GOLDBELT ELECTRIC THEATER LLC
OPERATING AGREEMENT
BETWEEN: Goldbelt, Incorporated
An Alaska corporation (Goldbelt)
AND: Spitz, Inc.
A Delaware corporation (Spitz)
EFFECTIVE DATE:
RECITALS:
Goldbelt and Spitz, who are hereinafter collectively referred to as the
"Members" and individually as a "Member", desire to form a limited liability
company for the purposes and on the terms and subject to the conditions stated
in this Agreement.
AGREEMENTS:
1. Formation of Limited Liability Company
1.1 Formation. The Members hereby form a limited liability company
(Company) pursuant to the provisions of the Limited Liability
Company Act of the State of Alaska, Alaska Statute ss.10.50.010 et
seq., in accordance with the provisions of this Agreement.
1.2 Name. The name of the Company shall be Goldbelt Electric Theater
LLC.
1.3 Articles of Organization. Articles of Organization for the Company
shall be filed by the Members with the Alaska Department of Commerce
and Economic Development promptly upon the execution of this
Agreement. The Company shall not conduct any business prior to the
filing of the Articles of Organization.
1.4 Principal Place of Business. The principal place of business of the
Company shall be at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇. The business of the Company may also be conducted at such
other or additional place or places as may from time to time be
designated by the Members.
1.5 Registered Office and Registered Agent. The mailing address of the
Company's initial registered office shall be at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and the name of its
initial registered agent at such address shall be Goldbelt,
Incorporated.
1.6 Purposes and Powers. The Company is formed for the following
purposes:
1.6.1 To construct, lease, own and operate a domed projection screen
and theater, ancillary video projection operations, and
visitor amenities for theaters, including snack and souvenir
concession operations, at one or more locations in Alaska.
1.6.2 To do all things necessary, incident, or in furtherance of
such business.
1.7 Term of Company. The Company elects to continue in existence until
December 31, 2010, unless the term of the Company is extended prior
thereto by mutual agreement of all Members. If the term of the
Company is extended by mutual agreement of the Members, the term
shall continue until five years from the effective date of the
Members' agreement to extend the term of the Company, unless the
term of the Company is further extended for one or more additional
five-year terms prior thereto by mutual agreement of all Members. On
the expiration of the term of the Company, the Company shall be
dissolved and its affairs shall be wound up in accordance with the
provisions of Section 12.
1.8 Title. Title to the property and assets of the Company shall be held
in the name of the Company.
2. Capital
2.1 Initial Contributions.
(a) Spitz shall be obligated, to the extent provided below, to
make capital contributions to the Company up to an aggregate
amount of $300,000.
(b) $180,000 of such capital contribution by Spitz shall be in the
form of a reduced purchase price for the Electric Horizon
System (including related development and theater design fees)
that is being provided by Spitz to the Company pursuant to the
purchase contract for such system between the Company and
Spitz (the "Purchase Contract"), a copy of which is annexed
hereto as Exhibit A. The Purchase Contract shall include,
among other things, provisions insuring to Spitz's reasonable
satisfaction the Company's ability to pay and perform its
obligations under the Purchase Contract (whether by arranging
for payment directly by a third party financier or otherwise).
Such capital contribution shall be deemed made by Spitz in
installments at the same time as amounts are required to be
paid by the Company to Spitz under the Purchase Contract and
in the same ratio as each required payment is of the total
amount to be paid under the Purchase Contract.
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(c) The remaining $120,000 commitment of Spitz shall be callable
by the Manager as needed to pay 40% of the Company's cost of
obtaining show content (or, if Spitz's percentage of such
costs are less than $120,000, as thereafter needed to pay 40%
of the Company's other costs); provided, however, that it is
agreed and understood that in no event will Spitz be required
to make a capital contribution pursuant to this Section 2.1(c)
except to the extent that, after giving effect to Spitz's
capital contributions pursuant to this Section 2.1(c) and
Goldbelt's capital contributions pursuant to Section 2.1(d),
the aggregate amount of capital contributions made by Spitz
pursuant to this Section 2.1(c) does not exceed 40% of the
total capital contributions made pursuant to Section 2.1(c)
and Section 2.1(d).
(d) Goldbelt shall be obligated to make capital contributions
sufficient to provide the Company with all the remaining cash
that the Company will need prior to the date (the "Opening
Date") of the commencement of the Company's operations (i.e.,
the opening of the Company's first theater for business).
Goldbelt may reduce the amount of its obligation under this
Section 2.1(d) by obtaining debt financing on commercially
reasonable terms for the Company (but in no event shall the
acquisition of such financing be considered a capital
contribution by Goldbelt). In the event that Goldbelt is
required by any creditor to guarantee any such indebtedness,
Spitz will be offered the opportunity to co-guarantee the
debt. If Goldbelt guarantees the debt but Spitz elects not to
guarantee the debt, an amount equal to 1.5% of the amount so
guaranteed shall be deducted from Spitz's Capital Account and
added to Goldbelt's Capital Account (and, for purposes of
calculating the Percentage Interests of the Members, such
amount shall thereafter be considered an amount contributed to
the Company's capital by Goldbelt, and shall not be considered
an amount contributed to the Company's capital by Spitz).
2.2 Additional Contributions. Except as otherwise required by applicable
law, no Member shall have any obligation to make any additional
contributions to the capital of the Company, nor shall any such
additional capital contribution be made to or accepted by the
Company except (i) with the approval and consent of both Members, or
(ii) pursuant to Section 2.3 below.
2.3 Pre-Emptive Rights.
(a) At any time subsequent to the Opening Date that the Company
seeks to raise additional capital through equity financing
(including any financing in which all or part of the
securities sold are convertible into or exchangeable for, or
represent the right to purchase or otherwise acquire, any
equity securities), Spitz and Goldbelt (each an "Original
Member") shall each have the right and option to purchase up
to 50% of such equity then being offered at the same price and
upon the same terms as are offered by the Company; provided,
however, that such right will not apply to the first $300,000
of capital being provided by each of Spitz and Goldbelt
pursuant to Section 2.1 above. The Manager shall give written
notice to the Original Members at least thirty (30) days prior
to the issuance of such equity, which written notice shall set
forth, in reasonable detail, the terms and conditions of the
proposed issuance of new equity. Each Original Member
intending to purchase a portion of the equity being offered
shall, within twenty (20) days of delivery of such written
notice, deliver notice of such intention to the Manager. The
failure to give such notice shall be deemed a waiver of such
Original Member's rights to purchase. In the event an Original
Member waives its rights, any Original Member who does
exercise its rights shall have the right to purchase amounts
which the other Original Member chooses not to purchase, if
such exercising Original Member includes in its notice an
intention to make such additional purchase.
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(b) Nothing in Section 2.3(a) above shall in any way limit the
amount of capital contributions that Goldbelt is required to
make pursuant to Section 2.1(d) above, or provide Goldbelt
with any right or option to elect not to make any capital
contribution (unless, and only to the extent, Spitz exercises
its pre-emptive right to make capital contributions that
Goldbelt would otherwise be required to make pursuant to
Section 2.1(d) above).
2.4 Loans from Goldbelt. In the event that both Members determine that
additional funds are necessary in order to meet the needs of the
Company, Goldbelt may, at Goldbelt's sole discretion, loan the funds
to the Company. All amounts loaned by Goldbelt to the Company shall
bear interest at a rate equal to one and one-half (1.5) percentage
points over the prime rate of interest in effect on the date of
disbursement of the Company as quoted in the Wall Street Journal, or
if that publication becomes unavailable, another reputable source
selected by the Members. The specific terms of repayment of any loan
arrangements for security for the loan must be agreed upon by all of
the Members prior to the time the loan is disbursed, as a condition
of such disbursement. Loans made by Goldbelt to the Company under
this Section 2.4 shall, for all purposes, be considered loans and
shall not be considered additional capital contributions by
Goldbelt.
2.5 Interest. No interest shall be paid on the initial contributions
made by either Member or on any subsequent contributions by either
Member to the capital of the Company.
2.6 Return of Contributions; No Right to Withdraw Capital. Each Member
shall look solely to the assets of the Company for the return of
such Member's capital contributions and, if the assets of the
Company are insufficient to return such capital contributions, such
Member shall have no recourse against any other Member for that
purpose. Except as specifically provided in this Agreement, a Member
may not withdraw capital from the Company. To the extent any amount
that any Member is entitled to receive from the Company pursuant to
any provision of this Agreement constitutes a return of capital,
each of the Members consents to the withdrawal of such capital. A
Member shall not have the right to demand and receive property other
than cash in return for such Member's capital contribution.
2.7 Capital Accounts. The Company shall maintain a separate capital
account (a "Capital Account:") for each Member in accordance with
the requirements of Treasury Regulationss.1.704-01. Each Member's
Capital Account shall be equal to:
2.7.1 The amount of cash and the fair market value of the property
contributed to the capital of the Company by such Member
(including the assumption of Company debt by the Member); plus
2.7.2 Such Member's allocable share, pursuant to Section 4, of any
profits of the Company and any items of Company gain or
income; minus
2.7.3 Such Member's allocable share, pursuant to Section 4, of any
losses of the Company and any items of Company loss or
expense; minus
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2.7.4 The amount of cash and the fair market value of property
distributed to such Member (including the amount of any debt
of such Member assumed by the Company).
Each Member's Capital Account shall be further adjusted as provided in
Section 2.1(d) if applicable.
3. Conduct of Company Business.
3.1 Management. The Company shall be a manager-managed limited liability
company with Goldbelt acting as manager. Goldbelt shall provide the
necessary management level personnel who will spend the time
reasonably necessary following the effective date of this Agreement
to initiate and operate the business of the Company. Goldbelt shall
be responsible for the management of the Company's day-to-day
business operations.
3.2 Management Fees. Goldbelt shall not receive a management fee for its
services.
3.3 Employment of Personnel. Goldbelt, as manager of the Company, shall,
subject only to Section 6.1.2 below, have the full power and
authority to cause the Company to hire such employees as Goldbelt
determines to be in the Company's best interests.
4. Allocation of Net Profits and Losses
4.1 Determination. The net profit or net loss of the Company for each
fiscal year shall be determined as of the end of such fiscal year by
the Company's certified public accountant in accordance with
generally accepted accounting principles consistently applied.
4.2 (a) Allocation. After giving effect to the special allocations set
forth in Sections 4.4 and 4.5, the net profit or net losses of the
Company for any fiscal year shall be allocated among the Members in
accordance with Percentage Interests.
(b) Adjusted Capital Account Deficits. Any losses allocated pursuant
to to Section 4.1(a) hereof shall not exceed the maximum amount of
losses that can be so allocated without causing a Member to have a
negative Capital Account at the end of any fiscal year. In the event
some but not all of the Members would have a negative Capital
Account as a consequence of an allocation of losses pursuant to
Section 4.1(a) hereof, the limitation set forth in this Section
4.1(b) shall be applied on a Member by Member basis so as to
allocate the maximum permissible losses to each Member under Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations. A Member who would
have been allocated an amount of losses but for the limitation in
the first sentence of this Section 4.1(b) shall thereafter share in
profits only after the other Members have been allocated 100% of
such Member's share of profits to the extent of (and among such
Members in proportion to) any losses previously borne by each of
them in respect of such Member. In the event that no Member may be
allocated losses as a result of the prohibition contained in this
Section 4.1(b), losses shall be allocated in accordance with
Percentage Interests.
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4.3 "Percentage Interests" shall mean, with respect to each Member, such
Member's Adjusted Capital Contribution (expressed as a percentage of
the aggregate Adjusted Capital Contributions of all Members).
"Adjusted Capital Contribution" shall mean, with respect to each
Member, the amount of capital contributed by such Member pursuant to
Sections 2.1, 2.2 and 2.3 of this Agreement. In the event that a
Member sells all or a portion of its interest in the Company or the
Company redeems all or a portion of such Member's interest in the
Company, the Member's Adjusted Capital Contribution shall be reduced
by the same proportion as the interest purchased or redeemed bears
to such Member's entire interest. If a person acquires all or a
portion of a Member's interest, such person shall be considered to
have made the capital contribution as so relates to the interest
purchased.
4.4 Special Allocations Relating to Depreciation for Income Tax Purposes
4.4.1 All depreciation, amortization, and similar deductions
relating to property, equipment, and other capital assets
shall be allocated between the Members in proportion to the
positive balances in the Capital Accounts of the Members at
the end of the fiscal year for which the deduction is
available. The alternative minimum tax adjustment relating to
depreciation under IRCss.56(a)(1) will be allocated in the
same manner. Notwithstanding the other provisions of this
Section 4.4.1, no allocation of deductions shall be made to
any Member under this Section 4.4 to the extent that such
allocation would cause the Member to have a negative Capital
Account at the end of the fiscal year in which the allocation
would otherwise be made.
4.4.2 Upon the sale, exchange, or other taxable disposition of any
item of equipment or other capital asset the depreciation,
amortization, or similar deductions with respect to which have
been specially allocated to the Members under Section 4.4.1,
any gain realized by the Company shall be allocated to the
Members in the same proportions as the deductions that have
been specially allocated to the Members with respect to the
asset under Section 4.4.1, provided that the gain specially
allocated to a Member under this Section 4.4.2 shall not
exceed the excess, if any, of (a) the aggregate deductions
allocated to the Member pursuant to Section 4.4.1 with respect
to the asset over (b) the aggregate gain from the asset
allocated to the Member pursuant to this Section 4.4.2 for the
fiscal year to which the allocation relates and all prior
fiscal years.
4.5 Additional Special Allocations for Income Tax Reporting Purposes.
Notwithstanding any provision of this Section 4, the following
special allocations shall be made in the following order:
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4.5.1 Except as otherwise provided in Treasury
Regulationsss.1.704-2(f), if there is a net decrease in the
Partnership Minimum Gain (as defined in Treasury
Regulationsss.ss.1.704-2(b)(2) and 1.704-2(d)) of the Company
during any fiscal year, each Member shall be specially
allocated items of Company income and gain for such fiscal
year (and, if necessary, subsequent fiscal years) in an amount
equal to such Member's share of the net decrease in
Partnership Minimum Gain of the Company, determined in
accordance with Treasury Regulationsss.1.704-2(g). Special
allocations made under this Section 4.5.1 shall be made to
Members in proportion to the respective amounts required to be
allocated to each Member. The items of Company income and gain
to be specially allocated under this Section 4.5.1 shall be
determined in accordance with Treasury Regulations
ss.1.704-2(f)(6) andss.1.704-2(j)(2).
4.5.2 Except as otherwise provided in Treasury
Regulationsss.1.704-2(i)(4), if there is a net decrease in
Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any fiscal year, each Member who has a
share of the Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with
Treasury Regulationsss.1.704-2(i)(5), shall be specially
allocated items of Company income and gain for such fiscal
year (and, if necessary, subsequent fiscal years) in an amount
equal to such Member's share of the net decrease in Member
Nonrecourse Debt, determined in accordance with Treasury
Regulationsss.1.704-2(i)(4). For purposes of this Section
4.5.2, "Member Nonrecourse Debt" shall have the meaning set
forth in treasury Regulations ss.1.704-2(b)(4) for "partner
nonrecourse debt," and "Member Nonrecourse Debt Minimum Gain"
shall mean an amount, with respect to each Member Nonrecourse
Debt, equal to the Partnership Minimum Gain of the Company
that would result in such Member Nonrecourse Debt were treated
as a Nonrecourse Liability, determined in accordance with
Treasury Regulations ss.1.704-2(i)(3). Special allocations
made under this Section 4.5.2 shall be made to Members in
proportion to the respective amounts required to be allocated
to each Member. The items of Company income and gain to be
specially allocated under this Section 4.5.2 shall be
determined in accordance with Treasury
Regulationsss.ss.1.704-2(j)(2).
4.5.3 If any Member unexpectedly receives any adjustment in any
fiscal year of the Company that results in a deficit balance
in the Member's Capital Account, the Member shall be specially
allocated items of Company income and gain (consisting of a
pro rata share of each item of Company income and gain for
such fiscal year) in an amount and manner sufficient to
eliminate the deficit balance in the Member's Capital Account
as quickly as possible. However, the special allocation
provided in this Section 4.5.3 shall be made only if and to
the extent that the affected Member would have a deficit
balance in the Member's Capital Account after all other
allocations provided for in this Section 4 have been made as
if Section 4.5.4 and this Section 4.5.3 were not part of this
Agreement.
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4.5.4 If any Member has a deficit balance in the Member's Capital
Account at the end of any fiscal year of the Company in an
amount that exceeds the sum of (a) the amount such Member is
obligated to restore pursuant to any provision of this
Agreement, and (b) the amount such Member is deemed to be
obligated to restore pursuant to the next to the last
sentences of Treasury Regulationsss.ss.1.704-2(g)(1) and
1.704-2(i)(5), each such Member shall be specially allocated
items of Company income and gain in the amount of such excess
as quickly as possible pro-rata in accordance with the amount
of such deficits. However, the special allocation provided in
this Section 4.5.4 shall be made with respect to a Member only
if and to the extent that the affected Member would have an
excess deficit balance in the Member's Capital Account as
described in this Section 4.5.4 after all other allocations
provided for in this Section 4 have been made as if Section
4.5.3 and this Section 4.5.4 were not part of this Agreement.
4.5.5 Nonrecourse deductions, as defined in Treasury Regulations ss.
1.704-2(b)(2), for any fiscal year of the Company shall be
specially allocated among the Members in proportion to each
Member's respective share of losses under Section 4.2.
4.5.6 Any Member Nonrecourse Deductions for any fiscal year of the
Company shall be specially allocated to the Member who bears
the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions
are attributable in accordance with Treasury Regulationsss.
1.704-2(i)(1). For purposes of this Section 4.5.6, "Member
Nonrecourse Deductions" shall have the meaning set forth in
Treasury ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇. 1.704-2(i)(1) and 1.04-2(i)(2) for
"partner nonrecourse deductions," and "Member Nonrecourse
Debt" shall have the meaning set forth in Treasury
Regulationsss. 1.704-2(b)(4) for "partner nonrecourse debt."
4.5.7 If an adjustment to the adjusted tax basis of any asset of the
Company required under IRC ▇▇.▇▇. 734(b) or 743(b) must be
taken into account, under Treasury Regulation ss.
1.704-1(b)(2)(iv)(m), in determining the Capital Accounts of
Members, the amount of the adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment
increases basis) or loss (if the adjustment decreases basis)
and such gain or loss shall be specially allocated to the
Members in a manner consistent with the manner in which their
Capital Accounts are to be adjusted under the Treasury
Regulations.
4.6 Regulatory Allocations. The allocations set forth in Section 4.4 and
Section 4.5 ("Regulatory Allocations") are intended to comply with
requirements of the Treasury Regulations and shall be interpreted
accordingly. The Members desire that, to the extent possible, all
Regulatory Allocations be offset either with other Regulatory
Allocations or with special allocations of other items of Company
income, gain, loss, or deduction. Notwithstanding any other
provision of Section 4 (other than the Regulatory Allocations),
offsetting special allocations of Company income, gain, loss or
deduction shall be made in whatever manner the Members reasonably
determine appropriate so that, after such offsetting allocations are
made, the Capital Account of each Member is, to the extent possible,
equal to the Capital Account the Member would have had if the
Regulatory Allocations were not part of this Agreement and all items
of Company income, gain, loss, deduction, and credit were allocated
pursuant to Section 4.2.
5. Distributions
5.1 Distributions to Members. Within 90 days after the end of each
fiscal year, the Company shall make a distribution in an amount
equal 50% of the available cash flow after debt service. The
Company's obligation to make such a distribution is subject to the
restrictions governing distributions under the Limited Liability
Company Act of the State of Alaska, Alaska Statute ss. 10.50.010 et
seq. Any distribution pursuant to this Section 5.1 shall be made to
the Members in proportion to Percentage Interests.
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5.2 Other Distributions. The Members shall, not less often than
quarterly, review the financial operations and cash position of the
Company and may, subject to the restrictions governing distributions
under the Limited Liability Company Act of the State of Alaska and
the consent of each of the Members, cause the Company to distribute
any cash that is in excess of the amount that the Members determine
is reasonably needed by the Company.
5.3 Tax Distributions. At least 10 days before the payment of a periodic
installment of estimated tax is required to be made by a Member,
whether federal, state and/or local tax, where the amount to be paid
by such Member is greater than the amount such Member would have
been obligated to pay if such Member did not own an interest in the
Company (an "Additional Tax Payment"), then the Company shall
distribute cash to the Members, pro rata in accordance with their
Percentage Interests, until each Member has received at least an
amount equal to the difference between (x) the amount of an
Additional Tax Payment due from such Member, minus (y) the
difference (if and only if a positive number) between the aggregate
amount of distributions heretofore made to such Member pursuant to
Section 5.3 minus the aggregate amount of Additional Tax Payments
theretofore made by the Member. Any amount distributed pursuant to
this Section 5.3 shall be treated as a loan by the Company to the
Members and shall be deducted from any future distributions that
would otherwise be made to such Members pursuant to Sections 5.1,
5.2 and 12.3. The Members and the Managers shall cooperate in all
respects to provide each other with all requisite information such
that the amount of tax distributions due to the Members pursuant to
this Section 5.3 may be determined.
6. Administration of Company Business
6.1.1 Management. The business and affairs of the company shall be
managed exclusively by its designated manager (the "Manager").
The Manager shall direct, manage and control the Company to
the best of its ability and, subject to Section 6.1.2, shall
have full and complete authority, power and discretion to make
any and all decisions and to do any and all things that the
Manager reasonably deems to be required to accomplish the
business and objectives of the performance of its duties under
this Agreement. The Manager shall at all time act in the best
interests of the Company and its Members.
6.1.2.Approval of the Members. The following actions of the Company
shall require the approval of all Members of the Company:
(a) The entering into of any transactions with Affiliates of
either Member; "Affiliate" means an individual or entity
that directly, or indirectly, through one or more
intermediaries, controls or is controlled by, or is
under common control with, any Member;
(b) The establishment of an annual budget, and any material
deviations therefrom (or from the initial business
plan);
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(c) The hiring of, and entering into of employment
agreements with, executive personnel;
(d) Any amendment or repeal of any provision of, any
addition of provisions to, or any waiver of any
provision of, this Agreement, the Company's Articles of
Organization or other organizational documents;
(e) Any acquisitions, by way of asset acquisition, stock,
partnership or other equity interest acquisition, merger
or similar transaction, of another business enterprise
by the Company;
(f) Any transaction or series of transactions involving the
sale of all or a substantial portion of the business
operations of the Company, whether by sale of interests
or sale of assets of the Company and/or its
subsidiaries, merger, or any combination of the
foregoing;
(g) Any joint venture, partnership or similar arrangement by
the Company;
(h) Any loan, guarantee or other extension of credit by the
Company other than in the ordinary course of business;
(i) Any material change in the nature of the business
conducted by the Company;
(j) The selection of officers of the Company;
(k) The dissolution, liquidation or termination of the
Company;
(l) Filing a petition seeking relief for the Company under
any law for the relief of debtors;
(m) The incurrence, renewal, refinancing, prepayment (other
than mandatory repayments) of any indebtedness or
amendment of the terms of indebtedness of the Company
other than (i) trade or working capital debt incurred in
the ordinary course of business and (ii) any
indebtedness that Goldbelt may obtain pursuant to
Section 2.1;
(n) Any redemption, purchase for cancellation or other
acquisition by the Company of any equity interest in the
Company or any of its subsidiaries;
(o) The organization or creation of any new direct or
indirect subsidiaries of the Company;
(p) Any merger, consolidation, combination or reorganization
of the Company; and
(q) Entering into any agreement, arrangement, undertaking or
commitment to take any of the foregoing steps or
actions.
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6.2 Number Tenure, and Qualifications. The initial Manager shall be
Goldbelt. Goldbelt shall not be entitled to resign as Manager of the
Company for a period of five years commencing on the date hereof. In
the event Goldbelt resigns during such period, Goldbelt shall
forfeit its entire interest in the Company. The number of Managers
shall be fixed from time to time by the affirmative vote of a
majority of the Members but in no instance shall there be fewer than
one manager. Each Manager shall be appointed and hold office until
resignation or removal from office by the vote of a majority of the
Members. Manager(s) need not be residents of the State of Alaska.
6.3 Certain Powers of the Manager. Subject to Section 6.1.2 and without
limiting the generality of Section 6.1.1 above, the Manager shall
have the power and authority, on behalf of the Company:
6.3.1 To acquire property;
6.3.2 To purchase liability and other insurance to protect the
Company's property and business;
6.3.3 To hold and own real and personal properties in the name of
the Company;
6.3.4 To invest any Company funds in time deposits, short-term
governmental obligations, commercial paper, or other
investments;
6.3.5 Upon the affirmative vote of all of the Members, to sell or
otherwise dispose of all or substantially all of the assets of
the Company in a single transaction or plan so long as such
disposition does not violate or otherwise cause a default
under any other agreement under which the Company may be
bound;
6.3.6 To employ accountants, legal counsel, managing agents, or
other experts to perform services for the Company and to
compensate them from Company funds;
6.3.7 To act as the "tax matters partner" pursuant to Section 6231
of the Code.
6.4 Authority to Bind the Company. Unless authorized in writing to do so
by this Agreement or by a Manager, no Member, agent, or employee of
the Company shall have any power or authority to bind the Company in
any way, to pledge its credit or to render it liable for any
purpose.
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6.5 Meetings. A meeting of the Members shall be held once each year in
Juneau, Alaska every October. The Company shall reimburse Spitz for
the cost of sending not more than two representatives to each
meeting (although Spitz may send more representatives at Spitz's
cost). The purpose of the meetings shall be for the Members to
review the current operations and finances of the Company, to adopt
an annual budget and to discuss the future direction of the
operations and finances of the Company and of its hiring and
training program(s).
6.6 Member Actions. Notwithstanding any other provisions of this
Agreement, if all of the Members shall hold a meeting at any time
and place, such meeting shall be valid without call or notice, and
any lawful action taken at such meeting shall be the action of the
Members. Any action required or permitted to be taken by the Members
at a meeting may be taken without a meeting if consent in writing,
describing the action taken, is signed by all of the Members. Any
such written consent shall be included in the Company's records of
meetings. Meetings of the Members may be held by conference
telephone or by any other means of communication by which all
participants can hear each other simultaneously during the meeting,
and such participation shall constitute presence in person at the
meeting.
6.7 Budgets. The Manager shall prepare an operating budget and a capital
expenditure budget for the Company for each fiscal year of the
Company, beginning with the first fiscal year following the
effective date of this Agreement. Such budgets will not be effective
unless approved by all Members. No Manager or Member shall make any
expenditure or take any action during a fiscal year unless it is
consistent with the approved operating budget and capital budget for
that fiscal year, except with the prior consent of all the Members.
6.8 Devotion of Time; Outside Activities.
6.8.1 Spitz is engaged in other businesses and activities occupying
a substantial portion of its time. Accordingly, Spitz is
required to devote to the business of the Company only so much
of Spitz's time and attention as Spitz reasonably deems
necessary or advisable. Except as otherwise provided in
Section 14.1, Spitz may, during the continuance of the
Company, engage in any activity for Spitz's own profit or
advantage without the consent of Goldbelt, and neither the
Company nor Goldbelt shall have any right to any income or
profit derived from such activity.
6.8.2 Goldbelt is engaged in other businesses and activities
occupying a substantial portion of its time. Accordingly,
Goldbelt is required to devote to the business of the Company
only so much of Goldbelt's time and attention as Goldbelt
reasonably deems necessary or advisable. Except as otherwise
provided in Section 14.2, Goldbelt may, during the continuance
of the Company, engage in any activity for Goldbelt's own
profit or advantage without the consent of Spitz, and neither
the Company nor Spitz shall have any right to any income or
profit derived from such activity.
6.9 Banking Affiliation. The Company shall maintain accounts at such
banks and other financial institutions, as the Members shall
determine. All funds of the Company shall be deposited in the
Company's name and shall be withdrawn from such financial
institutions upon the signature of such individual or individuals as
may be designated by the Manager from time to time.
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6.10 Indemnification. The Company shall indemnify each of the Members to
the extent permissible under the laws of the State of Alaska, as the
same exist or are hereafter amended, against all liability, loss,
and costs (including, without limitation, attorney fees) incurred or
suffered by such Member by reason of or arising from the fact that
such Member is or was a member of the Company, or is or was at the
request of the Company serving as a manager, member, director,
officer, trustee, employee, or agent of another foreign or domestic
limited liability company, corporation, partnership, joint venture,
trust, benefit plan, or otherwise (the "Indemnified Party"), if such
Indemnified Party acted in good faith and in a manner in which such
Indemnified Party reasonably believed to be in the best interest of
the Company. The Company may, by action of the Members, provide
indemnification, as provided above, to employees and agents of the
Company who are not Members. The indemnification provided in this
section shall not be exclusive of any other rights to which any
person may be entitled under any statute, bylaw, agreement or
resolution of Members, by contract or otherwise.
7. Accounting
7.1 Books and Records. The Company shall keep adequate records and books
of account and shall maintain them in accordance with generally
accepted accounting principles. The Members shall cause annual
financial statements of the Company to be prepared, which shall
include a balance sheet, a profit and loss statement, cash flow
statement, and such supporting statements as the Members may from
time to time deem relevant. The Company's books and records of
account, financial statement, federal, state, and local income tax
returns for the three most recent fiscal years, a register showing
current names and addresses of the Members, a copy of the Company's
Articles of Organization and any amendments thereto, and this
operating agreement shall be maintained by the Members at the
principal office of the Company. Each Member shall at all times have
access to all such books and records.
7.2 Method of Accounting. The books of account of the Company shall be
kept on an accrual basis.
7.3 Accounting Year. The books of account of the Company shall be kept
on a calendar year basis. The taxable year of the Company shall be
the calendar year.
7.4 Income Tax Information. The Company shall timely furnish each Member
with information pertaining to the Company's taxable income or loss,
including but not limited to the informational tax returns of the
Company and the Schedule K-1 applicable to such Member. Such
information shall show each Member's distributive share of each
class of income, gain, loss, deduction, or credit of the Company.
Such information shall be furnished to the Members as soon as is
practicable following the close of the Company's taxable year.
7.5 Tax Matters Member. Goldbelt shall serve as the "tax matters
partner" of the Company.
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7.6 Annual Accounting. Within 90 days after the end of each fiscal year,
the Company shall provide all Members with an annual report
containing a balance sheet as of the end of that fiscal year and
statements of income or loss, Members' equity, and cash flow. Such
financial statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied in accordance
with the accrual method of accounting and shall be audited by a
certified public accountant who is mutually acceptable to the
Members.
8. Dissolution of Company.
8.1 Events Causing Dissolution. Except as otherwise provided in Section
10.10, the Company shall be dissolved (within the meaning of the
Limited Liability Company Act of the State of Alaska) by any of the
following events of dissolution:
(a) By the express will of a Member, evidenced by written notice
of such Member's intention to withdraw from the Company given
at the time and in the manner specified in Section 9;
(b) By the express will of all Members who have not assigned their
interests or suffered them to be charged their separate debts,
evidenced by a written instrument of dissolution signed by all
such Members;
(c) By the occurrence of any event that makes it unlawful for the
business of the Company to be carried on or for the Members to
carry on the business of the Company;
(d) By the dissolution of a Member;
(e) By the occurrence of any of the following events of bankruptcy
to a Member:
(i) The Member makes an assignment for the benefit of
creditors;
(ii) The Member files a voluntary petition in bankruptcy;
(iii) The Member is adjudicated a bankrupt or insolvent;
(iv) The Member files a petition or answer seeking for the
Member any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar
relief under any statute, law, or regulation, or a
proceeding against the Member seeking such relief is not
dismissed within 120 days after the commencement of such
proceeding;
(v) The Member files an answer or other pleading admitting
or failing to contest the material allegations filed
against the Member in any proceeding of the foregoing
nature; or
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(vi) The Member seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator of the
Member or of all or any substantial part of the Member's
property, or the appointment, without the Member's
consent, of such a trustee, receiver, or liquidator is
not vacated or stayed within 120 days after the
appointment or after the expiration of the stay;
(f) By the bankruptcy of the Company.
8.2 Cross-References; Definitions. The provisions of Section 10 shall
govern the effect of any dissolution described in any of Sections
8.1(a), 8.1(d) or 8.(e) and the relative rights and obligations of
the Members. For the purposes of this Section 8 and Sections 9, 10
and 11:
(a) The term "Withdrawing Member" refers to a Member described in
any of Sections 8.1(a), 8.1(d), or 8.1(e), and includes the
successors in interest of a dissolved Member described in
Section 8.1(d).
(b) The term "Remaining Member" refers to the Member other than
the Withdrawing Member.
(c) The term "Effective Date of Withdrawal" refers to dissolution
of the Company under any of Sections 8.1(a), 8.1(d) or 8.1(e).
8.3 Winding up of Company. In the event of dissolution described in any
of Sections 8.1(b), 8.1(c), or 8.1(f), the affairs of the Company
shall be wound up and its assets and properties distributed in the
manner provided by Section 12.
9. Withdrawal of a Member. Each Member shall have the right to withdraw from
the Company after January 31, 2004, by giving written notice of such
intention to withdraw to the Company and to the Remaining Member not later
than six months prior to the Effective Date of Withdrawal. Otherwise, a
Member may not voluntarily withdraw from the Company.
10. Option to Wind Up or Continue Company Following Dissolution
10.1 Scope. The provisions of this Section 10 all apply in the case of an
event of dissolution described in any of Sections 8.1(a), 8.1(d), or
8.1(e).
10.2 Effect of Dissolution. Except as provided in this Section 10, no
event of dissolution described in any of Section 8.1(a), 8.1(d), or
8.1(e) shall terminate the Company or require or entitle the Company
or any Member or Members to wind up the Company business and
affairs.
15
10.3 Election of Remaining Member. Upon the occurrence of an event of
dissolution described in any of Sections 8.1(a), 8.1(d), or 8.1(e),
the Remaining Member may elect to continue the business and affairs
of the Company, either by itself or in association with others, and
to purchase the interest in the Company of the Withdrawing Member by
giving written notice of such intention not later than 60 days
following the Effective Date of Withdrawal of the Withdrawing
Member. The business may be continued by the Remaining Member only
if the Remaining Member or the Company purchases the interest in the
Company of the Withdrawing Member. The purchase of the interest of
the Withdrawing Member shall be made at the time, in the manner, for
the price, and on the terms specified in Section 11. The Remaining
Member's ordering an appraisal of the interest in the Company of the
Withdrawing Member shall not alone be deemed to constitute an
election by the Remaining Member to purchase the interest of the
Withdrawing Member.
10.4 Continuation of Company Business. Upon the timely giving of notice
as provided by Section 10.3, the Remaining Member, either by itself
or in association with others, shall be entitled to continue the
business and affairs of the Company and for that purpose may possess
the Company property and continue to use the Company name.
10.5 Winding Up Company Business. In the event the Remaining Member fails
to give timely notice as provided in Section 10.3, or fails to
purchase the interest in the Company of the Withdrawing Member at
the time, in the manner, for the price, and upon the terms specified
in Section 11, the Members shall proceed with reasonable promptness
to wind up the business and affairs of the Company in accordance
with the provisions of Section 12.
11. Purchase and Sale of Company Interest of Withdrawing Member
11.1 Scope. This Section 11 governs the time, manner, price, and terms at
and upon which the Remaining Member who has given timely notice
under Section 10.3 shall purchase or cause the Company to purchase
the interest in the Company of a Withdrawing Member.
11.2 Purchase Price. The purchase price of the interest in the Company of
the Withdrawing Member shall be determined by agreement of the
Withdrawing Member and the Remaining Member. If the Members are
unable to agree on a purchase price for the interest by the
expiration of 30 days following the giving of the notice provided in
Section 10.3, the value of the interest shall be determined by
appraisal, and the purchase price for the interest shall be the
appraised value thereof. In determining the appraised value of the
interest in the Company of the Withdrawing Member, (i) no discount
will be applied by virtue of either the lack of marketability of
such interest or the fact that such interest is not a controlling
interest in the Company, and (ii) no premium will be attributed by
virtue of the fact that such interest represents a controlling
interest in the Company.
11.3 Appraisal Procedure. If an appraisal is required, it shall be
conducted as follows:
(a) The Withdrawing Member shall give notice to the Remaining
Member of the names of at least three appraisers acceptable to
the Withdrawing Member, and the Remaining Member shall select
an appraiser from that list, who shall appraise the fair
market value of the interest in the Company of the Withdrawing
Member. All appraisers included on the Withdrawing Member's
list shall be Accredited Senior Appraisers as designated by
the American Society of Appraisers, or shall have comparable
experience.
16
(b) Within 90 days after selection of an appraiser, the appraiser
shall determine the fair market value of the interest in the
Company of the Withdrawing Member on the Effective Date of
Withdrawal. Such appraisal shall be conducted in accordance
with the standards and guidelines of the Uniform Standards of
Professional Appraisal Practice. In determining such value,
the appraiser shall consider, among other things (i) the value
of the Company as a going concern and the Percentage Interest
of the Withdrawing Member, and (ii) if greater, the amount
that the Withdrawing Member would receive upon the winding up
of the Company, and shall be limited by the restrictions set
forth in the last sentence of Section 11.2 above. The value of
the interest of the Withdrawing Member as determined by the
appraiser shall be binding upon the Withdrawing Member and the
Remaining Member.
(c) The decision of the appraiser shall be in writing and shall be
dated. A copy of the decision shall immediately be delivered
to the Withdrawing Member and the Remaining Member.
(d) All costs of the appraisal shall be borne by the Withdrawing
Member and the Remaining Member in proportion to their
respective Percentage Interests.
11.4 Terms of Payment. The purchase price determined under Section 11.2
shall be payable in cash.
11.5 Assignment; Indemnification. Contemporaneously with the payment
under Section 11.4, the Withdrawing Member shall execute and deliver
such instruments, with full covenants of warranty, as shall be
effective to transfer and assign the entire interest in the Company
of the Withdrawing Member to the Remaining Member.
11.6 No Other Interest or Profits. Except for payments expressly provided
for in this Section 11, neither a Withdrawing Member nor any legal
representative of a Withdrawing Member shall be entitled to receive
from the Remaining Member or the Company any amount in respect of
the Withdrawing Member's interest in the Company except the amount
of any distributions made to the Withdrawing Member prior to the
Effective Date of Withdrawal.
11.7 Documentation. In order to give effect to the provisions of this
Section 11, each of the Members, for such Member and such Member's
successors and assigns, agrees to execute, acknowledge, and deliver
any instruments, agreements, and other documents reasonably required
to effect the purchase and the sale, transfer, and assignment of any
interest in the Company subject to this Section 11, including but
not limited to all such deeds, bills of sale, and other instruments
of transfer and conveyance as a title insurer may require as a
condition to insuring that title to any Company property is vested
in the Remaining Members, or in the Company as reconstituted
following the purchase and sale of an interest in the Company under
this Agreement.
12. Winding Up Company Business and Affairs
12.1 Scope. This Section 12 applies in case an event of dissolution
described in any of sections 8.1(b), 8.1(c) or 8.1(f); in the case
described in Section 10.5; and in the case of the expiration of the
term of the Company as provided in Section 1.7.
17
12.2 Winding Up. In any case to which this Section 12 applies, the
Members (exclusive of any Member whose interest has been purchased
under Section 11) shall proceed with reasonable promptness to wind
up the business and affairs of the Company and to complete Company
transactions begun but not then complete, and may, in the exercise
of their business judgment and if commercially reasonable, determine
to sell or not to sell assets of the Company. In the event of the
case described in Section 10.5 above, the Company shall hire a
reputable investment banking firm reasonably satisfactory to the
Members to attempt to arrange for the sale of the Company as a going
concern as part of the winding up of the Company pursuant to this
Section 12.
12.3 Distribution of Assets. The assets of the Company (including
proceeds from the sale of any assets of the Company) shall be
applied and distributed in the following order of priority.
12.3.1To creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of liabilities of the
Company.
12.3.2To the setting up of any reserves that the Members determine
to be reasonably necessary for contingent, unliquidated, or
unforeseen liabilities or obligations of the Company or of the
Members arising out of or in connection with the Company. Such
reserves may, in the discretion of the Members, be paid over
to an escrow agent selected by the Members to be held by such
agent as escrow for the purposes of disbursing such reserves
to satisfy liabilities and obligations, as set forth above,
and at the expiration of such period as the Members may
reasonably deem advisable, distributing any remaining balance
as provided below; provided, however, that, to the extent that
it shall have been necessary, by reason of applicable law or
regulation, to create any reserves prior to any and all
distributions which would otherwise have been made under this
Section 12.3.2 and, by reason thereof, a distribution under
Section 12.3.1 above has not been made, then any balance
remaining shall first be distributed pursuant to Section
12.3.1 above.
12.3.3To Members pro rata in accordance with the positive balances
in their respective Capital Accounts on the date of
distribution.
12.4 Gains or Losses in Winding Up; In-Kind Distributions. Any gain or
loss on disposition of Company assets in the process of winding up
shall be credited or charged to the Members in the manner specified
in Section 4. Any property distributed in kind in the liquidation
shall be valued and treated for partnership accounting purposes in
accordance with Treasury Regulationss.1.704-1 as though the property
distributed had been sold at fair market value as of the date of
distribution; the difference between the fair market value of the
property distributed in kind and its book value shall be treated as
a gain or loss on the sale of the property distributed in kind and
shall be credited or charged to the Members in the manner specified
in Section 4. If the Members cannot agree on the fair market value
of the Company's property for purposes of this Section 12.4, the
matter shall be determined by an independent appraiser selected by
the Member or Members in charge of the winding up under Section
12.2, and the fair market value as so determined shall be conclusive
and binding on the Company and the Members.
18
13. Transfer of Company Interest
13.1 Restriction on Transfer. Except as expressly permitted under Section
11 or this Section 13, no Member shall sell, exchange, assign,
pledge, give, or otherwise transfer or encumber in any manner or by
any means whatsoever, whether by operation of law or otherwise, all
or any part of such Member's interest in the Company, without
complying with the remaining provisions of this Section 13 or
without obtaining the prior written consent of the other Member.
Additionally, notwithstanding anything in Section 13.2 to the
contrary, in no event shall a Member transfer its interest in the
Company prior to January 31, 2004. Any purported transfer in
violation of this Agreement shall be null and void and of no force
and effect.
13.2 Right of Refusal. Any Member who receives a bona fide written offer
upon specific terms and conditions to purchase all or any part of
such Member's interest, and who wishes to accept such offer (the
"Selling Member"), shall promptly provide written notice of such
offer (the "Notice") to the other Member (the "Nonselling Member").
Such Notice shall state with specificity the name and address of the
person(s) desiring to purchase the interest in the Company, together
with the price and terms of payment. A copy of such bona fide offer
of purchase shall accompany the Notice. Such Notice also shall
contain the offer of the Selling Member to sell the Selling Member's
interest in the Company described in the bona fide offer of purchase
to the Nonselling Member at the price and on the other terms and
conditions set forth in the bona fide offer of purchase. For a
period of 30 days after the giving of such Notice by the Selling
Member, the Nonselling Member shall have the option to accept the
offer of the Selling Member and to purchase the interest in the
Company of the Selling Member described in the bona fide offer of
purchase upon the terms and conditions set forth in the bona fide
offer of purchase. Such option shall be exercisable by the giving of
written notice of acceptance, signed by the Nonselling Member, to
the Selling Member, within such 60-day period.
Sale of such interest shall be made at the offices of the
Company on a mutually satisfactory business day within 30 days after
the expiration of the aforesaid 60-day offer period. Delivery of
instruments of transfer to the purchasing Member shall be made on
such date as payment of the purchase price therefor. If effective
acceptance shall not be received within the 60-day period, then the
Selling Member, subject to the remainder of this Section 13, may
sell any remaining part of its interest so offered for sale at a
price not less than the price, and on terms and conditions not more
favorable to the purchaser thereof than the terms and conditions,
stated in the Notice at any time within 90 days after the expiration
of the 60-day offer period. In the event the remaining interest is
not sold by the Selling Member as aforesaid during such 90-day
period, the right of the Selling Member to sell such remaining
interest shall expire and the obligations of this section shall be
reinstated.
19
13.3 Right of Co-Sale. In the event of its receipt of a Notice pursuant
to Section 13.2 above, the Nonselling Member, if not purchasing the
interest in the Company of the Selling Member pursuant to Section
13.2 above, shall have the additional right, exercisable upon
written notice to the Selling Member within 30 days after receipt of
the Notice, to participate in the Selling Member's sale of interests
in the Company to the third party described in the Notice, pursuant
to the specified terms and conditions of such bona fide written
offer. The right of participation of the Nonselling Member shall be
subject to the following terms and conditions:
(i) The Nonselling Member exercising rights of co-sale hereunder
may sell all or any part of its interests in the Company up to
that amount equal to the product obtained by multiplying (1)
the aggregate number of Percentage Interests covered by the
bona fide written offer by (2) a fraction, the numerator of
which is the number of Percentage Interests at the time owned
by such Nonselling Member and the denominator of which is the
sum of (x) the number of Percentage Interests owned by the
Selling Member plus (y) the aggregate number of Percentage
Interests at the time owned by the Nonselling Member.
(ii) The Nonselling Member shall effect its participation in the
sale by promptly delivering to the Selling Member such
documentation as is reasonably requested by the bona fide
third party offeror to effect the transfer of interests in the
Company.
(iii) The documentation that the Nonselling Member delivers to the
Selling Member pursuant to Section 13.3(ii) shall be
transferred to the prospective purchaser or purchasers in
consummation of the sale of interests in the Company pursuant
to the terms and conditions specified in the bona fide written
offer, and the Selling Member shall concurrently therewith
remit to the Nonselling Member that portion of the sale
proceeds to which the Nonselling Member is entitled by reason
of its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment
or otherwise refuses to purchase interests in the Company from
the Nonselling Member exercising its rights of co-sale
hereunder, the Selling Member shall not sell to such
prospective purchaser or purchasers any interests in the
Company unless and until, simultaneously with such sale, the
Selling Member shall purchase such shares or other securities
from the Nonselling Member for the consideration that the
Nonselling Member would have received but for such prohibition
or refusal.
(iv) The exercise or non-exercise of the rights of a Nonselling
Member hereunder to participate in one or more sales of
interests in the Company made by a Selling Member shall not
adversely affect its rights to participate in subsequent sales
of interests in the Company subject to this Section 13.3.
(v) If the Nonselling Member elects to participate in the sale of
the interests in the Company subject to the Notice, the
Selling Member may, not later than 90 days following delivery
to the Company and the Nonselling Member of the Notice , enter
into an agreement providing for the closing of the transfer of
the interests in the Company covered by the Notice within 60
days of such agreement on terms and conditions described in
such Notice. Any proposed transfer on terms and conditions
other than those described in the Notice, as well as any
subsequent proposed transfer of any of the interests in the
Company by the Selling Member, shall again be subject to the
co-sale rights of the Nonselling Member and shall require
compliance with the procedures described in this Section 13.3.
20
13.4 Rights of Assignee. Any person to whom the entire remaining interest
of a Member is transferred pursuant to Section 13.2 above shall,
automatically and without the requirement of further action on
behalf of the Company or its members or managers, become a member of
the Company. In accordance with the Limited Liability Company Act of
the State of Alaska, no other person to whom an interest in the
Company is transferred or assigned shall be a Member or otherwise be
entitled, during the continuance of the Company, to participate in
the management or administration of the business or internal affairs
of the Company, to require any information or account of Company
transactions, or to inspect the Company books and records, unless
admitted as a Member with the consent of all Members. In such latter
case, the assignee shall merely be entitled to receive, in
accordance with the terms of the assignment or other transfer, the
profits, losses, and distributions to which the assigning or
transferring Member would otherwise be entitled.
14. Restrictions on Members
14.1 Spitz's Noncompetition Agreement. During and for the period
commencing on the effective date of this Agreement and ending three
years following the earlier of (a) the purchase of the interest of a
Member in the Company by the other Member or (b) the winding up of
the business of the Company pursuant to Section 12, neither Spitz
nor any of its Affiliates shall directly or indirectly engage in the
development or operation of any ImmersaVision(TM) (or similar)
theater in the State of Alaska without giving the Company the right
of first refusal (on commercially reasonable terms) to pursue such
operations.
14.2 Goldbelt's Noncompetition Agreement. During and for the period
commencing on the effective date of this Agreement and ending three
years following the earlier of (a) the purchase of the interest of a
Member in the Company by the other Member or (b) the winding up of
the business of the Company pursuant to Section 12, neither Goldbelt
nor any of its Affiliates shall engage in any activities which shall
compete with the business of the Company.
15. Miscellaneous
15.1 Waiver of Right of Dissolution by Court Decree. The Members
acknowledge and agree that care has been taken in this Agreement to
provide fair and reasonable terms governing the dissolution of this
Company. Accordingly, the Members accept the provisions of this
Agreement as the sole and exclusive basis for dissolution of the
Company and the determination of the relative rights and obligations
of the Members from and after dissolution. Each Member waives and
renounces its right to apply for a court decree of dissolution or to
seek appointment by a court of a liquidator for the Company.
15.2 Specific Performance. The Members declare that it is impossible to
measure in money the damages that will accrue if a Member or the
successors or assigns of a Member should fail to perform any of the
obligations contained in this Agreement. Therefore, the terms and
provisions of this Agreement may be specifically enforced in equity,
and the parties hereby waive the claim or defense that the remedy at
law is adequate for a breach of any of the terms and provisions of
this Agreement.
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15.3 Amendment of Agreement. This Agreement may be amended only by the
written agreement of the Members.
15.4 Notices. Any notice, consent, or other communication required or
given or made under this Agreement shall be in writing and shall be
deemed to have been sufficiently given or made either (i)
immediately when sent by facsimile machine to the facsimile number
noted below, or (ii) upon successful delivery when personally
delivered or mailed by certified mail, return receipt requested, to
the address and attention noted below:
Goldbelt: Goldbelt, Incorporated
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Spitz: Spitz, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇.▇. ▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any member may change its address for notices by giving notice of
such change to the other Member in accordance with this section.
1.5.5 Binding Effect. This Agreement shall be binding upon all parties and
their estates, legal representatives, heirs, devisees, successors,
and assigns, provided that this Section 16.5 shall not be construed
as a modification of the restrictions against assignment contained
in this Agreement.
15.6 Further Assurances. The Members will execute and deliver such
further instruments and do such further acts and things as may be
required to carry out the intent and purpose of this Agreement.
15.7 Waiver. No waiver of any right arising out of a breach of any
covenant, term or condition of this Agreement shall be a waiver of
any right arising out of any other or subsequent breach of the same
or any other covenant, term or condition or a waiver of the
covenant, term or condition itself.
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15.8 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and
understandings between them relating to the subject matter of this
Agreement, oral or written, all of which are hereby canceled.
15.9 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, all other provisions shall nevertheless
continue in full force and effect.
15.10 Captions. The captions are inserted only for convenience and are not
a part of this Agreement or a limitation of the scope of the
particular section to which each refers.
15.11 Gender and Number. If the context of any section of this Agreement
so requires, the masculine, feminine and neuter genders shall be
deemed to include the other or others. The singular and plural
numbers shall each be deemed to include the other.
15.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
15.13 Authority. Each individual executing this Agreement on behalf of a
corporation warrants that he is authorized to do so and that this
Agreement will constitute the legally binding obligation of the
corporation that the individual represents.
15.14 Disputes.
15.14.1 Senior Officers. Any claim or dispute between Goldbelt, whether as
Manager and/or a Member, on one side, and Spitz on the other,
arising out of or in connection with this Agreement or any agreement
entered into in connection with the transactions contemplated hereby
(including without limitation the Purchase Contract) or any alleged
breach hereof or thereof (a "Claim") shall be submitted for
resolution to the Chief Executive Officer of Goldbelt and the
President of Spitz, who shall meet in Minneapolis, Minnesota (or
such other location as they shall mutually agree) within 20 days of
such submission to seek in good faith an amicable settlement.
15.14.2 Binding Arbitration.
(A) Governing Principles. Any Claim not settled by the parties
within 40 days after written notice of the Claim is first given by
either party to the other shall be finally settled by arbitration
under the Commercial Arbitration Rules (the "Rules") and the
Guidelines for Expediting Larger, Complex Commercial Arbitrations of
the American Arbitration Association (the "AAA"), and judgment upon
the award rendered in such arbitration may be entered in any court
having jurisdiction over it. The arbitration shall be conducted in
Minneapolis, Minnesota.
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(B) Selection and Qualification of the Arbitrator. There shall
be one arbitrator (referred to as the "Arbitrator"). The parties
shall endeavor to agree on the selection of an Arbitrator, but if no
agreement has been reached within 40 days of claimant's demand that
the Arbitrator be selected the Arbitrator shall be selected by the
AAA upon the request of any party. The Arbitrator shall conduct
himself/herself as a neutral, and be subject to disqualification
pursuant to Section 19 of the Rules. The Arbitrator shall be
compensated at his or her normal hourly or per diem rates for all
time spent in connection with the arbitration proceeding, and
pending final award, appropriate compensation and expenses shall be
advanced equally by the parties.
(C) Preliminary Hearing. Within 15 days after the Arbitrator
has been appointed, a preliminary hearing among the Arbitrator and
counsel for the parties shall be held for the purpose of developing
a written plan for the management of the arbitration that shall
promote the efficient, expeditious and cost-effective conduct of the
proceeding.
(D) Interim Relief from a Court. Any party may request a court
to provide interim or provisional relief, and such request shall not
be deemed incompatible with the agreement to arbitrate or as a
waiver of that agreement.
(E) Powers of the Arbitrator and Arbitration Procedures. The
Arbitrator shall permit and facilitate such discovery as it
determines is appropriate, including prehearing depositions,
particularly of witnesses who will not appear, and orders to protect
the confidentiality of proprietary information, trade secrets, and
other sensitive information disclosed in discovery. Papers,
documents and written communications shall be delivered by the
parties directly to each other, the Arbitrator, and the AAA tribunal
administrator. The Arbitrator shall actively manage the proceeding
to make it fair, expeditious, economical and less burdensome and
adversarial than litigation. The Arbitrator may limit the issues,
limit the time for each party to present its case, exclude testimony
and other evidence that it deems irrelevant, cumulative or
inadmissible, and order that the direct testimony of witnesses be
furnished by written sworn statement. All documents that a party
proposes to offer in evidence, except for those objected to by an
opposing party, shall be self authenticated. There shall be a
stenographic transcript of the proceedings, the cost of which shall
be borne equally by the parties, pending the final award. Any Claim
submitted to arbitration shall be resolved in accordance with Title
9 of the U.S. Code (U.S. Arbitration Act) which shall govern the
interpretation, enforcement and proceedings pursuant to this
arbitration provision.
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(F) Rendering of Award. The award rendered by the Arbitrator
shall itemize the awards, shall not include punitive damages but may
include all or a part of a party's reasonable attorneys' fees, and
shall state the reasoning on which it rests. Before rendering the
final award, the Arbitrator shall submit to the parties an unsigned
draft of the proposed award, and each party may deliver, within 15
days after receipt of such draft, a written statement of alleged
errors of fact, computation, law or otherwise. The Arbitrator may
disregard any party's statement to the extent that it is in
substance an application for reargument. Within 20 days after
receipt of such statements, the Arbitrator shall render the final
award.
GOLDBELT, INCORPORATED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
SPITZ, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
Title: President