EXHIBIT 10.17
OPERATING AGREEMENT
FOR
BOSTON MEDICAL MARKETING,
a limited liability company
ARTICLE 1.
DEFINITIONS
The following capitalized terms are used in this Operating Agreement with
the meanings thereafter ascribed:
"Affiliate" means (a) in the case in an individual, any relative of such
Person, (b) any officer, directors, trustee, partner, manager, employee or
holder of ten percent (10%) or more of any class of the voting securities of or
equity interest in such Person; (c) any corporation, partnership, limited
liability company, trust or other entity controlling, controlled by or under
common control with such Person; or (d) any officer, director, trustee, partner,
manager, employee or holder of ten percent (10%) or more of the outstanding
voting securities of any corporation, partnership, limited liability company, or
trust or other entity controlling, controlled by or under common control with
such Person.
"Articles of Organization" means the Articles of Organization of Boston
Medical Marketing as filed with the Secretary of State of Nevada as the same may
be amended from time to time.
"Capital Account" means a capital account maintained in accordance with the
rules contained in Treas. Reg. Section 1.701-1(b)(2) as maintained in accordance
with the rules contained in Treas. Reg. Section 1.701-1(b)(2) as maintained in
accordance with applicable rules under the Code and as set forth in Treas. Reg.
Section 1.704-1(b)(2)(4) as amended form time to time.
"Capital Contribution" means any contribution to the capital of the Company
in cash or property by a Shareholder whenever made.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" means Boston Medical Marketing, a Limited Liability Company.
"Deceased Holder" has the meaning ascribed to such term in Section 6.5
hereof.
"Disposition" means any transfer or attempted transfer of all or any part
of the rights and incidents of ownership of the Shares, including, in the case
of a Shareholder, the right to vote, and the right to possession of shares as
collateral for indebtedness, whether such transfer is outright or conditional,
inter vivos or testamentary, voluntary or involuntary, or for or without
consideration.
"Distributable Cash" means all cash, revenues, and funds received by the
Company from Company operations, less the sum of the following to the extent
paid or set aside by the Company: (a) all principal and interest payments on
indebtedness of the Company and all other sums paid to lenders; (b) all cash
expenditures incurred incident to the normal operation of the Company's
business; (c) such Reserves as the Board of Managers deems reasonably
necessary to the proper operation of the Company's business.
"Economic Interest" means a Shareholder's share of the Company's Net
Profits, Net Losses and distributions of the Company's assets pursuant to this
Operating Agreement with share shall be equal to the quotient of the number of
Shares held of record by such Shareholder divided by the total number of Shares
then outstanding.
"Economic Interest Holder" means a holder of Shares which only represent an
Economic Interest and not any right to vote or otherwise participate in the
affairs or management of the Company.
"Entity" means any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
cooperative, or association or any foreign trust or foreign business
organization.
"Event of Dissolution" means an event so defined in NRS 86.491.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" at any time and from time to time means the quotient of
(a) the fair market value of the Company as of the date immediately prior to the
relevant meaning, as determined in good faith by the Board of Managers of the
Company, divided by (b) the total number of Shares outstanding on the applicable
date. In making the determination of the Fair Market Value pursuant to this
subsection, the Board of Managers shall assume that fair market value of the
Company is equal to the amount which would be paid in cash for the Company, as a
going concern, by an unaffiliated third party financial buyer, and may take into
account such additional factors as may be relevant to such valuation, including
without limitation, the absence of a trading market for the Shares, the minority
status of the Shares, and such other facts and circumstances as may be material.
The Board of Managers may, but shall not be obligated to, engage in the services
of a reputable, experience investment banking firm to assist it in the
determination of Fair Market Value. The cost of determining Fair Market Value
shall be borne by the Company.
"Fiscal Year" means the Company's fiscal year, which shall be the calendar
year.
"Initial Capital Contribution" means the initial contribution to the
capital of the Company made by a Shareholder pursuant to this Operating
Agreement, which shall be $.0001 per Share.
"Manager" means one or more Persons designated or elected to the Board of
Managers pursuant to this Agreement.
"Net Capital Contribution" as to a Shareholder means the aggregate Capital
Contribution by such Shareholder reduced by the amounts distributed to such
Shareholder as returns of capital.
"Net Losses" means the Company's taxable loss as computed under the Code.
"Net Profits" means the Company's taxable income and gain as computed under
the Code.
"Nevada Act" means Chapter 86 of the Nevada Revised Statutes ("NRS").
"New Securities" has the meaning ascribed to such term in Section 6.10
hereof.
"Officer" means one or more persons appointed by the Board of Managers
pursuant to Article 6 hereof.
"Operating Agreement" means this Operating Agreement as originally executed
and as amended from time to time.
"Permitted Disposition" means a Disposition by an assignment of an Economic
Interest in the Company (evidenced by the Shares to be assigned):
(a) to which each Shareholder consents in writing;
(b) effected pursuant to the provisions of Section 12.1 hereof; or
(c) to a member o such Shareholder's immediate family, as defined in the
regulations promulgated under Section 15 of the Exchange Act, or to
any trust for his or their benefit.
The foregoing notwithstanding, no Permitted Disposition shall entitle the
transferee to the rights and benefits of a Shareholder, unless and until such
transferee is admitted to the Company as a Shareholder in the manner described
in Article 14 hereof. In addition, no Disposition shall be a Permitted
Disposition unless the Transferring Shareholder shall have obtained in written
agreement of the transferee, that such transferee will be bound by, and the
Shares proposed to be transferred will be subject to, the restrictions on
transfer in Article 13 of this Operating Agreement.
"Person" means any individual or entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such "Person"
where the context so permits.
"Preferred Return" means an amount computed as if it were interest to each
Shareholder's Net Capital Contribution, from time to time, as determined by the
Board of Managers from time to time.
"Prime Rate" means the "prime rate" as announced from time to time.
"Reserve" means with respect to any fiscal period, funds set aside or
amounts allocated during such period to reserves which shall be maintained in
amounts deemed sufficient by the Board of Managers for working capital and to
pay taxes, insurance, debt service, or other costs or expenses incident to the
ownership or operation of the Company's business.
"Shareholder" means each of the parties who executes a counterpart of this
Operating Agreement as a Shareholder and each of the parties who may hereafter
become Shareholders pursuant to this Agreement. If a Manager has purchased or
received a Shareholder Interest in the Company, such Manager will have all the
rights of a Shareholder with respect to such Shareholder Interest, and the term
"shareholder" as used herein shall include a Manager to the extent such Manager
has purchased a Shareholder Interest in the Company. If a Person is an
Shareholder immediately prior to the purchase or other acquisition by such
Person or an Economic Interest, such Person shall have all the rights of a
Shareholder with respect to such purchased or otherwise acquired Shareholder
Interest or Economic Interest, as the case may be.
"Shareholder Interest" means a Shareholder's entire interest in the Company
consisting of such Shareholder's Economic Interest together with the right to
vote on, consent to, or otherwise participate in any decision or action of or by
the Shareholders granted pursuant to this Operating Agreement or the Nevada Act.
A Shareholder is entitled to one vote for each Share held by such Shareholder on
all matters that require or are submitted by the Board of Managers to a vote or
other action by the Shareholders.
"Shares" are the basis for determining a Shareholder's share of the Net
Profits and Net Losses, distributions of the Company's assets pursuant to this
Operating Agreement, and the voting rights of Shareholders. Shares shall be
evidenced by certificates in the form approved by the Board of Managers. Shares
shall be designated as either Class A Common Stock or Class B Common Stock,
pursuant to Article 8.
"Transaction" means the Company shall consummate (a) a sale of all or
substantially all of the assets of the Company, (b) the merger of the Company
into another person or any consolidation, share exchange, combination,
reorganization, or like transaction in which the Company is not the survivor or
in which Persons holding a majority of the Shares of the Company issued and
outstanding immediately prior to the consummation of such transaction and any
related transaction hold less than a majority of the issued and outstanding
equity interests of the resulting or surviving person immediately after the
consummation of such transaction or transactions, or (c) a sale or transfer of
85% or more of the issued and outstanding Shares of the Company held by
Shareholder.
"Transferring Shareholder" means Shareholder who sells, assigns, pledges,
hypothecates, or otherwise transfers for consideration or gratuitously all or
any portion of the Shares held of record by such Shareholder.
"Treasury Regulations" or "Regulations" means the Federal Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Withdrawing Shareholder" means a Shareholder who counts or incurs in Event
of Dissociation within the meaning of NRS 86.491.
ARTICLE 2
BUSINESS OF COMPANY
The Company may engage in any lawful business whatsoever, or which shall at
any time appear conducive to or expedient for the protection or benefit of the
Company and its assets. The Company shall have all powers necessary to or
reasonably connected with the Company's business which may be legally exercised
by a limited liability company under the Nevada Act or which are necessary,
customary, convenient, or incident to the realization of its business purpose.
ARTICLE 3
NAMES AND ADDRESSES OF SHAREHOLDERS
The names and addresses of the Shareholders are set out on Schedule 1
hereto under the caption Shareholder's Name and Address.
ARTICLE 4
RIGHTS AND DUTIES OF MANAGERS
Section 4.1 Management. The full and entire management of the business and
affairs of the Company shall be vested in the Board of Managers which shall have
and may exercise all of the powers that may be exercised or performed by the
Company. Except for situations in which the approval of the Shareholders is
expressly required by this Operating Agreement or by non-waivable provisions of
applicable law, the Board of Managers shall have full and complete authority,
power and discretion to manage and control the business, affairs, and properties
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.
Section 4.2 Number, Tenure, and Qualifications. The Board of Managers shall
initially consist of five (5) persons. The Shareholders shall, from time to
time, fix by resolution the precise number of the Board of Managers, provided
that there shall be not less than five (5) nor more than twelve (12) Managers.
Managers shall be elected at each annual meeting of Shareholders and shall hold
office until the first to occur of the death (or dissolution as the case may
be), resignation, or removal of such Manager, or until a successor to such
Manager shall been elected and qualified.
Section 4.3 Manner of Action,. Quorum. At any time when there is more than
one Manager, the Board of Managers may not take any action permitted to be taken
by the Board of Managers, unless the Board of Managers act at any regular or
special meeting held in accordance with Section 4.5 hereof or by unanimous
written consent in accordance with Section 4.6 of this Operating Agreement. A
majority of the Board of Managers shall constitute a quorum for the transaction
of business at any meeting. All resolutions adopted and all business transacted
by the Board of Managers shall require the affirmative vote of a majority of the
Managers present at the meeting. Managers need not be residents of the State of
Nevada or Shareholders of the Company.
Section 4.4 Vacancies. The Managers may fill the place of any Manager which
may become vacant prior to the expiration of his term, such appointment by the
Managers to continue until the expiration of the term of the Manager whose place
has become vacant, or may fill any vacancy created by reason of an increase in
the number of Managers, such appointment by the Managers to continue for a term
of office until the next election of Managers by the Shareholders and until the
election of the successor.
Section 4.5 Meetings. The Managers shall meet annually, without notice,
following the annual meeting of the Shareholders. The Board of Managers may set
any number of regular meetings by resolution. No notice need be given for any
annual or regular meeting of the Board of Managers. Special meetings of the
Managers may be called at any time by any two Managers, on two days written
notice to each manager, which notice shall specify the time and place of the
meeting. Notice of any such meeting may be waived by an instrument in writing
executed before or after the meeting. Managers may attend and participate in
meetings either in person or by means of conference telephones or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such
communication equipment shall constitute presence in person at any meeting.
Attendance in person at such meeting shall constitute a waiver of notice
thereof.
Section 4.6 Action in Lieu of Meeting. Any action to be taken at a meeting
of the Managers, or any action that may be taken, shall be signed by all of the
Managers and any further requirement of law pertaining to such consents have
been complied with.
Section 4.7 Removal. Any Manager may be removed from office with cause,
upon the majority vote of the Shareholders, at a meeting with respect to which
notice of such purpose is given. For purposes of this provision, cause shall be
defined as conduct which is fraudulent or otherwise detrimental to the business
and/or reputation of the Company.
Section 4.8 Certain Powers of the Board of Managers. The Board of Managers
shall have plenary power and authority to conduct the business of the Company.
Without limiting the generality of the preceding sentence or the powers
described in Section 4.1 hereof, the Board of Managers shall have full power and
authority to authorize the Company.
(a) To acquire property from any Person as the Board of Managers may
determine. The fact that a Manager or a Shareholder is directly or indirectly
affiliated or connected with any such person shall not prohibit the Board of
Managers from dealing with that Person.
(b) To borrow money for the Company from banks, other lending institutions,
one or more Manager, Shareholder, or affiliates of a Manager or Shareholders on
such terms as the Managers deem appropriate, and in connection therewith, to
hypothecate, encumber and grant security interest in the assets of the Company
to secure repayment of the borrowed sums. NO debt shall be contracted or
liability incurred by or on behalf of the Company except by the Board of
Managers, or to the extent permitted under the Nevada Act, by agents or
employees of the Company expressly authorized to contract such debt or incur
such liability by the Board of Managers.
(c) To purchase liability and other insurance to protect the Company's
property and business.
(d) To invest any Company funds temporarily (by way of example but not
limitation) in time deposits, short-term governmental obligations, commercial
paper or other investments.\
(e) Upon the affirmative vote of the Shareholders holding at least a
majority of the Shares held by the Shareholders, to sell or otherwise dispose of
all or substantially all of the assets of the Company as part of a single
transaction or plan so long as such disposition is not in violation of or a
cause of a default under any other agreement to which the Company may be bound.
The affirmative vote of the Shareholders shall not be required with respect to
any sale or disposition of the Company's assets in the ordinary course of the
Company's business.
(f) To execute on behalf of the Company all instruments and documents,
including, without limitation, checks; drafts; notes and other negotiable
instruments; mortgages or deeds of trust; security agreements; financing
statements; documents providing for the acquisition, mortgage or disposition of
the Company's property; assignments; bills of sale; leases; partnership
agreements, operating agreement of other limited liability companies; and any
other instruments or documents necessary, in the opinion of the Board of
Managers, to the business of the Company.
(g) To employ accountants, legal counsel, managing agents, or other experts
to perform services for the Company and to compensate them from Company funds.
(h) To enter into any and all other agreements on behalf of the Company,
with any other Person for any purpose, in such forms as the Board of Managers
may approve.
(i) To create offices and to delegate executive responsibility to them, and
to appoint individuals, who need not be Managers, to serve as such officers at
the pleasure of the Board of Managers.
(j) To do and perform all other acts as may be necessary or appropriate to
the conduct of the Company's business.
(k) To issue authorized but unissued Shares.
(l) To fix, without Shareholder action, the relative rights, privileges,
preferences as to (i) allocations of taxable income, gain, and loss and (ii)
distributions.
Unless authorized by the Board of Managers, no attorney-in-fact, employee,
or other agent of the Company shall have any power or authority to bind the
Company in any way, to pledge it credit, or to render it liable pecuniary for
any purpose. NO Shareholder shall have any power or authority to bind the
Company unless the Shareholder has been authorized by the Board of Managers to
act as an agent of the Company in accordance with the previous sentence.
Section 4.9 Liability for Certain Acts. No Manager shall be liable to the
Company or to any Shareholder for any loss or damage sustained by the Company or
any Shareholder except loss or damage resulting from (a) intentional misconduct,
(b) knowing violation of law, or (c) a transaction from which such Manager
received an improper personal benefit in violation or breach of the provisions
of this Operating Agreement or the Nevada Act. The Managers shall be entitled to
rely on information, opinions, reports, or statements, including but not limited
to financial statements or other financial data, prepared or presented by any
Officer or by third persons employed by an Officer.
Section 4.10 Indemnity of the Managers, Officers, Employees, and Other
Agents. To the fullest extent permitted by the Nevada Act, the Company shall
indemnify the Managers and its Officers, if any, from and against all costs of
defense (including reasonable attorneys' fees), judgments, fines, and amounts
paid in settlement suffered by a Manager because a Manager was made a party to
an action because the Manager is or was a Manager or an Officer of the Company
or an Officer, director, partner, or manager of another Person at the request of
the Company, and make advances for expenses to such Managers and officers with
respect to such matters to the maximum extent permitted under applicable law.
Section 4.11 Resignation. Any Manager of the Company may resign at any time
by giving written notice to the Shareholders of the Company. The resignation of
any Manager as a Manager shall take effect upon receipt of notice thereof or at
such later time as shall be specified in such notice, and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. The resignation of a Manager who is also a Shareholder shall
not affect the Manager's rights as a Shareholder and shall not constitute an
Event of Dissolution as to such Manager.
Section 4.12 Officers' and Managers' Compensation. Any salaries or other
compensation of the Officers shall be fixed by the Board of Managers, and no
Officer shall be prevented from receiving such salary by reason of the fact that
he is also a Shareholder of the Company. Managers who are employees of the
Company shall not receive special or separate compensation for serving as the
Board of Managers, but may receive compensation as Officers or employees.
ARTICLE 5
OFFICERS
Section 5.1 General Provisions. The Officers of the Company shall consist
of a President, and a Secretary/Treasurer who shall be elected by the Board of
Managers, and such other officers as may be elected by the Board of Managers or
appointed as provided in this Operating Agreement. Each Officer shall be elected
or appointed for a term of office running until the meeting of the Board of
Managers following the next annual meeting of the Shareholders, or such other
term as provided by resolution of the Board of Managers or the appointment to
office. Each Officer shall serve for the term of office for which he or she is
elected or appointed and until his or her successor has been elected or
appointed and has qualified or his or her earlier resignation, removal from
office, or death. Any two or more offices may be held by the same person, except
that the President and the Secretary/Treasurer shall not be the same person.
Section 5.2 President. The President shall be the chief executive officer
of the Company and shall have general and active management of the operation of
the Company subject to the authority of the Board of Managers. The President
shall be responsible for the administration of the Company, including general
supervision of the policies of the Company and general active management of the
financial affairs of the Company, and shall execute bonds, mortgages, or other
contracts in the name and on behalf of the Company.
Section 5.3 Vice President. The Company may have one or more Vice
Presidents, elected by the Board of Managers or appointed by the President, who
shall perform such duties and have such powers as may be delegated by the
President or the Board of Managers.
Section 5.4 Secretary/Treasurer. The Secretary shall keep minutes of all
meetings of the Shareholders and the Board of Managers and have charge of the
minute books and shall perform such other duties and have such other powers as
may from time to time be delegated to him or her by the President or the Board
of Managers. The Secretary/Treasurer shall be charged with the management of the
financial affairs of the Company, shall have the power to recommend action
concerning the Company's affairs to the President, and shall perform such other
duties and have such other powers as may from time to time be delegated to him
or her by the President or the board of Managers.
ARTICLE 6
RIGHTS AND OBLIGATIONS OF SHAREHOLDERS
Section 6.1 Limitation on Liability. Each Shareholder's liability shall be
limited as provided in the Nevada Act.
Section 6.2 No Liability for Company Obligations. No Shareholder will have
any personal liability for any debts or losses of the company beyond such
Shareholder's Capital Contributions, except as provided by law.
Section 6.3 Priority and Return of Capital. Except as may be expressly
provided in Article 10, no Shareholder shall have priority over any other
Shareholder, either as to the return of Capital Contributions or as to Net
Profits, Net Losses, or distributions. This Section 6.4 shall not apply to loans
(as distinguished from Capital Contributions) which a Shareholder has made to
the Company.
Section 6.4 Purchase Upon Death. Upon the death of any Shareholder or the
dissolution of a corporate Shareholder (the "Deceased Shareholder"), the Company
shall have the irrevocable option, exercisable for 6 months after the date of
death of the Deceased Shareholder, to purchase from the estate of such Deceased
Shareholder, all Shares then owned by the estate of the Deceased Shareholder.
The Purchase Price for such Shares shall be the Fair Market Value and shall be
paid by delivery of an unsecured promissory note of the Company, payable to the
order of the Deceased Shareholder (or the personal representative, executor, or
administrator of the Deceased Shareholder, as the case may be), and bearing
interest at the Prime Rate in effect on the date of the closing plus tow
percentage points, with accrued and unpaid interest being due on each principal
installment payment date. The principal amount of such note shall be payable in
(i) eight (8) equal quarterly installments if the original principal amount of
the note is equal to or less than $1,500,000, (ii) sixteen (16) equal quarterly
installments if the original principal amount of the note is greater than
$1,500,000 but equal to or less than $2,000,000; or (iv) twenty (20) equal
quarterly installments if the original principal amount is greater than
$2,000,000. Payment of quarterly installments shall commence on the first three
month anniversary of the closing date of any purchase of Shares pursuant to this
Section 6.5, payable to the order of the Deceased Shareholder (or the personal
representative, executor, or administrator of the Deceased Shareholder, as the
case may be).
Section 6.5 Failure to Deliver Shares to the Company. If a Shareholder
becomes obligated to sell any Shares to the Company or to the Other Shareholders
under this Agreement (the "Obligated Shareholder") and fails to deliver such
Shares in accordance with the terms of this Agreement, the Company or such Other
Shareholders (as hereinafter defined) may, in addition to all other remedies it
may have, tender to the Obligated Shareholder, at the address set forth in the
Share transfer records of the Company, the purchase price for such Shares as is
herein specified, and (i) in the case of Shares to be sold to the Company
pursuant to this Agreement, cancel such Shares on its books and records
whereupon all of the Obligated Shareholder's right, title and interest in and to
such Shares shall terminate, (ii) in the case of Shares to be sold to an Other
Shareholder under this Agreement, issue certificates representing such Shares to
the Other Shareholder and register the Other Shareholder on its Company's books
and records as the record owner of the Shares whereupon all of the Obligated
Shareholder's right, title and interest in and to such Shares shall terminate.
Section 6.6 Company's Inability to Purchase. If the Company is entitled to
purchase the Shares of a Shareholder pursuant to this Agreement and the Company
at such time is unable to fulfill its obligations hereunder because of the
Company's commitments to creditors or because of Board of Managers has
determined that the Company does not have financial wherewithal to perform the
obligation of the Company, the Company may assign its rights or delegate its
obligations hereunder to all other Shareholders (the "Other Shareholders'). Each
Other Shareholder shall have the right to purchase up to such Shareholder's
pro-rata Share made available on a pro-rata basis, to the other Shareholder who
did purchase a pro-rata allocation. The Other Shareholders may then perform all
of the obligations of the Company, and exercise all rights of the Company, with
respect to the purchase of such Shares.
Section 6.7 Status of Shares Purchased by Company. Shares purchased by the
Company pursuant thereto shall not be deemed to be outstanding, and shall revert
to authorized, and unissued Shares.
Section 6.8 Minimum Distributions. The Company shall, unless restricted or
prohibited by the Nevada Act unless the Board of Managers determines otherwise,
make at least annually distributions to Shareholders in an amount that is deemed
by the Board of Managers sufficient to pay the combined estimated federal and
state income tax liability of Shareholders resulting solely from inclusion of
the operating results of the Company on the personal tax returns of the
Shareholders. The Board of Managers shall not be required to consider the
personal circumstances of Shareholders in making determination of the estimated
combined federal and state income tax liability of the Shareholders, and may
make an assumption as to the "tax bracket" applicable to Shareholders as a
group.
Section 6.9 Preemptive Rights to Purchase New Securities. The Company
hereby grants to each Shareholder the right to purchase up to a pro rata share
of any New Securities, as hereinafter defined (the "Purchase Rights"), which the
Company may, from time to time, propose to sell and issue. A pro rata share, for
purposes of this Purchase Right, is a fraction, the numerator of which is the
number of Shares then held by a Shareholder, and the denominator of which is the
total number of Shares then outstanding.
(a) Except as set forth below, "New Securities" shall mean any Ownership
Interest, whether now authorized or not, and any rights, options, or warrants to
purchase said Ownership Interest, and securities of any type that are, or may
become, convertible into Ownership Interests. Notwithstanding the foregoing,
"New Securities" does not include: (i) securities offered to the public
generally pursuant to a registration statement filed pursuant to the Securities
Act of 1933, or pursuant to Regulation A under the Securities Act of 1933; (ii)
securities issued pursuant to the acquisition of another Person by the Company
by a merger, share exchange, the purchase of substantially all of the assets, or
other reorganization whe3reby the Company or its Shareholders own not less than
fifty-one percent (51%) of the voting power of the surviving or successor
Person; (iii) Shares or related options exercisable for Shares issued to
employees of, officers, and Managers of the Company pursuant to any plan or
arrangement approved by the board of Managers of the Company; (iv) securities
issued pursuant to any rights or agreements including without limitation
convertible securities, options, and warrants, provided that the Purchase Right
under this Section 6.10 applies with respect to the initial sale of New
Securities or the grant by the Company of such rights or agreements; (v)
securities issued in connection with any recapitalization by the Company.
(b) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Shareholder written notice of its intention,
describing the type of New Securities, and the price and terms upon which the
Company proposes to issue the New Securities. Each Shareholder shall have
fifteen (15) days from the date of receipt of any such notice to agree to
purchase up to its respective pro rata portion of shares of such New Securities
for the price and upon the terms specified in the notice by giving written
notice to the Company of such Shareholder's intentions and stating therein the
quantity of New Secretes to be purchased by such Shareholder.
(c) In the event a Shareholder fails to exercise the Purchase Right within
said fifteen (15) day period, the Company shall have one hundred eighty (180)
days thereafter to sell or enter into a written agreement (pursuant to which the
sale of New Securities covered thereby shall be completed, if at all, within
sixty (60) days form the date of said agreement) to sell the New Securities not
purchased by the Shareholders at a price and upon such terms which are no more
favorable to the purchase of such New Securities than specified in the Company's
notice to the Shareholders. IN the event the Company has not sold the New
Securities or entered into a written agreement to sell the New Securities within
said one hundred eighty (180) day period (or completed the sale of the new
Securities within sixty (60) days from the date of said agreement, as provided
above), the Company shall not thereafter issue or sell any New Securities
without first offering such securities in the manner provided in this Section
6.10.
(d) The Purchase Right granted to a Shareholder under this Section 6.10
shall expire upon the date such Shareholder no longer owns any Shares.
ARTICLE 7
MEETINGS OF SHAREHOLDERS
Section 7.1 Annual Meeting. A meeting of Shareholders shall be held
annually, within six (6) months of the end of the fiscal year of the Company.
The annual meeting shall be held at such time and place and on such date as the
Board of Managers shall determine from time to time and as shall be specified in
the notice of the meeting. Failure to hold the annual meeting of Shareholders as
provided above shall not invalidate any actions taken by the company after the
failure to hold the annual meeting as provided above.
Section 7.2 Special Meetings. Special meetings of Shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
any two (2) Managers or upon the written request of Shareholder or Shareholders
holding at least 25% of the then outstanding Shares held by Shareholders.
Special meetings of Shareholders shall be held at such time and place and on
such date as shall be specified in the notice of the meeting.
Section 7.3 Place of Meetings. Annual or special meetings of Shareholders
may be held within or outside the State of Nevada.
Section 7.4 Notice of Meetings. Written notice of annual or special
meetings of Shareholders stating the place, day, and hour of the meeting shall
be given not less than ten (10) nor more than fifty (50) days before the date of
the meeting, either personally or by mail, by or at the direction of the Board
of Managers or person calling the meeting, to each Shareholder entitled to vote
at such meeting. If mailed, such notice shall be deemed to be given two calendar
days after being deposited in the United States mail, addressed to each
Shareholder at the address of each shareholder as it appears on the books of the
Company, with postage thereon prepaid, Notice of a meeting may be waived by an
instrument in writing executed before or after the meeting. The waiver need not
specify the purpose of the meeting or the business transacted. Attendance at
such meeting in person or by proxy shall constitute a waiver of notice thereof.
Notice of any special meeting of Shareholders shall state the purpose or
purposes for which the meeting is called.
Section 7.5 Meeting of all Shareholders. If all of the Shareholders shall
meet at any time and place, either within or outside the State of Nevada, and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any lawful action may be
taken.
Section 7.6 Record Date. For the purpose of determining Shareholders
entitled to notice of or to vote at any meeting of Shareholders or any
adjournment thereof, or Shareholders entitled to receive payment of any
distribution, or in order to make a determination of Shareholders for any other
purpose, the date on which notice of the meeting is mailed or the date on which
the resolution declaring such distribution is adopted, as the case may e, shall
be the record date for such determination of Shareholders. When a determination
of Shareholders entitled to vote at any meeting of Shareholders has been made as
provided in this Section 7.6, such determination shall apply to any adjournment
thereof.
Section 7.7 Quorum. At all meetings of Shareholders, a majority of the
outstanding Shares held by Shareholders represented at the meeting in person or
by proxy, shall constitute a quorum for the transaction of business. In the
absence of a quorum at any such meeting, a majority of the Shares so represented
may adjourn the meeting from time to time for a period not to exceed sixty (60)
days without further notice. However, if at the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each Shareholder of record entitled to vote at the meeting. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The Shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
during such meeting of that number of Shares whose absence would cause less than
a quorum to be present.
Section 7.8 Manner of Acting. If a quorum is present, the affirmative vote
of Shareholders holding a majority of the Shares represented at the meeting, in
person or by proxy and entitled to vote shall be the act of the Shareholders,
unless the vote of a greater or lesser proportion or number is otherwise
required by the Nevada Act, by the Articles of Organization, or by this
Operating Agreement.
Section 7.9 Actions Requiring Shareholder Approval. In addition to specific
requirements for Shareholder action elsewhere in this Operating Agreement,
(a) The Shareholders hall have the right, by the affirmative vote of
Shareholders holding at least a majority of the Shares held by Shareholders to
approve the (I) sale, exchange, or other disposition if all, or substantially
all, of the Company's assets (other than in the ordinary course of the Company's
business) which is to occur as part of a single transaction or plan, (ii) any
merger of the Company into another Person, if the Company shall not be the
survivor of the Merger and (iii) election of Managers to the Board of Managers.
(b) The Shareholders hall have the right, by the affirmative vote of
Shareholders holding at least a majority of the Shares held by Shareholders to
approve the (I) amendment of the Operating Agreement (other than an amendment to
reflect the designation by the Board of Managers of any special class or series
of authorized but unissued Shares pursuant to the authority granted to the Board
of Managers pursuant to Section 4.8(I) hereof) and (ii) admission of new
Shareholders as provided in Article 14 hereof.
Section 7.10 Proxies. At all meetings of Shareholders, a Shareholder may
vote in person or by proxy executed in writing by the Shareholder or by a duly
authorized attorney-in-fact. Such proxy shall be filed with the Board of
Managers of the Company before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
Section 7.11 Action by Shareholders without a Meeting. Action required or
permitted to be taken at a meeting of Shareholders may be taken without a
meeting if the action is evidenced by one or more written consents describing
the action taken, signed by the Shareholders holding a majority of the
outstanding Shares held by Shareholders, or such greater number as may be
required to approve such action and delivered to the Board of Managers of the
Company for inclusion in the minutes or for filing with the Company records.
Action taken under this Section 7.11 is effective when the Shareholders required
to approve such action have signed the consent, unless the consent specifies a
different effective date. The record date for determining Shareholders entitled
to take action without a meeting shall be the date the first Shareholder signs a
written consent.
Section 7.12 Waiver of Notice. When any notice is required to be given to
any Shareholder, a waiver thereof in writing signed by the person entitled to
such notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
Section 7.13 Meeting by Telephone; Action by Consent. Shareholders may also
meet by conference telephone call if all Shareholders can hear one another on
such call and the requisite notice is given or waived.
ARTICLE 8
AUTHORIZED CAPITAL, CAPITAL CONTRIBUTIONS, AND LOANS
Section 8.1 Authorized Shares. The aggregate number of Shares which the
Company shall have the authority to issue is 5,000,000, of which 4,750,000
share, without par value, shall be designated as Class A Common Stock, and
250,000 shares, without par value, shall be designed as Class B Common Stock.
The Class A Common Stock and Class B Common Stock shall be identical in all
respects and have equal rights and privileges, except as otherwise provided in
this Article 8.
The Board of Managers shall have the authority without Shareholder action
to issue all authorized but unissued Shares (including Treasury Shares) for such
consideration as the Board of Managers deems appropriate.
Section 8.2 Share Certificates. Shares shall be evidenced by a numbered
certificate in such form as shall be approved by the Board of Managers, signed
by the President and the Secretary. Any such Share certificates shall be kept in
a book and shall be issued in consecutive order therefrom. The name of the
person owning the Shares, the number and class of Shares, and the date of issue
shall be entered on the stub of each certificate. Share certificates exchanged
or returned shall be canceled by the Secretary and returned to their original
place in the Share book.
Section 8.3 Voting. Voting shall be divided between the Class A Common
Stock and Class B Common Stock as follows:
In all matters, holder of Class A Common Stock shall be entitled to one
vote per share and holders of Class B Common Stock shall be entitled to twenty
votes per share.
Section 8.4 Transfer of Shares. Transfers of Shares shall be made on the
Share books of the Company by the Transferring Shareholder in person or by power
of attorney, upon surrender of the old certificate evidencing the Shares to be
transferred, duly assigned to the transferee, and only upon compliance with the
provisions of this Operating Agreement. See Section 12.1.
Section 8.5 Capital Contributions. Each initial Shareholder shall make an
Initial Capital Contribution of $.0001 per Share and each Person who thereafter
purchases Shares from the Company shall make a Capital Contribution in an amount
determined by the Board of Managers.
Section 8.6 Additional Contributions. Except as set forth in Section 8.4
hereof, no Shareholder shall be required to make any Capital Contributions or
loans to the Company. TO the extent approved by the Board of Managers, from time
to time Shareholders may be permitted to make additional Capital Contributions
and/or loans if and to the extent they so desire, and if the Board of Managers
determine that such additional Capital Contributions and/or loans are necessary
or appropriate in connection with the conduct of the Company's business
(including without limitation expansion or diversification). In such event,
Shareholders hall have the opportunity (but not the obligation) to participate
in such additional Capital Contributions and/or loans on a pro rata basis in
accordance with the number of Shares held of record.
Section 8.7 Withdrawal or Reduction of Contributions to Capital.
(a) A Shareholder shall not receive out of the Company's property any part
of such Shareholder's Capital Contribution until all liabilities of the Company,
except liabilities to Shareholders on account of their Capital Contributions,
have been paid or there remains property of the Company sufficient to pay them.
(b) A Shareholder, irrespective of the nature of such Shareholder's Capital
Contribution, has only the right to demand and receive cash in return for such
Capital Contribution.
ARTICLE 9
DISTRIBUTIONS
Section 9.1 Distributions. All distributions of cash or other property
shall be made to Shareholders as follows:
(a) First, to Shareholders and Economic Interest Holders until they have
received their full Preferred Returns, such distribution to be in proportion to
their accrued but unpaid Preferred Returns;
(b) Net, to the Shareholder and Economic Interest Holders in the proportion
that the positive Capital Account balance of each such Shareholder and Economic
Interest Holder bears to the positive Capital Account balance of all such
Shareholders and Economic Interest Holders until such balances are reduced to
zero;
(c) Finally, to all Shareholders and Economic Interest Holders pro rata in
accordance with the ratio that the number of Shares held of record by such
Shareholder and Economic Interest Holder bears to all Shares then outstanding.
Section 9.2 Limitation Upon Distributions. No distribution shall be made to
Shareholders if the distribution is prohibited by the Nevada Act.
Section 9.3 Interest on and Return of Capital Contributions. No
Shareholder or Economic Interest Holder shall be entitled to interest on its
Capital Contribution or to the return of its Capital Contribution, except as
otherwise specifically provided for herein.
ARTICLE 10
ALLOCATIONS
Section 10.1 Net Profits. Net Profits shall be allocated for each Fiscal
Year as follows:
(a) First, to Shareholders and Economic Interest Holders until the Net
Profits allocated to them for such Fiscal Year and all prior Fiscal Years is
equal to 50% of the aggregate amount of the Net Losses allocated to them
pursuant to Section 10.2 hereof for all prior Fiscal Years;
(b) Finally, to Shareholders and Economic Interest Holders in the ratio
that the number of Shares held by such Shareholder or economic Interest Holder
bears to all Shares then outstanding.
Section 10.2 Net Losses. Net Losses shall be allocated:
(a) First, to Shareholders and Economic Interest Holders whose Capital
Accounts reflect an initial Capital Contribution, in the proportion that the
positive capital account balances of each of such Shareholders bears to the
positive capital account balances of all Shareholders, until the capital account
balances of such Shareholders equal zero;
(b) Next, to Shareholders and Economic Interest Holders until the aggregate
amount of Net Losses allocated to them for such fiscal year and all prior fiscal
years is equal to the aggregate Net Profit allocated to them pursuant to Section
10.1(C) hereof for all prior Fiscal Years; such allocation to be in the amount
of the Net Profit allocated to each of them pursuant to that Section;
(c) Finally, the balance, to Shareholders and Economic Interest Holders in
the ratio that the number of Shares held by such Shareholder or Economic
Interest Holder bears to all Shares then outstanding.
Section 10.3 Alternative Allocations. It is the intent of the Shareholders
that each Shareholder's distributive share of income, gain, loss, deduction,
credit (or item thereof) be determined and allocated consistently with the
provisions of the Code, including Sections 704(b) and 704(c) of the Code. If in
connection with the issuance of Shares or other new securities pursuant to the
provisions hereof, or if for any other reason, the Managers deem it necessary in
order to comply with the Code, the Managers may, and they hereby are, authorized
and directed to allocate income, gain, loss, deduction or credit (or items
thereof) arising in any year differently than as provided for in this Article 11
if, and to the extent (i) that allocating income, gain, loss, deduction or
credit (or item thereof) would cause the determinations and allocations of each
Shareholder's distributive share of income, gain, loss, deduction or credit (or
item thereof) not to be permitted by the Code and any Treasury Regulations
promulgated thereunder or (ii) inconsistent with a Shareholder's interest in the
Company taking into consideration all facts and circumstances. Any allocation
made pursuant to this Section shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Agreement, an no further amendment
of this Agreement or approval by any Shareholder shall be required to effectuate
such allocation. IN making any such allocations under this Section ("New
Allocations") the Managers are authorized to act in reliance upon advice of
counsel to the Company or the Company's regular certified public accountants
that, in their opinions after examining the relevant provisions of the Code and
any current or future proposed or final Treasury Regulations thereunder, the New
Allocation is necessary in order to ensure that, in either the then-current year
or in any preceding year, each Shareholder's distributive share of income, gain,
loss, deduction or credit (or items thereof) are determined and allocated in
accordance with the Code and the Shareholder's interests in the Company.
New Allocations made by the Managers in reliance upon the advice of counsel
and accountants as described above shall be deemed to be made in the best
interests of the Company and all of the Shareholders consistent with the duties
of the Managers hereunder and any such New Allocations shall not give rise to
any claim or cause of action by any Shareholder or Economic Interest Holder
against the Company or any Manager.
ARTICLE 11
BOOKS AND RECORDS
Section 11.1 Accounting Period. The Company's accounting period shall be
the calendar year.
Section 11.2 Records, Audits and Reports. The Company shall maintain
records and accounts of all operations and expenditures of the Company. The
Company shall keep at its principal place of business the following records:
(a) A current list of the full name and last known address of each
Shareholder, Economic Interest Owner and Manager,
(b) Copies of records to enable a Shareholder to determine the relative
voting rights of each Shareholder if any;
(c) A copy of the Articles of Organization of the Company and all
amendments thereto;
(d) Copies of the Company's federal, state, and local income tax returns
and reports, if any, for the three most recent years;
(e) Copies of the Company's written Operating Agreement, together with any
amendments thereto;
(f) Copies of any financial statements of the Company for the three most
recent years.
Section 11.3 Tax Returns. The Board of Managers shall cause the preparation
and timely filing of all tax returns required to be filed by the Company
pursuant to the Code and all other tax returns deemed necessary and required in
each jurisdiction in which the Company does business. Copies of such returns, or
pertinent information therefrom, shall be furnished to the Shareholders within a
reasonable time after the end of the Company's fiscal year.
Section 11.4 Financial Statements, Reports, etc. The Company shall furnish
to each Shareholder:
(a) within one hundred fifty (150) days after the end of each fiscal year
of the Company, a balance sheet of the Company, as of the end of such fiscal
year and the related statements of income, Shareholders' equity, and changes in
cash flows for such fiscal year, prepared in accordance with generally accepted
accounting principles;
(b) within sixty (60) days after the end of each quarter, other than the
last quarter in each fiscal year, a balance sheet of the Company and an income
statement of the Company, unaudited but prepared in accordance with generally
accepted accounting principals;
(c) promptly following receipt by the Company, each audit response letter,
accountant's management letter, and other written report submitted to the
Company by its independent public accountants in connection with an annual or
interim audit of the books of the Company or any of its subsidiaries.
(d) promptly after the commencement thereof, notice of all actions, suits,
claims, proceedings, investigations, and inquiries that could materially
adversely affect the Company;
(e) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property, or affairs of
the Company as to shareholders may reasonably request.
Section 11.5 Compliance with Laws. The Company shall comply with all
applicable laws, rules, regulations, and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
Section 11.6 Keeping of Records and Books of Account. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles, consistently
applied, reflecting all financial transactions of the Company and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts, and other purposes in connection with its
business shall be made.
ARTICLE 12
TRANSFERABILITY
Section 12.1 Transfer Restricted. No Shareholder Interest in the Company or
Corporation owning an interest in the Company may be transferred to a Person
without the prior written approval of (a) all of the Managers and (b)
Shareholders holding Shares constituting at least two-thirds (66.67%) of all
Shares. No Shareholder may Dispose of such Shareholder's Economic Interest in
the Company evidenced by the Shares unless such Disposition is a Permitted
Disposition.
Section 12.2 Successors to Economic Rights. References in this Operating
Agreement to Shareholder shall also be deemed to constitute a reference to
Economic Interest Owners where the provisions would include those regarding
Capital Accounts, distributions, allocations, and contributions. A transferee
shall succeed to the transferor's Capital Contributions and Capital Account to
the extent related to the Economic Interest transferred, regardless of whether
such transferee becomes a Member.
ARTICLE 13
ADMISSION OF NEW SHAREHOLDERS
At any time after the date of the formation of the Company, an Person,
including a person who, by virtue of a Permitted Disposition becomes a holder of
an Economic Interest in the Company (a "Permitted Transferee") may become a
Shareholder if (a) such Person is approved in writing by all of the Managers and
(b) the admission of such person as a Shareholder is approved in writing by
Shareholders holding at least two-thirds (66.67%) of the outstanding Shares held
by Shareholders. Upon the occurrence of (a) and (b) in the preceding sentence,
such Person shall be admitted as a Shareholder of the Company by (i) executing a
counterpart of this Agreement and (ii) if the Person is not a transferee in
connection with a Permitted Disposition, the payment of a Capital Contribution
in an amount determined by the Board of Managers and/or the payment of the
purchase price of the stock to be issued, said price to be determined by the
Board of Managers. Upon delivery to the Company of cash of such Capital
Contribution, and/or purchase price the Company shall issue a certificate
evidencing the number of Shares purchased in connection with the Shareholder
Interest acquired by such Person. No additional Shareholders (or substitute
Shareholders) shall be entitled to any retroactive allocation of losses, income
or expense deductions incurred by the Company. The Board of Managers may, at the
time of Shareholder is admitted, close the Company books (as though the
Company's tax year had ended) or make pro rata allocations of loss, income, and
expense deductions to a new Shareholder for that portion of the Company's tax
year in which a Shareholder was admitted in accordance with the provisions of
706(d) of the Code and the Treasury Regulations promulgated thereunder.
ARTICLE 14
DISSOLUTION AND TERMINATION
Section 14.1 Dissolution.
(a) The Company shall be dissolved upon the occurrence of any of the
following events:
(i) by the vote or written consent of Shareholders holding at least a
majority of the Shares; or
(ii) the sale of all or substantially all of the Company's assets and
the collection of all proceeds therefrom; or
(iii) notwithstanding the above, the Company shall dissolve, at the
latest, at the time specified in Section 1.5.
(b) If the Company is continued after the occurrence of an Event of
Dissolution pursuant to this Section, any successor in interest of the
Shareholder as to whom the Event of Dissolution occurred shall become an
Economic Interest Owner but shall not be admitted as a Shareholder except in
accordance with Article 14 hereof.
(c) A Shareholder shall not voluntarily withdraw from the Company or take
any other voluntary action which causes an Event of Dissolution. A Shareholder
shall have no right to withdraw from the Company.
(d) Unless otherwise approved by Shareholders holding at least a majority
of the Shares held by the other Shareholders, a Shareholder who suffers or
incurs an Event of Dissolution or whose status as a Shareholder is otherwise
terminated (a "Withdrawing Shareholder)", regardless of whether such termination
was the result of a voluntary act by such Withdrawing Shareholder, shall not be
entitled to receive the fair value of his Membership Interest, and such
Withdrawing Shareholder shall become an Economic Interest Owner.
(e) Damages for breach of Section 14.1(C) shall be monetary damages only
(and not specific performance), and such damages may be offset against
distributions by the Company to which the Withdrawing Shareholder would
otherwise be entitled.
Section 14.2 Effective of Dissolution. Upon dissolution, if the business of
the Company is not continued, the Company shall commence to wind up its affairs
and shall file a statement of commencement of winding up, and publish the notice
permitted by the Nevada Act.
Section 14.3 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made by the company's
independent accountants of the accounts of the Company and of the Company's
assets, liabilities, and operations, from the date of the last previous
accounting until the date of dissolution. The Manager(s) shall then immediately
begin to wind up the affairs of the Company consistent with maximization of
realization as the company's assets. All Shareholders acknowledge that final
collection of such indebtedness and distribution with respect thereto may extend
over a period of years and that winding up will proceed consistently with the
foregoing.
(b) If the Company is dissolved and its affairs are to be wound up, the
Board of Managers shall:
(i) Sell or otherwise liquidate all of the Company's assets consistent
with realization of full value of such assets and collection of any assets
outstanding (except to the extent the Manager(s) may determine to
distribute any assets to Shareholders and Economic Interest Holders in
kind),
(ii) Allocate any profit or loss resulting from such sales to
Shareholders in accordance with Section 10 hereof,
(iii) Discharge all liabilities of the Company, including liabilities
to Shareholders who are creditors, to the extent otherwise permitted by
law, other than liabilities to Shareholders for distributions, and
establish such Reserves as may be reasonably necessary to provide for
contingent or liabilities of the Company.
(iv) The remaining assets shall be distributed to Shareholders and
Economic Interest Holders, either in cash or in kind, as determined by the
Board of Managers, with any assets distributed in kind being valued for
this purpose at their fair market value, in accordance with the positive
balance (if any) in each Shareholder's or Economic Interest Holder's
Capital Account (as determined after taking account all Capital Account
adjustments for the Company's taxable year during which the liquidation
occurs) with the balance, if any, being distributed pro rata to the
Shareholders and Economic Interest Holders in accordance with the Economic
Interests held by such holders. Any such distributions in respect of their
Capital Accounts shall be made in accordance with the time requirements set
forth in Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury Regulations.
(v) If any assets of the Company are to be distributed in kind, the
net fair market value of such assets as of the date of dissolutions has be
determined by independent appraisal or by the Board of Managers.Such assets
shall be deemed to have been sold as of the date of dissolution for their
fair market value, and the Capital Accounts of Shareholders shall be
adjusted pursuant to the provisions of this Operating Agreement to reflect
such deemed sale.
(c) Notwithstanding anything to the contrary in this Operating Agreement,
upon a liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Treasury Regulations, if any Shareholder or Economic Interest Holder has a
deficit Capital Account (after giving effective to all contributions,
distributions, allocations, and other Capital Account adjustments for all
taxable years, including the year during which such liquidation occurs), such
Shareholder or Economic Interest Holder shall ▇▇▇▇ no obligation to make a
Capital Contribution sufficient to eliminate the negative balance of such
Shareholder's Capital Account.
(d) Upon completion of the winding up, liquidation, and distribution of the
assets, the Company shall be deemed terminated.
Section 14.4 Certificate of Termination. When all debts, liabilities, and
obligation have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
Shareholders and Economic Interest Holders, the Company shall file the Articles
of Dissolution in accordance with Nevada Revised Statutes.
Section 14.5 Return of Contribution Nonrecourse to Other Shareholders. Upon
dissolution, each Shareholder and Economic Interest Holder shall look solely to
the assets of the Company for the return of such Shareholder's Capital Account.
If the Company property remaining after the payment or discharge of the debts
and liabilities of the Company is insufficient to return the Capital Account of
one or more Shareholder or Economic interest Holder, including, without
limitation, all or any part of that Capital Account attributable to Capital
Contributions, then such Shareholders shall have no recourse against the
Company, any Manager, or any other Shareholder.
ARTICLE 15
MISCELLANEOUS PROVISIONS
Section 15.1 Application of Nevada Law. This Operating Agreement, and the
application of interpretation hereof, shall be governed exclusively by its terms
and by the laws of the State of Nevada, and specifically the Nevada Act.
Section 15.2 No Action for Partition. No Shareholder or Economic Interest
Holder has any right to maintain any action for partition with respect to the
property of the Company.
Section 15.3 Execution of Additional Instruments. Each Shareholder hereby
agrees to execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
Section 15.4 Construction. Whenever the singular number is used in this
Operating Agreement and when required by the context, the same shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter genders and vice versa.
Section 15.5 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
provision hereof.
Section 15.6 Waivers. The failure of any party to seek redress for
violation of or to insist upon the strict performance of any covenant or
condition of this Operating Agreement shall not prevent a subsequent act, which
would have originally constituted a violation, from having the effect of an
original violation.
Section 15.7 Rights and Remedies Cumulative. The rights and remedies
provided by this Operating Agreement are cumulative and the use of any one right
or remedy by any party shall not preclude or waive the right not use any or all
other remedies. Such rights and remedies are given in addition to any other
rights the parties may have by law, statue, ordinance, or otherwise.
Section 15.8 Severability. If any provision of this Operating Agreement or
the application thereof to any person or circumstance shall be invalid, illegal
or unenforceable to any extent, the remainder of this Operating Agreement and
the application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
Section 15.9 Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
insure to the benefit of the parties hereto and, to the extent permitted by this
Operating Agreement, their respective heirs, legal representatives, successors,
and assigns.
Section 15.10 Creditors. None of the provision of this Operating Agreement
shall be for the benefit of or enforceable by any creditor of the Company.
Section 15.11 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
Section 15.12 Federal Income Tax Elections; Tax Matters Partner. All
elections required or permitted to be made by the Company under the Code shall
be made by the Board of Managers as determined in their sole discretion. For all
purposes permitted or required by the Code, the Shareholders constitute and
appoint _____________________ as Tax Matters Partner or, if
_____________________ is no longer a Manager, then such other Shareholder as
shall be designated by the Shareholders holding a majority of the Shares. The
provisions on limitations of liability of the Shareholders and Managers
contained herein and indemnification in Section 4.11 hereof shall be fully
applicable to the Tax Matters Partner in his or her capacity as such. The Tax
Matters Partner may resign at any time by giving written notice to the Company
and each of the other Shareholders. Upon the resignation of the Tax Matters
Partner, a new Tax Matters Partner shall be elected by Majority Consent of the
Members.
Section 15.13 Certification of Non-Foreign Status. In order to comply with
1445 of the Code and the applicable Treasury Regulations thereunder, in the
event of the disposition by the Company of a United States real property
interest as defined in the Code and Treasury Regulations, each Shareholder shall
provide to the Company, an affidavit stating, under penalties of perjury, (a)
the Shareholder's address, (b) United States taxpayer identification number, and
(c) that the Shareholder is not a foreign person as that term is defined in the
Code and Treasury Regulations. Failure by any Shareholder to provide such
affidavit by the date of such disposition shall authorize the Board of Managers
to withhold ten percent (10%) of each such Shareholder's distributive Share of
the amount realized by the Company on the disposition.
Section 15.14 Notices. Any and all notices, offers, demands, or elections
required or permitted to be made under this Agreement ("Notices") shall be in
writing, signed by the party giving such Notice, and shall be deemed given and
effective (a) when hand-delivered (either in person by the party giving such
notice, or by its designated agent, or by commercial courier) or (b) on the
third (3rd) business day (which term means a day when the United States Postal
Service, or its legal successor ("Postal Service") is making regular deliveries
of mail on all of its regularly appointed week-day rounds in Reno, Nevada)
following the day (as evidenced by proof of mailing) upon which such notice is
deposited, postage pre-paid, certified mail, return receipt requested, with the
Postal Service, and
(a) If to the Company
Genomic Actives Research
& Development, A Limited Liability Company
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P.O. Box 2838
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American Medical Research,
A Limited Liability Company
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P.O. Box 2838
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DJH Holdings
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P.O. Box 2838
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with a copy (which shall not constitute notice) to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Guild, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
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(b) if to a Shareholder or Economic Interest Holder, to the Shareholder's
or Economic Interest Holder's address as reflected in the Share ownership
records of the Company or as the Shareholders shall designate to the Company in
writing.
Section 15.15 Amendments. Any amendment to this Operating Agreement shall
be made in writing and signed by Shareholders holding at least two-thirds
(66.67%) of the Shares held by Shareholders.
Section 15.16 Invalidity. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and the Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted. If any particular provision herein is
construed to be in conflict with the provisions of the Nevada Act or other law,
the provision so this Operating Agreement shall control to the fullest extent
permitted by law. The invalidity or unenforceability of any provision hereof
under applicable law shall not affect or invalidate the other provisions hereof,
and this Agreement shall be construed in all respects as if such invalid
provisions were omitted.
Section 15.17 Captions. Titles and captions are inserted for convenience
only and in no way define, limit, extend, or describe the scope of intent of
this Agreement or any of its provisions and in no way are to be construed to
affect the meaning or construction of this Agreement or any of its provisions.
Section 15.18 Banking. All funds of the Company shall be deposited in its
name in an account or accounts as shall be designated from time to time by the
Board of Managers. All funds of the Company shall be used solely for the
business of the Company. All withdrawals form the Company bank accounts shall be
authorized by Officers or by such other persons as the Board of Managers may
designate from time to time.
Section 15.19 Arbitration. Any dispute, controversy, or claim arising out
of or in connection with, or relating to, this Agreement or any breach or
alleged breach hereof shall, upon the request of any party involved, be
submitted to, and settled by, arbitration in the City of Reno, State of Nevada,
pursuant to the commercial arbitration rules then in effect of the American
Arbitration Association (or at any time or at any other place or under any other
form or arbitration at the sole discretion of the Board of Managers). Any award
rendered shall be final and conclusive upon the parties and a judgment thereon
may be entered in the highest court of the forum, state or federal, having
jurisdiction. The expenses of the arbitration shall be borne equally by the
parties to the arbitration, provided that each party shall pay for and bear the
cost of its own experts, evidence and counsel's fees, except that in the
discretion of the arbitrator, any award may include the cost of party's counsel
if the arbitrator expressly determines that the party against whom such award is
entered has caused the dispute, controversy or claim to be submitted to
arbitration as a dilatory tactic.
Section 15.20 Determination of Matters Not Provided For In This Agreement.
The Board of Managers shall decide any questions arising with respect to
the Company and this Agreement which are not specifically or expressly provided
for in this Agreement.
Section 15.21 Further Assurances. Each Shareholder agrees to cooperate, and
to execute and deliver in a timely fashion any and all additional documents
necessary to effectuate the purposes of the Company and this Operating
Agreement.
Section 15.22 Legends. Any certificate evidencing Share shall bear the
following legends:
On the face of the certificate:
"TRANSFER OF SHARES EVIDENCED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE
WITH CONDITIONS PRINTED ON THE REVERSE OF THIS CERTIFICATE."
On the reverse:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND TRANSFERABLE ONLY
IN ACCORDANCE WITH THAT CERTAIN OPERATING AGREEMENT OF BOSTON MEDICAL MARKETS A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY IN RENO, NEVADA.
NO TRANSFER OR PLEDGE OF THE SHARES EVIDENCED HEREBY MAY BE MADE EXCEPT IN
ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF SAID AGREEMENT. BY ACCEPTANCE
OF THIS CERTIFICATE, ANY HOLDER, TRANSFEREE OR PLEDGE HEREOF AGREES TO BE BOUND
BY ALL OF THE PROVISIONS OF SAID AGREEMENT."
"SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE HOLDER FOR
INVESTMENT PURPOSES ONLY AND NOT FOR RESALE, TRANSFER OR DISTRIBUTION, HAVE BEEN
ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF APPLICABLE
STATE AND FEDERAL SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED OTHER THAN PURSUANT TO EFFECTIVE REGISTRATION UNDER SUCH LAWS, OR IN
TRANSACTIONS OTHERWISE IN COMPLIANCE WITH SUCH LAWS, AND UPON EVIDENCE
SATISFACTORY TO THE COMPANY OF COMPLIANCE WITH SUCH LAWS, AS TO WHICH THE
COMPANY MAY RELY UPON ANY OPINION OF COUNSEL SATISFACTORY TO THE COMPANY."
Each Shareholder shall promptly surrender the certificate representing
Shares to the Company so that the Company may affix the foregoing legends
thereto. A copy of this Agreement shall be kept on file in the principal office
of the Company in Reno, Nevada. Upon termination of all applicable restrictions
set forth herein and upon tender to the Company of the appropriate stock
certificates, the Company shall reissue to the holder of such certificates new
certificate which shall contain only the second paragraph of the restrictive
legend set forth above. This legend may be modified form time to time by the
Board of Managers of the Company to conform to such statutes or to this
Operating Agreement.
Section 15.23 Investment Representation. In addition to the restrictions on
transfer set forth above, each Shareholder understands that Shareholder must
bear the economic risk of this investment for an indefinite period of time
because the Share are not registered under the Securities Act of 1933, as
amended (the "1933 Act") or the securities laws of any state of other
jurisdiction. Shareholder has been advised that there is no public market for
the shares and that eh Shares are not being registered under the 1933 Act upon
the basis that the transactions involving its sale are exempt from such
registration requirements, and that reliance by the Company on such exemption is
predicated in part on the Shareholder's representations set forth in this
Agreement. Each Shareholder acknowledges that no representations of any kind
concerning the future intent or ability to offer or sell the Share in public
offering or otherwise have been made to the Shareholder by the Company or any
other person or entity. The Shareholder understands that the Company makes no
covenant, representation or warranty with respect to the registration of
securities under the Securities Exchange Act of 1934, as amended, or its
dissemination to the public of any current financial or other information
concerning the Company. Accordingly, the Shareholder acknowledges that there is
no assurance that there will ever be any public market for the Share, and that
the Shareholder may not be able to publicly offer or sell any thereof.
Each Shareholder represents and warrants that the Shareholder is able to
bear the economic risk of losing Shareholder's entire investment in the Company,
which investment is not disproportionate to Shareholder's net worth, and that eh
Shareholder has adequate means of providing for Shareholder's current needs and
personal contingencies without regard to the investment in the Company. The
Shareholder acknowledges that an investment in the Company involves a high
degree of risk. The Shareholder acknowledges that Shareholder and Shareholder's
advisors have had an opportunity to ask questions of and to receive answ3ers
from the officers of the Company and to obtain additional information in writing
to the extent that the Company possesses such information or could acquire it
without unreasonable effort or expense: (I) relative tot eh Company and the
Shares; and (ii) necessary to verify the accuracy of any information, documents,
books and records furnished. Each Shareholder represents, warrants and covenants
to the Transferor and the Company that the Shareholder is a resident of the
state shown on Schedule 1 hereto and will be the sole party in interest as to
the Shares acquired hereunder and is acquiring the Shares for the Shareholder's
own account, for investment only, and not with a view toward the resale or
distribution thereof.
Each Shareholder agrees that the Shareholder will not attempt to pledge,
transfer, convey or otherwise dispose of the Shares except in a transaction that
is the subject of either (I) an effective registration statement under the 1933
Act and any applicable state securities laws, or (ii) an opinion of counsel,
which opinion of counsel shall be satisfactory to the Company, to the effect
that such registration is not required. The Company may rely on such an opinion
of Shareholder's counsel in making such determination. Each Shareholder consents
to the placement of legends on any certificates or documents representing any of
the Share stating that the Shares have not been registered under the 1933 Act or
any applicable state securities laws and setting froth or referring to the
restrictions on transferability and sale thereof. The Shareholder is aware that
the Company will make a notation in its appropriate records, and notify its
transfer agent, with respect to the restrictions on the transferability of the
Shares.
Each Shareholder represents that the Shareholder has consulted with the
Shareholder's attorneys, financial advisors and other regarding all financial,
securities and tax aspects of the proposed investment in the Company and that
such advisors have reviewed this Agreement and all documents relating to this
Operating Agreement on Shareholder's behalf. Shareholder and the Shareholder's
advisors have sufficient knowledge and experience in business and financial
matters to evaluate the Company, to evaluate the risks and merits of an
investment in the Company, to make an informed investment decision with respect
to investment in the Company, and to protect the investors' interest in
connection with the investor's acquisition of shares in the Company without the
need for additional informed which would be required to be included in a
complete registration statement effective under the 1993 Act.
Section 15.24 Partnership not Intended for Non-Tax Purposes. The
Shareholders have formed this Company under the Act, and expressly disavow any
intention to form a partnership under Nevada's Uniform Partnership Act or the
Partnership Act or laws of any other state. The Shareholders do not intend to be
partners one to another or partners as to any third party. TO the extent any
Shareholder, by word or action, represents to another person that any other
Shareholder is a partner of that the Company is a partnership, the Shareholder
making such wrongful representation shall be liable to any other Shareholder who
incurs personal liability by reason of such wrongful representation.
IN WITNESS WHEREOF, the undersigned have set their hands and seals
effective as of April, 1997. [SIGNATURES CONTINUED ON NEXT PAGE]
SIGNATURE PAGE TO OPERATING AGREEMENT
FOR BOSTON MEDICAL MARKETING
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Signature
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Name (Printed)
EIN # ▇▇-▇▇▇▇▇▇▇
Social Security or
Federal Tax Identification Number
SIGNATURE PAGE TO OPERATING AGREEMENT
FOR BOSTON MEDICAL MARKETING
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Signature
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Name (Printed)
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Social Security or
Federal Tax Identification Number
SIGNATURE PAGE TO OPERATING AGREEMENT
FOR BOSTON MEDICAL MARKETING
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Signature
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Name (Printed)
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Social Security or
Federal Tax Identification Number
OPERATING AGREEMENT
Shareholder's Name and Address Shares Owned
DJH Holdings, LLC 2,500,000
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American Medical Research 2,250,000
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Genomic Actives Research & Development 250,000 B Shares
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