EXHIBIT 10.5
OPERATING AGREEMENT
OF
FWB SOFTWARE, LLC
This Operating Agreement of FWB Software, LLC, a California limited
liability company (the "COMPANY"), is entered into effective as of the 1st day
of July, 1996, among STREAMLOGIC SOFTWARE CORPORATION, a Delaware corporation
("SUB") and FWB SOFTWARE, INC., a California corporation ("FWB").
RECITALS
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Sub and FWB, as the initial Members of the Company, desire to form the
Company to acquire and operate the software business previously conducted by
FWB.
Therefore, Sub and FWB hereby agree to form a limited liability company
under the California Limited Liability Company Act (the "ACT") on the following
terms and conditions:
SECTION 1. FORMATION
1.1 FORMATION OF COMPANY. The Company has been organized as a California
limited liability company by the filing of Articles of Organization pursuant to
the Act with the California Secretary of State. A copy of the Articles is
attached to this Agreement as Exhibit A.
1.2 NAME. The name of the Company is "FWB Software, LLC" and all Company
business shall be conducted under that name or such other names that comply with
applicable law as the Manager may select from time to time.
1.3 PURPOSE AND SCOPE. Subject to the provisions of this Agreement and the
Articles, the purposes of the Company are to acquire the Software Business (as
hereinafter defined) from FWB, to operate the Software Business, and to do any
and all other acts or things that may be necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of
the business of the Company.
1.4 TERM. The Company shall commence on the date the Articles are filed
and shall continue until the date set forth in the Articles, unless earlier
dissolved pursuant to the terms of this Agreement or the Act.
1.5 OFFICE; AGENT. The office of the Company required by the Act to be
maintained in the State of California shall be located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or such other office (which need not be a place of
business of the Company) as the Manager may designate from time to time in the
manner provided by law. The name and address of the agent for service of process
of the Company shall be ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇. The Company may have such other offices as the Manager may designate from
time to time.
1.6 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
(a) ACT. The California Limited Liability Company Act, as amended from
time to time.
(b) AFFILIATE. When used with reference to a specified Person, (i) any
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with the specified Person, (ii)
any Person that is an officer or director of, partner or trustee of, or serves
in a similar capacity with respect to, the specified Person or of which the
specified Person is an officer, director, partner, or trustee, or with respect
to which the specified Person serves in a similar capacity, (iii) any Person
that, directly or indirectly, is the beneficial owner of ten percent (10%) or
more of any class or voting securities of, or otherwise has a substantial
beneficial interest in, the specified Person or of which the specified Person
has a substantial beneficial interest, and (iv) any immediate family member or
spouse of the specified Person.
(c) AGREEMENT. This Operating Agreement, as originally executed and as
amended, modified, supplemented or restated from time to time in accordance with
its terms.
(d) ARTICLES. The Articles of Organization of the Company, as originally
filed and as amended or restated from time to time in accordance with this
Agreement and the Act.
(e) ASSET PURCHASE AGREEMENT. The Asset Purchase Agreement of even date
herewith between StreamLogic Corporation, as buyer, and FWB, as seller.
(f) ASSIGNEE. A Person who has acquired by assignment a Membership
Interest or an Economic Interest but who has not been admitted as a Member of
the Company.
(g) BANKRUPTCY. With respect to a Person, being the subject of an order
for relief under Title 11 of the United States Code, or any successor statute or
other statute in any foreign jurisdiction having like import or effect.
(h) CAPITAL ACCOUNT. As defined in Section 2.4.
(i) CLOSING. As defined in Section 2.2.
(j) CODE. The Internal Revenue Code of 1986 or any successor statute, as
amended from time to time.
(k) COMPANY. FWB Software, LLC, a California limited liability company.
(l) COMPANY RIGHTS AGREEMENT. The agreement of even date herewith, in the
form attached as Exhibit D to this Agreement.
(m) DISTRIBUTABLE CASH. Cash funds of the Company from any source which
the Manager determines to be available for distribution to Members.
(n) ECONOMIC INTEREST. A Person's right to share in the income, gains,
losses, deductions, credit, or similar items of, and to receive distributions
from, the Company, but such term does not
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include any other rights of a Member including, without limitation, the right to
vote or to participate in management, or, except as provided in Section 17106 of
the Act, any right to information concerning the business and affairs of the
Company.
(o) FISCAL YEAR. The taxable year of the Company, as determined under
Section 706 of the Code.
(p) INVESTED CAPITAL. The value of money or property contributed, or
services rendered, to the Company as capital by any Member in that Person's
capacity as a Member pursuant to this Agreement.
(q) MAJORITY VOTE. The vote of Members holding more than fifty percent
(50%) of the Percentage Interests.
(r) MANAGER. A Person elected by the Members to manage the Company, who
shall have the power and authority of a manager under the Act.
(s) MEMBER. A Person who (i) has been admitted to the Company
as a Member in accordance with this Agreement and (ii) has not resigned,
withdrawn, or been expelled as a Member or, if other than an individual, been
dissolved.
(t) MEMBERSHIP INTEREST. A Member's rights in the Company, collectively,
including the Member's Economic Interest, any right to vote or participate in
management, and any right to information concerning the business and affairs of
the Company provided by the Act.
(u) NET INCOME AND NET LOSS. As defined in Section 3.10.
(v) OFFICER. Any Person appointed by the Manager to be an officer of the
Company pursuant to Section 4.2.
(w) PERCENTAGE INTEREST. With respect to a Member, the number of Shares
owned by such Member expressed as a percentage of the total outstanding Shares.
The aggregate Percentage Interests shall at all times equal 100 percent.
(x) PERSON. An individual, partnership, limited partnership, trust,
estate, association, corporation, limited liability company, or other entity,
whether domestic or foreign.
(y) RIGHTS AGREEMENT. The agreement of even date herewith, in the form
attached as Exhibit E to this Agreement.
(z) SHARES. Ownership of the Company shall be divided into and represented
by Shares. The number of Shares issued to each Member shall be set forth in
Exhibit B to this Agreement.
(aa) SOFTWARE BUSINESS. FWB's business of developing, making and
distributing firmware for use with mass-storage solutions and software both for
use with mass-storage solutions and as standalone products, including its RAID
Toolkit, CD ROM Toolkit/TM/ and HardDisk Toolkit/TM/ products.
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(bb) STREAMLOGIC CORPORATION. StreamLogic Corporation, a Delaware
corporation, the parent of Sub.
(cc) TAX DISTRIBUTION. As defined in Section 3.1.
(dd) TAX ITEMS. The income, gains, losses and deductions of the Company
for federal income tax purposes, as determined by the Company's accountants.
(ee) TAX MATTERS PARTNER. The Member designated as the Tax Matters Partner
pursuant to Section 7.4.
(ff) TREASURY REGULATIONS. Final and temporary income tax regulations
issued by the U. S. Treasury Department.
SECTION 2. CAPITALIZATION OF THE COMPANY.
2.1 INITIAL CONTRIBUTIONS
(a) FWB CONTRIBUTION. At the Closing, FWB shall transfer, assign and
deliver to the Company all of FWB's assets, properties and business remaining
after the sale of the Hardware Business (as such term is defined in the Asset
Purchase Agreement), except that FWB may retain the aggregate sum of up to
$2,400,000 in cash and accounts receivable. FWB's contribution shall be subject
to, and the Company shall assume, perform and carryout, and hold FWB harmless
against, all of the debts, obligations and liabilities of FWB, including FWB's
obligations under the Asset Purchase Agreement, other than the debts,
obligations and liabilities of FWB which are assumed by StreamLogic Corporation
under the Asset Purchase Agreement. At the Closing, FWB shall execute and
deliver the General Conveyance and Assumption of Liabilities in substantially
the form of Exhibit C. The Members agree that the net fair market value of FWB's
contribution to the Company and the number of Shares issued in exchange therefor
shall be as set forth in Exhibit B hereto.
(b) SUB CONTRIBUTION. At the Closing, Sub shall transfer, assign and
deliver to the Company One Million Two Hundred Fifty-Six Thousand One Hundred
Twenty-Three (1,256,123) shares of the common stock (the "COMMON STOCK") of
StreamLogic Corporation ("STREAMLOGIC"). The Members agree that the net fair
market value of Sub's contribution to the Company and the number of Shares
issued in exchange therefor shall be as set forth in Exhibit B hereto.
Notwithstanding the foregoing, at the Closing the Company may elect in writing
either of the following: (1) On the date 120 days after the Closing a
calculation of the then market value of the StreamLogic common stock is to be
made (based on the average of the closing sale prices for StreamLogic common
stock for the twenty (20) trading days immediately prior to such date (the
"AVERAGE PRICE")) and the Company either receives additional shares from Sub or
returns shares of the StreamLogic common stock to Sub to adjust the market value
(based on the Average Price) of the shares held by the Company to $7,500,000; or
(2) on the date 120 days after the Closing a calculation of the then market
value of the StreamLogic common stock is to be made (based on the Average Price)
and so long as the market value (based on the Average Price) is between
$6,000,000 and $9,000,000 no adjustment is made, but (A) if the market value
(based on the Average Price) is less than $6,000,000 the Company shall receive
additional shares of StreamLogic common stock from Sub to increase the market
value (based on the Average Price) to $6,000,000, and (B) if the market value
(based on the Average Price) is greater than $9,000,000 the Company shall return
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shares of StreamLogic common stock to Sub to reduce the market value (based on
the Average Price) to $9,000,000. Any adjustment under the preceding sentence
shall not cause any adjustment in Sub's Invested Capital or its Capital Account.
2.2 CLOSING. The capitalization of the Company shall take place
concurrently with the closing of the transactions contemplated by the Asset
Purchase Agreement and the execution of the Rights Agreement and the Company
Rights Agreement (the "CLOSING"). All transactions at the Closing shall be
deemed to take place simultaneously and no party shall have any obligation to
deliver any document or take any action contemplated by this Agreement to be
delivered or taken at the Closing unless at the Closing there occurs
simultaneously each and every other transaction contemplated by this Agreement
to occur at the Closing.
2.3 ADDITIONAL CONTRIBUTIONS. At the discretion of the Manager, the
Company may issue additional Membership Interests in exchange for additional
contributions to the capital of the Company, on such terms as are determined by
the Manager, which may include priority over existing Membership Interests as to
Economic Interests, voting rights and participation in management. Without
limiting the generality of the preceding sentence, the Manager may grant options
to purchase Shares to employees of the Company or to other Persons, for such
amounts and on such terms as the Manager may determine in its discretion. This
Agreement may be amended by the signature of the Manager to reflect the sale of
the additional Membership Interests, the admission of additional Members and any
changes in allocations of Economic Interests, voting rights and participation in
management, and such amendment shall not require the approval of the Members.
2.4 CAPITAL ACCOUNTS. A separate Capital Account (a "CAPITAL ACCOUNT")
shall be maintained for each Member for the full term of this Agreement in
accordance with the capital accounting rules of section 1.704(b)(2)(iv) of the
Treasury Regulations. Each Member shall have only one Capital Account,
regardless of the number of Membership Interests in the Company owned by the
Member and regardless of the time or manner in which the Membership Interests
were acquired by the Member. Pursuant to the basic rules of section 1.704-
l(b)(2)(iv) of the Regulations, the balance in each Member's Capital Account
shall be:
(a) increased by the amount of money contributed by the Member (or
the Member's predecessor in interest) to the capital of the Company pursuant to
this Section 2 and decreased by the amount of money distributed to the Member
(or the Member's predecessor in interest) pursuant to Section 3 or Section 8
hereof;
(b) increased by the fair market value of each item of property
(determined without regard to section 7701(g) of the Code) contributed by the
Member (or the Member's predecessor in interest) to the capital of the Company
pursuant to this Section 2 (net of all liabilities secured by the property that
the Company is considered to assume or take subject to, under section 752 of the
Code) and decreased by the fair market value of each item of property
(determined without regard to section 7701(g) of the Code) distributed to the
Member (or the Member's predecessor in interest) by the Company pursuant to
Section 3 or Section 8 hereof (net of all liabilities secured by the property
that the Member is considered to assume or take subject to, under section 752 of
the Code);
(c) increased by the amount of Net Income and items of income or gain
allocated to the Member (or the Member's predecessor in interest) pursuant to
Section 3 hereof;
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(d) decreased by the amount of Net Loss and items of loss or expense
allocated to the Member (or the Member's predecessor in interest) pursuant to
Section 3 hereof;
(e) to the extent that Company property is reflected in the Capital
Accounts and on the books of the Company at a book value that differs from the
adjusted tax basis of such property, adjusted in accordance with Treasury
Regulations Section 1.704-1(b)(2)(iv)(g) for allocations to Members of
depreciation, depletion, amortization, and gain or loss, as computed for book
purposes, with respect to such property; and
(f) otherwise adjusted in accordance with the other Capital Account
maintenance rules of section 1.704-l(b)(2)(iv) of the Treasury Regulations.
2.5 VALUATION OF COMPANY ASSETS. The book values of all Company assets
shall be adjusted to equal their respective fair market values (taking Code
Section 7701(g) into account), as reasonably determined by the Manager, upon the
occurrence of any of the following events: (i) a contribution of money or
property (other than a de minimis amount) to the Company by a new or existing
Member as consideration for a Membership Interest; (ii) a distribution of money
or property (other than a de minimis amount) by the Company to a Member as
consideration for a Membership Interest; and (iii) the liquidation of the
Company within the meaning of Treasury Regulations section 1.704-1(b)(2)(ii)(g);
provided, however, that the adjustments pursuant to clauses (i) and (ii) of this
sentence shall be made only if the Manager reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interest of the Members. Any such adjustments shall be reflected by
corresponding adjustments to the Capital Accounts which reflect the manner in
which the unrealized income, gain, loss, or deduction inherent in such property
(that has not been reflected in the Capital Accounts previously) would be
allocated among the Members if there were a taxable disposition of such assets
for such fair market values.
2.6 LOANS. The Manager, from time to time and in its reasonable judgment,
may obtain loans from third parties or Members to meet operating expenses and
capital expenditures of the Company, which loans may be unsecured or secured by
all or a portion of Company assets.
SECTION 3. DISTRIBUTIONS AND ALLOCATIONS
3.1 TAX DISTRIBUTIONS. For each Fiscal Year of the Company in which the
Company has taxable income (except the Fiscal Year in which the Company is
liquidated), the Company shall distribute an amount equal to the product of (i)
the Company's taxable income multiplied by (ii) the sum of (x) the highest
marginal federal income tax rate imposed on individual taxpayers plus (y) the
product of the highest marginal California income tax rate imposed on individual
taxpayers multiplied by the difference of 100 percent minus the federal marginal
income tax rate determined under clause (x) (the "TAX DISTRIBUTION"). For
example, if the highest marginal federal income tax rate is 39.6 percent and the
highest marginal California income tax rate is 11 percent, the effective tax
rate for purposes of the Tax Distribution would be 39.6% + [11% x (100% -
39.6%)], or 46.2 percent. The Company shall endeavor to make the Tax
Distribution in periodic distributions which conform to the deadlines for paying
estimated tax payments, and in any event the Tax Distribution shall be completed
not later than ninety (90) days after the end of the Fiscal Year in which the
Company has taxable income. Except as otherwise provided in the next sentence,
the Tax Distribution shall be distributed to those Members to whom the Company's
taxable income is
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allocated and in proportion to such allocations. If a Membership Interest (or an
Economic Interest) is assigned prior to the making of the Tax Distribution, the
full amount of the Tax Distribution attributable to such Membership Interest (or
Economic Interest) shall be distributed to the Person who holds such Membership
Interest (or Economic Interest) as of the time the Tax Distribution is made.
3.2 NONLIQUIDATING DISTRIBUTIONS. Except as otherwise provided in Sections
3.1 and 8.3, Distributable Cash shall be allocated and distributed to the
Members in proportion to their Percentage Interests as of the time the
distribution is made.
3.3 WITHHOLDINGS AS DISTRIBUTIONS. For California tax purposes, each
Member which is a nonresident of California shall execute and deliver to the
Manager the agreement of such nonresident Member required by Section 18633.5 of
the California Revenue and Taxation Code (the "NONRESIDENT TAX AGREEMENT") no
later than sixty (60) days after becoming a Member. If any nonresident Member
fails to deliver a Nonresident Tax Agreement, the Company shall be required to
make payments to the State of California pursuant to Section 18633.5 of the
California Revenue and Taxation Code and any such payments shall be treated as
distributions to such Member for all purposes under this Agreement. If such
payments exceed the amount of distributions such Member would otherwise have
received from the Company, such Member shall be obligated to return such excess
payments to the Company, plus interest at the Member Loan Rate from the date of
such excess payments.
3.4 ALLOCATION OF NET INCOME. After giving effect to the special
allocations set forth in Section 3.6, Net Income for any Fiscal Year or other
period shall be allocated among the Members as follows:
(a) First, to those Members who have received prior allocations of Net
Loss (including Net Loss allocated to a predecessor of a Member to the extent
such Net Loss has been reflected in the Member's Capital Account) until all such
prior allocations of Net Loss have been offset in full by allocations of Net
Income under this Section 3.4(a), in inverse order to the prior allocations of
Net Loss (i.e., the last dollar of Net Loss allocated shall be offset by the
next dollar of Net Income allocated);
(b) Thereafter, Net Income shall be allocated to the Members in proportion
to their Percentage Interests.
3.5 ALLOCATION OF NET LOSS. After giving effect to the special allocations
set forth in Section 3.6, Net Loss for any Fiscal Year or other period shall be
allocated among the Members as follows:
(a) First, to those Members who have received prior allocations of Net
Income (including Net Income allocated to a predecessor of a Member to the
extent such Net Income has been reflected in the Member's Capital Account) until
all such prior allocations of Net Income have been offset in full by allocations
of Net Loss under this Section 3.5(a), in inverse order to the prior allocations
of Net Income (i.e., the last dollar of Net Income allocated shall be offset by
the next dollar of Net Loss allocated);
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(b) Next, Net Loss shall be allocated to the Members in proportion to the
positive balances in their Capital Accounts, until each Member's Capital Account
balance has been reduced to zero; and
(c) Next, Net Loss shall be allocated to the Members in proportion to
their Percentage Interests, except that in no event shall Net Loss be allocated
to any Member if such allocation would reduce such Member's Capital Account
balance to less than a deficit amount equal to the amount such Member is deemed
obligated to restore to its Capital Account pursuant to the next to last
sentences of Treasury Regulations sections 1.704-2(g)(1) and (i)(5).
3.6 SPECIAL ALLOCATIONS. Prior to making the allocations described in
Sections 3.4 and 3.5, Company income, gain, loss and deduction shall be
allocated in accordance with the following provisions and applied in the
following order:
(a) Except as otherwise provided in section 1.704-2(f) of Regulations, if
there is a net decrease in Company Minimum Gain during any Company taxable year,
each Member shall be specially allocated items of Company income and gain for
the year (and, if necessary, subsequent years) in an amount equal to the portion
of the Member's share of the net decrease of Company Minimum Gain, determined in
accordance with Treasury Regulations section 1.704-2(g). 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 Treasury Regulations section
1.704-2(j)(2). This Section 3.6(a) is intended to comply with the "minimum gain
chargeback" requirements of Treasury Regulations section 1.704-2(f) and shall be
interpreted consistently therewith. "COMPANY MINIMUM GAIN" shall have the same
meaning as "partnership minimum gain" in Treasury Regulations section 1.704-
2(b)(2).
(b) Except as otherwise provided in section 1.704-2(i)(4) of the Treasury
Regulations, if there is a net decrease in Member Nonrecourse Debt Minimum Gain
attributable to Member Nonrecourse Debt during any Company taxable year, each
Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable
to the Member Nonrecourse Debt, determined in accordance with Treasury
Regulations section 1.704-2(i)(5), shall be specially allocated items of Company
income and gain for the year (and, if necessary, subsequent years) in an amount
equal to the portion of each such Member's share of the net decrease in Member
Nonrecourse Debt Minimum Gain attributable to the Member Nonrecourse Debt,
determined in accordance with Treasury 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 to such
sentence. The items to be so allocated shall be determined in accordance with
Treasury Regulations section 1.704-2(j)(2). "MEMBER NONRECOURSE DEBT MINIMUM
GAIN" and "MEMBER NONRECOURSE DEBT" shall have the same meanings as "partner
nonrecourse debt minimum gain" and "partner nonrecourse debt," in Treasury
Regulations sections 1.704-2(i)(2) and (b)(4), respectively.
(c) If a Member unexpectedly receives an adjustment, allocation or
distribution of any item described in Treasury Regulations sections 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), and the adjustment, allocation or distribution
creates a deficit balance in the Member's Capital Account in excess of the
amount the Member is deemed obligated to restore to its Capital Account pursuant
to the next to last sentences of Treasury Regulations sections 1.704-2(g)(1) and
(i)(5) (an "excess deficit"), items of
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income and gain shall be allocated to the Member in an amount and manner
sufficient to eliminate the excess deficit as soon as possible. Solely for
purposes of applying this Section 3.6(c), each Member's Capital Account shall be
reduced to the extent of adjustments, allocations or distributions described in
subparagraphs (4), (5) and (6) of Treasury Regulations section 1.704-
1(b)(2)(ii)(d) which are reasonably expected as of the end of the taxable year.
This Section 3.6(c) is intended to comply with the "qualified income offset"
provisions of Treasury Regulations section 1.704-1(b)(2)(ii)(d) and these
provisions shall be interpreted, and allocations hereunder shall be made, in
conformity with the regulations.
(d) Nonrecourse Deductions for any taxable year or other period shall be
allocated to the Members in proportion to their Percentage Interests. The term
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury
Regulations section 1.704-2(b)(1).
(e) Member Nonrecourse Deductions for any taxable year or other period
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which the Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulations section
1.704-2(i). The term "MEMBER NONRECOURSE DEDUCTIONS" shall have the same meaning
as "partner nonrecourse deductions" in Treasury Regulations section 1.704-
2(i)(2).
(f) The allocations set forth in Section 3.6(a) through Section 3.6(e),
inclusive (the "REGULATORY ALLOCATIONS") are intended to comply with certain
requirements of Treasury Regulations Section 1.704-1(b). The Regulatory
Allocations shall be taken into account in allocating other net profits, net
losses, and items of income, gain, loss and deduction among the Members so that,
to the extent possible, the net amount of the allocations of other net profits,
net losses, and other items and the Regulatory Allocations to each Member shall
be equal to the net amount that would have been allocated to each such Member if
the Regulatory Allocations had not occurred.
3.7 TAX ALLOCATIONS. Except as otherwise provided in the second sentence
of this Section 3.7, all items of Partnership taxable income, gain, loss and
deduction shall be allocated among the Members consistent with the allocations
of Net Income and Net Loss under Sections 3.4 and 3.5. If Company property is
reflected in the Capital Accounts and on the books of the Company at a book
value that differs from the adjusted tax basis of the property, then
depreciation, depletion, amortization, and gain or loss, as computed for tax
purposes, with respect to the property, shall be determined and allocated among
the Members, solely for tax purposes, so as to take account of the variation
between the adjusted tax basis and the book value of the property in any
reasonable method determined by the Manager and permitted under Section 704(c)
of the Code and Treasury Regulations thereunder.
3.8 OTHER ALLOCATION AND DISTRIBUTION RULES
(a) For purposes of determining Net Income or Net Loss, or any other items
allocable to any period, Net Income, Net Loss and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Manager
using any permissible method under Code Section 706 and Treasury Regulations
thereunder.
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(b) Any amounts withheld by the Company pursuant to the Code or any
provision of any state or local law with respect to any allocation or
distribution to a Member shall be treated as a distribution to the Member for
all purposes under this Agreement.
(c) No Member shall become entitled to any distribution from the Company
until such time as the distribution is actually paid by the Company. No Member
has any right to demand and receive any distribution from the Company in any
form other than money. No Member may be compelled to accept from the Company a
distribution of any asset in kind in lieu of a proportionate distribution of
money being made to other Members.
(d) If any asset of the Company is to be distributed in kind to one or
more Members (including upon dissolution of the Company under Section 8.3), such
asset shall be valued at its fair market value (taking Code section 7701(g) into
account) on the date of distribution, and the Capital Accounts of the Members
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss, or deduction inherent in such asset (that has not been reflected in the
Capital Accounts previously) would be allocated among the Members if there were
a taxable disposition of such asset at its fair market value on the date of
distribution.
(e) No distribution shall be made by the Company if such distribution is
prohibited by Section 17254 of the Act. Any Member who receives a distribution
from the Company which is determined to have been prohibited by Section 17254 of
the Act shall, within thirty (30) days following notice, return such
distribution to the Company.
3.9 INTEREST ON CAPITAL. Except as otherwise expressly provided in this
Agreement, no Member shall receive any interest on its Invested Capital or its
Capital Account.
3.10 DETERMINING NET INCOME AND NET LOSS. "NET INCOME" and "NET LOSS"
shall mean, for each Fiscal Year or other period, an amount equal to the
Company's taxable income or loss for the 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:
(a) Any income that is exempt from federal income tax shall be added to
the Company's gross income;
(b) Any expenditures of the Company described in Code section 705(a)(2)(B)
(or treated by Treasury Regulations as if described in that section) shall be
treated as a deduction of the Company;
(c) Gain or loss from any disposition of Company property shall be
computed with reference to the book value of the property if its book value
differs from its adjusted tax basis;
(d) If the book value of any Company property differs from its adjusted
tax basis, depreciation, amortization, or other cost recovery deductions with
respect to the property shall be computed with reference to the book value;
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(e) Any items which are specially allocated pursuant to Section 3.6 hereof
shall be taken into account prior to computing, and shall be excluded from the
computation of, Net Income or Net Loss for purposes of this Section 3.10; and
(f) Any other adjustments which the Manager determines are necessary to
comply with Treasury Regulations section 1.704-1(b) shall be made.
SECTION 4. MANAGEMENT
4.1 MANAGER. The business and affairs of the Company shall be managed by
the Manager, who shall manage in its capacity as a Member. Except for situations
in which the approval of the Members is expressly required by this Agreement or
by nonwaivable provisions of applicable law, the Manager shall have full and
complete authority, power, and discretion to manage and control the business,
affairs, and properties of the Company.
The initial Manager of the Company shall be FWB. If FWB ceases to be the
Manager for any reason, a new Manager shall be elected by Majority Vote. The
Manager must be a Member of the Company and must own at least 20% of the
outstanding Shares. If at any time there is no Member who owns at least 20% of
the outstanding Shares, the Articles and this Agreement shall be amended to
increase the number of Managers (who must be Members) so that the Managers
collectively own at least 20% of the outstanding Shares. Any such amendment may
also provide for meetings of the Managers and their respective voting rights.
4.2 OFFICERS. The Manager may, from time to time, appoint one or more
individuals to be officers of the Company. Any officers so appointed shall have
such authority and perform such duties as the Manager may, from time to time,
delegate to them. Unless the Manager decides otherwise, if the title of an
officer is one commonly used for an officer of a business corporation formed
under the General Corporation Law, the use of such title shall constitute the
delegation to such officer of the authority and duties that are normally
associated with that office. Any number of offices may be held by the same
individual. The salaries or other compensation, if any, of the officers and
agents of the Company shall be fixed from time to time by the Manager. Any
officer may be removed as such, either with or without cause, by the Manager.
4.3 LIABILITY OF MANAGERS. A Manager shall not be liable to the Company or
the Members for any mistake of fact or judgment or for the doing of any act or
the failure to do any act by the Manager in conducting the business, operations
and affairs of the Company, which may cause or result in any loss or damage to
the Company or the Members, unless such mistake, act or failure to act is the
result of the Manager's fraud, bad faith, gross negligence, or willful
misconduct. In performing his duties, a Manager shall be entitled to rely on
information, opinion, reports, or statements, including financial statements and
other financial information, prepared or provided by any attorney, independent
accountant, officer, employee or other agent of the Company, or other Person as
to matters which the Manager reasonably believes to be within such Person's
professional or expert competence, unless the Manager has knowledge concerning
the matter in question that would cause such reliance to be unwarranted under
the circumstances.
4.4 INDEMNIFICATION. The Company shall indemnify and hold harmless, to the
fullest extent permitted by law, (i) each Member, (ii) each current or former
Manager and (iii) each director,
11
officer, agent, partner, employee, counsel and Affiliate of each Member, each
Manager and the Company, or of any of their Affiliates (individually, an
"INDEMNIFIED PARTY"), as follows:
(a) The Company shall indemnify and hold harmless, to the fullest extent
permitted by law, any Indemnified Party from and against any and all losses,
claims, damages, liabilities, expenses (including legal fees and expenses),
judgments, fines, settlements and other amounts ("INDEMNIFIED COSTS") arising
from all claims, demands, actions, suits or proceedings ("ACTIONS"), whether
civil, criminal, administrative or investigative, in which the Indemnified Party
may be involved, or threatened to be involved, as a party or otherwise arising
as a result of its status as (i) a Member of the Company, (ii) a Manager, or
(iii) a director, officer, agent, partner, employee, counsel or Affiliate of a
Manager, a Member or the Company or any of their Affiliates, regardless of
whether the Indemnified Party continues in the capacity at the time the
liability or expense is paid or incurred, and regardless of whether the Action
is brought by a third party, a Member, or by or in the right of the Company;
provided, however, no such Person shall be indemnified for any Indemnified Costs
-------- -------
which proximately result from the Person's fraud, bad faith, gross negligence or
willful misconduct or the Person's material breach of this Agreement.
(b) The Company shall pay or reimburse, to the fullest extent allowed by
law and consistent with Section 4.4(a) above, in advance of the final
disposition of the proceeding, Indemnified Costs incurred by the Indemnified
Party in connection with any Action that is the subject of Section 4.4(a) above.
(c) Notwithstanding any other provision of this Section 4.4, the Company
shall pay or reimburse Indemnified Costs incurred by an Indemnified Party in
connection with such Person's appearance as a witness or other participation in
a proceeding involving or affecting the Company at a time when the Indemnified
Party is not a named defendant or respondent in the proceeding.
(d) The Manager may cause the Company to purchase and maintain insurance
or other arrangements on behalf of the Indemnified Parties against any liability
asserted against any Indemnified Party and incurred by any Indemnified Party in
that capacity, or arising out of the Indemnified Party's status in that
capacity, regardless of whether the Company would have the power to indemnify
the Indemnified Party against that liability under this Section 4.4. The
indemnification provided by this Section 4.4 shall be in addition to any other
rights to which the Indemnified Parties may be entitled under any agreement, any
vote of the Members, as a matter of law, or otherwise, and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnified
Party.
(e) An Indemnified Party shall not be denied indemnification in whole or
in part under this Section 4.4 because the Indemnified Party had an interest in
the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
4.5 CONFIDENTIALITY. Each Member recognizes that in its capacity as a
Member, it will receive information about the Company and its operations which
is confidential and proprietary to the Company. Each Member agrees to keep all
information about the Company received in its capacity as a Member confidential
and to not disclose that information to any other person, including employees or
consultants of the Company, other than disclosures specifically authorized by
the Manager.
12
SECTION 5. INTERESTS OF MEMBERS
5.1 ADMISSION OF MEMBERS.
(a) The initial Members of the Company are the Persons executing this
Agreement as of the date of this Agreement as Members, each of whom is admitted
to the Company as a Member effective upon the execution by such Person of this
Agreement.
(b) Persons who acquire Membership Interests pursuant to Section 2.3 of
this Agreement shall become Members upon satisfaction of the conditions set
forth in Section 5.5 below.
5.2 AUTHORITY OF MEMBERS. No Member, acting solely in the capacity of a
Member, is an agent of the Company and no Member (other than a Manager or an
Officer) can bind or execute any instrument on behalf of the Company.
5.3 VOTING RIGHTS OF MEMBERS. The Members shall have the right to vote on
the matters set forth in this Agreement, including the matters listed in this
Section 5.3. Except as otherwise provided in this Agreement or in the Act,
matters on which the Members may vote shall require the approval of a Majority
Vote. Members shall have the right to vote on the following matters:
(a) The election to continue the Company following the occurrence of an
event described in Section 8.1(d), which shall require the vote of Members as
specified in that Section;
(b) Except as otherwise provided in Section 2.3, any amendment of the
Articles or this Agreement; provided, however, that no amendment may require a
Member to contribute additional capital to the Company unless the Member has
approved the amendment;
(c) Removal of the Manager or election of a successor Manager;
(d) Any merger of the Company with or into another business entity;
(e) The dissolution of the Company pursuant to Section 8.1(b); and
(f) Such other matters as the Manager may from time to time elect to
submit to the vote of the Members, it being understood and agreed that the
Manager shall not be obligated to submit any other matters to the vote of the
Members.
5.4 WITHDRAWAL. No Member shall have the right or power to withdraw from
the Company as a Member.
5.5 TRANSFERS OF INTERESTS. Subject to the restrictions on transfer set
forth in the Rights Agreement, the Members may sell, transfer, pledge, encumber
or otherwise dispose of their Membership Interests or interests therein. Any
attempted sale, transfer, pledge, encumbrance or other disposition of a
Membership Interest or an interest therein which does not comply with the
requirements of the Rights Agreement shall be void and of no effect.
(a) Until the Assignee becomes a Member, the voting rights and rights to
participate in the management and affairs of the Company which are attributable
to the interest assigned shall be
13
suspended and may not be exercised by the assignor or the Assignee. The Company
and the Manager shall be entitled to treat the record owner (as reflected on the
books of the Company) of any Membership Interest as the absolute owner thereof
in all respects, and shall incur no liability for distributions made in good
faith to such owner until such time as a written assignment of such interest has
been received by the Company. The effective date of an assignment shall be (i)
the date of receipt and acceptance by the Manager of the written notice of
assignment, or (ii) such later date as may be specified in the notice of
assignment. An Assignee shall be entitled to become a Member only upon the terms
and conditions set forth in Section 5.5(b).
(b) An Assignee may be admitted as a Member upon satisfaction of the
following conditions: (i) the filing with the Company of a duly executed written
instrument of assignment in a form approved by the Manager specifying the
interest being assigned and setting forth the intention of the assignor that the
Assignee succeed to the assignor's interest as a Member with respect to such
interest; and (ii) the execution and acknowledgment by the assignor (except in
the case of an assignment occurring by will, intestate succession, or otherwise
by operation of law) and Assignee of any other instruments reasonably required
by the Manager, including the acceptance and adoption by the Assignee of the
provisions of this Agreement.
5.6 DECEASED, INCOMPETENT OR DISSOLVED MEMBER. If a Member who is an
individual dies or is adjudged by a court of competent jurisdiction to be
incompetent to manage the Member's person or property, the Member's executor,
administrator, guardian, conservator, or other legal representative may exercise
all of the Member's rights for the purpose of settling the Member's estate or
administering the Member's property. If a Member is a corporation, trust, or
other entity and is dissolved or terminated, the powers of that Member may be
exercised by its legal representative or successor.
SECTION 6. MEETINGS OF MEMBERS
6.1 PLACE OF MEETINGS. Meetings of Members shall be held at any place
stated in any proper notice of meeting, provided that place is within the County
of San Mateo, State of California.
6.2 REGULAR MEETINGS. Regular meetings of the Members shall not be
required.
6.3 SPECIAL MEETINGS. Special meetings of Members may by called by any
Manager or by any Member or Members representing not less than 10 percent of the
Percentage Interests, for the purpose of addressing any matters on which the
Members may vote.
6.4 NOTICE OF MEETINGS.
(a) Whenever Members are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given not less than 10 days
nor more than 60 days before the date of the meeting to each Member entitled to
vote at the meeting. The notice shall state the place, date and hour of the
meeting and the general nature of the business to be transacted. No other
business may be transacted at such meeting.
(b) Notice of a Members' meeting shall be given either personally or by
mail or other means of written communication, addressed to the Member at the
address of the Member appearing on the books of the Company or given by the
Member to the Company for the purpose of notice.
14
The notice or report shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by other means of written
communication.
(c) Upon written request to a Manager by any Person entitled to call a
meeting of Members, the Manager shall immediately cause notice to be given to
the Members entitled to vote that a meeting will be held at a time requested by
the Person calling the meeting, not less than 10 days nor more than 60 days
after the receipt of the request. If the notice is not given within 20 days
after receipt of the request, the Person entitled to call the meeting may give
the notice.
(d) When a Members' meeting is adjourned to another time or place, except
as provided in the last sentence of this paragraph, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the Company may
transact any business that may have been transacted at the original meeting. If
the adjournment is for more than 45 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Member of record entitled to vote at the meeting.
6.5 QUORUM. Members holding a majority of the Percentage Interests
represented in person or by proxy shall constitute a quorum at a meeting of
Members. The Members present at a duly called or held meeting at which a quorum
is present may continue to transact business until adjournment, notwithstanding
the loss of a quorum, if any action taken after loss of a quorum, other than
adjournment, is approved by the requisite percentage of voting interests
specified in this Agreement or in the Act.
6.6 ACTION WITHOUT A MEETING. Any action that may be taken at any meeting
of the Members may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed and delivered to the Company by Members
having not less than the minimum number of votes that would be necessary to
authorize or take that action at a meeting at which all Members entitled to vote
thereon were present and voted.
Unless the consents of all Members entitled to vote have been solicited in
writing, (i) notice of any Member approval of an amendment to the Articles or
this Agreement, a dissolution of the Company as provided in Section 17350 of the
Act, or a merger of the Company as provided in Section 17551 of the Act, without
a meeting by less than unanimous written consent shall be given at least 10 days
before the consummation of the action authorized by such approval, and (ii)
prompt notice shall be given of the taking of any other action approved by
Members without a meeting by less than unanimous written consent, to those
Members entitled to vote who have not consented in writing.
Any Member giving a written consent, or the Member's proxyholder, may
revoke the consent by a writing received by the Company prior to the time that
written consents of Members having the minimum number of votes that would be
required to authorize the proposed action have been filed with the Company, but
may not do so thereafter. The revocation is effective upon its receipt at the
office of the Company required to be maintained pursuant to Section 17057 of the
Act.
6.7 TELEPHONIC MEETINGS. Members may participate in a meeting of the
Company through the use of conference telephones or similar communications
equipment, as long as all Members
15
participating in the meeting can hear one another. Participation in a meeting
pursuant to this Section 6.7 constitutes presence in person at that meeting.
6.8 PROXIES. The use of proxies in connection with this Section 6 will be
governed in the same manner as in the case of corporations formed under the
California General Corporations Law.
6.9 RECORD DATE. In order that the Company may determine the Members of
record entitled to notices of any meeting or to vote, or entitled to receive any
distribution or to exercise any rights in respect of any other lawful action, a
Manager, or Members representing more than 10 percent of the Percentage
Interests, may fix, in advance, a record date, that is not more than 60 days nor
less than 10 days prior to the date of the meeting and not more than 60 days
prior to any other action. If no record date is fixed:
(a) The record date for determining Members entitled to notice of or to
vote at a meeting of Members shall be at the close of business on the business
day next preceding the day on which notice is given or, if notice is waived, at
the close of business on the business day next preceding the day on which the
meeting is held;
(b) The record date for determining Members entitled to give consent to
Company action in writing without a meeting shall be the day on which the first
written consent is given;
(c) The record date for determining Members for any other purpose shall
be at the close of business on the day on which the Manager adopts the
resolution relating to the other action, or the 60th day prior to the date of
the other action, whichever is later;
(d) The determination of Members of record entitled to notice of or to
vote at a meeting of Members shall apply to any adjournment of the meeting
unless a Manager or the Members who called the meeting fix a new record date for
the adjourned meeting, but the Manager or the Members who called the meeting
shall fix a new record date if the meeting is adjourned for more than 45 days
from the date set for the original meeting.
SECTION 7. ACCOUNTING MATTERS
7.1 MAINTENANCE OF RECORDS. The Company shall maintain at the office
referred to in Section 1.5 all of the following:
(a) A current list of the full name and last known business or residence
address of each Member and of each holder of an Economic Interest set forth in
alphabetical order, together with the contribution and share in profits and
losses of each Member and holder of an Economic Interest.
(b) A current list of the full name and business or residence address of
each Manager.
(c) A copy of the Articles of Organization and all amendments thereto,
together with any powers of attorney pursuant to which the Articles of
Organization or any amendments thereto were executed.
(d) Copies of the Company's federal, state and local income tax or
information returns and reports, if any, for the six most recent taxable years.
16
(e) A copy of this Agreement and any amendments thereto, together with any
powers of attorney pursuant to which this Agreement or any amendments thereto
were executed.
(f) Copies of the financial statements of the Company, if any, for the six
most recent Fiscal Years.
(g) The books and records of the Company as they relate to the internal
affairs of the Company for at least the current and past four Fiscal Years.
7.2 DELIVERY TO MEMBERS AND INSPECTION.
(a) Upon the request of a Member or an Assignee, for purposes reasonably
related to the interest of that Person as a Member or an Assignee, a Manager
shall promptly deliver to the Member or Assignee, at the expense of the Company,
a copy of the information required to be maintained by paragraphs (a), (b) and
(d) of Section 7.1, and a copy of this Agreement.
(b) Each Member, Manager and Assignee has the right upon reasonable
request, for purposes reasonably related to the interest of that Person as a
Member, Manager, or Assignee, to each of the following:
(1) To inspect and copy during normal business hours any of the
records required to be maintained by Section 7.1.
(2) To obtain from a Manager promptly after becoming available, a
copy of the Company's federal, state, and local income tax or information
returns for each year.
(c) A Manager shall promptly furnish to a Member a copy of any amendment
to the Articles or this Agreement executed by a Manager pursuant to a power of
attorney from the Member.
(d) Any request, inspection, or copying by a Member or Assignee may be
made by that Person or by that Person's agent or attorney.
7.3 REPORTS.
(a) The Company shall send or cause to be sent to each Member or Assignee
as soon as practicable after the end of each Fiscal Year such information as is
necessary to complete federal and state income tax or information returns and,
if the Company has 35 or fewer Members, a copy of the Company's federal, state,
and local income tax or information returns for the year.
(b) If the Company has more than 35 Members:
(1) A Manager shall cause an annual report to be sent to each of the
Members not later than 120 days after the close of the Fiscal Year. That
report shall contain a balance sheet as of the end of the Fiscal Year and
an income statement and statement of changes in financial position for the
Fiscal Year.
(2) Members representing at least 5 percent of the voting interests
of the Members, or three or more Members, may make a written request to a
Manager for an income
17
statement of the Company for the initial three-month, six-month, or nine-
month period of the current Fiscal Year ended more than 30 days prior to
the date of the request, and a balance sheet of the Company as of the end
of that period. The statement shall be delivered or mailed to the Members
within 30 days thereafter.
(3) The financial statements referred to in this paragraph (b) shall
be accompanied by the report thereon, if any, of the independent
accountants engaged by the Company or, if there is no report, the
certificate of a Manager that the financial statements were prepared
without audit from the books and records of the Company.
7.4 TAX AND ACCOUNTING MATTERS. The Company's taxable year and accounting
method for income tax purposes shall be as determined under the Code and
Treasury Regulations. The Company's accounting records shall be maintained in
accordance with generally accepted accounting practices for the Company's type
of business. FWB shall be the "tax matters partner" within the meaning of
Section 6231(a)(7) of the Code, unless and until another Member is appointed to
be the tax matters partner by the Manager. The tax matters partner shall have
all of the authority granted by the Code to a tax matters partner, provided that
the tax matters partner shall keep each Member informed as to the status of any
audit of the Company's tax affairs.
SECTION 8. DISSOLUTION AND LIQUIDATION
8.1 EVENTS OF DISSOLUTION. Except as otherwise provided in this Agreement,
the Company shall be dissolved and its affairs shall be wound up upon the
happening of the first to occur of the following:
(a) At the time specified in the Articles.
(b) Upon the Majority Vote of the Members to dissolve the Company.
(c) Upon the sale or other disposition of all or substantially all of the
assets and properties of the Company and distribution to the Members of the
proceeds of the sale or other disposition.
(d) Upon the death, withdrawal, expulsion, Bankruptcy, or dissolution of
a Member, unless the business of the Company is continued by a vote of a
majority of the Percentage Interests of the remaining Members within 90 days of
the happening of that event.
8.2 EFFECT OF DISSOLUTION. Upon any dissolution of the Company under this
Agreement or the Act, except as otherwise provided in this Agreement, the
continuing operation of the Company's business shall be confined to those
activities reasonably necessary to wind up the Company's affairs, discharge its
obligations, and liquidate its assets and properties in a businesslike manner.
Upon the occurrence of an event of dissolution, unless the business of the
Company is continued as provided herein, the Manager shall cause to be filed a
certificate of dissolution under Section 17356 of the Act.
8.3 LIQUIDATION AND TERMINATION
(a) If the Company is dissolved, then an accounting of the Company's
assets, liabilities and operations through the last day of the month in which
the dissolution occurs shall be made, and the
18
affairs of the Company shall thereafter be promptly wound up and terminated. The
Manager will appoint one or more Persons to serve as the liquidating trustee of
the Company. The liquidating trustee will be responsible for winding up and
terminating the affairs of the Company and will determine all matters in
connection therewith (including, without limitation, the arrangements to be made
with creditors, to what extent and under what terms the assets of the Company
are to be sold, and the amount or necessity of cash reserves to cover contingent
liabilities) as the liquidating trustee deems advisable and proper; provided,
--------
however, that all decisions of the liquidating trustee will be made in
-------
accordance with the fiduciary duty owed by the liquidating trustee to the
Company and each of the Members. The liquidating trustee will liquidate the
assets of the Company as promptly as is consistent with obtaining the fair
market value thereof, and the proceeds therefrom, to the extent sufficient
therefor, will be applied and distributed in the following order:
(1) To the payment and discharge of all of the Company's debts and
liabilities to creditors (including Members) in the order of priority as
provided by law, other than liabilities for distributions to Members; and
(2) The balance, if any, in proportion to the Members' positive
Capital Account balances as of the date of such distribution, as determined
after taking into account all Capital Account adjustments for the Fiscal
Year during which such liquidation occurs. Such distributions shall be made
by the end of the Fiscal Year in which the liquidation occurs or, if later,
within ninety (90) days after the date of such liquidation.
(b) After all of the assets of the Company have been distributed, the
Company shall terminate; however, if at any time thereafter any funds in any
cash reserve fund referred to in Section 8.3(a) are released because the need
for the cash reserve fund has ended, the funds shall be distributed to the
Members in the same manner as if the distribution had been made pursuant to
Sections 8.3(a)(1) and (2) above.
(c) Notwithstanding anything to the contrary in this Agreement, upon a
liquidation within the meaning of Regulation section 1.704-1(b)(2)(ii)(g), if
any Member has a deficit or negative balance in the Member's Capital Account
(after giving effect to all contributions, distributions, allocations, and other
Capital Account adjustments for all taxable years, including the year during
which such liquidation occurs), the Member shall have no obligation to make any
capital contribution to the Company, and the negative balance of the Member's
Capital Account shall not be considered a debt owed by the Member to the Company
or to any other Person for any purpose whatsoever.
8.4 CERTIFICATE OF CANCELLATION. Upon the completion of the winding up of
the affairs of the Company, the Manager shall prepare, execute and deliver to
the California Secretary of State a certificate of cancellation in accordance
with Section 17356 of the Act.
8.5 RECOURSE TO ASSETS. The Members shall look solely to the assets of the
Company for any profits or return of their capital contributions. If the assets
remaining after the payment or discharge of the debts and liabilities of the
Company are insufficient to return a Member's capital contributions or profits,
the Member shall have no recourse against the Company or the other Members.
19
SECTION 9. DISPUTE RESOLUTION
9.1 DISPUTE RESOLUTION; CONFIDENTIALITY. Any controversy, dispute or claim
("CLAIM") between any Member and the Company, or between Members, arising out of
or relating to this Agreement or the Company, whether arising in contract or
tort, law or equity, shall be subject to a non-binding mediation, and if not
then resolved, shall be finally determined by a binding arbitration, both
conducted as set forth below. Each Member agrees that any Claim, and all matters
concerning any Claim, will be considered confidential, and will not be disclosed
to any person outside the Company except as provided below with respect to the
Mediation or Arbitration contemplated by Section 9.2 or Section 9.3 below.
9.2 MEDIATION.
(a) Any Claim shall first be the subject of a non-binding mediation
("MEDIATION"), conducted by a retired judge or other mediator who is a member of
Judicial Arbitration & Mediation Services, Inc./Endispute ("JAMS") or other
agreed upon mediator. Any Member or the Company may initiate the Mediation by
written notice to the other Member(s) involved in the Claim. The date the notice
is given is called the "MEDIATION INITIATION DATE."
(b) The mediator ("MEDIATOR") shall be a retired judge or other mediator,
selected by mutual agreement of the parties to the dispute, and if they cannot
so agree within thirty (30) days after the Mediation Initiation Date, the
Mediator shall be selected through such procedures as JAMS regularly follows.
(c) The Mediation shall be held within thirty (30) days after the Mediator
is selected, or such longer period as the parties to the dispute and the
Mediator mutually decide.
(d) The Company shall bear the cost of the Mediator's fees and expenses,
but each party to the dispute shall pay its own attorneys' and expert witness
fees and any other associated costs.
9.3 ARBITRATION.
(a) In the event any Claim is not fully resolved by mutual agreement of
the parties to the dispute at the Mediation, the Claim shall be finally
determined by a binding arbitration ("ARBITRATION"), conducted by a single
arbitrator chosen by the parties as described below. Any Member may initiate the
Arbitration by written notice to the other Member(s), to the Company and to the
"ARBITRATION TRIBUNAL," as defined below. The Company may initiate the
Arbitration by written notice to the Members and to the Arbitration Tribunal.
The date the notice is given is called the "ARBITRATION INITIATION DATE."
(b) Except as expressly modified herein, the Arbitration shall be
conducted in accordance with the provisions of Section 1280 et seq. of the
-- ---
California Code of Civil Procedure, or their successor sections ("CCP"), and
shall constitute the exclusive remedy for the determination of any Claim,
including whether the Claim is subject to arbitration. The Arbitration shall be
conducted under the procedures of the Arbitration Tribunal, except as modified
herein. The Arbitration Tribunal shall be JAMS, unless the parties to the
dispute cannot agree on a JAMS arbitrator, in which case the Arbitration
Tribunal shall be the San Francisco Office of the American Arbitration
Association ("AAA").
20
(c) The arbitrator ("ARBITRATOR") shall be a retired judge or other
arbitrator employed by JAMS selected by the same procedures as described above
for selecting the Mediator. If the parties to the dispute are unable to mutually
select a JAMS arbitrator, then the arbitrator shall be selected from the Large
and Complex Case Project ("LCCP") panel of the AAA, by mutual agreement of the
parties to the dispute. If the parties to the dispute cannot agree on an
arbitrator within sixty (60) days after the Arbitration Initiation Date, the
Arbitrator shall be selected by the AAA, from its LCCP panel, through such
procedures as the AAA regularly follows. If for any reason the AAA does not so
act, the Company or any Member who is a party to the dispute may apply to the
Superior Court in and for the City and County of San Francisco, California, for
the appointment of a single arbitrator.
(d) No party shall have the right to conduct discovery in connection with
the Arbitration proceeding except for (i) the pre-hearing production of relevant
documents, (ii) one deposition of each opposing party, and (iii) one deposition
of an expert witness.
(e) The Arbitrator shall try any and all issues of law or fact and make
the award within thirty (30) days after the close of evidence in the
Arbitration. The Arbitrator shall issue an award at the close of the arbitration
proceeding which shall dispose of all of the claims of the Members and of the
Company that are the subject of the Arbitration. The Arbitrator shall be
empowered to (i) enter equitable as well as legal relief, (ii) provide all
temporary and/or provisional remedies, and (iii) enter equitable orders that
will be binding upon the Company and the Members.
(f) Judgment upon the award rendered by the Arbitrator may be entered in
any court having jurisdiction thereof. The following time periods set forth in
the CCP shall be shortened as follows: Section 1288 - from four years to 90
days, and from 100 days to 30 days; Section 1288.2 - from 100 days to 30 days.
(g) The fees and expenses of the Arbitrator shall be shared by the parties
to the Arbitration as determined by the Arbitrator.
SECTION 10. SHARE CERTIFICATES
10.1 CERTIFICATES. Every Member shall be entitled to have a certificate,
signed by the Manager or by the President or a Vice President and the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Company, certifying the number of Shares owned by the Member.
10.2 REPLACEMENT CERTIFICATES. The Members may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Company alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificates of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Members may, in their discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates to give the Company a bond
in such sum as it may direct as indemnity against any claim that may be made
against the Company with respect to the certificates alleged to have been lost,
stolen or destroyed.
10.3 TRANSFERS. Upon surrender to the Company of a certificate for Shares
duly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the
21
duty of the Company, provided that the transfer is in compliance with the terms
of this Agreement, to issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.
SECTION 11. REPRESENTATIONS AND WARRANTIES OF SUB
Except as set forth otherwise in Schedule 11 hereto, Sub represents and
warrants as of the Closing that:
11.1 ORGANIZATION AND STANDING OF SUB. Sub is a duly organized and validly
existing corporation in good standing under the laws of the state of its
incorporation and has the corporate power and authority to enter into and
perform this Agreement and to consummate the transaction contemplated hereby.
11.2 CORPORATE ACTION. Sub has the corporate power and will, prior to the
Closing, have taken all necessary corporate action required to authorize,
execute, deliver and perform this Agreement and any other agreements and
instruments executed in connection herewith and therewith. When executed and
delivered by Sub, this Agreement and any other agreement and instrument executed
in connection herewith and therewith will constitute the valid and binding
obligations of Sub, enforceable in accordance with their terms.
11.3 GOVERNMENT APPROVALS. Except for the filings to be made, if any, to
comply with exemptions from registration or qualification under federal and
state securities laws, no authorization, consent, approval, license, exemption
of or filing or registration with any court or governmental agency or
instrumentality is necessary for the offer, sale, execution or delivery by Sub,
or for the performance by it of its obligations under, this Agreement.
11.4 LITIGATION. There is no litigation or governmental proceeding or
investigation pending, or, to Sub's knowledge, threatened against Sub affecting
any of its properties or assets that, if decided adversely to Sub, will result
in any material adverse change in the business, operations, affairs, prospects
or conditions of Sub or that, if decided adversely to Sub, will call into
question the validity of this Agreement, nor, to Sub's knowledge, has there
occurred any event or does there exist any condition on the basis of which any
litigation, proceeding or investigation might properly be instituted.
11.5 FILED REPORTS. The common stock of StreamLogic Corporation is
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and quoted on the Nasdaq Stock Market. Sub or StreamLogic
Corporation has delivered to FWB copies of StreamLogic Corporation's (a) Annual
Report on Form 10-K for the fiscal year ended March 29, 1996 (the "FORM 10-K
REPORT") as filed with the Securities and Exchange Commission (the "COMMISSION")
and (b) all proxy statements relating to StreamLogic Corporation's meetings of
stockholders (whether annual or special) during 1996 as filed with the
Commission. Sub or StreamLogic Corporation has made available to FWB upon its
request all other reports, registration statements and other documents filed by
StreamLogic Corporation with the Commission under the Exchange Act and the
Securities Act of 1933, as amended (the "SECURITIES ACT"), for the past three
fiscal years. All such documents described in the first two sentences of this
Section 11.5 are collectively referred to as "STREAMLOGIC CORPORATION'S FILED
REPORTS". StreamLogic Corporation
22
has during the last three fiscal years timely filed all reports, registration
statements and other documents (including StreamLogic Corporation's Filed
Reports) required to be filed with the Commission under the rules and
regulations of the Commission, and all of StreamLogic Corporation's Filed
Reports complied as to form with the Securities Act or the Exchange Act, as the
case may be. As of their respective date, StreamLogic Corporation's Filed
Reports (including any exhibits or schedules thereto or documents incorporated
therein by reference) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
11.6 SECURITIES ACT OF 1933. Sub has complied and will comply with all
applicable federal or state securities laws in connection with the transfer to
the Company of the StreamLogic Corporation common stock.
11.7 NO BROKERS OR FINDERS. Sub owes no commission, fee or other
compensation to any Person as a finder or broker as a result of the transactions
contemplated by this Agreement.
11.8 CAPITALIZATION; STATUS OF CAPITAL STOCK. The authorized capital stock
of StreamLogic Corporation is as set forth on StreamLogic Corporation's Filed
Reports. All of the issued and outstanding shares of capital stock of
StreamLogic Corporation as of March 29, 1996 are set forth on the Form 10-K
Report. All of the outstanding shares of capital stock of StreamLogic
Corporation have been duly authorized, are validly issued and are fully paid and
nonassessable, and no holder thereof is entitled to preemptive rights. Between
the date hereof and the Closing, there shall have been no material change in the
outstanding capital stock of StreamLogic Corporation. Except as set forth in
StreamLogic Corporation's Filed Reports, there are no options, warrants or
rights to purchase shares of its capital stock or other securities authorized,
issued or outstanding, nor is StreamLogic Corporation obligated in any manner to
issue shares of its capital stock or other securities.
11.9 ABSENCE OF CHANGES. Since March 29, 1996, no event has occurred or
failed to occur that would be required to be disclosed in the footnotes of
StreamLogic Corporation's financial statements for such statements to be
prepared in accordance with generally accepted accounting principles, and to the
best knowledge of Sub, there has been no other event or condition of any
character specifically relating to StreamLogic Corporation which specifically
pertains to and materially adversely affects its business, properties or
condition, financial or otherwise.
11.10 INVESTMENT REPRESENTATIONS BY SUB. Sub represents that:
(a) Sub has been advised that the Shares have not been registered under
the Securities Act nor qualified under any state securities laws on the grounds
that no distribution or public offering of the Shares is to be effected, and
that in this connection the Company is relying in part on the representations of
Sub set forth herein.
(b) It is Sub's intention to acquire the Shares for its own account and
that the Shares are being and will be acquired for the purpose of investment and
not with a view to distribution or resale thereof.
23
(c) Sub is able to bear the economic risk of an investment in the Shares
acquired by Sub pursuant to this Agreement and can afford to sustain a total
loss on such investment.
(d) Sub is an experienced and sophisticated investor, able to fend for
itself in the transactions contemplated by this Agreement, and has such
knowledge and experience in financial and business matters that Sub is capable
of evaluating the risks and merits of acquiring the Shares.
(e) Sub, by reason of its business or financial experience, has the
capacity to protect its own interests in connection with the purchase of the
Shares.
(f) Sub acknowledges that the certificate representing the Shares, when
issued, shall contain a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND ANY SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (I) IN A
TRANSACTION REGISTERED UNDER SAID ACT AND SUCH STATE SECURITIES LAWS OR
(II) IN A TRANSACTION FOR WHICH AN EXEMPTION FROM REGISTRATION UNDER SAID
ACT AND SUCH LAWS IS AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION
OF COUNSEL TO SUCH EFFECT REASONABLY SATISFACTORY TO IT.
(g) Sub represents that it is an "accredited investor," as that term is
defined in Rule 501 of Regulation D under the Securities Act.
SECTION 12. REPRESENTATIONS AND WARRANTIES OF FWB
Except as set forth otherwise in Schedule 12 hereto, FWB represents and
warrants as of the Closing that:
12.1 ORGANIZATION AND STANDING OF FWB. FWB is a duly organized and validly
existing corporation in good standing under the laws of the State of California
and has the corporate power and authority to enter into and perform this
Agreement and to consummate the transaction contemplated hereby.
12.2 CORPORATE ACTION. FWB has the corporate power and will, prior to the
Closing, have taken all necessary corporate action required to authorize,
execute, deliver and perform this Agreement and any other agreements and
instruments executed in connection herewith and therewith. When executed and
delivered by FWB, this Agreement and any other agreement and instrument executed
in connection herewith and therewith will constitute the valid and binding
obligations of FWB, enforceable in accordance with their terms.
12.3 GOVERNMENTAL APPROVALS. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental agency or
instrumentality is necessary for the execution or delivery by FWB, or for the
performance by it of its obligations under, this Agreement.
24
12.4 LITIGATION. There is no litigation or governmental proceeding or
investigation pending, or, to FWB's knowledge, threatened against FWB affecting
any of its properties or assets that might result in any material adverse change
in the business, operations, affairs, prospects or conditions of FWB or that
might call into question the validity of this Agreement, nor, to FWB's
knowledge, has there occurred any event or does there exist any condition on the
basis of which any litigation, proceeding or investigation might properly be
instituted.
12.5 NO BROKERS OR FINDERS. Except for amounts due to ▇▇▇▇▇▇▇ & Co., FWB
owes no commission, fee or other compensation to any Person as a finder or
broker as a result of the transactions contemplated by this Agreement.
12.6 ABSENCE OF CHANGES. Since March 30, 1996, except as disclosed in
Schedule 12 (including disclosures therein with respect to FWB's recent
financial results and proposed tax and special distributions to FWB's
shareholders and a proposed loan from FWB's shareholders), no event has occurred
or failed to occur that would be required to be disclosed in the footnotes of
FWB's financial statements for such statements to be prepared in accordance with
generally accepted accounting principles, and to the best knowledge of FWB,
there has been no other event or condition of any character specifically
relating to FWB which specifically pertains to and materially adversely affects
its business, properties or condition, financial or otherwise.
12.7 INVESTMENT REPRESENTATIONS BY FWB. FWB represents that:
(a) FWB has been advised that the Shares have not been registered under
the Securities Act nor qualified under any state securities laws on the grounds
that no distribution or public offering of the Shares is to be effected, and
that in this connection the Company is relying in part on the representations of
FWB set forth herein.
(b) It is FWB's intention to acquire the Shares for its own account and
that the Shares are being and will be acquired for the purpose of investment and
not with a view to distribution or resale thereof.
(c) FWB is able to bear the economic risk of an investment in the Shares
acquired by FWB pursuant to this Agreement and can afford to sustain a total
loss on such investment.
(d) FWB is an experienced and sophisticated investor, able to fend for
itself in the transactions contemplated by this Agreement, and has such
knowledge and experience in financial and business matters that FWB is capable
of evaluating the risks and merits of acquiring the Shares.
(e) FWB, by reason of its business or financial experience, has the
capacity to protect its own interests in connection with the purchase of the
Shares.
(f) FWB acknowledges that the certificate representing the Shares, when
issued, shall contain a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND ANY SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (I) IN A
TRANSACTION
25
REGISTERED UNDER SAID ACT AND SUCH STATE SECURITIES LAWS OR (II) IN A
TRANSACTION FOR WHICH AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND
SUCH LAWS IS AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION OF
COUNSEL TO SUCH EFFECT REASONABLY SATISFACTORY TO IT.
(g) FWB represents that it is an "accredited investor," as that term is
defined in Rule 501 of Regulation D under the Securities Act.
12.8 INVESTMENT REPRESENTATIONS OF FWB AS MANAGER OF THE COMPANY: FWB as
Manager of the Company represents that:
(a) The Company has been advised that the Common Stock has not been
registered under the Act nor qualified under any state securities laws on the
grounds that no distribution or public offering of the Common Stock is to be
effected, and that in this connection you are relying in part on the
representations of the Company set forth herein.
(b) It is the Company's intention to acquire the Common Stock for its own
account and that the Common Stock is being and will be acquired for the purpose
of investment and not with a view to distribution or resale thereof.
(c) The Company is able to bear the economic risk of an investment in the
Common Stock acquired by the Company pursuant to this Agreement and can afford
to sustain a total loss on such investment.
(d) The Company is an experienced and sophisticated investor, able to fend
for itself in the transactions contemplated by this Agreement, and has such
knowledge and experience in financial and business matters that the Company is
capable of evaluating the risks and merits of acquiring the Common Stock.
(e) The Company, by reason of its business or financial experience, has
the capacity to protect its own interests in connection with the purchase of the
Common Stock.
(f) The Company acknowledges that the stock certificate representing the
Common Stock, when issued, shall contain a legend in substantially the following
form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND ANY SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (I) IN A
TRANSACTION REGISTERED UNDER SAID ACT AND SUCH STATE SECURITIES LAWS OR
(II) IN A TRANSACTION FOR WHICH AN EXEMPTION FROM REGISTRATION UNDER SAID
ACT AND SUCH LAWS IS AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION
OF COUNSEL TO SUCH EFFECT REASONABLY SATISFACTORY TO IT.
(g) The Company represents that it is an "accredited investor," as that
term is defined in Rule 501 of Regulation D under the Securities Act.
26
SECTION 13. REGISTRATION RIGHTS
At the Closing, the Company and StreamLogic Corporation shall execute and
deliver the Company Rights Agreement in the form of Exhibit D hereto. Also at
the Closing, the Company and Sub shall execute and deliver the Rights Agreement
in the form of Exhibit E hereto.
SECTION 14. GENERAL PROVISIONS
14.1 GOVERNING LAW. This Agreement and the rights of the parties hereunder
will be governed by, interpreted, and enforced in accordance with the laws of
the State of California.
14.2 ATTORNEYS' FEES. If any legal action or other proceeding is commenced
to enforce or interpret any provision of, or otherwise relating to, this
Agreement, the losing party or parties shall pay the prevailing party's or
parties' actual expenses incurred in the investigation of any claim leading to
the proceeding, preparation for and participation in the proceeding, any appeal
or other post judgment motion, and any action to enforce or collect the judgment
including without limitation contempt, garnishment, levy, discovery and
bankruptcy. For this purpose "expenses" include, without limitation, court or
other proceeding costs and experts' and attorneys' fees and their expenses. The
phrase "prevailing party" shall mean the party who is determined in the
proceeding to have prevailed or who prevails by dismissal, default or otherwise.
14.3 BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the Members, and their respective distributees, successors and
assigns; provided, however, nothing contained in this Section 14.3 shall limit
-------- -------
the effectiveness of any restriction on transfers of Membership Interests.
14.4 TERMS. Any reference to the Act, the Code or other statutes or laws
will include all amendments, modifications, or replacements of the specific
sections and provisions concerned. The parties mutually acknowledge that they
and their attorneys have participated in the preparation and negotiation of this
Agreement. In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.
14.5 HEADINGS. All headings are inserted only for convenience and ease of
reference and are not to be considered in the construction or interpretation of
any provision of this Agreement.
14.6 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under the present or future laws effective
during the term of this Agreement, the provision will be fully severable; this
Agreement will be construed and enforced as if the illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of the illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a provision as similar in terms to the illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
27
14.7 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and counterpart
signature pages may be assembled to form a single original document.
14.8 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions and conditions of this Agreement and the transactions
contemplated by this Agreement.
14.9 NO THIRD PARTY BENEFICIARY. This Agreement is made solely and
specifically among and for the benefit of the parties, and their respective
successors and assigns subject to the express provisions relating to successors
and assigns, and no other Person will have any rights, interest or claims or be
entitled to any benefits under or on account of this Agreement as a third party
beneficiary or otherwise.
14.10 NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing and shall
be effective for all purposes upon receipt on any business day before 5:00 PM
local time and on the next business day if received after 5:00 PM or on other
than a business day, including without limitation, in the case of (i) personal
delivery, (ii) delivery by messenger, express or air courier or similar courier,
(iii) delivery by United States first class certified or registered mail,
postage prepaid and (iv) transmittal by telecopier or facsimile, addressed to
the addresses set forth in Exhibit B to this Agreement.
In this section "business days" means days other than Saturdays, Sundays,
and federal and state legal holidays. Either party may change its address by
written notice to the other in the manner set forth above. Receipt of
communications by United States first class or registered mail will be
sufficiently evidenced by return receipt. In the case of illegible or otherwise
unreadable facsimile transmissions, the receiving party shall promptly notify
the transmitting party of any transmission problem and the transmitting party
shall promptly resend any affected pages.
14.11 AMENDMENTS.
(a) AMENDMENTS TO AGREEMENT. Except as otherwise provided in Section 2.3,
this Agreement may be amended in whole or in part only as provided in Section
5.3. Except as otherwise provided in Section 2.3, any amendment shall be in
writing, dated and signed by the Members who have approved it. If any conflict
arises between the provisions of the amendment, or amendments, and the terms
hereof, the most recent provisions shall govern and control.
(b) AMENDMENTS TO ARTICLES. The Articles shall be amended whenever
required by the provisions of this Agreement or by the Act. Any such amended
Articles shall be filed for record by the Members as required by the Act, and
this Agreement shall also be amended as necessary to reflect such change.
14.12 TITLE TO COMPANY PROPERTY. Legal title to all property of the
Company will be held and conveyed in the name of the Company.
14.13 WAIVER. No waiver of any obligations under this Agreement will be
enforceable or admissible unless set forth in a writing signed by the party
against which enforcement or admission
28
is sought. No delay or failure to require performance of any provision of this
Agreement shall constitute a waiver of that provision as to that or any other
instance. Any waiver granted shall apply solely to the specific instance
expressly stated.
14.14 ENTIRE AGREEMENT. This Agreement and the Exhibits contain the entire
understanding between the Members and supersede any prior written or oral
agreements between them regarding the same subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between the Members relating to the subject matter of this Agreement which are
not fully expressed in this Agreement.
14.15 NO STATE LAW PARTNERSHIP. The Members intend that the Company not be
a partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member be an agent, partner or joint venturer of any other
Member, for any purposes other than federal and state tax purposes, and this
Agreement shall not be construed to suggest otherwise.
14.16 COMPANY COUNSEL. The Members understand that this Agreement has been
prepared by McCutchen, Doyle, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") on behalf of FWB,
and that ▇▇▇▇▇▇▇▇▇ has not represented any other Member in connection with the
preparation of this Agreement. The other Members recognize that by signing this
Agreement they will be bound by provisions relating to, among other things, the
obligation to contribute capital, the rights to distributions, and restrictions
on the transferability of their Membership Interests. Each of the other Members
also recognizes that it has the right to retain independent legal counsel to
represent it in connection with its review, negotiation, and execution of this
Agreement, and it has made its own determination whether to retain such
independent legal counsel before signing this Agreement. Furthermore, the
Company may select ▇▇▇▇▇▇▇▇▇ as legal counsel for the Company. In the event of
disputes between the Members and/or the Company, the Members and the Company
agree that ▇▇▇▇▇▇▇▇▇ may withdraw from representing the Company and continue to
represent FWB.
14.17 EXHIBITS. The following Exhibits attached to this Agreement shall
be deemed to be a part of this Agreement and are fully incorporated herein by
this reference:
Exhibit A Articles of Organization
Exhibit B Initial Capital Contributionsand Share Ownership
Exhibit C General Conveyance andAssumption of Liabilities
Exhibit D Company RightsAgreement
Exhibit E Rights Agreement
The Members have executed this Agreement as of the date set forth above, or
if earlier, as of the date the Articles are accepted for filing by the
California Secretary of State.
STREAMLOGIC SOFTWARE FWB SOFTWARE, INC., a California
CORPORATION, a Delaware corporation corporation
By /s/ ▇▇▇ ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------ -----------------------------
▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer ▇▇▇▇▇▇ ▇▇▇▇, President
29