FIRST AMENDED OPERATING AGREEMENT FOR Noninvasive Medical Technologies, LLC A Michigan Limited Liability Company
FIRST
AMENDED OPERATING AGREEMENT
FOR
Noninvasive
Medical Technologies, LLC
A
Michigan Limited Liability Company
This
First Amended Operating Agreement is made on May 5, 2005 between Members
▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. Kalitta, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ as the majority of initial members of the Company
and all of those who are subsequently admitted as members (individually,
a
"Member" and collectively, the "Members") who agree as follows:
ARTICLE
I
Definitions
1. Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
1.1 "Act"
means
the Michigan Limited Liability Company Act, M.C.L.A. §§450.4101 et seq., MSA
21.198 (4101) et seq., as amended from time to time.
1.2 “Affiliate”
means,
(i) with respect to a Member (1) any ancestor, descendant, sibling or spouse
of
any Member; (2) any trust established for the benefit of any one or more
of the
persons referred to in clause (1) above; and (3) any entity which directly
or
indirectly is controlled by one or more of the individuals referred to in
clause
(1) above; or (ii) any entity in which the Member or one or more of the persons
referred to in clause (1) above is a shareholder, officer, director, venturer,
partner, or member. For this purpose, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the
management and policies of a person or entity, whether through ownership
of
voting securities, by contract or otherwise.
1.3 "Agreement"
means
this Operating Agreement, together with any amendments adopted in accordance
with this Agreement and the Act.
1.4 "Articles"
means
the
Articles of Organization, including any restatements or amendments thereto,
that
are filed with the Department.
1.5 "Capital
Contributions"
means
the amount of cash, property or services contributed by the Members to the
Company, and Capital Contribution means the amount of cash, property or services
contributed by a Member to the Company.
1.6 "Cause"
means
actions by the Members that cause material damage to the Company as a result
of
a Member's fraud, willful misconduct, gross negligence or breach of this
Agreement.
1.7 "Code"
means
the Internal Revenue Code of 1986, as amended.
1
1.8 “Company”
means
Noninvasive Medical Technologies, LLC, a Michigan limited liability
company.
1.9 “Company
Interest”
means,
with respect to each Member, such Member’s (i) entire interest in the Company
and the property assets, business and capital thereof, (ii) share of profits,
losses and distributions of the Company allocable to such Member under this
Agreement; and (iii) the right of the Member (but not an assignee) to vote
as a
Member of the Company under this Agreement.
1.10 "Company
Value”
shall
have the meaning as set forth in Exhibit A attached to and made a part of
this
Agreement.
1.11 "Department"
means
the
Michigan Department of Consumer and Industry Services, Corporation, Securities
and Land Development Bureau.
1.12 “Initial
Capital Contribution”
means
the original Capital Contribution made by the Members to the Company on its
formation.
1.13 "Members"
are
the
persons identified in Exhibit B who have made the designated capital
contributions and whose ownership percentage is as noted:
1.14 "Membership
Percentages"
means
the
percentage of ownership of each Member as set forth in the preceding Section
1.13, as adjusted from time to time pursuant to this Agreement.
1.15 "Permitted
Transferee"
shall
mean any Member or a Member's spouse, ancestors or lineal descendants or
a trust
established for the exclusive benefit of any of the foregoing
individuals.
1.16
“Membership
Majority”
shall
mean any portion of voting interests that exceed fifty percent (50%) of the
Outstanding Ownership; “Membership
Supermajority”
shall
mean any number of voted shares that equal or exceed eighty percent (80%)
of the
Outstanding Ownership.
1.17
“Authorized
Ownership”
shall
mean the total ownership interest of the Company authorized for issuance
by the
Company; “Outstanding
Ownership”
shall
mean Authorized Ownership Interests that have been issued or reissued by
the
Company to Members from time to time, pursuant to this Agreement and any
subsequent amendments hereto; “Reserved
Ownership”
shall
mean Authorized Ownership that has not been issued and is retained by the
Company for future issuance subject to the provisions of this Agreement;
“Treasury
Ownership”
shall
mean Outstanding Ownership previously issued and held by Members that has
been
subsequently redeemed, repurchased, or otherwise recovered by the Company
and
held by the Company. Treasury Ownership may be reissued upon the affirmative
vote of 60% of the Managing Board Members pursuant to Article IX.
2
ARTICLE
II
Organization
2.1 Formation.
The
Company has been organized as a Michigan Limited Liability Company under
and
pursuant to the Michigan Limited Liability Company Act, 1993 PA 23 (the "Act")
by the filing of Articles of Organization ("Articles") with the Consumer
and
Industry Services Department of the State of Michigan as required by the
Act.
2.2 Name.
The name
of the Company is Noninvasive Medical Technologies, LLC. The Company may
also
conduct its business under one or more assumed names.
2.3 Purposes.
The
purpose of the Company is to develop, manufacture and sell medical equipment
and
such other related activities for which limited liability companies may be
formed under the Act. The Company will have all the powers necessary or
convenient to affect any purpose for which it is formed, including all powers
granted by the Act.
2.4 Duration.
The
Company will continue in existence perpetually, as indicated in the Articles
of
the Company or until the Company dissolves and its affairs are wound up in
accordance with the Act or this Operating Agreement.
2.5 Registered
Office and Resident Agent.
The
Registered Office and Resident Agent of the Company will be as designated
in the
initial or amended Articles. The Registered Office and/or Resident Agent
may be
changed from time to time. Any change will be made in accordance with the
Act.
If the Resident Agent resigns, the Company will promptly appoint a
successor.
2.6 Organizational
Expenses.
All
organizational expenses of the Company in connection with the formation of
the
Company and the preparation of this Agreement shall be paid by the
Company.
2.7 Intention
for Company.
The
Members have formed the Company as a limited liability company under the
Act.
The Members specifically intend and agree that the Company is not a partnership
(including a limited partnership) or any other venture, but a limited liability
company under and pursuant to the Act. No Member will be construed to be
a
partner in the Company or a partner of any other Member or person, and the
Articles, this Operating Agreement and the relationships created by this
agreement and arising from this agreement will not be construed to suggest
otherwise.
ARTICLE
III
Books,
Records and Accounting
3.1 Books
and Records.
The
Company will maintain complete and accurate books and records of the Company's
business and affairs as required by the Act and these books and records will
be
kept at the Company's Registered Office.
3
3.2 Fiscal
Year; Accounting. The
Company's fiscal year will be the calendar year. The particular accounting
methods and principles to be followed by the Company will be selected by
the
Members from time to time.
3.3 Member's
Accounts.
The
Company will maintain separate Capital Accounts for each Member. Each Member's
Capital Account will reflect the Member's capital contributions and increases
for the Member's share of any net income or gain of the Company. Each Member's
Capital Account will also reflect decreases for distributions made to the
Member
and the Member's share of any of the Company's losses and
deductions.
ARTICLE
IV
Capital
Contributions
4.1 Initial
Commitments and Contributions.
By the
execution of this Operating Agreement, the initial Members agree to make
the
capital contribution of $100 each, receipt of which is hereby acknowledged
by
the Company. Any additional Member (other than an assignee of a membership
interest who has been admitted as a Member) must make the capital contribution
stated in an agreement between the Member and the Company or as otherwise
determined by the Members in accordance with Article IX. No interest will
accrue
on any capital contribution and no Member will have any right to withdraw
or to
be repaid any Capital Contribution except as provided in this Operating
Agreement.
4.2 Additional
Contributions.
In
addition to the initial Capital Contributions under Article I, Paragraph
1.14,
upon a Membership Supermajority vote of the Members, the Members shall make
additional Capital Contributions to the Company (“Additional Capital
Contribution”) in proportion to their Membership Percentages in effect at the
time of the call for additional capital. The Additional Capital Contributions
shall be in the amounts necessary to carry out the purpose of the Company
to
cover all costs, expenses or charges with respect to the operation of the
Company.
4.3 Failure
To Contribute.
If any
Member fails to make a Capital Contribution when required, the Company may,
in
addition to pursuing any other rights and remedies the Company may have under
the Act or applicable law, take any enforcement action (including, the
commencement and prosecution of court proceedings) against the Member that
the
Managing Members consider appropriate. Moreover, the remaining Members may
elect
to contribute the amount of the required capital themselves, according to
their
respective Capital Contributions. The Members who make contributions will
be
entitled to treat these amounts as an extension of credit to the defaulting
Member, payable upon demand, with interest accruing on the extension at the
rate
of six (6%) percent per annum until paid. This extension of credit will be
secured by the defaulting Member's interest in the Company. Each Member who
defaults grants to each Member who may later grant an extension of credit,
a
security interest in the defaulting Member's interest in the Company. In
addition, the defaulting Member shall, for the period that the default
continues, loose his or her voting rights under this Agreement and the
defaulting Member’s ownership interest will not be considered part of the
Outstanding Ownership for purposes to determining voting requirements for
actions requiring a vote of the Membership.
4
4.4 Borrowings.
The
Company may borrow sums for Company purposes from any source (including any
Member), as reasonably determined by the Company, provided that such borrowing
is incurred in the ordinary course of business which is related to the ownership
of the Property not prohibited by any applicable law, regulation or agreement.
In the event the Company requires additional funds necessary for its operations
in excess of any reserved amounts, as determined by the Members, the Company
may
borrow such funds from the Members. Additionally, upon an affirmative vote
of
60% of the Managing Board Members pursuant to Article IX, the Company may
pledge
any remaining Reserve Ownership shares as security for any undertaking properly
authorized by the Managing Board.
4.5 Title
to Company Property.
All
property owned by the Company shall be owned by the Company as an entity
and,
insofar as permitted by applicable law, no Member shall have any ownership
interest in any Company property in its individual name or right, and each
Member's interest in the Company shall be personal property for all
purposes.
4.6 Special
Buy-out Provision for Member Kalitta.
The
Company has the option, upon its election as defined for purposes of this
provision to be a positive vote of any three Members, to recover 6.67% of
Member
Kalitta’s Membership Interest in exchange for the payment of One Million
($1,000,000) Dollars. In the event the Company elects to exercise its option,
which shall be exercised in its sole discretion, Member Kalitta will retain
his
remaining interest in the Company but shall be entitled to assign or transfer
that remaining interest to any other Member without the consent of the Company.
When Member Kalitta’s 6.67% interest is reacquired by the Company, it shall be
held by the Company free and clear as Treasury Ownership which shall be
available for distribution by the Company upon a 60% vote of the Managing
Board
as provided in Article IX. Nothwithstanding any provision herein to the
contrary, the Company shall buy Kalitta’s Membership Interest as provided herein
before any member distributions of any sort such that a minimum of 6.67%
of
Kalitta’s Membership Interest shall be reacquired by the Company before any
other distributions are made. In the event that the Company failes to reacquire
Kalitta’s Membership Interest and Members ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall be required
purusant to a separate agreement to acquire Kalitta’s Membership Interests,
Members ▇▇▇▇▇▇▇▇ and Kelsey shall each be entitled to acquire 50% of Kalitta’s
Membership Interests free of any right of the Company to repurchase those
intersts: provided, however, that Members ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall be entitled
at their sole election to require the repurchase of 6.67% of Kalitta’s former
interests (50% from each) as provided above. In the event Members ▇▇▇▇▇▇▇▇
and
Kelsey are called upon by Member Kalitta to acquie Kalitta’s interest as
specified above, Kalitta shall notify the Company and allow it thirty (30)
days
to acquire 6.67% of Kalitta’s interest as provided above.
4.7
Anticipated
Additions to Membership.
By this
Agreement, the Company hereby authorizes a total of 100% of Authorized Ownership
and authorizes the issuance of 75% of the Authorized Ownership as Outstanding
Ownership in accordance with Article 1.13 of this Agreement. Additionally,
the
Company hereby elects to retain the remaining 25% of the Authorized Ownership
as
Reserved Ownership for the purpose of raising additional working capital
through
equity investment and for the purpose of attracting key management and strategic
relationships, if necessary. Any final arrangement to, or agreements that
shall
effectuate the issuance of Reserved Ownership shares shall be in writing
and
must be approved by the affirmative vote of 80% of the Managing Board Members
as
provided in Article IX.
5
4.8 Provision
for the Distribution of Unused Reserved Ownership.
In the
event all of the Reserved Ownership interest of 25% as specified in Article
1.13
is not required for distribution to investors as decided by the Managing
Board
in accordance with Article 9.2, any remaining Reserve Ownership shall thereafter
be distributed as determined by an affirmative vote of 80% of the Managing
Board
Members.
ARTICLE
V
Allocations
and Distributions
5.1 Allocations.
Except
as may be required by the Internal Revenue Code of 1986 as amended or this
Operating Agreement, the Company's net profits, net losses, and other items
of
income, gain, loss, deduction and credit will be allocated among the Members
in
accordance with each Member's Membership Percentage.
5.2 Distributions.
The
Company may elect to make distributions to the Members from time to time.
Distributions may be made only after the Management Board determines in its
reasonable judgment, that the Company has cash on hand exceeding the Company's
current and anticipated needs (including operating expenses, debt service,
acquisitions, reserves, and mandatory distributions, if any). All distributions
will be made to the Members in accordance with each Member's respective
Membership Percentage. To the extent any membership interests are held in
reserve or are otherwise undistributed at the time the Management Board
determines to make a distribution, then the Management Board may either elect
to
not make a distribution on account of the reserved interests or distribute
the
amount which would be allocated to the reserve interests to the Members
according to their respective Membership Interests. Distributions will be
in
cash or property, or both, as the Managing Board determines. No distribution
will be declared or made if, after giving it effect, it would violate the
provisions of applicable law governing the permissibility of distributions
by
limited liability companies to their members.
ARTICLE
VI
Assignment
of Membership Interests
6.1 General.
Every
sale, assignment, transfer, exchange, mortgage, pledge, grant, hypothecation,
or
other disposition of any membership interest will be made only in compliance
with this article. No membership interest shall be disposed of if: (a) the
disposition would cause a termination of the Company under the Internal Revenue
Code of 1986, as amended; (b) the disposition would not comply with all
applicable state and federal securities laws and regulations; and (c) the
assignee of the membership interest fails to provide the Company with the
information and agreements that the Company may require in connection with
such
a disposition. Any attempted disposition of a membership interest in violation
of this article is void.
6.2 Permitted
Assignments.
Subject
to the provisions of Section 6.1, a Member may not assign his Company Interest
in whole or part without consent of the Company; provided, however, a Member
may
assign his Company Interest without consent to: (i) another Member or (ii)
a
Permitted Transferee. Any permitted assignment shall not of itself substitute
the assignee (who is not already a Member) as a Member or entitle the assignee
to vote or otherwise participate in the management of the Company. Such assignee
is only entitled to receive, to the extent assigned, the allocations of profits
and losses and any distributions the assigning Member would otherwise be
entitled to. Unless otherwise provided, the assignor shall retain the right
to
vote the assigned shares and remain a Member liable for payment of any remaining
installments of Capital Contributions due with respect to the interest assigned.
No assignment of a Company Interest shall be effective with respect to the
Company until written notice is given to the Company.
6
6.3 Right
of First Refusal.
If any
time a Member (the "Selling Member") receives a good faith offer to purchase
or
makes a good faith offer to sell (or transfer without full and adequate
consideration) all or any part of that Selling Member's Company interest
(the
"Offer"), the Selling Member shall make any acceptance of the Offer conditional
upon the right granted in this Section to the Company and the other Members
to
purchase that portion of the Selling Member's Company Interest. Notwithstanding
the foregoing, this provision is not triggered by an assignment of an interest
in the Company that is permitted under Section 6.2 (i) or (ii). The Selling
Member shall give the Company written notice of the Offer containing a copy
of
the Offer, which shall be subject to reasonable verification ("Notice").
The
Company shall have thirty (30) days after receipt of the notice to elect
to
purchase the Selling Member's Company Interest at the price and terms as
set
forth in the Offer. If the Company does not elect to purchase the Selling
Member's Company Interest, then the Members shall have an additional thirty
(30)
days to elect to purchase such Company Interest at the same price and terms
set
forth in the Offer. The Members individually shall provide written notice
to the
Selling Member stating whether or not the Member desires to purchase a pro
rata
portion of the Company Interest subject to the Offer (based on Membership
Percentages of the purchasing Members). If the Members do not purchase the
Selling Member's Company Interest, then the Selling Member shall be free
to sell
his Company Interest during the period of 90 days after expiration of the
option
in accordance with the Offer and subject to Section 6.4 below. However, any
further sales of the Selling Member's Company Interest and his assignee's
interest, shall be subject to the rights granted under this
Section.
6.4 Admission
of Assignees as Members.
An
assignee under this Section 6 shall be admitted as a Member only upon the
unanimous written consent of all the Members. As a condition of such consent,
the Members may require a substitute Member to comply with the following
requirements: (i) the assignment instrument being in form and substance
satisfactory to the Members and the Company's counsel; (ii) the assignor
and
assignee named therein having executed and acknowledged such other instrument
or
instruments as the Members may deem necessary or desirable to effectuate
such
admission; (iii) the assignment having accepted and adopted all of the terms
and
provisions of the Agreement, as the same may have been amended, as if the
assignee were a party who joined in the execution of this Agreement; and
(iv)
such assignee having paid or acknowledged an obligation to pay, as the Members
may determine, all reasonable expenses (including attorneys' fees) connected
with such admission. If admitted, the substitute Member has, to the extent
assigned, all of the rights and powers (including voting rights), and is
subject
to all the restrictions and liabilities of a Member.
6.5 Section
754 Election.
In the
event of the transfer of a Member's interest in the Company by sale or exchange,
or upon the death of a Member, the Company, if the person acquiring such
interest so requests and the Members consents (which consent may be withheld
for
any reason), shall elect pursuant to Code Section 754, to adjust the basis
of
the Company property. Each Member hereby agrees to provide the Company with
all
information necessary to give effect to such election. The transferee shall
reimburse the Company for any reasonable costs incurred as a result of such
election, as determined by the Members.
7
ARTICLE
VII
Buy-Out
Provisions Upon Member’s Death
7.1 Buy-Out
Option.
If a
Member (or for this purpose if the Member is a trust, then the grantor) dies
(the "Deceased Member"), the Company shall have an option to acquire not
less
than all of the Deceased Member's interest in the Company ("Company Interest");
provided, however, if the Company Interest was previously transferred to
a
Permitted Transferee or is transferred to a Permitted Transferee within sixty
(60) days of the death of the Deceased Member, then the Company and other
Members shall not have the option to purchase the Company Interest of the
Deceased Member. The option shall be exercisable by written notice to the
Deceased Member's personal representative and the successors in interest
to the
Deceased Member, collectively the "Selling Members", at any time within one
hundred eighty (180) days after death of the Deceased Member or the appointment
of personal representative, whichever is later ("Notice to Purchase"). If
the
option is exercised, the Deceased Member's Company Interest shall be purchased
by the Company. If the Company does not exercise its option within the first
120
days of the 180 day period, then the remaining Members shall have the option
to
purchase the Deceased Member's Company Interest in proportion to each purchasing
Member's Membership Percentage. The Company shall purchase the Deceased Member's
Company Interest for (i) an amount agreed upon by the parties within 30 days
from the date of the Notice to Purchase, or if they cannot agree, then (ii)
an
amount equal to the Deceased Member's Company Interest as defined in Section
7.2.
7.2 Net
Equity.
The Net
Equity of the Deceased Member's Company Interest shall be the amount that
would
be distributed to the Deceased Member in an orderly sale of the Company pursuant
to Section 12.2 if (i) all of the Company's assets were sold at their Company
Fair Market Value (ii) the Company paid its accrued, but unpaid, liabilities
and
establish reserves for reasonably anticipated contingent and unknown
liabilities, and (iii) the Company distributed the remaining proceeds to
the
Members in liquidation, as of the date of the Notice to Purchase. The Net
Equity
shall be determined by an independent accountant jointly selected by the
Company
and the representative of the Deceased Member who shall thereafter determine
the
Net Equity of the Company pursuant to a methodology which is appropriate
for the
current operations of the business on the Valuation Date and such determination
shall be final and binding on all parties.
7.3 Closing.
(a) The
closing for the purchase of the Deceased Member's Company Interest shall
take
place within 20 days after the purchase price has been finally agreed upon
or
the Net Equity determined. At the closing, the Selling Members shall execute
and
deliver such instruments as the Company or purchasing Members shall reasonably
require to vest in the Company or the purchasing Members as the case may
be the
interest of the Selling Members in and to the Deceased Member's Company
Interest.
8
(b) Upon
delivery of such instruments, the Company shall pay to each Selling Member
their
share of the purchase price in the form of a 15% cash down payment and the
balance of the purchase price as a promissory note bearing interest, which
shall
be payable quarterly throughout the term of the note, at the rate of nine
percent (9%) per annum ("Note"). All of principal and interest due under
the
Note shall be payable at the later of the following events: (i) sixty (60)
months from the closing date of the sale, or (ii) the earlier of the refinancing
or maturity date of any permanent loan on the Property ("Maturity Date").
The
Note shall further contain a provision that if the Company makes distributions
of cash to Members in their capacity as Members prior to the Maturity Date,
then
the Company or the purchasing Member, as the case may be, shall be required
to
simultaneously distribute or pay cash to the Selling Members in an amount
equal
to that which would have been distributed to the Deceased Member if he were
still a Member in the Company, with the same Membership Percentage that the
Deceased Member owned immediately prior to the sale of his Company Interest.
Any
interim payment received on the Note shall be applied first to the accrued
unpaid interest and the remainder to principal. The Note shall permit prepayment
at any time without penalty and shall provide for immediate payment of the
balance due on default in payment of principal or interest after 10 days
written
notice of default. The Company also shall obtain a release of personal
guarantees of the Selling Members and their Affiliates and agree in writing
to
defend, indemnify and hold harmless the Selling Members to the extent that
they
have any direct or indirect liability for the debts or other obligations
of the
Company.
7.4 Failure
to Purchase.
If the
Company or another Member does not purchase the Deceased Member's Company
Interest, the Deceased Member's estate or successors in interest shall succeed
to the Deceased Member's Company Interest, but such interest in the Company
shall remain subject to all of the provisions of this Agreement. Such successors
shall be treated as assignee under Section 6.2 and shall not be admitted
as a
substitute Members in place of the Deceased Member unless approved and in
compliance with Section 6.4.
ARTICLE
VIII
Meetings
of Members
8.1 Voting.
Members
will be entitled to vote in accordance with their respective interests in
the
Company. To the extent any portion of the interests in the Company have not
been
issued or distributed, or are otherwise held as Reserved Ownership or Treasury
Ownership by the Company, each Member shall be entitled to vote that percentage
of the Company-held shares equal to that Member’s percentage of the Outstanding
Ownership of the Company.
8.2 Required
Vote.
Unless a
greater vote is required by this Operating Agreement, the Act or the Articles,
an affirmative Membership Majority vote or consent of the Members entitled
to
vote or consent on the matter is required. Notwithstanding any contrary
provisions in this Operating Agreement or the Articles, the following actions
must be approved by a Membership Supermajority vote of the Members: (a) a
public
offering of debt, (b) a public offering of stock, (c) any action which would
result in a dilution of the Members’ current interests, (d) a dissolution of the
Company, (e) a change in the composition of the Managing Board of the
Company.
8.3 Meetings.
An
annual meeting of Members for the transaction of business as may properly
come
before the Meeting will be held at a place, date, and time that the Members
determine. Special meetings of Members for any proper purpose (including
for
informational purposes) may be called at any time by any Member holding at
least
10 percent of the Membership Percentages of all Members. The Company must
deliver or mail written notice stating the date, time, place and purpose(s)
of
any meeting to each Member entitled to vote at the meeting. The notice must
be
given not less than 10, and no more than 60 days before the meeting date.
All
meetings of Members will be conducted as the Members themselves see
fit.
9
8.4 Consent.
Any
action required or permitted to be taken at an annual or special meeting
of the
Members may be taken by consent without a meeting, prior notice, or a vote.
The
consent must be in writing, state the action so taken and be signed by the
Members having at least the minimum number of votes that would be necessary
to
authorize or take action at a meeting at which all membership interests entitled
to vote on the action were present and voted. Every written consent must
also
bear the date on which each Member signs the consent. No action will be deemed
to be taken under this Section 8.4 unless written consents from Members having
the minimum number of votes necessary to authorize or take action are delivered
to the Members no more than thirty (30) days after the earliest dated consent.
Action taken by written consent will be deemed to be taken as of the date
that
all requisite consents have been delivered to the Members. Prompt notice
of the
taking of action without a meeting by less than unanimous written consent
must
be given to all Members who did not consent in writing to the
action.
ARTICLE
IX
Management
9.1 Managing
Board.
The
Company shall be managed by a Managing Board comprised of five individuals
unless the Members change the size of the Managing Board by a Membership
Supermajority vote of the Members. The Managing Board Members are ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. Kalitta, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇.
▇▇▇▇▇ who shall serve until replaced by a Membership Supermajority vote of
the
Members. Each of the Managing Board Members shall have a single equal vote
on
all matters properly before the Managing Board and the Managing Board Members
may replace, by a vote of at least 80% of the Managing Board Members, the
Chairperson of the Managing Board who shall be responsible to ensure that
the
Managing Board takes action on all matters necessary for the operation of
the
Company. The initial Chairperson of the Managing Board shall be ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇. The Chairperson of the Managing Board shall hold a meeting of
the
Managing Board upon the request of any two Managing Board Members and shall
place on the agenda for such meeting any matter requested by any two Managing
Board Members. Costs for such meetings will be born by the Company including
travel expenses. Meetings may be held telephonically.
9.2 The
Managing Board must approve all major contracts proposed by the Officers
of the
Company. The Managing Board shall select the officers of the Company and
their
compensation by a vote of at least four (4) of the Managing Board Members,
if
the Managing Board is comprised of five (5) Managing Board Members or by
a vote
of at least 80% of the Managing Board Members if the size of the Managing
Board
is increased or decreased by the Members as provided herein. The initial
officers and their monthly salaries are as follows:
10
|
POSITION
|
OFFICER
|
MONTHLY
SALARY
|
|
President
and CEO:
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
$7,500/$10,000*
|
|
Executive
Vice President:
|
▇▇▇
▇. ▇▇▇▇▇▇
|
$7,500
|
|
Vice
President and CFO:
|
▇▇▇▇▇
▇▇▇▇▇
|
$7,500*
|
|
Vice
President, Secretary and
|
||
|
General
Counsel:
|
▇▇▇▇
▇▇▇▇▇▇▇▇
|
$7.500*
|
* The
compensation of ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ and the adjustment to compensation
for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be deferred and not paid until such payment changes
are authorized by a simple majority of the Managing Board Members.
In
connection with the Company’s efforts to obtain federal grant monies for special
projects and research programs, Member ▇▇▇▇▇▇▇▇▇, as an officer of the Company,
is authorized to execute such grant applications and other documents on behalf
of the Company as are necessary to pursue such grants. As CEO, Member ▇▇▇▇▇▇▇▇▇
shall endeavor to obtain whatever status is required of other Managing Board
Members (of such subcommittee as the Managing Board dictates) as is necessary
to
allow the disclosure of the details of such grants or grant programs to the
Managing Board or its designated subcommittee. While any such grant request
is
pending and during the administration of any open grant program, Member
▇▇▇▇▇▇▇▇▇ will remain President and CEO of the Company and his compensation
will
remain at the minimums set forth above unless his status and compensation
are
changed by a minimum vote of 80% of the Managing Board Members.
9.3 Other
than matters reserved to the Managing Board or Members as provided herein,
the
officers of the company shall have the responsibilities delegated to each
of
them by a vote of 80% of the Managing Board. The officers shall have the
ability
to conduct the day-to-day business of the Company including opening bank
accounts; disbursing funds from the Company’s accounts in order to meet the
Company’s obligations pursuant to various transactions; establishing
relationships with and engaging the services of attorneys, accountants and
other
professionals; negotiating and executing contracts on behalf of the Company
where authorized by the Managing Board; obtaining insurance covering the
business and affairs of the Company and its property and on the lives and
well
being of its Members, employees and agents; engage freight forwarders,
transportation agents and warehouse services incidental to the operations
of the
Company; begin, prosecute, or defend any proceeding in the Company's name;
and
such other acts as are consistent with the day-to-day operations of the company.
Chief Executive Officer (CEO) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is granted by the Managing
Board
full authority to make all operational decisions normally associated with
the
position of CEO subject to ratification by the Managing Board where required
by
this Agreement. The Company shall indemnify, defend and hold the officers
and
Managing Board Members harmless from and against all liabilities, claims,
entitlements and suits arising out of its management responsibilities as
set
forth above.
11
9.4 Powers
of Members.
The
Members shall select the Managing Board Members as provided herein and all
matters concerning the termination and dissolution of the Company or its
operations shall require the vote of a Membership Supermajority of all of
the
Members entitled to vote.
9.5 Standard
of Care; Liability.
(a) The
Members must discharge their duties as Members in good faith, with the care
an
ordinarily prudent person in a like position would exercise under similar
circumstances, and in a manner the Members reasonably believe to be in the
best
interests of the Company.
(b) To
the
full extent permitted by law, the Members, Managing Board Members and Officers
will not be liable for any monetary damages to the Company or its Members
for
any breach of these duties. It is specifically acknowledged that the prospective
or current Members may be induced to undertake or continue to serve as Members
of the Company in reliance on the provisions of this Section 9.5(b), and
these
provisions shall be a contract right. No repeal, amendment, alteration or
modification of this Section 9.5(b) will be effective as to the Members for
acts
occurring prior to the date of repeal, amendment, alteration or modification
unless the Members consent in writing to the applicability of the repeal,
amendment, alteration or modification in the specific case. Notwithstanding
anything contained in this Operating Agreement to the contrary, the affirmative
vote of the holders of at least 80 percent in interest of the Membership
Percentages will be required to alter, amend, adopt any provision inconsistent
with or repeal this Section 9.5(b).
(c) ▇▇▇▇▇
▇.
▇▇▇▇▇ shall act as “Tax Matters Partner” of the Company, as defined in Code
Section 6231(a)(7). The Tax Matters Partner shall have the powers and duties
provided for in such Code Section and in the related Treasury Regulations.
The
Tax Matters Partner shall promptly send the Members copies of any notices
received from the Internal Revenue Service with respect to the Company issues
or
proceedings before the Internal Revenue Service.
ARTICLE
X
Exculpation
of Liability; Indemnification
10.1 Exculpation
of Liability.
Unless
otherwise provided by law or expressly assumed, a person who is a Member
will
not be liable for the acts, debts or liabilities of the Company.
10.2 Indemnification.
(a) Except
as
otherwise provided in this article, the Company will indemnify any Member
and
may indemnify any employee or agent of the Company who was or is a party
or is
threatened to be made a party to a threatened, pending, or completed action,
suit, or proceeding (whether civil, criminal, administrative, or investigative
and whether formal or informal) other than an action by or in the right of
the
Company, where the person is a party because he or she is or was a Members,
employee, or agent of the Company. The Company will indemnify the Members,
employee, or agent against expenses, including attorney fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by the person in connection with the action, suit or proceeding. The Company
will indemnify any Member, employee, or agent if the person acted in good
faith,
with the care an ordinarily prudent person in a like position would exercise
under similar circumstances, and in a manner that the person reasonably believed
to be in the best interests of the Company. With respect to a criminal action
or
proceeding, the person must have had no reasonable cause to believe the person's
conduct was unlawful. To the extent that a Member, employee, or agent of
the
Company has been successful on the merits or otherwise in defense of an action,
suit, or proceeding or in defense of any claim, issue, or other matter in
the
action, suit, or proceeding, such person will be indemnified against actual
and
reasonable expenses, including attorneys fees, incurred by him or her in
connection with the action, suit, or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification. Unless ordered
by a
court, any indemnification permitted under this article will be made by the
Company only as the Company authorizes in the specific case after (i)
determining that the indemnification is proper under the circumstances because
the person to be indemnified has met the applicable standard of conduct and
(ii)
evaluating the reasonableness of the expenses and of the amounts paid in
settlement. This determination and evaluation will be made by a majority
vote of
the Members entitled to vote who are not parties or threatened to be made
parties to the action, suit or proceeding. However, no indemnification will
be
provided to any Members, employee, or agent of the Company for or in connection
with (A) the receipt of a financial benefit to which the person is not entitled;
(B) voting for or assenting to a distribution to Members in violation of
this
Operating Agreement or the Act; or (C) a knowing violation of law.
12
(b) The
right
to indemnification conferred in this Section 10.2 is a contract right and,
subject to the limitations set forth above, includes the right, to the fullest
extent permitted by law, as the same exists or may subsequently be amended,
to
be paid by the Company the expenses incurred in defending any proceeding
in
advance of its final disposition.
(c) If
a
claim under subsection (a) of this Section 10.2 is not paid in full by the
Company within 30 days after a written claim has been received by the Company,
the claimant may at any later date bring suit against the Company to recover
the
unpaid amount of the claim and, if successful in whole or in part, the claimant
will be entitled to be paid also the expense of prosecuting the claim. It
will
be a defense to any action (other than an action brought to enforce a claim
for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Company) that the claimant has not met the standards of conduct
which make it permissible under applicable law for the Company to indemnify
the
claimant for the amount claimed, but the burden of proving the defense will
be
on the Company. Neither the failure of the Company (including its Members)
to
have made a determination prior to the commencement of the action that
indemnification of the claimant is proper in the circumstances because he
or she
has met the applicable standard of conduct stated by applicable law and/or
this
Operating Agreement, nor an actual determination by the Company (including
its
Members) that the claimant has not met the applicable standard of conduct,
will
be a defense to the action or create a presumption that the claimant has
not met
the applicable standard of conduct.
13
ARTICLE
XI
Self
Dealing
11.1 Self
Dealing.
Any
Member and any Affiliate may deal with the Company, directly or indirectly,
as
vendor, purchaser, employee, agent, lender or otherwise. No contract or other
act of the Company shall be voidable or affected in any manner by the fact
that
a Member or his Affiliate is directly or indirectly interested in such contract
or other act apart from his interest as a Member, nor shall any Member or
his
Affiliate be accountable to the Company or the other Members in respect of
any
profits directly or indirectly realized by him by reason of such contract
or
other act, and such interested Member shall be eligible to vote or take any
other action as a Member in respect of such contract or other act as it would
be
entitled were he or his Affiliate not interested therein. Notwithstanding
the
foregoing provisions of this Section 11.1, (i) any direct or indirect interest
of a Member or Affiliate in any contract or other act, other than his interest
as a Member, shall be disclosed to all other Members, (ii) such contract
or
other act shall be on an arm's length basis between the parties and on
commercially reasonable terms, (iii) such contract or other act shall be
approved by the unanimous consent of the Members entitle to vote unless the
same
is authorized herein, and (iv) the Members shall not receive or hold any
property of the Company as collateral security in respect of any claim against
the Company.
ARTICLE
XII
Dissolution
and Winding Up
12.1 Dissolution.
The
Company will dissolve and its affairs wound up on the first to occur of the
following events: (a) at any time specified in the Articles or this Operating
Agreement; (b) upon the happening of any event specified in the Articles
or this
Operating Agreement; (c) by the vote of a Membership Supermajority of all
of the
Members entitled to vote; (d) upon the death, withdrawal, expulsion, bankruptcy
or dissolution of a Member or the occurrence of any other event that terminates
the continued membership of a Member in the Company unless within 90 days
after
such termination of membership, remaining Members holding a majority in interest
of the remaining capital interests and the profits interests in the Company
consent to continue the business of the Company and to the admission of one
or
more Members as necessary. For these purposes, a majority in interest of
the
capital interests and the profits interests in the Company will mean the
greater
of (i) a majority in interest of the Membership Interests as of the time
of the
vote or (ii) the interest as will be necessary to satisfy the meaning of
the
term under regulations, rulings or procedures promulgated by the Internal
Revenue Service regarding the meaning of the term (including but not limited
to
Revenue Procedure 94-64) or applicable court decisions; (e) upon the entry
of a
decree of judicial dissolution.
12.2 Winding
Up.
On
dissolution, the Company must cease carrying on its business and affairs
and
will begin winding them up. The Company will complete the winding up as soon
as
practicable. Upon the winding up of the Company, its assets will be distributed
first to creditors to the extent permitted by law, in satisfaction of Company
debts, liabilities and obligations and then to Members and former Members.
Distributions to Members and former Members will be made first to satisfy
liabilities for distributions and then in accordance with the Members'
Membership Percentage. The proceeds will be paid to the Members within 90
days
after the date of winding up.
14
ARTICLE
XIII
Miscellaneous
Provisions
13.1 Terms.
Nouns
and pronouns will be deemed to refer to the masculine, feminine, neuter,
singular and plural, as the identity of the person or persons, firm, or
corporation may in the context require.
13.2 Headings.
The
article and section headings contained in this Operating Agreement have been
inserted only as a matter of convenience and for reference, and in no way
will
be construed to define, limit or describe the scope or intent of any provision
of this Operating Agreement.
13.3 Counterparts.
This
Operating Agreement may be executed in several counterparts, each of which
will
be deemed an original but all of which will constitute one and the same
agreement.
13.4 Entire
Agreement.
This
Operating Agreement, together with the Company's Articles of Organization
constitutes the entire agreement among the parties and contains all of the
terms
between the parties with respect to the subject matter. This Operating Agreement
together with the Company's Articles of Organization supersede any and all
other
prior or contemporaneous agreements, either oral or written, between the
parties
with respect to the subject matter.
13.5 Severability.
The
invalidity or unenforceability of any particular provision of this Operating
Agreement will not affect the other provisions, and this Operating Agreement
will be construed in all respects as if the invalid or unenforceable provisions
were omitted.
13.6 Amendment.
This
Operating Agreement may be amended or revoked upon the affirmative vote of
80%
of the Outstanding Ownership interests entitled to vote, at a meeting called
for
such purpose, or by written consent signed by 80% of the Outstanding Ownership
interests entitled to vote.
13.7 Notices.
Any
notice permitted or required under this Operating Agreement will be conveyed
to
the party at the address reflected in this Operating Agreement and will be
deemed to have been given when deposited in the United States mail, postage
paid, or when delivered in person, or by courier or by facsimile
transmission.
13.8 Binding
Effect.
Subject
to the provisions of this Operating Agreement relating to transferability,
this
Operating Agreement will be binding on and will inure to the benefit of the
parties, and their respective distributees, heirs, successors and
assigns.
13.9 Arbitration.
Any
disputes arising out of this Agreement which cannot be resolved by the Members
themselves or pursuant to the terms of this Agreement shall be submitted
to
binding arbitration in Southfield, Oakland County, Michigan in accordance
with
the rules of the American Arbitration Association ("AAA"). The arbitration
is to
be conducted by a single arbitrator in accordance with the expedited commercial
arbitration rules, as existing as of the time the arbitration is commenced
of
the AAA. Modification to the expedited procedures may be made only for
exceptional good cause, as determined by the arbitrator. Judgment upon the
arbitration award may be entered in a court of competent jurisdiction. The
arbitrator will be entitled to apportion the costs of the arbitration
proceedings and to award any party attorney fees and costs on such basis
as the
arbitrator may determine. The arbitrator shall have the authority to award
injunctive relief.
15
13.10 13.10 Governing
Law.
This
Operating Agreement is being executed and delivered in the State of Michigan
and
will be governed by, construed and enforced in accordance with the laws of
the
State of Michigan, without regard to choice of law principles.
13.11
Confidentiality
and Non-Competition.
The
Members and all former Members shall maintain the confidentiality of all
business contacts, including sellers, buyers and investors, and shall not
engage
in any transaction not involving the Company with any of those contacts without
the express written agreement of the Company, unless such business contact
was
established by the Member or former Member engaged in a proposed transaction
through that Member’s former business dealing with that business contact. It is
the intent of this provision that Members not be allowed to utilize the business
contacts of the Company generated by other Members for any purpose which
does
not benefit the Company. The Members and former Members shall not disclose
the
names of the Company’s business contacts to any person or entity outside of the
Company and the other Members. Notwithstanding the above provisions, all
Members
individually agree to execute any additional non-competition and/or
confidentiality agreements that the Company deems necessary to rightfully
protect the intellectual property, business plans and strategies, and
proprietary product research, development, manufacturing and/or distribution
systems of the Company, in its sole discretion from time to time.
The
parties have executed this Operating Agreement on the dates set below their
names, to be effective on the date listed on the first page of this Operating
Agreement. This Agreement may be executed by duplicate originals.
|
Members:
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
||
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
|
|
||
|
▇▇▇▇▇
▇▇▇▇▇▇▇
|
▇▇▇▇▇▇
▇▇▇▇▇▇
|
||
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
|
|
||
|
▇▇▇▇▇
▇▇▇▇▇
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
||
|
/s/
▇▇▇▇▇ ▇▇▇▇▇
|
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
||
|
|
|
16
Exhibit
A
Company
Value
(▇▇▇▇
▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇)
17