Exhibit 2
================================================================================
OPERATING AGREEMENT
OF
C&E DM, LLC
A NEVADA LIMITED LIABILITY COMPANY
Dated as of March 1, 1994
================================================================================
Page 52 of 106 Pages
C&E DM, LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the "Agreement") is made
and entered into and effective as of March 1, 1994, by and between The ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ Family Trust dated February 12, 1991 (the "Trust") and C&E
DM Limited Partnership, a California limited partnership ("C&E"), with reference
to the recitals set forth below.
R E C I T A L S
A. The Trust and C&E have formed a limited liability company (hereinafter
called the "LLC") pursuant to the provisions of Chapter 86 of the Nevada Revised
Statutes.
B. In consideration of the covenants and the promises made herein, the
parties hereto hereby agree as follows.
ARTICLE 1 - DEFINITIONS
1.1 Adjusted Capital Account Deficit - "Adjusted Capital Account
--------------------------------
Deficit" means, with respect to any Member, the deficit balance, if any, in such
Member's Capital Account as of the end of the relevant Fiscal Year, after giving
effect to the following adjustments:
1.1.1 increase such Capital Account by any amounts which such
Member is obligated to contribute to the LLC (pursuant to the terms of this
Agreement or otherwise) or is deemed to be obligated to contribute to the
LLC pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
1.1.2 reduce such Capital Account by the amount of the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.2 Affiliate - "Affiliate" means, when used with reference to a
---------
specified Person, (i) the Principal of the Person, (ii) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(iii) any Person owning or controlling 10% or more of the outstanding voting
interests of such Person, and (iv) any relative or spouse of such Person.
1.3 Agreement - "Agreement" means this Limited Liability Company
---------
Operating Agreement, as originally executed and as amended from time to time, as
the context requires. Words such as "herein", "hereinafter", "hereto", "hereby"
and "hereunder", when used with reference to this Agreement, refer to this
Agreement as a whole, unless the context otherwise requires.
1.4 Articles of Organization - "Articles of Organization" means the
------------------------
articles of organization filed with the Nevada Secretary of State for the
purpose of forming the LLC.
Page 53 of 106 Pages
1.5 Available Cash Flow - "Available Cash Flow" means, with respect to
-------------------
any Fiscal Year or other period, the sum of all cash receipts of the LLC from
any and all sources, less all cash disbursements (including loan repayments,
capital improvements and replacements) and a reasonable allowance for Reserves,
contingencies and anticipated obligations as determined by the Manager.
1.6 Business of the LLC - "Business of the LLC" shall have the meaning
-------------------
set forth in Section 2.7 hereof.
1.7 Capital Account - "Capital Account" of a Member shall have the
---------------
meaning set forth in Section ? hereof.
1.8 Capital Contribution - "Capital Contribution" shall have the meaning
--------------------
set forth in Article 3 hereof.
1.9 Code - "Code" means the Internal Revenue Code of 1986, as amended
----
(or any corresponding provision or provisions of any succeeding law).
1.10 Depreciation - "Depreciation" means, for each Fiscal Year or other
------------
period, an amount equal to the depreciation, amortization or other cost recovery
reduction allowable with respect to an asset for such Fiscal Year or other
period.
1.11 Dissolution - "Dissolution" means (i) when used with reference to
-----------
the LLC, the earlier of (a) the date upon which the LLC is terminated under the
Statute, or any similar provision enacted in lieu thereof, or (b) the date upon
which the LLC ceases to be a going concern, and (ii) when used with reference to
any Member, the earlier of (a) the date upon which there is a Dissolution of the
LLC or (b) the date upon which such Member's entire interest in the LLC is
terminated by means of a distribution or series of distributions by the LLC to
such Member.
1.12 Fiscal Year - "Fiscal Year" means the period of January 1 to and
-----------
including December 31.
1.13 Initial Members - "Initial Members" means the Trust and C&E.
---------------
1.14 LLC - "LLC" means C&E DM, LLC.
---
1.15 LLC Interest - "LLC Interest" or "Interest" means an ownership
------------
interest in the LLC.
1.16 LLC Loans - "LLC Loans" shall refer to any loans or advances made by
---------
any Member to the LLC at the Member's option, without obligation to so do, to
the extent the LLC does not have sufficient resources (assets, borrowings or
otherwise) to meet its LLC obligations. Such LLC Loans shall bear interest at
the rate agreed to between the Member and the Manager.
1.17 LLC Minimum Gain - "LLC Minimum Gain" means the amount determined by
----------------
computing with respect to each nonrecourse liability of the LLC, the amount of
gain (of whatever character), if any, that would be realized by the LLC if it
disposed (in a taxable transaction) of the Property subject to such liability in
full satisfaction thereof, and by then aggregating the amounts so computed as
set forth in Regulations Section 1.704-2(d).
Page 54 of 106 Pages
1.18 Manager - "Manager" means the Person elected to manage the LLC
-------
pursuant to Section ? of this Agreement. At any time that the Members shall
have elected to have more than one Manager, all such Persons so elected shall be
referred to as the "Managers."
1.19 Member Nonrecourse Debt - "Member Nonrecourse Debt" has the meaning
-----------------------
set forth in Regulations Section 1.704-2(b)(4).
1.20 Member Nonrecourse Debt Minimum Gain - "Member Nonrecourse Debt
------------------------------------
Minimum Gain" means an amount, with respect to each Member Nonrecourse Debt,
equal to the LLC Minimum Gain that would result if such Member Nonrecourse Debt
were treated as a nonrecourse liability of the LLC, determined in accordance
with Regulations Sections 1.704-2(i)(2) and (3).
1.21 Member Nonrecourse Deductions - "Member Nonrecourse Deductions" has
-----------------------------
the meaning set forth in Regulations Section 1.704-2(i)(2). The amount of
Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a
Fiscal Year of the LLC equals the excess (if any) of the net increase (if any)
in the amount of Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt during that Fiscal Year over the aggregate amount of any
distributions during that Fiscal Year to the Member that bears (or is deemed to
bear) the economic loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse Debt and are
allocable to an increase in Member Nonrecourse Debt Minimum Gain attributable to
such Member Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(2).
1.22 Members - "Members" means collectively all Persons who hold
-------
Interests in the LLC. Reference to a "Member" shall be to any one of the
Members.
1.23 Net Capital Contributions - "Net Capital Contributions" means the
-------------------------
aggregate of a Member's Capital Contributions over the aggregate distributions
theretofore made to such Member pursuant to Section 5.1.
1.24 Net Profits and Net Loss. "Net Profits" and "Net Loss" mean, for
------------------------
each Fiscal Year or other period, an amount equal to the LLC's taxable income or
loss for such year or period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
1.24.1 Any income of the LLC that is exempt from Federal income tax
and not otherwise taken into account in computing Net Profits or Net Loss shall
be added to such taxable income or loss;
1.24.2 Any expenditures of the LLC described in Code Section
705(b)(2)(B) or treated as Code Section 705(b)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in
computing Net Profits or Net Loss shall be subtracted from such taxable income
or loss;
1.24.3 Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to
Page 55 of 106 Pages
the fair market value of the Property disposed of, notwithstanding that the
adjusted tax basis of such Property differs from its fair market value;
1.24.4 In lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period, computed in accordance with the subsection hereof entitled
"Depreciation"; and
1.24.5 Notwithstanding any other provision of this subsection, any
items of income, gain, loss or deduction which are specifically allocated shall
not be taken into account in computing Net Profits or Net Loss.
1.25 Percentage Interest. "Percentage Interest" of a Member means the
-------------------
proportion which a Member's Capital Account bears to the aggregate of all
Members' Capital Accounts. The Initial Members' Percentage Interests shall be
in the following percentages:
Trust - 10%
C&E - 90%
1.26 Period of Duration. "Period of Duration" shall have the meaning set
------------------
forth in Section 2.6 hereof.
1.27 Person. "Person" means any individual, partnership, corporation,
------
trust, limited liability company, or other entity.
1.28 Principal. "Principal" means the natural Person which is in
---------
ultimate control of a Member.
1.29 Property. "Property" means all assets of the LLC, both tangible and
--------
intangible, or any portion thereof.
1.30 Regulations. "Regulations" means the federal income tax regulations
-----------
promulgated by the Treasury Department under the Code, as such regulations may
be amended from time to time. All references herein to a specific section of
the Regulations shall be deemed also to refer to any corresponding provisions of
succeeding Regulations.
1.31 Reserves. "Reserves" means funds set aside from Capital
--------
Contributions or gross cash revenues as reserves. Such Reserves shall be
maintained in amounts reasonably deemed sufficient by the Manager for working
capital and the payment of taxes, insurance, debt service, repairs, replacements
renewals, or other costs or expenses incident to the Business of the LLC, or in
the alternative, the Dissolution of the LLC.
1.32 Secretary of State. shall mean the Secretary of State of the State
------------------
of Nevada.
1.33 Statute. "Statute" shall mean Chapter 86 of the Nevada Revised
-------
Statutes (or any corresponding provision or provisions of any succeeding law).
1.34 Vote. Except where superseded by another Section of this Agreement,
----
or required by the terms of the Statute, Code or applicable Regulations
thereunder, all decisions made by this LLC shall be approved by fifty-one
percent (51%) of the votes ("Vote") of the Members, wherein each Member casts a
number of votes equal to its Percentage Interest in the LLC.
Page 56 of 106 Pages
ARTICLE 2 - INTRODUCTORY MATTERS
2.1 Formation of LLC. On February 16, 1994, the parties formed the LLC
----------------
pursuant to the provisions of the Statute by filing the Articles of Organization
with the Secretary of State.
2.2 Name. The name of the LLC is "C&E DM, LLC." The Members shall
----
operate the Business of the LLC under such name or use such other or additional
names as the Members may deem necessary or desirable provided that: (i) no such
name shall contain the individual name of any Principal of any Member, or any
similar name or variation thereof; (ii) the Members shall have reasonably
determined, before use of any such name, that the LLC is entitled to use such
name and will not by reason of such use infringe upon any rights of any other
Person, or violate any applicable laws or governmental regulations; and (iii)
the Members shall register such name under assumed or fictitious name statutes
or similar laws of the states in which the LLC operates.
2.3 Principal Office. The LLC shall maintain its principal place of
----------------
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such
other place in California as the Manager shall from time to time designate.
This location shall be referred to from time to time as the "principal office"
of the LLC.
2.4 Office of Record. The address of the office in Nevada where the
----------------
records of this LLC shall be maintained is: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, or such other place as the Manager may determine.
2.5 Agent for Service of Process. The name and address of the LLC's
----------------------------
agent for service of process is ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
2.6 Period of Duration. The period of duration of the LLC ("Period of
------------------
Duration") shall be thirty (30) years, commencing on the date of the filing of
the Articles of Organization with the Nevada Secretary of State, unless the LLC
is terminated or dissolved sooner, in accordance with the provisions of this
Agreement.
2.7 Business and Purpose of the LLC. The purpose of the LLC is to
-------------------------------
engage in any lawful activities for which a LLC may be organized under the
Statute, including, but not limited, to the ownership and development of real
estate projects.
ARTICLE 3 - MEMBERS & CAPITAL CONTRIBUTIONS
3.1 Names and Addresses of Initial Members. The names and addresses of
--------------------------------------
the Initial Members are as follows:
3.1.1 The ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ Family Trust dated February
12, 1991, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
3.1.2 C&E DM Limited Partnership, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
3.2 Contributions. The Initial Members shall contribute the following
-------------
to the LLC:
Page 57 of 106 Pages
3.2.1 The Trust shall contribute Forty Thousand Dollars ($40,000)
in cash and Ten Thousand shares of the common stock of ▇▇▇▇▇▇▇▇ Studio Equipment
Group, a California corporation ("▇▇▇▇▇▇▇▇").
3.2.2 C&E shall contribute Three Hundred Sixty Thousand Dollars
($360,000) in cash and Ninety Thousand shares of the common stock of ▇▇▇▇▇▇▇▇.
3.3 Additional Contributions. Except as shall be expressly set forth
------------------------
herein, no Member shall be required to (a) make any additional Capital
Contributions, (b) make any loan, or (c) cause to be loaned any money or other
assets to the LLC.
3.4 Rights with Respect to Capital.
------------------------------
3.4.1 LLC Capital. No Member shall have the right to withdraw,
-----------
or receive any return of, its Capital Contribution, and no Capital Contribution
may be returned in the form of property other than cash except as specifically
provided herein.
3.4.2 No Interest on Capital Contributions. Except as expressly
------------------------------------
provided in this Agreement, no Capital Contribution of any Member shall bear any
interest or otherwise entitle the contributing Member to any compensation for
use of the contributed capital.
3.5 Establishment of Capital Accounts. A separate capital account
---------------------------------
("Capital Account") shall be maintained for each Member. For book purposes,
each Member's Capital Account will be separated into a contribution account and
an income (loss) account and will be maintained according to generally accepted
accounting principles. Sections 3.6 and 3.7 below describe the appropriate
accounting treatment for tax purposes of the Capital Accounts.
3.6 General Rules for Adjustment of Capital Accounts. The Capital
------------------------------------------------
Account of each Member shall be:
3.6.1 Increases. Increased by:
---------
3.6.1.1 Such Member's cash contributions;
3.6.1.2 The agreed fair market value of property
contributed by such Member (net of liabilities secured by such contributed
property that the LLC is considered to assume or take subject to under Code
Section 752);
3.6.1.3 All items of LLC income and gain (including income
and gain exempt from tax) allocated to such Member pursuant to Article 4, 4 or
other provisions of this Agreement; and
3.6.2 Decreases. Decreased by:
---------
3.6.2.1 The amount of cash distributed to such Member;
3.6.2.2 The agreed fair market value of all actual and
deemed distributions of property made to such Member pursuant to this Agreement
(net of liabilities secured by such distributed property that the Member is
considered to assume or take subject to under Code Section 752);
Page 58 of 106 Pages
3.6.2.3 All items of LLC deduction and loss allocated to
such Member pursuant to Article 4 or other provisions of this Agreement.
3.7 Special Rules With Respect to Capital Accounts.
----------------------------------------------
3.7.1 Time of Adjustment for Capital Contributions. For purposes
--------------------------------------------
of computing the balance in a Member's Capital Account, no credit shall be given
for any Capital Contribution which such Member is to make until such
contribution is actually made. "Capital Contribution" refers to the total amount
of cash and the agreed fair market value (net of liabilities) contributed to the
LLC by that Member and any subsequent contributions of cash and the agreed fair
market value (net of liabilities) of any other property subsequently contributed
to the LLC by that Member.
3.7.2 Intent to Comply with Treasury Regulations. The foregoing
------------------------------------------
provisions of Sections 3.6 and 3.7 and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations Section. To the extent such provisions are
inconsistent with such Regulations Section or are incomplete with respect
thereto, Capital Accounts shall be maintained in accordance with such
Regulations Section.
3.8 Transferee's Capital Account. In the event any Member transfers any
----------------------------
Interest in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred Interest.
ARTICLE 4 - ALLOCATION OF PROFITS AND LOSSES
4.1 Allocation of Net Profits and Losses. Except as otherwise provided
------------------------------------
in this Article 4, 4, Net Profits and Net Loss of the LLC in each Fiscal Year
shall be allocated among the Members as follows:
4.1.1 Net Profits. Net Profits shall be allocated among the
-----------
Members as follows:
4.1.1.1 first, to each of the Members until the cumulative
Net Profits allocated to such Member pursuant to this Section 4.1.1 is equal to
the cumulative Net Loss allocated to the Member pursuant to Section 4.1.2 for
any prior period; and
4.1.1.2 thereafter, to the Members in accordance with their
Percentage Interests.
4.1.2 Allocation of Net Loss. Except as otherwise provided in this
----------------------
Article 4, Net Loss shall be allocated among the Members as follows:
4.1.2.1 first, to offset any Net Profits allocated pursuant
to Section ? hereof, and then to offset any Net Profits allocated pursuant to
Section ? hereof (in each case pro rata in proportion to their shares of Net
Profits being offset);
4.1.2.2 second, in proportion to the positive balances, if
any, in the Members' respective Capital Accounts, until such balances are
reduced to zero; and
Page 59 of 106 Pages
4.1.2.3 third, to the Members, pro rata, in accordance with
their Percentage Interests; provided, however, that if, and to the extent that
the allocation of Net Loss in this manner would cause a Member to have an
Adjusted Capital Account Deficit at the end of the Fiscal Year, then such Net
Loss shall instead be allocated to the Member who has the largest Percentage
Interest.
4.2 Residual Allocations.. Except as otherwise provided in this
--------------------
Agreement, all items of LLC income, gain, loss, deduction, and any other
allocations not otherwise provided for shall be divided among the Members in the
same proportions as they share Net Profits or Net Losses, as the case may be,
for the Fiscal Year.
4.3 Qualified Income Offset.. If any Member unexpectedly receives any
-----------------------
adjustments, allocation or distributions described in clauses (4), (5) or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d), items of LLC income shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 4.3 is intended to
constitute a "qualified income offset" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d)(3).
4.4 Minimum Gain Chargeback.. If there is a net decrease in LLC Minimum
-----------------------
Gain during a Fiscal Year, each Member will be allocated, before any other
allocation under this Article 4, items of income and gain for such Fiscal Year
(and if necessary, subsequent years) in proportion to and to the extent of an
amount equal to such Member's share of the net decrease in LLC Minimum Gain
determined in accordance with Regulations Section 1.704-2(g)(2). This Section
4.4 is intended to comply with, and shall be interpreted consistently with, the
"minimum gain chargeback" provisions of Regulations Section 1.704-2(f).
4.5 Member Nonrecourse Debt Minimum Gain Chargeback.. Notwithstanding
-----------------------------------------------
any other provision of this Article 4, but except Section 4.4, if there is a net
decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year of the LLC, each Member who has a share
of the Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(5), shall be specially allocated items of LLC income and gain for
such year (and, if necessary, subsequent years) in an amount equal such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4). This Section 4.5 is intended
to comply with a minimum gain chargeback requirement of that Section of the
Regulations and shall be interpreted consistently therewith.
4.6 Member Nonrecourse Deductions.. Any Member Nonrecourse Deductions
-----------------------------
for any Fiscal Year or other period shall be specially allocated to the Member
who bears (or is deemed to bear) the economic risk of loss with respect to the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
4.7 Special Allocations.. Any special allocations of items of Net
-------------------
Profits pursuant to Sections 4.4, 4.5 and 4.6 shall be taken into account in
computing subsequent allocations of Net Profits pursuant to Section 4.1, so that
the net amount of any items so allocated and the gain, loss and any other item
allocated to each Member pursuant to Section 4.l shall, to the extent possible,
be equal to the net amount that would have been allocated to each such Member
pursuant to the provisions of this Article if such special allocations had not
occurred.
Page 60 of 106 Pages
4.8 Fees to Members or Affiliates.. Notwithstanding the provisions of
-----------------------------
Section 4.1, in the event that any fees, interest, or other amounts paid to any
Member or any Affiliate thereof pursuant to this Agreement or any other
agreement between the LLC and any Member or Affiliate thereof providing for the
payment of such amount, and deducted by the LLC in reliance on Section 707(a)
and/or 707(c) of the Code, are disallowed as deductions to the LLC on its
federal income tax return and are treated as LLC distributions, then
4.8.1 the Net Profits or Net Loss, as the case may be, for the
Fiscal Year in which such fees, interest, or other amounts were paid shall
be increased or decreased, as the case may be, by the amount of such fees,
interest, or other amounts that are treated as LLC distributions; and
4.8.2 there shall be allocated to the Member to which (or to whose
Affiliate) such fees, interest, or other amounts were paid, prior to the
allocations pursuant to Section 4.1, an amount of gross income for the
Fiscal Year equal to the amount of such fees, interest, or other amounts
that are treated as LLC distributions.
4.9 Section 704(c) Allocation.. Any item of income, gain, loss, and
-------------------------
deduction with respect to any property (other than cash) that has been
contributed by a Member to the capital of the LLC and which is required or
permitted to be allocated to such Member for income tax purposes under Section
704(c) of the Code so as to take into account the variation between the tax
basis of such property and its fair market value at the time of its contribution
shall be allocated to such Member solely for income tax purposes in the manner
so required or permitted.
ARTICLE 5 - DISTRIBUTIONS
5.1 Available Cash Flow. Available Cash Flow of the LLC shall be
-------------------
distributed to the Members in accordance with the following priority and
agreements:
5.1.1 First. Pro rata among the Members, in the ratio of the
-----
principal balances outstanding, until all of the accrued but unpaid interest on
all LLC Loans, if any, has been paid, and then the principal amounts thereof.
5.1.2 Second. To the Members, pari passu, on a pro rata basis,
------ ---- -----
until each Member has received a ten percent (10%) interest (simple) on their
Net Capital Contribution from time to time outstanding.
5.1.3 Third. To the Members, pari passu, on a pro rata basis,
----- ---- -----
until all Net Capital Contributions are reduced to zero.
5.1.4 Fourth. To the Members in accordance with the applicable
------
Percentage Interests as of the time of such distribution.
5.2 Liquidating Distributions. Subject to the provisions of Section
-------------------------
11.4, Available Cash Flow in liquidation of the LLC shall be distributed first
in accordance with Section 4.1.1 and then to the Members, pro rata in accordance
with each Member's positive Capital Account balance, to the extent thereof,
after allocation of Net Profits and Net Loss and all other appropriate Capital
Account adjustments and then in accordance with the applicable Percentage
Interests of the Members.
Page 61 of 106 Pages
ARTICLE 6 - RIGHTS, DUTIES, OBLIGATIONS,
AND COMPENSATION OF MANAGERS AND OFFICERS
6.1 Manager. The LLC shall be managed by ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ (the
-------
"Manager"). The Manager shall have such rights, duties and powers as are
specified in this Agreement, or conferred upon the Manager by Vote of the
Members.
6.1.1 Duties of the Manager. The Manager is the general manager
---------------------
and chief executive officer of the LLC and has, subject to the control of the
Members, general supervision, direction, and control of the business of the LLC.
The Manager shall preside at all meetings of the Members. The Manager shall
have the general powers and duties of management typically vested in the office
of president and general manager of a corporation, and such other powers and
duties as may be prescribed by the Members. Until the Members shall have
elected more than one Manager for the LLC, the term "Manager" as used in this
Agreement, but other than Section 6.2, shall mean the Person who alone has the
powers and duties specified in this Section 6.1.1.
6.1.2 Election. Each Manager of the LLC shall be chosen
--------
annually by the Vote of the Members. In voting for Managers, each Member shall
have a number of votes equal to its Percentage Interest in the LLC. The
candidate for each Manager position who obtains the majority of Member votes
cast shall succeed to that Manager position. Each Manager shall hold his office
until he or she shall resign or shall be removed or otherwise disqualified to
serve, or his or her successor shall be elected and qualified.
6.1.3 Subordinate Officers. The Members may appoint such other
--------------------
officers of the LLC as the Business of the LLC may require, each of whom shall
hold office for such period, have such authority and perform such duties as are
provided in this Agreement, or as the Members determine.
6.1.4 Removal and Resignation. Any Manager or other officer of
-----------------------
the LLC may be removed, with or without cause, by the Vote of the Members. Any
Manager or other officer of the LLC may resign at any time without prejudice to
any rights of the LLC under any contract to which the Manager or other officer
of the LLC is a party, by giving written notice to the Members, or to the
Manager, as applicable. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
6.1.5 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled by a
Vote of the Members, through the appointment of a successor officer who shall
hold the office for the unexpired term.
6.2 Co-Managers. If at any time during the Period of Duration, the
-----------
Members by Vote shall determine to have more than one Manager, the Managers
shall be elected pursuant to the provisions of Section ? and shall be subject to
removal pursuant to the provisions of Section ?. Each Manager shall also have
the right to resign provided in Section ?, and any vacancy in a Manager position
shall be filled pursuant to the provisions of Section ?. The following
provisions of this Section 6.2 shall govern the manner in which the Managers
shall manage the Business of the LLC if the Members have elected more than one
Manager.
6.2.1 The Managers shall share in the duties described in Section
?.
Page 62 of 106 Pages
6.2.2 Meetings of the Managers shall be held at the principal
office of the LLC, unless some other place is designated in the notice of
the meeting. Any Manager may participate in a meeting through use of a
conference telephone or similar communication equipment so long as all
Managers participating in such a meeting can hear one another. Accurate
minutes of any meeting of the Managers shall be maintained by the officer
designated by the Managers for that purpose.
6.2.3 Regular meetings of the Managers shall be held immediately
following the adjournment of the annual meeting of the Members at which the
Managers are elected. No notice need be given of such regular meetings.
6.2.4 Special meetings of the Managers for any purpose may be
called at any time by any Manager. At least forty-eight (48) hours notice of the
time and place of a special meeting of the Managers shall be delivered
personally to the Managers or personally communicated to them by an officer of
the LLC by telephone, telegraph or facsimile. If the notice is sent to a Manager
by letter, it shall be addressed to him at his last known business address as it
is shown on the records of the LLC. In case such notice is mailed, it shall be
deposited in the United States mail, first-class postage, prepaid, in the place
in which the principal office of the LLC is located at least four (4) days prior
to the time of the holding of the meeting. Such mailing, telegraphing,
telephoning or delivery as above provided shall be considered due, legal and
personal notice to such Manager.
6.2.5 With respect to a special meeting which has not been duly
called or noticed pursuant to the provisions of Section 6.2.4, all transactions
carried out at the meeting are as valid as if had at a meeting regularly called
and noticed if: (i) all Managers are present at the meeting, and sign a written
consent to the holding of such meeting, or (ii) if a majority of the Managers
are present and if those not present sign a waiver of notice of such meeting or
a consent to holding the meeting or an approval of the minutes thereof, whether
prior to or after the holding of such meeting, which waiver, consent or approval
shall be filed with the other records of the LLC, or (iii) if a Manager attends
a meeting without notice and does not protest prior to the meeting or at its
commencement that notice was not given to him or her.
6.2.6 Any action required or permitted to be taken by the Managers
may be taken without a meeting and will have the same force and effect as if
taken by a vote of Managers at a meeting properly called and noticed, if
authorized by a writing signed individually or collectively by all, but not less
than all, the Managers. Such consent shall be filed with the records of the LLC.
6.2.7 A majority of the total number of incumbent Managers shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Managers, and except as otherwise provided in this Agreement or by the
Statute, the action of a majority of the Managers present at any meeting at
which there is a quorum, when duly assembled, is valid. A meeting at which a
quorum is initially present may continue to transact business, notwithstanding
the withdrawal of Managers, if any action taken is approved by a majority of the
required quorum for such meeting.
6.3 Limitations on Rights and Powers. Except by the unanimous agreement
--------------------------------
of the Members which is evidenced in a writing, neither the Manager nor any
other officer of the LLC shall have authority to:
6.3.1 Enter into or commit to any agreement, contract, commitment
or obligation on behalf of the LLC obligating any Member or Principal to find
additional capital, to make or guarantee a loan or to increase its personal
liability either to the LLC or to third parties;
Page 63 of 106 Pages
6.3.2 Receive or permit any Member or Principal to receive any fee
or rebate, or to participate in any reciprocal business arrangements that would
have the effect of circumventing any of the provisions hereof;
6.3.3 Materially alter the Business of the LLC or deviate from any
approved business plan of the LLC as set forth in this Agreement;
6.3.4 Permit or cause the LLC to place title to any Property in
the name of a nominee;
6.3.5 Permit the LLC's funds to be commingled with the funds of
any other Person;
6.3.6 Do any act in contravention of this Agreement;
6.3.7 Do any act which would make it impossible to carry on the
Business of the LLC;
6.3.8 Confess a judgment against the LLC;
6.3.9 Possess Property, or assign rights in specific Property, for
other than a LLC purpose;
6.3.10 Admit any person as a Member, except as otherwise provided
in this Agreement;
6.3.11 Sell, lease, pledge, hypothecate, or grant a security
interest in any Property, except in the ordinary course of business;
6.3.12 Attempt to dissolve or withdraw from the LLC; and
6.3.13 Invest or reinvest any proceeds from the operation of the
LLC, or the sale, refinancing or other disposition of any Property.
6.4 Compensation of Manager. The LLC shall pay to the Manager such
-----------------------
salary and other benefits as shall be approved from time to time by Vote of the
Members. The LLC shall reimburse the Manager for any expense paid by the
Manager that properly is to be borne by the LLC.
6.5 Compensation of Members. Except as expressly permitted by this
-----------------------
Agreement or any other written agreement, the LLC shall pay no compensation to
any Member or any Principal of any Member for their services to the LLC.
6.6 Expense Reimbursement. The LLC shall reimburse the Members for any
---------------------
expense paid by them that properly is to be borne by the LLC, as approved from
time to time by the Manager.
Page 64 of 106 Pages
ARTICLE 7 - MEMBERS' MEETING
7.1 Place of Meetings. Meetings of the Members shall be held at the
-----------------
principal office of the LLC, unless some other appropriate and convenient
location shall be designated for that purpose from time to time by the Manager.
7.2 Annual Meetings of Members. The annual meeting of the Members shall
--------------------------
be held, each year, on the anniversary of the date of this Agreement, at 10:00
a.m. If this day shall be a legal holiday, then the meeting shall be held on
the next succeeding business day, at the same time. At the annual meeting, the
Members shall elect the Manager (or Managers) and transact such other business
as may be properly brought before the meeting.
7.3 Special Meetings. Special meetings of the Members may be called at
----------------
any time by the Manager or by one or more Members holding in the aggregate no
less than ten percent (10%) of the Percentage Interests. Upon receipt of a
written request, which request may be mailed or delivered personally to the
Manager, by any Person entitled to call a special meeting of Members, the
Manager shall cause notice to be given to the Members that a meeting will be
held at a time requested by the Person or Persons calling the meeting, not less
than thirty-five (35) nor more than sixty (60) days after the receipt of such
request. If such notice is not given within twenty (20) days after receipt of
such request, the Persons calling the meeting may give notice thereof in the
manner provided by this Agreement.
7.4 Notice of Meetings. Except as provided for in Section ? for special
------------------
meetings, notice of meetings shall be given to the Members in writing not less
than ten (10) nor more than sixty (60) days before the date of the meeting by
the Manager. Such notices shall be given personally, by mail, or by facsimile,
and shall be sent to each Member's last known business address appearing on the
books of the LLC. Such notice shall be deemed given at the time it is delivered
personally, or deposited in the mail, or sent by facsimile. Notice of any
meeting of Members shall specify the place, the day and the hour of the meeting,
and (i) in case of a special meeting, the general nature of the business to be
transacted, or (ii) in the case of an annual meeting, those matters which the
Manager, at the date of mailing, intends to present for action by the Members.
7.5 Validation of Members' Meetings. The transactions of a meeting of
-------------------------------
Members which was not called or noticed pursuant to the provisions of Section
7.3 or 7.4 shall be valid as though transacted at a meeting duly held after
regular call and notice, if Members holding in the aggregate fifty-one percent
(51%) or more of the Percentage Interests are present, and if, either before or
after the meeting, each of the Members entitled to vote but not present at the
meeting signs a written waiver of notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the records of the LLC. Attendance shall
constitute a waiver of notice, unless objection shall be made.
7.6 Actions Without a Meeting.
-------------------------
7.6.1 Any action which may be taken at any annual or special
meeting of Members may be taken without a meeting and without prior notice if a
consent in writing, setting forth the action so taken, shall be signed by
Members holding in the aggregate fifty-one percent (51%) or more of the
Percentage Interests; provided, however, that the Manager may not be elected by
written consent except by the unanimous written consent of all Members, and that
any action which by the terms of this Agreement or by the Statute is required to
be taken pursuant to a greater vote of the Members may only be taken by a
written consent which has been signed by Members holding the requisite number of
votes.
Page 65 of 106 Pages
7.6.2 Unless the consents of all Members have been given in
writing, notice of any approval made by the Members without a meeting by less
than unanimous written consent shall be given at least ten (10) days before the
consummation of the action authorized by such approval. Any Member giving a
written consent may revoke the consent by a writing received by the LLC prior to
the time that written consents of Members required to authorize the proposed
action have been filed with the LLC. Such revocation is effective upon its
receipt by the LLC.
7.7 Quorum and Effect of Vote. Each Member shall have a number of votes
-------------------------
equal to the Percentage Interest held by such Member, provided that if, pursuant
to the Statute or the terms of this Agreement, a Member is not entitled to vote
on a specific matter, then such Member's number of votes and Percentage Interest
shall not be considered for purposes of determining whether a quorum is present,
or whether approval by Members holding fifty-one percent (51%) or more of the
Percentage Interests has been obtained, in respect of such specific matter.
Members holding an aggregate of fifty-one percent (51%) or more of the
Percentage Interests shall constitute a quorum at all meetings of the Members
for the transaction of business, and the Vote of Members shall be required to
approve any action, unless a greater vote is required by this Agreement or by
the Statute.
ARTICLE 8 - RESTRICTIONS ON TRANSFER OR CONVERSION
OF LLC INTERESTS
8.1 Transfer or Assignment of Member's Interest. The Interest of each
-------------------------------------------
Member is personal property, and may be transferred or assigned only as provided
in this Agreement. No transfer, hypothecation, encumbrance or assignment
("Transfer") of a Member's Interest, or any part thereof, in the LLC will be
valid without the unanimous written consent of all of the Members, other than
the Member proposing to dispose of its Interest. Any transferee who has
obtained an Interest without the unanimous written consent of all Members shall
have no right to participate in the management of the business and affairs of
the LLC or to become a Member thereof.
8.2 Void Transfers. Any Transfer made in violation of this Article 8
--------------
shall be of no force or effect, and the transferring Member shall continue to be
obligated under each and every provision of this Agreement.
ARTICLE 9 - ADDITIONAL CAPITAL CONTRIBUTIONS;
ADMISSION OF NEW MEMBERS
9.1 Additional Capital. During the Period of Duration, each of the
------------------
Members shall be required to make additional Capital Contributions to the LLC if
such additional Capital Contributions are approved by Members holding, in the
aggregate, seventy-five percent (75%) or more of the Percentage Interests. Each
Member shall be obligated to contribute an amount of additional capital equal to
such Member's Percentage Interest times the total Capital Contribution amount
required of all Members. The Members' Percentage Interests shall be adjusted to
recognize any Member's failure to make the required additional Capital
Contribution. Any Member who fails to contribute some or all of the required
additional capital shall be in default of this Agreement and shall have no right
to participate in the management of the business and affairs of the LLC, but
such Member shall not forfeit its rights to distributions and Net Profits and
Losses allocations.
Page 66 of 106 Pages
9.2 Admission of New Members. The consent of all Members set forth in a
------------------------
writing shall be required for a Person to be admitted into the LLC as a new
Member. The amount of Capital Contribution which must be made by the new Member
shall also be determined by the consent of all Members and the new Member shall
not be deemed admitted into the LLC until the Capital Contribution required of
such Person shall have been made.
ARTICLE 10 - BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
10.1 Maintenance of Books and Records. The LLC shall cause books and
--------------------------------
records of the LLC to be maintained in accordance with generally accepted
accounting principles, and shall give reports to the Members in accordance with
prudent business practices and the Statute. There shall be kept at the
principal office of the LLC, as well as at the office of record of the LLC
specified in Section 2.4, if different, the following LLC documents:
10.1.1 A current list of the full name and last known business
address of each Member, set forth in alphabetical order, together with the
Capital Contributions and share in Net Profits and Losses of each Member;
10.1.2 A current list of the full name and last known business
address of each Manager, set forth in alphabetical order;
10.1.3 Copies of the Articles of Organization of the LLC and any
amendments thereto, together with copies of any executed powers of attorney
pursuant to which any document of or relating to the LLC has been executed;
10.1.4 Copies of the LLC's federal, state and local income tax or
information returns and reports, if any, for the three most recent Fiscal Years;
10.1.5 This Agreement;
10.1.6 Financial statements of the LLC for the three most recent
Fiscal Years;
10.1.7 The LLC's books and records for at least the current and
past three Fiscal Years;
10.1.8 Originals or copies of all minutes, actions by written
consent, consents to action and waivers of notice to Members and Member Votes,
actions and consents; and
10.1.9 The information required to be maintained by the LLC
pursuant to Section 86.241(e) of the Statute, which information shall at all
times be reflected in and incorporated into this Agreement.
10.2 Annual Accounting. Within 90 days after the close of each Fiscal
-----------------
Year of the LLC, the LLC shall (i) cause to be prepared and submitted to each
Member a balance sheet and income statement for the preceding Fiscal Year of the
LLC (or portion thereof) in conformity with generally accepted accounting
principles and (ii) provide to the Members all information necessary for them to
complete federal and state tax returns.
Page 67 of 106 Pages
10.3 Inspection and Audit Rights. Each Member, at its own expense, has
---------------------------
the right to inspect and copy during normal business hours any of the ▇▇▇ ▇▇▇▇▇
and records required to be maintained in accordance with this Agreement. Such
right may be exercised through any agent, representative or employee of the
Member. Any Member may require a review and/or audit of the books, records and
reports of the LLC. The determination of the Manager as to adjustments to the
financial reports, books, records and returns of the LLC, in the absence of
fraud or gross negligence, shall be final and binding upon the LLC and all of
the Members.
10.4 Bank Accounts. The bank accounts of the LLC shall be maintained in
-------------
such banking institutions as the Manager shall determine, provided such
institutions have a net worth in excess of One Hundred Million Dollars
($100,000,000).
ARTICLE 11 - TERMINATION AND DISSOLUTION
OF LLC
11.1 Dissolution. The LLC shall be dissolved upon the occurrence of any
-----------
of the following events:
11.1.1 When the Period of Duration of the LLC expires;
11.1.2 The unanimous written agreement of all Members to dissolve
the LLC;
11.1.3 The death, retirement, resignation, expulsion, bankruptcy or
dissolution of a Member or the occurrence of any other event which terminates
the Member's continued membership in the LLC, unless the business of the LLC is
continued by the unanimous written consent of all the remaining Members within
ninety (90) days after the occurrence of such event.
11.2 Statement of Intent to Dissolve. As soon as possible after the
-------------------------------
occurrence of any of the events specified in Section 11.1 above, the LLC shall
execute a Statement of Intent to Dissolve in such form as prescribed by the
Secretary of State.
11.3 Conduct of Business. Upon the filing of the Statement of Intent to
-------------------
Dissolve with the Secretary of State, the LLC shall cease to carry on its
business, except insofar as may be necessary for the winding up of its business,
but the LLC's separate existence shall continue until the Articles of
Dissolution have been filed with the Secretary of State or until a decree
dissolving the LLC has been entered by a court of competent jurisdiction.
11.4 Distribution of Net Proceeds. The Members shall continue to divide
----------------------------
Net Profits and Losses and Available Cash Flow during the winding-up period in
the same manner and the same priorities as provided for in Articles 4 and 5
hereof. The proceeds from the liquidation of Property shall be applied in the
following order:
11.4.1 To the payment of creditors, in the order of priority as
provided by law, except to Members on account of their contributions;
11.4.2 To the payment of loans or advances that may have been made
by any of the Members or their Principals for working capital or other
requirements of the LLC;
Page 68 of 106 Pages
11.4.3 To the Members in accordance with Section 4.1 hereof; and
11.4.4 To the Members in accordance with the positive balances in
their Capital Accounts after adjustments for all allocations of Net Profits and
Losses.
Where the distribution pursuant to this Section ? consists both of cash (or
cash equivalents) and non-cash assets, the cash (or cash equivalents) shall
first be distributed, in a descending order, to fully satisfy each category
starting with the most preferred category above. In the case of noncash assets,
the distribution values are to be based on the fair market value thereof as
determined in good faith by the liquidator, and the shortest maturity portion of
such non-cash assets (e.g., notes or other indebtedness) shall, to the extent
such non-cash assets are readily divisible, be distributed, in a descending
order, to fully satisfy each category above, starting with the most preferred
category.
11.5 Deficit Make-Up. In the event the LLC is "liquidated" within the
---------------
meaning of Regulations Section 1.704-1(b)(2)(ii)(g) and after giving effect to
all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs, a Member has a deficit
balance in his Capital Account, such Member shall contribute to the capital of
the LLC an amount equal to such deficit.
ARTICLE 12 - INDEMNIFICATION OF THE MEMBERS, MANAGERS AND
THEIR AFFILIATES
12.1 Indemnification of the Members and their Principals. The LLC shall
---------------------------------------------------
indemnify and hold harmless the Members, the Managers, their Affiliates and
their respective officers, directors, employees, agents and Principals
(individually, an "Indemnitee") from and against any and all losses, claims,
demands, costs, damages, liabilities, joint and several, expenses of any nature
(including reasonable attorneys' fees and disbursements), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which the Indemnitee was involved or may be involved, or threatened to be
involved, as a party or otherwise, arising out of or incidental to the Business
of the LLC, excluding liabilities to any Member, regardless of whether the
Indemnitee continues to be a Member, an Affiliate, or an officer, director,
employee, agent or Principal of the Member at the time any such liability or
expense is paid or incurred, to the fullest extent permitted by the Statute and
all other applicable laws.
12.2 Expenses. Expenses incurred by an Indemnitee in defending any
--------
claim, demand, action, suit or proceeding subject to Section 10.1 shall, from
time to time, be advanced by the LLC prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the LLC of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that such Person is not entitled to be indemnified as authorized
in Section 12.1.
12.3 Indemnification Rights Non-Exclusive. The indemnification provided
------------------------------------
by Section 12.1 shall be in addition to any other rights to which those
indemnified may be entitled under any agreement, vote of the Members, as a
matter of law or equity or otherwise, both as to action in the Indemnitee's
capacity as a Member, as an Affiliate or as an officer, director, employee,
agent or Principal of a Member and as to any action in another capacity, and
shall continue as to an Indemnitee who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns and administrators
of the Indemnitee.
Page 69 of 106 Pages
12.4 Errors and Omissions Insurance. The LLC may purchase and maintain
------------------------------
insurance, at the LLC's expense, on behalf of the Members and such other Persons
as the Members shall determine, against any liability that may be asserted
against, or any expense that may be incurred by, such Person in connection with
the activities of the LLC and/or the Members' acts or omissions as the Members
of the LLC regardless of whether the LLC would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
12.5 Assets of the LLC. Any indemnification under Section 12.1 shall be
-----------------
satisfied solely out of the assets of the LLC. No Member shall be subject to
personal liability or required to fund or to cause to be funded any obligation
by reason of these indemnification provisions.
ARTICLE 13 - MISCELLANEOUS PROVISIONS
13.1 Counterparts. This Agreement may be executed in several
------------
counterparts, and all counterparts so executed shall constitute one Agreement,
binding on all of the parties hereto, notwithstanding that all of the parties
are not signatory to the original or the same counterpart.
13.2 Survival of Rights. This Agreement shall be binding upon, and, as
------------------
to permitted or accepted successors, transferees and assigns, inure to the
benefit of the Members and the LLC and their respective heirs, legatees, legal
representatives, successors, transferees and assigns, in all cases whether by
the laws of descent and distribution, merger, reverse merger, consolidation,
sale of assets, other sale, operation of law or otherwise.
13.3 Severability. In the event any Section, or any sentence within any
------------
Section, is declared by a court of competent jurisdiction to be void or
unenforceable, such sentence or Section shall be deemed severed from the
remainder of this Agreement and the balance of this Agreement shall remain in
full force and effect.
13.4 Notification of Notices. Except for notices to be given under
-----------------------
Articles 6 and 7 for purposes of meetings of Managers and meetings of Members,
any notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given if personally delivered,
transmitted by facsimile (with mechanical confirmation of transmission), or
deposited in the United States mail, registered or certified, postage prepaid,
addressed to the parties' addresses set forth below. Notices given in the
manner provided for in this Section 13.4 shall be deemed effective on the third
day following deposit in the mail or on the day of transmission or delivery if
given by facsimile or by hand. Notices must be addressed to the parties hereto
at the following addresses, unless the same shall have been changed by notice in
accordance herewith:
To the Trust: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To C&E: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
13.5 Construction. The language in all parts of this Agreement shall be
------------
in all cases construed simply according to its fair meaning and not strictly for
or against any of the Members.
13.6 Section Headings. The captions of the Articles or Sections in this
----------------
Agreement are for convenience only and in no way define, limit, extend or
describe the scope or intent of any of the provisions hereof, shall not be
deemed part of this Agreement and shall not be used in construing or
interpreting this Agreement.
Page 70 of 106 Pages
13.7 Governing Law. This Agreement shall be construed according to the
-------------
internal laws, and not the laws pertaining to choice or conflict of laws, of the
State of Nevada.
13.8 Additional Documents. Each Member, upon the request of another
--------------------
Member, agrees to perform all further acts and execute, acknowledge and deliver
all documents which may be reasonably necessary, appropriate or desirable to
carry out the provisions of this Agreement, including but not limited to
acknowledging before a notary public any signature heretofore or hereafter made
by a Member.
13.9 Pronouns and Plurals. Whenever the context may require, any pronoun
--------------------
used in this Agreement shall include the corresponding masculine, feminine and
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
13.10 Time of the Essence. Except as otherwise provided herein, time is
-------------------
of the essence in connection with each and every provision of this Agreement.
13.11 Further Actions. Each of the Members agrees to execute, acknowledge
---------------
and deliver such additional documents, and take such further actions, as may
reasonably be required from time to time to carry out each of the provisions,
and the intent, of this Agreement, and every agreement or document relating
hereto, or entered into in connection herewith.
13.12 ARBITRATION OF DISPUTES. ANY PARTY HERETO MAY REQUIRE THE
-----------------------
ARBITRATION OF ANY DISPUTE ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY RELATED AGREEMENT. SUCH PARTY MAY INITIATE AND REQUIRE ARBITRATION BY GIVING
NOTICE TO THE OTHER PARTIES SPECIFYING THE MATTER TO BE ARBITRATED. IF LEGAL
ACTION IS ALREADY PENDING ON ANY MATTER CONCERNING WHICH THE NOTICE IS GIVEN,
THE NOTICE SHALL NOT BE EFFECTIVE UNLESS GIVEN BY THE DEFENDANT THEREIN AND
GIVEN BEFORE THE EXPIRATION OF TWENTY (20) DAYS AFTER SERVICE OF PROCESS ON THE
PERSON GIVING THE NOTICE. EXCEPT AS PROVIDED TO THE CONTRARY IN THESE PROVISIONS
ON ARBITRATION, THE ARBITRATION SHALL BE IN CONFORMITY WITH AND SUBJECT TO
APPLICABLE RULES AND PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION (OR ANY
SUCCESSOR THERETO). IF THE AMERICAN ARBITRATION ASSOCIATION IS NOT THEN IN
EXISTENCE AND THERE IS NO SUCCESSOR, OR IF FOR ANY REASON THE AMERICAN
ARBITRATION ASSOCIATION FAILS OR REFUSES TO ACT, THE ARBITRATION SHALL BE IN
CONFORMITY WITH AND SUBJECT TO THE PROVISIONS OF APPLICABLE NEVADA STATUTES (IF
ANY) RELATING TO ARBITRATION AT THE TIME OF THE NOTICE. THE ARBITRATORS SHALL BE
BOUND BY THIS AGREEMENT AND ALL RELATED AGREEMENTS. PLEADINGS IN ANY ACTION
PENDING ON THE SAME MATTER SHALL, IF ARBITRATION IS REQUIRED AS AFORESAID, BE
DEEMED AMENDED TO LIMIT THE ISSUES TO THOSE CONTEMPLATED BY THE RULES PRESCRIBED
ABOVE. EACH PARTY SHALL PAY THE COSTS OF ARBITRATION, INCLUDING ARBITRATOR'S
FEES, AS AWARDED BY THE ARBITRATOR(S). THE NUMBER AND SELECTION OF ARBITRATOR(S)
SHALL BE IN ACCORDANCE WITH THE RULES PRESCRIBED ABOVE, EXCEPT THAT (I) EACH
ARBITRATOR SELECTED SHALL BE NEUTRAL AND FAMILIAR WITH THE PRINCIPAL SUBJECT
MATTER OF THE ISSUES TO BE ARBITRATED, SUCH AS, BY WAY OF EXAMPLE, REAL ESTATE
DEVELOPMENT, OR REAL ESTATE MANAGEMENT, OR SUCH OTHER SUBJECT MATTER AS MAY BE
AT ISSUE, (II) THE TESTIMONY OF WITNESSES SHALL BE GIVEN UNDER OATH, AND (III)
DEPOSITIONS AND OTHER DISCOVERY MAY BE ORDERED BY THE ARBITRATOR(S).
Page 71 of 106 Pages
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE `ARBITRATION OF DISPUTES'
PROVISION DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY
OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES' PROVISION TO
NEUTRAL ARBITRATION.
The ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Family Trust dated February 12, 1991
By:/s/ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, Trustee
By:/s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, Trustee
C&E DM Limited Partnership
By:/s/ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, General Partner
13.13 WAIVER OF JURY. WITH RESPECT TO ANY DISPUTE ARISING UNDER OR IN
--------------
CONNECTION WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, AS TO WHICH NO PARTY
INVOKES THE RIGHT TO ARBITRATION HEREINABOVE PROVIDED, OR AS TO WHICH LEGAL
ACTION NEVERTHELESS OCCURS, EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS IT
MAY HAVE TO DEMAND A JURY TRIAL. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY THE MEMBERS AND EACH PARTY ACKNOWLEDGES THAT NONE OF THE
OTHER MEMBERS NOR ANY PERSON ACTING ON BEHALF OF THE OTHER PARTIES HAS MADE ANY
REPRESENTATION OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. THE MEMBERS EACH FURTHER ACKNOWLEDGE THAT IT HAS
BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING
OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL. THE MEMBERS EACH FURTHER ACKNOWLEDGES THAT IT HAS READ
AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION.
Page 72 of 106 Pages
13.14 Third Party Beneficiaries. There are no third party beneficiaries
-------------------------
of this Agreement except (i) Affiliates and Principals of the Members and (ii)
any other Persons as may be entitled to the benefits of Article 12 hereof.
13.15 Tax Elections. The Manager, in his sole discretion, shall cause the
-------------
LLC to make or not make all elections required or permitted to be made for
income tax purposes.
13.16 Partition. The Members agree that the Property that the LLC may own
---------
or have an interest in is not suitable for partition. Each of the Members hereby
irrevocably waives any and all rights that it may have to maintain any action
for partition of any Property the LLC may at any time have an interest in.
13.17 Entire Agreement. This Agreement and the Articles of Organization
----------------
constitute the entire agreement of the Members with respect to, and supersedes
all prior written and oral agreements, understandings and negotiations with
respect to, the subject matter hereof.
13.18 Waiver. No failure by any party to insist upon the strict
------
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
13.19 Attorneys' Fees. In the event of any litigation, arbitration or
---------------
other dispute arising as a result of or by reason of this Agreement, the
prevailing party in any such litigation, arbitration or other dispute shall be
entitled to, in addition to any other damages assessed, its reasonable
attorneys' fees, and all other costs and expenses incurred in connection with
settling or resolving such dispute. The attorneys' fees which the prevailing
party is entitled to recover shall include fees for prosecuting or defending any
appeal and shall be awarded for any supplemental proceedings until the final
judgment is satisfied in full. In addition to the foregoing award of attorneys'
fees to the prevailing party, the prevailing party in any lawsuit or arbitration
procedure on this Agreement shall be entitled to its reasonable attorneys' fees
incurred in any post judgment proceedings to collect or enforce the judgment.
This attorneys' fees provision is separate and several and shall survive the
merger of this Agreement into any judgment.
13.20 Confidentiality and Press Releases. The Members and their
----------------------------------
respective Affiliates and Principals hereby agree that it is in all of their
best interests to keep this Agreement and the Business of the LLC and all
information concerning such business confidential. Such parties each agree that
they will not take any action nor conduct themselves in any fashion, including
giving press releases or granting interviews, that would disclose to third
parties unrelated to the LLC or the Business of the LLC any aspect of the LLC or
the Business of the LLC without the unanimous prior written approval of all
Members. To the extent such prior approval is given, it may be conditioned upon
approval of the text of any press release or the scope of any intended
interview.
Page 73 of 106 Pages
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Agreement as of the date first written above.
The ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Family Trust, dated February 12, 1991
By: /s/ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, Trustee
By: /s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, Trustee
C&E DM Limited Partnership, a
California limited partnership
By: /s/ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, General Partner
Page 74 of 106 Pages