ADVISORY AND SERVICING AGREEMENT
This Advisory and Servicing Agreement (this "Agreement") is entered into as
of July14, 1999, by and between Xxxxxxx Xxxx, having his principal place of
business at 0000 Xxxx Xxxx Xxxxxxx, XX 00000 (the "Company") and J. Xxxxxx
Xxxxxx, LTD, a Missouri LLC, having its principal place of business at 000 Xxxx
Xxxxxx Xxxx. Xxxxx 0000, Xxxxxx Xxxx, XX 00000 ("JTHL")
W I T N E S S E T H:
A. The Company intends to have JTHL establish a publicly held corporation
(eQuorumNet, of the state of Nevada) to be traded on the OTC Bulletin
Board, more specifically described on Exhibit A attached hereto and
incorporated herein by this reference (the "Public Company"), which
Public Company will be in the business of network marketing and
e-commerce.
B. JTHL, through its management and staff, is experienced in the areas
starting up publicly held companies to be traded on the OTC Bulletin
Board, and possesses adequate personnel and contacts to advise and
perform certain other services for the Company with regard to the
organization of the Public Company.
C. The Company desires to avail itself of the experience, advice and
assistance of JTHL and to have JTHL undertake the duties and
responsibilities hereinafter set forth.
D. JTHL is willing to render such services for the compensation and in
accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. ENGAGEMENT: Company hereby engages JTHL and JTHL hereby agrees to
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render advisory and other services for the Company, to the best of its
ability, including, without limitation, the following:
(a) assisting and advising the Company with regard to the corporate
structure of the Public Company, including, without limitation,
providing Articles of Incorporation, Bylaws, organizational
corporate minutes; necessary business licenses; obtaining
transfer agent, printing and distribution of stock certificates
(the "Corporate Services")
(b) assisting in obtaining appropriate audited financial statements
and tax returns (the "Financial Services"); and
(c) assisting the Company in preparing an Offering Memorandum under
Section 504 of the Securities Exchange Act, together with all
ancillary documentation, including, without limitation, Form D;
Form 10; 15c2-11 filing; SB-2 Stock Registration; obtaining a
trading symbol and CUSIP number for the Public Company,
preparation of necessary offering circulars; preparation of
necessary Blue Sky ("Securities Services").
Notwithstanding the foregoing, JTHL will not be required by the
Company to take any action or perform any services for which it must
be registered with or licensed by the Securities Exchange Commission,
any State Bar association or any state's securities commission.
2. TERM: JTHL agrees to have completed, or caused to be completed, all
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necessary activities in order that the Public Company will begin
trading on the OTC Bulletin Board within One Eighty Hundred (180) days
of the date of this contract. In the event that the Public Company
does not begin trading on the OTC Bulletin Board on or before that
date, JTHL will reimburse the Company for all amounts previously paid
by the Company to JTHL; provided, however, the Company will remain
responsible for the payment of all Third Party Professionals and
Expenses (as those terms are defined herein); and provided further
that the Company has timely provided JTHL with all necessary
information to perform the services required hereunder.
3. THIRD PARTY PROFESSIONALS: The parties hereto acknowledge and agree
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that in order to provide the Corporate Services, the Financial
Services and the Securities Services, it will be necessary for JTHL to
engage third party professionals, including, without limitation,
attorneys, corporation services
and accountants ("Third Party Professionals"). JTHL shall be
responsible for the payment of all Third Party Professionals and
Expenses.
4. COMPENSATION: As compensation for all services rendered by JTHL under
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this Agreement, Company shall pay JTHL a total of Eighty Thousand
Dollars ($80,000) in the following sums, in immediately available
funds by bank wire transfer or cashier check:
(a) Twenty Thousand Dollars ($20,000) upon signing of this agreement:
(PAID) and
(b) Ten Thousand Dollars ($10,000) within Ten (10) days of the date
of this agreement: (PAID) and
(c) Five Thousand Dollars ($5,000) upon completion of 504 Reg. D
Offering Memorandum: and
(d) Ten Thousand Dollars ($10,000) upon submittal of Form 10
Registration and SB-2 stock Registration materials to legal
counsel for review and filing of the Form 10 Registration with
SEC and the filing of SB-2 Stock Registration with the SEC: and
(e) Ten Thousand Dollars ($10,000) upon completion and filing of the
15c2-11 with the NASD and:
(f) Twenty Five Thousand Dollars ($25,000) upon notice from NASD of
effective trading date that the stock will be publicly traded on
the OTC Bulletin Board.
5. EXPENSES: Except as otherwise expressly indicated herein, JTHL shall
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be reimbursed by the Company for all reasonable out-of-pocket expenses
incurred by JTHL in obtaining services or products from any third
party during the performance of its services hereunder ("Expenses").
The company's obligation to reimburse JTHL pursuant to this
subparagraph shall be subject to the presentation to Company by JTHL
of an itemized account of such expenditures, together with supporting
vouchers, in accordance with Company's policies as in effect from time
to time.
6. DEFAULT: In the event that the Company shall default in the payment of
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any of the payments outlined in Paragraph 4 above, JTHL, may, but
shall not be obligated to, terminate this Agreement and retain all
amounts paid to JTHL prior to said date of termination. In addition,
the Company shall assign to JTHL, or its nominees, all of the
Company's right, title and interest in the Public Company as of the
date of termination.
7. INDEPENDENT CONTRACTOR: It is expressly agreed that JTHL is acting as
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an independent contractor in performing its services hereunder.
Company shall not pay any contributions to Social Security,
unemployment insurance, federal or state withholding taxes, nor
provide any other contributions or benefits, which might be expected
in an employer-employee relationship.
8. ASSIGNMENT: This Agreement is a personal one, being entered into in
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reliance upon and in consideration of the singular skill and
qualifications of JTHL. JTHL shall therefore not voluntarily or by
operation of law assign or otherwise transfer the obligations incurred
on its part pursuant to the terms of this Agreement without the prior
written consent of Company. Any attempted assignment or transfer by
JTHL of its obligation without such consent shall be wholly void.
9. MODIFICATION OF AGREEMENT: This Agreement may be modified by the
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parties hereto only by a written supplemental agreement executed by
both parties.
10. NOTICE: Any notice required or permitted to be given hereunder shall
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be sufficient if in writing, and if sent by registered or certified
mail, postage prepaid, addressed as follows:
If to Company:
Xxxxxxx Xxxx
0000 Xxxx Xxxx
Xxxxxxx, XX 00000
If to JTHL: J. Xxxxxx Xxxxxx, LTD
0000Xxxx Xxxxxx Xxxx. Xxxxx 0000
Xxxxxx Xxxx, XX 00000
With a copy to: McDowell, Rice, Xxxxx & Xxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: R. Xxxx Xxxxx
Or to such other address as the parties hereto may specify, in writing, from
time to time.
11. WAIVER OF BREACH: This waiver by either party of any breach of any
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provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
12. ARBITRATION: Any and all disputes and controversies arising out of, or
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in any manner relating to permanent performance of this Agreement
which cannot be settled by an agreement between the parties hereto,
shall be submitted to and settled by arbitration in the state of
Oklahoma in accordance with the rules of the American Arbitration
Association, and judgement upon any arbitration award may be entered
in any court having jurisdiction.
13. TITLES: The titles of the Sections herein are for convenience of
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reference only and are not to be considered in construing this
Agreement.
14. GOVERNING LAW: This Agreement has been executed and delivered in the
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State of Missouri and its interpretation, validity and performance
shall be construed and enforced in accordance with the laws of such
State.
15. SEVERABILITY: If any provision of this Agreement or the application of
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any provision to any person or circumstances is held invalid or
unenforceable, the remainder hereof and the application of the
remainder hereof to other persons or circumstances shall remain valid
and enforceable.
16. INDEMNIFICATION: The parties hereto hereby remise, release and forever
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discharge the other and their respective officers, directors, agents,
servants, employees, attorneys, subsidiaries, affiliates, successors,
assigns and any firm, organization, corporation, partnership, entity
or person liable by, through, under or on behalf of them, from any and
all liability, actions, contracts, indebtedness, obligations, claims,
causes of action, suits, damages, demands, costs and expenses
whatsoever, of every kind and nature, known or unknown, disclosed or
undisclosed, whether or not known or contemplated, whether in law or
in equity, arising out of any act, omission or transaction that has
happened, occurred or arisen prior to and including the date of this
Agreement. Further, the parties hereto hereby agree to indemnify and
hold harmless the other and their respective agents, employees,
directors and officers from and against any and all liability, loss,
cost, damage, claim, counterclaims, actions and causes of action and
all costs and expenses related thereto (including but not limited to
attorneys' fees and court costs) that the other and/or its agents,
employees, directors and officers have now incurred or may hereafter
suffer or incur arising out of or in any way related to the execution
of this Agreement and the performance by it of its functions under
this Agreement.
17. BINDING AGREEMENT: This Agreement shall be binding upon and shall
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inure to the benefit of the respective legal representatives,
successors and assigns of the parties hereto.
18. ENTIRE AGREEMENT: This Agreement contains the entire contract of the
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parties with respect to the subject matter hereof and supersedes all
agreements and understandings between the parties concerning the
subject matter hereof.
19. TRANSMISSION: The transmission of this Agreement by fax, wire,
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telexes, or mail shall be deemed a legal and binding transmission.
The parties hereto have executed this Agreement as of the date first above
written.
Xxxxxxx Xxxx
By: /S/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx
J. Xxxxxx Xxxxxx, LTD.
By: /S/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
EXHIBIT A
eQuorumNet, of Nevada (Public Corporation) will be structured as follows:
50,000,000 shares authorized
8,500,000 shares issued and outstanding
Breakdown as follows:
*7,330,000 shares to Xxxxxxx Xxxx
80,000 shares to be divided amongst 30-100 shareholders
90,000 shares to JTHL or its assignees; 24 month non-dilutable .0075%
position to be maintained
If any additional shares are to be issued for any reason whatsoever during the
first 24 months beginning upon the date of this Service Agreement, JTHL will be
issued additional shares to constitute a .0075% ownership of the Company.
SERVICES RENDERED:
A. Nevada corporation, with presence of business in Nevada
B. Nevada and city of Reno business licenses
C. Good standing certificate from the state of Nevada
D. Articles of Incorporation, by-laws and minutes
E. Audited shareholder list
F. 98% controlling block of stock
G. Federal and state tax returns, if required
H. Form 10 registration prepared and filed with the SEC
I. SB-2 stock registration
J. Form D filed with the SEC
K. 15c 2-1 filed by corporate Broker/Dealer with the NASD
L. 504 Reg. D Offering Memorandum, with legal opinion from legal
counsel attesting to the condition and validity of the company
and offering
M. Offering circular
N. Transfer Agent selected, and shares printed
O. Legal counsel opinion letter to Transfer Agent covering states
that the company can issue stock in
P. CUSIP #
Q. Trading symbol
R. Audited financial statements
S. Financial statements filed with Xxxxx'x or Standard & Poor
(secondary market blue sky in over 35 states)
T. Primary market Blue Sky filing in 7 states
U. All legal work to accomplish this goal
V. Consulting services provided for 60 days at no additional charge
to assist in the understanding of the public arena
*The 98% controlling (7,330.000 Shares) block of stock issued to Xxxxxxx Xxxx
will be legended and held in trust until J Xxxxxx Xxxxxx LTD is paid in full the
amount of this agreement.
J. Xxxxxx Xxxxxx LTD
/S/ Xxxxx X. Xxxxxx
Xxxxxxx Xxxx
/S/ Xxxxxxx Xxxx
OPERATING AGREEMENT
OF
EQUORUMNET, L.C.
A MISSOURI LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
ARTICLE 1 - FORMATION AND CONTINUANCE 1
Section 1.1 Intent 1
Section 1.2 Articles of Organization 1
Section 1.3 Name and Principal Office 1
Section 1.4 Term 1
Section 1.5 Purpose of LLC 1
Section 1.6 Registered Office and Agent 1
Section 1.7 Defined Terms 1
ARTICLE 2- CAPITAL 4
Section 2.1 Capital Contributions/Admission of Members 4
Section 2.2 Use of Capital 4
Section 2.3 Return of Capital 4
Section 2.4 Capital Accounts 4
Section 2.5 Additional Capital 4
2.5.1 Deferred Capital Contributions 4
2.5.2 New Capital 4
Section 2.6 Failure to Contribute 4
2.6.1 Material Breach 4
2.6.2 Interest on Defaulted Amounts 5
2.6.3 Purchase and Sale of Interest 5
2.6.4 Foreclosure of Security Interest 5
2.6.5 Suspension of Defaulting Members' Rights 6
2.6.6 Redemption Rights of Defaulting Members 6
Section 2.7 Limited Liability of Members 6
Section 2.8 Loans 6
2.8.1 Member's Loans 6
ARTICLE 3- MANAGEMENT OF LLC & AGREEMENTS AMONG MEMBERS 7
Section 3.1 Authority of the Managing Member 7
Section 3.2 Liability of Members; Indemnification 8
Section 3.3 Compensation of Managing Member, Members
or Affiliates 8
3.3.1 Compensation/Reimbursement of Expenses 8
Section 3.4 Title to Property 9
Section 3.5 Special Power of Attorney 9
ARTICLE 4- DISTRIBUTIONS AND ALLOCATIONS 10
Section 4.1 Distributions and Allocations Generally 10
Section 4.2 Distributable Net Proceeds 10
Section 4.3 Net Losses, Income and Gain 10
Section 4.4 LLC Reserves 10
ARTICLE 5- BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS 10
Section 5.1 Books and Records 10
Section 5.2 Annual Reports 11
Section 5.3 Tax Information 11
Section 5.4 Bank Accounts 11
Section 5.5 LLC Elections 11
Section 5.6 Fiscal Year 11
ARTICLE 6- MEMBERS' RELATIONSHIPS 11
Section 6.1 Transfer of a Member's Interest--Approval 11
Section 6.2 Assignment of Member's Interest as Security for
Loan 11
Section 6.3 Right of First Refusal 12
Section 6.4 Additional Restrictions 12
Section 6.5 Legend Conditions 12
Section 6.6 Substituted Members 12
Section 6.7 Withdrawal of a Member 13
Section 6.8 Terminating Events 13
Section 6.9 Repurchase of Ownership Interests 13
Section 6.10 Rights of Members to Receive Property Other
Than Cash 13
Section 6.11 Encumbrance of a Member's Interest 13
Section 6.12 Dissolution or Partition 13
Section 6.13 Right to Purchase Other Property 13
Section 6.14 Meetings of, or Actions by, the Members 14
Section 6.15 Election and Removal of Managing Member 14
6.15.1 Election of Managing Member 14
6.15.2 Removal of Managing Member 14
6.15.3 Status of Managing Member 14
6.15.4 Resignation of Managing Member 14
ARTICLE 7- DISSOLUTION AND WINDING UP 15
Section 7.1 Dissolving Events 15
Section 7.2 Liquidation and Final Distribution of Proceeds 15
Section 7.3 Time of Liquidation 15
Section 7.4 Liquidation Statement 16
ARTICLE 8- MISCELLANEOUS 16
Section 8.1 Voting and Approval 16
Section 8.2 Amendment of the Agreement 16
Section 8.3 Notices 16
Section 8.4 Binding Arbitration 16
Section 8.5 Tax Controversies 16
Section 8.6 Captions and Pronouns 17
Section 8.7 Binding Effect 17
Section 8.8 Entire Agreement 17
Section 8.9 Choice of Law 17
Section 8.10 Severability 17
Section 8.11 Rebates, Kickbacks and Reciprocal Arrangements 17
Section 8.12 Counterparts and Execution 17
OPERATING AGREEMENT
OF
EQUORUMNET, L.C.
A MISSOURI LIMITED LIABILITY COMPANY
This OPERATING AGREEMENT (the "Agreement") is made and entered into as of
the 3rd day of August, 1999, by and among the members (the "Members") of
eQuorumNet, L.C., a Missouri limited liability company.
ARTICLE 1- FORMATION AND CONTINUANCE
Section 1 1 Intent. The Members hereto desire to form a limited liability
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company (the "LLC") pursuant to the terms and conditions set forth herein and in
the Missouri Limited Liability Company Act, R.S. Mo. 347 010 et seq., as
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amended (the "Actt"). In the event of a conflict between the Act and this
Agreement, this Agreement shall control.
Section 1.2 Articles of Organization. The Members shall file an original
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and one copy of the Articles of Organization (sometimes referred to herein as
the "Articles") in the office of the Secretary of State of the State of
Missouri. There shall promptly be filed an amendment to the Articles eliminating
any inconsistency between the Articles and Section 1.5 hereof or any other
provision hereof.
Section 1.3 Name and Principal Office. The name of the LLC is eQuorumNet,
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L.C. The LLC's principal office is 000 X. Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx,
Xxxxxxxx 00000, and thereafter at such other place or places as the Members may
from time to time designate. Such name shall be used at all times in connection
with the business and affairs of the LLC. The LLC and its trade name shall be
registered with the appropriate authorities in any jurisdiction in which the LLC
conducts its business.
Section 1.4 Term. The LLC shall commence as of the date of filing of the
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original Articles and shall continue until perpetually, unless sooner wound up,
dissolved and terminated under the terms, conditions and agreements set forth
herein.
Section 1.5 Purpose of LLC. The LLC is formed for the purpose of
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acquiring, owning and administering the LLC Property and operating the Business
of the LLC as described below. In addition, the LLC may engage in all other
general business activities related to or incidental to the above-stated
purposes.
Section 1.6 Registered Office and Agent. The LLC's registered office shall
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be 000 X. Xxxxxx Xxxx., Xxxxx 0000, Xxxxxx Xxxx, Xxxxxxxx 00000, and the LLC's
registered agent at this address shall be Xxxxx Xxxxxx.
Section 1.7 Defined Terms. The following terms used in this Agreement
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shall have the following meanings (unless otherwise provided herein):
"Agreement" shall mean this Operating Agreement of eQuorumNet, L.C., as
amended from time to time.
"Affiliate" shall mean any person or entity which: (i) directly or
indirectly controls, is controlled by, or is under common control with a Member;
or (ii) owns or controls 10% or more of the outstanding voting securities of a
Member; or (iii) is an officer, director, employee, partner or trustee of any
entity described above; or (iv) is an entity for which a Member is an officer,
director, partner or trustee.
"Appraised Value" shall mean a M.A.J. appraisal of the LLC Property which
is approved by a majority of the Ownership Interests exclusive of those
Ownership Interests being sold, redeemed or otherwise transferred.
"Articles" shall mean the Articles of Organization of the LLC, as amended
from time to time.
"Bank" shall mean the bank designated by the Members as the LLC's primary
bank.
"Bankruptcy" shall mean the initiation of proceedings under Title XI of the
United States Code for any Member, whether voluntarily or involuntarily; or, the
appointment of a trustee, administrator, receiver or other entity for the
purpose of administrating assets of any Member for the benefit of creditors; or,
any other transfer of assets by a Member, whether voluntarily or involuntarily,
for the benefit of creditors.
"Bankruptcy Code" shall mean Title XI of the United States Code as now or
hereafter amended.
"Business" shall mean the business of the LLC which shall include all
lawful acts in the State of Missouri.
"Capital Accounts" shall mean the accounts maintained with respect to
Members as described in Section 2.4.
"Capital Contributions" shall mean the contributions in cash and property
of the Members to the capital of the LLC as described on Exhibit "B".
"Code" shall mean the Internal Revenue Code of 1986, as now or hereafter
amended.
"Deferred Capital Contribution" shall mean the future Capital Contribution
obligation, if any, of each Member which may be called by the Members as
provided in Section 2.5.
"Distributable Net Proceeds" shall mean, as of any date, all cash funds of
the LLC from whatever source derived on hand at such date, after:
(a) payment of all operating expenses of the LLC payable at such time;
(b) payment of all costs of purchase, sale, refinance, condemnation or
other disposition, including any fees paid to a Member or an Affiliate of a
Member;
(c) payment of all then-due unsecured indebtedness of the LLC; and
(d) provision for LLC Reserves.
"LLC" shall mean eQuorumNet, L.C., a Missouri limited liability company.
"LLC Property" shall mean all real and personal property owned by the LLC,
including the Property.
"LLC Reserves" shall mean the cash reserves established by the Members for
any expenses related to the LLC Property, and for the payment of any future
contingencies and anticipated obligations considering, among other things,
projected cash requirements for the LLC, the amount and source of cash on hand,
and the projected receipt of cash by the LLC from operations.
"Managing Member" shall initially mean Xxxxx Xxxxxx and any successors,
replacements or other parties elected or appointed as provided herein who must
be a member of the LLC. The Managing Member's authority shall be limited to
routine day-to-day business as described in Section 3. There shall be no
requirement that the LLC have a Managing Member.
"Members" shall mean those parties who have been admitted as members in the
LLC.
"Members' Loan" shall mean any loan the Members make to the LLC at any time
during the LLC's existence as provided in Section 2.8.1.
"Ownership Interest" shall mean the capital and profits ownership of a
Member in the LLC, as generally described in Section 4.2, and shall include all
rights to participate in the management of the LLC granted to Members. For
purposes of voting, the Distributable Net Proceeds allocation percentages set
forth in Section 4.2 shall be deemed to be the "Ownership Interest Percentages".
"Ownership Interest Value" shall mean the value of an Ownership Interest
equal to the product of the Ownership Interest and the Appraised Value of the
LLC Property, reduced by all Property debt and all obligations of the LLC.
"Prime Rate" shall mean the prime rate of interest announced or published
from time to time by the Bank.
"Pro Rata" shall mean the ratio that each Member's Ownership Interest bears
to the Ownership Interests of all the Members.
"Property" shall mean the real and personal property described on Exhibit
"A" attached hereto and made a part hereof.
"Regulations" shall mean the Treasury Department Regulations issued
pursuant to the Code.
"Sale Notice" shall mean a written notice delivered in connection with a
sale of a Member's Ownership Interest setting forth (a) the name(s) of the
person(s) to whom a sale is proposed to be made, ~) the purchase price to be
paid for the Ownership Interest, including a complete description of any and all
non- cash consideration to be derived, (c) the terms and conditions of the sale,
(d) the date of the closing of the sale and (e) all other pertinent details of
the transaction.
"Service" shall mean the Internal Revenue Service.
ARTICLE 2- CAPITAL
Section 2.1 Capital Contributions/Admission of Members. The Members who
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have made the required Capital Contribution set forth on Exhibit "B" shall be
admitted. Members shall also agree to contribute the Deferred Capital
Contributions, if any, specified in the Agreement when called by the Members.
Each Member shall be severally liable for his own Capital Contribution and
Deferred Capital Contribution and not jointly and severally liable for the
Capital Contribution and Deferred Capital Contribution of any other Member.
Section 2.2 Use of Capital. All capital contributed to the LLC shall only
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be employed in the business and for the benefit and advantage of the LLC.
Section 2.3 Return of Capital. Except as expressly provided herein, no
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Member shall be entitled to the return of his Capital Contributions. No Capital
Account of any Member shall earn interest.
Section 2.4 Capital Accounts. The LLC shall maintain a Capital Account for
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each Member. The Capital Account shall be increased by Capital Contributions and
income and shall be decreased by distributions and losses. The Capital Account
shall be generally maintained in conformity with Code 704 and Regulations
1.704-1 (b)(2)(iv). All decisions regarding the Capital Accounts shall be made
by Members holding a majority of the Ownership Interests.
Section 2.5 Additional Capital.
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2.5.1 Deferred Capital Contributions. Additional Capital
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Contributions as set forth on Exhibit "B" may be required from the Members from
time to time as requested by Members holding a majority of the Ownership
Interests thirty (30) days after written notice.
2.5.2 New Capital. If at any time during the LLC's term there are
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insufficient LLC Reserves (after consideration of Deferred Capital
Contributions) to pay the debt service, operating expenses, or other expenses or
costs necessary to operate the Property, the Members shall have the authority to
raise additional capital by selling additional Ownership Interests, first to
Members and, if necessary, to non-Members. The Members must first offer any new
Ownership Interests pro rata to the existing Members, excluding any Members in
default under Section 2.6, upon such terms and conditions, and for such prices,
as are proposed for sale to third parties. If the Members do not purchase all
the new Ownership Interests within twenty (20) days of notice, then the
remaining new Ownership Interests may be offered to non- Members on the same
terms and conditions. Such new Members shall be admitted to the LLC upon
purchase of the new interests and completion of all required documentation.
Section 2.6 Failure to Contribute.
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2.6.1 Material Breach. The Members agree that any failure to make
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a required Deferred Capital Contribution is critical to the success of the LLC
and will jeopardize the investment of all Members. The failure of any Member to
make any Deferred Capital Contribution when due (a "Payment Default") shall
constitute a material breach of this Agreement and shall forthwith, upon such
Payment Default, give rise to the remedies set forth in this Section (any one or
more of which may be pursued by the Members by vote of a majority of the
remaining Ownership Interests) in addition to all other remedies which
the LLC and all non-defaulting Members may otherwise have under Missouri law
excluding consequential damages and damages for lost profits.
2.6.2 Interest on Defaulted Amounts. If any Member is in Payment
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Default and does not cure such default within fifteen (15) days after notice of
such default, he shall pay an interest charge at an annual rate equal to two
percent (2.00%) over the Prime Rate, at the time such default occurs, or the
then legal maximum, whichever is lower. Such interest rate shall be adjusted
every six months during the period of default.
2.6.3 Purchase and Sale of Interest. If any Member is in Payment
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Default, and the Member does not cure the default within fifteen (15) days by
payment of the full amount of the Deferred Capital Contribution which is due,
plus accrued interest on the defaulted amount, the Managing Member may send a
notice to all non-defaulting Members stating that those non-defaulting Members
wishing to purchase said interest shall have the pro rata right to do so by
giving notice of such intent to the Managing Member within fifteen (15) days of
their receipt of the notice. Any Member failing to give such notice of intent
within such fifteen (15) day period shall be deemed to have waived such right
and any portion of the defaulting Member's interest not so acquired by
non-defaulting Members shall be offered to the remaining non-defaulting Members
by notice from the Managing Member and any such non-defaulting Member shall have
a pro rata right to acquire the interest offered by giving the Managing Member
notice within fifteen (15) days of their receipt of the notice. This procedure
will be followed until all of the defaulting Member's interest has been acquired
by the non-defaulting Members if they so elect. (Any Member acquiring such
interest is sometimes hereinafter referred to as a "Replacement Member".)
The total purchase price for any purchase under this Section shall be
eighty percent (80%) of the defaulting Member's Ownership Interest Value, less
all interest accrued on the defaulted amount to the date of such purchase, such
twenty percent (20%) discount representing the risk, hardship and administrative
costs of the default to the LLC. The purchase price shall be payable in cash.
Notwithstanding the foregoing, if Replacement Member or Members purchase(s) the
defaulting Member's interest, the Replacement Member(s) shall have all rights
associated with the entire interest. Any purchaser acquiring a defaulting
Member's interest pursuant to this Section shall be obligated to contribute any
remaining additional contributions required of such Member under this Agreement.
2.6.4 Foreclosure of Security Interest. To secure the obligations
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of the Members to make Deferred Capital Contributions, each Member expressly
grants the LLC a personal property security lien upon the interest of each
Member. If a Member is in Payment Default for fifteen (15) days and does not
cure such Payment Default by payment of the full amount of the Capital
Contribution which is due plus accrued interest before the end of the fifteen
(15) day period, the LLC shall have the right on ten (10) days written notice to
foreclose the lien and have the interest of the defaulting Member sold at a
public or private sale, at the election of the LLC, the foreclosure and sale to
be conducted in accordance with the applicable provisions of the Uniform
Commercial Code of the State of Missouri pertaining to the foreclosure of a
personal property security lien; provided, however, that the remedy provided by
this Section 2.6.4 shall be pursued only after the remedy provided by Section
2.6.3 has been exhausted without Replacement Members purchasing one-hundred
percent (100%) of the defaulting Member's interest.
Each Member acknowledges that it will not be feasible to have a
public sale for various reasons, including required compliance with provisions
concerning registration, qualification or
compliance with, the Securities Act of 1933, any successor statute thereto, or
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder, or in any other applicable securities law or any rule or regulation
promulgated thereunder. The Members, therefore, consent and agree that the
Ownership Interest(s) may be sold in one or more private sales to a restricted
group of purchasers who may be obliged to agree, among other things, to acquire
such Ownership Interest(s) for their own account for investment and not with the
view to the distribution or resale thereof, and each Member acknowledges that
any such private sale may be at prices and on other terms less favorable to the
defaulting Member than if such Ownership Interest were sold at a public sale.
Each Member agrees that any private sales made under the foregoing circumstances
shall be deemed to have been made in a commercially reasonable manner under the
Uniform Commercial Code as enforced in the State of Missouri or any other
jurisdiction.
2.6.5 Suspension of Defaulting Members' Rights. All rights and
-------------------------------------------
benefits of a defaulting Member attributable to the defaulting Member's
Ownership Interest, including the right to receive distributions of LLC Reserves
and Distributable Net Proceeds, shall be suspended during the period of default
and the Managing Member shall have the right to exercise all voting rights
attributable to the defaulting Member during the period of default; provided,
however, that if any distribution of funds is made during the period of default,
then the defaulted amounts plus accrued interest will be deducted from any
distribution otherwise payable to such defaulting Member; provided, further,
that if the amount of the defaulting Member's allocable share of such
distribution does not exceed such Member's defaulted amount plus accrued
interest, then the default shall not be cured, the Member shall continue to be
in default to the extent that his defaulted amount plus accrued interest exceeds
his allocable share of the distributions to the Members. If the defaulting
Member is also a Managing Member, then such Member shall be deemed to have
resigned as of the date any applicable cure period lapses and shall be replaced
as provided in Section 3.2.
2.6.6 Redemption Rights of Defaulting Members. A Member whose
------------------------------------------
Ownership Interest(s) will be sold at foreclosure sale under this Section 2.6
shall have the right only until the transfer of such Ownership Interest(s) to
redeem the Ownership Interest(s) by payment, in cash, to the LLC of (a) all
costs and expenses, including legal fees associated with any enforcement
actions; ~) payment of all Deferred Capital Contributions associated with the
Ownership Interest(s) (whether called or not); (c) interest on all amounts owed
under (a) and (b) at the lesser of eighteen percent (18%) per annum or the
maximum rate allowed by law from the date such costs and expenses were incurred
in the case of (a) and from the date of delinquency in the case of (b).
Section 2.7 Limited Liability of Members. Notwithstanding anything to the
----------------------------
contrary herein contained, however, the liability of a Member for the operating
or other losses of the LLC shall in no event exceed, in the aggregate, the
amount of his Capital Contributions and obligations to make Deferred Capital
Contributions under Sections 2.1 and 2.5. Members shall not be obligated to
restore any negative Capital Account balances. No creditor or any party other
than the other Members shall have the right to enforce any obligation to make
Deferred Capital Contributions pursuant to Section 2.5 against the Members.
Section 2.8 Loans.
-----
2.8.1 Member's Loans.
---------------
(a) Member's Loans. Members may make a "Member's Loan" to the
---------------
LLC for any purpose determined to be necessary or desirable
by the holders of a majority of the
Ownership Interests. The Members shall give ten (10) days
written notice of such recommendation which shall be
approved or rejected as provided in Section 6.14.
(b) Repayment of Member's Loans. Member's Loans shall be repaid
---------------------------
as funds are available out of: (i) subsequent Capital
Contributions; (ii) cash proceeds generated from the
ownership and operation of the LLC's business; and/or (iii)
cash proceeds generated from the LLC Property. Member's
Loans shall be repaid prior to any distribution to Members
under Article 4.
(c) Interest Rate. Member's Loans to the LLC shall bear interest
-------------
at an annual rate of two percent (2.00%) over the Prime Rate
at the time such loan is made, or the then legal maximum
rate, whichever is lower, unless otherwise approved by
Members holding a majority of the Ownership Interests. The
Prime Rate shall be adjusted (increased or decreased) every
six months during the period of the loan.
(d) Obligation to Loan. No Member shall in any way be obligated
-------------------
or required to make loans to the LLC except as specifically
set forth herein. If a Member's Loan is to be made, all
Members shall have an opportunity, but not an obligation, to
participate in the loan on the basis of their Ownership
Interests.
ARTICLE 3- MANAGEMENT OF LLC AND AGREEMENTS AMONG MEMBERS
----------------------------------------------
Section 3.1 Authority of the Managing Member. Except as expressly provided
--------------------------------
to the contrary in this Agreement, the Managing Member shall have co-existent
authority with the Members over the daily routine and ordinary management and
control of the LLC business. Except as expressly provided in this Agreement or
as expressly directed by a vote of the holders of a majority of the Ownership
Interests, the Managing Member shall have no additional authority regarding
management of the LLC. All of the authority to manage the LLC and make all
decisions and bind and obligate the LLC shall remain with the Members. The
Members shall retain all rights to manage the LLC, which shall include, but not
be limited to, the following:
(a) take all action necessary or desirable to acquire the Property
and, own, manage and operate the Business of the LLC as set forth herein;
(b) sell or mortgage or otherwise dispose of or encumber or take any
action with regard to the LLC Property;
(c) acquire such insurance as the Members deem reasonable and
advisable;
(d) pay, collect, compromise, arbitrate or otherwise adjust any and
all claims or demands of or against the LLC;
(e) act for the LLC in all transactions concerning the LLC Business
and/or the LLC Property or underlying property, including execution on
behalf of the LLC of all documents in connection therewith;
(f) employ at the LLC's expense such persons, firms, companies,
agents, employees, attorneys, accountants, financial advisors, business
consultants, and such other professional personnel, including Affiliates of
the Members;
(g) establish bank accounts for the LLC funds, authorize designees to
disburse such funds on behalf of the LLC, and for such purpose;
(h) negotiate with and compensate, as required, any governmental
authorities regarding assessments, taxes and related matters;
(i) invest LLC funds in any form of bank accounts, government
obligations, stocks, bonds or any other investment;
(j) admit Members to the LLC as provided herein;
(k) distribute to Members their share of Distributable Net Proceeds;
(1) perform all other acts reasonably necessary in connection with the
LLC business.
The execution and delivery of any instrument described above that is signed by
any Member shall be sufficient to bind the LLC. Notwithstanding the above,
Members holding a majority of the Ownership Interests shall approve any action
regarding the Property or the Business of the LLC which falls outside of the
routine day-to-day management of the LLC.
Section 3.2 Liability of Members, Indemnification. No Member shall be
----------------------------------------
liable under a judgment, decree or order of a court, or in any other manner, for
any debt, obligation or liability of the LLC. A Member of the LLC shall not be
personally liable to the LLC or its Members for monetary damages for breach of
fiduciary duty, except for liability for any acts or omissions which involve
intentional misconduct, fraud or knowing violation of law or for a distribution,
redemption or purchase of or with respect to a Member's Ownership Interest in
the LLC in violation of Missouri law. Any repeal or modification of this Section
by the Members of the LLC shall be prospective only, and shall not adversely
affect any limitation on the personal liability of a Member of the LLC existing
at the time of such repeal or modification or thereafter arising as a result of
the acts or omissions prior to the time of such repeal or modification. The LLC
shall indemnify, save and hold harmless a Member from any loss, damage,
liability or expense incurred or sustained by him by reason of any act performed
by him or any omission of his, for or on behalf of the LLC and in furtherance of
its interest; provided, however, that such right to indemnification shall not
apply to or relieve the Member from liability for gross negligence or willful
malfeasance.
Section 3.3 Compensation of Managing Member, Members or
------------------------------------------------
Affiliates.
-----------
3.3.1 Compensation/Reimbursement of Expenses. No Member,
----------------------------------------
including the Managing Member, shall receive compensation for managing the LLC.
The Members will receive reimbursement for all direct out-of-pocket expenses
incurred for and on behalf of the LLC when acting within the course and scope of
their authority hereunder.
Section 3.4 Title to Property. Title to the Property and to all other LLC
-----------------
assets shall be held in the name of the LLC.
Section 3.5 Special Power of Attorney. Each Member hereby constitutes and
-------------------------
appoints the Managing Member of the LLC, or any of them, and any successor of a
Managing Member, and any duly appointed officer or general partner of an entity
which is a Managing Member, with full power of substitution, the true and lawful
attorney-in-fact of the undersigned, with the power to execute, acknowledge,
record, file and/or publish:
(a) any amendment to the Articles pursuant to the Act or the laws of
any state in which such documents are required to be filed to; provided
such document is not inconsistent with the terms of this Agreement;
(b) any instrument, certificate, or document required by any
regulatory agency, laws of the United States, any state, or any other
jurisdiction in which the LLC is doing or intends to do business or which
the Members direct, by majority vote, the Managing Member to file or
record; provided that such instrument, certificate or document is not
inconsistent with the terms of this Agreement as in effect at that time;
and
(c) any documents which may be required to continue the business of
the LLC, to admit additional or substitute Members or to dissolve and
terminate the LLC pursuant to the terms of this Agreement.
This power of attorney is expressly limited to those matters set forth in (a) -
(c) above and no Managing Member shall take any action as attorney-in-fact for
the Members beyond the authority expressly set forth in this Agreement or alter
the rights of the Members with regard to allocations, distributions or other
financial matters, voting, receipt of reports and information, or limitations on
actions by a Managing Member under the Agreement, unless the Member has given a
power of attorney to a Managing Member expressly for that purpose.
The foregoing grant of authority:
(a) is a special power of attorney coupled with an interest in favor
of the Managing Member and as such, shall be irrevocable and shall survive
and shall not be affected by the subsequent disability, incapacity, death,
incompetency, dissolution, or insanity of all or any of the Members;
(b) may be exercised for each Member by a signature of any Managing
Member or by listing the names of all the Members and executing any
instrument with the single signature of the Managing Member acting as
attorney-in-fact for all of them; and
(c) shall survive the assignment by a Member of the whole or any
portion of such Member's interest in the LLC, except that where the
assignee of the entire interest of a Member has furnished a power of
attorney and has been approved by the Members for admission to the LLC as a
substitute Member, this power of attorney shall survive the assignment for
the sole purpose of
enabling the Managing Member to execute, acknowledge, and file any
instrument necessary to effect the substitution, and this power shall
terminate thereafter.
ARTICLE 4- DISTRIBUTIONS AND ALLOCATIONS
Section 4.1 Distributions and Allocations Generally. All distributions of
---------------------------------------
LLC funds to the Members and allocations of taxable income and loss shall be
allocated according to this Article 4 and shall be made in accordance with good
and sound business and accounting practices at such times as the Members, by
majority vote, may determine in their sole discretion. The LLC shall account for
income, losses and distributions as if the LLC were a partnership, and shall
file all tax returns and reports on that basis under Subchapter K of the Code.
Section 4.2 Distributable Net Proceeds. Subject to Section 4.1, the
----------------------------
Distributable Net Proceeds shall be allocated and distributed periodically to
the Members in the Ownership Interest Percentages set forth on Exhibit "B" as
they may change from time to time.
Section 4.3 Net Losses. Income and Gain. Except as otherwise provided in
-----------
the Special Allocations Provisions, if any, set forth in Exhibit "C", all
taxable income, loss or capital gains or losses, or any other item reportable by
the LLC for tax purposes shall be allocated in the Ownership Interest
Percentages set forth in Section 4.2 and Exhibit "B" as they may change from
time to time.
Section 4.4 LLC Reserves. The LLC shall at all times maintain sufficient
-------------
reserves to pay its debts as they become due in the normal course of business.
LLC Reserves that are distributed to the Members shall be allocated and
distributed to the Members as provided above for Distributable Net Proceeds.
ARTICLE 5- BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS
Section 5.1 Books and Records. At all times during the LLC's existence,
-------------------
the Members shall keep or cause to be kept true and accurate books of account.
Such books and records shall be kept in accordance with the method of accounting
selected by the Members for federal income tax purposes. Each Member, or his
duly appointed representative, shall, at all reasonable times, have access to
such books. The Members shall maintain, at the registered office of the LLC, the
following:
(a) a list of all Members' names and addresses together with their
Capital Contributions;
(b) a copy of the Articles, this Agreement and all amendments thereto;
(c) copies of minutes of all meetings, including written consents
obtained from Members in lieu of meetings;
(d) copies of LLC tax returns and financial statements; and
(e) any other record required to be maintained by law.
Section 5.2 Annual Reports. Within seventy-five (75) days after the end of
--------------
each fiscal year, the Managing Member shall cause to be delivered to each person
who was a Member at any time during the fiscal year, an annual report containing
the following:
(a) unaudited financial statements of the LLC, including without
limitation, a balance sheet as of the end of the LLC's fiscal year, and a
statement of income and expenses;
(b) a general description of the activities of the LLC during the
period covered by the report; and
(c) a report of any material transactions between the LLC and any
Members, or any of their Affiliates, including fees or compensation paid by
the LLC and the services performed by such Members or any such Affiliates,
for such fees and compensation.
Section 5.3 Tax Information. The Managing Member shall deliver to each of
---------------
the Members, within seventy-five (75) days after the expiration of each tax year
of the LLC, IRS Form 1065, including a "K-l" Statement and applicable state tax
return information. This statement shall show the allocation of profit or loss
of the LLC for federal income tax purposes, including all separately stated
items, to each Member. The Members shall arrange for the preparation and filing
of all necessary information returns of the LLC and shall make all necessary
elections, determinations and allocations. The LLC shall bear all costs in
connection with the requirements of this Section.
Section 5.4 Bank Accounts. The Members shall, in the name of the LLC, open
-------------
and maintain a bank account or accounts to deposit all LLC funds, and shall use
such funds solely for the LLC's business.
Section 5.5 LLC Elections. The LLC shall be taxed as a partnership for tax
-------------
purposes. The Managing Member shall make all elections for the LLC provided for
in the Code as directed by the Members, including, but not limited to, the
elections provided for in Section 754 of the Code.
Section 5.6 Fiscal Year. The fiscal year of the LLC (shall be the calendar
-----------
year) shall end on the 31st day of December in each year.
ARTICLE 6- MEMBERS' RELATIONSHIPS
Section 6.1 Transfer of a Member's Interest--Approval. Except as provided
-----------------------------------------
in this Article 6, no Member shall sell, transfer, assign, convey, encumber or
otherwise dispose of; by operation of law or otherwise, the whole or any part of
his interest in the LLC, without the prior express written consent of the
managing member. The approved right regarding the transfer of ownership's
interests may be unreasonably withheld. Any such unauthorized transfer shall not
vest the transferee with any rights as a Member other than the transferor's
right to receive distributions.
Section 6.2 Assignment of Member's Interest as Security for Loan. A Member
----------------------------------------------------
shall not be entitled to assign his Ownership Interest as security for a loan,
unless approved under the same criteria as a transfer under Section 6.1.
Section 6.3 Right of First Refusal. If a sale or other transfer of a
-------------------------
Member's interest to a third party is otherwise approved, the remaining Members
shall have a right of first refusal to match any bona fide offer to purchase a
Member's interest in the LLC on the same terms and price as such bona fide
offer, to be elected and exercised within thirty (30) days after delivery of a
Sale Notice by the selling Member to the remaining Members. The Members shall
have the right to purchase not less than all of such Member's interest, to be
allocated pro rata based on the purchasing Members' Ownership Interests at such
time.
Section 6.4 Additional Restrictions. No Member shall sell, transfer or
------------------------
dispose of, by operation of law or otherwise, all or any part of his interest in
the LLC except by written instrument satisfactory to the Members, accompanied by
such assurance of the genuineness and effectiveness of each such signature. No
assignment shall be valid or effective unless such assignment is in compliance
with the conditions contained in this Article 6. Any unauthorized assignment or
transfer shall be void ab initio.
-- ------
Section 6.5 Legend Conditions. Any documents and records evidencing a
------------------
Member's interest in the LLC, whether issued originally or subsequently, shall
bear and be subject to legend conditions as follows:
"Ownership Interests evidenced by this certificate or otherwise may not be
sold, assigned, transferred or otherwise disposed of to any person or entity,
unless authorized or approved pursuant to the Articles of Organization and
Operating Agreement. Any unauthorized assignment or transfer shall be void ab
--
initio. Assignees of an Ownership Interest may become substituted Members only
------
as provided in the Articles of Organization and Operating Agreement."
Section 6.6 Substituted Members. No assignee of the whole or any portion
--------------------
of a Member's Ownership Interest (which shall include any purchaser, transferee,
donee, testate or intestate transferee or any other recipient receiving such
Ownership Interest for any reason) shall have the right to become a substituted
Member in place of his assignor, unless:
(a) his assignor designates such an intention in the instrument of
assignment;
(b) the Members holding fifty percent (50%) of the remaining Ownership
Interests consent (which consent may be unreasonably withheld);
(c) the form and substance of the assignment instrument are
satisfactory to the Members;
(d) the assignor and assignee execute and acknowledge any other
instrument or instruments necessary or desirable to effectuate the
admission, including, but not limited to, a power of attorney with
provisions more fully described in this Agreement;
(e) the assignee accepts, adopts and approves in writing all of the
terms and provisions of this Agreement and any amendments; and
(f) the assignee pays all reasonable expenses connected with the
admission. After all necessary approvals have been obtained, transfers
shall be considered effective for LLC
administration purposes on the first day after the execution of all necessary
documents by the assignor, the assignee and the Managing Member, as appropriate.
Except for a transferee admitted as a Member pursuant to this Section, any
transferee shall hold his Ownership Interest as an assignee and shall at all
times be entitled to the proportionate share of such transferee's interest in
the profits of the LLC distributed in accordance with the terms and conditions
of this Agreement, but such transferee shall not become a Member and shall have
no voting rights in any LLC decisions or be entitled to any other rights of a
Member unless he becomes a Member.
Section 6.7 Withdrawal of a Member. Except as provided in this Agreement,
----------------------
no Member shall be entitled to withdraw or retire from the LLC. The amount that
such Member is entitled to shall be determined as provided in Section 2.6.3 and
shall include any discount in value set forth therein and all other expenses
associated with a withdrawal transaction and determination of value. A Member
shall be liable to the LLC and other Members for any damages caused by any
withdrawal or attempted withdrawal. The LLC shall not be required to make any
distributions to such Member until the amount of such damages are finally
determined and shall have the right to set off such damages against any
distributions.
Section 6.8 Terminating Events. The death, insanity, dissolution,
-------------------
termination, retirement, expulsion or Bankruptcy of a Member shall dissolve and
terminate the LLC, unless Members owning fifty percent (50%) of the remaining
Ownership Interests elect to continue the LLC. Upon the death, dissolution,
termination, incapacity or Bankruptcy of a Member, the personal representative,
trustee or successor in interest of the deceased, incapacitated, dissolved or
bankrupt Member shall become an assignee of the Ownership Interest of the
deceased, incapacitated, dissolved or bankrupt Member; provided, however, that
such assignee may become a substituted Member only in compliance with the terms
set forth in Section 6.6.
Section 6.9 Repurchase of Ownership Interests. The LLC shall have the
------------------------------------
right to purchase any Member's Ownership Interests in the LLC upon request of a
Member upon terms mutually agreeable to it and the Member if the purchase does
not impair the capital or the operation of the LLC and is approved by Members
holding a majority of the remaining Ownership Interests. The LLC is under no
obligation to ever repurchase any Member's interest in the LLC, and there is no
assurance that the LLC will ever repurchase any Member's interest in the LLC.
Section 6.10 Rights of Members to Receive Property Other Than Cash. No
--------------------------------------------------------
right is given to a Member to demand and receive property other than cash in
return for his Capital Contributions.
Section 6.11 Encumbrance of a Member's Interest. Except as otherwise
--------------------------------------
provided herein, no Member may encumber in interest in the LLC.
Section 6.12 Dissolution or Partition. Except as provided in Section
--------------------------
7.1(c), no Member shall have the right to, and each Member hereby agrees that it
shall not, seek to dissolve or cause the dissolution of the LLC or to seek to
partition or otherwise cause a partition of the LLC Property, whether by court
action or otherwise, it being agreed that such a dissolution (or attempted
dissolution) or partition (or attempted partition) would cause a substantial
hardship to the LLC and the remaining Members.
Section 6.13 Right to Purchase Other Property. Nothing contained in this
---------------------------------
Agreement shall be deemed to restrict in any way the freedom of each Member to
conduct any other business or any other
activity whatsoever, including without limitation, the acquisition, ownership,
development, construction, leasing, operation, management and sale of real
property, without notice or accountability to the LLC or Members, without
participation by the LLC or Members, and without liability to any of them, even
if such business or activity competes with the LLC's business.
Section 6.14 Meetings of, or Actions by, the Members. Meetings of the
-------------------------------------------
Members to vote upon any matters under this Agreement or any amendments, may be
called at any time by any remaining Members, or by one or more Members who hold
at least fifty percent (50%) of the then Ownership Interests by delivering
written notice to the remaining Members, either in person or by first class mail
that a meeting will be held not less than ten (10) days nor more than sixty (60)
days after the mailing of the notice of the meeting. A detailed statement of the
proposed action, including a verbatim statement of the wording of any resolution
proposed for adoption by the Members and of any proposed amendment to this
Agreement shall be included with the notice of a meeting. The meeting shall be
held at the principal office of the LLC. All expenses of the meeting and
notification shall be borne by the LLC. Only Members who are not in default
shall be entitled to vote as Members.
Members who hold a majority of the then Ownership Interests eligible to
vote on any matter shall constitute a quorum for the transaction of that
specific action at any meeting. Personal presence of the Members shall not be
required; provided that an effective written consent to or rejection of such
proposed action is submitted. Attendance and voting in-person by a Member at any
meeting shall revoke any previously submitted written consents or rejections of
the proposed action. Submission of a later written consent or rejection with
respect to any action shall revoke an earlier one as to that action.
Any matter on which the Members are authorized to take action, under this
Agreement or under law, which may be taken by the Members without a meeting and
shall be as valid and effective as an action taken by the Members at a meeting,
if written consents to such action by the required number of Members are signed
by all the Members entitled to vote upon such action at a meeting.
Section 6.15 Election and Removal of Managing Member.
--------------------------------------------
6.15.1 Election of Managing Member. The Members may initially
------------------------------
appoint or elect by majority vote of the Ownership Interests (excluding the
Ownership Interests held by the Managing Member) a Managing Member to perform
the duties set forth in Section 3.1. Such appointment shall continue until such
Managing Member shall resign, shall be removed, or shall otherwise be unable to
serve.
6.15.2 Removal of Managing Member. During the term of this LLC, a
--------------------------
Managing Member may be removed for any reason by a vote of those Members who
hold a majority of the then Ownership Interests (excluding the Ownership
Interests held by the Managing Member).
6.15.3 Status of Managing Member. A Managing Member must always
---------------------------
be a Member in good standing. There shall be no requirement that the LLC shall
have a Managing Member at any time. Such office shall be filled in the
discretion of the Members.
6.15.4 Resignation of Managing Member. A Managing Member may
---------------------------------
resign on thirty (30) days notice to the Members. A Managing Member who shall
voluntarily or involuntarily be
subject to Bankruptcy or who shall have defaulted as a Member for failure to pay
a Deferred Capital Contribution under Section 2.5 shall be deemed to have
resigned.
ARTICLE 7- DISSOLUTION AND WINDING UP
Section 7.1 Dissolving Events. This LLC shall be dissolved upon the
------------------
occurrence of any one of the following events:
(a) on the dissolution, termination, death or Bankruptcy of a Member
unless Members holding fifty percent (50%) of the remaining Ownership
Interests elect to continue the business within ninety (90) days after the
occurrence of such event
(b) on the voluntary sale, condemnation or foreclosure of all,
substantially all of the LLC property; or
(c) on the election to dissolve evidenced by the affirmative vote or
written consent of all Members.
Section 7.2 Liquidation and Final Distribution of Proceeds. On dissolution
----------------------------------------------
for any reason whatsoever, the LLC shall thereafter engage in no further
business other than that necessary to wind up the business and net profits or
net losses during the winding-up period shall be allocated in the same ratio as
net profits and net losses were allocated prior to dissolution. The Members
shall direct the Managing Member to file any required statement of intent to
dissolve. The proceeds from the liquidation of LLC assets shall be distributed
in the following order:
(a) the expenses of liquidation and the debts of the LLC shall be
paid;
(b) to the establishment of any reserves which the Members may deem
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the LLC. Such reserves shall be paid to a trust to be held
for the purpose of disbursing such reserves in payment of any such
liabilities or obligations and, at the expiration of such period as the
Members shall deem advisable, the trust balance remaining shall be
distributed in the manner provided below by this Section 7.2;
(c) to the Members in accordance with their positive Capital Account
balances (after all allocations of gain or loss) in the manner provided in
Section 4.3 within the later of: (i) the end of the taxable year in which
the liquidation occurs; or (ii) ninety (90) days from the date of
liquidation;
(d) any remainder in accordance with the Members! Ownership Interest
percentages.
Any shortages in any category (a), (b) or (c) above shall be allocated first
based on the priority of claims and then ratably among claims and obligations of
equal priority.
Section 7.3 Time of Liquidation. A reasonable time shall be allowed for
---------------------
the orderly liquidation of the LLC's assets and the discharge of liabilities to
creditors so as to enable the Members to minimize the losses attendant upon a
liquidation.
Section 7.4 Liquidation Statement. Each of the Members shall be furnished
---------------------
a statement prepared by a Member so directed, which shall set forth assets and
liabilities of the LLC as of the date of complete liquidation. Upon the Members
complying with the foregoing liquidation distribution plan, the Members shall
cease to be members, and shall execute, acknowledge and cause to be filed any
appropriate certificate of cancellation of the LLC.
ARTICLE 8 - MISCELLANEOUS
Section 8.1 Voting and Approval. All voting and approvals by Members under
-------------------
this LLC Agreement shall be by Ownership Interest and Ownership Interest
Percentage, and not by per capita vote of the Members. A "majority vote" shall
mean a vote of more than fifty percent (50%) of the Ownership Interests entitled
to vote and voting or approving any matter. Those Members who are in default
shall not be allowed to vote on any matter and their Ownership Interests shall
be excluded (from both numerator and denominator) in determining voting
percentages. Likewise, the Ownership Interests of Members in certain other
situations as specified in the LLC Agreement (such as Members requesting
approval of a transfer of their Ownership Interest) shall be excluded in
determining voting percentages.
Section 8.2 Amendment of the Agreement. Except as otherwise stated in this
--------------------------
Agreement, the approval of the Members who hold at least fifty percent (50%) of
the then Ownership Interests shall be required to amend this Agreement, it being
hereby agreed, however, that no change in the amount of Capital Contributions
may be made without the written consent of all Members.
Section 8.3 Notices. Any and all written communications required or
-------
permitted by this Agreement or by law shall be in writing and shall be deemed
served or given: (a) when personally delivered; or, (b) one business day
following its deposit in the United States mail, postage prepaid, addressed to
the Member(s) to be so served at the addresses set forth on the signature page.
Any Member may change his forwarding address for notices by delivering written
notice to the remaining Members of such change of address.
Section 8.4 Binding Arbitration. All disputes and controversies between
--------------------
any of the Members relating to the subject matter of this Agreement shall be
resolved by arbitration in Kansas City, Missouri before a proceeding
administered by the American Arbitration Association and in accordance with the
rules of the American Arbitration Association. In connection therewith,
discovery shall be permitted pursuant to the provisions of the Missouri and
Federal Rules of Civil Procedure. Any matter determined by arbitration as
aforesaid shall be final and binding upon all of the parties thereto.
Section 8.5 Tax Controversies. Should there be any controversy with the
------------------
Service or any other taxing authority involving the LLC or an individual Member
or Members, the outcome of which may adversely affect the LLC either directly or
indirectly, the LLC may incur expenses it deems necessary and advisable in the
interest of the LLC to oppose such proposed deficiency, including, but not
limited to, attorneys' and accountants' fees. Xxxxx Xxxxxx is hereby designated
as the "Tax Matters Partner" pursuant to the requirements of Section 6231 (a)(7)
of the Code and in such capacity shall represent the LLC in any disputes,
controversies or proceedings with the Service. The Tax Matters Partner shall
take such action to make the remaining Members "Notice Partners" under I.R.C.
6223. The Tax Matters Partner shall only take such action as is approved by
holders of a majority of Ownership Interests.
Section 8.6 Captions and Pronouns. Any titles or captions of sections
-----------------------
contained in this Agreement are for convenience only and shall not be deemed
part of the text of this Agreement. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as required for the identification of the person or persons, firm or firms,
corporation or corporations.
Section 8.7 Binding Effect. Except as otherwise herein provided, this
---------------
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their heirs, executors, administrators, successors and all persons hereafter
holding or having an interest in this LLC, whether as assignees or otherwise.
Section 8.8 Entire Agreement. This Agreement contains the entire
-----------------
understanding between the parties respecting the within subject matter and
supersedes any prior understanding and agreements between them with respect
thereto. All representations, agreements, arrangements or understandings, oral
or written, between and among the parties hereto are fully expressed herein.
Section 8.9 Choice of Law. This Agreement is made pursuant to and shall be
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construed in accordance with the laws of the State of Missouri.
Section 8.10 Severability. If any term or provision of this Agreement or
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the performance thereof shall be invalid or unenforceable to any extent, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement, and this Agreement shall be
valid and enforced to the fullest extent permitted by law.
Section 8.11 Rebates, Kickbacks and Reciprocal Arrangements. No Member nor
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its Affiliates shall receive any rebates or kickbacks or participate in any
reciprocal business arrangements that would circumvent any federal or state
securities laws or participate in any reciprocal business arrangements that
would circumvent the restrictions against dealing with affiliates or promoters
or would lower the profits or increase the losses of the LLC.
Section 8.12 Counterparts and Execution. This Agreement may be executed in
--------------------------
multiple counterparts, each of which shall be deemed an original Agreement, and
all of which shall constitute one Agreement among each of the parties,
notwithstanding that all of the parties are not signatories to the original or
the same counterpart, to be effective as of the day and year first set forth
above. This Agreement may also be executed by facsimile followed by overnight
transmission of the original execution copy.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
ADDRESSES: MEMBERS:
eQuorumNet
By /S/ Xxxxx Xxxxxx
Name Xxxxx Xxxxxx
Title Manager
STATE OF Missouri )
)SS
COUNTY OF Xxxxxxx )
On this 23rd day of August, 1999, before me appeared Xxxxx Xxxxxx
to me personally known who being by me duly sworn, did say that he is the
manager of eQuorumNet, a Nevada corporation, and the seal affixed to the
foregoing instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed on behalf of said corporation by authority of
its board of directors, and said Xxxxx Xxxxxx acknowledged said instrument to be
the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed
my official seal the day and year last written above.
S/ X. X. X'Xxxx XX
Notary Public
My Commission Expires: 08/08/02
EXHIBIT "A"
LLC Property
NONE
EXHIBIT "B"
Capital Contributions
Member Capital Contribution Ownership Interest
====== ==================== ==================
eQuorumNet $4,133.00 100%
