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1 July 2004 A NORTH CAROLINA MANAGER-MANAGED LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT ("AGREEMENT") of XYZ INVESTMENTS, LLC (the "Company), a limited liability company organized pursuant to the North Carolina Limited Company Act, is executed effective as of the 3RD day of SEPTEMBER, 1999, by and between the Company and the persons executing this Agreement as Members. WITNESSETH WHEREAS, JOHN Q. INVESTOR, WILLIAM A, SMITH, and BOB Q. INVESTOR have organized a North Carolina Manager-Managed Limited Liability Company pursuant to the North Carolina Limited Liability Company Act through the filing of Articles of Organization effective SEPTEMBER 3, 1999; WHEREAS, the undersigned Members and the Company have reached written agreement as to the affairs of the Company as outlined in this Amended Operating Agreement; WHEREAS, the undersigned Members and the Company have reached agreement on the appointment of a Manager of the Company; WHEREAS, the undersigned Members and the Company have reached agreement as to the terms upon which a Membership Interest shall be purchased or redeemed by the Company and the Members and understand that any and all rights or restrictions pertaining thereto are representative of a bona fide business arrangement which is not a device to transfer property to the natural objects of the transferor's bounty for less than full and adequate consideration in money or money's worth and at the time of its creation, such rights or restrictions are comparable to similar arrangements entered into by persons in an arm's length transaction; WHEREAS, the undersigned Members intend that the Company be taxed for federal and state income tax purposes as a partnership and not as an association; WHEREAS, the undersigned Members desire to operate the Company in lawful business for which limited liability companies may be organized under the Act;
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WHEREAS, each party signing this Agreement understands that this Agreement contains legally binding provisions, has had the opportunity to consult with a lawyer, and has either consulted a lawyer or consciously decided not to consult a lawyer; and
WHEREAS, as of 1 July 2004, the undersigned members wish to amend the Operating Agreement as reflected herein; NOW THEREFORE, based on the mutual promises and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree that the rights and obligations of the parties and the administration, operations, dissolution and termination of the Company shall be governed accordingly: ARTICLE I DEFINITIONS Certain terms used in this Agreement shall have the meanings (unless otherwise expressly provided in the Agreement) set forth in the attached Appendix A. ARTICLE II BACKGROUND INFORMATION ON COMPANY OPERATIONS A. Formation; Type of LLC Selected.
The Company was formed upon the effective time of filing of the Articles of Organization of the Company by the Secretary of State. The parties to this Agreement acknowledge that the Company is a "Manager-Managed LLC", in which the Members of the Company are not necessarily Managers by virtue of their status as Members. B. Name of Company.
The business and affairs of the Company shall be conducted under the name XYZ INVESTMENTS, LLC. The name of the Company may be changed from time to time by amendment of the Articles of Organization. The Company may transact business under an assumed name by filing an assumed name certificate in the manner prescribed by Chapter 66 of the North Carolina General Statutes. C. Registered Office and Registered Agent.
The Company's registered office shall be 9 Pack Square, Suite 204, Asheville, NC 28801, and the name of its initial registered agent at such address shall be JOHN Q. INVESTOR. The registered agent of the Company shall forward to the Company at its last know address any notice, process, or demand that is served on the registered agent. D. Principle Office of Company.
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The principle office of the Company within the State of North Carolina initially shall be located at 9 Pack Square, Suite 204, Asheville, NC 28801. The Company may locate its principle office at any other place or places, as the Manager(s) may from time to time deem necessary or advisable. E. Term.
The Company shall continue in existence until the close of the Company's business on 1 January 2050, as specified in the Company's Articles of Organization, unless the Company is earlier dissolved and its affairs wound up in accordance with the provisions of this Agreement or the Act. If permitted by the Act, such term may be extended by a Majority in Interest of all Members. F. Purposes and Powers.
1. The Company may engage in any lawful business for which limited liability companies may be organized under the Act of Organization including, but not in any way limited to, the ability of the Company to invest its assets in lieu of making distributions. 2. The Company shall have the same powers as an individual to do any and all things necessary and convenient to carry out the business and affairs of the Company, including, without limitation, the powers listed in N.C.G.S. §57C-2-02 of the Act, The Company shall carry out the foregoing activities pursuant to the arrangements set forth in the Articles of Organization and this Agreement. G. Annual Report.
The Company shall file with the Secretary of State an annual report setting forth the information required in N.C.G.S. § 57C-2-23(a). The annual report shall be delivered to the Secretary of State each year within sixty (60) days immediately following the last day of the month in which the Company was organized. The Manager of the Company shall ensure that the annual report is timely filed and that information listed therein is current H. Required Records.
The Company shall maintain at its principal office (or such other location selected by the Manager) the records required to be maintained under §57C-3-04 of the Act, which shall include the following: (I) information regarding the status of the business and the financial condition of the Company; (2) promptly after becoming available, a copy of the Company's federal and state income tax returns for the year; (3) a current list of the name and last known business, residence, or mailing address of each Member; (4) a copy of the Articles of Organization and this Agreement, and any amendments thereto; and (5) information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each Member, and the property and services that each Member has agreed to contribute in the future, and the date on which each became a Member. I. Books of Account and Other Records.
1. The Company shall maintain the Company's books and records and shall determine all items of Income, Loss, Net Income and Net Loss in accordance with the method of accounting selected by the Members consistently applied. All of the records and books of account of the Company, in whatever form maintained, shall at all time be maintained as set forth in this Agreement and shall be open to the inspection and examination of the Members as set forth in Paragraph J of ARTICLE III.
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setting forth all of the terms and conditions for admission of the Member. capital contribution. and Membership Interest for each of the initial Members of the Company are reflected in Schedule I attached hereto and made a part hereof. loss. Membership Interest In representation of ownership in the Company. The terms governing such accounts initially shall be determined by the Manager(s) and withdrawals from such bank accounts shall be made only by such parties as may be approved in a banking resolution adopted by the Company. Such annual statement may be audited or unaudited as required by the Managers. 1 JULY 2004 Page 4 of 31 . and shall provide to each person who at any time during the fiscal year was a Member with an annual statement (including a copy of Schedule K. in such amounts and percentages as may be determined by the terms and conditions of any Subscription Agreements accepted by the Company or as determined by the Members of the Company. with the initial Members and the Company having further executed Subscription Agreements and attached the same to this Agreement. The Manager shall cause the Company to file a Federal and State Income tax return and all other tax returns required to be filled by the Company for each fiscal year or part thereof. gain. Bank Accounts. A Capital Contribution Agreement substantially similar in form to that which is attached as part of Schedule I shall be executed by any contributing Member and the Company. Membership interest (as reflected by Membership Units) shall be issued in exchange for contributions of cash or property.I to Internal Revenue Service Form 1065) indicating such Member's share of the Company's income. with said resolution kept among the records required to be kept by the Company under the Act. expense and other items relevant for Federal and State Income tax purposes.2. ARTICLE III MEMBERSHIP A. K. The Members will determine when and for what consideration the Company's records kept in accordance with the preceding Paragraph H of ARTICLE II shall state the value and the nature of the contribution received by Company and the amount of Membership Interest received in return by the Member.00 Membership Units with Membership Certificates duly reflecting the signature of two Members. addresses. Subsequently Admitted Members. J. Initial Members. The Company acting by and through its Manager is authorized to issue 800. LLC. The bank account(s) of the Company shall be maintained in such banks or financial institutions approved by the Manager. Issuance of Membership Interest 1. The names. 2. All expenses in connection with the keeping of the books and record of the Company and preparation of audited and unaudited financial statements required to implement the provisions of this Agreement or otherwise needed for the conduct of the Company's business shall be borne by Company as an ordinary expense of its business. Company Tax Return and Annual Statement. or one Member and a Manager. B. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS.
trust. the Manager shall provide a certified Statement of Membership Interest (according to the records of the Company). the Member's guardian. Representative of Members. In the case of a Person acquiring a Membership interest directly from the Company. 1. If a Member is a corporation. including any authority the Member has under the terms of this Agreement to give a transferee the right to become a Member. limited liability company or other entity is dissolved or terminated. Representatives of Members Who Are Entities. 3. LLC. Acquiring a Membership Interest from Company. as of the date the statement is provided. or a portion thereof. without complying with the provisions set forth in ARTICLE IX. shall become a Member only if admitted to be a Member pursuant to aforementioned provisions and the provisions of Paragraph C of ARTICLE IX. or creditors. Acquiring a Membership Interest from a Member. General Rule How to Become a Member. C. Admission of Members. or other legal representative may exercise all of the Member's rights for the purpose of administering his or her person or property. A Person becomes a Member of the Company by acquiring a Membership Interest from a Member or directly from the Company. 5. however. conservator. A transferee of a Member’s Membership Interest. 4. or settling his or her estate. 6. beneficiaries. but only if he/she/its is admitted to be a Member by the unanimous consent of all Members in accordance with the provisions of Paragraph C of ARTICLE IX. to be a Member. and making final distributions of the entity's assets to its owners. he/she/its shall nevertheless be bound by this Agreement if then in effect. Certified Statements of Membership Interests. A Member may not voluntarily assign or transfer his/her/its Membership Interest. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. At the written request of a Member. stating the amount of Membership Interest owned. if such Person fails to execute such document. 2. In addition to any other requirements for admission set forth in this Agreement. executor. If a Member who is an individual is adjudged by a court of competent jurisdiction to be incompetent to manage his person or his property.Schedule I shall be amended by the Company as of the effectiveness of any transfer or subsequent issuance of any Membership Interest and kept with. D. Ceasing to be a Member. the powers of that Member may be exercised by its legal representative for the purpose of liquidating. administrator. and upon making the Capital Contributions specified in ARTICLE VII. Assignment/Transferability. a Person must not lack capacity or be prohibited from being a Member and must expressly assent to the provisions of this Agreement in writing. or any part thereof. E. partnership. 1 JULY 2004 Page 5 of 31 . the Person shall become a Member with respect to such Membership interest only with the unanimous consent of all Members. 3. Representative of Members who are Natural Persons. Preconditions for Admission as Member. or if an individual Member dies. winding up. compliance with the provisions of Paragraph C of ARTICLE IX.
G.S. following. In the case of a Member that is a corporation. or the appointment of a trustee. A Member ceases to be a Member of the Company upon the happening of any of the following "events of withdrawal". liquidation. readjustment. the mere pledge of. or encumbrance in or against. In the case of an individual Member. dissolution. unless such economic rights have been transferred by him/her/it or shall have been acquired from the Member upon the happening of an "event of withdrawal" (as defined below). receiver. §57C-4-07 (liability upon wrongful distribution). or liquidator for the Member or all or any substantial part of the member's properties without the Member's agreement or acquiescence. In the case of a Member that is a partnership or another limited liability company. the dissolution and commencement of winding-up of the partnership or limited liability company. the appointment of a trustee or receiver for. readjustment.If a Member ceases to be a Member of the Company by the terms of this Agreement. or regulation. He/she/it shall retain the right to receive distributions and allocations with respect to his/her/its economic rights. said Member automatically forfeits whatever management rights he/she/it has under the terms of this Agreement. The Member's removal as a Member in accordance with the provisions of Paragraph G. or granting of a security interest. all or part of a Membership Interest of a Member shall not cause the Member to cease to be a Member or the secured party to have the power to exercise any right or powers of a Member. The continuation of any proceeding against the Member seeking reorganization. lien. LLC. law. or (f) filing of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding described in this subparagraph. 6. for 120 days after the commencement thereof. law.G.C. a Member ceasing to be a Member by the terms of this Agreement shall not be released from his/her/its liability to the Company under N.C. composition. (c) being adjudicated a bankrupt or insolvent (or the Member has entered against him or her an order for relief in any bankruptcy or insolvency proceeding): (d) filing a petition or answer seeking any reorganization. dissolution. 4. arrangement. or liquidation of the Member or of all or any substantial part of Member's properties. or similar relief under any statute. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. or regulation. The Member's: (a) assignment of that Member's Membership Interest for the benefit of creditors. or acquiescence in. which appointment is not stayed or verified within 120 days. liquidation. §57C-4-02 (liability for contribution) and N. (b) filing of a voluntary petition in bankruptcy. 1. (e) seeking consent to. arrangement. the Member's death or adjudication by a court of competent jurisdiction as incompetent to manage the Member's person or property. the dissolution of the corporation or the revocation of its charter. 1 JULY 2004 Page 6 of 31 . Except as otherwise set forth in subparagraph 3. 3. In any event. or similar relief under any statute. 2. if any. composition.S. 5. or a transfer of fifty percent (50%) or more of its voting stock.
Members' Access to Information. but only if the Membership Interests of such other Members represent a Majority in Interest of all Membership Interests in the Company at that time. Unanimous Membership Approval or Consent for Certain Transactions/Events. or (3) amend or modify this Agreement or the Articles of Organization pursuant to Paragraph E of ARTICLE XI. The Company shall have thirty (30) days from the receipt of a written demand to provide the information requested. and must be made in good faith and for a proper purpose. and must be made in good faith and for a proper purpose.7. representative. No Voluntary Withdrawals of Members. (2) merge the Company into or with. 1. Any reasonable expenses incurred in the production of such information shall be borne by the Member requesting such information. Removal of Member Only by All Other Members. Neither any Member nor a successor. The demand shall describe with reasonable particularity the purpose and the records or AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. shall be required to: (I) admit any Person as a Member. J. Records. The demand shall describe with reasonable particularity the purpose and the records or information desired. No Member shall have the power or right to voluntarily withdraw from the Company nor shall any Member have the right to receive a return of his/her/its capital contribution. Legal title to all Company assets shall he held in the name of the Company. or consent of all Members. foreign or domestic. G. Any demand for Company information and records made by a Member pursuant to the provisions of this Paragraph J shall be made. A Member may be removed only by the unanimous act of all other Members. F. transferee nor assignee of such Member shall have any right. Subject to the procedures set forth in subparagraph 2. 8. The approval. I. LLC. In the case of a Member who is acting as a Member by virtue of being a trustee of a trust. 2. each Member shall have the right to obtain from the Company from time to time the records required to be maintained pursuant to Paragraph J shall be made. title or interest in or to any Company property or the right to partition any real or personal property owned by the Company. In the case of a Member that is an estate. the Member proposed for removal must be given no less than thirty (30) days written notice prior to the date of the meeting at which such removal will be acted upon by all other Members. Nature of Member's Interests. in writing. If a removal is to take place. following. The Membership Interest of each Member in the Company shall be intangible personal property for all purposes. in writing. H. 1 JULY 2004 Page 7 of 31 . the termination of the trust (but the substitution of a new trustee shall not be treated as an event of withdrawal). the distribution by the fiduciary of the estate's entire Membership Interest in the Company. agreement. another limited liability company.
The purposes of the annual meeting need not be enumerated in the notice of such meeting. at the principle office of the Company or at such other time and place within or without the State of North Carolina as shall be designated by the Members from time to time and stated in the notice of the meeting. except as otherwise provided by law or this Agreement. 1 JULY 2004 Page 8 of 31 . D. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Paragraph. The Company shall have thirty (30) days from the receipt of a written demand to provide the information requested. Quorum. Nothing herein shall prohibit the Company from maintaining its records in other than written form if the form is capable of conversation into written form within a reasonable time. to each Member of record entitled to vote at such meeting. Nothing herein shall render any Member or other Person liable for the debts and obligations of the Company for failing to keep or maintain the records or information subject to inspection herein. Annual Meetings of Members. A Majority in interest of all Members entitled to vote at a Meeting shall constitute a quorum at all meetings of the Members. Record Date. such determination shall apply to any adjournment thereof. An annual meeting of the Members shall be held prior to the end of the fiscal year. Once a quorum is AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. Special meetings of the Members maybe called by the holders of not less than forty percent (40%) of all of the Membership Interest (as reflected by Membership Units) issued by the Company or by the Manager. E. shall be the record date for such determination of Members.information desired. Notice of Meetings of Members. or Members entitled to receive payment of any distribution. stating the principal office of the Company as the location and the purpose or purposes for which the meeting is called. For the purpose of determining Members entitled to notice of any meeting of Members or any adjournment thereof. shall be delivered not less than ten (10) days nor more than sixty (60) days before the date of the meeting. ARTICLE IV MEETINGS OF MEMBERS A. 3. Business transacted at all special meetings shall be confined to the purpose or purposes stated in the notice. day and hour of the meeting. Written notice stating the place. Special Meetings of Members. LLC. and additionally in the case of a special meeting. as the case may be. 4. B. or to make a determination of Members for any other purpose. the date on which notice of the meeting is mailed or the date on which such distribution is declared. C. Any reasonable expenses incurred in the production of such information shall be borne by the Member requesting such information.
G. without notice other than announcement at the meeting. Except for matters listed in Paragraph I of ARTICLE III. a complete list of the Members entitled to vote at such meeting. or any adjournment of such meeting. Selection of a Manager. by Majority of the Manager(s) taken at a meeting or evidenced by a written consent in lieu thereof executed by a Majority of the Manager (s). preceding. Actions of Members. The Company shall be entitled to treat the holder of record of any Membership Interest as the holder in fact of such Membership Interest for all purposes. LLC. The Manager shall make. 1 JULY 2004 Page 9 of 31 . except as expressly provided by this Agreement or the laws of North Carolina . and accordingly shall not be bound to recognize any equitable or other claim to or interest in such Membership Interest on the part of any other person. However. Registered Members. All actions of the Members entitled to vote and provided for herein may be taken by written consent without a meeting. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection of any Member during the whole time of the meeting. the subsequent withdrawal from the meeting of any Member prior to adjournment or the refusal of any Member to vote shall not affect the presence of a quorum at the meeting. H. Any such action which may he taken by the Members without a meeting shall be effective only if the consents are in writing. however. the Articles of Organization. and any other matter for which the affirmative vote of the holders of a greater portion of the Membership Interests is required by the Act or this Agreement. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. If. until the holders of the requisite amount of Membership interest shall be present or represented. which list. (10) days before each meeting of Members. for a period often (10) days prior to such meeting. such quorum shall not be present at the opening of any meeting of the Members. F. and such participation in a meeting shall constitute presence in person at the meeting. with the address of and the amount of Membership Interest held by each. and are signed by all Members eligible to vote on such action. List of Members Entitled to Vote. the Members entitled to vote at such meeting shall have the power to adjourn the meeting from time to time.present at a meeting of the Members. shall be kept on file at the principal office of the Company and shall be subject to inspection by any Member at any time during usual business hours. failure to comply with the requirements of this paragraph G shall not affect the validity of any otherwise valid action taken at such meeting. Members may participate in any meeting of the Members by means of a conference telephone or similar communications equipment provided all persons participating in the meeting can hear one another. all decisions with respect to the management of the business and affairs of the Company shall he made by action of the Manager (or if more than one. ARTICLE V MANAGEMENT OF THE COMPANY A. set forth the action so taken. whether or not it shall have express or other notice of such claim or interest. Except as otherwise may be expressly provided by this Agreement. at least ten. Management Vested in Manager (s). or the Act. arranged in alphabetical order. the act of the Members shall be the affirmative vote of a Majority in Interest of the Members represented at the meeting who are entitled to vote.
1 JULY 2004 Page 10 of 31 . or (b) Any event that. Company shall he managed by a Member selected by a Majority in Interest of all Members (other than the Manager). with all of the powers and duties of the initial Manager. to make all decisions regarding those matters and to perform any and all other acts customary or incident to the management of the Company's business. or other applicable law.The Company shall be managed by a Manager. D. 2. with said withdrawal effective immediately upon such notice. Removal. The Manager (s) shall have full and complete authority. INVESTOR. unless no Member shall be able to serve. The Manager shall be a Member. initially JOHN Q. except only as to those acts as to which approval by the Members is expressly required by the Articles of Organization. B. Once elected. C. The Manager may voluntarily resign by providing written notice to all Members. The Manager (s) may delegate responsibility for the day-to-day management of the Company to any individual Manager or Person retained by the Manager (s) who shall have and exercise on behalf of the Company all powers and rights necessary or convenient to carryout such management responsibilities. Interim Management. who shall serve as Manager until the Members choose a replacement Manager in accordance with the terms of the following Paragraph D of this Article. 1. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. LLC. A Majority in Interest of all Members other than the Manager shall be required to elect a replacement Manager. would be deemed an event of withdrawal (as defined in ARTICLE III) with respect to such Manager. the Members may remove such Manager by the action of a Majority in Interest of the Members and elect a new Manager by the action of a Majority in Interest of the Members: (a) The Manager (s) willful or intentional violation or reckless disregard of he Manager's duties to the Company. or later as may be agreed by all of the Members who are not Managers. If any one or more of the following events occurs with respect to a Manager. this Agreement. Withdrawal. The Members shall elect a replacement Manager at a regular or special meeting of the Members. Replacement Manager. Upon the effective date of the removal or withdrawal of the Manager. the replacement Manager shall serve as Manager. if the Manager were a Member. The Manager shall be deemed to have involuntarily withdrawn as Manager of the Company if any of the "events of withdrawal" identified in Paragraph E of Article III occur with respect to such Manager and notice of such event is made know to each Member. the Act. with such voluntary withdrawal taking effect thirty (30) days after the date the Manager gives such notice to all Members. Withdrawal of a Manager. Removal. power. and discretion to manage and control the business of the Company. who shall serve until and unless removed by the Member (s) or until and unless he resigns from this position in accordance with the terms of this Article. or at a later date stated in the notice of withdrawal.
trade. for Company purposes. and improve.E. subject in all cases to the other provisions of this Agreement and the requirements of applicable law. and to own. (g) Execute or modify leases with respect to any part or all of the assets of the Company. convey. An act of a Manager that is not apparently for carrying on the usual course of the business of the Company does not bind the Company unless authorized in fact or ratified by the Members of the Company. releases and discharges. (b) Construct. powers. binds the Company. or modifications of such mortgages or deeds of trust. finance. refinance. and complete discretion. General Powers of Manager. or otherwise. maintain. to manage. the power to: (a) Acquire by purchase. administer. modify. (c) Sell. or extend any mortgages or deeds of trust which may affect any asset of the Company and in connection therewith to execute for and on behalf of the Company any extensions. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. in whole or in part. and the act of every Manager. any real or personal property. (d) Enter into agreements and contracts and to give receipts. or lease any real estate and any personal property. Signature Authority. sell. (h) Prepay. in connection therewith. control. amend. or exchange Company assets in the ordinary course of the Company's business. assign. renewals. in fact. tangible or intangible. unless the Manager so acting has. and to make all decisions affecting such business and affairs. including. (e) Purchase liability and other insurance to protect the Company's properties and business. F. LLC. lease. Binding the Company. and operate the business and affairs of the Company for the purposes herein stated. mortgage. (f) Borrow money for and on behalf of the Company. and authority. exclusive. operate. without limitation. and. The Manager shall have signatory authority to bind the Company and is an agent of the Company for the purpose of its business. (i) Execute any and all other instruments and documents which may he necessary or in opinion of the Manager desirable to carry out the intent and purpose of this Agreement. including execution in the name of the Company of any instrument for apparently carrying on in the usual way the business of the Company. The Manager shall have full. dispose. to delegate responsibility for the day-to-day management of the Company to any individual Manager or Person retained by the Managers who shall have and exercise on behalf of the Company all powers and rights necessary or convenient to carry out such management responsibilities. execute and deliver instruments authorizing the confession of judgment against the Company. no authority to act for the Company in the particular matter and the person with whom the Manager has knowledge of the fact that the Manager has no such authority. 1 JULY 2004 Page 11 of 31 .
but not limited to. except as provided in the Act for (i) acts or omissions which the Manager knew at the time of the acts or omissions were clearly in conflict with the interest of the Company. documents whose operation and effect extend beyond the term of the Company. ARTICLE VI LIMITATION OF LIABILITY AND INDEMNIFICATION OF MANAGERS A.including. Notwithstanding anything to the contrary in this Agreement. C. as amended from time to time. and responsibilities under this Agreement. The Company may also indemnify its employees and other representatives or agents up to the fullest extent permitted under the Act or other applicable law. provided that the indemnification in each situation is in writing and is first approved by Members owning a Majority in Interest of all Membership Interest at a meeting of the Members. The Company shall indemnify the Manager to the fullest extent permitted or required by the Act. Limitation of Liability. Other Rights. accounting. (j) Make any and all expenditures which the Manager. the accomplishment of the purposes of the Company. or Any other act requiring the approval or consent of the Members. without limitation. and the Company may advance expenses incurred by the Manager upon the approval of the Members and the receipt by the Company of an undertaking by such Manager to reimburse the Company unless it shall ultimately be determined that such Manager is entitled to be indemnified by the Company against such expenses. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. deems necessary or appropriate in connection with the management of the affairs of the Company and the carrying out of its obligations. B. No Manager of the Company shall be liable to the Company or its Members for monetary damages for an act or omission in such person's capacity as a Manager. or (ii) any transaction from which the Manager derived an improper personal benefit. (k) Enter into any kind of activity necessary to. including. 1 JULY 2004 Page 12 of 31 . or incidental to. in his or her sole discretion. LLC. and other related expenses incurred in connection with the organization and financing and operation of all the Company. the Manager shall not undertake any of the following without the approval of the Members: (a) (b) Any Capital Transaction. in connection with. and (l) Invest and reinvest Company reserves in short-term instruments or money market funds. Indemnification. all legal.
Loans by a Member to the Company shall not be considered Capital Contributions. the Members may elect to allow the remaining Members (the "Lending Members") to contribute to the Company. no Member shall be required to contribute any additional capital to the Company. and (iv) not be deemed to create any rights for the benefit of any other person or entity. pro rata by Membership Interest. administrators or other successors of an indemnity. with simple interest at an annual rate equal to the applicable federal rate then in effect such that a sufficient amount of interest will be charged with respect to such loan so as to avoid the imputation of Interest. both as to action in official capacities and as to action in another capacity while holding such office. In addition to the loans to the Defaulting Member provided for in this Paragraph. Capital Contributions. 1 JULY 2004 Page 13 of 31 . until all of such loans are repaid by the Defaulting Member. executors. 4. ARTICLE VII CONTRIBUTIONS TO CAPITAL AND CAPITAL ACCOUNTS LOANS A. then the Manager shall first take reasonable efforts to borrow against the Company's assets If these efforts are unsuccessful. LLC. all distributions from the Company which would have been paid to the Defaulting Member shall be paid to the Lending Members. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. Each initial Member agrees to contribute cash to the Company in the amount set forth as the Initial Capital Contribution of such Member on Schedule I and the Subscription Agreements attached thereto. 2.The indemnification provided by this Agreement shall: (i) be deemed exclusive of any other rights to which a person seeking indemnification may be entitled under any statute. vote of Members or otherwise. 5. No Member shall be paid interest on any Capital Contribution to the Company. Capital Accounts. In addition. All amounts contributed by the Lending Members shall be considered a loan to the Defaulting Member. provided such terms do not result in adverse tax consequences under the Code and applicable Treasury Regulations. upon approval of the terms thereof by the Members. (iii) inure to the benefit of the estate. applied first to interest. then to principle of all such loans 3. agreement. Except as set forth above. If the Manager determines at any time (or from time to time ) that the Initial Capital Contributions are insufficient to carry out the purposes of the Company. (ii) continue as to a person who ceases to be a Member. such Additional Capital Contribution. If a Majority in Interest of all the Members approve such request. 1. B. payable in equal annual principal installments. any Member may make a loan to the Company upon commercially reasonable terms. Loans. heirs. then each of the Members shall be obligated to make such additional contributions within the time period approved by the Majority (each as "Additional Capital Contribution") to the Company ratably in accordance with Interest of all the Members entitled to vote. then the Manager shall give notice to each Member and request that the Members make additional contributions to the capital of the Company. If any Member fails to fulfill any commitment to contribute additional capital (the "Defaulting Member").
1 JULY 2004 Page 14 of 31 . Except as otherwise expressly provided herein. no Member shall be required to contribute to the capital of. 2. The initial Capital Account of each Member shall be the Initial Contribution of such Member. LLC. No Member shall have the right to withdraw all or any part of his/her/its Capital Contribution or to receive any return on any portion of his/her/its Capital Contribution. "net income" or "net profit" or "net loss" shall be determined AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. following. Such Capital Account shall be decreased by (i) the amount of cash distributed to the Member by the Company pursuant to Paragraph B of Article VIII and (ii) such Member’s allocable share of Net Loss pursuant to Paragraph A of ARTICLE VIII. the net income or net profit or net less of the Company for the fiscal year. 1. or distributions. but shall not have an absolute right to. C. The Members intend that such provisions be interpreted and applied in a manner consistent with such Treasury Regulations. 2. liabilities and obligations of the Company shall. the Company. Said Ceiling Amount may be amended by the unanimous agreement of all Members and said adjustments in the Ceiling Amounts shall be reflected in an addendum to Schedule Ill executed by all of the Members. ARTICLE VIII ALLOCATIONS DISTRIBUTIONS ELECTIONS AND OTHER TAX MATTERS A. a Member may. Net Losses. except as may be otherwise specifically provided in this Agreement. and as between the parties to this Agreement. Withdrawal or Reduction of Member's Contributions to Capital. Notwithstanding any other provision in this Agreement. be limited to and not exceed the aggregate "Ceiling Amount" applicable to each Non-Managing Member. 1.704-1(b). Allocations. receive property other than cash. or loan any funds to. in any event. The Company shall maintain a separate Capital Account for each Member pursuant to the principles of Paragraph B and Treasury Regulation Section 1. No Member shall have priority over any other Member. if any. shall he allocated to each Member based on such Member's Membership interest. General Rules on Allocating Profits or Losses Subject to the provisions of Paragraph A(2).1. D. The Members are authorized to modify the manner in which the Capital Accounts are maintained if the Members determine that such modification (i) is required or prudent to comply with the Treasury Regulation and (ii) is not likely to have a material effect on the amounts distributable to any Member upon the dissolution of the Company. Under circumstances involving a return of any Capital Contribution. The initial Ceiling Amount applicable to each Non-Managing Member is set forth in Schedule III attached hereto. The provisions of this Paragraph B and other portions of this Agreement relating to the proper maintenance of Capital Accounts are designed to comply with requirements of Treasury Regulation Section 1.704-l(b)(a2)(iv). provided that this subsection shall not apply to a loan (as distinguished from Capital Contributions) which a Member has made to the Company. The Capital account should he increased by (i) the amount of the subsequent Capital Contributions of such Member to the Company under Paragraph A of this ARTICLE and (ii) such Member's allocable share of Net Income pursuant to Paragraph A of Article VIII. prorated for any fractional part of an applicable fiscal year of the Company. Liability of Members. the liability of each Non-Managing Member for the debts. either as to the return of Capital Contributions or as to Net Income. For purposes of this Agreement.
Any Member who unexpectedly receives an adjustment. and other items allocated to each Member pursuant to this ARTICLE shall. if necessary. LLC. (a) . gain. provided that an allocation pursuant to this subsection shall he made only if and to the extent that such Member would have a deficit capital account balance in excess of such sum after all other allocations provided for in this ARTICLE have been made as if this subsection were not in this Agreement. In the event any Member has a deficit capital account balance at the end of the Company fiscal year which is in excess of the sum of (i) the amount such Member is obligated to restore pursuant to any provision of this Agreement and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of the Treasury Regulation Sections l.704-1(h) 2(ii)(d)(4). subsequent years) in an amount and manner provided by Treasury Regulations Section 1704-2(i). allocation. (e) Curative Allocations.I(b)(2)(ii) or otherwise be in accordance with his interest in the Company within the meaning of Treasury Regulation Sections 1..704-29g)(l) and l. to the extent provided by such Treasury Regulation. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. (c) Gross Income Allocation.704-2. (5) or (6) that causes or increases a negative balance in his capital account (in excess of any amount that Member is obligated to restore) shall be allocated items of income and gain sufficient to eliminate such excess or negative balance caused thereby. (d) Section 704(b) Limitation.(d).(d) hereof shall be taken into account in computing subsequent allocations pursuant to this ARTICLE. be equal to the net amount that would have been allocated to each Member had not allocations ever been made pursuant to the preceding subsection. 1 JULY 2004 Page 15 of 31 . (b) Qualified Income Offset. consistently applied. such allocation shall be made to the other Member or Members entitled to receive such allocation hereunder.704-2.704-1 (b)(3) and 1. Notwithstanding any other provision of this Agreement to the contrary. and in accordance with the regulations promulgated under Section 704 of the Code. losses. To the extent an allocation cannot be made to a Member due to the application of this subsection d. each Member shall be specifically allocated items of Company income and gain for such fiscal year (and.704. or loss pursuant to the proceeding subsections (a) . Notwithstanding any other provision of this Article. as quickly as possible. prior to any other allocation pursuant hereto. The items to be allocated shall be determined in accordance with Treasury Regulations Section 1. The following special allocations shall be made in the following order and priority to the extent applicable: (a) Minimum Gain Charge Back. if there is a net decrease in the Company minimum gain during any fiscal year or any other period. Special Allocations. to the extent permitted by applicable Treasury Regulations. so that the net amount of any items so allocated and the income. each such Member shall be specifically allocate items of Company income and gain in the amount of such excess as quickly as possible.in accordance with the cash method of accounting. no allocation of any item of income or loss shall be made to a Member if such allocation would not have "economic effect" pursuant to Treasury Regulation Section 1. 2.704-2(i)(5). Any allocations of items of income. or distribution described in Treasury Regulation Section 1.
Tax Status. or in any way be taken into account in computing. If Manager is satisfied that distributions need not be utilized to pay down Company's debts and except as to matter provided in Paragraph C of this ARTICLE. and deduction with respect to any property contributed to the capital of the Company shall. Before making any discretionary distributions of cash. No distribution shall he declared and paid if such distribution would cause the Company to violate any limitation on distributions provided in the Act. shall not be construed to extend the purposes of the Company or expand the obligations or liabilities of the Members. losses. Manager may distribute Distributable Cash and other property at such times and in such amounts as he/she/they shall determine. using any convention permitted by law and selected by the Members. state. All interim distributions of Distributable cash or other property shall be allocated to the Members in proportion to the economic rights held by such Member(s) or other Person(s) holding such rights associated with a Member's Membership interests. or distributions. each item of taxable income and loss shall be prorated in accordance with Section 706 of the Code. Except as otherwise provided herein. D. LLC. provided. 1 JULY 2004 Page 16 of 31 . Manager may. each of the Members hereby recognizes that the Company will be subject to all provisions of Subchapter K of the Code. Limitation Upon Distributions. solely for tax purposes. pursuant to any provision of this Agreement. Notwithstanding any provision contained in this Agreement to the contrary. In the event of a transfer of. Net Income. In accordance with Code Section 704(c) and the Treasury Regulations thereunder. any Member's capital account or share of income. an interest in the Company during a fiscal year. B. be allocated amount the Members so as to take account of any variation between the adjusted basis of such property to the Company for Federal income tax purposes and its fair market value at the time of its contribution. loss. With this Agreement. income. Elections and Modifications to Allocations. and pursuant to state law. however. 3. Interim Distributions. other items. or Net Loss of the Company shall be allocated to the Members in the same manner as such allocations are made for book purposes pursuant to Paragraph A of this ARTICLE. 2. and local taxes and shall not affect. Allocations for Tax Purposes. The Company shall make such election for Federal income tax purposes as may be determined by the Manager(s) acting in their sole and absolute discretion. Allocations pursuant to this subsection are solely for purposes of federal. gain. For any Membership Interest not owned by the same Person for the entire fiscal year. that the filling of all required returns thereunder. such allocation will be prorated C. 1. E. prefer to pay down any of the Company's debts. each item of Income. The Manager(s) may cause the Company to elect pursuant to Section 754 of the Code and the Treasury Regulations to adjust the basis of the Company assets as provided by Section 743 or 734 of the Code and the Treasury Regulations thereunder. in his sole discretion.(f) Tax Allocations: Code Section 704(c). all Members agree that they shall prepare and execute any amendments to this Agreement determined by the Manager(s) to be necessary for the Company to comply AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. or other change in. solely for federal income tax purposes.
For the purposes of this Agreement. The preceding sentence shall also be deemed to allow and to contemplate the transfer of some Membership Interest to the Long. Transfers of Membership Interest. Rights of a Transferee. Any direct out-of-pocket expenses incurred by the Tax Matters Partner in carrying out the Tax Matters Partner's obligations hereunder shall he allocated to and charged to the Company as an expense of the Company for which the Tax Matters Partner shall be reimbursed. PA. or William J. A transferee of all or part of a Member's Membership Interest shall have only the rights. Transferability of Membership Interest -. Transferability of Management Rights. and to expend Company funds for professional services and costs associated therewith.with the provisions of Treasury Regulations Sections 1.704-2(b)(4). 1 JULY 2004 Page 17 of 31 . other than cash. LLC. including resulting administrative and judicial proceedings. Investor. profit sharing plan). The Tax Matters Partner shall have the final decision-making authority with respect to all Federal income tax matters involving the Company. The Tax Matters Partner is authorized and required to represent the Company in connection with all examinations of the Company's affairs by tax authorities. General Prohibition Against Any Transfer. Byrne or Bob Q. to or by the Company. The Members agree to cooperate with the Tax Matters Partner and to do or refrain from doing any or all things reasonably required by the Tax Matters Partner to conduct such proceedings. 3.704-2 upon the happening of any of the following events: (i) incurring any liability which constitutes a "nonrecourse liability" as defined in Treasury Regulation Section 1. A Member's management rights (if any) may not be transferred. Warren & Jones. unless said transfers of Membership Interest or assignment of Membership interest is to a corporation or partnership controlled in part or fully by: John Q. (ii) a constructive termination of the Company pursuant to the Code Section 708(b)(l)(B). 1.704-1(c) and 1. B. PA. F. Tax Matters Partner. the Manager may designate one Member as the "Tax Matters Partner" for federal income tax purposes in accordance with the provisions of Code Section 623 l(a)(7) and Treasury Regulations promulgated thereunder. ADMISSION OF MEMBERS. powers and privileges set out in Paragraph B of this ARTICLE or as otherwise provided by law and shall not become a Member of the Company except as provided in Paragraph C of this ARTICLE. profit sharing plan (successor by change of name to the Long. 4. BUY-SELL AGREEMENT A. A Member shall not at any time offer to or 'Transfer" (as defined in ARTICLE I) all or any part of his/her/its Membership Interest except in accordance with the conditions and limitations set forth in this ARTICLE. Parker. Parker & Warren.704-2(b)(3) or a "partner nonrecourse liability" as defined in Treasury Regulation Section 1. ARTICLE IX TRANSFERABILITY OF MEMBERSHIP INTERESTS. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS.704-1(h). or (iii) the contribution or distribution of any property. 2. Transfers Not Made In Accordance with Agreement. 1. Investor. Any transfer not made in accordance with the conditions and limitations set forth in this ARTICLE and otherwise in this Agreement shall be null and void.General Rules.
(ii) prevent the Company from being taxed as a partnership for Federal income tax purposes. Payment by the transferee of such reasonable expenses as the Company may incur in connection with the transferee's admission as a Member. Consequences of Transfer of Membership Interest.Unless and until admitted as a Member of the Company in accordance with Paragraph C of this ARTICLE. 1 JULY 2004 Page 18 of 31 . economic damages sustained by the Company as a result of the dissolution and winding up. 2. or privileges of a Member. In the event of his/her/its transfer of part of his/her/its Membership interest. Buy-Sell Agreement. receipt by the Company of an opinion of counsel. satisfactory in form and substance to all Members that such admission will not: (i) violate any Federal or applicable state securities law. LLC. except that the transferee shall be entitled to receive the distributions and allocations associated with the transfer of his/her/its Membership interest. C. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. (b) If the Company is continued pursuant to the procedures set forth in Paragraph B(l)(c) of ARTICLE X. Any transferee in receipt of economic rights takes the assignment subject to any claims or offsets the Company may have against the Member/assignor. The transferee's consent to become a Member and acceptance. D. preceding. Value of Membership Interest. and 4. or (iii) otherwise adversely affect the Company or its Members. the transferee of a Membership Interest shall not be entitled to any of the rights. A Member ceases to be a Member of the Company upon the transfer of all of his/her/its Membership Interest. in a form satisfactory to all Members of all the terms and conditions of this Agreement. the Member shall remain a Member of the Company to the extent of-his/her/its retained Membership Interest. At the election of the Manager.(e). Admission of Transferee as Member. powers. following) as of the date of withdrawal. the Member shall be entitled to participate in the winding up of the Company to the same extent as any other Member except that any distributions and allocations to which the Member would have been entitled shall be reduced by any consequential. If a Member ceases to he a Member in accordance with the terms of Paragraph E of Article III. 3. A transferee of a Membership interest may be admitted as a Member of the Company upon furnishing to the Company the following: 1. The written consent of all Members to admit the transferee as a Member. the Member shall be entitled to the "Fair Value" of his/her/its Membership Interest (as defined in subsections (c) . prior to the expiration of the term of the Company: (a) If the Company is dissolved pursuant to ARTICLE X. E. The transferee derives his/her/its rights exclusively through the Member/assignor. provided that the Company has received notice of the assignment and has duly noted the assignment in its records.
The Company. The qualified appraiser shall be mutually selected by the Company and the Selling Member within ten (10) days following the expiration of the thirty (30) day period described above. settlements. the Company shall use the proceeds from that policy (net of any expenses in obtaining the proceeds or any taxes due by the Company as a result of the receipt of the insurance proceeds) within 120 days of the receipt of the proceeds. and with interest on each such installment at the applicable federal rate in effect (under Code Section 1274 or similar section) at the time of the Member’s death. prepay all or part of the sums due hereunder without penalty at any time. The costs of the appraisal shall be paid by the Company. (f) The Company may from time to time purchase policies of insurance on the lives of Key Members. judgments. Except as otherwise provided in this Agreement. in such installments as the remaining Members shall determine (but not less frequently than annually). expenses. then the Fair Value shall be determined by a qualified appraiser. damages. within thirty (30) days of these two appraisers being appointed. The third appraiser shall then determine the Fair Value. they are not able to agree on an appraised value. Any additional funds due to the deceased Member’s estate or heirs shall be payable over a period determined by the Company (but not to exceed five (5) years) in such installments as the Company shall determine (but not less frequently than annually). Any Member withdrawing in contravention of this Paragraph A shall indemnify. and hold harmless the Company and all other Members (other than a Member who is.(c) The Fair Value shall be the price agreed to by the Company and the Member or his successor (the “Selling Member”) in good faith negotiations. to make any necessary payment required by this paragraph E. In the event the Company and the Selling Member are unable to agree on a qualified appraiser within such ten (10) day period. may. and with interest on each such installment at the applicable federal rate in effect (under Code Section 1274 or similar section) on the event of withdrawal. fines. those two appraisers shall pick a third appraiser to appraise the Fair Value. reduced by any damages to the Company or its Members as a result of the withdrawing Member's breach of this Agreement). (d) In the event the Company and the Selling Member are unable to agree upon a Fair Value within thirty (30) days. to be paid over a period not to exceed five (5) years. no Member shall at any time withdraw from the Company or withdraw any amount of his/her/its Capital Account or Capital Interest. defend. (e) "Fair Value" shall be the fair market value of the Company as a whole times the Member’s percentage of owner membership interest in the Company (and. Consequences. Damages related herein shall be monetary damages only (and not AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. 1 JULY 2004 Page 19 of 31 . at the time of such withdrawal. If. at its election. ARTICLE X DISSOLUTION AND TERMINATION A. General Prohibition Against Withdrawal. if applicable. in default under this Agreement) from and against any losses. or taxes suffered or incurred by the Company or any other Member arising out of or resulting from such withdrawal. LLC. Upon the death of any Member resulting in life insurance proceeds payable to the Company. each shall select a qualified appraiser and those two appraisers shall meet and attempt to agree on an appraised value.
§§57-6-07 and 57C-6-08. provided. § 57C-6-05. 1 JULY 2004 Page 20 of 31 Distribution of Assets Upon Dissolution. or legal representative or successor thereof) shall wind-up the Company's affairs by. order: AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. 4. (d) The entry of a decree of judicial dissolution or the issuance of a certificate for administrative dissolution under the Act. Articles of Dissolution. and distributing the remaining assets as provided in N. however. Upon dissolution of the Company: (a) the business and affairs of the Company shall terminate. the Members shall cause Articles of Dissolution to be executed on behalf of the Company and filed with the Secretary of State.G. and (b) the Manager (or if one does not exist. The Members shall execute.S. as promptly as reasonably possible following the dissolution so as to obtain the fair market value for the Company's assets.S.specific performance) and such damages may be offset against distributions by the Company to which the withdrawing Member would otherwise be entitled. 3. or some other Member. B. (a) When the period fixed for the duration of the Company in the Articles of Organization shall expire. the Members may cause any part or all of the assets of the Company to be sold in such manner as the Members shall determine in an effort to obtain the best prices for such assets. acknowledge. Dissolution of the Company shall be effective as of the day on which the event occurs giving rise to the dissolution. Notice of the dissolution shall be brought to the attention of creditors in accordance with the provisions set forth in N. disposing of the Company's properties that will not be distributed in kind to its Members. Notice of Dissolution to Creditors. but the Company shall not terminate until there has been a winding-up of the Company's business affairs and the assets have been distributed as provided in this ARTICLE. Dissolution. all Members or the legal representative or successor to the Members whose event of withdrawal has resulted in dissolution. that the Members may distribute assets of the Company in kind to the Members to the extent practicable.G. In settling accounts after dissolution. D. the assets of the Company shall be paid in the following . 1.C. Upon the dissolution and commencement of the winding-up of the Company. (c) Upon the election to dissolve the Company by all remaining Members after an event of withdrawal (as defined in Paragraph E of ARTICLE III of this Agreement) occurs with respect to any Member. C. discharging or making provision for discharging its liabilities. and file any and all other instruments necessary or appropriate to reflect the dissolution of the Company. collecting the Company's assets. LLC. The Company shall be dissolved upon the first of the following to occur.C. 2. Upon Dissolution of the Company. (b) Upon the election to dissolve the Company by all of the Members.
such assets shall be distributed to the Members entitled thereto as tenants-in-common in the same proportions as the Members would have been entitled to cash distributions had such property been sold for cash and the net proceeds thereof distributed to the Members. an amount equal to the then remaining credit balance in the Capital Accounts of the Members shall be distributed to the Members in proportion to the amount of such balances. First.1. family members or affiliates. (d) such Member AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. Distribution in Kind. If any assets of the Company are distributed in kind. ARTICLE XI MISCELLANEOUS PROVISIONS A. (b) he or she understands that his or her Membership interest in the Company has not been registered under the 1933 Act or the securities law of any jurisdiction in reliance upon exemptions contained in those laws. to creditors. (c) such Member. including Members who are also creditors of the Company. Except as otherwise provided in this Agreement or the Act. Except as otherwise expressly provided in this Agreement or the Act. that the Member is capable of evaluating the merits and economic risks of acquiring and holding the Membership Interest and the Member is able to bear all such economic risks now and in the future. partners. B. Third. knowledge and sophistication in financial and business matters generally. Second. and 3. alone or together with the Member’s representatives. If distributions in kind are made to the Members upon dissolution and liquidation of the Company. agents. and in the type of transactions in which the Company proposes to engage in particular. possesses such expertise. each Member hereby represents and warrants to the Company and to every other Member that: (a) the Membership Interest of such Member is acquired for investment purposes only. in proportion to their Membership Interest. any interest therein or the profits therefrom. the Capital Account balances of such Members shall be adjusted to reflect the Members' allocable share of gain or loss. in the order of priority as provided by law. as amended. 2. employees. and not with a view to or in connection with any distribution. Completing Business. re-offer. resale or other disposition not in compliance with the Federal Securities Act of 1933. Notwithstanding anything contained in this Agreement to the contrary. shall be prohibited or restricted in any way from investing in or conducting. 1 JULY 2004 Page 21 of 31 . for the Member's own account. either directly or indirectly. including the ownership and operation of business or properties similar to or in the same geographical area as those operated or held by the Company. nor any of their shareholders. any remainder shall be distributed to the Members of the Company. business of any nature whatsoever. LLC. which would have resulted if the distributed property had been sold at its fair market value. and the rules and regulations thereunder ("the 1933 Act") and applicable state securities laws. E. Member Representations and Agreements. directors. officers. any investment in or conduct of any such business by any such Person or entity shall not give rise to any claim for an accounting by any Member or the Company or any right. neither the Members nor the Manager.
2. assign. Notice. cannot be sold unless such Membership Interests are subsequently registered under the 1933 Act and any applicable state securities laws or an exemption from registration is available: (g) such Member is aware that only the Company can take action to register Membership Interests under the 1933 Act or under the securities laws of various states and the Company is under no such obligation and does not purpose to attempt to do so. therefore. All notices. transfer. to change their respective addresses by delivering to the other parties written notice of such change in the manner prescribed in subparagraph 2 of this Paragraph. contemporaneously or hereafter. 1 JULY 2004 Page 22 of 31 . addressed to the Manager(s) and to each other Member given in accordance with this section. that it is duly organized. 5. above. C.has had access to all of the information with respect to the Membership Interest acquired by the Member under this Agreement that the Member deems necessary to make a complete evaluation thereof and has had the opportunity to question other Members concerning such Membership Interest. (iii) deposited in the United States mail. 3. (iv) transmitted via telecopier or other similar device to the attention of such person with receipt acknowledged. 1. 4. ask or demand for the purpose of establishing compliance with the 1933 Act and applicable state securities laws: and (j) if that Member is an organization. and in good standing under the laws of its state of organization and that it has full organization power and authority to execute and agree to this Agreement and to perform its obligation hereunder. (i) such Member agrees that the Member will truthfully and completely answer all questions. or (v) otherwise deposited in the United States mail. deposited for next day delivery with an overnight courier or telecopier. demands and requests to be sent to any Member pursuant to this Agreement shall be deemed to have been properly given or delivered if addressed to such person at the address as it appears on the Company records and (i) personally served. and make all covenants. in an envelope addressed to said Member at his/her/its last know address. or mailed by first class United States mail. All distributions to any Member shall be made in person or at the address to which notices are sent unless otherwise specified in writing by any such Member. if personally delivered. prepaid and registered or certified with return receipt requested. postage prepaid. or (ii) as indicated upon the return receipt if deposited in the United States mail with return receipt requested. demand or request is intended to be given at such Member's address set forth in Schedule I to this Agreement (unless the Company's records reveal a different address for such Member). or other similar overnight courier services. first class. demands and requests so given shall be deemed received: (i) when actually received. hypothecate or otherwise encumber the Member's Membership Interest. All notices. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. or in the case of the Company. All notices. validly existing. The Members shall have the right from time to time. (e) such Member's decision to acquire the Membership Interest for investment has been solely based upon the evaluation by the Member. and at any time during the term of this Agreement. (ii) deposited for next day delivery by Federal Express. that the Company may. demands or requests provided for or permitted to be given pursuant to this Agreement must be in writing and addressed to the Member to whom the notice. to its principle place of business. LLC. (f) such Member is aware that the Member must bear the economic risk of an investment in the Company for an indefinite period of time because Membership Interests have not been registered under the 1933 Act or under the securities laws of various states and. mortgage. (h) such Member is aware that this Agreement places restrictions on the ability of a Member to sell. A Member may change his or her address by notice in writing to the Company.
Failure on the part of any Member in default. provided. and the remainder of this AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. J. No consent or waiver. I. however. Treasury Regulations. that each party hereto agrees to execute and acknowledge all documents and writings which the Manager may deem necessary or expedient to the achievement of the Company's purposes. by any Member to or for any breach or default by any other Member in the performance by such other Member of his/her/its obligations under this Agreement shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other Member of the same or any other obligations of such other Member under this Agreement. To the extent that the undersigned initial Members desire at the time of execution of this Agreement to preserve partnership tax treatment under federal and state income tax laws and to otherwise benefit from the flexible provisions provided under Subchapter K. H. LLC. 1 JULY 2004 Page 23 of 31 . References to Law. Additional Documents. the parties desire at all times to preserve the right to amend the Operating Agreement to appropriately reflect any change in the law affecting the tax classification of the Company. All references to Statutes. Buncombe County. F. of the Company. Amendments. regardless of how long such failure continues. express or implied. No Action for Partition. real or personal. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent. contains the entire agreement among the parties relative to the subject matter thereof. Waiver. North Carolina . Code Sections. as amended from time to time in accordance with the terms of this Agreement. G. This Agreement is made in Asheville. shall not constitute a waiver by such Member of his/her/its rights hereunder. only that portion of the Agreement causing said invalidity or unenforceability shall be excised or disregarded from this Agreement. Entire Agreement. including all schedules to this Agreement. This Agreement or the Articles of Organization may only be amended or modified by a written Agreement approved of and executed by all of the Members. construed and enforced in accordance with the procedural and substantive laws of the State of North Carolina without giving effect to the conflict of laws and provisions thereof. and other laws shall include subsequent amendments made to the law referenced in this Agreement and any corresponding provisions of succeeding law unless such amendments or corresponding provisions in the law are contrary to the intent of the parties to this Agreement. and the rights and obligations of the Members hereunder shall be interpreted. No Member shall have any right to maintain any action for partition with respect to the property.D. Severability. E. This Agreement. Governing Law.
each of which shall be deemed an original for all purposes and all of which when taken together shall constitute a single instrument. and the intent of this Agreement shall be enforced to the greatest extent permitted by law. being the Members of the Company as of the date of this Amendment. successor. K. and assigns. this Agreement shall be read as if the appropriate gender were used. M. All of these counterpart instruments shall be read as though one and they shall have the same force and effect as if all of the parties had executed a single signature page. or any creditor of any Member. the singular shall include the plural and vice versa. IN WITNESS WHEREOF. condition or provisions herein contained. this Agreement shall inure to the benefit of and be binding upon the undersigned Members and their respective legal representatives. 2004. 1 JULY 2004 Page 24 of 31 . however. feminine or neuter gender is used inappropriately in this Agreement. the loss. other than the Members and the Company. which single instrument with multiple executed signature pages affixed thereto constitutes the original instrument. destruction. LLC. Tense and Gender. 0. Executed signature pages to any instrument may be detached and affixed to a single instrument. the text shall control. 1 July 2004. or other disappearance of any one or more of the original counterparts of this Agreement shall not affect its validity in any manner. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. Captions. and such provisions are and shall be held to be for the sole and exclusive benefits of the Members and the Company. Whenever the masculine. N. remedy or claim under or in respect to this Agreement or any covenant. any legal or equitable right. mutually consenting to the admissibility of the others as Members. Unless the context clearly indicates otherwise.Agreement and the application of such provisions to other persons or circumstances shall not he affected thereby. Benefits of Agreement. Provided. or any other person or entity whatsoever. and do hereby assume and agree to be bound by and to perform all of the terms and provisions set forth in this Agreement. have caused this Agreement to be duly adopted by the Company on this the 1st day of July. This Agreement may be executed in multiple counterparts. is intended or shall be construed to give to any creditor of the Company. Subject to the restrictions on transferability set forth in this Agreement. Nothing in this Agreement expressed or implied. the undersigned. L. Binding Agreement. Captions are included solely for the convenience of reference and if there is any conflict between captions and the text of this Agreement. Counterparts.
John Q.. Trustee Carl F. Investor. Profit Sharing Plan Bob Q.A. Park. Investor ACME . P. LLC. Trustee AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. Investor Bob A. 1 JULY 2004 Page 25 of 31 .
"Income” means. "Distributable Cash” means.1.704. 9. "Fiscal Year” means the calendar year. provided that the first year of the Company shall commence on January 1. 8. 12.I (b)(2)(iv). the balance in such Member's Capital Account at the end of the relevant fiscal year. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. “Articles of Organization” means the Articles of Organization of the Company filed with the Secretary of State. recognized and classified for federal income tax purposes. 5. 7. each item of income and gain as determined. 10. for each fiscal year or other period. provided that any income or gain that is exempt from federal income tax shall be included as if it were and item of taxable income. "Adjusted Capital Account” means. LLC. 1 JULY 2004 Page 26 of 31 . in the discretion of the Members. "Capital Account” means for each Member the account established pursuant to Paragraph B of ARTICLE VII of this Agreement and maintained in accordance with the provisions of this Agreement. as amended from time to time (and any corresponding provisions of succeeding law). 6. "Loss" means. 4. (ii) payment of all outstanding and unpaid current obligations of the Company as of such time. 2. each item of loss or deduction as determined. and (iii) such reserved as the Members or the Manager deem necessary or appropriate for Company operations. "Capital Contribution” means any contribution to the capital of the Company in cash or property by a Member whenever made. "Capital interest” means the right of any Member to be paid the amount in that Member's Capital Account. "Act" means the North Carolina Limited Liability Company Act (Chapter 57C of the North Carolina General Statutes). with respect to a Member.ARTICLE VII of this Agreement. 3. 1999 and continue through December 31. as the same may be amended from time to time and any corresponding provisions of succeeding law. all funds of the Company on hand or in bank accounts of the Company as.APPENDIX A 1. with respect to the Company for a period of time. (ii) expenditures contemplated by 4 709 of the Code (except for amounts with respect to which an election is properly made under 4 709(h) of the Code) and (iii) expenditures resulting in a deduction for a loss incurred in connection with the sale or exchange of Company property that is disallowed to the company under § 267(a)(l) or §707(b) of the Code. "Code" means the Internal Revenue Code of 1986. as determined in accordance with Treasury Regulation 1. recognized and classified for federal income lax purposes. for each fiscal year or other period. as amended or restated from time to time. is available for distribution to the Members after provision has been made for (i) payment of all operating expenses of the Company as such time. 11. 2000. "Initial Capital Contribution” means the initial contribution to the capital of the Company made by a Member pursuant to Paragraph A. increased by (I) expenditures described in §705(a)(2)(B) of the Code.
a limited partnership. any sale. quasi-community property or similar state law. the Member’s share of the profits. a partnership. an unincorporated association. ‘Majority in Interest” means with respect to any referenced group of Members. and credits of the Company. (2) a Member’s “voting rights”. to the extent transferred. “Transfer” means with respect to all or any part of. 1 JULY 2004 Page 27 of 31 . only the economic rights to which the transferor would be entitled but for the transfer. respectively. 17. 16. 18. LLC. “Members” refers to such Persons as a group. “Secretary of State” means the Secretary of State of North Carolina . assignment. or a domestic corporation. “Manager-Managed LLC” means a limited liability company in which all Members by virtue of their status as Members are not necessarily Managers of the Company. a combination of any of such Members who. losses. or another entity. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. “Net Income” and “Net Loss” means. a professional corporation. However. a Member’s right to have access to certain Company information.. “Transferee” means the transferee of a Membership Interest pursuant to the conditions and limitations set forth in ARTICLE IX of this Agreement who is entitled to receive. a trust. marital property settlement. exchange. gains. Transfer shall mean incident to any divorce. gift. In addition. 22. a limited liability company. equitable distribution of marital property or similar state law. “Member” means each Person designated as a Member of the Company on Schedule I hereto.. for each fiscal year or other relevant period. such transferee shall not have any other rights of Membership. the right to receive distributions of the Company’s assets. a foreign corporation. provided that any subsequent Transfer by the trustee of such trust shall in any event be deemed to have been made by the trust grantor. (I) the excess of the Income for such period over the Loss for such period. if any’ and (3) a Member’s “management rights” (i. and estate. in the aggregate. or any additional Member admitted as a Member of the Company in accordance with ARTICLE 111 and ARTICLE IX. 19. 15. 21. a foreign liability company. which shall include unless otherwise set forth at the time of issuance: (1) a Member’s “economic rights” (i.e. a Membership Interest. Until elected and admitted as a Member. 14. and a Member’s Capital Interest). or other inter vivos disposition of such Membership Interest. or any transfer pursuant to applicable community property.13. “Majority in Interest” means any Person so appointed or elected by the Members. Deductions. “Person” means an individual.e. and (ii) the excess of the Net Loss for a fiscal year or the relevant period shall be computed by excluding from such computation any Income specially allocated under Paragraph A of ARTICLE VIII. and also means any testamentary disposition of such Membership Interest. 20. and any right to participate in management of the Company) as provided in the Act and this Agreement. “Membership Interest” means all of a Member’s rights in the Company. own more than fifty percent (50%) of the Membership Interest entitled to vote to give their consent on such matter(s) and which are owned by all of such referenced group of Members. a transfer made to a trust that is wholly revocable by the transferor shall not be a Transfer for purposes of this Agreement provided that a majority in interest of the Members have reviewed the terms of the trust agreement for qualification as a wholly revocable grantor trust and are satisfied that the trust may he a Member of the limited liability company.
“Treasury regulations” means the Income Tax Regulations and Temporary Regulations promulgated under the Code. 1 JULY 2004 Page 28 of 31 . as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). LLC. AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS.23.
1 JULY 2004 Page 29 of 31 . Asheville.000 51% Bob Investor 46 Kim Street Asheville.000 25% 24% AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS.SCHEDULE I MEMBERSHIP Member. NC 28801 Acme Profit Share C/o Bob Q. LLC.O. Trustee P. NC 28782 Initial Capital/In Kind Contribution Membership Interest 300. Investor 1123 Oak Street. Box 09999 Asheville.. NC 28802 250. Investor. New Address John Q.000 249.
1 JULY 2004 Page 30 of 31 .SCHEDULE II DESIGNATION OF MANAGER Ted Prosser. LLC. Shall be Designated Manager AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS.
SCHEDULE III LIABILITY CEILING AMENDED OPERATING AGREEMENT OF XYZ INVESTMENTS. 1 JULY 2004 Page 31 of 31 . LLC.
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