
on the last day of such taxable year. The amount of Nonrecourse
Deductions of the Company shall be determined in accordance with
Regulations Section 1.704-2(c).
2. MEMBER NONRECOURSE DEDUCTIONS. Except as otherwise
required by Section C and Section D of this Article VII, hereof,
all Member Nonrecourse Deductions of the Company for any taxable
year shall be allocated in accordance with Regulations Section
1.704-2(i)(1). The amount of Member Nonrecourse Deductions shall
be determined in accordance with Regulations Section 1.704-
2(i)(2).
Section C. SPECIAL ALLOCATIONS
1. QUALIFIED INCOME OFFSET. Except as provided in Section
C.2 of this Article VII, in the event any Member unexpectedly
receives any adjustments, allocations or distributions described
in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the
Regulations, items of Company income and gain shall be specially
allocated to each such Member in an amount and manner sufficient
to eliminate, to the extent required by the Regulations, the
adjusted capital account deficit of such Member as quickly as
possible.
2. MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section C, if there is a net decrease in
Company Minimum Gain during any Company fiscal year, each Member
who would otherwise have an adjusted capital account deficit at
the end of such year shall be specially allocated items of
Company income and gain for such year (and, if necessary,
subsequent years) in an amount and manner sufficient to eliminate
such Member's adjusted capital account deficits as quickly as
possible. The items to be so allocated shall be determined in
accordance with Section 1.704-1(b)(4)(iv)(e) of the Regulations.
Notwithstanding any other provision of this Section C.2, if there
is a net decrease in Minimum Gain attributable to Member
Nonrecourse debt during a Company Taxable Year, each Member with
a share of the Minimum Gain attributable to such member
Nonrecourse Debt shall be allocated items of income and gains for
such year (and, if necessary, subsequent years) in accordance
with Regulations Section 1.704-2(i)(4). The items to be so
allocated shall be determined in accordance with Regulations
Section 1.704-2(i). This Section C.2 is intended to comply with
the
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minimum gain chargeback requirement in such sections of the
Regulations and shall be interpreted consistently therewith.
3. ALLOCATION OF REMAINING INCOME AND GAINS ON SALE OR
OTHER DISPOSITION. Except as otherwise required by this Section
C, income and gains arising from the sale, exchange, transfer or
disposition or condemnation of all or substantially all of the
Company's property shall be allocated, for Federal income tax
purposes, among those who shall be Members on the date of such
transaction or transactions as follows:
(a) If one or more Members has a negative Capital
Account after such Member's Capital Account is adjusted to
reflect any allocation of gains under Section B.2 of this
Article VII, but before such Member's Capital Account is
adjusted to reflect any distribution under Section C of this
Article VII, with respect to the disposition to which this
section is being applied, such income and gains shall be
allocated to such Members in proportion to their negative
Capital Accounts until each such Member's Capital Account
equals zero.
(b) To the extent one or more Member's Capital Account
balance is less than (i) the total of all Members' Capital
Account balances times (ii) such Member's Membership Interest
in the Company (a "Capital Disparity"), such income and gains
shall be allocated among such Members in proportion to Capital
Disparities until all of the Members' Capital Accounts are, as
nearly as possible, in proportion to their Membership
Interest.
(c) The balance of such income and gains shall be
allocated to the Members in proportion to their Membership
Interest.
4. ASSIGNMENTS. In the event of an assignment of an
interest in the Company (other than an assignment by reason of
the death of a Member), the assigning Member's distributive share
of Company income, gains, loss, deductions and credits and
expenditures not deductible in computing its taxable income (in
respect of the interest so assigned) shall be the share of such
items attributable to such interest accruing prior to such
assignment (based on an interim closing of the books of the
Company), and the Assignee's share shall be the share of such
items attributable to such interest after such assignment (based
on such interim closing).
5. MANDATORY SECTION 704(C) ALLOCATIONS. Notwithstanding
the foregoing, to the extent that Code Section 704(c),
Regulations Section 1.704-3, 1.704-1(b)(2)(iv), or any other
regulations which may be proposed or promulgated under Code
Section 704(c), require allocations of Company income, gains,
losses or deductions in a manner which is different than that set
forth above, the provisions of Section 704(c) and the regulations
thereunder shall control such allocations among the Members. In
the absence of a contrary agreement among the Members, such items
shall be allocated in accordance with the "Traditional method
with curative allocations" set forth in Regulations Section
1.704-3(c) or any successor regulation.
Section D. CURATIVE ALLOCATIONS
The allocations set forth in Sections C.1. and C.2. of this
Article VII (the "Regulatory Allocations") are intended to comply
with certain requirements of Regulations Section 1.704-1(b),
Regulations Section 1.704-2, and Regulations Section 1.704-3 and
shall be interpreted and
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applied in a manner consistent therewith. Notwithstanding any
other provisions of this Section (other than the Regulatory
Allocations), the Regulatory Allocations shall be taken into
account in allocating other profits, losses and items of income,
gain, loss and deduction among the Members so that, to the extent
possible, the net amount of such allocations of other profits,
losses and other items in the Regulatory Allocations to each
Member shall be equal to the net amount that would have been
allocated to each such Member if the Regulatory Allocations had
not occurred.
Section E. FEDERAL INCOME TAX
It is the intent of this Company and its Members that this
Company will be governed by the applicable provisions of
Subchapter K, of Chapter 1, of the Code.
ARTICLE VIII. DISTRIBUTIONS
Section A. OPERATING DISTRIBUTIONS
The Company's Cash Available For Distribution shall, at such
times as the Board of Managers of the Company deem advisable, be
distributed among the Members in proportion to their respective
Member Interest, as of the date of any such distribution. The
term "Cash Available For Distribution" shall mean the total cash
revenues generated by the Company's operations (including
proceeds from the sale or refinancing of Company assets), less
all cash expenditures of the Company for debt service and
operating expenses, and less a reasonable amount determined by
the Board of Managers to be set aside for reserves.
Section B. PAYMENT OF MEMBER LOANS
Under all circumstances, Member Loans shall be repaid first
out of any Cash Available for Distribution. If a difference
exists between the Members in the amount of Member Loans made to
the Company, any Member with more Member Loans outstanding (in
value) than another Member shall receive the first distributions
of any available cash until that Member's Loan is in parity with
the other Member Loans, if any. Thereafter, the Member Loans
will be repaid ratably to the Members with Loans. It is the
intention of the Members that Member Loans will be repaid as cash
is available for distribution and may result in revolving
payments to the Members as additional Member Loans are advanced
to the Company.
Section C. DISTRIBUTION ON DISSOLUTION AND LIQUIDATION
In the event of the dissolution and liquidation of the
Company for any reason, after the payment of or provision for
creditors pursuant to NRS Section 86.521 and other applicable
law, the Company's assets shall be distributed among the Members
in accordance with their respective positive Capital Account
balances, in accordance with Regulations Section 1.704-
1(b)(2)(ii)(b)(2).
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ARTICLE IX. ACCOUNTING AND RECORDS
Section A. RECORDS AND ACCOUNTING
The books and records of the Company shall be kept, and the
financial position and the results of its operations recorded, in
accordance with the accounting methods elected to be followed by
the Company for federal income tax purposes. The books and
records of the Company shall reflect all Company transactions and
shall be appropriate and adequate for the Company's business.
The fiscal year of the Company for financial reporting and for
federal income tax purposes shall be the calendar year.
Section B. ACCESS TO ACCOUNTING RECORDS
All books and records of the Company shall be maintained at
any office of the Company or at the Company's principal place of
business, or as determined from time to time by the Board of
Managers, and each Member, and its duly authorized
representative, shall have access to them at such office of the
Company and the right to inspect and copy them at reasonable
times. The Company shall keep all records required to be kept at
the registered office of the Company by Chapter 86 of the NRS at
such registered office of the Company.
Section C. ANNUAL TAX INFORMATION
The Board of Managers shall use its best efforts to cause
the Company to deliver to each Member within ninety (90) calendar
days after the end of each fiscal year all information necessary
for the preparation of such Member's federal income tax return.
ARTICLE X. TERM
Section A. TERM
The term of this Company shall begin on the date the
Articles of Organization are filed with the Nevada Secretary of
State and shall continue until December 31, 2047, unless
terminated prior thereto in accordance with the provisions
hereof, by unanimous agreement of the Members or pursuant to
Chapter 86 of the NRS.
ARTICLE XI. DISSOLUTION OF THE COMPANY
AND TERMINATION OF A MEMBER'S INTEREST
Section A. DISSOLUTION
This Company must be dissolved on the death, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member or
occurrence of any other event which terminates a Member's
continued membership in the Company, unless the business of the
Company is continued by the consent of all the remaining Members
of the Company.
Section B. DEATH OF A MEMBER; CONTINUATION
After the death of a Member, if all the remaining Members
consent to the continuation of the business of the Company, the
personal representative ("Representative") of the deceased
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Member and, after the distribution of the deceased Member's
estate, the deceased Member's heirs or legatees, shall
immediately succeed to the interest of the deceased Member in the
Company, subject to the provisions of Section A of Article V.
During administration of the estate of the deceased Member, such
Representative (and after distribution of the deceased Members
estate such heirs or legatees) shall only have the right to share
in the profits and losses of the Company.
Section C. OPTION TO PURCHASE DECEASED MEMBER'S INTEREST
Upon the death of a Member, the Company shall have the
option, within sixty (60) calendar days of the Member's date of
death, to purchase the deceased Member's interest in the Company
for an agreed upon price, or if no price can be agreed upon, the
fair market value of such interest as determined by an
independent qualified appraiser appointed by the Members and the
deceased Member's Representative. If they cannot agree on an
appraiser, the Members and such Representative shall each appoint
an Appraiser. Within five (5) calendar days after all of the
Appraisers have been designated pursuant to the preceding
sentence, the Appraisers shall, by unanimous agreement, select
one additional independent appraiser, who, together with the
Appraisers, shall serve as an Appraisal Committee to review and
analyze the fair market value of the Membership Interest at
issue, and, within ten (10) calendar days thereafter, the
Appraisal Committee shall render its written decision as to the
fair market value of such interest. The appraised value of such
other consideration shall be final and binding on all parties
hereto. If the Company elects to purchase the interest of the
deceased Member, it shall pay the agreed price or the fair market
value of such interest to the deceased Member's Representative,
in cash, within such sixty (60) calendar day period. If the
Company does not purchase the interest of the deceased Member
within such sixty (60) day period, then the remaining Member(s)
shall have the right to purchase the deceased Member's interest,
in proportions based upon the remaining Member Interests held by
each remaining Member, pursuant to the terms of this Section. If
neither the Company nor the remaining Members purchase the
interest of the deceased Member within such sixty (60) calendar
day periods, then all rights to purchase the deceased Member's
interest pursuant to this Section shall terminate.
Section D. BANKRUPTCY, INSOLVENCY OR DISSOLUTION
In the event a Member (the "Bankrupt Member") institutes or
consents to any proceeding under the federal bankruptcy laws
relating to the Member or to all or any part of its property; or
is unable or admits in writing to its inability to pay its debts
as they mature, or makes an assignment for the benefit of
creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any part of
its property; or applies for or consents to the liquidation or
dissolution of such Member or all or substantially all of its
property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without
the application or consent of the Member and the appointment
continues undischarged or unstayed for thirty (30) calendar days;
or any proceeding under the federal bankruptcy laws or any other
applicable laws relating to such Member or to all or any part of
its property is instituted without the consent of such Member and
continues undischarged or unstayed for sixty (60) calendar days,
if all the remaining Members consent to the continuation of the
business of the Company, the remaining Members shall have the
right to purchase the entire Membership Interest of the Bankrupt
Member at a price equal to the fair market value of such interest
at the time of such bankruptcy, as determined by an independent
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qualified appraiser appointed by the Members, including the
Bankrupt Member. If they cannot agree on an appraiser, the
Members, including the Bankrupt Member, shall each appoint an
Appraiser. Within five (5) calendar days after all of the
Appraisers have been designated pursuant to the preceding
sentence, the Appraisers shall, by unanimous agreement, select
one additional independent appraiser, who, together with the
Appraisers, shall serve as an Appraisal Committee to review and
analyze the fair market value of the Membership Interest at
issue, and, within ten (10) calendar days thereafter, the
Appraisal Committee shall render its written decision as to the
fair market value of such interest. The appraised value of such
other consideration shall be final and binding on all parties
hereto.
A purchase of a Bankrupt Member's interest shall be an all
cash transaction completed within one-hundred and twenty (120)
calendar days after the date the bankruptcy petition is filed by
or against the Bankrupt Member. The Company shall send a notice
of the bankruptcy to all the Members and each Member wishing to
purchase all or part of the Bankrupt Member's interest (a
"Purchasing Member") must so notify all the other Members in
writing within twenty (20) calendar days after delivery of the
notice. Unless they agree otherwise, if there is more than one
Purchasing Member, each Purchasing Member may purchase the same
proportion of the Bankrupt Member's interest as the Member
Interest of that Purchasing Member bears to the total Member
Interest of all the Purchasing Members. If no remaining Member
wishes to purchase the Bankrupt Member's interest, or the
Purchasing Members do not actually purchase the Bankrupt Member's
interest within the time set forth in this Section D, then all
rights to purchase the Bankrupt Member's interest pursuant to
this Section shall terminate.
In the event that a non-Member third party purchases the
Bankrupt Member's Membership Interest, the third party shall
comply with the terms and conditions of this Agreement and shall
only have the right to share in the profits and losses of the
Company unless otherwise determined by the remaining non-Bankrupt
Members pursuant to Section A of Article V.
ARTICLE XII. TRUST MEMBERS
Section A. TRUSTEE LIABILITY
When any trustee becomes a Member of this Company, he shall
be a Member not individually but solely as a trustee, in the
exercise and under the power and authority conferred upon and
vested in such trustee. Nothing contained in this Operating
Agreement shall be construed as creating any liability on any
such trustee personally to pay any amounts required to be paid
hereunder, or to perform any covenant, either express or implied,
contained herein; all such liability, if any, is hereby expressly
waived by the other Members of this Company. Any liability of
any Member which is a trust (whether to the Company or to any
third person) shall be a liability to the full extent of the
trust estate and shall not be a personal liability of any
Trustee, grantor or beneficiary of any trust.
Section B. STATUS OF SUCCESSOR TRUSTEES AS MEMBERS
Any successor trustee or co-trustee of any trust which is a
Member shall be entitled to exercise the same rights and
privileges and be subject to the same duties and obligations as
the
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predecessor trustee. As used in this Article XII, the term
"trustee" shall include any and all such successor trustees.
ARTICLE XIII. INDEMNIFICATION
Section A. INDEMNITY
This Company does hereby indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or
in the right of the Company, by reason of the fact that he is or
was a Manager, Member, employee or agent of this Company, or is
or was serving at the request of this Company as manager,
director, officer, employee or agent of another limited liability
company or corporation, against expenses, subject to the
provisions of Section D of this Article XIII, including
attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of this Company, and, with respect to a
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself,
create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not
opposed to the best interest of this Company, and that, with
respect to any criminal action or proceeding, he had reasonable
cause to believe that his conduct was unlawful.
Section B. INDEMNITY FOR ACTIONS BY OR IN THE RIGHT OF THE
COMPANY
This Company does hereby indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of this
Company to procure a judgment in its favor by reason of the fact
that he is or was a Member, Manager, employee or agent of this
Company, or is or was serving at the request of this Company as a
Member, Manager, director, officer, employee or agent of another
limited liability company, corporation, partnership, joint
venture, trust or other enterprise against expenses, subject to
the provisions of Section D of this Article XIII, including
amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or
settlement of the actions or suit if he acted in good faith and
in a manner which he reasonably believed to be in or not opposed
to the best interests of this Company. Indemnification may not
be made for any claim, issue or matter as to which such a person
has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to this Company
or for amounts paid in settlement to this Company, unless and
only to the extent that the court in which the action or suit was
brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
Section C. INDEMNITY IF SUCCESSFUL
To the extent that a Member, Manager, employee or agent of
this Company has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
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Sections XIII.A and XIII.B of this Agreement, or in defense of
any claim, issue or matter therein, this Company does hereby
indemnify such person or entity against expenses, subject to the
provisions of Section XIII.D. of this Agreement, including
attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
Section D. EXPENSES
Any indemnification under Sections XIII.A and XIII.B of this
Agreement, unless ordered by a court or advanced pursuant to
Section E of this Article XIII, must be made by this Company only
as authorized in the specific case upon a determination that
indemnification of the Member, Manager, employee or agent is
proper in the circumstances. The determination must be made:
1. By a Majority vote of the Board of Managers who were
not parties to the act, suit or proceeding; or
2. If a Majority vote of the Board of Managers who were
not parties to the act, suit or proceeding cannot be obtained, by
a vote of the Members whereby Members who hold more than fifty
percent (50%) of the outstanding Membership Interests and who
were not parties to the act, suit or proceeding, vote to approve
indemnification; or.
3. If neither a Majority vote of the Board of Managers nor
a vote of the Members holding more than fifty percent (50%) of
the outstanding Membership Interests who were not parties to the
act, suit or proceeding can be obtained, by independent legal
counsel in a written opinion.
Section E. ADVANCE PAYMENT OF EXPENSES
The expenses of Members and Managers incurred in defending a
civil or criminal action, suit or proceeding shall be paid by
this Company as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the Member or Manager to repay the
amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by this
Company. The provisions of this subsection do not affect any
rights to advancement of expenses to which personnel other than
Members or Managers may be entitled under any contract or
otherwise by law.
Section F. OTHER ARRANGEMENTS NOT EXCLUDED
The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this Article XIII:
1. Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under the Articles of Organization or any agreement,
vote of Members or otherwise, for either an action in his
official capacity or an action in another capacity while holding
his office, except that indemnification, unless ordered by a
court pursuant to Section B of this Article XIII, or for the
advancement of expenses made pursuant to Section E of this
Article XIII, may not be made to or on behalf of any Member or
Manager if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
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2. Continues for a person who has ceased to be a Member,
Manager, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE XIV. MISCELLANEOUS PROVISIONS
Section A. COMPLETE AGREEMENT
The Master Agreement, the Articles of Organization and this
Operating Agreement, constitute the complete and exclusive
statement of the agreement among the Members with respect to the
subject matter contained therein. The Master Agreement, the
Articles of Organization and this Operating Agreement replace and
supersede all prior agreements by and among the Members or any of
them. The Master Agreement, the Articles of Organization and
this Operating Agreement supersede all prior written and oral
statements and no representation, statement, or condition or
warranty not contained in the Master Agreement, the Articles of
Organization and this Operating Agreement will be binding on the
Members or be of any force and effect whatsoever. To the extent
that the terms of the Articles of Organization and the Operating
Agreement differ from the terms of the Master Agreement, the
terms of the Master Agreement shall control.
Section B. AMENDMENTS
This Operating Agreement may be amended by the Members but
only at a special or annual meeting of the Members, not by
written consent, and only if the notice of the intention to amend
the Operating Agreement was contained in the notice of the
meeting, or such notice of a meeting is waived by all Members.
Section C. APPLICABLE LAW
This Operating Agreement, and its application, shall be
governed exclusively by its terms and by the laws of the State of
Nevada.
Section D. HEADINGS
The headings in this Operating Agreement are inserted for
convenience only and are in no way intended to describe,
interpret, define, or limit the scope, extent or intent of this
Operating Agreement or any provisions contained herein.
Section E. SEVERABILITY
If any provision of this Operating Agreement or the
application thereof to any person or circumstance shall be deemed
invalid, illegal or unenforceable to any extent, the remainder of
this Operating Agreement and the application thereof shall not be
affected, unless the essence of the Agreement is thereby
destroyed, and shall be enforceable to the fullest extent
permitted by law, unless the essence of the Agreement is thereby
destroyed.
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Section F. EXPENSES
If any litigation or other proceeding is commenced in
connection with or related to this Agreement, the prevailing
party shall be entitled to recover from the losing party all of
the incidental costs and reasonable attorneys' fees, whether or
not a final judgment is rendered.
Section G. HEIRS, SUCCESSORS AND ASSIGNS
Each and all of the covenants, terms, provisions and
agreements contained in this Operating Agreement shall be binding
upon and inure to the benefit of the existing Members, all new
and substituted Members, and their respective assignees (whether
permitted by this Agreement or not), heirs, legal
representatives, successors and assigns.
Section H. EXECUTION
This Agreement may be executed in counterparts, and when so
executed each counterpart shall be deemed to be an original, and
said counterparts together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Operating Agreement was adopted by
a unanimous vote of all the Members of this Company at the
organizational meeting thereof held on ____________________,
1997.
MEMBERS:
Gridiron Marketing, LLC,
a California limited liability company
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President of DeMur, Inc.,
an Ohio corporation
Authentic Products, Inc.,
a Nevada corporation
By: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Its: Chief Executive Officer and
Chairman of the Board
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SCHEDULE A
INITIAL CAPITAL
MEMBER CONTRIBUTION MEMBER INTEREST
Authentic Products, Inc. $100,000.00 50.00%
Gridiron Marketing, LLC $100,000.00 50.00%