AMENDED AND RESTATED OPERATING AGREEMENT FOR THE CHOSEN, LLC A UTAH LIMITED LIABILITY COMPANY
Exhibit 2(c)
AMENDED
AND RESTATED OPERATING AGREEMENT
FOR
THE
CHOSEN, LLC
A UTAH
LIMITED LIABILITY COMPANY
This
Amended and Restated Operating Agreement, is made as of March 6,
2018, by and among the parties listed on the signature pages
hereof, with reference to the following facts:
A. On October 24,
2017, Articles of Organization for THE CHOSEN, LLC (the "Company"),
a limited liability company under the laws of the State of Utah,
were filed with the Utah Secretary of State.
B.
On December 7,
2017, ▇▇▇▇▇▇ ▇▇▇▇, as the Manager of the Company, and Dallas
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as the
Members of the Company, executed an Operating Agreement for the
Company.
C.
The Parties hereto
now desire to enter into this Amended and Restated Operated
Agreement for the Company.
NOW,
THEREFORE, the parties (hereinafter sometimes collectively referred
to as the "Members," or individually as the "Member") by this
Agreement set forth the Amended and Restated Operating Agreement
for the Company under the laws of the State of Utah upon the terms
and subject to the conditions of this Agreement.
ARTICLE
I
DEFINITIONS
When
used in this Agreement, the following terms shall have the meanings
set forth below (all terms used in this Agreement which are not
defined in this Article I shall have the meanings set forth
elsewhere in this Agreement):
1.1 "Act" shall mean the Utah
Revised Uniform Limited Liability Company Act, as the same may be
amended from time to time.
1.2 "Agreement" shall mean this
Operating Agreement, as originally executed and as amended from
time to time.
1.3 "Articles of Organization" shall
mean the Articles of Organization for the Company originally filed
with the Utah Secretary of State and as amended from time to
time.
1.4 “Available Cash” shall
mean all net revenues from the Company’s operations,
including net proceeds from all sales, refinancing, and other
dispositions of Company property that the Manager, in the
Manager’s sole discretion, deems in excess of the amount
reasonably necessary for the operating requirements of the Company,
including debt reduction and Reserves.
1.5 "Capital Account" shall mean
with respect to any Member the capital account which the Company
establishes and maintains for such Member pursuant to Section
3.3.
1.6 "Capital Contribution" shall
mean with respect to any Member, the amount of the money and the
Fair Market Value of any property (other than money) contributed to
the Company in consideration of a Percentage Interest held by such
Member. A Capital Contribution shall not be deemed a
loan.
1.7 “Capital Event” shall mean
a sale or disposition of any of the Company’s capital assets,
the receipt of insurance and other proceeds derived from the
involuntary conversion of company property, the receipt of proceeds
from a refinancing of Company property, or a similar event with
respect to Company property or assets.
1.8
“Class A Percentage
Interest” shall mean a fraction, expressed as a
percentage, the numerator of which is the total of a Member’s
Class A Preferred Units and the denominator of which is the total
of all outstanding Class A Preferred Units.
1.9
“Class A Preferred Face
Value” shall mean $10.00 per Class A Preferred
Unit.
1.10
“Class A Preferred
Members” shall mean the holders of Class A Preferred
Units as set forth on Exhibit A.
1.11
“Class A Preferred Units”
shall mean the Units representing the Membership Interests having
the rights and obligations with respect to Class A Preferred Units
in this Agreement. The Manager has the authority to issue an
unlimited number of Class A Preferred Units.
1.12
"Code" shall mean the Internal
Revenue Code of 1986, as amended from time to time, the provisions
of succeeding law, and to the extent applicable, the
Regulations.
1.13
“Common Members” shall
mean the holders of Common Units as set forth on Exhibit
A.
1.14
“Common Units” shall mean
the Units representing the Membership Interests having all the
rights and obligations with respect to Common Units in this
Agreement.
1.15
"Company" shall
mean THE CHOSEN,
LLC, a Utah Limited
Liability Company.
1.16
"Distributable Cash" shall mean
the amount of cash which the Manager deems available for
distribution to the Members, taking into account all debts,
liabilities, and obligations of the Company then due and amounts
which the Manager deems necessary to place into reserves for
customary and usual claims with respect to the Company's
business.
1.17
“Economic Interest” shall
mean shall mean an interest in the distributions of the Fund but
shall not include any right to vote or to participate in the
management of the Fund.
1.18
“Economic Interest Owner”
shall mean the owner of an Economic Interest who is not a
Member.
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1.19
“Fair Market Value” shall
mean, with respect to any item of property of the Company, the
item’s adjusted basis for federal income tax purposes, except
as follows:
A. The Fair Market
Value of any property contributed by a Member to the Company shall
be the value of such property, as mutually agreed by the
contributing Member and the Company;
B. The Fair Market
Value of any item of Company property distributed to any Member
shall be the value of such item of property on the date of
distribution as mutually agreed by the distribute Member and the
Company;
1.21
"Fiscal Year" shall mean the
Company's fiscal year, which shall be the calendar
year.
1.22
“Involuntary Transfer”
shall mean, with respect to any Membership Interest, or any element
thereof, any Transfer or Encumbrance, whether by operation of law,
pursuant to court order, foreclosure of a security interest,
execution of a judgment or other legal process, or otherwise,
including a purported transfer to or from a trustee in bankruptcy,
receiver, or assignee for the benefit of creditors.
1.23
“Majority Interest” shall
mean a Member or Members whose Percentage Interests represent more
than fifty percent (50%) of the outstanding Percentage
Interests.
1.24
"Manager" shall mean The Chosen
Productions, LLC.
1.25
"Member" shall mean each Person
who (a) is a signatory to this Agreement; has been admitted to the
Company as a Member in accordance with the Articles or this
Agreement; or is an assignee who has become a Member in accordance
with Article VII and
(b) has
not resigned, withdrawn, been expelled or, if other than an
individual, dissolved.
1.26
“Membership Interest”
shall mean a Member’s right in the Company, collectively,
including the Member’s Economic Interest, any right to Vote
or participate in management, and any right to information
concerning the business and affairs of the Company.
1.31
“Total
Percentage Interest” shall mean a fraction, expressed
as a percentage, the numerator of which is the total of a
Member’s Units and the denominator of which is the total of
all outstanding Units.
1.33
“Proxy” has the meaning
set forth in the first Utah Limited Liability Company Act. A Proxy
may not be transmitted orally.
1.34
“Regulations” (or
“Reg”)
shall mean the income tax regulations promulgated by the United
States Department of the Treasury and published in the Federal
Register for the purpose of interpreting and applying the
provisions of the Code, as such Regulations may be amended from
time to time, including corresponding provisions of applicable
successor regulations.
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1.35
“Reserves” shall mean the
aggregate of reserve accounts that the Manager, in the
Manager’s sole discretion, deems reasonably necessary to meet
accrued or contingent liabilities of the Company, reasonably
anticipated operating expenses, and working capital
requirements.
1.39
“Transfer” shall mean,
with respect to a Membership Interest or any element of a
Membership Interest, any sale, assignment, gift, Involuntary
Transfer, Encumbrance, or other disposition of such a Membership
Interest or any element of such Membership Interest, directly or
indirectly, other than an Encumbrance that is expressly permitted
under this Agreement. A transfer into a revocable family trust for
estate planning purposes shall not qualify or constitute a Transfer
hereunder.
1.40
“Transfer Agent” shall
mean such bank, trust company or other person as may be appointed
from time to time by the Manager to act as registrar and transfer
agent for any class of Units; provided that, if no such Person is
appointed as registrar and transfer agent for any class of Units,
the Board shall act as registrar and transfer agent for such class
of Units.
1.41
“Units” shall mean the
units of Membership Interest in the Company and shall include all
Common Units and Class A Preferred Units, and any other class of
Membership Interest authorized by the Manager. Each Unit in the
Company represents a Unit of Membership Interest in the
Company.
1.42
“Vote” shall mean a
written consent or approval, a ballot cast at a meeting, or a voice
vote.
1.43
“Voting Interest” shall
mean, with respect to a Member, the right to Vote or participate in
management and any right to information concerning the business and
affairs of the Company provided under the Act, except as limited by
the provisions of this Agreement. A Member’s Voting Interest
shall be directly proportional to that Member’s Percentage
Interest.
ARTICLE
II
ORGANIZATIONAL
MATTERS
2.1 Formation. Pursuant to the Act,
the members have formed a Utah Limited Liability Company under the
laws of the State of Utah by filing the Articles with the Utah
Secretary of State and entering into this Agreement. The rights and
liabilities of the Members shall be determined pursuant to the Act
and to this Agreement. To the extent that the rights or obligations
of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act,
control.
2.2 Name. The name of the Company
shall be "THE CHOSEN,
LLC." The business of the
Company may be conducted under that name or, upon compliance with
applicable laws, any other name that the Manager deems appropriate
or advisable. The Manager shall file any fictitious name
certificates and similar filings, and any amendments thereto, that
the Manager considers appropriate or advisable. The phrase "LLC"
shall always appear as part of the name of Company on all
correspondence, stationary, checks, invoices and any and all
documents and papers executed by Company and as otherwise required
by the Act.
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2.3 Term. The term of this
Agreement shall be co-terminus with the period of duration of the
Company provided in the Articles, unless extended or sooner
terminated as hereinafter provided.
2.4 Office and Agent. The Company
shall continuously maintain an office and registered agent in the
State of Utah as
required by the Act. The principal office of the Company shall be
as the Manager may determine. The Company also may have such
offices, anywhere within and without the State of Utah, as the
Manager from time to time may determine, or the business of the
Company may require. The registered agent shall be as stated in the
Articles or as otherwise determined by the Manager.
2.5 Addresses of the Members and the
Manager. The respective addresses of the Members and the
Manager are set forth on Exhibit A.
2.6 Purposes of Company. The
purpose of the Company is to engage in any lawful activity for
which a Limited Liability Company may be organized under the Act.
Notwithstanding the foregoing, without the consent of the Members,
the Company shall not engage in any business other than the
following:
(a) T.V. and Film
production;
(b)
purchase of any
real or personal property; make any investment; and engage in any
joint venture, general partnership, limited partnership, or other
business activity proposed by the Manager and not prohibited by law
or this Agreement; and
(c)
such other
activities directly related to the foregoing business as may be
necessary, advisable, or appropriate, in the reasonable opinion of
the Manager to further the foregoing business.
2.7 Title to Property in Name of
Company. Real and personal property purchased by the Company
shall be held and owned in the name of Company.
ARTICLE
III CAPITAL CONTRIBUTIONS
3.1 Initial Capital Contributions.
Each Member shall contribute such assets or services as are set
forth on Exhibit A as their initial Capital Contribution.
The Manager shall maintain, or cause to be maintained, by the
Transfer Agent in whole or in part, the company register as set
forth on Exhibit A, as amended from time to time to reflect the
admission of any new Member, the withdrawal or substitution of any
Member, the Transfer of interests among Members, receipt by the
Company of notice of any change of address of a Member or the
change in any Member’s Capital Contributions (in each case,
so long as such change has been made in accordance with the terms
set forth in this Agreement). An amended Exhibit A shall supersede
any prior Exhibit A and become a part of this
Agreement.
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3.2 Additional Capital
Contributions. No Member shall be required to make any
additional Capital Contributions. To the extent unanimously
approved by the Manager, from time to time, the Members may be
permitted to make additional Capital Contributions if and to the
extent they so desire, and if the Manager determines that such
additional Capital Contributions are necessary or appropriate for
the conduct of the Company's business, including without
limitation, expansion or diversification. In that event, the
members shall have the opportunity, but not the obligation, to
participate in such additional Capital Contributions on a pro rata
basis in accordance with their Percentage Interests. Immediately
following such Capital Contributions, the Percentage Interests
shall be adjusted by the Manager to reflect the new relative
proportions of the Capital Accounts of the Members.
3.3 Capital Accounts. An individual
Capital Account for each Member shall be maintained and adjusted in
accordance with the following provisions:
A. A Member’s
Capital Account shall be increased by that Member’s Capital
Contributions.
B. A Member’s
Capital Account shall be decreased by the amount of cash
distributed to that Member.
C. If any Economic
Interest (or portion thereof) is transferred, the transferee of
such Economic Interest or portion shall succeed to the
transferor’s Capital Account attributable to such interest or
portion.
3.4 No Interest. No Member shall be
entitled to receive any interest on his or her Capital
Contributions.
3.5 Limitation on Withdrawal of Capital
Contribution. No Member shall have the right to withdraw his
or her Capital Contribution or to demand and receive property of
the Company or any distribution in return for his or her Capital
Contribution, except as may be specifically provided in this
Agreement or permitted by law.
ARTICLE
IV MEMBERS
4.1 Limited Liability. Except as
provided in the Utah Limited Liability Company Act relating to
distributions by the Company relating to the responsibility of
Members for certain unsatisfied debts or obligations of the
Company, no Member or Manager shall be liable under a judgment,
decree or order of a court, or in any other manner, for a debt,
obligation or liability of the Company whether that liability or
obligation arises in contract or tort. No Member shall be required
to loan any funds to the Company. No Member shall be required to
make any contribution to the Company by reason of any negative
balance in his or her Capital Account, nor shall any negative
balance in a Member's Capital Account create any liability on the
part of the Member to any third party.
4.2 Admission of Additional
Members. The Manager may admit to the Company additional
Members. Any additional Members shall obtain Membership Interests
and distributions of the Company on such terms as are determined by
the Manager. Notwithstanding the foregoing, substitute members may
only be admitted in accordance with Article VII.
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4.3 Transactions With The Company.
Subject to any limitations set forth in this Agreement and with the
prior approval of the Manager, and after full disclosure of the
Member's involvement, a Member may lend money to and transact other
business with the Company. Subject to other applicable law, such
Member has the same rights and obligations with respect thereto as
a person who is not a Member. A loan to the company by a Member
shall not dilute the ownership interest of any other
Member.
4.4 Remuneration to Members. Except
as otherwise authorized in, or pursuant to, this Agreement
(including Section 10.3 below), no Member is entitled to
remuneration for acting in the Company business.
4.5 Members Are Not Agents.
Pursuant to Section 5.1 and the Articles, the management of the
Company is vested in the Manager. No Member, acting solely in the
capacity of a Member, is an agent of the Company nor can any Member
in such capacity bind nor execute any instrument on behalf of the
Company.
4.6
Meetings of
Members.
A. Date, Time and Place of Meetings of
Members; Secretary. Meetings of Members may be held at such
date, time and place within or without the State of Utah as the
Manager may fix from time to time. Formal meetings of members are
not required to take action.
B. Power to Call Meetings. Unless
otherwise prescribed by the Act or by the Articles, meetings of the
Members may be called by any Manager, or upon written demand of
Members holding more than ten percent (10%) of the Percentage
Interests for the purpose of addressing any matters on which the
Members may vote.
C. Notice of Meeting. If a formal
meeting is desired, written notice of a meeting of Members shall be
sent or otherwise given to each Member in accordance with Section
4.7D not less than ten (10) nor more than sixty (60) days before
the date of the meeting. The notice shall specify the place, date
and hour of the meeting and the general nature of the business to
be transacted. No other business may be transacted at this
meeting.
D. Manner of Giving Notice; Affidavit of
Notice. Notice of any meeting of Members shall be given
either personally or by first-class mail or telegraphic or other
written communication, charges prepaid, addressed to the Member at
the address of that Member appearing on the books of the Company or
given by the Member to the Company for the purpose of
notice
E. Validity of Action. Any action
approved at a meeting, other than by the approval of a Majority
Interest of the Members entitled to vote, shall be valid only if
the general nature of the proposal so approved was stated in the
notice of meeting or in any written waiver of notice.
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F. Quorum. The presence in person
or by proxy of the holders of a Majority Interest shall constitute
a quorum at a meeting of Members. The Members present at a duly
called or held meeting at which a quorum is present may continue to
do business until adjournment, notwithstanding the loss of a
quorum, if any action taken after loss of a quorum (other than
adjournment) is approved by at least Members holding a Majority
Interest.
G. Adjourned Meeting; Notice. Any
Members' meeting, whether or not a quorum is present, may be
adjourned from time to time by the vote of the majority of the
Membership Interests represented at that meeting, either in person
or by proxy, but in the absence of a quorum, no other business may
be transacted at that meeting, except as provided in Section
4.7F.
H.
Waiver of Notice or Consent.
The actions taken at any meeting of Members, however called and
noticed, and wherever held, have the same validity as if taken at a
meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or
after the meeting, each of the Members entitled to vote, who was
not present in person or by proxy, signs a written waiver of notice
of consents to the holding of the meeting or approves the minutes
of the meeting. All such waivers, consents or approvals shall be
filed with the Company records or made a part of the minutes of the
meeting.
K. Record Date. In order that the
Company may determine the Members of record entitled to notices of
any meeting or to vote, or entitled to receive any distribution or
to exercise any rights in respect of any distribution or to
exercise any rights in respect of any other lawful action, the
Manager, or Members representing more than ten percent (10%) of the
Percentage Interests, may fix, in advance, a record date, that is
not more than sixty (60) days nor less than ten (10) days prior to
the date of the meeting and not more than sixty (60) days prior to
any other action
L. Voting. At any meeting, each
Member shall be entitled to cast one vote for each Unit such Member
owns, in person or by proxy, equal to such Member’s
Percentage Interest on the Record Date. The failure of a Member to
vote in person at a meeting or to timely deliver such
Member’s Proxy on or before the commencement of such meeting,
shall be deemed to constitute the consent and approval by such
Member to all business transacted at the applicable meeting. The
Members neither shall take part in the management of the Company,
nor transact any business for the Company in their capacity as
Members; neither shall they have power to sign for, or to bind, the
Company; provided, however,
that the Members shall have the right as provided in this Agreement
to approve or consent to certain matters previously approved by the
Manager and recommended to the Members.
Except
as otherwise provided in this Agreement, a Majority Interest of the
Members either present and voting at a meeting duly called and held
or acting by written consent shall be required to approve the
following actions with respect to the Company:
(i)
The sale, exchange or other disposition of all, or substantially
all, of the Company's assets occurring as part of a single
transaction or plan, or in multiple transactions over a three (3)
month period, except in the orderly liquidation and winding up of
the business of the Company upon its duly authorized
dissolution;
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(ii) The
merger of the Company with another limited liability company or
limited partnership;
(iii)
The merger of the
Company with a corporation or a general partnership or other
person;
(iv)
The conversion of the Company to another type of entity organized
within or without the State, including without limitation, a
limited partnership;
(v)
The decision to
change the tax election status of the Company; and
(vi)
Any other
transaction described in this Agreement as requiring the vote,
consent, or approval of the Members.
M. Proxies.
Every Member entitled to vote for Manager or on any other matter
shall have the right to do so either in person or by one or more
agents authorized by a written Proxy signed by the Member or his
attorney in fact and filed with the Manager or secretary, if any,
of the Company. A proxy shall be deemed signed if the Member's name
is placed on the Proxy (whether by manual signature, typewriting,
telegraphic transmission, electronic transmission or otherwise) by
the Member or the Member's attorney in fact.
N. Action
Without a Meeting. Any action required to be taken at a
meeting of the Members, or any action which may be taken at a
meeting of the Members, may be taken without a meeting with a
written consent. Such consent shall set forth the action so taken
with the signature of the requisite Members required to act,
whether before or after such action. Such consent shall have the
same force and effect as a requisite vote of the Members, and the
Manager may so describe it as such in any article or document filed
with the Utah Secretary of State or otherwise. The Board shall be
promptly provided with a copy of any written consent of the Members
and shall keep such written consent in the books and records of the
Company.
ARTICLE
V
MANAGEMENT
AND CONTROL OF THE COMPANY
5.2 Management of the Company by the
Manager.
A. Exclusive Management by the
Manager. The business, property and affairs of the Company
shall be managed exclusively by the Manager. Except for situations
in which the approval of the Members is expressly required by the
Articles or this Agreement, the Manager shall have full, complete
and exclusive authority, power, and discretion to manage and
control the business, property and affairs of the Company; to make
all decisions regarding those matters; and to perform any and all
other acts or activities customary or incident to the management of
the Company's business, property and affairs. No Member who is not
the Manager, acting alone, shall have any authority to act for or
to undertake or assume any obligation, debt, duty or responsibility
on behalf of the Company.
B. Subscription Agreement. The
Manager has the power to enter into an Irrevocable Subscription
Agreement for the purpose of obtaining the funds necessary to
purchase certain real property.
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C. Agency Authority of the
Manager.
The
Manager, acting alone, is authorized to endorse checks, drafts, and
other evidences of indebtedness made payable to the order of the
Company, but only for the purpose of deposit into the Company's
accounts. All checks, drafts, and other instruments obligating the
Company to pay money in an amount of less than Fifteen Thousand
Dollars ($15,000.00) may be signed by the Manager, acting alone.
All checks, drafts, and other instruments obligating the Company to
pay money in an amount of Fifteen Thousand Dollars ($15,000.00) or
more must be signed on behalf of the Company. The Manager, acting
alone, shall be authorized to sign contracts and obligations on
behalf of the Company.
5.3
Election of the
Manager.
A. Number, Term, and
Qualifications. The Chosen Productions, LLC shall be the
Manager of the Company. Unless he or she resigns, the Manager shall
hold office until a successor shall have been elected and
qualified. The Manager shall be elected by the affirmative vote or
written consent of Members holding a Majority Interest. A Manager
need not be a Member, an individual, a resident of the State of
Utah, or a citizen of the United States.
B. Resignation. Any Manager may
resign at any time by giving written notice to the Members without
prejudice to the rights, if any, of the Company under any contract
to which the Manager is a party. The resignation of any Manager
shall take effect upon receipt of that notice or at such later time
as shall be specified in the notice; and, unless otherwise
specified in the notice, the acceptance of the resignation shall
not be necessary to make it effective. The resignation of a Manager
who is also a Member shall not affect the Manager's rights as a
Member and shall not constitute a withdrawal of a
Member.
C. Removal. The Manager shall not
be removed by the Members.
D.
Vacancies. Any vacancy of the
manager occurring for any reason may be filled by the affirmative
vote or written consent of Members holding a Majority
Interest.
5.4
Powers of the
Manager.
▇. ▇▇▇▇▇▇ of the Manager. Without
limiting the generality of Section 5.2, but subject to Section 5.4B
and to the express limitations set forth elsewhere in this
Agreement, the Manager shall have all necessary powers to manage
and carry out the purposes, business, property, and affairs of the
Company, including, without limitation, the power to exercise on
behalf and in the name of the Company all of the powers described
in the Utah Limited Liability Company Act.
B. Limitations on Powers of the
Manager. Notwithstanding any other provisions of this
Agreement, no debt or liability of more than Fifteen Thousand
Dollars ($15,000.00) may be contracted on behalf of the Company.
Additionally, the Manager shall not have authority hereunder to
cause the Company to engage in the following transactions without
first obtaining the affirmative vote or written consent of a
Majority Interest (or such greater Percentage Interests set forth
below) of the Members:
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(i) The sale, exchange
or other disposition of all, or substantially all, of the Company's
assets occurring as part of a single transaction or plan, or in
multiple transactions over a three (3) month period, except in the
orderly liquidation and winding up of the business of the Company
upon its duly authorized dissolution;
(ii)
The merger of the
Company with another limited liability company or limited
partnership;
(iii)
The merger of the
Company with a corporation or a general partnership or other
person;
(iv)
The conversion of
the Company to another type of entity organized within or without
the State, including without limitation, a limited
partnership;
(v)
The decision to tax
election status of the Company; and
(vi)
Any other
transaction described in this Agreement as requiring the vote,
consent, or approval of the Members.
5.5 Members Have No Managerial
Authority. The Members shall have no power to participate in
the management of the Company except as expressly authorized by
this Agreement or the Articles and except as expressly required by
the Act. Unless expressly and duly authorized in writing to do so
by the Manager, no Member shall have any power or authority to bind
or act on behalf of the Company in any way, to pledge its credit,
or to render it liable for any purpose.
5.6 Performance of Duties; Liability of
Managers. The Manager shall not be liable to the Company or
to any Member for any loss or damage sustained by the Company or
any Member, unless the loss or damage shall have been the result of
fraud, deceit, gross negligence, reckless or intentional
misconduct, or a knowing violation of law by the Manager. The
Manager shall have a fiduciary responsibility for the safekeeping
and use of all funds and assets of the Company and shall use them
solely for the benefit of the Company. The Manager shall perform
its managerial duties in good faith, in a manner they reasonably
believe to be in the best interests of the Company and its Members,
and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar
circumstances. The Manager shall not have any liability by reason
of being or having been a Manager of the Company if the Manager so
performs the duties of the Manager.
In
performing its duties, the Manager shall be entitled to rely on
information, opinions, reports, or statements, including financial
statements and other financial data, of the following persons or
groups unless they have knowledge concerning the matter in question
that would cause such reliance to be unwarranted and provided that
the Manager acts in good faith and after reasonable inquiry when
the need therefor is indicated by the circumstances:
(a) one or more
officers, employees or other agents of the Company whom the Manager
reasonably believe to be reliable and competent in the matters
presented;
(b)
any attorney,
independent accountant, or other person as to matters which the
Manager reasonably believe to be within such person's professional
or expert competence; or
(c)
a committee upon
which the Managers do not serve, duly designated in accordance with
a provision of the Articles or this Agreement, as to matters within
its designated authority, which committee the Manager reasonably
believes to merit competence.
5.7 Devotion of Time. The Manager
is not obligated to devote one hundred percent (100%) of the time
or business efforts to the affairs of the Company. The Manager
shall devote whatever time, effort and skill as they deem
appropriate for the operation of the Company.
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5.8 Competing Activities. The
Manager and its officers, directors, shareholders, partners,
members, managers, agents, employees and Affiliates may engage or
invest in, independently or with others, any business activity of
any type or description, including without limitation those that
might be the same as or similar to the Company's business and that
might be in direct or indirect competition with the Company.
Neither the Company nor any Member shall have any right in or to
such other ventures or activities or to the income or proceeds
derived therefrom. Notwithstanding the paragraphs above, if the
Manager and/or any of the Member(s) has an offer to acquire a
collection of collectables from a third party, then the Manager
shall have the ability to use their own judgment in terms of
selling or purchasing said items to a third party, if said manager
believes that the Company does not have financial ability to make
such purchase
The
Members acknowledge that the Manager and its Affiliates own and/or
manage other businesses, including businesses that may compete with
the Company and for the Manager’s time. The Members hereby
waive any and all rights and claims which they may otherwise have
against the Manager and its officers, directors, shareholders,
partners, members, managers, agents, employees and Affiliates as a
result of any of such activities.
5.9 Transactions between the Company and
the Manager. Notwithstanding that it may constitute a
conflict of interest, the Manager may, and may cause its
Affiliates, to engage in any transaction (including, without
limitation, the purchase, sale, lease, or exchange of any property
or the rendering of any service, or the establishment of any
salary, other compensation, or other terms of employment) with the
Company so long as such transaction is not expressly prohibited by
this Agreement and so long as the terms and conditions of such
transaction, on an overall basis, are fair and reasonable to the
Company and are at least as favorable to the Company as those that
are generally available from persons capable of similarly
performing them and in similar transactions between parties
operating at arm's length.
A
transaction between the Manager and/or its Affiliates, on the one
hand, and the Company, on the other hand, shall be conclusively
determined to constitute a transaction on terms and conditions, on
an overall basis, fair and reasonable to the Company and at least
as favorable to the Company as those generally available in a
similar transaction between parties operating at arm's length if a
Majority Interest of the Members having no interest in such
transaction (other than their interests as Members) affirmatively
vote or consent in writing to approve the transaction.
Notwithstanding the foregoing, the Manager shall not have any
obligation in connection with any such transaction between the
Company and the Manager or an Affiliate of the Manager, to seek the
consent of the Members.
5.10 Payments
to Managers. Except as specified in this Agreement, no
Manager or Affiliate of a Manager is entitled to remuneration for
services rendered or goods provided to the Company. The Managers
and their Affiliates shall receive only the following
payments:
A. Management Fee. The Manager
shall not receive a Management Fee for services as the
Manager.
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B. Services Performed by the Manager or
its Affiliates. The Company shall pay the Manager or
Affiliates of the Manager for services rendered or goods provided
to the Company outside the normal scope of the
“goodwill” they are providing to the Company, including
as Purchasing and Selling Agents, to the extent that the Manager is
not required to render such services or goods themselves without
charge to the Company; and to the extent that the fees paid to the
Manager or its Affiliates do not exceed the fees that would be
payable to an independent responsible third party who is willing to
perform such services or provide such goods.
C. Expenses.
The Company shall reimburse the Manager and its Affiliates for the
actual cost of goods and materials used for or by the Company. The
Company shall also pay or reimburse the Manager or its Affiliates
for organizational expenses (including, without limitation, legal
and accounting fees and costs) incurred to form the Company and
prepare the Articles and this Agreement. Except as otherwise
provided herein, the Manager and its Affiliates shall not be
reimbursed by the Company for the following expenses: (i) salaries,
compensation or fringe benefits of directors, officers or employees
of the Manager or its Affiliates; (ii) overhead expenses of the
Manager or its Affiliates, including, without limitation, rent and
general office expenses.
5.11 Acts
of the Manager as Conclusive Evidence of Authority. Any
note, mortgage, evidence of indebtedness, contract, certificate,
statement, conveyance, or other instrument in writing, and any
assignment or endorsement thereof, executed or entered into between
the Company and any other person, when signed by the Manager, is
not invalidated as to the Company by any lack of authority of the
Manager in the absence of actual knowledge on the part of the other
person that the Manager had no authority to execute the
same.
5.12
Limited
Liability. No person who is the Manager or an officer or who
is both the Manager and officer of the Company shall be personally
liable under any judgment of a court, or in any other manner, for
any debt, obligation, or liability of the Company, whether that
liability or obligation arises in contract, tort, or otherwise,
solely by reason of being a Manager or an officer or both the
Manager and an officer of the Company. However, this shall not
absolve of knowing or intentional acts engaged in by the
Manager.
ARTICLE
VI
DISTRIBUTIONS
6.1 Distribution of Assets by the
Company. Subject to applicable law and any limitations
contained elsewhere in this Agreement, the Manager may elect from
time to time to distribute Distributable Cash to the Members, which
distributions shall be in the following order of
priority:
(a) To the Economic
Interest Owners of the Class A Preferred Units until an amount
equal to 120% of the Class A Preferred Face Value per each Class A
Preferred Unit has been distributed to the Economic Interest Owners
of the Class A Preferred Units in proportion to their Class A
Percentage Interests; and
(b) To the
Members in proportion to their Percentage Interests.
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All
such distributions shall be made only to the persons who, according
to the books and records of the Company, are the holders of record
of the Economic Interests in respect of which such distributions
are made on the actual date of distribution. Neither the Company
nor the Manager shall incur any liability for making distributions
in accordance with this Section 6.5.
6.2 Form of Distribution. A Member,
regardless of the nature of the Member's Capital Contribution, has
no right to demand and receive any distribution from the Company in
any form other than money. No Member may be compelled to accept
from the Company a distribution of any asset in kind in lieu of a
proportionate distribution of money being made to other Members.
Except upon a dissolution and the winding up of the Company, no
Member may be compelled to accept a distribution of any asset in
kind.
6.3
Restriction on
Distributions.
A. No distribution
shall be made if, after giving effect to the
distribution:
(i)
The Company would
not be able to pay its debts as they become due in the usual course
of business.
(ii) The Company's total
assets would be less than the sum of its total liabilities plus,
unless this Agreement provides otherwise, the amount that would be
needed if the Company were to be dissolved at the time of the
distribution, to satisfy the preferential rights of other Members,
if any, upon dissolution that are superior to the rights of the
Member receiving the distribution.
B. The Manager may
base a determination that a distribution is not prohibited on any
of the following:
(i)
Financial
statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances.
(ii) A fair
valuation.
(iii) Any other
method that is reasonable in the circumstances.
Except
as provided in Section 48-5-405 of the Utah Limited Liability
Company Act, the effect of a distribution is measured as of the
date the distribution is authorized if the payment occurs within
one hundred twenty (120) days after the date of authorization, or
the date payment is made if it occurs more than one hundred twenty
(120) days of the date of authorization.
C. A Member or Manager
who knowingly and intentionally votes for a distribution in
violation of this Agreement or the Act is personally liable to the
Company for the amount of the distribution that exceeds what could
have been distributed without violating this Agreement or the Act
if it is established that the Member or Manager did not act in
compliance with Section 6.3B or Section 10.4. Any Member or Manager
who is so liable shall be entitled to compel contribution from (i)
each other Member or Manager who also is so liable and (ii) each
Member for the amount the Member received with knowledge of facts
indicating that the distribution was made in violation of this
Agreement or the Act.
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6.4 Return of Distributions. Except
for distributions knowingly made in violation of the Act or this
Agreement, no Member or Economic Interest Owner shall be obligated
to return any distribution to the Company or pay the amount of any
distribution for the account of the Company or to any creditor of
the Company. The amount of any distribution returned to the Company
by a Member or Economic Interest Owner or paid by a Member or
Economic Interest Owner for the account of the Company or to a
creditor of the Company shall be added to the account or accounts
from which it was subtracted when it was distributed to the Member
or Economic Interest Owner.
ARTICLE
VII
TRANSFER
AND ASSIGNMENT OF INTERESTS
7.1 Transfer and Assignment of
Interests. Any Member, or its heirs, executors,
administrators and assigns shall be entitled to Transfer, assign,
convey, sell, or encumber all or any part of his or her Membership
Interests, subject to any restrictions imposed by applicable
securities laws or regulations.
7.2 Effective Date of Transfers.
Any Transfer of all or any portion of a Membership Interest shall
be effective as of the first day of the month following the date
upon which the requirements of Sections 7.1, 7.2 and 7.3 have been
met. The Manager shall provide the Members with written notice of
such Transfer as promptly as possible after the requirements of
Sections 7.1, 7.2 and 7.3 have been met. Any transferee of a
Membership Interest shall take subject to the restrictions on
Transfer imposed by this Agreement.
7.3 Rights of Legal
Representatives. If a Member who is an individual dies or is
adjudged by a court of competent jurisdiction to be incompetent to
manage the Member's person or property, the Member's executor,
administrator, guardian, conservator, or other legal representative
may exercise all of the Member's rights for the purpose of settling
the Member's estate or administering the Member's property,
including any power the Member has under the Articles or this
Agreement to give an assignee the right to become a Member. If a
Member is a corporation, trust, or other entity and is dissolved or
terminated, the powers of that Member may be exercised by his or
her legal representative or successor.
7.6 Effective Date of Transfers of an
Interest. Any Transfer of all or any portion of an Interest
in Company will take effect on the first (1st) day of the month
following receipt by the Members of written notice of Transfer. Any
transferee of an Interest in the Company shall take subject to the
restrictions on Transfer imposed by the Agreement.
7.7 Consequences of Pledge or Grant of
Security Interest. The pledge or granting of a security
interest, lien or other encumbrance in or against any or all of the
Interest of a Member shall not cause the Member to cease to be a
Member or to grant anyone else the power to exercise any rights or
powers of a Member.
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ARTICLE
VIII
ACCOUNTING,
RECORDS, REPORTING BY MEMBERS
8.1 Books and Records. 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 followed for federal income tax
purposes. The books and records of the Company shall reflect all
the Company transactions and shall be appropriate and adequate for
the Company's business. The Company shall maintain at its principal
office in Utah all of the following:
A.
A current list of
the full name and last known business or residence address of each
Member and Economic Interest Owner set forth in alphabetical order,
together with the Capital Contributions, Capital Account and
Percentage Interest of each Member and Economic Interest
Owner;.
B. A
current list of the full name and business or residence address of
the Manager.
C.
A copy of the
Articles and any and all amendments thereto together with executed
copies of any powers of attorney pursuant to which the Articles or
any amendments thereto have been executed.
D.
Copies of the
company's federal, state, and local income tax or information
returns and reports, if any, for the six (6) most recent taxable
years;
E.
A copy of this
Agreement and any and all amendments thereto together with executed
copies of any powers of attorney pursuant to which this Agreement
or any amendments thereto have been executed;
F. Copies of the
financial statements of the Company, if any, for the six (6) most
recent Fiscal Years; and
G.
The Company's books
and records as they relate to the internal affairs of the Company
for at least the current and past four (4) Fiscal
Years.
8.2
Delivery to Members and
Inspection.
A. During regular
business hours and at a reasonable location specified by the
Company, a Member or Economic Interest Owner may inspect and copy
full information regarding the activities, affairs, financial
condition, and other circumstances of the Company as is just and
reasonable if:
(i)
the Member or
Economic Interest Owner seeks the information for a purpose
reasonably related to the Member's or Economic Interest
Owner’s interest as a Member or Economic Interest
Owner;
(ii)
the Member or
Economic Interest Owner makes a demand in a record received by the
Company, describing with reasonable particularity the information
sought and the purpose for seeking the information
(iii)
the information
sought is directly connected to the member's purpose
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B. Not later than 10
days after receiving a demand pursuant to Section 9.2A, the Company
shall inform the Member or Economic Interest Owner that made the
demand of:
(i)
the information
that the Company will provide in response to the demand and when
and where the Company will provide the information;
and
(ii)
the Company’s
reasons for declining,
if the Company declines to provide any demanded
information.
C.
The Manager has the
right, upon reasonable request for purposes reasonably related to
the interest of the Person as Manager, to inspect and copy during
normal business hours, at a reasonable location specified by the
Company, any record maintained by the Company regarding the
Company’s activities, affairs, financial condition, and other
circumstances, to the extent the information is material to the
Manager’s rights and duties under this
Agreement.
D.
The Company shall
furnish to the Manager:
(i)
without demand, any
information concerning the Company’s activities, affairs,
financial condition, and other circumstances which the Company
knows and is material to the proper exercise of the Manager’s
rights and duties under this Agreement, except to the extent the
Company can establish that it reasonably believes the Manager
already knows the information; and
(ii)
on demand, any
other information concerning the Company’s activities,
affairs, financial condition, and other circumstances, except to
the extent the demand or information demanded is unreasonable or
otherwise improper under the circumstances.
E.
Any request,
inspection or copying by a Member or Economic Interest Owner under
this Section 9.2 may be made by that Person or that Person's agent
or attorney.
8.3
Annual
Statements.
A. The Manager shall
cause an annual report to be sent or made available to each of the
Members not later than one hundred twenty (120) days after the
close of the Fiscal Year. The report shall contain a balance sheet
as of the end of the Fiscal Year and an income statement and
statement of changes in financial position for the Fiscal Year.
Such financial statements shall be accompanied by the report
thereon, if any, of the independent accountants engaged by the
Company or, if there is no report, the certificate of a Manager
that the financial statements were prepared without audit from the
books and records of the Company. The Manager shall be deemed to
have made a report available to each Member as required by this
Section 9.3A if it has either (i) filed such report with the United
States Securities and Exchange Commission via its Electronic Data
Gathering, Analysis and Retrieval system and such report is
publicly available on such system or (ii) made such report
available on any website maintained by the Company and available
for viewing by the Members.
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B. The Managers shall
cause to be prepared at least annually, at Company expense,
information necessary for the preparation of the Members' and
Economic Interest Owners' federal and state income tax returns. The
Managers shall send or cause to be sent to each Member or Economic
Interest Owner within ninety (90) days after the end of each
taxable year such information as is necessary to complete federal
and state income tax or information returns, and, if the Company
has thirty-five (35) or fewer Members, a copy of the Company's
federal, state, and local income tax or information returns for
that year.
C. The Managers shall
cause to be filed at least annually with the Utah Secretary of
State the statement required under the Utah Limited Liability
Company Act.
8.4
Filings. The Manager, at
Company expense, shall cause the income tax returns for the company
to be prepared and timely filed with the appropriate authorities.
The Manager, at Company expense, shall also cause to be prepared
and timely filed, with appropriate federal and state regulatory and
administrative bodies, amendments to, or restatements of, the
Articles and all reports required to be filed by the Company with
those entities under the Act or other then current applicable laws,
rules, and regulations. If a Manager required by the Act to execute
or file any document fails, after demand, to do so within a
reasonable period of time or refuses to do so, any other Manager or
Member may prepare, execute and file that document with the Utah
Secretary of State.
8.6 Bank Accounts. The Manager
shall maintain the funds of the Company in one (1) or more separate
bank accounts in the name of the Company, and shall not permit the
funds of the Company to be commingled in any fashion with the funds
of any other Person.
8.7 Accounting Decisions and Reliance on
Others. All decisions as to accounting matters, except as
otherwise specifically set forth herein, shall be made by the
Manager. The Manager may rely upon the advice of their accountants
as to whether such decisions are in accordance with accounting
methods followed for federal income tax purposes.
8.8 Taxation. The Board shall cause
the Company to elect to be taxed as a subchapter C corporation
under the Code by filing Form 8832 with the Service. Subject to the
consent of a Majority Interest of the Members, the Manager may
change the tax election status of the Company from time to time.
During any period for which the Company has elected to be taxed as
a subchapter C corporation, the Company will not make any
allocations of income, losses or expense deductions to the Members.
Tax information reasonably required by Members for federal and
state income tax reporting purposes with respect to a taxable year
shall be furnished to them on or before January 31st of the year
immediately following such taxable year.
ARTICLE
IX
DISSOLUTION
AND WINDING UP
9.1 Dissolution. The Company shall
be dissolved, its assets shall be disposed of, and its affairs
wound up on the first (1st) to occur of the following:
A. Upon the happening
of any event of dissolution specified in the Articles;
B.
Upon the entry of
an order of judicial dissolution pursuant to the Utah Limited
Liability Company Act;
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C. Upon the consent of
all of the
Members;
D.
As otherwise provided by the Utah Limited Liability Company
Act.
9.2 Distributions in Kind. Any
non-cash asset distributed to one (1) or more Members shall first
be valued at its Fair Market Value to determine the distributions
that would have resulted if such asset were sold for such value.
Such distributions shall then be distributed pursuant to Article
VI. The amount distributed to each Member receiving an interest in
such distributed asset shall be the Fair Market Value of such
interest. The Fair Market Value of such asset shall be determined
by the Manager or by the Members or, if any Member objects, by an
independent appraiser (any such appraiser must be recognized as an
expert in valuing the type of asset involved) selected by the
Manager or liquidating trustee and approved by the
Members.
9.3.
Order of Payment of
Liabilities Upon Dissolution.
A. The distribution of
payments of the Company in the process of winding-up shall be made
in the following order: (i) All known debts and liabilities of the
Company, excluding debts and liabilities to Members who are
creditors of the Company; (ii) All known debts and liabilities of
the Company owed to Members who are creditors of the Company; (iii)
The remaining assets shall be distributed to the Members in
accordance with their positive Capital Account
balances.
Such
liquidating distributions shall be made by the end of the Company's
taxable year in which the Company is liquidated, or, if later,
within ninety (90) days after the date of such
liquidation.
B. The payment of a
debt or liability, whether or not the whereabouts of the creditor
is known, has been adequately provided for if:
(i) Payment thereof has
been assumed or guaranteed in good faith by one (1) or more
financially responsible persons or by the United States government
or any agency thereof; and the provision, including the financial
responsibility of the person, was determined in good faith and with
reasonable care by the Members or the Manager to be adequate at the
time of any distribution of the assets pursuant to this
Section.
(ii)
The amount of the
debt or liability has been deposited.
This
Section 10.3B shall not prescribe the exclusive means of making
adequate provision for debts and liabilities.
9.4 Compliance with Regulations.
All payments to the Members upon the winding up and dissolution of
Company shall be strictly in accordance with the Regulations and
the Code.
9.5 Limitations on Payments Made in
Dissolution. Except as otherwise specifically provided in
this Agreement, each Member shall only be entitled to look solely
at the assets of Company for the return of his or her positive
Capital Account balance and shall have no recourse for his or her
Capital Contribution (upon dissolution or otherwise) against the
Manager or any other Member except as provided in Article
XI.
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9.6 Certificate of Cancellation.
The Manager or Members who filed the Certificate of Dissolution
shall cause to be filed in the office of, and on a form prescribed
by, the Utah Secretary of State, a certificate of cancellation of
the Articles upon the completion of the winding up of the affairs
of the Company.
9.7 No Action for Dissolution.
Except where the Manager has failed to liquidate the Company as
required by this Article X, each Member hereby waives and renounces
his or her right to initiate legal action to seek the appointment
of a receiver or trustee to liquidate the Company or to seek a
decree of judicial dissolution of the Company on the ground that
(a) it is not reasonably practicable to carry on the business of
the Company in conformity with the Articles or this Agreement, or
(b) dissolution is reasonably necessary for the protection of the
rights or interests of the complaining Member. Damages for breach
of this Section 10.7 shall be monetary damages only (and not
specific performance), and the damages may be offset against
distributions by the Company to which such Member would otherwise
be entitled.
ARTICLE
X
INDEMNIFICATION
AND INSURANCE
10.1 Indemnification
of Agents. The Company shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened,
pending or complete action, suit or proceeding by reason of the
fact that he or she is or was a member, Manager, officer, employee
or other agent of the Company or that, being or having been such a
Member, Manager, officer, employee or agent, he or she is or was
serving at the request of the Company as a manager, director,
officer, employee or other agent of another limited liability
company, corporation, partnership, joint venture, trust or other
enterprise (all such persons being referred to hereinafter as an
"agent"), to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable
law may hereafter from time to time permit. The Manager shall be
authorized, on behalf of the Company, to enter into indemnity
agreements from time to time with any person entitled to be
indemnified by the company hereunder, upon such terms and
conditions as the Manager deems appropriate in their business
judgment.
10.2 Insurance.
The Company shall have the power to purchase and maintain insurance
on behalf of any person who is or was an agent of the Company
against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person's
status as an agent, whether or not the Company would have the power
to indemnify such person against such liability under the
provisions of Section 11.1 or under applicable law.
ARTICLE
XI
INVESTMENT
REPRESENTATIONS
Each
Member hereby represents and warrants to, and agrees with, the
Managers, the other Members, and the Company as
follows:
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11.1 Preexisting
Relationship or Experience. (i) He or she has a preexisting
personal or business relationship with the Company or the Manager
or one (1) or more of the Company’s officers, or control
persons or (ii) by reason of his or her business or financial
experience, or by reason of the business or financial experience of
his or her financial advisor who is unaffiliated with and who is
not compensated, directly or indirectly, by the Company or any
affiliate or selling agent of the Company, he or she is capable of
evaluating the risks and merits of an investment in the Membership
Interests and of protecting his or her own interests in connection
with this investment.
11.2 No
Advertising. He or she has not seen, received, been
presented with, or been solicited by any leaflet, public
promotional meeting, newspaper or magazine article or
advertisement, radio or television advertisement, or any other form
of advertising or general solicitation with respect to the sale of
the Membership Interests.
11.3 Investment
Intent. He or she is acquiring the Membership Interests for
investment purposes for his or her own account only and not with a
view to or for sale in connection with any distribution of all or
any part of the Membership Interests. No other person will have any
direct or indirect beneficial interest in or right to the
Membership Interests.
11.4 Purpose
of Entity. If the Member is a corporation, partnership,
limited liability company, trust, or other entity, it was not
organized for the specific purpose of acquiring the Membership
Interests.
11.5 Economic
Risk. He or she is financially able to bear the economic
risk of an investment in the Membership Interests, including the
total loss thereof.
11.6 No
Registration of Membership Interests. He or she acknowledges
that the Membership Interest has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or
qualified under the Utah Corporate Securities Law, as amended, or
any other applicable blue sky laws in reliance, in part, on his or
her representations, warranties, and agreements
herein.
11.7 Membership
Interest in Restricted Security. He or she understands that
the Membership Interests are a "restricted securities" under the
Securities Act in that the Membership Interests will be acquired
from the Company in a transaction not involving a public offering,
and that the Membership Interests may be resold without
registration under the Securities Act only in certain limited
circumstances and that otherwise the Membership Interests must be
held indefinitely. In this connection, he or she understands the
resale limitations imposed by the Securities Act and is familiar
with SEC Rule 144, as presently in effect, and the conditions which
must be met in order for the Rule to be available for resale of
"restricted securities," including the requirement that the
securities must be held for at least two (2) years after purchase
thereof from the Company prior to resale (three (3) years in the
absence of publicly available information about the Company) and
the condition that there be available to the public current
information about the Company under certain circumstances. He or
she understands that the Company has not made such information
available to the public and has no present plans to do
so.
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11.8 No
Obligation to Register. He or she represents, warrants, and
agrees that the Company and the Manager are under no obligation to
register or qualify the Membership Interests under the Securities
Act or under any state securities law, or to assist him or her in
complying with any exemption from registration and
qualification.
11.9 Investment
Risk. He or she acknowledges that the Membership Interest is
a speculative investment which involves a substantial degree of
risk of loss by him or her of his or her entire investment in the
Company, that he or she understands and takes full cognizance of
the risk factors related to the purchase of the Membership
Interests, and that the Company is newly organized and has no
financial or operating history.
11.10 Investment
Experience. He or she is an experienced investor in
unregistered and restricted securities of limited liability
companies or limited partnerships.
11.11 Transferability.
He or she acknowledges that, although the Membership Interests are
freely transferable, there is no public market for the Membership
Interests and none is expected to develop, and that, accordingly,
it may not be possible for him or her to liquidate his or her
investment in the Company.
11.12 Information
Reviewed. He or she has received and reviewed all
information he or she considers necessary or appropriate for
deciding whether to purchase the Membership Interests. He or she
has had an opportunity to ask questions and receive answers from
the Company and the Manager and the Company’s officers and
employees regarding the terms and conditions of purchase of the
Membership Interests and regarding the business, financial affairs,
and other aspects of the Company and has further had the
opportunity to obtain all information (to the extent the Company
possesses or can acquire such information without unreasonable
effort of expense) which he or she deems necessary to evaluate the
investment and to verify the accuracy of information otherwise
provided to him or her.
11.13 No
Representations by Company. Neither the Manager, nor any
agent or employee of the Company or of the Manager, or any other
person has at any time expressly or implicitly represented,
guaranteed, or warranted to him or her that he or she may freely
Transfer the Membership Interests, that a percentage of profit
and/or amount or type of consideration will be realized as a result
of an investment in the Membership Interests, that past performance
or experience on the part of the Manager or its Affiliates or any
other person in any way indicates the predictable results of the
ownership of the Membership Interests or of the overall Company
business, that any cash distributions from Company operations or
otherwise will be made to the Members by any specific date or will
be made at all, or that any specific tax benefits will accrue as a
result of an investment in the Company.
11.17 Consultation
with Attorney. He or she has been advised to consult with
his or her own attorney regarding all legal matters concerning an
investment in the Company and the tax consequences of participating
in the Company, and has done so, to the extent he or she considers
necessary.
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11.18 Tax
Consequences. He or she acknowledges that the tax
consequences to him or her of investing in the Company will depend
on his or her particular circumstances, and neither the Company,
the Manager, the Members, nor the partners, shareholders, members,
managers, agents, officers, directors, employees, Affiliates, or
consultants of any of them will be responsible or liable for the
tax consequences to him or her of an investment in the Company. He
or she will look solely to, and rely upon, his or her own advisers
with respect to the tax consequences of this investment.
Nothwithstanding, the Company shall make sufficient distributions
to the Members to satisfy any taxes attributed to the Members as a
result of their ownership interest(s) in the Company.
11.19 No
Assurance of Tax Benefits. He or she acknowledges that there
can be no assurance that the Code or the Regulations will not be
amended or interpreted in the future in such a manner so as to
deprive the Company and the members of some or all of the tax
benefits they might now receive, nor that some of the deductions
claimed by the Company may not be challenged by the Internal
Revenue Service.
11.20 Indemnity.
He or she shall indemnify and hold harmless the Company, each and
every Manager, each and every other Member, and any officers,
directors, shareholders, managers, members, employees, partners,
agents, attorneys, registered representatives, and control persons
of any such entity 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, by reason of or arising from any misrepresentation
or misstatement of facts or omission to represent or state facts
made by him or her including, without limitation, the information
in this Agreement, against losses, liabilities, and expenses of the
Company, each and every Manager, each and every other Member, and
any offices, directors, shareholders, managers, members, employees,
partners, attorneys, accountants, agents, registered
representatives, and control persons of any such Person (including
attorneys' fees, judgments, fines, and amounts paid in settlement,
payable as incurred) incurred by such Person in connection with
such action, suit, proceeding, or the like.
ARTICLE
XII MISCELLANEOUS
12.1 Counsel
to the Company. Counsel to the Company may also be counsel
to any Manager or any Affiliate of a Manager. The Manager may
execute on behalf of the Company and the Members any consent to the
representation of the Company that counsel may request pursuant to
the Utah Rules of Professional Conduct or similar rules in any
other jurisdiction ("Rules").
12.2 Complete
Agreement. This Agreement and the Articles constitute the
complete and exclusive statement of agreement among the Members and
the Manager with respect to the subject matter herein and therein
and replace and supersede all prior written and oral agreements or
statements by and among the Members and the Manager or any of them.
No representation, statement, condition or warranty not contained
in this Agreement or the Articles will be binding on the Members or
the Manager or have any force or effect whatsoever. To the extent
that any provision of the Articles conflict with any provision of
this Agreement, the Articles shall control.
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12.3. Binding
Effect. Subject to the provisions of this Agreement relating
to transferability, this Agreement will be binding upon and inure
to the benefit of the Members, and their respective successors and
assigns.
12.4. Jurisdiction.
Each Member hereby consents to the exclusive jurisdiction of the
state and federal courts sitting in Utah in any action on a claim
arising out of, under, or in connection with this Agreement or the
transactions contemplated by this Agreement, provided such claim is
not required to be arbitrated pursuant to Section 12.5. Each Member
further agrees that personal jurisdiction over him or her may be
effected by service of process by registered or certified mail
addressed to the address provided in Exhibit A of this Agreement,
and that when so made shall be as if served upon him or her
personally with the State of Utah.
12.5. Disputed
Matters. The parties to this agreement shall make every
effort to resolve any controversy or dispute arising out of this
Agreement. The parties may elect, based upon the nature of the
controversy or dispute regarding the interpretation of any of the
provisions hereof, or the action or inaction of any Member and/or
the Manager hereunder may be submitted to a third party agreed to
by both Members and/or the Manager, based upon the nature of the
controversy or dispute.
No
action at law or in equity based upon any claim arising out of or
related to this Agreement shall be instituted in any court by any
Member except (a) an action to compel arbitration pursuant to this
Section 12.5 or (b) an action to enforce an award obtained in an
arbitration proceeding in accordance with this Section
12.5.
12.6.
Exhibits. All Exhibits attached
to this Agreement are incorporated and shall be treated as if set
forth herein.
12.7. Severability.
If any provision of this Agreement or the application of such
provision to any person or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision to
persons or circumstances other than those to which it is held
invalid shall not be affected thereby.
12.8. Notices.
Any notice to be given or to be served upon the Company or any
party hereto in connection with this Agreement must be in writing
(which may include facsimile) and will be deemed to have been given
and received when delivered to the address specified by the party
to receive the notice. Any party may, at any time by giving five
(5) days' prior written notice to the other parties, designate any
other address in substitution of the foregoing address to which
such notice will be given.
12.9. Amendments.
All amendments to this Agreement will be in writing and signed by
all of the Members.
12.10. Reliance
on Authority of Person Signing Agreement. If a Member is not
a natural person, neither the Company nor any Member will (a) be
required to determine the authority of the individual signing this
Agreement to make any commitment or undertaking on behalf of such
entity or to determine any fact or circumstance bearing upon the
existence of the authority of such individual or (b) be responsible
for the application or distribution of proceeds paid or credited to
individuals signing this Agreement on behalf of such
entity.
-24-
12.11 No
Interest in Company Property; Waiver of Action for
Partition. No Member or Economic Interest Owner has any
interest in specific property of the Company. Without limiting the
foregoing, each Member and Economic Interest Owner irrevocably
waives during the term of the Company any right that he or she may
have to maintain any action for partition with respect to the
property of the Company.
12.12 Multiple
Counterparts. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same
instrument.
12.13 Attorney
Fees. In the event that any dispute between the Company and
the Members or among the Members should result in litigation or
arbitration, the prevailing party in such dispute shall be entitled
to recover from the other party all reasonable fees, costs and
expenses of enforcing any right of the prevailing party, including
without limitation, reasonable attorneys' fees and
expenses.
12.14
Time is of the
Essence. All dates and times in this Agreement are of the
essence.
12.15
Remedies Cumulative. The
remedies under this Agreement are cumulative and shall not exclude
any other remedies to which any person may be lawfully
entitled.
12.16 No
Third Party Beneficiary. The Agreement is made solely and
specifically among and for the benefit of the parties hereto, and
their respective successors and assigns subject to the express
provisions hereof relating to successors and assigns, and no other
person will have any rights, interest, or claims hereunder or be
entitled to any benefits under or on account of the Agreement as a
third party beneficiary or otherwise.
12.17 Not
for Benefit of Creditors. The provisions of the Agreement
are intended only for the regulation of relations among Members and
Company. The Agreement is not intended for the benefit of a
creditor who is not a Member and does not grant any rights to or
confer any benefits on any creditor who is not a Member or any
other person who is not a Member, a Manager, or an
officer.
12.18 Publicity.
None of the parties will make any disclosure of the transactions
contemplated by the Agreement or the other agreements, or any
discussions in connection therewith, without the prior written
consent of each of the other parties. The preceding sentence shall
not apply to any disclosure required to be made by the Act or other
applicable law as reasonably determined by counsel to the party
determining that such disclosure is required, except that such
party, whenever practicable, shall be required to consult with the
other party concerning the timing and content of such disclosure
before making it.
12.28
No
Responsibility for Pre-Formation Commitments. In the event
that any Member (or any of such Member's shareholders, or
Affiliates) has incurred any indebtedness or obligation prior to
the date hereof that related to or otherwise affects Company,
neither Company nor any other Member shall have any liability or
responsibility for or with respect to such indebtedness or
obligation unless such indebtedness or obligation is assumed by
Company pursuant to a written instrument signed by all Members.
Furthermore, neither Company nor any Member shall be responsible or
liable for any indebtedness or obligation that is hereafter
incurred by any other Member (or any of such Member's shareholders
or Affiliates). In the event that a Member or any of such Member's
shareholders or Affiliates, (collectively, the "liable Member"),
whether prior to or after the date hereof, incurs (or has incurred)
any debt or obligation for which neither Company nor the other
Members have any responsibility or liability, the liable Member
shall indemnify and hold harmless Company and the other Members
from any liability or obligation they may incur in respect
thereof.
-25-
IN
WITNESS WHEREOF, all of the Members of THE CHOSEN, LLC, a Utah Limited Liability Company,
have executed this Agreement, effective as of the date written
above.
MANAGER:
THE
CHOSEN PRODUCTIONS, LLC
By:
/s/ ▇▇▇▇▇▇
▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇
Title:
Manager
[Manager Signature Page to the Operating Agreement]
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|
|
MEMBERS:
|
|
|
|
|
|
|
|
|
For Individuals:
Name of
Individual:
Signature:
Address:
__________________________________________
|
|
|
For Entities:
Name of
Entity:
By:
Name:
Title:
Address:
__________________________________________
|
[Members Signature Page to the Operating
Agreement]
-27-
EXHIBIT
A THE CHOSEN, LLC
|
Member and Address
|
Percentage of
Membership
Interests
|
Class A
Preferred Units
|
Common Units
|
|
The
Chosen Productions, LLC
▇ ▇
▇▇▇▇ ▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
100%
|
N/A
|
1,300,000
|
|
TOTAL
|
100%
|
N/A
|
1,300,000
|
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