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Intrepid Technologies,LLC
Contribution Agreemcnt
dated Sept.28,1998
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Clerk:G.Bartlett
Description
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IIXIIIBITS
PLTF:ETREPPID TECH,IN C.
DEFT:DENN IS M O NTGOM ERY,ETAL.
PATY:J.Stephen Peek
DATY: Ronald John Logar
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OPERATING AGREEMENT
OF
INTREPID T:CHNOLOGIES.LLC
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OF
INTREPID TECHNOLOGIES.LLC
CFREM-O
-NTTRUST@I;aadDENNIS MONTGOMERY and BRENDA K.MONTGOMERY,asCo--rrultee:
A.
DouplasJ.Flye,an individual
,executedpacknowl
edgedand filed.asthe Organizer,Articlqs
ofOrganizati
onwlththeNevadaSK retafyofStaleonSEPTEMBER 28,1998.forthe forrnati
onof*INTREPID
TECHNOLOGIES,LLC@pursuanttoiheapplicableproviqionsoftheNRS(asletine herein).
B. FCP/LPIFREMONTm OSTandMONTGOMERYTRUST,asMembersoftheLLC (asdetined
herein),wl
shtoenterIntdandadoptthisAgreementastheOpefatingAgreementoftheLLC,goveminglts
-
organkationandmanagerrl
ent,and tl
!efights,powers,dutlesand obllgatkmsofthe ManagementC/mmittee,
the Manager,and the Membefl,resa cti
vely,oftheLLC.
NDW ,THEREFORE,ln oonside
'rationoftheforegoing premises @rld the m ulualcovenantsand
onditions conhined heereiflpand wit:tlw intention ofbeing legally bound hereby,the padies hereto
agree a/follou ;
ARTICLE 1
DEFINITIONS
G ceptaaomerwtse separatelydepnedel
sewhere intlll
:e reernent,follcwingare theterfnsaad
meaning;asused mrouqhoutthi
s Agreement
1.1 'Adiusted CaoitalAccourltDefidteI ans wkh resped t:any Membec the dejcitbalAnce.
ifany,insuch Membe sCaplta!Accountasofthe end oftherelevantFisealYear,afterlving effed tothe
foll
4zwngadju:tments:
1.1.1 lncfease suchCapiialAcoountbyany amountsWhich sucllMemberlsQbligated to
ctmtributetotheLLCpursuanttoRegulationsSectlons1.;04Q(g)(1)and1.7(14Q(i)(5)'
.and
1.f.2 Ncxduce such CapitalAccourltbytlle amtmntofthe 1te.
111: desclibed in Regulati
ons
Pelon,(iii)an#PersoqowftlfgofeontrllingTEN PERCENT(10%)ormoreoftheovtstandi
ngvoling
Interesl ofsuchPerson,and(Iv)anyrelativeorsp seofsud)Persoft
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*AnrAernent*means this Opefaing Agreementofthe LLC,as origioally executed and as
amendedfrom timeto tirnehereaftef.asthecontextrequi
rea.W ordssuch aseherein,'ghefeinafteq'*hereto.*
lhereby,and uhereundec,whenused withreferencettbisAgreement,referto thisAgreementasa whole,
unlessthe contextotherwlse requires.
cashfeceeiptsoftheLt.
C from anyandaIIsourraes,Iesoallcashdisbursements(tncludingloanrepaymenll
capitaljmprovefnents and replacemcnls)and a reasonable ajlowance forResemesvconti
ngencinsand
antlcipatedobligationsasdetemjnedbytheManagementCommittee.
1.6
I
lh#prKiptiqpcplqvpl-tlpt
-iflhe qqpsy-hawyv4lpg!.4ny-4>>#tpjfjrhfrom-ijsadjuppd kpp.
!.
pfpr-fe
--d.qpl....... .-. .
-
Depreciationwithrespeeettosuchassetforsuchyearorotherperi
odbearstosuchbeginningadjtwtedtax
basls.Howeveqifthefedefalin metaxDepreci
ati wl
Q1ru ped to suchassetfchrstlch yearisVero,'lm k
depredatfonshalbedete> nedwith referencetosucllbegianingGrossAssetValue usinganyreasonab!e
method sel
ected bythe LLC.
1.T
2.T hereof.
1.8
shal
lbe determ ined Inaccordancewitb Secti
on3.5hereof.
1.9
*caD'
ltalContributionfshallhavethe meanlngsetforthlnSection 3.6.1hereof.
1.11 X ommltteeMmberlgpri
mansoneofthree(3)Personsapm intadW theMembem toserve
onthe ManagementCornmxee puluanttoSecton6.1.4 ofthlsAgreement TheCommittee Membersehall
atadtimesud colledivelyastheManaqementCommittee,whichshallbecharged with timsepowers,dutles
andfespoflsibilitiesasx tfortbinArticle6aqdel
sewhereInthl:Agreement
1.12 'Denfetlatlorl/meal
ti foreach FiscalYearorothrpfie ,anglnoklntm tlait thb
depredati
O ,alntlfo a:tm oroMeroostfelxwefyredl#r.
b'naapt- blewithfespectto ana% etIorsucb Rscal
Yearorotherperi
od.
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falrmarketvalueofsuchassetasmutuallyagfeedbytheLLC andtheaffectedMemberts)onthedateof
distribution.
otherwlseresul
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sSectlon1.16.4.
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1.21
nonrecourse kabil'
ltyoftheLLC,theamountofgain(ofwhatevercharader).ifany,thatwouldberealizedby
1.23 *ManaaementCommittee.meansrcoll
ec*ely,thethree(3)Commi
tteeMembersapm inted
by the MemM rsto manageei
e LLC pufsuanttoSectitm 6.1ofthisAgreernentacting togetberto managethe
LLC Ine nrdanoe witlthe termsandconditionsofthisAgreement.The ManagementCommittee shallbe
charged with those powers.duties and responsibilties as setforth in Alti
cl
e 6 and elsewhere in this
Agreement.
elsewhereInlhisAgreement.
1.25 AMemberNonYcouraeDebt>hastherfleaningset60*1inRegulationsSecti
on1.704-2(b)(4).
1.26 eMem ber Nonrecourse DebtMlnimum Gainemeans aq amount,with resped to each
MemberNonrecourr.e N bt,equalto the LtC Minimum Gainlhatwouldresul
tifsklch MemberNonrecourse
Debtwere treated asanoarecourseli
abpityoftheLLC.determinedinaccordancewith RegulationsSections
1.704Q(i)(2)and(3).
1.2/
1.7G4Q(1)(2).n eamountofMemberNonrecourseDedudonswi
thresmd toaMernberNtmrecourK Debt
fora FIM IYearoftheLLG equalstheexreeass(ifapy)ofthenetincfease(ifany)intlleamountolMember
Nonreoourse DebtMinlmum Galnattjbutableto suchMembe.rNonr/- lrse DebtdurlngtlvtFl= 1Yearover
Minimum Gai
n attributabl
e tosuch MemberNonrecourse Debt determlned IRaX ordan *1t11Regulatbns
Secb
tlon1.704-2;)(2).
1.28
OfganizationorthisAgreementoranassigneeofanlnterestotherthananEccnomio lnterestwhohas
become aMemberpursuantto Sedion 9,3hereof.
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703(a)(forthispufm scsaIIItemsofincome,jain,lossordeductlonfequiredtobeStatedseparatelyPursuant
toCodesedion703(a)(1)shallbeincfudedlntaxabl
eincomeorlossljWfthtllefot
lowing adjustmenl:
1.
3Q.1 Anyi
ncomeoftheLLC l
hati
seaemptfrom Federalincame taxaqd nototherwlsetaken
into accountin mputing NetProjts orNetLnsses shallbeadded to such ta able incomeorloss;
. ..- .
..
1.3Q,3 Galnorlossresul
tingfrcm anydi
sposiionofPfopertywi
thresped towhkhgainorloss
i
s recognizedforFe erali
pcometax purposesshallbecornputedbyr:fefenceto the fairmarketvalue Qfthe
'
arysoelationfIimited-ll
abllls oompany,orolhefenb'
ty,vzhetherdomesti
corforelgn.
1.34
1.36 eReaulationl' means the federalincome tax f% tllatiotts promtllgated by the 'rreasury
DepatmentundertheCmde,assuchregulationsmaybeamendedffom lifnetoQme.AlreferencN herein
lo a Bpedfk sedbn ofthe Regul
ations shallbe deemed also to referto any corsm nding provisfonsof
succeeding Regulations.
1.37
M eNes.Guch Resefve.sshal
lbemaintainedk)arnounl
l
ydeel
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oftheMem% rs,whemerbyballotwri
ttenconsentofavoi
cevote,whereineachMembershal
lhaveandcast
a numberofvotes equalto tmtMembe/sPercentagelnterest
ARTICL6 2
INTRODUCTORY MAU ERS
2.1 Form ation ofthe LLC.Theparties have formed the LtC pursuanttoEections86.151and
86.201.1 ofthe NRS byexecuting,acknowledgingand filingtheArticlesofOrganization with the Secretary
efState and byentering into andadoptingthisAgreement.
.. -
- - .
.- - - . - . -
2.3 Nam e. The name ofthe LLC is.INTRFPID TECHNOLOGIES,LLC-' The Members shall
operate the Bualnessofthe LLC undersuch nameorusesuchotherorqdditi
tmalnamesasthe Members
maydeem nlvnRmnryordesirable provideda!Isuchname ofnarresshai
lbe i
n compliance with theNRS and
otherapplic ble laws.
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2.4
PrincioalBusinessOm ce.n eLLC shal
lrnplntainitsprincipa!busineessoffl
ce at685 GARY
COURT,INCUNE VILLAGE,NEVADA 89451,witha mailing addressofP,O.BOX 4964,INCLINEVILLAGE.
Pva etualExl
%tence.Assetfodh ln tlle ArllclesofOrgaakatf
on ofthe LLC,tlle LLC shall
havePel
m tualexi:tence,untiltheLLC lslerminatedQrdlssolvetinaov dancewl
ththisK reement.The
existen ofthq LLC xhallm mmence as oftheeffectivedateofthisAgreement,SEPTEMBER 28,1998.
2.7 Purpos* and Btlslness ofth: LLC. The purpose and busl
ness ofthe LLC shallbe to
devdop,m tens diseibute,licenr.eand explo:in anyrnannerand nawoddwide bms: thatcerzlnK ftware
tLC may
orengqgelnanyotherlawfaladivi
:e.swhie lhe LLC dee= isne sx ry,Incidentaltoor
demi
rpblp incm necli
onwitbtl
e Business oftheLLC.
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2.8
Ho lndlvldualAuthoritv ofa MemberorCommittee Member. No MemberorCommi
ttee
Member,ading alone orwith the Manager,any otherCommittee Member effi
cerorothernon-manager
Membeq shal
lhave the aklthodty to actfor,orto untedake orassurne,any obligation,debt,duty or
responsi
bil'
lly on behalroftlhe LLC.
2.9
Tdle to ProoertvIntheNameoftheLLC.A lProperiycwnd by the LLC shallbe held and
owned arl
d conveyance madeinme name ofthe LLC,AIlagreements.dctum ents,certificatesand other
lnstrumentsprovidi
ng forthe am uisi
tf
on oromerdism stionofPropertyofthe LLC shallbe valid and binding
upon it,exceptasotherwisepl
w ided herein.ifapprovedby the ManagementCommi
ttee andexecuted by
the Presi
dentofthe LLC asprovidedforherein.
2.10
. . - - - --
Secrelfy,ifone i
s apm inted bytheManagementCemmitteel.shaflkeepaad maintairlercavseto bekept
andmaintalnedacomenymlnuteNhoktoincludeIheM iclesofOrganizationcftheLLC andthisM reefrKmt,
and any amendments thereto,and mlnutes ofaI
Imeetings (orctlnsents in Iieu ofmeetings)ofthe
MaaagRmeptCommittee,wri
ttenconsentsoftheM embers,and otberimpodaotdocvmenl ofthe LLC.
ARTICLE 3
MEMBERS AND CAPJAL CONTRIBUTIO
..NS
3.1
Namq: and Addreeaea ofthe Members. The initi
alMembers ofthe LLC are FCP/LP,
FREMONT TRUST and MONTGOMERY TRUST.Thecomplete namesand addreysesofthe Membersof
the LLC are setfOI'
M onF-XHIBIT A attachedhereto and made apartofthi:Agreement,whdch exhlbi
tmay
be am ended orrnodified from tit
netotim e.
3.2
MemberCanjulContrlbutlons. Immediatelytollowing the executionofthisAgreement,the
Mernbefsshallmakeork)e obligatedtomakethe CapitalContributi
onsto tlle LLC assetforth inSection 3.3
bel- .AIICaph lContributbnsofthe gembers shallbe setforth onEXHIBIT A attached hereto and made
apadofthi
sN reemenkwhichexhibitmaybeamendedormodifiedfrom timetotime.lftheMemberQils
tornalethelnitlalCapttal ntrlbutionsasspeci
fiedi
nSection3.3wIthInthlrty(30)daysaftertheeffective
dateofthisAgreenxnt,thenthatMember'senfreMembemhlplnterestshallterminateand*atMembershall
lndemnifyand hol
d tl:eLLC andalIofthe otherMembefsharrnleu from ark
yl
oss,costorexpense,including
reasonable attorneys'feesand cosks,causedby the failure tomaRe such lnitialCapltalContribution.
3.3
ln casll in the mazmum aggregate ax untofup to Nine Hundred Seventy-Five n ousand Dollars
($895,000.X)shallbecontributedandgai
dbyFCP/LPtotheLLCfrom timetotimeupalwrittepreqklestW
the ManagementCommittee and inaooordance101anyApproved Budget(asdefi
ned in Sedkm 6.2.3
hereot).
3.3.2
'I
Contrlbuti
on to tlle LkC incash In the maxlmum aggregate erroqntofup to n req Hundred Twenly-Five
a
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LLC andMONTGOMERYTRUST,astheContributor(the'MontpomervTrustContributlonAareement*).
MONTGOMERY TRUSTshallmakea GapitalContrtbution to the LLC ofthe Technology and his Rights(as
thosetcrmsaremorepartl
cul
adydew ibedintheMontgomeryTrultContlibutl
onAgreement)having an
agreed InitialGrossAssetValueofOneMilioqThreeHundredThousandDollars($1,300,Q00.00),which
TechnolY yandRightsshallbecontributedconcurrenti
ywil MONTGOMERY TRUSTS admissiontomeLLC
asa Member.
3.4
AddleonalCanitaiContributlin orLoans to theLLC.Additi
onalCapitalContfibptions may
beealledforfrom tirr/ totimebythe ManagementCommittee,bywrittennoti
upontlle Membersffom tjme
totime(theMAddttnalCanitalConthbutions')toenabletheLLC toGonductitsBusl
ness.Thewrittennoti
ce
to the Membersshall&etforththeamountofAdditionalCapitalContrfbutlonsneeded,the datebywhi
d lthe
Membersshallcontribute,whichateshallnotbesoonerthanten(10)daysofrecelptofsuchnotice.Each
M embefshallbe required to make suchAdditionalCapitalContributions in proportion to thelrPec ntage
InterestintheLLC, No Memberrnay voluntarilymake anyAdditionalCaplv Contri
butions,and shallnotbe
required orperm4ted to fnakeanymakeany loaa orcauseto be l
oaned any money orotherassetsto the
kLC.
3.5
3.6
GeneralRul.e forDetennininq GapltalAccounts. The CapitalAcrx qntofgadlMember
shallbedeterminedasf011:
- :
3.6.1 lncmases.TheCapillAccountQfa MembershallbeIncreased by:
3.6.1.1 Sud)Membel
ascashcuntributions'
,
Iiabil
itiesseotlred bysuchO ntri
btltedpropertythattheLLC isconsideredtoassuroeortakesubjed tnunde.
r
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3.6.2.2 'FheGrossAssetvalueofaIIactualenddeemeddistributi
onsorprorhertyrnade
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hMemberpursuanttothisAgreement(netofIiabllitiessecuredbysuchdistributed propedythatthe
MemberisconsideredtoassumeortakesubjecttounderCodesection752)'
,
3.6.2.3 Al1itemsofLLC deducton and I
oss allocated to such Memberpursuantto
Afticle 4orotherprovi
si
ons ofmisAgreement.
3.7
ofcashandtheGrossAssetvalue(netofIiabiliti
es)Qfpropertyiniti
alycontn-butedtotheLLC bythatMember
an:any.
subK quel
.
ltcontrlbutonsotcaslland.theGross.M setValue(notofIiabilities)ofany-otherpropefty
subsm uenfy contri
btlted to the LLC bythatMembeq includingAdditionalCapi
talContrlbutions.
3.7.2 Intentto com plvW ithYreasul Regulatione.Theforegoingprovisi
onsofSed on:
3.
5 and 3.6and the otlerprovisi
onsofthisAgreementrelallng to themaintenance ofCapi
talAccountsare
intendedtocornplywithRegkllationsSectt
on1.704-1(b),andqhallbeinterpretedandappliedinamanner
cngistentw101vudlRegulations Sedion. To the extentsuch provisions are inconslstentwith such
Regulatitms Secl n or are incomplete with resped thereto,CapitalAcrmunts shal
lbe mainlined In
acc rdance WithsueehRegulationsSection.
.-
3.8
Tonsferee'
s CaDitalAccount Intheeventa Member,ortheholderofanFconomiclnte= t,
transfee an lnterestinacre
ordancewiththetermsofthls& reementthetransteree shallsucceeed to the
CapltalAcc ntofthetransferorto theextentitrelatesto the tmnsferred lnterest3.9
Lim@
dations on UabiliW and Obllcation: ofth: Membeo
..
and
-.Mantlers. Exceptfora
MembelY ll
abk'
ftytothe LLC forif
.
sCapb 1ContribubonsorforanyIiabili
tyafislng aftqraMemberhas rightfull
y
rereeivedaretum ofcapl
talpursuanttoNRSSecion86.391.andtheri
ght.
sofjudgmentcretitor:tgcharge
a Member'
s Em nomicInterestforc/rtain unsatisedjudgmntsofaMemberpursuantto NRS Sectlon
86.
401.and unl
essotherwkseprovidedforinanagreementsigned by aMemberorthe Managerorcomrfittee
Memberto be o arged,no Member,ManagerorCommittee Memberhaltbe i
ndivl
duall
y llable undera
hlndsto the LLC,ex- ptas provided forin this Agreement. No Membershallbe requlred to make any
contrlbqtl
on to the LLG by reason ofany negative basance in hIsCapitalAqox ntjn:rqhallany negative
bal
ance ina M embef:CapktalAem untGreate anyliabi
li
tyonthe partofthe Membertoany thlrdparty'
.
3.10
(oranysuchMembe/sshareholders,p-lrtnersorM li
ates)hasIncurredanyindebtednessorobtigationprlor
tothecam lencert*ntoftheG tenceofthe LLC thatrelated toorotherwiseeffedsthe LLCIneltherthe LLC
n0rany OtherMemb/rsNallhave any responsibilityofiabilityfoq orwi
th fesped to such indebtedn :or
Obligation,tlnl
essassumedbyllle LLC ptlrsuanttoawrltteninstrumentdulysEgned by allMembers.
ARTICLE 4
ALLOCATION OF NET PROFITS AND NET LOSSES
4.1
Proft qqdNet1n.
tb
mm QftheLLC lneachFiscalYearshallbeall= tedamongtheMembersassqtforthln
Sedicns4.1.1 and4.1.2 bel
ow.
.
jjxzss
(
y
er
.
xr)wm y/qc.c
OPuymsjyoaoj
qass.xr.ssumjypjyjjju5
- 1.M 1
22,.Case
22. 220
6 0:2284 D m'-s J.FrDocument
yg, Esk. 644-11 Filed 05/28/08h.
??18 16?.
1
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Page
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'
4.1.2 Allocation of Net Losses: Deduction for Gearantked Pavm ent. Fxcept as
othm wise provlded inthisAdicl
e 4,NetLossesshallbeallocatedamong the Membersasfollows:
qf(Nprll4lk'e%qtLosseslla.
stwaerlall ate4N qpltothe tcltlmt/lativeNQtPr/sts prevlotzslyallocatedto
tjje
.gomjxrs.
4.1.2.2 Sccond,theful
lamountofthe LLC'S dqdudt
fm fortheGuaranteed Payment
shallte al
loemte ,pro cak,between FCP/LP and FREMONT inaccordan withtheirPercentagelnterezt:.
4.1.2.3 Third,pro rata,to FCP/LP and FREMONT '
IX UST.iq proportion to their
positivebalances.ifany,intheirrespectiveCapi
u lAccounts,qntilFCP/LP'Sand FREMONT m usrsCapi
tal
Ac= untbalances are feducedtozero.
4.1.
2.
4 Fotlrth,toMONTGOMERY TRUST,inpropoftix tottlem si
tivebalan ,ifany,
inhisCapltalAcezunt unti
lMONTGOMERY TRUGT'S CapitalAccountbalane Isredtlced tozero.
''
4.2
RgsidualAllocations, Faceptas omerwise prvided in thi
s Agreement al
Iitems QfLLC
income.gai
n.I
oeys.dedudion,andany otberallocati
omsnotQtherwlse pmvidedforshallbedivided beY een
.
the Membeo in lhe ryame proportions asthey shnre NetProfitsorNetLosses,asthe case may be,forthe
Fisca!Year.
4.3
ordistributionsdescribedindauses(4)f(5)or(6)ofRegulatinsSedio1.704-1(b)(2)(ii)(d)jitel
m ofLLC
income shallbe speciallyallecated to such Memberin an amountand mannersucienttclel
iminate the
Adjusted Capi
falAcoountDeli
citcreated bysuchadjustments,allocationsordistributions asquic,
kjyas
posslble. R ls Section 4.3 is intended to consjtute a @qtlali
fied '
Income offset,withln the meanlng of
RegulatbnsSedion1.704-1(b)(2)(ii)(d)(3).
4.4
Minimum Gain cham ebaek.Ifthereis anetdocrease InLLC Mlnknum Gainduring aFiscal
YqaqeachMemberwillix all
ocated,beforeanyotheralkcationunder*% Artide4,Iternsoflrm meand galn
forxuctlFi
scalYear(andIfnecessary,subsequentyears)inpropodiontoandtotbeextentofanamotlnt
equalto suoh MemY r's shareofthe netdecrease ln LLG Mint
m um Galn determlned in aozordance wlth
4.5
Mem ber Nonreeourse DebtMlnim um GalrtCharaeback Notwithstanding any other
provi
sionoftillsAtti
de 4,btltexcegtSecti
on4.4,ifthere isa netdecrearye in MemberNonrex urse Debt
Mi
ni
nwm Oain attlibulbleto aMemberNonrecourse Debtduring anyFiltrnlYearoftheLLC,eachMember
wtohasashare ofthe Mem* rNonrectmrseDebtMi
nlmum Gaicattn'butable to such MemY rNonrex urse
C
1= tT
.e
@.-.+X;PAK
opeRvlsoAorlss,zy:vr.pxve:reppid 0116
72,.Case
27. 283:06-cv-00056-PMP-VPC
06 6:q2Fk 9' ,142 J. FrDocument
p, Esr. 644-11 Filed 05/28/088'
7212 17F'
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Page
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;
'
Regulati
onsSection1.704-2(i)(4).ThisSecbon4.5isintendedtocomplywithamlnimufrlgainchargeback
requirementofthatSec:on ofthe Regulationsand shal
lbelnterpreted consistently therewiK.
4.5
Yearorotherperiod shal
lde gpeclall
y al
lpo ted tothe Memberwho bears toris deemed to bear)the
e nom i
c ri
skofIosswith respectto the MemberNonrecourse Debttowhiohsklch MemberNonrecourse
Dedudionsar:adributabl
einaccordancewithRegulationsSection1.;04-2(i)(2).
4.7
SpeclalAllocations.Anyspecialal
locaionsofitemsofNetPmfitz pueuantttlSections4.4,
4.5and 4.5 shallte taken intoaccountincomputjngsubqequentallocationsofNetProfds pursuantto Sectilm
4.1.Aoihatthe netamountofany l
temsso all
ocatedand thegaia,lossand anyotheritem all
ocated toeach
Mem- fpursuantto Sedion4.1shal
l.tothe extentpossible,beequaltothenetarrt
ountthatwould have been
adcm ted toeach such Memberpursuanttothe provisi
onsofthisArti
cle4 ifsuGh specialallocati
onshad not
ox urred,
4.8
Feesto Mem bem ofAffiliates.Notwithstanding the provi
sionsofSection4.1,inthe event
thatany fees,inteqest,orother amounts paid to any Memberor any Affiliate thereofptlrsuantto this
4.8.2 ThereshallbeallocatetotheMembertowhicN(OrtowhoseAffiliate)sq(;hfoes.
4.9
property(otherthancash)thathasbeoncontri
butedbya Membertothecapitalofthe LLC andwhichI
s
requlredorpermi
tted to be alocatedto suchMemberforjncometaxpurposes unde Code sectlon 7M (c)so
asto 1**Intoa= untthevark
atlonbetweenthetaxbaslsofguchproperly and IK GrossAsetvalue atthe
takeIntoa= tmtanyvaat'
ionbetweentheadjustedbaslsofsuchPropertyforfederallncometaxpurp-e.s
andit'
iGrossAssetValuelnthesamemannerasundersection7tM(c)andtheRegulatitmspromulgated
tbe under.Any elections orotherdedslonsrelating to suctlal
l= tioms shaltbe made inany maqnerQot
llrl(622rM)
OPEMMNGAGREEMENT-P+ e
14relgid011y
N 1+ l
3:06-cv-00056-PMP-VPC
Document
Page
93
J2,.Case
22, 200
6 6:g2pk > ''2 J. Fryz
, Esl. 644-11 Filed 05/28/08
8.
7212 182.of17
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'
Priortothe detefmi
natonoftheamountofdistributons, provlsionsshallbemade foraIIknown feasonabl
e
obligations and liabiltties ofthe LLCIwhetherornutsuchobl
i
gations and Iiabiliti
ee
s are due orcontingentr
exceptthatprovisi
on neednotbe made% anypoftion ofany LLC finaocing, the amountofwhich can be
reasonablyexpeded to besatisied from the prooeedsofthe saleofthe thenremaining Propedyoftlhe LLC.
5.2
ttC and its lendezs,wimin ninety (99)days aftefthe ccmclusion ofeach FiscalYear,the Management
Committee slmlldetermineandpflwidewri
tten noticeto!heMembersofthe amotlnt(the rraxLiabilitv
ShordallAmount*),ifany,bywhich(a)theaggregatefederalandstatelxliability(ifany)incurredbytle
Memberswithfesped tothenetincomeoftheLLC forsuchprecedingFiscalYear(whi
chtaxIiabilityshall
be determined by applying the highesteffective indi
vidualtax rates then in effed fortile FiscalYearln
itlo tlpp),exceeds(M)theaggregatedlstribtltjon:ofAvail
ableCashFlow madebytheLLC withresped to
suchFiscalYear(includingapydistributionsmadetotheMemberswithrespecttothetnalfi
scalquarterof
suchFiscalYearl.TheManagementCot
w nitteeshalluse areasonableeffortstocakl
setheLLC todistri
bute
the Tax Liabill
'
tyShortfallAmotlntto Qle Membersinthetfme and mannerrequiredhereunderfincluding,but
notI
irfited to,bzrr- ing on belmlfofl
heLLC suff
ki
entfuntsto enable the LLC todisbibute suchTaxLiabil
ity
ShortfallAmount. Eaceh such distribudonshallbe madetothe Membefs assoon as practicable aoersuch
ftlndsareavailable.ItistheobjedkeoftheMembersthatwhilethen xUabil
ityShordallAmount*i
lIbe
determinedattheendofeachFiscalYear1totheextentpossibleand subjecttoth/forc oi
ng,dltribtltlons
willbe made in respectthorcofon a quadedy basis to facplitate the Members'ability to make quadedy
estimated tax payments with resX ctto theirnetincome from the LLC. Atthe end ofeach FiscalYearas
''
contemplatedabove,finaladjustmentsshallbemadetoreflec'
ttheadualresull ofsucilFiscalYear.
Alm cke 6
MANAGEMENT OFTHE LLC
6.1
ManageentoftheLLC.Subjed tothepmvl
slnnsoftheNRS,theM idesofOrganlation
andtoanyIi
mitqtionssetforthinthisAgreement(asmaybeamendczdfrom tilnetoti
me)relatlngtoedons
required to be approved bylhe Members,the Business and affai!
'
s ofthe LLC shallbe managd ,and a1
I
Company m wersshapbevestedinthe Managenx ntCofnmlttea The dayto-dayoperae nsofthe LLC shall
'
MONTOOMERY,anl
ndlvldual,orhlssuccessorasappolnte W theManagementComml
tteepursuantto
Section 6.1.2 bebw.
6.1.2 Ekction ofSuooessorManaqer.Upon ttte Managq/: reslgnato fr?m offi
o or
- -
IXX(;
awM
-XW)-/OPA'EY
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3:06-cv-00056-PMP-VPC
93
s, Esq. 644-11 Filed 05/28/0880.Page
7212 19F'of1$
J!r.22.
2006
6:22?k 2 7N Iqs J.FrDocument
.
'
.> e
''
.M .L
areMembers.shallappointone(1)CommitteeMeznber.FachMembermayappointoneormorealtemates
fortheCommittee Membeo apm i
ntedbyit. Aa al
ternateshal
lhaveallthepowelY ofthe Committee Member
in his absen orinabilityto serve. EachCommi
tt
ee Membermayvote by detivering hisproxy to another
appointedbytheManagementCommlttee inaccordancewittlthlssection6.1.5.TheCtlakmanshail(i)
preai
deatManagementCommittee meeti
ngs'
,(
iijhavetheauthoritytoexecuteanddeli
veronbehalfofand
(iii)eyoriye4uchrlghtsorperform stahdutiesasareotherwiseprovidedinthisAgreementofasmaybe
approved from ime to timebytheManagementCommittee.TheChairman may (IfIIyberemoved from office
byRmaxrityoftheCommitteeMembefs.lntheeventtheChairmanresi
gnsori
srernoved,amajofityofthe
Commi
ttee Membersshalleled a replacementChairman.
6.1.6 Oleoation ofPowers and Duties. n e ManagementCommi
ttge may by wrltten
resolutbnfrom 1= to tirt
e del
egateanyofi
tsptywerltgthe Manager,the Chairman.oflicers,empl
oyeesof
a Mem- r,ortoRnyomerPefBon.Sur.hdelegaion otpowersmayinclude,butnotbe Iimitedto,theauthori
ty
.
to executeand deltveronbellalfofand i
nthename oftlle LLC anyagreements,X ntracts,rotes,moftgages,
..
'
6.1.7.1 TheManagementCofwnitteeshallmeelatI
eastonc: each qtladefIn lncline
Wl
age,Nevada,orsklchothertimesorplacesastheChaifmanshal
ldetermine(unses:stlchmedngshall
bewatvedbyalICommitteeMembefs)oropthecalloftheChairmanortheManager.Suchrneeiingsshall
becalleduponatl
eastten(1Q)dayspriorwrtttennoice,exreeptinthecaseofanemqrgency,lnwhichevept
suchameetlngmayt2 called upocpri
ornoti
ceastheChalrmandee1
115appropnqate,butinnoevent1er,sman
fody-eight(48)hours.Anagenda foreachmeetingshalibepreparedInadyancebytheChalrmanorme
Manager,asthe case may be,and circul
ated to the Committee Membee. AppawalQfthe Management
Cm mi
ttee shallrequire amajo:tyIn numberofmeCommltteeMembers.'Ihe Mae ernentCornrnitteemay
ad withouta Ineeting lf(i)tl!e actlon Kken is approved in wridng by the numberofCommlttee Mernbers
partidih
ateinmeetinm byteleptloneorvl
deoconfefenceG theikeorW wfittenproxy,aridstlchpa '' Yn
shallbe deemedattendanm forpurw sesofdetermlnlngWhethera qA rum I
s present
6.2
''
Powem .Dutm
- @nd Responvibilitiesofthe Manauem entcorrtnaX ee.n eManagement
cemmltteesllallhavealloftherighfs,dutiesandpowerssspedrledinthisAgreqment,indqdingwlout
Iimitation,the genenlpcwers and duiesofmanagementtyplcallyvested in the boal
'd ofdiredofl and the
oflice ofa ch'
lefpxecutke offlcerefa colw ration Matteo requlring the approvalofthe m nagement
.
Cm rnmi
ttee shallifzlude,withokltlimitation,the tll
owing:
t1m
1
2 trk
'
apMl AK
OFERAMNGAGREFMENT-l>A> 13
-
e'Treppid 0119
Jqh.Case
22. 200
3:06-cv-00056-PMP-VPC
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Document
Es, 644-11 Filed 05/28/0886.
Page
7218 20?'
ofl93
b
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.d.oe .
'
n ousandDoll
arl($5Q,
000.00),whicbarenecessafyorappropfiateforMedevel
ogmontorexploitaionofthe
TechnologyorareinfudheranceofmeBusinessoftheLLC,including,butnotIimitedto butexpree
sslysubjed
to the li
m itadons requiring Mernberapprovalpursuantto Secti
on 6.4.4 hereof,contracts oragreements
betweenthe LLC and/ori/ M liates(
x any omerPersontopfovidemeLLC wil
h gcodsorsel
vi
cesofanykind
in whi
ch tl:e LtC orits Managermay bave an actualorpotentialceonflid ofinteru t,and including any
amendmenE orfnodifi
cationsthereto,orrenewalsorterminaticmsthereof.
6.2.2 The approval,execution,deli
very and perf
ormance on behalfof the LLC ofthe
orrenewal
smereto.Eacbsuchbudget(andanyamendmentstheretofrcfrlmetotime),aqerapprovajby
thQMgnggqmentGpmmitteg,shplbereferre:tohereinasaneAporoved Budaet*
.
LLC W mortgaje,pledge.granti
ngasecuri
tyinterestinorotherlienontheLLC'Sassetl.
6.2.5 R e appointmentand termination ofocers,hi
ring and sling ofemployees,orlhe
engagementof ntraclors/gubcontradors,consutanl,expec andQtilerPelx nsnecessary orapgopliate
to carry outthe Busiherns ofthe LLC,inclqding the sel
ectionand engagementofan independentcerified
public accounting 51r1:and legalounself
orthe LLC,and to approve the terms ofany such appointment,
employrnentorengagement,d
ncluding approvalofbhetermsand paymentofcompeflsation.
6.
2.6 n e approvalofthe amountand iming forrequesl foraddi
ti
onalaclvances on
FCWLP'Sand FREMONT TRUST'SCapita!Contributlons pursuantto Sedion: 3.3.1 and 3.3.2 tlereofas
required by the LLC tocontintle the developmentorexploi
tati
on oftheTechnology Qrto othetwisectmdud
its gusinessin accoxlance with anyApprovedBudget
re:ped to theTechnology.
Ii
- nse,Ieav ,rental,assi
gnmenttransferorotherdisposi
tipnQfa1IQranymaterlalpartoftheassetsQf*e
LLC,includirigme Tedmdogyandanypatentrightsmereto,whetherasa single tranu dlon ora serie.
sof
transactlonsas pad ofa plan.
6.
2.
9 Any materialdecisions relatng to the testmarkd ng,m anufadure.distribuion,
Iicensuro orexplob tionoftheTe nology.
6.3
tl
'e rlgtll,dutlesandm wefsasspecsedInthts& reement,subjed totbeIimvtiop:setfolthInthisArtide
6 and elsewhere in thlsAgreement. The Managershallhave responsibll
ity fe oondvding Qle dartoday
operationsofthe BuslnessandtheLLG andfOCimplementingthe declslol
u anddire vesofthe Manage- nt
Peommltteeinconnedi
ontherewith,subjed to thesuperviskm,dlfedion artdO ntro!oftbe Management
Comm>
'
kl
oxwkea
e.
z
mk
xwvfepA.ec
wxt
oprexmxoAoFvxuvr-pw s
rx
eppj
ljalza
N
fm ll
'
239.2
2. 20g0
6:@$8k D- -'nS J. FryDocument
. E!C. 644-11 Filed 05/28/08
80.Page
7213 21@'of16
Case
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..w .
..
officeofachiefoperadngofjcefofacofm ration.Subjecttotheprovisi
onsandIimildonagetf01
-1)1inSedions
6.2and6.4hereof,theManagershallhaveresponsibilityforthefollowingmatters(listedbywayofexample
andnotinItmitationthereoj andshallhavetheauthorityonbehalfofandinthenameoftheLLC to door
perform,ofcausetobedoneoriledormed,suchactsorl
hings and to oegutiate,exectlto,acknowledgeand
delivera!Iagreemenw,dx umentsand instrumentslnconnectiontherewith:
forthecondud oftileacfvitiesoftheLLC'SBusiness,alli
naccordancewithandsubjecttoApprovedBtldge/.
6.3.3 Authofize.negotiate,.
execute anddeliveronbehal
fofthe LLC anyand aIIcontrac?
oragreements,verbalorwritten.having acontfactval
ue orobligation afnountofl
ess than Fi
ftyThotl
sand
'
6.3.5 ToconfessajudgmentagalnsttheLLC,orapprovethefili
ngoforsettiementofany
ciaims,IndudingIitsationmatters,fororagainsttheLLC,oflessthanFiftyTnousandDol
lars($50,000.00).
6.3.6 Execute anddeliverbcms and Indemnitjesby orOn behalfofthe LLC a: may be
required forthe ownershlpand/orsaleofany LLC Property,asexpresstydi
rededtodo so on acase bycase
basi
s by th@ ManagementCommittee.
6.3.7 To purdlase r
labilityandomerlnsurancetoproted theTechnology.th* LtC Properly.
and Businessofthe LLC.
6.3.8 neManager,subjecttothereasOabl
eapprovaloftheManagemeqt(70r1111**,shal
l* rltedmlcalengi
neers,p famme.
rsandote r mptltertechni
cl
anstodevel
op orexpzittheTe fola.
:
Jy.
6.3.9 Fmm Erne to Kme,amend EXHIBIT A to thisAgreemenltoreflecetanychange Inthe
and&qentwlttlthe:ecretaryofStateandtopayaf
lfilingfeestherefor.
.
'
i'Q*t
T
R
:
w.
p.r*
)wMAK
oespxywoAoRccuusT-eagejj jan1zl
e repp
Ji,2Case
2. 2003:06-cv-00056-PMP-VPC
6 6J?1 .l-.'''n! J. FrDocument
s. ESI. 644-11 Filed 05/28/08h'Page
7213 22
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6.3.12 IftheManagerdeemsitnecessafyoappfrpri
ale,tc?adopta Coqjpanyseal,circtpar
infoan ccmtaining the words''INTREPID TEGHNOLOGIES,LkC,.
'togetherwi
th thedateofformati
onctfthe
LLC,and suchotherinformationasshallbe appropriate forbanklngadotherBusinesspurposes.
6.3,13 Maintain a minute book to indude the Artictes ofOfgankation ofthe LLC,this
Agreementandanyamendmentsorsupplementshereto andthqminutesofmeetings(orconsentsInIieu
ofmeetings)ofthe ManagementCornmitteetwritten consents ofthe Members.and otherimpoe nt
documentsofthe LLC.
6.4
Llm ltatlons on-.
-tbo-Managementcomm..
ittep and Manaoer.Neitherthe Management
Commi
tts.e northe Managershallhavethe authority todo anyofthefollowing withoutthe pfiorunanlmous
VoteofaI
lofthe Membefs:
..
6.4.2 Sell,Iicense,Ieasesrent,tfansfeqassignQrQtherwisedisposeofal1orsubstantiaW
aIloftle assets ofthe LLC,including the Technology orany gatentrights thereto,whetherln a slngle
D nsactionQra seri
es ofrelated tfnnsactiongas pad ofa plan.
'
6.4.3 ApprovetheTransferofaMember'slntere%t(exceptfortheTmnsferofupto10% of
aMember'sSclmomiclnterestptlrsuanttoSecticrl9.1,3ttereot).
''
Anyad i
ncontzaventionofthisAgreetnentoranyvali
d amendmeqthereto theArticles
ofO/ anizatlonoranyamendmentthereof.
m lr-mslollbeexdusivetotheLLC,andheshalldevotestlbstandalyal1ofhlsfullKrteadattentionand
efrorts to e!e Bqslrless alld a@airs ofthe LLC dudng Ivasonable btls4ness hx rs. n e ManagerD'
IaF be
reqqifpdtotravelfrpm time totirnelnfurthetance ofhisduEesand responsibilitieshereunder.Tho Manager
agfeet* prw ide hiasefvicesina mannerconslstentwiththe X liclesoftheLLC asmay l)e adopte fK m
ti- to timeby the ManagementCom ittee.
6.5
'
sz
xk
lo
xa
mr
oz
ow
ol
- opx.c.c
(PUSATINGAGReFMENT-'P. . 1:
-
e'rteppid 0122
> $.e 1
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of193
J22.Case
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25 6:0l2k b ''*! J. FfDocument
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7212 23?'
8
' '
partofanyotherlimitedIi
abi
litycompany,Iimitedpadnership,genel
'alpadnership,jointventure,comoration
orotherentity,by: (i)devqloging,Ii
censingorexploiting inanymannefanysoftwareprogramsorother
technole y whichis competidvewith the Technologyorthe Busineasofthe LLC,clrprovldinganyservices
orsupplies which are encompassed within the definition ofthe *Business''ofthe LLC as setforth in this
Agreement'(ii)purcasingorotbefwise acquiring,owning,hol
ding,opecaling,managing,investing inor
otherwisedism sing ofaIllle businessofthe LLC'SBusiness and i
nteresg therein ofanykind ornature;or
(iii
)otherwi
seengaginginanyora1IaspectsofaIlkebusinessofQleLLC'SBusiness.n eManager'sorhis
forcostsasprovldedforinSection6.6.1above,aGuafacteedPayment(asthatterm isdefinedinsedioo
;07(c)oftheCode)intheaggregateamountofElevenThousandDollafs($11,000.0W permonthpayabl
e
on the first(1st)dayofeach calendarmonthcommencingascfOctober1,1998.and terminating on
Mamh 3,2000,The paymenta0damountofsuch Guamnteed PaymentQrsuch othercompensafonte be
paidtotbeManagerforhisservioesrnaybeadjusted,renewedorierminatedbytheManagementCommittee
'
di
stribtldonhasbeenapprovedeltherimmediatel
y beforeorI
m mediatel
y afterapprpvalbythe Management
mmittee.
.
6.8
RlchtsofInspection. The ManagerandCommitee Membersshallhave theabsolute right
atany feasfmable time to insped andceopyarlbooks.recordsand documentsolevery klnd,andb)insped
thepllysl
o lpcpertiesofthe LLC andalso fits subsidiae Iimi
tedliability companies,domcsticorforeign.
$tIcI
1Insm di
onbythe ManageroranyCommitteeMembermaybe rnadeinperson orbyagentrttorrley
and Indudesthe rfghttocopyandobtalnabst
rads.
- -
(1*)intestklmeprorltsoftheLLC,exceptwhereaMemberfi
lesasltementwiththeIRS,inaccordance
wlthapplicableTreasuryregula ons,stadngthattheTaxMattersManagerhasno skl
chatlthorltyteactontlvt
Mem be/sbehalt M yMemberfili
ngsue.h astatementwi
th the IRS shallnotifythe Managerthereofwlthin
thirty(30)daysofsuchfil
ing.
Cl
T
-zv l
TD ) AK
OPERATINOM REEMENT.Pag.1T
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i, Esq. 644-11 Filed 05/28/0889.
7217 248.
S
'
,'
;. w e
,- L
wayjcu: y
DEFAULTS
'
shal
lbe deemedthe D qfaultlnq Member'and the MemberorMemberswho havenotothefwise defaulted
shal
lbe deemed the*Nondefaultlno Member@)
foraperi
odofthirty(30)daysafternoti
cetosuchDefaul
tingMemberiprovided.however,noDefaultshal
lbe
deemedtohaveocourredIf(i)suchDefauldngNembe/sfailureofpee rmanceiscurable,and(ii)ifsuch
Defaulttobecufabl
e,butaftertheexerciseofreasonablediligenceitisfound such Defaultcannotbe cured
-
. ..
wi
thln-thlrty(30)daysaftecnoti
ce,buttheall
egedl
yDefaulti
ngMemberhas lwnencedtocuresuchDefuult
wi
thinthe 30.
.day periodand thereafterdiligentlyproceedstocuresuchDefault.
7.1.2 TrxlnvfvrlnVlolationofAcreement.AnypurportedorattemptedTfansferlasdefi
nvd
InSecti
on9.1.
2bel
- )byanyMemberi
nvi
olationofArticle9hereofatanytimedtllingtheexistenceofthe
LLC.
7.2
Remedies ferDefault. Upon the oc rrence ofa Defaulthereundec tbe Nondefanlling
Membersshal
lhave thef011* % choi ofremedi
es,noneofwhictlshallbe exdusi
veorInanyway Iimitthe
Nondefaulting Membefsfrofn seeking anyotherremedythey may have in law orin m vity:
'
7.2,1 Rem vdv forDefaultUnderSection 7.1.4 ofthls Agreem ent. In fhe eventofa
Defaultdescribed in Secti
on 7.1.1 above,the Nondefaulting Membershallhave the right(but notthe
obl
igation)tornakeanAddifonalCapi
talContributionls)totlleLLC ortolendtotheLLC theamountts)thet
should have been ntributed byQw Defaultng Member.M ysuchamountso loaned shallaccrue lnterest
N reementslalbepal
dtotl'eNondefaultingMemberandappliedinrepaymentoftheamountssoIoaned,
with anysudlN ymentappliedhrsttoattorneys'feea. stsandexpenses (ifany);thento interestthen
a rued;thqnto thq belal
w e inredkrtbn ofthe pfincipalarrmuntuntilthe Nondefaul
ting MqmberhasbW n
repaldaIlarfxxlntsso Ioanedto tbe LLC tocuresudlDefault lncludlng allaccrued interestxfeesarld costs
asprovided forherein.
llz
K-lt
HPAW z'
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yg.ES$, 644-11 Filed 89,
7218 25?.
0
:.
''
w y
. ...
7.2.2.
3 TerminatetheLLC.bywrittennoticetotheDefaultingMemberatanyti
qx prior
tothe DefaultO ingcured.
8.1
inordertoapproveanyacti
onoftheLLC asrequiredbythlsAgreementortheNRS.
8.2
'
8.2.1 Anyadionreqkiri
ngepprovaloftheMemberspursvanttothisM reementmaybe
approvedwithoutthec ndud ofameetingandwlthoutprlornojcelfawe encansentsetting11rt11the acti
on
oracti
onsso taken.issigned byMembersbolding,kltheaggregate,aMaXKN in Interestormoreofthe
Members.unl
essa grvaterVote isrequired under,ora Iesservoteisprovided forIn,thisAgreementorthe
NRS.
8.2.
2 Unl
essthe unaqimouswrtten(xpcyentQfthe Membershas beengi
ven,notlce ofany
suchadi
c approvedby1- thanaI1ofthe Membersshal
lbe gi
vento those Memberswhodi
d notN rtkipate
Inclrapproveofsuhaditm withinten(10)daysfollcwingtheapprovalthereof.
8.2.3 Any Membergklng awrittenrm sentmayfw oke tileconsentbyglving written notice
to the LLC priorto thetime thatwrittenconx ntsoftM Mernbersholdi
ng,inthe aggregate,the Voterequlred
to atl
thorizettle pm posed action have been sledwith the LLC. Suc,h revocation i
s effective onlyupon its
receiptbylbe LLC.
6.3
enftled to Vote on a specirlc maoer,then such Member's numberofVotes stlallnotbe considered for
purposesofdetarmgni
pg whemerapprovalbyVote ofthe Membershas been obtained in relpectofsuch
speci
ficmatter.
ARTICL.E 9
9.1
AgreementIthe lnterestofeacb Mernberafi lhe E nomlc lntqrestofa Peer:on who ls nota Member
constitute-s the personalpropertyofthe Mem- rofEctm mic Interestholder. No MemberorEo nomic
Interesthol
derhasany InterestInthe Property ofQleLLC.
9.1.1 A Membe/slnterestoranEoonornioInterestmayonlybeQpnafefred orao igned In
stricta= rdancewi
th OIY Agfeernent
9.1.
2 N0trdnsfer,hype ecati
on,enoufnbcan ofv igna nt(aq-ransfee)ofaMefn- r's
lnterestIn the LLC wilbe valid tlnleGs unanlmously appfuved by the Memberslotherthan the Member
prom singlodl
sy seoflh lnterest lfleo thanunanlnotlsO nsentofthe Membefslotllerthan the Member
prolv yedtodispx oofIY Intere tdoe.snotapproveQo lh psfer,thetransfefeeofthe Memte stnterestse ll
IXBI
w
YC
:
IX'
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G
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nothaveanyrtghtto padicipate inthe managementofthe Business and affairsofthe LLC orto becomea
Memberoftbe LLC.
9.1.3 ATransferoluptotenpefcef!t(10*/1)ofaMember'sEconomicIntere-stmaybedone
withouttheconsentoftheotherMembers,the ManagefortheManagementCommittee.The transfereeof
an EconomicInterestshallnothaveany ri
ghtto parjcipate i
n the managementofthe Husi
ness and affairs
ofthe LLC orto become a Member. Notwithstanding the Ioregoing,any Tfansferby a Memberofan
EconomicInterestinexcessof10% skallbe deemedaTransferofsuch Membe/s LLC Interestand shallbe
subfecttoSection9.1.2above.
9 2 Void Transfers, Any Tr'
ansferofan Iqterestwhi
ch does notsatisfy the requirements of
Sedion 9.1.
2 above shallbenullari
d void,andthetmnsferring Membershalloontjnueto be a Memberofthe
LLC aDd to be obli
gated undereach and everyprokl
sionofthisAgreement
'
.
9.3
Admission ofN*w Members.A new Membermaybe admittedintothe kLC only upon the
unanilnousVoteofaIlofthe Members.
determinedW theVoteofa11exisingMembefs.
9.3.2 A new Membershapnoti)edeemedadmit'
tedj
ntothe LLC unti
ltlleCapitalContbutjon
rm uired ofsueeh Person shallhave been madeafld stlqh Pelx nhasbecome a partyto thisAgreementby
executing and delkering to the LLC a O unterpad signature page to this Agreementacknowledging his
atxeptance of.and agreeing to beboupd by,the terrnsal
hdconditionsofthisAgreement,
'
'
'
94
n esubstltuted Member.shal
ihw eqIItherightsandpowersandshallbesubjecttoalltherestrictionsand
Iiabilitesofthe transferrlng Membec exoeptthatthesubstltutl
onofthe transferee Membershallrl
otrelease
thebansferring Memberfrom Ilablli
tyto the LLC pufx antttlNRS Secti
on85.351. No substitutedMember
shalbedeemedadrnittedintolbeLLC untilsuchsubsti
tutedMemberhasbecomeapa* tomisAgreement
byexectl
tinganddel
ivefingtotheManagementCommitteoqcounterpade nature pageto thisAgreemeot,
acknY edgingbisacceptanceQf,andagreeingtobee undW,theterrnandO ndltlonsofthlsM reement.
ARTICLE 1
@nyinformae requlredtobeINAiA i
nGIW theLLC pursuanttoNRSSedion86.241.asBmendd frem Nme
to ime.
10.3 lnsnection and AuditRiqbts. Each Member,atits own expense,has the right.upon
reearm ablefeques'tandforpurN esreasonablyrelatd totheSnterestofthatMember,* lnsped andcpy
dudnglermalbtl
slnesshoursanyofti'
l
e LLC 17t* andrecordsrequifedto l)emaintai
ned inaccordaa with
Section 10.1atm e. Gudlrlghtmaybeexerdsed W the MemberorthatMerrl
becs agentorattorney.Any
Cl
j
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T
*V D) A EC
OPERATINGAGREEMEN'I.eage20
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06 62058. (> ''As J. Fr?9.
Esi. 644-11 Filed 05/28/0819.
7213 27?'
.
'
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..
Membefmay requirearevi
ew and/orauditQfthe books, recordsand reportsofthe LLC. Thedetefmination
LLC,in the absence offfaud orgross negligence, shallbe jnaland binding upon tle LLC and aI1ofthe
M embel
'
s
10.4
'
tobeQleLkc'
sVaxMattersManaaee (deinedasq-raxMadersPartnerinCodesedi
on6231)terepresent
the LLC (atthe LLC'Sexpense)inconnectionwitha1IexaminationsoftheLLC'
Saffairsbytaxaithorities,
indudingresungjudi
cialandadministrajveproceedings,andtoe-xpendLLC fundsforprofessionalservi
s
an ixmtryau oclate terewith. In its capacity as G ax Malters Manageryethe designated PeMon shall
overseethe LLC taxaffalrs intheoverallbestinterestsofthe LLC.
10.5 EstablishmentpfBankAccoilntq:Authorlzed Slnnatodes.The ManagementCommittee
shallauthoc e tlheestablishmentofoneormofedem si
tofy acczmntsIn Nevada and elsewhereforthe Iunds
ofthe LLC.AlIdisbursetncnk fmm the LLC'Sbankaccountsshallbein accordancewiththisAgreement. Any
-
authortzedtosi
gnthem,maybesignedonttieLLC'SbeihalfW theManager,adi
ngalone.Anysuchchecka,
dfafts oromerlnstrumentsobiigating the LLG to pay money in ex ss of$25,000.00.whetherasa slngle
clv kofasefie.sofchecks.shallrequirethejolntsi
gnaturesoftheManagerandaPersondesignatedfrom
time to time bythe ManagementCommi
ttee,
C..a.
O t181ar1c> onhandmaybeinvestedW theManagementCorrkmioeeonbehalfoftheLLC
.
-'
8832.Enti
tyGl
asstflcationElectitm,wittlthetnteraalRevenueSefvi
iflthetimeaqdmancerprererlbedW
the appli bl
e regtll
adons.n e elu onforsuchcl
assifo ti
onshallbeeffedkeasofthe effective dateofthls
& feement
10.6.2 DgeofAcceleratedDepreciationMethods.'rotheextentpermittedbyajplible
oftheqs- tsoftheW c.
1:.6.3 Accogotlno Method.Forgnanclalreporjng purx ses, the boolfs arld rece s ofthe
LLC sballbe kept()nthe CASH METHOD OF ACCOUNTING appliedin aK nslstenttnanlYrandshallrelelt
alItransactionsofthe LLC and beapprop:ateandadequate forQlepurposesofthe LLC
.
II
K
mH t
T
eX
.pM
OWWWE
) '
C
OPERATINQAIIRKMY -Page21
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.
80,
7212 28F.
'
'
11.1 LLC': Purchase Option. Upon the occurrence ofany ne ofthe foll- lng events (a
11.1.1 The l
ntended sale,lransfer,encumbmnce orhypothecation ofa Member's LLC
Interest
11.1:2 Thewi
thdrawalofaMemberfrom the LLC'
,
11.1.3 Thedeath ofanindivkualMembec
11.1.4 n e bankruptcyofa Membeq
ltmayexefciseonlybygivln:writtennoticetoSel
lingMemberonorbeforethethlrtieth(30th)dayfoll
owing
reoel
ptbythe LLC ofthe SellingMembef'snotice.Upon the giving ofthe notte,the LLC shallbe obligated
shall,onorbelofethefiftil(5th)dayfollowingteendofthel
%-dayperioddeKribedabove,glvewrittennoti-
InterestInthetamepropoftbnasthatRember'slnterestbearstoaIItheVembersryotledngtpurdlase
Membeo,then,subjecttotheunanimousapprovaloftheremainingMemberspursuanttoArtizle9hereof.
fheSelpngMembermay sellhI
s lnterestto a O nafi
dethktm artypurchaseronthe priM andtermsretflxth
in Secti
on 11.3 bel- . Forthls purpose.the Selling Membershallprovide the LLC and the remainirlg
Memberswf
tllsuch infofm ati
onregardingthe third-pqdyptlfch% e.rastheymayreasonablyreqflest lfKe
remainlng Members do notunanimouslyapprcve the purchmserand the sale and trafsferofthe Solling
.
Member'
slntereattosuc.
hjurchaseer,thentheSeljngMembershal
lremainaMemterandshall ntintleto
beobligatedas aMemberIn accordan with Sedion9.2 hereof.
SellingMemberapdtheremainin:Membefs(the*purchasePrIc@*).lfiheSellingMemberandtheremaini
flg
IIQWT
(
eXiW
)WWWVY
OFfMNNGAGREEMERT-eage22
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Jh.23.
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b10bFk
/'38 J'Fl1Document
0, ESq. 644-11 Filed 05/28/0880.Page
7212 29F'of2$
*
'
W ithinten(10)daysaftertheexpifv
atfonofthe30-daypedoddescribedabove,the Selling
Memberandtheremaini
ngMemberzshalle.
11!:11nameone(1)afbitrator.ThedisputedvaluationsoftheLLC
Interestand tl
)e Purchase Price determined by the Seling Memberand the remaining Membersshallbe
submi
tte lo lle arbisatof.Theafbitratorshallthendeterminewhetherthe Sell
ing Memberorthe fer
tmingng
Members'Ptlrchase Price ismorerefkctke ofthe fairmarketvalueoftheLLC andthe LLC Interest. The
arbi
tratormustseled the valuation and Purchase Pri
ce submitted by eitherthe Selling Memberorthe
remainingMembers. N0 othervalue maybe determined. Thedecisi
onofthe arbi
trator%hallihevakd and
bindingona1lparties,andjudgmentfnaybeenteredthereoninanycourtofcompetentjurisdidion.Ttleparty
accepted shallpay aIlofthe fees,costs and otherexpenses incurred in
orpadieswhose valuation ispp.t'
connectionwi
th thedetermination.
..
ARTICLE 12
TERMINATIQN
- AND.DISSOLUTION.
12.1 Diasolution.PursuanttoNRS SecionK .
491,theLLC shallbedlssol
vedupontheoccurrence
ofany ofthe following events:
12.1,2 Thesale,Ii
cense,I
ease,reptal,asskgnmentorotherdi
sposilionofaIlor%ubsl nti
all
y
al1t)ftlle asseta efthe LLC,i
ncltlding the Teohnology orany patentriglltsthereto.whethero urring ina
single tr/nsad on ora seriesofrelateGtransadionsaspartofa plan.
12.2 continuation and Condud ofBusinessAfterDissolution. Upontlle occurremce ofany
disM l
utim eventspc ifiedinSectiml12,1ahwe,tl- LLC abal
l ase to carryon 11 Bklslnou ,euzptInsofar
as may b. necessary forthe winding tlp d Its Buslness. n e LLC shallcontinue as q O mpany forthe
pqrpose ofproseutlng 4nd defending stli
ts.aeti
ons.pfpceedlnga and clal
rns ofany kirld orr'ature by or
agalnstitandofenablingitgradtlallytosettl
eand dse itsButiness,to colled and discharge itsobllgatio% ,
VZX @
QQ*
)e AK
OPEPATINBM REQMEIIT-P-e'
fDreppid0129
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12.4.
4 Next.to MONTGOMERY TRUST in accordan with bis gositive CapillAccount
bal
an 'and
Wherethedlstrilmtionpursuantto1lsSedion12.
4consists1)*1ofcasll(orcashequkalents)
andnono shassets,thecash(orcashequivalents)stlal!firstbedistfibuted,inadescendingordeqtofully
sati
sfyeachcategofy slartin: withthe mostpreferred categoryabove. Inthe case ofnoncash assets,the
distributi
on values are to be based on the fairmarketvalue thereofas detefmined in good faim by the
lkul
dator,andtheshorte.
stmaturityportionofsuchnon-cashassets(e.y.,notesorolherindebtedness)shall
,
ARTIC LE 13
..
INDEMNIFICATION
'-
uettl
emenl and othefafnounl arising frpm any and aI
Iol
alms,demands,actions,suits orprom edings.
whetherckil,crlmi
nal.admlnistrativeorinvestigati
ve,inwhi
cbthe Indemnltee Isinvolved asa party arising
outofthe Businessofthe LLC,excluding Ii
abil
itiesto any Membeq regardl
ess ofwtletherthe Indemnitq/
cY tinuesto be aMember,anAffiliatq oranofficer,dlrectoq empleyee,agentorPfindpalofthe Memberat
the time any such I
iablll
tyorexpenseis paidorincurred,to thq fullestextentpermitted by the NRS and all
otherappliable Iaw:,provlded lhattheMemberorsuch Personactedingood fai
th,within whati
s reax nably
believed to be the scopeofit%atlthnrity and fora purpose whlch Itreasonably believed to be inthe be-st
interesY ofthe LLC and the Memhersorolhpl
w ise In compliance wlth the proVi
zlons ofthis Agreement;
provied!howeve.
r(pmattheLLC shalnotberequiredloindemnlfyanylndefnniteeqapdanysuchlndemnltee
shallbellable,foranyIorxs,exllemseordamagewhlchtheLLC rnaysufferasarezultof(A)suchIndernnitee,s
wlllfulmisconductgrossnegligen orbadfaithipfailingtoperform Rsdtltieshereundec(B)acionsfaken
byguchIndemniteelnvioladonefthi
sAgfeement,(C)tllerereeiptW Ktlcbld emni
teeofanyfnandalbenefi
ts
towhlchltisnotendtledpursuanttothl
sAgreement,or(D)mevotebysuchIndemniteefQradistributionof
fundsoftti
eLLCinvklati
onf*isN reementortheAd;(Ii)theLLCshallnotberm ukedtinenmifyBny
lndemniteeforanybreac.hoftheprovisi
onsofmia& reementrorforany10::,expeqseordarnagewbichIt
may stle rasa rezultfth bfee ofthisAgreeementbyQleRernbert;whk)h thelndemnltee b relate ;and
(iI4anykabi
lityhereundershalbeIirritedsolelytotheassetq@ndpr
w ertie:ofQleLLC,andnoMem'ber(or
anyM liateofanyMember)shakIvveanyIiabll'
ftyorobflgationW reasonoftheseindemniqcadonprovisi
m .
13.2
beinaddltiontoanyotherrlghtatowhicllthoseIndemnzedrrkaybeenledtlnderanyagreementVoteof
.
7I
V
zl
QW
(lR,7puXP
)M FAXQ
OPERATINGAGREEMENT-Page24
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'
ARNCLE 14
AMENDMENTS
14.1 AmendmentorModifi
cation
..-ofth: Aqremont. Exceptforthe authori
ty granted to the
Managerhereklndefto amend EXHIBIT A to thisAgreementfrom tifne to time,this Agreementrnay be
adopted al
tered amended,orrepealed and anew operatlngagreementadoptedby theunanlmousVote of
lfleMembers.
.
.
14.2 AmendmentorModifi
cationofArticle&ofOruanization-. Exceptfortheauthorityglanted
to the Managerhereunderto amend orcorrqcttheM lclesofOrganization.and notwithstanding any other
.
provisi
ontothe(xntraryIntheArticlesofOrganizationorthisY reementfinnoeventshalltheAdicl
esof
Organl
zation beamendedwithoutthe unanimousVoteQfthe Memberv.
ARTICLE 15
NOTICES:W AIVER OF NQ-IICE
15.1
.-
shal
tbelnwritingandfnaybeeimer(i)pefsonall
ydel
ivered2whi
c;
hshallt)edeemedrc ekedatthe:IKe of
adqalrc iptthereotor(i)sentbyf% i
steredorcertisedmal,w11 postageandchargem prepaid,which:llal
be deemed deliveredseventy-Go (72)hoursafterdepositin tbe United Slatesfnail;or(ii)delivefedby
fa= imilebansmission,whkh :hallbedeemedreoeivedenthedate andatlhe tifm ofel
eotronl
o conjrmatln
ofsuchtrartsmissinn,ptovided anoriginalmechantcalsl
gnedoopyofsuch notie.
eorothercommuni tion is
alsoimmedlatelydeposited'intheUni
ted Statesmail*1t1srst-l
asspostageandchargesprepaid;or(iv)
deljvered bymessenger,FedF.
x orothertrackablecourierservi
oe,whichshallbede med dcliveredoq the
date and atthe fme as tracked and O nirmad bysuch cotlrierservice'
,and In each (w e,addressd Qr
delkez'
edtotheI
lartytowhom Mesamei
sdi
fectedatsuchpa@ saddressand/orfao imil
enufnbersetfodh
bel- ,oratsuchottleraddressand/orfacsimilb numberasthatpafty maysgeci
fybywritten notice givento
the otherpafties ioacm rdancewiththisparagraph;
Ilto tlle LLC:
INTREPID TFCHNOLOGIES,LLC
Atln: W arrenTrepp,11 ManagementCommittee Chairman
685GafyCotlk
InclineMllage,NV 89451
Mailinu Address!
P.O.Box4964
lnclineMllage,NV 89450
Facslmil::C02)831.
4395
..
I1I
///
///
II1
iW #
Q/-AO XAXC
.
EK RATINGAIX EMEITF-PA/
A Z:
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7213 32F'
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* ''v
'
'
Faoimile:(310)456.
4808
Ifto FGPE.P as aM em ber:
Facsimile!(702)531-4395
Ifto FREMONT TRUST as a Mem bor:
'
P.O,Box4964
lnczneullage,Nv 89450
Facsimtle:(702)831.4395
W itilacourtesv coovto:
Facsimile:(310)456-0808
lfto MONTGOMFRY TRUST as a Mem ber:
'
Fa=imll
e: (299)369-7530
llI
III
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23. 223:06-cv-00056-PMP-VPC
06 i:05?k R -'3s J. Frys'
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TEHIN +PARTNHRS
Attn: Nikol
aiTehin.Esq.
BankofAmeri
ca Center
5:5 CaliforniaStrpet,33e Floor
San Franci
sco,California9414-1609
Facsimile:(415)951-8808
W tlerecourtee
sycopiesare provi
dedfof,theserviceofanysLlr,h urtesycopysballnotonstitute notice to
the paftyheretlnder, IftheUni
ted States PosllService retums totheLLC orthe registered agentapynotice
as nndeliverable,a1lfuttlre noticesto thatMembersballbe deerned duly gkertifkeptavailable forthat
MemberattheLLC'
Spri
ncipalplaceofbuslnessfofone(1)year.
15.2 W ai
verofNotice. NoM ithstanding the foregoing,when,tlnderthe provisionsofthe NRS or
utl* rthq proisions ofthe Arlicle:ofQrgRni
zation QrthisAgresqmentrnofce is requtred to t)e gi
yqqjo q
Memberorto the Managerofthe LLC,awal
verIn wri
ting signed by the Person orPefBons entitl
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15.1
Cpuntqrparts.ThisAgreementrnaybeexecuted inseveralcountelpadslandalIcountezpads
16.5
areforconveni
enceCTW andinnowaydefine (imltextendor4er'
tzibetheKopeorIntentofany oflhe
plpvislone hereof,shallnot be deemed partofthis Agreementand shal
lnotbe used in construing or
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PROCEDURESOFTHEAMERI
CARARBITRATIONASSOCIATION (OR ANY SUCCESSORTHERETO).
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PROVISIONSOFAPPUCABLENEVADASTATUTES(IFM Y)RELATINGTOARBI
TRATI
ONATTHLTIME
OF THE NOTIGE.THE ARBIIRAIORS SHALL BE UOUND BY THIS AGREEM ENT AND ALL RELATED
TBOSE CONTEMPLATED MY THB RULES PRESCRIBED ABOW .FACH MEMHSR SFIALLPAY THE
CO8TS OFARBITRATIONCINCLUDING ARBI
TRATOR'SFEES,ASAWARDED BYTHEARBPIRATORIS).
THBNUMBERANDSELECTIONOFARBITEIATORIS)SHALLBEINACCORDANCEWITHTHERULES
PRESCRIBED ABOVE,EXCEPTTHAT(i
)M CH ARBITRATOR SELECTED SHALLBE NEUTRALAND
BY WAY OF EXAMPL6 ONLY,TK HNOLOGY AND SOFIW ARE DEVELOPMSNX 0R SUCH OTHER
DISPUTE ARISING OUT OF THE MATFERS INCLUDED IN THE 'ARBITM TION OF DISPUTEB.
PROVISIONDK IDED BYNEW G M B- MONM DYOUM EGIMNGUPG RIGG SYOU MIGIW
POSSE8S TO HAVETHE DISPUTE LI
TIGAYED IN A COURT OR JURY TRIAL 'BY INITIALING IN THE
SPACEBELOW YOU M EGM NG UPYOLIR JUDICIALRIGFITSTO DISCOVERYM DAPPEK UNLESS
SUCH RIGHTS ARE8PEQ FICALLY INCLUDED IN THE ARBITRATION OF DISPUTES'PROVISION. IF
YOU REFUBE TO SUBMIT TO ARBITRATION AFW R AGREEING TO THIS PROVISION YOU MAY BE
COMPELLED TO ARBITM TE UNDER THEAUTHORIW OF THEAPPUCAA E STATE STATUTE.YOUR
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. NOTHING CONTAINED HEREIN
SHALL PRLN ENT ANY MEMBER FRQM SEEKING EQUITABLE REMEDIES FROM A COURT OF
COMPETENTJURISDIW ION.
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(i)Vfillatu andPecipalsoftheMembersand@)ac/otherPefsonsasmaybeefltltledtetl)ebenejtsof
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thresped to,thewblqctmatterhereof,
16.16 W alvlr. No failure byany pafty to insistupoathe strictperformanctQfany covenantjduty,
prfw kdqo o!
lthlsAgYementshzbeenitledtoitsreasonableattnmeys feesincurredlnanym stjudgfnent
prGzedingstoK lled orenforcethejudgment Thisattomeys'feesprovislonissepafateandseveraland
sballmlrvivememergerofthi:& reementintoarlyjudgment.
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IN W I
TNESS W IIEREOF,the padies hereto haveexecuted and delivered,orcaused to beexecuted
and delkered by a duly authorized representali
va, tbis OPERATING AGREEME'NT of INTREPID
TECHNOLOGIES,LLC asofthedayand yearfirstabovewri
tten.
Further,th@ underslgned,asMem bers ofthe LLC,acknowledgetheyhavq read anduqderstand
t
lmfol oingOpemtingAgrHmentforINTRFPIDTECHNOLOGIES,LLG Includingspeiscallyzbut
not Iimlted to,sections 16.11 and 46.12,*Arbitration of Disputesg* and Y aiverof Jury THal,*
re pectives,arld,mltvidenedbythelrslgnaturesbelow,tlw uqdqrsigned herebyaknowledgeand
agr.eto thepeovisions conhined herein.
INTREPID TECHNOLOGIES,LLC
A Nevada Lim ited-uability Company
..
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B#11 M#mbery
*FCPILP*
FRIENDLY CAPITALPARTNERS,L.P.
A Califomie Limi
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By!Ffiendiy apitatlrlc.A
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ItsGeqer Partner
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RENDA K.
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EXHIBIT A
1*
t)THE OPEM TING AGREEMENT
OF
INTREPID TECHNOLOGIES,LLc
(Updatedasof3/23/99)
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maximtlm amountof
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FEIN 95-4412683
THE FREMONT TRUAT.DATED MAY 16.1994
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By and Between
INTREPID TECHNOLOGIES.LLC
as I'INTREPID''
and
DENNIS M ONTGOM ERY andBRENDA K.M ONTG OMERY.
a: CoG nlsteesofthe M ONTGOMERY FAM ILY TRUST
-
as the<'Contributor''
and
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A. lontgomeryhasdevelopedandoniibutorownscertainsowarecompressiontechnol
ogy
(asmorepadicularl
ydescribedherein).
B.
ContributordesirestocontributetheContributedAssets(definedbel
ow)toINTRFPID as
Interest in INTREPID equalto a Fifly Percenl(50%)Percenhge Interest(as those terms are more
particularly described in the Limited Liabi
lityCompany Operating AgreementofINTREPID (theelntrenid
OperatinaAnreementMl).
1.2. Contn-butedAssets.M usedinthisAgreement.theterm *contributedM sets*sha.mean
and include,collectively.aIlthefollowing assets,togetherwitbal
IofContributor's rights title and interest
thelein,taqgibleandintngible,presentorfuture Mcluding,butnotlimi
tedto.alldevelopment.distri
bqtion
and explol
tation rights.orto any proceedsderivedtherefrom:
1.2.1. A1IofContributor'sknow-howitrade secretqr,patentrights,copyrights,trademarks,
licenses and permits. registered of unregistered pending or appfoved'
.software programs and alI
programming and source codes used in connecti
on therewith or otbelwise requifed to operate any
componentthereojand al1programmingdocumentation.designs.materialsandotherinformation.allin
whatekerform and whereverlocated relating to orused in connedionwith orotherwise describing or
consi&ting ofany part of.the software compression technology contained on thatcedain Software
CompressionEngineDevelojmentProgram containedonCDNo.1ra1lofwhichi
sbelngcontributedby
Contributorbereunder(coll
ectlvely,theKl-echnoloqv*h.
iIXXXC
( )W CMEWBLEC
ContrlbutionAgreement-Page1
1.3.
specifi
call
ynotcontributing,transferringorconveyingtoINTREPIDunderthisAjreementorbyanyomer
means,norisINTREPID acquirfng from contribtltor,anyother'angible ori
atangl
ble assetsofContfibutor
notspeciliedherein andexpresslyisnotassum inganycl
airrl
s,liabilitiesorobl
igationsofContributorofany
hind ornature,whetherexisting asoftheClosing Dateorafising thereafteq on accountofContribtltor's
Qwnershp.developm ent'exploi
tationoroperationoftheContributed Assetsatanytim epriorto tbe Closing
'
Date.
ARTICLE 2
CONSIDEM TION
2.1.
pursuanttclsectitm 721(a)ofthelnternajRevenueCodeof1986.asamended).Contributorshatlreceivel
2.2. FairMarketValue:AmountofContrl
'butor's CaoytalJontributlon t/ INTREPID.For
purposes olvaluing Contributl
x'l CapitalContribution lo,and becoming a Member of.INTREPID.
Contribptorand INTREPID hereby acknowledge and agree thatthe aggregate fairmarketvalue ofthe
ContributedM setsshallbetheirGrossAssetvalue(asdefinedinthelntrepidOperatingAgreement)equal
toOneMi
lliocThreellurdmdThousandDolbars(41,
300,000.
90)whichhasbeendeterminedinaccordance
withthelntrepidOpelatinjAgreement ThepaftiesfuftheragreethatforaIItaxrepodingpurposes,the
allocationamongtheContnbutedM setsshallbe assetIodh(m theal
ltxationschedule atlacbedheretoand
resjecti
veapplicablei
ncometaxretums.Contri
butor'scontributi
onoftheContributedAssetstoINTREPID
asl
t%Capi
talConbibutionthereto and itsadmissionasa Membershallbeevidenced by hisexecuion and
deliveryatthe closin: ofa countem artsignature page to the Intrepid Operating Agreem entin accordance
ARTICLE 3
REPRESENTAM ONS AND W ARM NTIES OF CDNTRIBUTORM a'
m aterialinducementto INTREPID to eBterintoandperform tNTREPID'Sobligadonsunder*is
3.1
PowerandAuthorik .ContributorandMontgomel
y havetherequlsitep- erandauthority
toexecute.del
iverandperform thisAgreementand al$resated documenllinstruments and agfeements.
each ofwhichwillbe dul
y executed anddelivered by Contributorand MontgomeryattheClosing andshall
consti
tuteaval
id andbindiqgobligatonofContri
butorand Montgomery.n eexecuti
on anddelivee ofthis
Agreement,andanyagreementagreedtobeexecut
ed anddeliveredptlrstzantbareto,doesnotandwillnot
CXI
IQQCPGCMt&F''LEC
contrbutlonAgreement-Page2
- '
vi
olate anyprovi
sfonofanyagreement,order.fudgmentordecfee towhich ContcibutororMontgomefy i
s
a pafty.orbyw hich ConbjbutororMontgomefyisbound.
3.2
Title to Contributed Assel. Contributorhas orwitlhave atthe Closing good and
markeb ble ti
tl
e to a1
IoftlleContributedAssets freeandcl
earofal1security interests.m ortgages,pl
edges,
Iiens.encumbrances charges.orrestrictions ofany nature and specifically i
ncluding any contingent
Iiabiliti
esorliabilitiesarisingoutofanyIegalproceedingstowhich Contributorisaparty,and m ere are no
olherlicenses contm ctsoragreem entsoutstandingregardi
ng Contfibutot's I
ightto own develop,operate.
tlse.sell.transfec icense,distri
buteorexploi
ttheContributedAssets speci:callyincludingtheTechnology.
'
3.3
WorkinqCondition oftheTechnoloqv.TheTechnol
ogy i
sdevel
oped,isoperati
onaland
pedbrm s in tlle mannerwhi
cn Contribtltorhasrepresented te tlle LLC oritsrepresentatives.A working
prototype ofthe Technole y has been developed.and Contributorhas conducted repeated and varied
'
uhdt-ntl
mbtf(
jbdilisns.'
Thei'
-are'l
ho'khbW'rbji'
dli#.'-/dih'kimrrfdi-Whfdh-n-'
did-b- '' -'- -- ''-' '
overcome orthatwould otherwiseinhibitorpreventthe softwarefrom propedyoperatingorperform ing in
themannerwhi
chi
tisdesi
gnedtodoorwhichContri
butorhasrepresented.Thereisnosqecialhardware
orothersoftware program whi
ch isrequiredto runoroperatethe program atanylevelthatlsnotgenerally
or readily available to the publi
c thatwould othel
w ise rnake itcostprohibi
tive or unreasonable to
m anufacture,distribute licenseorexploiti
n any mannerthe Technology.
3.
4
LeqalProceedinqy-.ExceeptassetforthonSCHEDULE 3.4 attached hereto and madea
palthereofneitherContributororMontgom efy hasno knowledgeofanypendingorthreatened Iitigation
governmentalirwestigationorotherproceeding againstorrela:ngtooraffectingContributtk Montgomely,
the Contributed Assets orthetransactionscontemplated bythisAgreementwhichcould have a material
adverse affectthereon. To the knowledge ofContributorand Montgomefyvnobasis forany such adi
on
exists.and thereisnoIegalim pedimentofwhkhContributororMontgom el
y haskn- ledgetothe cont
inued
devet
opm entand exploitationofthe Technologyorcontnued use oroperationofany ofthe Contri
buted
Assets i
n theordinarycourseofINTREPID'
Sbusi
ness.
3.
5
Contrah . Contributor has delivered to INTREPID copies of al
lwri
tten contradsl
obli
gationsand commi
tmentsofContributorenteredintoin connecti
on withand related to theContributed
M sets,a!lofwhichare listedby referenceon SCHEDULE 3-5 attached heretoandm adea pad hereof.
3.6
3.7
n xRetums:Taxes.Contributorbas5ladalIta'
sreturnsrequired to be jled by,and made
a11payment requiredtobemadebyit,wi
thresped toalI1
00 1,slteand fedel
'
alincomelxes,salestaxes.
usetaxes,employmenttaxesand similartaxesdueandpayabseon orbeforethedate ofthisAgreement
To Contributor's bestknowledge,informationand belief,thereare no such unpaidtax Iiabil
ities.
3.8
Commisslonsand Fees.Therearenovali
d claifm forbrokeragecommissions orfinders
orsirnit
arfees in connection withthe transactioncontemplated bythisAgreementwhich may nothave to
be asserted againstINTREPID resul
tingfrom any actiontaken byContributor.
3.S
Comoliance with Laws.Contri
butorisincompli
ancewith alllederal,stateand 1oca1laws.
regulations and ordinancesfelgting to aI
lofthe Contributed Assets.
3.10
toxlT
ws
.e
-eulpksfortQmtEG
apasler:
sl
contributionAgreement-Page3
w p:
to INTREPID pursuantto this Agreement,orin connection with the transactions contemplated hereby;
conMinsorwil
jconlin anyuntruestatementofarnatecialfactoromitsorwillomittostateand materialfact
necessaly to m ake the statem entsorfacts contained therein notmisleading.
3.11 Disclosure.Contributorhasrecei
vedcopi
esoftheAdiclesofOrgani
zati
on andthe Intrepid
OperatingAgreementand hashadanoppoduni
tytoreview suchdocum enlsandto askquestionsand to
feceive answefs and/orto revi
ew such otherdocuments orinstrum ents as requested by itand/orits
i
ndependentlegalcounseli
n connecti
onwith the transacti
ons contemplated by this Agreem ent
ARTICLE 4
REPRESENTATIO NS AND W ARRANTIES O F INTR EPID
..
'
'
'
' ''
1t1'
Z-Agte frfht.INTREPI
D h:/ebymkes'thtjlbll
Wih'
jIreptthttilm'
s zrkd WarrtmtiBs'upon which'the '- '
;
Contributorisrelylng:
4.1
O m ancationand Standinq.INTREPID isalimitedIiabil
itycom panydul
yorgani
zed,validly
existing and in good seanding underthe lawsofthe State ofNevada.
4.2
Pow erand Authori
tv. INTREPID has the requisite powerand authon'
ty to execute,deliver
andperform thisAgreem entand aj
!relateddocuments,instmm enksrelated thereto,eachofwhlch shal
lbe
dulyauthoroed.executedanddeli
veredbyanauthorizedrepresentative ofINTREPID atthe Closing and
shallconstittlte a valid and binding obli
gation ofINTREPID.
4.3
Broker.INTREPID hasneitheremployed norothelwise engaged any brokerortinderin
conned i
onW tIAthisAgreementorw i
thresped tothe transactionscontemplated hereby underterm swhich
Wotlld gi
ve rise fora claim againstContributorforany brokerage comm issi
on.findeps fee orsim ilar
Payrnent.
4.4
Canitalization. INTREPID is authorized to issue the M em bership Certiscate upon the
Closing.and the M em bership Cefticatecontemplatedtobeissued hereunderto Contributorwilbe dul
y
and Validly issued and willbe fully paid,provided Contributorhas fully transfen'ed and conveyed the
ContributedAssets to INTREPID inaccordance withthisAgreement
4.5
AIIobl
igatbnsofINTREPID underthisAgreementshal
lbesubjecttothefulfillmentofthefollowing
conditionson orpriorto the Closi
ng,anyora1Iofwhi
chmay be waived inwriting,in whol
e orin part.by
INTREPIO:
5.1
Contrl
-butor's @nd Montnomew 's Reoresentatlons and W arranties True atClollnq.
The representations andwarontiesofCo'ntributorand MontgomeryconKi
ned in thisAgreementshallbe
true andcorrectIn a1Im aterialrespectsonand asoftheCl
osingw i
th the same force and effectasthough
madeonthe date ofthe Cl
osing.
-
contributionAgreement-page4
'
'v .
5.2
Absence ofU tiqation. There shallbe no sui
t,acbon orotherproceeding pending or
threatened before any courtorbefore orbyany govefnm entalagencyin w hi
ch i
tis soughtto restrain
prohibit i
nval
idateorsetasi
de inwhole orinpaftthe devel
opment,m anufacturing,use,sale licensure
distribution orotherexploitationofthe Technology;the consumm ationofthisAgreem entorthetransacti
ons
contemplatedhereby'
,ortoobtainsubstantialdam agesinconnecti
ontherewith.
'
5.3
M ateriglChanqes.Thereshallhave beenno matefialchangesinContributor'
sContributed
M sets including,butnotlimited to any change in the waythe Technology operatesorpedorm s,and no
CharNesOrerrorshave octm rredin,and noalterationshave been m adein the design orprogram ming of,
theTechnologythatcoul
d inhibit.delayorpreventthefurtherdevelopment,use,operation,pedorrnanceor
exploitation OftheTechnology.
5.4
ADDrgvalofDocum entation. The form and substance ofal
lcertifice
ates.instrum ents and
Othefdocum entsdelivered ortobe deliveredbyContributorto INTREPID underthisAgreem entshallbe
l
iifdbiiinIlrespectst6INI-REPIO aridf
tscounel.
ARTICLE 6
CONTRIBUTOR'S CONDITIONS TO GLOSI
-N-G-
AIIobl
igationsofContributorunderthisAgreementshallbesubjed tothefulillmentofthefollowing
conditions on orpriorto the Closing,any oral!ofwhich may be waived inw rijng,in fullorin part,by
Contributoc.
6.1
INTREPID'SRenresentatlonsandW arrantiesTrueatCloA7nq.Therepresentaionsand
warranjes ofINTREPID IflP)iSAgreem entshallbetrueandcorred inaIImaterialrespectson and asofthe
Closing witllthesame forceineffed asthoughm ade asoftheClosi
ng.
-
6.2
ApDrovalofDocum entation.n eform andsubstanceofaIlcedi
ficates,I
nstrumentsand
otherdocum ents delivered ortobe deli
veredby INTREPID toContri
butorunderthisAgreementshallbe
satlsfactory inalIrespectsto Contributorandhi
scounsel.
'
A RTICLE 7
CLOSING:DELIVBRIES AT CLOSING
7.1
propertycontemplatedbythisAgreement(theKclosinu*)shaloccureffedveasofSEPTEMBER 28,1998,
orsoon thereafterata time and on a date as may be mutually agreed upon between INTREPID and
Contributor(the*closinaDate*). AttheClosing,thepartiesshaldel
iverandexchngethedocumentsand
p
setfodh i
n Sedi
on7.
2 below,orsuchotherdocumenE insubsbtuti
onthereforasaresatisfactol .
tothe recipientand itsorhiscounsel.
7.2
Deliveriesbv CbntributorattlleCloslna.
7.
2.1 A hnalupdatedSCHEDULE 1.2,
2,SCHEDULE 2.2 andSCHEDULE 3.5hereto.
7.2.2 A dul
yexecutedB2IofSalein aform and substance satisfactoryto INTREPID and
Sufficientto convey.tfansferandassignto INTREPID allri
ghts,dtleand interestin and to theContribute
Assets.includlng theTechnology.
c:
T
n
Nl
eapk tm mtec
$It
z?xx
% (
6r:
s:p
M)
'
'
7.3
n e MembershipCefti
ficate,dulyissued inthe name ofContributor.
7.3.2
A fi
nalupdatedSCHEDULE 2.2.
ARTICLE 9
SIJRVIVAL OF REPRESENTATIONS AND W ARRANTIES:
INDEM NIFICATION
'
'
9.1
Survlval.A11representaions warranties and statem entscontainedin thisAgreementor
in any schedule attched hereto. er any agreement executed pursuant hereto shall constitute
representationsandwarfantiesofContributorand Montgom ery,respecti
vely.Al
Isuchrepresentationsand
warfantiesshallsurvivethedateofthisAgreementandtheClosingDateforaperiodoffive(5)yearsand
L:m u Tre4iuclraplld7ootAgn:l.Ec
11azg:(6:sa$.
M)
Contribution Agreement-Page 6
each party covenants with the otherparties notto make any claim with respectto such representation and
warranties againstany palty afterthe date on which such survivorshallterm inate.
9.2
counsel,successorsand assigns(collectivel
y,the *lndemnitors'and indivi
duall
y.an elndemnitor'),shall
indem ni
fyand holdharm l
essINTREPID anditsamli
ated andsubsidiaryenti
ties,andeachoftheirrespedive
offi
cers.di
redors.sharehol
ders rnanagers,members empl
oyees.axpnts,counsel.successofs andassbns
tcollecti
vely,the*lndemnedPersons*andindividually,anMlndemnijedPerson*lof.from andagainstany
anda1lIiabili
ti
es Iosses,claims.damages.actions suits.costs,desci
enci
esand expenses(i
ncluding,but
notlimitedto,reasonabl
e feesanddisbuoementsofcounsel)arisingfrom orbyfeason of,orresul
tingfrom
'
anybreachby Indemnitorsofanyrepresentati
onjwarrantylagreementorcovenantcontained herein and
eachdocumentcefti
fi
cateorotherinstrumentfumished orto befumishedbyanIndemnitorhereunder,on,
ffom oraftertheCbsingDate orarisi
ngfrom (:
x'by reason oforresulting from Indem nitorsconductorthe
'
'
developmentvownershi
p!u.se,o.y-eru
or
o
ta.j.o
noft.h.e.Co
b.u.t
As
nclud
ngth.e
...o
-.n-ex
.pl
.-i
..
..nt
.r
.i
..ed
-.-s
.eY.i
.i
. Te
.. ch
.n
.o
-l
.ly..
' '' ''bisfi6innflfj#'
dtofnegtigenceollnilemni
torsori
tsemployees.agenfsorindependentcontractors
-
in anywayrel
ating to the Technologyorthe Contributed M sets.
9.3
writt
ennotic.
e oftherm mm eqcementofanyactionorotherproceeding in respectofwhichindem nilication
orreil
nbqrsementImaybe soughthereunder.orwithinsuch Iessertim easmay be provided bylaw forthe
defenseofsuch ad onorproceeding,suchlndemni
fied Personshalnotifythe lndemnitorts)thereof.lfany
suchactionorotherproceeding shallbe broughtagainstany Indem nifi
ed Person,Indemnitorshall,upon
wri
tt
eflnotice gi
venwithin a reasonable tim e fol
lowing recei
ptby Indem nitorofsuch noti
ce from lndem ni
sed
Person beene edto assum ethedefenseofsuchacti
onorproceedingwith counsel(A osen by lndemnitor
andreasonabl
ysajsfadorytothelndemni
fi
ed Person'provided,howeveqthatanyIndemnifi
edPersonmay.
athIs own expense.retain separate counselto participate in such defense. Notwi
thstanding the foregoingl
Indem nifi
ed Personshallhavethe rightto empl
oyseparate counselatlndem nitor's ekpense and tocontrol
Person:(i
)thereareormaybeI
egaldefensesavailabletosucblndemnifi
edPersonortootherIndemni
fied
Persons thatare differentfrom orin addition to those available to Indem nitorand whicb could notbe
adm uatel
yadvanced bycounselclwsenbyIndemni
torwor(ii
)aconfli
ctorpotentialconflid exists between
Indem nitorandsuchlndemnisedPersonthatwouldmakesuchsepacate representati
onadvzable;provi
ded,
however,thati
n noeventsbal
lIndemnitorbe requiredto payfeesand expenseshereunderform orethan
'
j r
eceivedbylndemnedPersonwi
thintwenty(20)daysafternoticeofthecommencementofanacti
onor
Prcceedingisreqeked bylndemni
tor,theentitlementofIndemnijed Persontotherequestedlndernniscation
shallbe determinedbynonbindingarbitrationinthefollowing mannec one arbitratorshallbe named by tl)e
IndemniedPersonandonebytheIndemnitorwi
thinfifteen(15)daysofreceiptbylndemnifi
edPersonof
thewrittennoti
ceofcontestreferredtoabove.Ifthetw'
oafbitratorscannotagree tlpon theall
owanceofthe
requestedindemnifcationwithinjfteen(15)daysaqerthei
rappointment.thearbi
katorsshallappointathird
arbitrator,andthedecisionofthemajorityshallbemadewithintwenty(20)daysthereafter.Allexpenses
ofarbitrati
onshallbepaid by theIosingpar
ty,orifthereshallbenocleardetermination astothe prevailing
OrIosing party.asthe case may be.such expensesshallbeshared equall
y by Indemnified Person and
lndem ni
tors orpro fata amonga1Ilndemnihed Persons andal1Indemnitors asthe case may be.
c:k>x>$as#kQr:pd.Gonbqgmtec
,,w s:
;,sap,a)
contributionAgreement-page7
'
ARTICLE 19
NOTICES
Fxceptfortheitemstobedel
ivered atorbefore theClosing,anynoticeofcommunicationrequired
orpermittedtobegivenhereundershallbeinwritingandmaybeeither(i)personallydelivered,whichshall
be deemedreceived atthetime ofactualreceiptthereot or(ii)sentbyregistered orceftifi
edmail.with
postageandchargesprepaid,whi
chshallbedeemeddeliveredseventyutwo(72)hoursafterdepositi
nthe
United Statesmail;or(iii)delivered by facsimiletransmission.which shallbedeemed received onthe date
and atthe tim eofelectronicconjrm ationofsuchtransmission provi
ded anori
ginalm echanicalsigned copy
ofsuchnotice orothercom munication i
s al
soimmedi
atel
ydeposi
tedinthe Uni
tedStates mailw i
thfirst-class
'
postageandchargesprepaid;or(iv)deliveredbyrnessenger.FedFxorothertfackabl
e courierservice which
shallbedeemed deliveredonthedateand atthe tim eastrackedandconrm edbysuch couriersefvice;and
i
neachcase.addressedordel
keredtothepartytowhom the sameisdi
rectedatsuc.h padysaddressandlor
).
qryttjorthWlqwsqrat@cjpthraddr>jsapd/orf
pcsimilenumberasthatpart
ymayspeciT
Kce
simil
e npm!
.
iywri
kennoticegiventotheotherpartieslnaocofdancewiil
iilsparagf/pif.
IftoINTREPID:
INTREPID TECHNO LOG IES,LLC
Attn:W arrenTrepp,ItsM anagementCom mitteeChairm an
685 Gae court
lncl
ine V ll
age,NV 89451
Mail
inq Address:
P.O .3ox 4964
InclineM llage,NV 89450
'
Facsi
m ile:(702)831-4395
W it: a courtesv convto;
Frye & l'
lsieh.LLP
Attn: Dougl
as J.Frye,Esq.
24955 PacificCoastHi
ghway,SuiteM 01
Malibu.Califom ia 90265.
.
4747
Facsimile:(310)456-0808
Ifto contributor:
Attn:DennisMontgomeryandBrendaK Montgomery,ItsCmirustees
818 CheneyCoud
Lodi.Cali
fornia 95242
'
'
Facsimil
e:(209)369-7530
'
DENNIS MONTGOMERY
:18cheneyCourt
Lodi,california 95242
Facsimile:(209)369-7530
IITC
(
IX
,IIA)'PW'GOC'
LYMLEC
cOntributionAgreement-Page8
m th aCoudesv Copvto:
TEHIN + PARTNERS
Attn: NikolaiTehin,Esq.
BankofAm eric.aCenter
555Cal
ifom iaStreet.33*Floor
SanFrancisco,Cali
fom i
a94104-1609
Facsimife'
.(415)951-8806
W herecourtesycopiesareprovided for theservice ofanysuch courtesycopy shallnotconsti
tute notice to
the pafty hereunder.
. .. ..
. ..
..
. . -
..
AMTIQI
.:M ... ...
. .
. . .....
...
GENERAL PROVISIONS
11.1 EntireAqreem ent Tbe partiesagreethatalInegotiationsarem erged into thi
sAgreement
and Mat,exceptfortheBillofSale thisAgreementconstitutesthe finalcornpleteand exclusivestatec nt
Qfthetermsofti!eAgreementrelatingtothecontribudonofContributof'sContributedAssetsinexchange
forthe M embehiplnterstinINTREPID assetfodh herein.Therearenoofalorotherw ritten agreement.
s
'11.3
No Third Partv Beneficlarles. exceptas omelw ise provided in this Agreement no rights
benefi
tQf anythird partynotasignatoryto thisAgreement
11.6
cirlmmstanceisadjudgedbyacoufttobevoidand unenforceable,thatshallinnowayaffectanyother
provi
slon ofthi
sAgreement the appli
cationofsuchprevisi
on i
n anyothercircurrk
stances.orthevalidity or
enforceability ofthi
sAgreementasawhole.
11.7
No W alver. No course ofconductbeo een the parties and no delay oromission ofthe
partiestoexerciseanyrightorp- ergivenunderthisAgreernentshall:(i
)impaifthesubsequentexercise
()fanysuchrightorpow'
er. or(ii)be const
zuedtobeawai
verofanybreachoran acquiescenceinor
consentto the cure ofany breachwhile anyotherbreach shallcontintl
e to exi
ssorbeconstrued to be a
c-
hT 4lbdnpk>cenukyntE?
'
1ap.)
,,z?x (s.
contributionAgreement-page9
'
'
>.
11.8 Affirm ative Acts;AdditionalDocum enl . Atany time and from time to time foll
owing the
Closing Date andateachpart
y'sown expense,thepadiesagreetotake orpedorm suchfurtheracts and
to exectlte and deliver such ftldher documents ceftifi
cates or instruments and to gi
ve oath to or
acknowledgebeforea notafy publicanydocurnents reasonabf
y requested bythe otherpartyto im plem ent
orcompl
etesuch pafty'sobli
gati
onshereunderorthetermsorintentofthisAgreement.
EFFECTIVEUNLESSGIVENBYTHEDEFENDANTTHEREINANDGIIENBEFORETHEEXPII
RATION
W TWO J!'
.
IJ(VW DYYS ?WW R >-EF.
4FItA (.
IF FTOCEqF 9.Y.& q.jX 6991
.
491.
X16.
9.I'IJX-Y-G ICE
ExcEpTAs PROVIDE6 TO #HEUONTR'
AO IN THESC P/OVISIOMS 09 ARBITIRATIONITH
ARBITI
RATIO N SHALL BE IN CO NFO RMIW W ITFIAND SUBJECT TO APPLICABLF RULES AND
AWARD PUNITIV'E DAMAGES. THE DV ISION OF THE M BITM TORS SHALLBE FINALAND
UNREVIEW ABLE FOR ERROR OF LAW OR LEGALREASONING OF ANY K ND.F-ACH PARR SHALL
PAY THE COSTS OF ARBITRAIION,INCLUDING ARBITRATORS'FEES,AS AW ARDED BY THE
ARBITM TORIS).
11.10 W aiverofJu> Tneal. W ITH RESPECT TO ANY DISPUTE ARISING UNDER OR IN
CONNECTION > TH THIS AGREFMENT OR ANY RELATED AGREEMENTSAS TO W HICH NO PARW
INVOKES THE RIGHT TO ARBITRATION HEREIN PROVIDED,OR AS TO W HICH LEGAL ACTION
NEVERTHELESS OCCURS.FACFIPARW HEREBY IRREVOCABLYW AIVESALLRIGHTS I
T OR HE MAY
HAVE TO DEMAND A JURY TRIAL. THIS W AIVER IS KNOWINGLY. INTENTIONALLY, AND
VOLUNTARILY MADE BY THE PARTIES,AND FM H PARTY ACKNOG EDGES THAT NONE OF THE
OTHER PARTIES NOR ANY PERSON ACTING ON BEHALF OFTHE OTHER PM TIES HAS MADEANY
REPRESENTATION OF FACT TO INDUCE TUIIS W AIVER OF TRIAL BY JURY OR IN ANY W AY TO
MODIFY OR NULLIFLY 1TS EFFECT.THE PARTIES HERETO FACH FURTHER ACKNOW LEDGE THAT
jjxga
:uizppocrewmtec
ContributionAgreement-Pagejg
'
TO DISCUSS THIS W AIVER W ITH CO UNSEL THE PARTIES FA CH FURTHER ACKNOW LEDGE THAT
IT O R HE HAS READ AND UMDERSTANDS THE M EANING AND RAM IFICATIO NS O FTHIS W AIVER
PROVISION.
11.11 Tim eisofthe Essence.TIME IS EXPRESSLY DECLARED TO BE O F THE ESSENCE
in thisAgreem entwitb respectto aIloftheterrns provisi
ons covenantsand conditionscontainedherein,
incltlding specificall
y.but not Iimited toIthe paymentofany moni
es or executi
on and delivery ofany
documentsprovided forherein.
11.12 Construction.The I
anguage i
n al
IpadsotthisAgreementshallbeconstrued,in aIlcases
accordi
ngloitsfakmeaning,andnolfoforagai
nstei
therpa@ hereto.Thepadiesacknowledge thateach
parl
y and its or bis counselhave reviewed and revised this Agreementand thatthe norm alrule of
construction to the effectthatany ambiguiti
es afe to be resolved againstthe drafting party shallnotbe
#?r.
ppl?yqt!iptlqlaterpf4tptiopoftpisAgrqqpppl, ..
11.15.1
PublicNotice.Subjectto theprovisionsofSec'
tioa 11.15.2.below.the rharties
QfthisAgreement,oranyfinanciali
nfofmadonregardingtheQther(past,pre-sentorfuture)thatwasobedlned
by theotherin the courseofthe negotiationofthisAgreementorinthecourseofthe performance ofthis
Agreementwi
thoutthe otherpady'swrittenapproval'
.provided,howeveqtheforegoing shallnotappl
y to
'
'
informationwhich(i)isgenerall
yavailabletothepublicotherthanasaresultofabreachofconfi
dential
ity
provKi
ons;(ii)becomesavaiableonanonconfidentialbasisfrom asourceotherthantheotherpartyoriks
amli
atesoragenLs,whichsourcewasnotitselfboundbyaconrdentialityagreernentaor(ii)whichisrequired
to bedisclosed bylaw.includingsecuritieslawsorpursuanttocoud order.
11.16 Governlnq Law. The validity. construction,interpretaion and enforcement of this
Agreement,andthe rightsand obli
gati
onsoftheparti
eshereunder,shallbe govem ed by and construedIn
accordance with the laws ofthe StaleofNevadawithoutgi
ving effecttoanyconflictoflaw provision.
11.17 Counterparts. To facilitate executi
on,this Agreementmay be executed in mtlltiple
cotlnterpafts.each ofwhich shallbedeemedan originalAgreement.and atIofwhich shallconstituteone
Agreemeptto be effecti
ve asofthe day andyearfirstabovewritten. Itshallnotbe necessaryin making
CY- TM -
azaate:saev)
,i
M OnY KEC
contributionAgreement-page11
IN W ITNESS W HEREOF,theparti
esheretohaveexecutedanddeli
vered,orceausedtobeexecuted
and deli
vered by a duly authorized representati
ve,thi
s CONTRIBUTION AGREEM ENT as ofthe day and
yearfif'
stabovewri
tten.whichAgreernentwhenfull
yexecuted,shallconstitute a valid.bindingagreement
on aI1padies.
IINTREPID''
INTR
ID TFCHNOLOG IESILLC
ANevJrLi
mi
t
edLi
a'
I
i
tyCompany
By:
TREPP
s anagementComm ittee Chairm an
''CONTRIBUTO R''
M ONTGOMERY F
Y TRUST
A California Revocab Trust
l
By:
DE Nl
'T
M ERY ItsCo-Trustee
BRENDA K
ONTG
'
i
By:
Y,ItsCo-T
tee
DENNIS
kzvselo,
sse.
RY.an lndi
vidual
contributionAgreement-page12
v e
SCHEDULE 1.2.2
CINTREPIDD ontheonehand.andDENNIS MONTGOMERY andBRENDA K MONTGOMERY,asCoTrustees ofthe MONTGOMERY FAMILY TRUST,a Californi
a fevocable trust(the Mcontributor'),and
DENNIS MONTGOMERY,anindi
vidualCMontclomerv*)ontheotherhand.
''
'
'
fli'fo-ljt
-iWln'g-is a fit ofa
-iltangiiie p
''
ersonalproperty oiContributor being
contributed,assigned,transferred and conveyed to INTREPID pursuantto Sectlon
1.2.2 ofthe Agreem ent:
'
ITO BE COMPLETED)
slzlll
(= cr*pi'*o'
*'W*'c
'
SCHEDULE 2.2
This schedule is attached to and made a paft ofthatcertain Contribution Agreement dated as of
September28,1998by and betweenINTREPID TECHNOLOGIES,LLC.aNevada l
imi
tedIiabilitycompany
'
'
''
'
''
'
($3
l
:
270
::8
*1
(RPM)
Technology
.00
Tangible PersonalProperty
.0O
TOTALCO NSIDERATIO N:
$1.300.000.00
'''
c
SCHEDU LE 3.4
'
'
''
'
'
Thefollowing'is alistofallIegalproceedings'ofGontributoro-r'Mkjfltdt#rrit#'tltili'
tf
to Contributoq Montgom eryortheContributedAssetsto bedisclosed byContributor
and Montgomery pursuantto Section 3.4 oftheAgreement:
1.
(C$1ld(
l:k*
p*
M*)O*>C**&%F?l'
E&
'
SCHEDU LE 3.5
Tbis schedule is attached to and made a pa4 ofthatcertain Contribution Agreem ent dated as of
September28,1998byand betweenINTREPIDTFCHNOLOGIES,LLC,a Nevada I
im itedliabili
tycompany
P NTREPID*),ontheonehand,andDENNISMONTGOMERY arldBRENDA K.MONTGOMERY,asCoTrustees ofthe VONTGOMERY FAMILY TRUST a Califomia revocable trust(the *contributor),and
DENNIS MONTGOMERY,an individual(MMontnomervp),on the otherhand.
'
'
'
Thefollowing '
is'a listof-allwrittentontracts;obligationsand othpreom m itm ents of
ITO BE COMPLETED)
ktvl
(
l:
rll-e
)pu- 'ec
'
'
BILL O F SA LE
1998.byandbetweenINTREPIDTECHNOLOGIES,LLC,aNevadaIimitedliabil
itycompanyCINTREPIDOJ.
ontheone hand aqd DENNIS M ONTGO M ERY and BRENDA K.MO NTGO M ERY as ce-Trusteas ofthe
'
''
HbW '
fii/itiz
b e #bifilb Xbkilust.ko<lo
''
liW lbk therec'
eiptansufjcncy
ofwhichisherebyacknowledged,Contri
butorherebysells.transfers,assi
gnsandconveysuntoINTREPID
aI
lotitsri
ghts.title,and interestin andto the fol
lowlngtangibl
e and intangible propedy andassetswhich
constitute aIIofthe*contributedAssets'being contributedbyContributorto INTREPID underthe term sof
tNe Contribtltion Agreem en:
1.
AIIofContributor'sknow-how;tradesecrets'
,patentrights.copyrights.trademarks.
Ii
censes and petmits regstered orunregfstered pending orapproved'soflware
programs andaIlprogram mingand source codes used inconnectiontherewithor
othe- ise required to operate any com ponentthereof' and a1
lprogramm ing
docum entation,designs,materialsand otheri
nform ation alIinwhateverform and
w hereverIocated relatingtoorused inconnectionwith orotherwisedescribing or
consistin: ofanypal
'tof thesoftware compressi
on technologyccntainedonthat
certain So> are Compression Engi
ne Developm entProgram cootained on CD
No.1.beingcontributed by Contributorpursuantto the termsofthe Contribution
Agreement(collectivei
y,the*'
I-echnoloqvpl'
,
2.
3.
Al
lofContri
butor'sbooksand recordsrel
atingto the ContributedAssets.
ContfibutorherebyreqresentsandwarrantstoINTREPID tbatitistheIawfulandequitableowner
oftheabove-describedContnbutedM sets.andithastheh'eeri
ghttocontribute,convey,transferand
assignitsentire interestthereinwi
thoutthe consentorpermissi
on of andwithouttherequlrementofany
noti
ceto,anypersonorentity.Contributorrepresent andwarrantstoINTREPID that,exceptasotherwise
disclosedto ltundertheContri
buti
on AgreementvaI
loftheContributedM setsarefreeandclearofany and
alIIiens securi
tyinterests charges,burdens claims restrictionsorencumbranceswhatsoever.
E'
ach ofContributorandINTREPID herebyacknowledgeand confi
rm thatthisNillofSale aad the
sale.tfansfer assi
gnmentandconveyance oftitlelothe ContfibutedAssetssetfodhherei
n byContributor
toINTREPID hereunderis beingexecuted anddelivered pursuanttotheContribution Agreement.ThisBitl
ofSale and the conveyance oftitle to the Contributed Assets to INTREPID hereundershallbe epective
imm ediately uponexecution and deliveryhereofatthe Cl
osing.
In the eventofany Ii
tigation,arbitrationorotherdispute arising asa fesultoforbyreason ofthisBill
ofSal
eorthesuUjectmatterhereof;theprevaili
ngpadyinanysuchIiti
gadon,arbitrati
onorotherdisputeshall
beentitl
edto,inadditionto anyotherdamagesassessed,itsreasonableattorneys'fees,and a1lothercosts
andexpenses incurred in connectionwith settling ortesolving such di
spute.Theattorneys'feeswhi
ch the
prevailingpartyisenti
tled to recovershalli
nclude feesforprosecuting ordefendinganyappealand shallbe
cqxxwhyreaekoeepw4hysauaec
279e,:4spu)
$1
'
- :
procedureonthisinsbumentshalbeenti
tledtoitsreasonableattorneys'feesincurfed in any postjudgment
proceedingsto collectorenforcethejudgment.
The validity construction,interpretati
on and entorcementofthis BillofSale,and the ri
ghts and
obligationsofthe partieshereunder shallbegovem ed byand construed inaccordancew i
ththe Iawsofthe
State ofNevada withoutgiving effectto any conflictofI
aw provisi
on.
.. .
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UCO NTRIBUTO.Rt'
A'aIiognia Rev
Ie Trust
k .
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By: N
TGOMERY.Itsco-Trustee
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SCHEDU LE 1.2.2
This schedule is attached to and made a pad ofthatcertain BillofSal
e dated as ofSeptem ber28,19981
from DENNIS MO NTGO MERY and BRENDA K MONTGO M ERY,asCo-Trusteesofthe MO NTGOM ERY
FAMILYTRUST,a Californiarevocabletrust(theMcontributo/'
)infavorofINTREPID TECHNOLOGIES,LLC,
aNevada limitedliabilitycompany(UINTREPID, .
Tlle follow ing is a Iist of all tangible personal propedy of Contributor being
contributed, assigned, transferred and conveyed to INTREPID pursuant to the
accom panying '
B ill'of-sale: ''
t-ro BECOMPLETED)
(:
No,CV06-00114
ETREPPID TECHNOLOGIES,INC.
.
VS.
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RONAL . NG
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A N evldl Lim ittd-Liability Com paRy
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applicableprovisioasftheNRS(asdefinedlerein).
B. Thelvlem bersexecutingthisApeem entwisllto adoptthisA greem entastheOperating
Agreementofth:Company,governing itsorganizationandmam gementand ther1g111,powers,
dutiesazldobligationsofthtM anagementcemmitcc,Qm Maaager,andteM em bers,respcctively.
antlmeningsastlsed thfougimutthisAgrtemo t:
1.1
''Adiqst
-edC.apital
-AccBulltDeflcit''meaas,withrespe-cttanyM ember,iikedeticit
givingefecttothefollowingadjlenents:
1.1.1 Inorev suqhcapitalAcctmtbyanyamountswltichsuchM emlxrisobligated
1.1.
2 Rcduoo such Cayihl Accmtmti)y the atnotmt oftlw ittms desclibed in
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l.4 . ''Article:ofOrganizatl/n''meanstheArticlesofOrganiz-ation(whichincludesa
designationt)ffesidectagentforserviceofpmcess)filedwiththeSecretaryofStateoftheStateof
Nevadaon SEPTEIVIBER 28,1998,FilingNo.1+ C-5563-98,forthepurposeoffonningtheLLC.
).5
witkrespecttosuchassctshall,eveptasotlwrwisercquh'edbyRegulationsSectonl.704-3(d),be
anamom twitichbearsthesameratio to suohbeginniag CxrossAssetvalueastheDepreciationwith
''Busine.ss''or''BusinesseftheLLC''mcansth:businessoftheLLC asdetinedin
'lcapitalContributioaffshallhavethemeaniagsetforthin Sedion3.7.1hmeof
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1.15 ''Dissolutiolltfmeans(i)whenusedwithreferencetotheLLC,theearlierof(a)the
date upon which tlle LtC isterm inated undertlle NRS,orarty slm ilarprovision enacted in lieu
themof,or(b)thedateuponwhichtheLLC ceasestobtagoiagcoacrm,and(ii)whenusedwith
referencetoarlyMember,theearlieref(a)thecLateum nwhiohthcreisaDissolutionoftheLLc or
(b)thedateuponwhiohsuch Member'sentireinterestilltheLLC istennitmted bymeansofa
distributionorseriesofdistributicnsbytheLLC to suchM eiuber,
1.16 ''Ecenom ic Interest''m eansaPerson'srightto shareilztheNd Profts,NetLosses
'
orsimilaritemspursuanttoSections4.1.1.4and4.1.2.5hereof,andtoreceivedistributionsfrom th.
e
LLC ptlrsuantto Sedions5.2.5 and 11.4.6 hcreofvwhich theassignorofsuch economicirtterest
'
l.17 ''Fiscal Ycar'l moaas the fiscal year of tlK LLC,rllnning for the period of
JANUARY 1toand ilwludingDECEM BER 31t)feachcdendarycar.
1.18 ''GrossAssetValue''meaos,witllrespecttoartyassetof*eLLC,theasset'sadjusted
'
basisforfederaiincometaxpurposes,exceptasfollows:
1.18.2 'I'
hoOrossAssetValueofallLLC assetsshallI7eadjustedtoeqlmltileir
respectivegror,
sfairmarketvalues,asmutuallyap'
eedbetweenthelat,
c andtheaffectedMemberts)
upontlm occlarenceoftlzefollowingevents:
1.18.2.1 TheacquisitiollofanadditionalInteresthltheLLC by any new ot
existingMemberinexohangeformlletI)aCa#..
m'ntttCapltalContribution;
fm lot&'-
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Interestin(htLI-C iftheLLC reasonablydetermincsthatsuohadjustmentisneccssazyorappropriatcto reflcctthe rclative eoonomicinterestsoftlw M om bersin the LLC ;and
1.18.2.3TheliquidationoftI
ZeLLC withinthemeaningofRrgttlationsSection
1.704-1(b)(2)(ii)(g);
1.1s.3 n eChossAssetValueofanyLLC assetdistributedtoany M embershallbe
1.12.4 TheGrossAssetValueoftheLLCassdsshallbeincreased(otdecreased)to
retlectanyadjustmentstotheadjustedbMisofsuchasseapurstmnttoCodesectionv/34tblorCode
section7430% butonlytotheextent1a1suchadjustmentsarctakmlintoaccountindetermining
CapitalAccolmtspursuantRegulationsSection 1.704-1($(2)(iv)(m)and Section 4.9 hereof;
providedohoweverythatGfossAssetValueshalluotbeadjustedpllrsuanttothisSection 1.18.4to
tlw xtenstlm LLC determinestlmtanadjustmentpursuanttoSection1.18.2aboveisnecessaryor
appropriateincomwctionwiththetransactionthatwouldothem iseresultinanadjastmentunder
thisScction 1.18.4.
eachnonrecourseliabilityoftheLLC,theamountofgaitl(ofwhatevercharacter),ifany,th1 would
berealizzdbytileLLC ifitdisw sed @ auxabletrarlsactioa)oftlw Propertysubjecttosuch
liahilityinfullsatisfactioatlwreof,artdfornootherconsideration,andsubjecttotheotherrulesset
jxwmmtjeeuxe- wa
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forthillRtgttlatiolu Section1.704-2,audbythenaggregatingtheamotmt.
ssocomputeda.
ssetforth
ittRegulationsSection1.704-2(d).
1.23 ''M aioritv in Interel''or'fM altla
r..
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1n.terestoftheM em bersf'means,lmless
otlletwiseprovidedintheAgrcemcnt,thePercentageInterestsoftlleclassA M embers,wllioh,taken
1.24 ''ManaeementCommittee''means,collectively,thethree(3)CommitteeMemher:
appointed by the Membersto managetheLLC pursu-mtto Section 6.1ofthisAgreementacting
togetherto mnnagetheLLC inaccordancewithtketermsandcondltinsc'ftbisAgreement- n e
M alm gem entComm ittecshallbechargedw iththosepowers,dutiesand responsibilitiesassetforth
in Article 6 and clscwhertinthis Agreem ent
accordancew1t.
11theM iclesofOrgnnizationQrthisAgreement,orisauassigneeortransfemeof
anIntorest,otherthananEconomicInterest,andwbohasbecomeaM emberptusuanttoSection9.3
hereof.
1.26,2 Hasnotresignd,witbdrawnorbcenexpelledasaM emberor)ifothertbnnan
individual,hmsbeen dissolved.
LLC,or,inthecaseofatraasferecM cmbcr,hassuooeede,dtotb.
eCapitalAccotmtofthetransferor
Member,andwhohasbecomeapattytothisAreementbyexecutingandsubmittingtotheMauajer
1.704-2(19(4)fQr'partaerlmnrecotlrsedebt.e'.
1.28 ''M emberNonrecourse DebtM int
'm um G aia''m eansan amotmt,$v1t11resped to
ilTlsq
ed**em ''-
OPERAIANGAGIkBBMENF,PAteS
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NonrecourseDebtweretreatedasanonrecottrseliabilityoftheLLC,determinedinaccordancewitil
RegulationsSections1.704-2(i)(2)and(3).
1.29 ''M emberNosreca- eDeductions''H iemee agsetfoe z RegulaonssK on
accordancew1t.
11RegulationsSectioa1.704-2(i)(2).
1.30 ''M embersbm Interest''or''Interest''mealssancpm lersllipkltGestzeLLf ,which
includesa M em ber'sEconomiclm erest,therightto Voteorparticipate in them anagem entofthe
LLC,andtherkhttoinformationconcerningtlleaffairsandBtlsinessoftheLLCa.
sprovidedinthis
Agreementandunderthe'
NRS.n eMembershipJnterestofaMember(includingtheEconomic
Interest)constitutcsthepersonalpropertyoftheM ember.NoMember:byvirtueofhisownerslp
ofaM embership Itlterest,hasorowas,orisdeemedtohaveorownvan interestirta11oranypartof
theLL's Property.
1.31 ''N etCapitalContribution''m e-anqaM em ber'sCapitalContribution,asofany date,
REDUCED BY a11priordistribtltionsofaM ember'sCapitalpursumzttoM iole5arld/orArticlel1
hereof.
withCodeseotion703(a)(fortbisptuyose,aliitelusofincome,gaiw lossordoduo,
tienroquiredt:
bessatedsepazatelypursuanttoCodesection703(a)(1)shallbeinoludedinfaxableincomeorloss),
witlvthefollowlngadjllvl
rnents:
1.32.1 Any incnme Qfthe LLC thatisexemptfrom Federalinoomc tax and nt
otherwisotaktnintoaooountinoompztingNetPtostsorNd Lossesshnllbeaddedtosuohuxable
incomeorloss;
gainorlorssisreco> z.
edforfedcalincometaxpuzpososshallbecomputodbymfcmncetothefair
marketvalueoftllePropertydispostdofknotwithshndingthattheadjustedfaxbasisofsuch
-- .- -
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tydiftrsfrom itsfairrnarkd valu;
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l.32.4 Inlieuofdepreciation,amortization,andotAercostrecoverydoductiorlslaken
into accotmt in computing sttoh Qaxablt income or loss,there shall be taken into aocount .
Depreciation for such FiscalYear orother period,computed ittaccordance w it.
h the subsectioa
hereoftatitled ''Depreciatioa'';and
1.32.5 Notwithstanding any otherprovision ofthissubsection,any item sofincom e,
gain,Iossordeductionwhicharespeciscallyallocatedshallntltbefakenintoaocountincomputing
N d ProtitsorNetLosses.
1.33 ''NRS''metqnsChapter86,Sections26.011to86.571,oftheNevadaRevisedStatutes,
asamendet oranycorrespondingprtyvisionorprovisionsofaaysucceedinglaw.
1.34 ''PercentaTeInterestlsl''meansafraction,expressedasapercentage,tllenum erator
ofwhich istllenum berofU nitsowred by aM em berandthe denom inatorofwhich istheagx egate
ntlmbe:of a11issued and outstanding Units ofthe M embers.The PercenGge Interests ofthe
M embersshallbt setforth on EYR IBIT A attached hereto arld m ade a partofthis A grexm ent,
which exhibitm ay be updated and amended from tim eto tim e by the M arlager.
1.35 ''Pcrson''meansan individual,padnership,lim itod pa> ership,corpomtion,trustz
shte,associatiow limited-liabilityoompany,orothertntity,whetherdmesticorfoteiga.
taugiblearldintangibleaincludhg,butncdlimhedto,theTechnology(defmedbelow),oranyportion
thereof.
'
promukatedbytlte'rreasuryDepnrtrnentunderthecbdr,assuchregulalionsmaybeamendede m
tlmetotime.Allrefcenoeshtreintoaspcifiosection QftheRegulationsshallbedeemedalsoto
rcfcrtoauyconw pondingprovisionsofsucceedingRegulatioas.
1.
40 ''Reseo es''ma nqftmdssetmqidefrom capitalContzibuNonsorrevenuesasreserves.
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ClassofUrtits
Number
ClassA Units
ClmssB Units
800,000
200,000
mayberequiredtmdertheapplicableprovisionsQftheNRS,tlteCodeorapplicableRejulations
INTRODUCFORY M ATTE.RS
2.1 FormationofG eLLC.ThepartieshavefonrrdtheLtf pursuanttoSeotioas86.151
and36.201.1oftheNRS byexecm ing,aclcnowledgingandfkliagtheAi clesofOrganizme nwith
theSecrda!'
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lheregisteredoftkeoftheLLC inNevada$hal)bctheadda ssoftheLLC'Sresidentagent.
'I'
helocation oftheLLC'Sregisteredofficeorthenameandaddressofitsrcsidentagent,orbothz
mayonly bechaugedby filingaccrtificateofchangewith theSecretaly ofStxteia theform and
m annetrequired by suoh oftit.
2.6 PerpetualExisteuce.AssetforthintheArticlesofOrgatlizvatitlnofflielslacztheLLc
shallhaveperpetualexistence,untiltlw LLC isterminatcd ordissolved in accordancewith tllis
Agreement.'l''
heexistenceoftlleLLC shallcommenoeasoftheeffecivedateofthisAgreement,
SEPTEM BER 28,1998.
.
soiwarecompmssionteclmologyownedbytheLLCttlm f'Teclluolomrf')alldtoticatkceazfyand
a1loftiw foregoingactivities(oollectively,the''Busiaess''l.TheLLC mayconductorengagein
any othor lawful activitios which $h LLC dttms is neccssmy,iucidentalto er desirable in
cotmection witllthc Businessofthc LLC.
2.10 M histtnanceoff-ompanvM-inutvBok'
.RgcordKeepix DnEes.r
fheManater
@ theSecretam ifoneisappointedbytheMmmgementCommittee)shallkeepaudmaintainor
causetobekeptand rnnintainedacompanyminutebook toincludetheArticlesofOrganizationof
IeLLCandthisAgreementvandanyamcndmentsthereto,andmintltesofallmeetings(orcoasehts
ialieuofmeotings)oftlzeMmzagemontCommitteejwrittenconsentsoftlw McmH s,andother
importantdocum entsofthcLLC.
im r.
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ARTICLE 3
M EM BERS AND CA PITAL CONTRIBUTIONS
3.1
3.3
Ad-d
.itjapxl Capital Contribution or Loans te the LLC . A dditional Capital
CommitteeuponwritennoticetotheClassA Memberst111e'AdditionalCapihlConfzibutionsn)
tocnabletheLLC toconductitsBusiness.n ewtittennoticetotlleClmssA M embvrsshallsetforth
the am ountofAdditionalCapitalContributions needed,the dateby whioh the Class A M embers
shallcoatrihute,whichdateshallnotbesoonerthanten(10)daysefreceiptofsuchnotice.Each
ClassA MembershallberequiredtomakesuchAdditionalCapitalContributimsingroportionto
theitPercentage Interestin t
lm LLC.No M embermayvoluntarily makeany AddittonalCapiul
Contributiomsand shallnotbc requird orperrnittod to m ake any rnnk'
e any loan or cause to Ix
loaned any monry orotherassdstothe LLC.
3.5
3.5.
2 Nah terestnn CapitalColltributions.Exceptasexpresslyprovidedforin
thisAgreementznoCaptalContributionofanyM cmbershallbe,aranyinterestorotllervvbetntttle
theoonttibntingM embertoatzycompemsationfortlseofthecontzibuted capitl.
'
Accotmtwillbeseparatedintoaoontribuoonaccotmtandaninoomc(loss)accounta1)4willbe
.
maintaincd ao rding to generally acccpte,d accounting principlcs. Seodons3.6 aud 3.7 bdow
desolibetheappropriateaccolmtingtreatmeatfortax purposesoftlr CapitlAccolmts.
r-
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93
3.6
G ener
-alRulesfor Determ iaitte CapitalAccounts. 'l'he CapitalAccolm tof eaach
Mom bershallbedeterrninedasfollows:
3.6.1 Increases.'fheCapitalAccountofaM embor5ha1lbeirtcreasedby;
3.6,!.lSuch Member'scmshoontributions;
3.6.1.2TheG ossAssetValueofpmpertycontributedbysltchMember(net
ofliabilities sectlred by such oontributed property thattht LLC is considered t assum e or take
subjectteImderCgdesection 75.
2):
3.6.1.3A11liabilitiesoftheLLC assumedby suoh M em ber,exoluging those
provided forin Section 3.6.2.2 below ;and
3.6.1.4 A llNd profit.
softIw LLC allooatedtosuchM em btrp= uu tteArtiole
4 orotheritemsin the natureofincomeorgainspecially alloeated herelmder,aad ia each case,
appropriatclyadjlzstedtotakriIINIaccolmtbookandtaxdifferences.
3.6.2 Decresses.TheCapitalAccolmtofaM embershattbedecreasedby:
3.6.2.1Theamoulltofcashdlstributedtosuch M ember;
3.6.2.2 n e Gross AssetValue ofallactual and deemed distributioms of
case,appropriatelyadjustqdtotakehltoaccountbel)karldtaxdiFerences.
3.7
3.7.1 TimeofAdiustmentforCam'talContribations.Forpurposeaofcomputing
tlzebalancein aM em- r':CayitalAccolmt,no creditslullbegiven foraay CapitalCtmtribue n
which such H emberisto make UI)SJI such contribution isacmally m ade. Fozpurpose:oftitis
Ag xmentzthesenn ''G pitalCnntribution''memlsthtlotalmnountofcash aad/orthe Gross
m'r zr '**''''-
OPERATYGAGARRMENT.PM:
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3:06-cv-00056-PMP-VPC
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LLC bythatMemberartdanysubsequeatcontributionsofcaasltand/ortheGrossAssctValue(net
ofliabilities)ofanyotherpropertysubsequentlycontributedorobligate,
dtobecoutributedtothe
LLC by lhatM ember,includingAdditionalCapitalContributiorts.
3.7.2 InteattoComplvW lth-rreasun Reeulationp.Theforegoingproyisiousof
Sedions3.5and3.6aadth0othczprovision.
softhisAgjeementrelatingtotheznaintenanc,eof
Capital Accouats are intended to comply w1t11Rcgtllatlons Sectioa 1.704-1(b)jand shall be
intrrpmted atldappliedinamanne:consistentwith suoh RegulationsSection.To theexteatsuch
pmvisiorusarcinconsistentwithsuchRegulatiorlsSectien erareincompletc 81t.
11respectthereto,
CapitalAccotmtsshallbem aintained in accordaacewith such RogulationsSection.
3.# 'rransferee's CapitalA ccount. In t
lm vent a M em bcr transfcrs azlIntercst in
accordance with the term softhisAgreem entvf
lm trausfcreeM em bershallsuoceed to theCapital
AccountofthetransferorM embertotheexteatitrelatestothetransfen'edInterest.In theeventof
Section86.391,aadtherightst)fjudgmentcreditorstochargeaMember'sBconomicInterestfor
cettainunsaisliedjudgmentsofaMembetpursuattttoNRSSecion86.401,andmtlessotherwise
providtd forin mlagreemcntsigm d by 4 Member,the M atmger0:Cvmmittee M emberto l)e
'
charged,noMembor,ManagerorCommittoeMembershallbeindividuallyltabletmderajudgment,
decreeorerderofceurt,ori:tanyothermazmer,forany debtoollligation Q:liabilityoftheLLC
whetherernotthatliabilityorobligationm'isesinoontraotortort.NoM embetshallberequkedto
loanaoyftmdstotheLLC,exoeptasprovidedforinthisAgreement.NoM embershaltberequired
tomakeaaycontrilmtiontotheLLC byreasonofanyncgauvebalanoeinhisCapitalAcootmt,nr
shallmly negativebalanorin aM ember'sCapihlAocetmtcreateany liability Qntllepartofthe
M ombortoany tltirdparty. '
3.10 N eR e-snfm sl
'biliw ortziabiliw forpre-Fbrm ation Com m itm entq.Intlm cvtntany
Member(QranystlchMember'sshareholdtrs,patmersnrAY liate'
s)llasilwurredaayindebtqdnoss
orobligationpriortotl!ecommencementoftheexistelv oftlm LLC thatrelated teorQtherwise
effectsteLLC,neithertheLLC noranyothyrhlemhrshallhaveanyresponsibilityorliabilityfnr,
orwithrespecttosuchindebtednessorobligation,unleessasstqnedbyZ eLLC pttrstmnttoawritten
'nlrtnlrneutduly sigm dbyallM tmbers.
l
ARTIKI,E 4
..
. .
. .-
th
ilxllr k*eth'M'ABc
OPERATINGAGREEMENI-Pag:e'1
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pfoportioninwhiohtheM emberssharedintheNetLossestmtilanamotmtofctunulativeNetProtks
hasbeenallocatedequaltothetotalofcumlllativeNetLossespreviouslyallocatedtotbeMemhers.
4.1.1.2 Sectmd,an amountofN etprofitsequaltotheaggregatepriority Retm n
which ilasnotbeen previolksly allocated to the ClassA M embersentitled to a Priority Retum
pursu'
m ttethisSrction4,1.1,2shallbeallocatei prorata,totheClassA Membersin accordaace
witlltheirrvspectivcPercentagoInterests.
4.1.1.3 'Ihird,aa am ountofNetProtitsequaltothe aggregatePriorityRettun
which has notbcen previotlsly allocated to the Class B M em bers entitled to a Priority Return
pursu'
m tto thisSeotion 4.l.1.3 shallbeallocated,proratartothc ClassB M em bersin accordance
'
with theirresm otivePtroentagehtcrests.
4.1.
2 NetLesses.Exceptasotherwiseprovided inthtsArticle4,NetLossesshall
beallocatedamongtheM embersa$fotlows:
4.1.2.1First,Net Losses shallbe allocate,d among the M embers itlthe
proportioninwhichtlw M emberssharedintlzeNetProtitsuntilanamotmtofcmnulativeNctlwosses
hasbeen allocate,d equaltothetotalcum ulativeN ttProftsprcviously allocated to the M embers.
4.1.2.2 Secomlypro ratav to FCP/LP and FREM ON T TRU ST,as Class A
M emben,inproportiontotheirpositivebalanoes,ifany,intimhresm cttveCapitalAcacotmts,un'tit
FCP/LP'SandFREM ON T'IRUST'SCeapitalAccouatbdancesarereduce,d to zero.
CapitalAccoutltbatanc,eisreducedtozero.
'
I'
heM embersintrndtitattheallocae nsprovide,d forin thisSection4.1shallresultinthepare s
.. .
obtninlngdistzibutiolksoverteltfeftheLLC(mcludinguponliquitlation)whichwillbeidentical
totlmseprovidd forinSsctipn 5.2hereofiandwillalw rcstlltintheparties'adjpgcp Cypj!!l
.
m m mqh*e R'z'f
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theizrelativeadjustedpositiveCapitaiAccotmtbaiauces.Accordingiy,totheexlem necessaryto
ensure thatthe allocations provided fo:in tllisAtticle 4 resultin distributionsoverthe Iife ofthe
LLC which areidenticaltothoseprovidedforinSeotion 5.2hereof,theM anagershallmakesuch
adjustmentstotheallocaon.
spfvidedfcrinArticle4asarereasonablynecessa!y toachievethe
'
foregoing result.
4.2 ResidualAllocadlns.Excepta.
sotherwiseprovidedin thisAgreement,a1litemsof
LLC ineome,gain,loss,deduction,andany Qtlteratlocationsnototherwiseprovided forshallbe
divided between theM embersinthesamepropo onsastheyshnreNetProfitsorNetLosses,as
thecase m ay be,forthe FiscalYear.
1.704-1m)(2)(ii)(d)(3).
'
ofiacomeaudgainforsuchFiscalYeartaadifnecessary,subsequentyears)inproporliontoand
totheextrntofanamountequaltosuchMember'
sshareofthenetdecreaseirlLLC M inimum Ciain
'
determlneditlacoordanc.eO t.
IIRegulatioasSectionl.704-2(g)(2).ThisSection4.4isinteadedto
comply with,andshallbeinterpreted consistentlywith,the'9
m'
m'
m)um gain chazzeback''provisions
ofReguladonsSoction1.704-2(1).
4.5 M tmberNanrec:urseDebtM inhuum Gain Charzeback Netwithstu
anding any
otherprovision ofthis Article4,butexceptSection 4.4,ifthere isa netdecrease in M ember
NonreoourseDebtM inirntmzGain attzibutabltto aM emborNom'
ecourseDebtduring azky Fiscal
YearofteLLP,eachM embcrwhohasasham oftheM emberNonrecolux DrbtM inirntlm oain
Rtgulations
Soction1.704-2(i)(5),shallbesmciallyallooatvditemsofLLCincomeandgainforsuohyeartand,
ifnecessary,subsequentyearslin pzlamountm ualsuchMemberdsshareofthtnetdecreasein
MemberNonrecourse DebtM inimum Cxaktattributable to such M ember Nonreoourse Debt,
chargebackrequirementoftbatSedionoftheRegulae asatldshallbeinterpreted(
%
7.nsistcntly
therewith.
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4.6
'$.- w
M em berNonrec
-p-qrseDeductiens. Any M em berNonrecourseD eductiousforany
bear)theeconomicriskoflosswitlzrespecttotheMemberl
kburecottrseDebttowhichsuchMember
NonrecourseDeduotionsareattributableinaccordanceu4thRegtllatiensSection I.704-2(i)(2).
4.7 SpecialA llocations. Any specialallocationsOfitemsofNetProfitspmsuantto
Sectiorts4.4,4.5 and4.6 shallbetaken into accountincomputing subsequentallocaonsofNet
Prostspursuantto Section 4.1,so thatthe netamountofany item sso allocated and the gain,loss
andallyotheritem allocatedtoeachM emberpurslmnttoSection 4.1shall,totheextentpossible,
1>e equalttlthe netamounttlm!would have bean ilocated $o each such M emberplusuantto the
provisionsofthisArticle4 ifsuhspecialallocatiorushadnotoccurred.
.
'
'
707(a)and/orCodesection707(c),aredisallowedasdedutionstotheLLC onits'foderalincome
tax retum and are treated asLLC distzibutioas,tllen:
4.8.1 '
IheNetProtitsorNetLosses,mstheoasemaybe,fortheFiscalYeariawhich
suchfees,interestrorotlwramourltswerepaidshalibcfncreasodordecreascd,asfecasemay 1 ,
bytlm mountofsuch fees,interest,orotheramotmtsthataretreatedasLLC distributions;and
4.9
toanypropezty(otherthancash)thatimsbeenconeibutedbyaMtmbtrttlthecapitaloftlw LLC
aod which isrequired orpernzitled tobeallocatedtosuohM emberforincometaxpluposesunder
codesedion704(c)soastotakeinoaocounttlm variationbetweenthetaxbasisofsuchproperty
and itsGrossAssd Valueattlw timtofitscontritution shallbeallecatdtosulzM embTrsolely
forincometaxpupesesinthemannersorequh'
edorpennitted.InheeventtheOrossAssd valu.
e
'
ofanyoftlzeIaLC'SPropertyisadjustedinaccordancewithSectioa1.12.2,subsequen.
tallocations
ofincome,gain,loss and dtductinn w1t.
11respectto such Property shalltake into accountany
variationbem etntheadjustcdbasisofsuchPropertyforfcderalincomefaxpurposesand2f:Gross
M setValue itlthc same mannerasundersection 704(0)and the Regtllatiom promulgated
tlwmlmder. Any mledioasorotherdecisionsrtlating to sullallocationsshallbe madt in any
mannerthatre onablyreflectsl eputposeandinteationofthisAgreement Totlieextentpermitted
byRegulationsSectionl.704-1@ (4Xi),a11itemsofinooms,gain,lssanddeductionforfederaland
statetaxpurposesAbn11beallocatedinaccordanoewiththeconespondingbook itetns.
ior.zr ''**''''''-
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IV GAGREEMENT-Page1f
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Y.- -
ARTICLE 5
DISTRIBW IONS OF AVM LABLE CASH FLOW
5.l
Distributinlu f)fAvag
'ableCashFlew. SubjtcttoSection5.3below,diszbutions
LLC,whetherornotsuchobtkatiol'isaadliabilitiesaredueorcone jentaexaptthatprovisionneed
notbemadeforanyportionofatlyLLC fmaccing,theaml
m tofwhchcanbereasonablyexpected
to besatisfed from theproceedsofthesaleofthethenremainingProperty oftheLLC.
5.2
PercentageIntereststmtiltheyhavereceivedaaamountequaltotlleirtmdistributedPliorityRettml
accnledthrough the date ofs'uch dlstribution.
5.3
'
ltlleG'raxLiabilitvSbertfallAmeunt''),ifany,bywhich(a)theagrgrtratftd.
m'alandstatetax
liability(ifarlylinourre,dby tlm Membersm'tlzrespoctto1h>nd inoomeofteLLC forsuch
precedingFiscalYear(whichtax liabilityshallbedoterminedbyapplyingthehighesteFeotive
individuatt'tx ratestben in effec'
tfortheFiscalYearin queaion),excee,
ds@)teagpegate
distributionsofDistributableCmshmadebytheLLcwitijrespedtosuchFisc.
alYeartincluiagany
dtstrilmuoasmadetot:eMemberswitlzrespem tothefinslflscalquarterofsuchFiscalY= ).'
l'tr
M anagementCommlttee shalluse allreasonable esbrtsto causethe LLC to distributetle TM
LiabilityShortfallAmounttotim Membersinthetimeandmannerrequiredhereundr,ipltsgl
'g,
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aspracticabloaftersuchfundsazeavailable.Itistheobjeotiveoftlw MembersthatwhiletheTax
Liabllity ShortfaliAmolmtwilllx determinedattlleendofeachFiscalYear,totheextentpossthle
andsubjeottotlleforegoing,distributionswilll)emadeinrespectthereofon aquarterlybasisto
facilitatetkeM embers'abilitytomakequarterly estimated taxpaymentswithrespectto theirnet
income from the LLC. Distribue asm adepursuantto this Section 5.3 shallbe taken inte account
inconnection Brithany subsequentdistributionstmdersections5.1an.
d 5.2 abovcse that,totlw
extentpossible,tlleM embersshallobtain distributionsinthesameorderandpricdtytheywoltld
have obtained ifthis Section 5.3 were notin this Agreement.A ttlm end ofeach FiscalYzar ms
contemplatedabove,tinaladjustznentsshallbemadetoretlecttlleacmalresula ofsuchFiscalYear.
M W ICLE 6
M ANA GEM ENT O F TllE LLC
'
conducttheBusinessiuaooordancowitb.andsubjed tothepolicies,procedures,decsionsand
diredivos oftheM anagem entComtaittee.
otremovalfrom ofEcebytlleMatmgementCommittee,asuocessor
theM anagementCommlttee.
ershnlll)eappoimedby
jm yje
jr - -wAzc
opgjux gcAG
T.pag;j7
W O PPZ 0075
('
6.l.4 M attaaemeutCommittee.TheMalmgementCommitteeshallconsistofthree
NameofAppointhlg
ClassA M ember
--
Appninted
ComtnitteeM ember
Frieadiy CapitalPartaers,L.P.
DouglasJ,Fv e
'
lnhcFremoutTrust
D enaisM oatgomery
W an'
eaTrepp
DenniKM onlgom ery
Section6.1.5.TheChnirmanshall(i)presideatMatmgementCommitteemeetings;(ii)havethe
autlmritytocxecuteanddoltveronbehatfofandinthenameoftheELC mlyageements,oenfzaets,
notcs, m ortgages, ovideace of iadebtedness, certificatew slatem onts, conveyanoes or otller
insmzmentsinwritiag,andanyusignmentorendorsementtllereof;and(iii)exercisesuchrkhtsor
pedblm such dutiesasareotherwiseprovidedinthisAgt
w uhentorasmaybeapprvedfrom time
to time by the M anagementCommittee. 'Ilz Chnirmaa maycd y beremoved from oftke by a
majrityoftlteCommitteeMembem.InthttventtheChainnahresignsorisremovtd,amajorit)r
oftheCornmitteeM embersshallelectareplaccmentChalrman.
6.1.6 Deleeatioa nfPowers and Dutiea. 'Ilm M anagementConunittee lhay by
written resolufon fzom meto time delegate any ofitspowrsto tl:e M anager,the Chsirrnanv
om cers,employeesofaM tmbez,vztoanyotherPorson.Sucdelegation ofpowersxna'
yirmlude,
butnotbelhnitcdto,tlw atlthoritytoexeecuteanddeliveronbelmlfofandi!ltlw namooftheLLC
any agreements,contracts,noteszmortgages,evidence ofimdebtedness,certiscates,statemcnt
z,
convcyancesorothtrins% mentsinwriting,andanyaszigmnentorendcDementthereotl
e'rreppid 0076
'
6.i.7.iThelvianagementCommitleesilailmeetatItmstoaceeachquazterin
InclineVillagc,Nevadw orsuchothertimesorplacesastheChairmanshalldetermiae(tmlesssuch
mectingshallbewaivedbyallCornmittreMembers)or(m tllecalloftheChairmanortheManager.
Suohmectingsshaltbecalteduponatleastten(10)dayspriorwrittennotice,exceptinthecaseof
an em ergency,in which eventsuch a meeting may be called upon prior noticc ms the Chairm an
deemsappropriate,butinnoeventlessthanforty-eight(42)hours.Anagendaforeaohmeding
shallbepreparedinadvmwebytheChairmanortheM anager,asthecasemaybe,andchvulatedto
action,and(ii)writlennoticeofsuchactionisgiventotlw CommitteeMemberswhodidnotprovide
suchwrittcaconsent.W rittenmiautes()fallmeetingsshallbemaintainred.artdtheminutesforeach
mcetingshallbeapprovedatasubsequentmodingofthoM anagvmentCommittec.
6.1.7.2n eM u% ementc e ux > yadopte teverM csandprocedums
relatingtoitsactivitiesasitmaydeem appropriate,proddedfhatsuohm lesandproctduresshallnot
beinclmsistentw1f.
11orviolatetheprvksionsofthisAgreement,andprovidedthatsuch rulesand
repzlations shallperm itm eetings by telephone,vidoo conferencirtg orthe like,and shallpermlt
ConzmitteeMemberstoparticipateinmeetinggbytelephoneorvideo conferenceorthelikeorby
w rit
'tcn proxy,and such participation shalllye deem ed attehdancc for purposes of doterm ining
w hetlwra quorum ispresent.
6.1.8 LiabilitvforCertinActa.TheM snagerandtheComml
'tteeM emthersshall
perform theirm anagorialdutiesin good faitlz,in am azmertheyreasonably believeto beintbebe-st
interestsoftheLLC,andwith suchcm'easanordinarilyprudtntpersoninalikepositionwoulduse
lmdvrsimilarcircumstances. A ManagerotComm itteeM emberw'
ho so performsthe dutiesof
M anagerorCom mitteeM ember shallnothave any liability by remson ofbeing orhaving been a
M armgerorCornmittceM emberoftheLLC.A M mlagerorCmmitteeM embershaltnotbeliable
to theLLC orto any M emberforany lossordamagesueninedby tile Company orany Member,
tuuess the loss ordam age shallhave been the resultof fraud,dooeit p'
oss negligence,willftzl
miscondutzbreaoh ofa iduciary duts orawrngfttlfnta'rtg by the M anagerorthe respective
CommitteeM ember.Neithertlm M anngt'rnortheM auagementCommitteeshallbeliablrforany
lossordnrnagetotlloCompany cattsodbyskikes,hbortroubles,riot,flres,explosions,toraadoes,
floods,actqofapublicenemy,insurrectipns,actsofGod,failm etocarryouttheprovisionsherO f
dueto provisionsoflaw ormleserIcgulationspromulgatedby any goven= entalagency orany
otlwrdemand orrequisie n ofanygovmnment,orfrom any otheroausebeyondtheoontroloftll
M anagerortheM anagementCornml
ettee.
6.2 Powersv.Dutjes and Respom ibilities of jke M anagem ent Com m ittee. The
M anagemntCornmittoe sllallhav; all of tlw tights,dlzties and powers as spec ed in this
Z=
MC
opm '
f'
fh:GAGREEMENT.page19
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6.2.1 Nleauthozizatitm,negosaNon,executionanddcliveryonbehalfc'fthelzt.
c of
anyand allcontractsoragreements,verbalorNvritten,havingaoontrad valueofobligationamolmt
..
inciuding,butuotlimitedto,butexpfesstysubjecttotlw limitationsrequiliagMemberapproval
pursuatktto Seqtion6.4.4hereof,contractsoragreementsbetweentlleLLC and/oritsAffiliatmsor
any otkerPersoa teprovidcthe LLC with goedsorservicesofany kind in which theLLC orits
M anagermay havean actualorpoterttialcnflictofhlterest,and including any amendmontsor
moditicationsthereto,orrenewalsortennkmtionsthereof
6.2.
2 'Iheapproval,cxtoutiQnmdeliveryandperformanceonbehalfofOLLC ofthe
M ontgomeryTrustConttibuon Agmcmeut,andamenthnentsormoditkatioasthereto.
6.
2.4 Subjod totlw ApprovedBudgeta
s,borrowingft
mdsfrom anyleadertooperate
QrmaimtainfhtBttsilmsscrftattyotherpurpostwhioh isinfurtheranceeftheBtksintssoftheLLC,
otherth% tradepayablesin theordiaat'
ycourseofblzsineos;tchissueevidermosofindobtednessin
connectioatherewitb;torefinance,increasetheamount()f)modify,amendorchaqgetlm termsot
orexteadthetimefortlTepaymeatotanyindebtednessorohtigatifm QftheLL.C,
'andtosecureany
ldebtednessorobligationoftlleLt,C bymodgage,pledge,grant'
tztgasecurity interestinorotlmr
lien on theLLC'Sassets.
6.2.5 'lheappointmtntmld tcnnination oo cers,ltiricg arld Iiring ofem ployees,
ortht tngagem ntofconadors,suboontraotors# onsult'
m ts; cxpcrtsarld otherPersonsneccasmy
orappropriatcto oar:youttheBtushwssoftheLLC,induding theseluctionandTngagementefan
iadepeadentcerv ed publicaccountlngftrm aadlegalocunselfortheLLC,andtoapprovetheterms
ofanysucltappointmen:employmentorengagemeatvincllldingapprovalofthetennsandpayment
6.
2.7 Subjod totheapprovalbytlm M emberspursllanttoSection6.4.2below,the
sale,Iioense,Iease,reafal,assknmen:transferorotherdispositionofalloranymsterialpartofthe
assetsoftheLLC,including theTm hnolegy and any patrntrightsthereto,whetherasasingle
kansaction orasetiesoftrausaotionsmspartofaplmu
''
6.2.8 Anymaferialdecisionsrelatingtothotestmarkcti
ng,manufacture,distribuienz
licenmlrtprxplgifation oftlleTeclmolpor.
-
im r,A'ee''kekt- -
OPRRA'
HNGAGRBBMENT-Page20
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.--
''**-r
-eM ana
.Eer.TheM armgtrshallactasthe
6,
3 Powers.Dutiesa-nd Resppnsibilitiesofth
PresidentoftheLLC mld shalllyecharged with tlte rights,dutiesandpowersasspecifitd in this
.
Agrecmentasubjecttotheli
m itationssd forthinthisArticle6andelsewhereinthisAgrccment The
M anagershallhaveresponsibilityforconductingtheday-to-dayoperatioasoftheBusitmssartdtlz
LEC artdforimpiem eatingtlt
edecisionsanddirectivcsoftheM artagementCoaunitteeincoxmeotion
therewith,subjecttothesuperdsiow directionaadcoatrotoftheMaaagementCormnittee
TheM anagershallhavethogene:alpawe:sanddutiesofmanagementtypicallyvested
'
6.3.1 PreparerexecuteandhleonbehalfoftheLLCallapplications(includingpatent
applicatbm),licem es,permits,mgistmtions,andconsents,andtootlmrwiseoommunicateanddreal
with anyand a11governrnentalagencieshavingjtuisdiction over,orin any way affecting,tlze
Technology,tlteBtlsiness()ranypartthereof.
6.3.
2 M akeordinav and necessary expendituresandincttrremsonableobligatioms
necessazyfortheconductoftheactivitie..
softheL1,C'SBusiness,a1Iinaccordanoewithalldsubject
to ApprovedBudgets.
Fiftyefi
lmusmldlE
lollrs($50,000.00),whiolltheManagrrdomnsarenecessaryorappropriateforie
developmentorexploitafonefthe-rochnology,orareinfurtberanceoftbeBtlsitless,including,but
therdo,orrenewatsor
' tionsthereof.
6.3.4 SubjccttotllepliorapprovalbytheMemberspursuauttoSection6.4.2belw
and theM anagementCornrnitteeptlrsuantto Secon 6.2.8 above,thesale,license,lease,rental,
csiglunentatranAfererotlv disw sition ofa1lorauy materialpartofthe assds of the LEC,
6.3.6 TocnfessajudgmentagaiasttheLEC,orapprovethefzlingoforstrttloment
ofany olaims,incltlrllna litigatioqmatters,fororagsingttheLLC.ofless thac Fitl,
y 'Ihmjqnt!d
Dllm's($50,
000.00).
W CK
Q *M OAAMM
OPEBAIINGAGREEMENT-Pa
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6.3.10 Prepm'
t,cxecuteand tileonbehalfoftlzeLLC theAnnualListofM anagers,
M embcrsand Agentwit.
htheSecrctaryofStteand topaya11filingfecstherefor.
offonnaionoftlleLLQ andsucbotherinfonnatincasshallbeappropliateforbankingandother
Businesspup oses.
6.3.13 M aintainaminutebooktoincludetlmArticlesofOrganizationofieLLc,tltis
Agjeemratandanyamendmentsrs'upplementsherett),andthemhmtesofmeetings(orconsnts
inllmzcfmetings)tftheManagementCommittee,writtenconstntsofth:Membc ,andotlwr
importmu docamentsofthe LLC.
6.4 Limit'
.a
ti
-o
-usont
-he
-M anaqem-entCom mltteeaRdM aapzer-NethertlkeM anagemetit
CommltteenortlleM snagershallhavetheauthorityto doany oftllefohlowirtgwithottttlleprior
VoteofaMajorityirlInteres'toftheMembers:
6.4.1 Exxptforthelimitodauthorityoftb.
eM anagertoam= dEX'
FITRIT A hereto
andtlm ArticlesofOrganization pursuantto Section6.3.9above,materiallyamendorrostatethis
AmeementortheM iclesofOrganization,inwholeorinpalt includingauyincmnqeiuthenumber
ofCommitteeM em bersoftheLLC pursuanttoSection 6.1above.
rrr@Jzl
eeXe- KkexWG
OPERATING AGREEMENT.Pag:22
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Aw
6.4.3 ApprovetheTraasferofaMembcf'sIntcrtst(cxceptfortheTransferofupto
1f)% ofaM ember'sEconomicIaterestptzrsuanttoSecticn9.l.3hereof).
6.4.4 ApproveanytransactioninvolvingthepaymmltofcompensationbytheLLC
to a M emberoran Affiliate ofa M ember,unlcssothenvise expressly authorized and approved
pursu'
m tto thisAgzcem ent.
6.5
Restrietiym Bn lndepelldentActivities'
.AgreementNotto Cam pete. S0 longas
M ONTGOM ERY is apm inted asa Conunittee M ember and/oras Cllief Teclmology Officer
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wbich are encompassed within the deflnition ofthe ''Blzsitless''t)fthe LLC as setfolth in this
Agreemvnt;(ii)purchasingt
arota
herwiseaq e a,owtting,lmlding,opelating,manxging,investing
irtoretlmrwiscdisposingofalikebtusinessofteLLC'SBlzsinessand intereststhereinofanykind
ornature;or(iii)otherwiseengaginginanyora11aspectsofall
'kebuszessoftlw LLC'SBusiness.
M olqR'cdlslEpvsr'sorhisAK liates'participationinanyoftheactivitiesrestrictedbytbispaagmph
shallbedecm ed a breaoh ofhis dutiesand obligationsasaCornrnittee M em berhereunder.
6.6
ty m pe
-nsatioa tq M attaeem ezlterM cm bers.
GuaraateedPayment(astlzatterm isdeliuodinszotion707(c)oftheCode)intheaggegatearnolmt
ofEleven'IhottsandFiveHlmdredDotlars($11,500.00)permont.
hpayableoathefttst(1st)dayof
each calendarm ontilcomm encing asofOctober1,1992,and tenninating on D ecem bcr31,2001.
toinspecttsephysioalproporosoftheLf-canttatsootitssubsidiav limitedliabilityccmpatues,
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6.1l AuthoritvtoSdtlewith1RS.Iftherearemorethanonehundred(100)Membersof
theLLC,the'CTU MattersManacer''(asapm intedinSetien10.
4below)shallhavctlleauthority
toenterintoasettlementwiththelnternalRevenueSerdceQnbehalf()fthoseM embershavingiess
.
statemrntv/ithtlm IRSshallnotifzthMp
magcrthereof:vithinthirty(30)daysofsuchfiling.
ARTICLB 7
DEFAULTS
LLC whiohoontinuesfclfapeliodofseven(7)daysafterwrittennotioetosuohDofaultingMember,
orfailurc in th: perfermaace efacy ofthe othez agreements orobligations contairmd in tlzis
Ageementifsaidfailurecontinuesforaperiodofthirty(30)daysafternoticetosuchDefaulting
M embm';provided,howevmr,noDefaultshalltedeemedtohaveoccurredif(i)suohDtfaulting
Mombor'sfailtu'eQfperformatxeiscurablc,and(ii)ifsuohDofaulttobecurable,butafterthe
exerciseofreasonablediligermeitisfotmdsuchDefaultr-qnnotbecuredwititinthirty(30)daysatler
noticc,butthoallegedlyDefattltingM emberllascommeacedtocul.
om chDefaultwhbintte30-day
(asdefmedinSedion9.1.2helow)byanyM emberinviolaionofArtiole9hereofatanytimeduring
theexisteaceoftheLLC.
7.2 RemediesfarDefault UpontlwoccurrelweefaDehulthereunder,tlzeNondcfaulting
M embersshnllhavtthefollowingchoiceofremedies,noneofwhich shallbeexdttsiverin atky
way limittheNondefaultingM tmbersfrom sm kingany therremedy theymay havein 1aw orin
equity:
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ofaDefaulsdescribedillSection7.l.labove,ttm NondefaulingMembershallhavetheright@ut
nottheobligation)to either:
7.2.1.1M akeanadditionalCapifzlConkibutiortts)totheLLC intheamotmt
oftheCapitalContributionoranyadditionalCapitalContributionApprovedby theM cmbersthat
shouldhavebeeacontributedl)ytbeDefaultirtgMemberts).AnyamolmtsocontributedtotheLLC
byaNondefaultingMembertlmtshouldhavebeencontributedbyaDefaultingMembershal!adjust
thePercentageInterestoftheNtmderaultingMcmbd s)andtheDefaultingMemberts)inthesame
prom rdon mstlleratio oftheirCapitalAccouatsinmw diately before theD efaultbearsto theratio
oftheirCapitatAccountsimmediatelyO ertheDefaulttthe''AdiustedPercentateInterest'').For
example,ifbeforea Defaultoccurstllet'
atio oftheCapitalA ccotmtsoftheN ondefaulting M em ber
and thcD efatzlting M em beris 85:15 artd theirPercentage lntercstsare50% artd451$,respectively,
'
7.2.1.2 Lend to tlle LLC the amount of the Capital Contzibution or the
whiohlterestshallaoomeandshallbeadjustedbasedupontlleforegoingrateatldbecompounded
oneachfkst(1st)dayofeacllmont.
hdtuiagtheterm oftheloan.M yamotmtssoloaned,togethcr
w ith interesttllereon as aforesaid,sllallbe irnm ediately due and payable from the Defatllting
M omberto the Nondefaulting M ember. Aslong asthe amotmtso loaned artd interestthereon
remainsuapaid,anydistributiontowhichtheDefaultingM embcrwouldothmwisebeentitledtmder
thisAgreemeatshalll>epaidtotheNondefaultingM emberandappliedinrcpam entoftheamounts
soloaned,withanysuchpam entappliedfirsttointeresttimnaccmedandthebalancetoprincipal.
7.2.2 Otherlkemediel-.
lntheeventofanyDefaulttmderthisAprementaincludng
aDefaulttmderSection7.l.l.above,andsolongaqsuclldefattltremaitusunourcd,theNondefattlting
M om berm ay,hutshallnotbe obligated 1 ,do any ora11ofthe fellewing:
availablinlaw andeqtlity,includingiajlmctivemlieft
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M W ICLE 8
M EM BERS'M EETIFGSN
'ACTIONS W ITHOUT M EETINGS
s.1 M ettinzs.'
lhcM embersslmllnotberequiredto holdanyregular,almualorspecial
m eetings in orderto approve any actioa ofthe LLC asfequired by thisAgreem entorthe NRS.
'
s.2
fprtlltheaotioneractionssotaken,issigm dbyMembersholding,intheaggregate,aMajrityin
lnterestormoreoftheMembers,unlessagreaterVoteisrequiredunder,oralesservotcisprovided
for1,thisAgreementortlteNRS.
2.
2.2 UnlessthcunanimottswlittencoasentoftheM embtrshasbeengivcn,notioe
ofany suoh actionapprevedby lessth= a11oftheM cmlxrsshallbegiventothoseM emberswho
didEtotpartioipatrinerappreveofsuchactionwithinttn(10)daysfollowingtheapprovaltherenf.
8.2.3 AnyM em6ergivingawrideaoonsentmayrevtlketheconsentl)ygivingwdtten
nodcetotheLLC priortothetimethatwrittencom entsoftheM embersholding,itttheaggregate,
the'Volerequiredtoauthorizetlteproposedactionhavebeenfiledwith theELC.Suchrevocation
istffective only um n itsreceiptby the LLC.
8.3 ExclusioaofVetm If,purspanttotheNlls rthetermsoftisAgreementaM ember
isnotentitled toVote on a spooitio matter,theltsuch M emher'
snumberofVotesshatlnotbe
consideredforpulw sesefdetermiuingwhetherapprfwalbyVoteoftheM embersl:asbeenobtained
inrespectofsuc: specitk matter.
ARTICLE9
RESTRICT IONS ON TRANSFER OF M EM BERSHIP INTERFSTS'
,
ADM ISSION M D SUBSTITW ION OFNEW M EM BFRS
9.l
TrpnsferprAssieamentefM ember's-lmte
.rest.TheInterestofeachM emberM d
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m itingatleastten(10)dayslnadvanceofhisintenttoTransfera.
nEcoriomicInterest.Suchaotice
shallcfmtaittthedateandamluntofthctralzsfcrredEconomicInterest,andthcname,address,
facsimile numberand > payeridentication rmmberof the trm sferee. The eansferee of an
EconomicIntereststtatlnotlmveanyrighttVote,palticipateinQm managemtntQfthtBtlsiness
atld affairsoflheLLC,orto becomea Member. NorigshtsastheholderofallEcoriomicIntert'st
shallbeconferredupontl)etransfereeumtilthetransfereeagreestobebotmdbya11ofhetennsand
provisionsoftikisApeemeat.Notwithstandingtheforegoing,aayTratlsfcrby a M emberofan
Econom iclnterestin excessofattaggregateof10% shallbe deem ed a Trausferofsuoh M em ber's
'
InterestandshallbesubjecttoSection9.1.2above.
9.1.4 Exoeptf0rany TransferofaClassA M ember'sIntercsttoanotherexisting
uponapprovalbyaMajorityinInterestoftheMembers.
9.3.1 n eamolmtofCapihlContzibution which mustbemadeby anew M ember
shallbe deerm ined by the M anagementCommittee.
9.4
a M ember'sInterestin accordanocwit.
h Soce c9.1.2 above,aPerson may bo substimttd asa
M emberand admittedtotheLLC,succeedingtoa11oftilezightsofariy M ember.n estlbstitute,d
Membershalihavea11therightsaadpowersandshllbtsubjecttoalltherestziofiousartdliabilifies
ofthetraasfeningM embrr,exceptthatthesubstihltionofthetlansferetM emberskallnotreloase
'
M embershallbcdeemedadmittedintotheLLC uulilsmhsubstimtedMemberhasIyecprpqApt y
tIQ Q/
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to tlzis Agreem erlt by executing and delivering to the M anagem cnt Comm itteo a cotmterpart
signature page to thisAgrccm cnt,aclcnowledging hisacceptaaceof,and agreeing to bebolmd by,
thetennsaadconditiotksofotisAgreement.
ARTICLE 10
ADM INISTRATION AND ACCOUNTING M ATTERS
determinationoftlw ManagementCommlttoeastoadjtustmentstothefmancialreportsybooks,
recordsand retum softhe LLC,ia theabsenceoffraud grgrossneglignoe,shallbe fmalaad
bindingupontheLLC and ai1ofthtM embers.Tltereshallbekeptatthepriucipalblzshm soffice
oftlm LLC,mswcllmsattheregisteredoflioooftheLLCspeci;edinSectkon2.5(ifdiFerent),any
informafion required to bemaintained by the LLC pursuanttoNRS Sectioq 86.241,asamended
hom timeto time.
'
?aymonoyuptoamaxtmum amotmtofTwenty-Five'IllotlsandDollars($25,000.00),kxluding
mstrumentspayabletotljeManagerorotherPersonsauthorizedtosignlem,maybesigledontlw
Ltf 'sbehalfbytlzeM anager,actingalone.Anysuchcheclcs,draftsoroieriastrlrnentaobligating
''
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OPERATING AGREBMENT.Pag:29
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M W ICLE 11
TERM INA.T.
lON AND DISSOLU H ON
shallnofimpairanyremedyorc'attseofactionavailabletooragainstitoritsM anager,Committev
11.4.3 'I'
KA proratw toFCP/LPandFM MONT TRUST,asCla A M embers,in
aooordancewitlldzeirpositiveCapillAocom tbalancaes;
11.4.4 FeurthatoM ONTCZOG RY TRUST,asaclassA M emberzinacoordancewith
lkism sidveCapifalAccolmtbalance;
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mcjAGREBMENT.e
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> $e $
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12.1 Issuaacm efLLC Certm cate!. n e Ults ofeach M emberin the LLC may be
represented by an LLC certiticate designating the classesofmembqrsbip alzd Uaits. Upon the
executionoftbisAgrcementandthepaymentoftheC'apitz ContributionsbytheM emberspursuant
So Article3hereof,theManagermaycausetheLLC toissueoneormorecertiticatesinthenameof
eachMemberoertt
'fylngthattheM embernamedthereiriistherecordholderoftlteUnitsofInterexs
setforththerein.ForgurposesofthisAgreoment,thetetmtreco.r
-dholder''shaltmearttheMmnber
whosenameappearsm Section 3.1astheM mnbcrown.
iagtheUrdtsatjsskle.
tlleUnit.
smjresentedbyteoriginalLLCcertificate.Excrptasotherwiserequiredbylaw,tlteIIC
shallbeentitltdtotreattherecordhlder()fK LLC certiticateonitsbooksastheowaertheleoffQr
a1lpuposesrogmdlessofanynotice()rkmowledgetotllrlmttazy.
12.3 LostqStoleaorDesta ved Certiticates.TheLLC shatlissueanew LLC cerifcate
inplaccofanyLLC Certiticatepreviously issuediftherecordholderoftheLLC Certifcate:
12-3.1 M akesproofbyaflidavitvinfo= K dse se c ndsfactol toieM apreviously issued LLC colfcatehmsbeenlostadestroyedorstolen;
. .
ero t
12.3.2 Rm utst.
sthtisslunoeofantw LLC certifcatebeffgetheLIac hu noticetlut
theLLC certifcateIlasiheenacquired by apmohaserforvalucingoed faitllalld withoutnoticr ef
anadversbdalm;
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A RTICLE 13
INDEM NIFICATION.
''
emplpyees,agentsandPzincipals(individually,an''Indempitee'f)from aqdagainstanyand21
losses,daims,demands,costs,damages,Eabilitks,jointand several,txw nsesofaay nature
(includingrrasonabltattomeys'feesanddisbtlrsemtnts),judgments,Enes,settlementsaadotkr
. 9u111 arising from any nnfla11claims,demands,aouons,suitsorproc-eM inas,whettzrcivil,
miminnl,administraiveorinvestigative,inwhichtbtIndcmniteeisinvolvedasapartyarlsingout
oftlAe Business of tbe LLC,exqluding liabilities to aay Member,rcgardcss of whctlmrthe
h demnitee ontinuo.
sto be aM emlher,an Affiliate,oran offoer,director,employee,agentor
'
loss,expeuserdamagewlchtheLLC maysuffermsaresultof(A)suchhdmnnitee'swillfd
misconduct,grossneglkenceorbadfaithinfailingtoperform ftsdutieshereunder,(B)aotionstaken
bysqzch Iademnite,
einviolationothisAgrccmrnta(C)tlzereoeiptby suohIndra niteeofany
fmancialbenefitstowhiohhisnotentledplvsuaattothisApeementvor(D)thevotebysuch
IademniteeforadistribuonoffkmdsoftheLLC inviolationofthisAgroementortlteAct;(i)the
LLC shallnotbe requirod to inde ' any Indemnl
'te.
eforany breach ofthepro< siozssofthis
Agretmeqt orforanylorxs,expenseordamagtwhiohitmaysufferas&resultoftim breach oftitis
AvoementbyttwMembertowhihtheIndemniteeisrelatezd'
,and@ )anyliabilityhereundorshall
helimitedsnlelytotheassrtsandpropertieseftl)eLLC,andnoMember(oranyAc liateofany
M mber)sllallbaveanyliabilityorobligationbyreasonQftlteseindemnificauonprovisions.
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'I'heforegoingprevisiqnsofthisArticie13shallsurviveforaperiodoffour(4)years
(whichnoticeshaltiacludeabriefdescriptionofeachsuchactiou,prch
ceedingorhwestigatioaaad
oftkeliabilitiesassertedtherein),afldtheforegoingprovisionsofthisAdicle13shallsurvivewit.
h
respecttoeaohsuohaction,proceedlngorinvestigatioasetfoe insuchnotice(oranyrelatedaction,
proceedingorinvestigationbasedupoatlmsameorsimilarlaims)untilsuchdateassuchaclion,
proceediagoriavestigatioaisultmatelyresolved.
TheLLC shallnotincurtllecostofthe portion ofany insurance,othtrth% public
liability irlslzranoe,which insw'
estlm M am gerorCormnittooM embersagaim taqy liabtlity asto
wllich tlzeM anagerorCornmitteeM embersarehereinprohibitedfrom being indenmified.
13.
2
13.3 Tadcmn
- tatilm Riehtq Non-Exclusivm The itidemnification pievided by
Section 13.1 shallbtin additbnto any otkerrigiktsttlwhich tlmstindemnified may b:entitle
'
Personagaiu,
stsuch liability undertheprovisionsofthisApeemeat.
ARTICLE 14
14.1 Am eld-mentor-M od
.IficatioltoftlleAereemext Exoeptfortiz auloritygante,dto
theM mlagerheretmderto amend EXNTBIT A to thisAgreementfrom timeto timewithoutth.
e
nv ssil ofafo- nlnmpndmenttoe sAgreomont,thetormsandprovisionsofthisAv eementmay
notbeadogted,akered,a onded,orrepealedaad anew opetatmg
' areementadopte,dwitlllmttle
theapprtwaibya> jorityinlntorestoftheMembers,
14.2 AmesdmextterM vdl
-fleaty
-f)ttofArticle,ofOrgangzatiom.Exoeptfortheautllority
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notwithstandittg auy other provision to the coatraz'y in the Articles of Organization or tllis
A greement,in no eventshaltthe ArticlosofOrgaaization be amended w ithoutthe approvalby a
MajorityinInterestoftleMembers.
ART ICLE 15
N O34CES:W AIVER O F NOTIC'E
lleretmdershallbeinwritingandmaybeeither(i)personallydelivered,wbichshallbedeemd
receivedatthethnefacttalreceiptthereof;or(ki)sentbyregisteredorcertifiedmail,withpostage
andchargesprepaid,whichshatlbedeemeddeliveedsventy-two(72)hotu'
safterdepositinthe
Unite,dStatesmail;o(iii)deliveredbyfacsimiletransmissiow whichslmtlbedeemedreeeivedon
tlle date at:d attile time ofelectronic conlirmation fstlch tmnqmission,provided an originnl
mechaaicisignedcoyyofsuchnoticeorothercommunicationisalsoimmediatelydepositedinthe
UnitedStatesmail-t.
11first-classqostageandcbargtsprepaid;or(iv)deliverdbymtsseqgor,
FedExorothertcackablecouriersem ce,whichshallbedoemeddelivtredontlw datcandatthetkne
a.
strackedaadoordirmedby suchcouticrscrvice;artd irtcachcase,addzessed ordelivered to the
party towhom thesameLsdirectedalsuohpartysaddressaud/ofacsimilenumbesetforthbelow,
oratsuchotlxraddressand/orfacsimilenumberasthatpartymayspecifyby writtennoticegivea
totlleotlterpartiesinacoordancc< th thispmagraplu
IfttjtlzeLLC-:
INTREPID TECHNOLOGIES,LLC
.
Attn:W arrenTrepp,11 M anagemrntCommitteeChairman
590LakeshoreBoulevazd
Ineline Village,Nevada 39451
M ailinaAddrerss:
P.O.Box4964
InclineVillage,Nevada 894,
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.
Facsimile:(775):31-4395
W ith aCourfesv Cqlw t():
Facsimte:(310)456-0202
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koptavailableforthatM emberattheLLC'Sprinoipalpiac,eof6tksinessforole(l)year.
15.
2 W aw
-erofNotice.Notwithstandingtheforegoing,wllea,undertlltprovisionsofthe
NRS orlmde:tileprovisionsoftheM iclesofOrganiyntion orthisAgrreemeat,noticeisrequimd
tobegiventoaM emberortotheM anageroftheLtC,awaiverinwritingsigaed bythePvrsonor
Persocseatitledtotl)enotice,whetherbeforeorafter1hetimestatedinit,isequivalenttothegiving
ofnotioe.
ARTICLE 1d
'
tl frrespectiveheirs,legatces,legalrepresentatives,successors,kansfereesaudassigns,inallcases
whetherbytlzlawsofdescentanddistrihuticc,merpecreversemerger,consolidation,saleofassds,
ol ersale,operatiou ofIaw orofherwise.
16.3 Sevem bih-tv.Intheeventany sectiow subscotifm orany sentencewifhinarlysection
orsubsmfonhereunderisdeclvedbyacouztofcompotmntjurisdictiontobevoidorunenforco ble,
suoh seotion,subsectionorsenteaceshallbedeemedsqvere,dfrom theremainderoftidsApe ment
andthebalanoeoftbisAreementshallremain infullforceandeffect
16.4 CetBtrlzction. 'l'he language in atlparls QfthisAgreementshallbe in al1cases
cortstrur,dsimglyaccord'
lngto itsfairmeaningandnotstrictlyfororagainstanyoftheM embers.
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lz Law. ThisAgreemcntand any amendmgutsozexhibitsereto,andthe
rightsandoblkationsofthepartiesheretmder,isexecutedunderandiaconformitywiththelaws
oitheStateofNEVADA relatingtoltmited-liabilitytompaaiesmldistobeconstrued,enforcedaad
govemediu accordaace ttmrewitllwitboutgiving efreotto any ooaflictofkaw provision.
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FURTHER ACKNOW LEDGE THAT IT 11A8 BEEN M PRESBNTED (OR I'JAS HAD Ti1B
OPPORM TYTOBEM PM SEO IW TA SIGY OOFM SAOREEMENTAND IN
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IT HAS IIEA D AN il UNDERSTAN D THE M EAN ING AND RAM IFICATION S OF THIS
W AIV ER PROVISION .
ovrpt(i)A liatesmldPliacipalsoftheMembersand(ii)anyotherPersonsasmaybeeatitledto
th<belwfitsofArticle13.1hereof.
16.14 No Partition.'f'
heM embcrsagreethatthePropertythattheLLC mayownorhave
aninterestinisnotsuihbleforjartition.EachoftheMembershcrebyirrevocablywaivesanyand
alirightsthatitmayhavcte mamtainmv action forpartitionofanyPropcrty tllcLf,C mayatany
time have an interestku
prirwrittenandoralagreoments,lmderstandingsaadnegotiatioaswithrespectto,thesubjectmatt
sr
hereof.
16.16 W aiver.N ofailurebyanyparty toinsistttponthestrictperfonnanceofanyoovenaut
ordefeadinganyapgealaxtdshallbeawardedforanysupplementatprocetdingsuntilthefulal
judgmentissatisfiedm full.lnadditiontothtforegoingawardofattorneys'feestotheprevailing
party,iegrgviM gp> l=llax uitgrarbctaonppcdreonthisAgreemcn!s'
ilallbeentitled
'
toitareasonableattorneys'feesmourredinanypostjudgmeatproceedingstocollectorcztforoethe
judgment.Thisattorneysfftesprevisjonisseparateandseveralandshatlsuwivcthemergcroftlkis
Agreementiutoartyjudgmtqlt.
16.18 Aqtlaritl,.Each signatorytothisApeementrepresentsandwa:4.at% thatl!eorsite
possessesallnec.
essyyc,apadtyandauloHl toactfor,sign,alldbindtlmrespectiveentityoawhose
brhatfheorsheisslgning.
(Remainderofthispageinten:onallyle9blank.
ThisAgreementconthmedandsipledonthefollowingpages,)
1+@:3
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TIEREOF,thcpartiesheretohaveexecutedand delivered,orcausedto be
executed and delivered by adtIly autllorized represenltive,thisAMLNDED AND RESTATED
OPERA'HNG AOREEM ENT ofINTREPID TECO OLOGIES,LLC asoftlzedayand yearfirst
abovewritlen.
Further,theuadersigaed,msM embersoftheLLC,acknowledgethey haveread aqd
tllderstand tlle foregnjng Am ended and Restated Operatiag Agreem ent for INTRE'ID
CLASS A M EM BERS:
By:
N TREPP,11 President
TI-1E F
ONT TRUST,DAR'ED M AY l6,1994
A Ncv aRevocabie rust
By:
TREPP,1t.
sTrustfm
M ONT MERY
LY TRUST
A CaliforniaRe c#b
! lcTM
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By:
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(Sigaaturescontinuedfrom tltepreviouspage)
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C'LASS B M EM BERS:
(R6FER 10 COONTERPART CLASS B MEMBER
A INVESTMBNT CERTIPICAT.ION AND SIGNATURE
k.x
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SIGNATIJRES 0
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CEASSB M EM M RS X entiuucd):
A
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othenvsesetbytheManagementConunittee;(ii)acknowledgeshehasroad andunderstandsthe
foregoing Operating Agreementofthe LI-C,particularly tilerestzidionscontained in Articlc 6
tllereoflandagreestobcbotmdbythcterms,provisiom ,covenantsand restzictiorkssetforthinsaid
DOUGLAS 1.FRYE,astohisappointmentas
M anagerandCommitteeM ember
TREP
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' Apv tntrequireathe priorA/o*.eofaM ajorityiahterestoft:e
Mome lntitle,dtoVg*,=dtim Memlm bythekwrittaaconsem dntM mvendateH witb.
Ilm duty haploved tldsAmendm entto lheOpea ting Apermmztlad tNe M em % tarexx zdon of
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Exoeptaavxpressly am endedandm odifiedherobyythe
raltbaaEtxte:dhlanyoth> m = u aad slmnreanal
'n in fullfitcearld e-
3. Faoh of the Class A M emh rs zepreseal aad warrants that the oftlcmts or
rqxv'sentauvese.
xeoaltingtlzisA8reementazrdutyautio- to entlrinloexecuteanddelivertlzks
4,
IN A ITN>
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ED O X AW D OPO D O AGG G
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TECO OLOOIES,LLC andie um-shag b:adopted asortbedayandyeazftrstaboqze vdttem
cTlvw idTeclmologies,LLC
A NevadaLimltcd Liabity Compaqy
By 11 ClassA M emicrs
THE
OICr
ST,DATQ
..D M AY IG 1994
By:
W 4 A N TF-EPP,!tsTrustee
FRIENDLY CAPIT
PARINEX S,L.P.
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ORIGINAL
SECOND AAR NDM ENT TO AM ENDED AND RESTATED
OPEIIA TING A GREEM ENT
OF
e'rreppid TecbnoloeiesaLLC-
liability oompany (tiw ''Comnanv'l datr,d and adopted January 1,1999,asamended by Fkst
Auwrlclmetd(Iatedandadopted7u1y7,2000(thct'W cratin/Aqrmmrat''lisdatedandadoptedon
M AY 25,:001,and isentered into amongtheundersia ed ClassA M embersoftheCompaay.
Exceptmsotherwised:fttledherein,ai1capitalizedtennsshallhavetllemeauingsascribedtothem in
tlw Oprrating Agrecm ent.
STATEM ENTS OF FAG :
A. '
f'
tm lmdenigne,darea1)oftheClassA M embcrsoftheCompany,andonlytheClass
A M embershavetherighttoVote.
B.
amondmenttotheOperatingAgreementrequitcstlleptiorVoteofaMajorityinInterestofthe
M cmbers(entitiedteVote),andtheMembors,bytheirwritleaconsentdaledevendatehere%ith,
havodulyapprovedtllisAmendmcnttotlwOperatingw+ eementaudtlxMembers'oxecutionQfthe
sm e.
1.
The dcfuzitifm of x'
Prierity Reltmf'setfortllin Sedion 1.37 of ihe Cj
perating
AFeementisherebyamendodinit,
sentiretytoreadmsfollows:
'
Contributiortyhlaaarrlourlte'qualtOFIFTEBNPERCENT(15%)per
nnnum,acore g ctunulatively from thedateofoontribuion oftlle
LLC,butnotcompotmded,proratedforauyperiodwhich isape al
year. Notwithstmlding theferegoing,aPriolit)rRettmzon in-kind
CapitwlCoatributionsshallb:oaloulatodandafa eixtaa amountne
gmatert%sntheaggregatePriorityRetttm accruinatoatlcashCapitat
Contributionste theLLC.''
t'rm ppidTecbnnlogies,LLC
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2.
Bxooptasexw osslyanendedandmodifiedhereby,tlm OperatingAgroouwntshalttmt
beajrected in any otherm anneracd shallrem ain in fttllforce and effod asoriginally execated,
3. Each of the Class A M embezs r/preseats aad warrants timt the oflicms or
reprcsentativesexecutingthisAgretmentaredulyauthorizedtoenterinto,executeanddeliverthis
Amendmenton bohalfoftherespecfiveM elnbe.
rexecuting thesame.
4. Forconvenience,thsximtlldmetltmaybeexgcutediam ultipleccunterpalts,eact)f
whichsllatlbedecmcdanorigillalo lwndmertt,andaltofwhichshallconsdtuteonoAmendmerltto
bteftctiveasofthedateaud inthemannerprovidedllereim
TI.
IE
01A T
ST,DATED M AY 16,1994
By:
rjlspp,Iisgrtustx
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T E M NT
RY FAME Y TRUST
By:
z)yi/
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e'rreppid-reobm logies,LLC
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SecoRdAmeltdmenttoOperptle Agrqvmeut-pagez
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RO NAL
By
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,Deputy
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AMENDED ANl
;RESTATED OPEIG TING AGREEM ENT'
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t EI)/ND IULSTA'I'ED OlE IIA'I'ING AGREEM ENT ismadeandeaterctl
into and cffectiveasofNOVEM BER ly 2001,by altd among t
ilosc Mkm bers(delincd bdow)
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imited-liabilitycompany(the
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Jz1f ''),andanyotborpeaons(detbtdbetow)wboshallillthofuturcbecomebound
by tl)o tcrmshercof.
ThisAgregzmentismadcwitllrcferenccto (hoCollowingfaca:
appliablpprovisionsofthoNRS(asdofinedhercin)
.
B.
Efroctivc Scptcmber 28, 1998,the Company and ifadopted theOperating Agresmentofc-f
sM cm borscntered into aad
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aj
Technologiea.11C'')ttheuol
'icinalAareement'A).
LLC (fonncrlyknownas'lntrepid
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ntlmentdatodcffectivcJuty7,
= 4bySecoad Ameuthuclltdatodeffectiveht
fay25,
B.
'Ilw M aaagemontCom lnidec aad itaM em brswho
thatitisi
areontitled (()Ve havode mcd
h tlm boatinzrest,softbCumgany and a1
1ofit,M cmW sSo amend afttlmstatetIZ
Amtrtdr,d Agrcxtmeatin itsontlrd'
yassetfofth hea in.
NOW ZTIIE'
REIX RIS iflcolulderation oftht f:tbgolng prentissand tl
ctvetlalltgand ctmditi
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onsCIPntaIII:IIllereln,and wlth tht inttution ofbdug Itgally boqnd
llertby,tlltpartleshrttilagreea:fellows:
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ARTICLE 1
DEFINITIONS
-.
givingoffkcttotlzofolluwingudjustmcnts;
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tloemredtobeobligatedtoconttibutctotlml.
1r1pursuanttoRcglllatiorlsSocdons1.704-2(.gXl)and
1.704-2(i)(5');and
1.2.2. Reducc such CapitalAccetlnt by tlle am outlt of lhe iterlu dasclibed ia
RgtllationsScctions1.704-1(b)(2)(ii)(d)(4),(5)and(6).
1.3. ''Ail%liate''lneans,whonusedwlthrcfcreacetoaspecified Persons(i)thepjincipalof
.l
tbePemon,(ii)aayPcrsofldirectlyorindirxtlycontroDingacontrolld byorundorcommlmcontrol
withsuchPerson,liiilanyPrzsonowningorcontrollipgTEN PBRCENT (10*)ormorcoftho
outstandingvotingintorostsofsuchPcrson,aftd(iv)allymlativtorspousofsuohPeofm.
'Aereem ent,'. eansthisAmendodandilcstatcdoparatingAgrconwntoftheII.tn.
14. '
.
as oziglnallycxcute,
d :m4 agam onded from tim etotimchereafter,asthecontoxtm quirea. w txds
suclzasGherein'''ttheroinafterr'*'xheroto.''''hcrcby''and ftll:totm dor#''whca used with r'
oferenceto
thi: Agretmont,rrferto thisAgrcementasawhelo,unlcssthc contextothonvise rq uiros.
1.5. lArtlcle-sofOrmnlz-atlorp'moats,collodivdy,theAzticlesofOrganizationfiled
with tlm Semtar,y of Stato (heainafar det
ined) oa SEFIEM BER 28, 1998,Filirtg No.
11C-5563-98forthopurposooffonningthcIJq gsamoadodbyCottitkateofAmendmentfild
w ith theSOCIrCIU'.yofStat
oonApril19.?,
(K
,tochiuyothenamoofthoI.1.C.and:nysubsoqurm
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w-
Howevcr,ifthefcderalifl
cometaxDegrcciatioawithaspecttosuchmssctforsuchyearis''zcrov''
bookdcprx iationshallbcdctcrruincdwithrefcrencetosuchbgi
nrting(JtossM sctvalueusingany
rcasouablemethodscloctedby theLLC.
1.8. StBusiness''orfdlluslltessortllelatf''meanstbebusincssofOICLLC asdGftnodin
Srotion 2.6 horeof.
receiviltgsulmrdinateddistributions&om theI,
1T!untilth:ClassA M emllersandclassC M embcl'
s
havercceivodthoirPfiotityRdum andaretum octhoiraggrvgateCapitalcontributfonstotlw LLC.
M w ClassB M emberasimllhavenovotmg
' rigllts.
1.13. GCIa C M embvrtsl''meansthoscM embcrsrc ivingapriorityltctttm anlhae g
priorityovortheCI- B M embttsindistdbutionshom titoLLC. V eclarxsC M emberssballhave
no voting rights.
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nnd(ii)whenutz'
z!withrefmrencfteanyMember,theoarlierof(a)tll:datculxm whichthettisa
int1 T,I.t7is
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1.18. tTzcoltomil'
ntercst''mcansaPcrson'srighttoshateintheNetProtita,N'
e,tI*ssms '
'
orslmilaritcmspursuanttoSectioIts4.1.1.4and4.l.2.5hcKof,andtoroccivcdisttibutionsfmmthe
IJ..C puouanttoScctions5.25 aud 10.4.5hcreof,whichtheassiglmrofsuchoconomicinterost
would othcrwiseboeutitled,butdocapp.lincludoanyothcrrigiltsofa M em berincludlng,without
lim itation,thotightto Votc.to participkttointhom anagcmcatoftheBusinoss and tfle affai:softhe
LLC;farany rightto igform ation concerning theBusinesstlctheI.LC.
..
adjuste.dbasisfoffederalincometaxpuqxlses,exceptasfollows:
'
1.20,1.The initialGrossAssctVf
tltleofany Assd contributcd by a M efntxrto tho
I.
JX sllallbe the gross fair markrt value ofsucN assct,as agroed betw ozn the LLC and thc
contributing M em lxr.
cxistingMomllerinexchangeformorcth= a#.
<m
.frlf
.mf4'CapitalCtmtribution;
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nimis amountofcasb urproperty asconsideratlon forShe K quisitioa ofa1loraportilm ofsuch
Member'sInteteftintlle1.
1f-!iftltcI.
1f7reasonzblydetcrmine.sthatsllchadjugtm&tisnece-ssaryor
appropriato tom flccetthcrclative rftmolnicinterostsofthcM embersirttho LLC;und
1.20.2.3.The liquidatiolloftllo 1f!within the m eaning ofRegulations
Sectitm 1-704-1(b)(2)(ii)(g);
1.20.3.'Ilo Grou ArwsotValuc ofany I.1T!aasctdistributod to anyM em bershallbe.
thi:seotiolt1.20.4.
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Ifth4GrtlsFAsrtValueofapassethasbcende rmine,doradjustzd'
pt
ifsuant
-''ttiSiktioijf'l8-1 i'Ib)o'rl'l84abovo suchGrossM sctValueshallthomaftcr1* adjustedbythc
.
1.21. 'r uarantec.d Paynleut''has tlle:mcaning sGt fortll in Secrif)n 6.7.2 of this
A pm ment,
.
. ''.' j
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nRcgulationsSection l.704-2(d).
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embcrinaccordancewqththisAgrccmcntandwhohasbecom ea M em bcrptlmnant(fa
,
secuoa8.3 hcreos.
1-28.2.Hmsrtotrcstgned,Fidldrawnorbo aexpellM asaM om bcroc,ifotlvx tk4n an
individual.hasbccn dissolved
.
1.704-2@)44)forE'partrtornotlrocourscdebt.''
1..30. fdM embcrNonrecourR lebtM inimum Galn''meansatktenouatx with respoctto
(NK IIM cmbcrNonrocourseDobt,e4ualtotheLlf Minimum GainthatwouldlrsultirsuchM embcr
N onrecour,
!o Debtwem tremtedmsanomrcourseIiabilityoftllotlr ,dotcrm ine.din accurdanccwith
''
RegulationsSedlonsl.704-2(i)(2)and(3).
1.31. f'M ember Nonrecour:t Deductioss''h;t
s tbe meaning setfollh in Rcgulatilms
exoeess(ifaaylofthone(lncreaso(ifauy)intllcamountofMcrnborNonrocoursoDobtMittinxm
Oain attributable to such M imlxrNortfecourseDGbtduring thatPisculYearoyertho aggmgate
Ilmountcfanydhtributionsduringth1FiscalYeartothcMmberthatbearg(ori:deeme,dtoholtr)
tboectmonziclorwqforsuch M emborNonmcourseDebttctheextcntsucb distributionsarof'
rom thc
procoods of 4uch M em bcr Nortrx oursc Dobt and arr allx ablo to aa increaso in M ema r
tlwTlf!clsrdtltod#tttoinfotm4tioconcemicgthtitffa'
trqudBluinessoftlw (.
f7Asprovidodin
thisAgre= rfttandc dertlzcNM .n MkmllershipInt6r%tofaM omlxrlincldld'
lngthoBrelmoznic
Intomstlcmutptee-qdzoporsonalpxpcftyoftIIGMeIrIIrT.NoMcmboqb'yvidueofhisown= ltipof
uM emlo hipJnt:re-skhasorowns,orisdoomr.dt:have,orll$% aaintnfm tina1loranypartcfthe
Iz,
t7.:pmm rty,
ova......,.....a.
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statedscparatelypurstunttoCodescction703(a)(1)shallbeincludcdintatableinconx orloss),
wit.llthofollowiugqdjustmeqts:
'
sha
'llbc subtractrd from such taxableincomcorIoss;
1.34.3.Gaioorlossmsaltingfrom anydispositiont)fPropcrtywithrrespoctto.
whkh
gainorlos:srccognizG forfeederalincometaxpurposesshallbrcomputedbyrefcrencctothcfair
m
P arkctvalue ofthe Property dispused of, rlotwrithstandiug thatteadjustod tax bwsisofstmh
repM ytliffersfrom itsfairm atketvalue;
'
)
'
l34.
4.la Iicu ofdepreciatlon,amodization,andothercostrecovov dtductitmstakem
into account in computing such taxablt income or loss, thore shall be tuk'
nn into account
D opm cialioa forsuc,
llFisct
tl Yeavor othc,rpe,
liod.computod in accordanco with the subscction
heroofontitled :t
D epmdatione':and
1-34.5.Notwithstandinganyotherprovisionofthissubsoction,anyitmsofincomo.
gain.Iossordeghctie!lthztavespecificAllyallocatc,d sl1:llnotbotakoninto acoouatinoomputlng
NN W ofitsorNotLosses,
'
l.35. t6NRS/ v ans Chaptor 86, Sectioas 86.011 to 86.590,of the Nkvada RoYised
Statutees,&%amGrtded,oraayceorrotptmtW gprovisim orpmviiiolu ofany:t!
'npltm .
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l.40. 'tpropflr
/'(twans411oranyperstmalprogcrtyand othcrasxt
tanybl,
'
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sof(hcLLQ btlth
n
cluding,butnotliraitzd to,ieTeM ol
thereof
ogytdcnrde lewl,oranym dion
-
1.41. e'Regulationsl'or4qXreasurvRezulytions''
ptom ulgatodbytheTroasuryDepartmcnlutldcrthecod meansthefodcralincom cti
u rcglllationd
tlmet
o,assuchregulationsrnaybeamcndedfmrn
o tim e.Allrofercmcoshore'
iuto a upecifi soctionoftboReg
ulationsshallbedeeeqxd alsoto
m ferto any cotx spondtugprtAvisiotw ofsucooeding Re
gulatitms.
1.
42. 'X evaluatlanEvcllt''moansatlyofthefollowingo
oftushorodlerproperty(oth
ccuramces:(1)tl
zectmtribtltitm
orthan ade p'
lfaffrlflamotjqt)by anew orcxiating M emberto tht3
capitaloftheCompanyas11cunsidtrationfortheissuanc,
ofcashorPmm rty(othcrtllanldrmnimisalnount)toaoMof
AdditionalUaits;or(2)thodiseibutioll
cmborinexchan
Compaa
go foraaInte,restin tho
y;pm-vided thatstlch cvontshallnotconititute aRovaluatiou E
Committooaas
vcntiftheM anagemont
onablydotozrninesthatitisnotflccessarytoJldjustthcbookbasisoProm lty ordm
M embcrs'CapitalAcoouIttlinonnectionwifhtheoccurrelweofallysuchcvont
pm visitm istoco
. Axci
qtcnttAttlli:
mpty witlltIITprovisiot
u ofRcgulutionsSocton k.704-l(b)(2)(iv)(9 andgh4llbo
iaterpretcdcousisteat!ythercwith
.
. 1
.
.'
l.43. f
Kceuly> ''meluufundssetiksidcrrom CapitalGmtribue nsortovon
ue,sasrea k-vcaq.
Such Rtscrvessllallbemtdntainedinamount
s
r
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ao
na
bl
y
d
x
me
d
s
uf
f
i
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e
nt
by
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Mxqflageme'llt
Colnmittcm for working capill and the pa
yment
of
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xcs
.
i
ns
ur
a
nc
o
mplaccmeat
dobt sorvico,mpe .
sreuowals.orothGrcaqtg ore&pensesincidentto (lw Busine,
alternativ
ssold)eLLC,orin tho
r,tM Dissolutilm oftlw U .C.
1.44. V twcretarvofState''meangthosec
ofStatzofthcStat
eofNcvada.
f7.
11.
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2ddb /:31?k D9dS18s J. Ff
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ARTICLE 2
..
slta!loperato theBusinessofttm LI
.
2.
3. PrincipalBugiusO fscm n eLILC shallmaintain itsprincipalbusints:oflicoat
S9DLAI
QP
.SI
4OIG BObO AO , INCLINEVILLAGB IVADA 89451,withamzilingaddmss
ofP.O .BOX 4964, INCLINE VILLAGE NEVADA 89,4NI
50.orany otherIocation asdcterm incd
,
from timo to tim eby tlho M anagem ontCom
mittee
.
2.5. PerptulExisteace.
S
.
grm met.'
I1z exlatw l;oofthrI.
1r shdlcommencz a$oftheeffxtived
BBR 72
atcofthisAgmeemenk
1
998.
,
chnologyownodbydloIJ,
t7(thoq'echlwlfy#')andlllfinAllf;eaayandall
of
t
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f
ogoi
ng
a
c
t
i
v
i
t
i
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l
(
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l
e
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,
otherla
the:*1
3tlsllleas'll.'
IlrLIX mayoonductorrngaqoinany
K B wfulactiyitythatthcLtf deeznsianecessary, incidcntaltoordosirablillconnttlon*1t11
usinossofthel.
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(ortheSecretary,ifonejsappointedbythoManagmentConzmittec)shallkeepalldmaintainor
causctobekeptandmaintaillcdacalrupanyminutebooktoincludethcArticlosofOrganzationottlloLl.
,C andthisAgrccmcnt,Jm dallyamcndtfieutstflcrct,andIninutesofallmei
ctings(orcortse'nts
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i
eu
of
mc
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dng
s
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ot
(
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M
a
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'
ARTICLE 3
MEM BERS,C U ITAL CONIX IBUT IONS
AND VAPITAL ACCO UG S
- -
andolassisofth:Memlxrsoff
lleLLC arege(fortlloaEXHIBITA attachcdherdoantlmadoa#lt
ofthisAgmcm euk which eAhibitm ayboimzcndedormtxlifiedfroln tim cto tim cwithouttim cav
octheMcmbers.
nt
amouctofAddittcnalContribudonsncede,dandthcdatebtwhicllthMemborslallcontribute
Contribuqomqahallbe pro rat: busr.d on 11): M cmbM 'rezpectivo Pottontago Infef- tg. Iunh
M
cmbershallhavetlleIight,butntthobligation,tomakran AddiuenalCapid Centributienat
t:itetimespezified intlloM anagementCornmitteee'snoticc. Ifany M em berdfx snotrfuat'othofull
nmountfamqw tedAdditicmalCapitalQmtribution,tl)eManagemeqtCommlttx mayleotK y
one.oranyombinalilm of,thfollowingoptions;
cm
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J)Case
,.lS.3:06-cv-00056-PMP-VPC
2005 7:7221
IIIS J. Ff
?9, Esq. 644-12 Filed 05/28/08 F9'
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* :
PerccntagcInterests)orasthcyotherwiScagrcc.IfAdditionalCapitalCoatributionsafematloby
'
som e. btlt rtot a1l M cm bca, no distzibution of Distribfltable Cash or any retum of Ceapital
Contributionsshallbem adetoaaynon-contributingM rm bcruntilanamouatoqualtoonefb nclmd
FiftyPcrcent(150%)ofsuchAdditionalCapltalCtmtributionsarercturucdtothoseMembefswho
l'
nadesuch AdditionalCapitalContributiops.
3.3.2. The Class A H embersshallhavo the figl!tto m akc the AdditionalCapital
contributingM cmlxrtlteaumborofUnitsdctermincdbydividillg(i)theamcuntofcashorthc
GrossAssctValucofotherPropezlycontribuled by such conttibuting M omberby (ii)tttc Unit
Valuo. as dctctm ine.d by thc M anagement Com m lttrm in connectioa with such rcqueat, for
AdctitionalCagio lCoatributions.
IftlteM anagomcntcofnm ittoocktemzinr.
s(.
11111theCom panyneodsadditionalfunl ,
butd'
etecttirteesnottorcque:tAdflitiouzlcapitalContributionsthomfor, tllrM anagemmktcommittco
'
m:ycatlsetheCompaRytoselladditionalUnit,
spursuanttoSection3.8belf)w orboKowsuchfunds
from any Person, including any M mbetorM em bors,uponGuch torvnKand conditiongAsm ay be
agreed toattho timc.No such loatitotlzcCom pany from &M imbershallbo deem ed * coastim tea
Noneofthetorms,covonacts,obligationsorriltsoontainedinthisscction3.31dor .
shi
ttibodcemodto12 forthebcnctitfmlyPorson,othtrthantheM om bczsand tlm Company,aud
3.
4.2. NolnterestonCanltalContrlbutlens.Exce'
ptasoxprasslyprovie ftx in
thlsAgrrecment.coCapltalContributioaofanyMembc shallbearanyintcreatorotherwiseentitle
thecontributiagM embortoaaycompnsationfortuooftllecontribete,dgqpital.
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JhpCase
IS. 23:06-cv-00056-PMP-VPC
006 7:72/4
!18s J. Ff
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'
''
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'
3 4 3 EstablislunentofCanit'
alAccunts. A scparate CapitalAccountshallbo
eqtablishcd and rnaintained forcachM ember-Forrecord koepingpurposes,oach M emlvtr':C-apital
'
'
'
--
M embcrshallbedeterminedasfgllows:
3.5.1. Iltcreascs. TheCapitalAccountofa M cmbershallbe incrcased by:
3.5.1.1. n eamouatofm oney contributodbysucllM ombortothecmpany;
3.5.1.2. TllcGrossAssetValucofpl'
opcrtyconttibutodbysuchM elnlxr(Re.t
ofliabilities secured by sach contributcd propcrty tlmttho LIX is considomd to assum c ortake
subjccttounderCodesection752);
3.5.1.3. Alltiabilitioqortl
w l.tr assumcdbysuchM em ixm excludingthox
provide.d foria Sezction 3.5.2.2 below;
'
.
k/
'
ciuc,appfopriatclyadjustedtotaktintoaccountbookandtaxdiffemnoes;and
3.5.1,5. Any incmase lm ulting fm m aRovaltlation Bvent
3.5.2. Dcrease-s.'l''
tz CapitalAccountofaM cmbcrshallbedec
3.5.2.1. Theamountofcms distributred to such M em bec
by:
.
case,aggropriatelyadjtutedtotak;iutoacountbookM dtaxdifferenoos:and
)
qxhq.xw-.adx.'
e ire-x- la.-
&tx kvie
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Value(notofIiabilitios)ofproN rtyinitiallycontributcdorobligatedtf
ylx contdbute,
dtothLlr by
thatM ombot artd any subseqtlegtcontributioasofcaslland/orthc Gross AssotValuo (nctof
ributed to theII C
liabilities)ofanyotherpropertysubscquentlycontributedorobligatedtobccont
e
'
alInrR ypartofanyAdditionalUnitawhichtho
anynmyfrom timetotiznepro& seloRllor
iuor,otherthaathtinidalisstkaqcofClau C OnitdandalyAdditionalUnik whicha:esctasidc,
x0ldorissuedtm& ranyunitOptionPlaaadoptodb/tlleM anagemectcommittr,
eandwhichdnot
itshall#vocachMemborwrittcnnoticocgitsintcation.desoribhlgthtypofUnitsaadtIZ prict
andtcrmsupoflwhkhtlm Companyproy sestoissuctb:sitme.F.achM omV rsh<lhavrftftr,
ea
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q- lklc.rxqiv- v r
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.
..
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(15)t.
taysfrom tbedatc oftrccigtofany such Iloticcto agrec to pumkaso up (o the Mom/ r's
respectiveproratashare(asdetcrminodbymlativcPerccntzgolnterests)ofsucbUait.sfortheprice
and upollthc tetm ss- ifie.d i1Itho notice by giving writta noticc to the Com pany and stating
thercin tbe,quantityofUnitsto be pqrchasexl
.
3.9.3. Assizn
' m tm tofllif:I!&qtlrFlrstRefusal;Lltlgtatlon.Tlw rightof(irstrcfusal
setforth in thisSection 3.9isnotansignablc. No M etntxrshallhave afly rights underthisScctitm
3.9 forany issuanceolunit,
sorlk ouomicIntcrestsby theCompanyuudortl!eOriginalAgrecmcnt,
the Rcstated A grccm entorthc Afftcrkded Agreemcntpliorto tllodate heroof.
3.10. Llrl1i(atIonsonIpiabllityandOlllicationst)fttkeM embe.zxand M unzeo .Faxcopt
- . - .- - - -
foraMcmbor'sIiabilitytfatho1.
1r ptzrsutmttoNRSSection86.391,artddm tightsofjudgnxnt
croditorstoyhargo&Member'sIkonomicIntcrestforccrtaiqunsatistiodjtldgment:ofa.Member
pursuantto'hm .
s Sedion 86.40t,and uoloss othcrwise providod forin an agrcelne'nt:iplr,
d by a
M em bcq tho M anagerp(Cormnittcm M cmbe.
rto lx chargod.no M om bcr,M anagororCommitto'e
McmbershallbcindividuallyIiableunderajudgment,dcoreeororderofcourqorinaayotlle.
r
m anner,forany debq obligation orliability ofthc1.1r whetherornotthatliability orobligation
arise.sin contractortort. N()M cmbershall l
x rcquired to loan any funds to tlte LIf ,cxccptas
providcd forin thisAgreoment.No M embcrshallberequilr,d tom akr any contributiontothe LLC
by reason ofany ncgative balanc.c in his Capi!A ccount,Ilor shallany Ilogativc bala cc it
la
M em bcr'sCapitalAccm ntcmato any llability on the pmtoftheM emborto any third party.
3.11. UlljtValue.Upoa tlle occurronco ofany Revaluation Evemt.tllo valuc ofthcUllits
t0m 'funltValue''lshallbethevalueofa1IissuedandoatstandingUnits(withoutgivingoffocttoli)
.
ctmtzibutionsgivmgrisetotlzeRcvalttatitm Event)dlvidcdbythonumberofUnit:thenissucdxld
outstandiqg(withoutgiyingcffectto any Unitsiouredorto beirhsuedinconsidemtioat)fAlty
contributiomsgivingris:totheRevhluationEvont).Aftorth:UnitValuchasbecnsoddt,
rminvd,
emchMcmber'sCeapitalAccountshallbeadjustedinaccol'dartccwithSection3.5,baxdonsuch
UnitValue.n rM nnagvmcntCom lnittoeshallux c'ornmerciallyreasmablecffott,
sto cstablishtho
fairvalue oftheUniu in accordancq with thissoction 3.1t.
ARTICV 4
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R AKlsmd-14
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:qCase
,.l8, 3:06-cv-00056-PMP-VPC
2206 7:3704
tlli J. Ft
kf' ESC. 644-12 Filed 05/28/08 hC'
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''
'
4.t.2.3. '
rhird, to DLNNLS M ONTGOM ERY and BRENDA K.
M0
M'HRY,asTrustecgof(V MONI'GOMSIW FAMIY-IXUSTItheUMONTGOMERY
'FRU5T''),asaclassAM ember.iupropoftiontoitsm sitivobalancc,ifany,ittitsCapitalAccount.
ut
ltilitaCapitalAccountbalancc isreduce,d to zcro.
4.1.2.
4. Foulth.Ne'
tI-osse,
sshallboallocatodtothoClassH M '
emlvrsand
Clas.C M cmbon in propotlionto thcpuitivebalaacees,ifany,in theM om bers're&poctiveCm /tal
Accounts.uat'
ilsucilbalaaceesarc retluoe.
d to zm o.
msultillthopadie,
sobtainingdistributionsoyrrtholifofthe1.
1r!(includingupoaIiquidatioa)
wlticllwilllx ideaticalt:thoseprovidodforinSedilm 5.2hercof,M dwillalaoresultinthipartloa'
acordanceV ,.
IItheirmlativcadjmtodpositivecapitalAccountbalalcea.A
'gly,totltext/nt
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32 of
* '.
*
,. +- #
*<
ctm stitutc a 'kualified incom e offset'' w ithin tllo mcanittg of kcttllatiofts Sectiq
l.704-1(b)(2)(ii)(d)(3).
q
itcmsofincomoandgail)forsuchFiscalYeartimdifnocossary.subscqucntyearslinproportionto,
and tothocxtentofan amountoqualtosuch M embor'sstlaa oftltenetdecroascinLIE M iltilnqm
G
aia dctorm il!od i:lacctlrtlaac.
o with RogulatlonsStction l.704-2(g)(2J.'1Yi3Section4.4isintenfled
.
provisionsofRogulatioftsScction1.
704-2(9.
'
'
f )
M
4.5. Memb
.erNourccnurseDelltMlnlmlt- GainCharzvbaelo Notwitlwtaadlngany
otkerprevision ofthis Article4, butxceptSectioa4.4,iftltete is a ttotdecrease in Mtlrtxr
Nonr
Y ocoutseDcbtM inimum Gain attributableto :M emlv!rNonmcoume Dobtduring any H scal
exqrofttlo!.
1F%oacttMombovwhohasashareofthcMembrrNonrecaurseDebtM ittimum Gaiq
attdbutabletosuchM c,nlllrrlfoarocoufrzDebt,dcterfniltcdiftacczxdaqcowithrl-lxrttsurylkrguliioc
Sxt
704-2(i)(5),shallB speciallyallocatedittuwofIfflincomeandgainforsuchyeartant,
if ion1.
ncceasary,subsezquvatycafs)in alzamountcqtlalxuch Mimlvr'sshare ofthGn:tdecreascin
.
'
M tmtrr Nona oourso Dtdtw4ions aro attzibutable in Accodance with Repllatlo:ts Sodiot
1.70G2(i)(2).
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18/08
4.
7. SpttiillAIlfKations. Aay spcclalallocations f?fitotns ofNctProlitspursuantto
Sections4.4, 4.5 and 4.6 shallbe takcn illto accouutin computing subsequentallocations ofNct
Profitspursuantlo scction 4 1,$o thatt
llc nctam ountofany itcmsso allocated and thegait) loss
and aflyofheritem alltx atredtocachM emk rpursuanttodectiop 4.lshall,tothcntclltpossib,le,bc
equalto thc notam ounttIM would havc becn allocatred to cach such M cdnbcrpursuant(()tlw
provistonsofthisAtticle 4 ifsuch spocia!allocationshad14otoccurrcd.
-
..
-- -
'
,tittctu purposr-sglulllx!altaxte,
d inaccordancewitlkthccozrosptmding bookitems,
ARTICLE 5
DISTRZ VTIONSO F AVAEA BLE CASH FLOW
'
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5.
2.1. first, pro rata, to tho Class A M emlx rs atld dlc Class C M embcr: in
accordancewith therespectiveamoqtsofthoiraccfuetlbqtuadistributed Priorityltcm rnuntiltllcy
have rccrived aa am ountequaltt)tlleirundistribute-d'lh'iority lkctt)m accrtlcd through the datc of
such dtribtltitm .
5.2.2. Secondjprocata,to tlicClassB M embcrsinaccordartccw ith theirrespectivc
Percentage Iatem stsuntilthey havcrcccived aaamountcqualto tlwirundistributcd Ptiority Returfl
accrtled I
hrough the dateofsuch digtdbution.
5.2.:3. Third, pro t-ata,to tlw Ctass A M omtx rs aRd the Class C M em bors iu
accordancowith thcirrex
spective CapitalCerltributionsulztilthcyhavereceivedanaggregateam otlnt
equaltheirrospective CapitalConrzibutionsto theLLC .
5.2.4. Fortll,pro rata,to tlloClassB M em lxrs inaccordancc with ttmirm spectivo
PcmontagcIntcrestsuatilthey havereeccivce
d anaggm gatz amountcqualto theirrespectiveCapital
Contributionstotlw IJ.
t3.
5.2.5. Thcreaftr,pl'
o I'
ata,to the M em bcrs in accordancc w itll their m'spem ivo
PorcontagcIntrosts.
amount(the:qkxrlabllitvsllorlfallAmouut'z),ifany,bywidch(a)tlmaggmgatefe alandgtate
tax Iiab'ility(ifany)lncutrodbytheM cmbcrswithrcsprctto tlm nd incomeortlloT.
f7forsuch
'a:pmcticableattersuchfundsato:vailahle.Itisttr objediveoftIIGMembetsthatwhilethe'l'
ax
IlallitityshoftfallAmuntwillbedettrrn'
luodattheoRdofrachPiKAIYoar, toth::xtontpossible
: )
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- w
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Case
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J2
r.1S.3:06-cv-00056-PMP-VPC
2006 F:77?k
ksl?s J. Ft
', ESC. 644-12 Filed 05/28/08 .
'1S135 ?.
20/50
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lnoomefrom thefJf7.
'DistributiousIlidegursuaatto thisSixytion5.3 shllbc takcnintoaccountin
connectien withanysubsequontdistlibutionsundel-sectiuns5.land 5.2 abovc so that,totheextcnt
possiblc,thcM ofqtxl'sshallobtain digtributions ia thc sarn:ordcrand pfiority they would have
obtained iftltis Section 5.3 were.ctltin tltis Agrrxmcnt. At tho cnd of each Fiscal Yoar ms
'
contcmplatcdabovo,finaladjustmtlm sllallixtmadtorollectLl
zcactualmsulf.
sofsuchFistralYear.
IRI-ICI,E 6
M ANAGEM ENT OF TR E I'ZI-C
'
6.1. M anaeementoftheL'
LC- Subjectto tttcprovisionsofflw NRS,thcArticlesfJf
Organizationand to arlylimitationgsctfotthintltisAgrcoment(asmaybenmendcd frorn timcto
time)rolAtingto actionsrcquire.
d tobeagpmvcdbytheM embcrs,theBusinessand affairsofthc
LLC shallbc managed,and a1lCompany gowers shallbc vcsted in thc M aoagem cntComm ittee.
'
appointcd pursuantto Section 6.l.1 bolow,who shallactasthc Pm sidentof the I..LC Imd shall
conductthoBusinessinaccordanccwithAndsubjecttothcpolicies,procodtlros,decisionsand
diroctivcsoftho M anagcmcntCnmmittco.
6.1.1. Deslzna tion off:hfanastcr-''Tfm M anagorofthoLLC shallIx DO UG LAS
J.FRXB,an individual,orjzissuccclsorasappointed by thc M anagementCom m ittcc pursuantto
Section 6.1.2 below.
-- .
orromklvulfrom officebythoManagemontCommittev,thoManagemcntCommittocshallappoinla
succossorM anager.
hastveendulyappointedtytltoMnnagemeatComrnittceinacoordaacowitlzthisAgv mxt.
6.1.4. m uaa mo tcmmY e lxteM nnagemo tcomm'
la l ilx e stoftlur,e
)
.
'' '
ARxtlvmll.
vtu rlelI#edtm d& ztzt/W Oprtntla Agttemed- 19
e'
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2:*317K/1
#.
. ..
fillcd by the Class A M embcr who appointed tlm Com rnittec M em bcr previously holding the
position thatisthen vacant.
TtteclkwsA M ombcrsexettutingthisAgtc menthea byappolntthosem rsons
setforth opposit theirresm ctivenalz below asthoirdegignated Comm ittcc M emborto sol'
vcon
thc M anagem ontCom rnittee of the Company. each of whom shallsorve attlm plcasure ofth4
rmsm ctivoappoiating M cm berandshallhold theirfespectivcoffiesuntiltheirmsiguation,removal
orofllcrdisqualificatinafm m sclviccaoruntiltheirrespectivcsuccessorshavebccnduly appointed
iaaccordancowith thisAgreoluont:
Nam aofAppoillting
ClassA M cm bcr
-
PricndlyCapitalPaftncl'
s,LP.
'I'heFromont'fMst
m nnisM ontgomery
Appointed
' Crrrtmidcc M mbrr
DouglasJ. l7ryc
W arm nTm pp
DenpisM ontgomcry
6.1.5. M'
aqaiymentCommittecChalrman, Thc MknlgemontCommittez shall
ndividual,orliissucccssorasappointed by thcManagemcntCommitteeitlaccordanccwithtbis
Section6.1-5.e14leChairmaashall(i)presideatManagcmentCommitteemoedngs;Ui)havotho
')
''
autlmlity(()executoanddlivcronbehalfofandinthenamcofthcLLC anyagmcllmnta.cotttract.a,
lotoG, m ortgagu , evidcnc.o of indobte noss, ctrtificattxs, statom onts, convcyancm or other
illstzument:inwliting,andanyasslgnmentorondol
xomentthereofiand(iii)exordsosuchlightsoc
G dorm suchdutir.sasareothotwisepmvidcdintlkisAgttometltorastxuqybqapptovedftxlm tlmtto
.
of
C tiw CommitteeM ombcrs. In theeventdw Chrman reeslgnsorisrcmovedvamajorityofthe
ommitteo Moml rsshallelra:tamplaccmentChainjlaa.
zhallb:pzrparr,di!ladvancobfthtcbairmannrtlkMrlager,astilcasemaylx, andcimulated to
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.
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sl's J. Fr
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'
'
thcCtfrttmittecMembers. Approvafof'theManagementComnuttccGhallrcquiroamajofityilz
numberoftlmCommittecMembers.'fhcManagcmentCommittcen'tyactwithoutammtingif(i)
theaction takenisapproved iawritingbytflenumlxrofColmnittef M cm bcr:nacessarytotakcsuch
action,cnd(ii)wfittcnnoticcofsuchactieqisgivcnto(heCommitteoMcmlvrswhodidnotpvide
such writtonconsertt.W litten minutcsofa1lmcetingsshallbcmaiatail
w d,al4d thc minutesforeach
moding shallt)cagpm ved atasuljsrquectmecting ofthe M anagcmcntComrnittec.
6.(.7.2- The M anagemertt Comm itlto may adopt whatcacr rults itrtd
procee
dures rclatilzg to its activitics a,
s it may deeem appm priate, providcd tbatsuch lvlcd afld
pr eeduresshallnotba iqconsistontwith orviolatcthe ptovisionsofthisAgxrcemcnt,&nd provided
thatguch zulesand vegulationsshallporm itmem ingsbytclephone, vidco confereacing orthclik'
e,
andsha.
llpcnnitcom mitte,
eM eulbel'sto participatcinmceti'
ngsbytrlcphonoorvideoconferellccor
tbo likc orby wlitten prtlxy,and such participation shallbe dccmcd attendance for purposts of
detormiuing whetheraquotum ispresent
'
-.
causedbjsttikM,labortroubles,Iiot,tires,eqplosions.torrladf
xs,floolls,actsofapttbliceacmy,
insurrrzuons,actsofGod,f'
4ilum tocafryoutthrprovisitlushcmnfdRetoprovisiottsoflaw orrttle.s
orrep lationspm m ulgatod by anygovernmontalagency oranyotherdom and orrcquisitionofany
goyomment,orff'
om lmy oterc'
ausc bcyond thccontrolofth: m nagotortho M lmggcmcnt
Commityrem.'
f'
hc M anagcmentCouullittee der,s hoq in any way,p '
arantr,c the teturn ofthe
M embcra'Capttl
tlContributioasoraprofitfortbcMembcrsfrom theopemtionxoftheCompany
6.2. P@w erwxDutle.s apd R-ponsibillti- of tlle M :naeement Condmittet. The
-
MK&gomontCornzn'
lttrz stwllltavca!tcftheIi/tx,4utitzaad m weersassyctfiod iwthls
Agv ment,indudingwitlloutlimifation,th:gerord powcrsand (lqtir.sofmaaagem cnttypkally
vestodiatheixl&1'
llofdiroctou andthcofficeofachicfexeecutiv:officerofilcofpomtin. m ftrs
tequiring th: apgroval of tlz ManagementCtlmmittec shallinclude, withfmt limitatilm,tlz
following:
m zsqant(0Sectilm 6.4htreotcontractsragrxmeatstetweontheIJT!and/oritsAflilittteserMy
'
' )
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6.2.2. n eapproval,cxccution,dclivcryandpeffbuilzncconbchalfogtheLLC of
tho M outgom ery TlustContribution Agreomcnt,and amcndm cntsormfxlificationsthercto.
:
'
6.
2.5. Theappointm ontandtorm inalitm ofofficers'hiring and firingofom ployeems,
ortheoqgagem cntofconactoO.suk guo ctors,coa6ultaats,cxpcra Itndethcrpcri
xmlinocesse Y
appropriato to carry outthc Buainessoftllc LLf ,including the selection and engagcmontofa!l
igdem ndont:.
r.111f1e.
41publicaccountingfirm audlegalcounselforthoIJq aadtoapprovethoterms
ofanysuch appointmoql,cm gloymentorngagcment,inctudingagprovalofthotcrm sluzd pam lcnt
ofcomm nsation.
'
6.2.6. '
I'ht approval t)f tllo am nt attd tizning of Any Additional Capital
Coatributionarequirodbythef.1.C tk
3uonductitsBusittess,including,witlloutIimitatioa,allcapital
retpire,
dtobcexpended with rupocttotllcTechnology.
tgershallu astlw
(.3. Pow ers,Dutiu andReaponxibllltlesoftheMalmtervTheM&ni
-
Agreement.subjecttoth:limitationssdforthinthi:Atticlc6andea whr.
reiathi: '
OIILn o
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wm mr
.wexuzw xtek-yv
kzwqxx- altqityvizwd zlgagfgtftlad Rqstaied t)ji ' Agaqla nt-22
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J
Case
h.I9.3:06-cv-00056-PMP-VPC
2106 7:2l?k
IICS J. Ff
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o.8S9. 644-12 Filed 05/28/08 F'
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following mattcl-s(listcd by way ofexafrtplc and notin limitation tllereeoo and Ghallhave tlzc
atlthoiity on behalf ofand in the namc of (he II.C to do ocpelfolm ,or calzso to l)e done or
porfofmed.suchactsortlzingsand toncgotiate,cxecute,acknowlcdge ald delivcral1agrcem cnts,
.
documcntsand instfumeat
.
sinconrtcctionthere-ith:
fmddealwithaayanda1lgovel'nmentalagoacieshavingjuristlicticm ovcr,oriaaaywayaffecting,
'
6.3.2. M akeordinm'
y aadnecrssarycxpcmditurosand incurreasollablcobligations
nccessary fortllcctxtductofttleactivitfesofthc I.r.
C 'sBusincss,a11inaccordanccwitl
landstlbjcct
to A pproved Budgets.
.
' ''
6.3-4. SubjocttotlteptiorapprovatbytileMomberspttfseuaottoScti(m6.
4.2%tow
.
'
6.3.5.Tooonfeo hjudgmontagaimtthoiIr,otwpprovcthzfilingnforscttlement
ofmlyclaim.
q,includnglitigatin matters,fororq ainsttltc l.1P , ()6lesstllan Fifty 'llxgsand
Dollllrs($50,* 0, ).
6.3.6. Faxcmttand(loverbondsan1indomniti. byorockhalfofdlcIJr!a$mgy
bemquire,dfortieom leulzipantb rsaloofany Pro- y, ascxpressly dimected to (k)se on acase,by-casobasigl)ythoM anasemeatContrnlttee.
S .
)
s u .-u'-- - -- - m- t-- -
2*01* 11
'
.
--
')
'
6.3.13.MaintainaminutcbooktoillcludothoArticle.
sofOrjanizationofthoLLC,
col
uonlsiplieuofmeetings)oftheM anagcmcntCommittec,writtenconscntstlfthcM embors,md
otherim portantdocumentsoftheLLC.
thcpriotVeteofaMajorityinItltGreestoftheM embers:
6.4.1. rxceplforthelirnitr,dauthorltyoftlm M anagortoaTRI.
IrIIIISX H IRW A hete,
to
6.4.3. Approvctheerranafrz'ofAMember'slntemst(exccptfortheTranllfcrofupte
10% ofaMomber'sEconimicIntcrostpvt'suanttoSeztioa8.1.
3htfmlg.
.a
rwwK.wukxtael- .
ukxwwum w lllafywwkdpferlA yfmufRn ktted tlllerwf-gAgreew td - 24
e'rreppid 0025
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1.tJ. 3:06-cv-00056-PMP-VPC
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''''12t)Id d ' Document
l/P r C % ' 644-12 Filed 05/28/08
lPage
0'll1141 Vof' 110
l()f21
- UI
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-
6.4.
4. .Approvoanytransactioninvolving thc paymctztofcomggm satio:lbythcLLC
to a M em bcroran Aftitiato ofa M omber,unlesothek-wiso c,
xpfcssly attthorized and approvcd
7
pursuantto thisAgrremcnt.
6.
4.9. Kuowinglypedofm aayacttotheertbanallyKtreqtliredbythisAgrtcmtm or
bylaw oranactuk
' eningoodfaitll)thatwould,atthctimoofsuchact.suljcctanyMomberoftlw
LLC toanyporsonalliabilityinanyjurisdiction.
6.5. TimeDevotGltoM anaxemenL Ulllessothcm iscdctermitledbytlm M anagemeqt
Conunittoo to bein tho bcstintcrcestsofthoLIX anditsM embers,the M anager'sscrvicesshlsllbe
noncxclusivc to thcLLC.TheM anagorneedstodavotoonlysuciltkuoarid attoritiontothoBuslness
mld affairs ofllr LLC as he shalldrom necessa!y and appropliate, in the cxcrciso ofhis own
z'
agmos.asachowlodgedbyhissieatuzrtothisAgreemetlqthatheshallproddehisservice,sina
mannor consistcntwith the policles of the LIf as m ay l)e adopte,d fm m tim o to tifnc by the
M acagcmontCommittoo.
'
'
Agreemept;(ii)pumilasingo:Qtherwiseacquiring,ewningvholding,ommting,managing.investing
t'
.
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lb3
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.-
ortlattsre;ortiii)otilerwiseengaginginanyorallaspectsofalikbusincssoftheLlr 'sBusine-ss.
.
-.
6.
7.2. Officers'Conm enrsatinn. Bxccptforanycompcnsatioa to bc paidtethc
ChiefTcchnologyOfticc.
rasse(furthbclow, no officcrofthoLtf shallre-ceiv:componsationf0r
hi
s
or
h
e
r
s
e
n
i
c
e
sua
l
c
s
s
o
thorwiscappvovedbythcM anagemcntCom mittec. Irtconsidcralit)nfor
l
zisfull-titl
x ,oxclugivoscrviccstotheLLC , M O NTGO M ERY.asCllicfTeechaology Officer, shall
rcceivo,in addiitm to any reimbulscment for com 11,: providcd for in Scction 6.8 bclow,a
-
GuazantecdPaymcat(a&thatttrfnisdogincdinsection7oxc)orthcCodel. '
I'
tzpaymenqamount
.
')
.-
'
t
softheLIX Imdalgoofitssubsidiazy Ilmltedliabilitycompai es,
do insy cttilephp icalpmpdttie.
tmostioorfroip .Suchins- titm bythcM anageroranyCoTnmltteaM embormaybemadein
pcrsonorby agenturgttomeyandincludesthelighttocopyandobtainabgtracts.
6.1l, Furnishlnj! ELC Infernptloa. Mlc M anxgor may mlreasc guch inftlrmi on
c
IoncerningtbeBusinossand operatiml:oftllef.1r tsuch source,sasiscustomaryorrequizrdby
4w orbyflzloorrcgulationorofdr,rofanyregulatcc body.
.
'
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6'i1Cl43 C.
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.
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thanaONE PEIICIJN'
P(1%)intcrestinthe,profitsof(heLLC,exeptwtlereaMomberfilesa
statemmtwit the IRS,in accordalw: with applicable Troasury rogulatiolls, stating thatthcTax
M attcrsM anagerhasno such authotitytu acton thatM om bcr'sbellalf, AnyM ombcrfilincstlclla
statemcntwitlltheIRSshallnotify(IIGManagcrthrcofwithinthitty(30)daysofsuchfiling
.
ARTICLE 7
aotpatticipatvinorapproveofsuc.
hacticm wititin(oa(l0Jdaysfollowingtlleapprovaltlmreof
.
. ..
.
' .
ARTICZE 8
RKS'rm C1*IONS ON TIG NSFER OF M FJM BERSEIP INTERESTS'
V
ADM ISSION ANb ST BSTITW ION OFNEW M EVBEKS
-
2.1. T m dsfe'
rerAgsiellmentofM emberk IMA UK ThoIuteroatofoaohMcme rand
.
thePcoqonzicItltemstofaPersonwheisn0taMomlxrclzsdtute&theporsonalpro- yoftiz
M emtrorflrBtonomiclqtetcsthol&r. NoM omk rotpa nomicInzmstholdorhasaayinteratin
thePmm ftyQftlz L.W .
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Page
8.1.2, Exccpt1s othcnvisc provitkd i:lSections 8.5.1 and 8.5.2 below,no sale,
-.
tlansfcr,hnxthccation,encumbrancc0:asxignmcl
lt(a'Transfer'')ofuMomber'sInterestoran
Fronomiclntcrestirtthc:LLC wtllbe validunlessagprove,d byaM anagcmeatComm itteo,initssolc
discrction.
8.1.3. Ps
xcoptforany Transfe,rofaClax
ssA M emb:r'slntetu tto anothe:
rexisting
,
'
n eSubstituteMemlxrshallhavea11thorightsandpowor:andshalll)esubjecttoallthorcestriotion:
and liabilitiosoftllc trapsfem engM em % r,exceptthutthe substittttioqofthetransforecM emborsbzl
Agrcena kacknowledgingbisprr.
e/tanceof,andagreringtoL bomdby,tl
zetenncandcoaditiens
oftbi:Ag= melt-
'
8.5.1. efhtmstrictionsonercmlsfercontMinodinthi:Article8shnllnotapplyto(1)a
ZfIofaI1oraaypottionofaMelnber':UnitsbyaMemlxrto hisspoux. ld,orJandchild
CF&mily'')orofa'rraasfcrofalloranypoftionofsuchIntorcstby&Memlxrto(i)atrm tsolelyfor
lholncfitoftIBOMem!:
e.,
rorNsP.
Aml
'lycr(ii)anyotlleremtltyatlut80% ottbovalueandvoting
Powcrofwltichi:owte ltlizectlyorindirectly)bysuchMembciaadhisFnmlly(oxceptnosuch
.
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Document
8f. (s9. 644-12 Filed 05/28/08 hPage
.7l'l45 ?.
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30758
transfer.
sshalll)emade pursuimtto anydivorce orseparation proccedings,unlcssthcM anagcmoqt
'
Regqlati
onD promulgatedundcrtheSccufitiesActor1933,asamcnded;or(3)anygiftbywillto
any entity tllatqualifics as a charitable organization underseution 501(c)(3)underthc Codo;
provided,howcver,thatsuchIntercstsllallrcmaiasubjecttothisAgreementandstlchtransferoc
shall,asa contlition toTm nsfor,agreeiawritiug tolyeLound bytlleternu ofthisAgmementbythe
oxecution ufacotm tetpartsiguattlrc pagoto thisAgreement.
'
writingatIcasttcn(10)daysinadvanceofhisintcllttoTrznsforanEconomicfntcrest-Suchnotice
sllallontain ther(Iate and amouqtoftll: transferred Econornic Intea sq mld thc name,addmss,
facsimile number and taxpayer identification number of tbe tgansfcre-e. '
T'htltcansferer ofan
Economic Intcreestshallnothavc anyright(o '
Voto,padicipate in tllo m anagomentofthc Etlsilw ss
and affairsofthcLLC,orto bocomo aM em bcr. No rightsasthc holderofalzEconom ic Inte.
re-st
sballI)rcoafcrrezlum lltlzetransrere.ctmtilthc tm nsrorecagreosto bebouadbyallofthctcnm and
provisilm s ofthi.
sAgrcemcnt. Netwithstanding the fom going, aay Tramsfcrby aM om borofan
EconomicInterestinexcessofanajgrcgatet)r10% shallbedecruedaTransforofsuchMcmber's
lnterostand shallIyosubjecttoScecuon8.1.2abovc.
r h
containedhoreia,ifaMajorityin(IlterestoftheMomixxsdoterrninestoselltlw Y mpany,wlwthcr
by mergor,consolidatilm ,salo ofa1lorsubstantially 111ofitqassca,salo of1111oftbe,outstanding
UnitsoftheCompanyorotherwiseto aanonaffiliatodthirdpartytanGApprovodSa1o'').allofthe
MemteersshallcmrtsonttoandraiscnoobjectionagainstsuohApprovodsale(indudingmfraining
from excrcisiqgmzyril t.
sofappraisal,irany)undshalltakeAIIneecessaryanddoslrablcactionsiu
theircapaity asM omborsirtconacctiorlwith tlm consurrtmationrsuoh Appmved Salo.'lYc
Mimbc shallagrefttsellthdrprorataamountotunitswiticharesubjecttosuchApprovedSale
ontlx termsandconditionsasprovidedbyaM ajorityinInterostofth4M embers'.'Iheobligatioruq
8.6. ReqtliremetttsonTransrer.NotwithstandiagaagilingintllisAlticlG8.nMomtvr
-
mayTnnqferanyIntemst(0th+ thanpursuanttoaneffoctivegistratiotl'
m tomentunderthe
Socuritie,sAc4 withoutfiatcomplyingwith thefollowing:
8.6.1, m livczingtothecompanyupoqitsrequstanopinionofcounsola
w 4mweevxm'.-..
uapzxqttulyvukhdmellzz dzzzfRn4tanedoper-tlnghgrnelntd-29
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2- 1.* 01
Case 3:06-cv-00056-PMP-VPC
Document
Page
of 110
J8r.I:.
JUCU '.JCPM
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1r11! J. tf?p'
LS9. 644-12 Filed 05/28/08 10.11
8146 P'
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I
'
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8.6.2. Evtry Peaon (inclntling such Pcrson's spotzsr,if anyl,othcr than the
Cornpany,to whom such lnterestistranaferrcd inctlmptiancew iththisArticle 8shalllx requiredto
executoartddelivcrto tllcCompanyacouatorpartsignaturepagetathisA grcom cnt,acknowlrdging
his acceptance of,and agroeil'
tg to t)c bound by,the tcnnsand conditions ofthis Agreclncntatld
agreeing to become a pafty to this Agmemcnt- At the tinw of exccution and delivery to tho
Cornpany ofsuchcountcfpad signaturcgage,guchPersonshallbc,admitted ;
1saSubstituteM emtvr.
ARTICLE 9
AtIM INISTRATION AND ACCOIJNTING M AT'I-ERS
9.1. M allltenanceofIlaolksand Records.n oLLC sllallcatuqebooksandrocordsofthe
I.
1fltobe m ai
ntaine,
d in accordance with gellorally acceptcd accotmthtg pzinciplos,and shallgivr
regerts to tho M ombers in accordaace with pmdentbusiness pmcticcs and (Ile NRS.n c
thoIJr,Jsswellasa.
t(horrgistorcdoflkeoftheELC sm cifiediuSection2.5(irdiffcmnt),any
inforrnation required tobo maintained by tlleIA ,
C pursuantto NRS Scction 86.241,ils amcade,d
from time to tiae.
.
' '''
.
9.2. AnnualXccountinz.Witltiaonelmadre,dtweaty(120)daysaf1m-thoclosoofeach
..J'
'
'
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Page7147 of
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3.3:06-cv-00056-PMP-VPC
JLUO l:1pPM
thct.
l.r topaymoneyinexcessof$25,(+ .00,whotherasaslnglecheckorasoriesofcheecka,shall
rcquiro tlzcjoiatsignatutr-s ofthe M anagcrand aPerson designatcd from time to timc by the
M anagcmelltCom m itte'e.
( g)
9.6.
4. OblieatiensotM tnlberstollepfe Allc ations.'llx M ombcsaroawarcof
thincomrtaxconsm uenccsofthc all- tiongmxdobyt1115Agt-znentandheroby agreotobe
bound bytheprovisionsofthisSection 9.6in mpxlingtheirshare,
softhe LLC incom candlossfor
.
9.6.6. Odlerklcctions.'I'
heLtanagemeatlztpmH ta l ithavotherigittinitxw lc
discmuonatanytintttomakrornottemakesuchothtrdxe asaszreauthorizr,doro e by
anyIaw ormgulation foriacom:eaxptum se,g(iacluding,butnotlimitedto,Anyeloctioaun/r
sections734,t43:nd754oftlleCA toadjusttllohasisoflhe,pzom rtyoftIIeTJTIicthepveatofa
Tr&nsfe:ofallQfpm oftlm InteretfanyMembex.Notwithltaqdingtlioabove,nM em/ r,nr
tG TTD.sh&l1rnakearlelodiontoB excludcdfrom theapplicauonofSuY haptorK ofthece or
any eimib.rprovidonsofstatellm'.
f >j
=
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Case 3:06-cv-00056-PMP-VPC
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Page 48rof
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Ju
.
'
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&RTIG ,E 10
ATI
ON Ae DISSOI,tIT-IO
--N
ERM
I
N
T
-
10.t.1. TheaffirmativcVotebyltMft
jorityinltltcl
cstofthcMbmbers;far
10.1.2. n osalt,liccnsc,Icaxe.rtmtal,twsignmcntorOthordispositiaofalior
substantially a1lvftheassctsofthc LLC,inclodiug theTechnotogy orany patentrights dlcrdot
w'
hctllertwcufrirlg in asirlglc transactitm orasmir,x
sofrelated transactionsas pallofaplan;or
l0.i.3. Upnnentryofadecre,
cofjudicialdissolutionpursua ttotheapplicablc
prtwisionsofthe NRS.
compi
myforthcpurpusoofjrosecutinganddeffadiqgsuits,actiolu,proclzsdingsmldclainuofany
kind ernaturebyoraguinstltandofemabtiugitpuduallytoscttleandcltlseit.sBusinexs.tocollct
and dischargoia obligations,to dislxurofand colwoy jt,
sPtopety imd to distributeitsmmsotsmtd
Property,butlzotforcontinuingthcBusincssforwhichitwasostablished.
- k)
'
'
M embet'surbfembe.rsaritingboforeitudistolutionandcommcncedwithtwo(2)yearsqftrerthedate
ofthe dissolution.
4amemalmrrand !heaamopziozitiosasprovide'
dforiaArtides4and5hoaof.Thoplncez'zlKfrom
thc liquidnfion ofPm pozty shallboapplie,d to liabiLties efthe1.,
1r irtthefollowingordotn
'
ow x.....a '
v--=- - -
z- yv-
we gdw Reuatedopn-tlngAgrement-32
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D*$. $
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Case 3:06-cv-00056-PMP-VPC
Document 644-12 Filed 05/28/08 111.1Page
49Fof
110
w .
xv y
CapitalAcoountllalaaces,asdeterminrxlahc.
rtakingintoktccourltallCapltalAccountadjustmcnts
rorthePisualYearduringwhich thc tiquidatioaoccurs.
l--iqitiatienprtzcecd.
swillbtlpaidwitin&)daysaftcrlbacndtlftheFisc.
alYeartor,if
later,within 120daysaftertilc date ofthc liquidatioll).'T'
hoCompany may offsetdamagcsfor
breach oftt
lisAgrezmentby afty M om berwhosc Drkits arc liquidate.
d upon tho tiquidatilm oftho
Com pany againstthe am ountothcfw iscdistributable te sugh M ember.
tllecmqcofotmtlasNassets,the.distributinvaluesafetobobasedontllefairmarketvalucthereofas
dderm incdiflgood faith by tlw liquidatur.and tiesilortestmaturitypoftionogstlch lw n-casllassets
(e.g.,notesorvtherindebtcdncss)shall,totheextentsuchnon-cashilssdsarcrcadilydivisiblc,bo
distributcd,inadcsccadingordtx,to fullysatlsh each catcgoe above,stmtingwith tllomost
proferreed catcgoty.
ARTICLE 11
ISSUANCE OP LLC CERTtFICXTES
'
.j
'
.
accordartcewii tftetermsofAdicle8ofthisAgrecmGntshallbetrallsflxableonth:booksofthe
I..1..C bytllcrecotuholderthcreofinm rsonorbysuchrecordhqlder'sduly authorized attornoy,but,
exceptaspm vidrdin Scction 11.3below withrospecttolost!stoloaordestmyed corv cates,rto
'
11.3, I- kstoltnnrIledrgre.
dG rjlfitafesvThe.t.l.c shallisstleanow Lu lcero
r.tificatt
inplaccofanyIJ.
f Certificateprtviouslyissued ifthcreoordholtkrofthoL1.f Certificate:
,
'
c<xux- xe '
s- r-
Case
3:06-cv-00056-PMP-VPC
Page
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Jqh.
1. /ldb
/:3/FM - !l3S J' b(Document
9f tg' 644-12 Filed 05/28/08''
l18l 50F'of71/17
>
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thattlz LI.
E ccrtitkatehasbceonacquiredby&pttrdlascrforvaluoingoodfaithantlwitlloutIlotke
'
ofan advcrscclaim ;
'
IfItMemberfailstonotifytileLLC withinareasoaabletimeaftorititxqtloticqortlw
loss.dmz
'tructionortheftofan LLC certificato,imd atralwferofthcUnitsofM emborship Icterest
ARYICLE 1
.
jygggxjjxjjxvjgx
emplcyeees,ascntsandPrincipals(individually.anxllndemnltetr')from andagainstanyanda1l
losscssclaims,domands,costs,damnge:,liabilitiez,jointand sovoral,expcnseaotmtynature
(iocludngreasoaallleattomcys'fe,e..
sanddisbursemrnts),judgments,tinis,se/
ttltmoaa andother
nm ouats arising from any and allclaims,demands,aczions,suits orp
'ngs.wtxethtrd vil.
critninal,adlninistrativ'
eorinvestigativm,inwhlchtlmlndemniteci:involvedasapG yMrimingoutof
j
fwwxmw,.ius.-
U Case
ih.I3.3:06-cv-00056-PMP-VPC
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l10LSll! J. llg'
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71/18
Document
Page151 F.
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.
h-v
v:
adisttibutionoffu:1(:
I.
softilcLLC inviolatioaofthisAgvezmeotcrthoAct;(i.
i)thcI.
JX shallnotbc
'
M embc:
rtowhichtNelhdcmnite,eisrelated;and(iii)anyliabilityhoreundershallbelimitedsoklyto
themsselsaadprolxrtics()ftllcI.1E,arldnoMcmbcr(oranyAffiliatcofanyMember)shallhavo
any Iiability orobligation by roftst):lofthesoindenmification provisions.
TheforegoingprovisionsofthisArticle12sllallsurviveforaperiodoffour(4)ycars
frtkfrlthedf
ltctltdissolutionofthcLLC;providcd,ifattheendofsuc,
hy liod,thereaftanyactions.
proccedirtgsr
'
)rinvcstigflion:the'nm nding, the M anagtrshktllso notify tlloM cm txn atsuch tim o
(whichnoticcshallindodeabrlofdescriptioaofcachsucllaction,pr ccdingorinvcstigationandof
(he liabilitirsassortcd tllcrein),alldthcforcgoing grovisioftsoftbigAdicle 12sball6fzrvivowith
respectto cach such action,procrezliltg orinveestigationsetforth in such nouce (orany relatcd
action.prlxcedingorinveestigationbascdupollthcsamcorsitnilarclajms)untilsuchda.
r
.
eassucll
'
'
-111c .'
I.
C shallnotincurthe ctstoftho Izurfen of'any insulance,otlmrthmzpublic
liabiity insum nce,which itlsurosthcM anagerorCommittreeM cm V l'
s againstany liability asto
which thcM anagerurConm littec M cm bersarellcm in prohibited from bcing indcm nified.
12.2. Expeasms. Faxponsesincun'
ed by an lndcmnitec in derendng any daim ,domand,
T.I.
c priorto thofinaldispositiopofsuch olaim ,demand,action.suitorpm ceeding llponrrcoiptby
tho 1.1flofan undnrtaking byoron behalfofthefndemnitr-cto rcpaysuch amountifitsl1&11lx
dototmine,
d thatsuoh Porsoa isnotcntittcd to boindcm uifedas attthorizod in Sr-ctitm 12.1.
12.3. Indem nificatlan Rizhtg NoneExcluslve. 'lihe indcmnification providod by
Soctgtm 12.1 shallb:ill2
. ditiollto anyothorrights towhicllthoscindemnitied may booTlt
itlod
underatly agfeemenq Voteofdhe M emlxm,asam atte oflaw orequity orotllorwise, 1)0t11l
t%to
acticm inthcIndemnitet'scajmcityaGaM mber,a.
:anAtlliatoorasunoftkrvdire tor,:mpleycc,
agentorpriacipalofaMsmlxrand1t$loa:yilctiouinanoO rcapadty.andshallcontinu;a:toan
12.4. Errbr;andOmlssion,ltqllranc.
e.Tholalf maypurtu
laseimd= lnte inturancev
atth: Llf ':expemse,on behalfoftlm M omborsand stlchotherPergoaaastlle M pmlmo &hAll
dotenniae,againstanyliabilitythatmaylx asserte,dagaim t,oraRyum nscthatmnybeincurmdby.
suchPeaonincoanrction withtheIICtiWtiOSofthe1JE nd/ortk M cink rs'actsoromijsionsas
tbeM mmlx.
z4ofthoIJr mgrdlr,jsofwhdherth:LLC wuldhavetlw m wortoindemnifysuclt
Potwo:lagairtstsuchliabilityua&r(lm prnvisiolzsofthis
mont
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yk,Lsq. 644-12 Filed 05/28/08 80.
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Njm cl.ji13
AM ENDSIENTS
ficativnQrthch.areem ftnt.Exceptforthcauthoritygrantedte
1
3.
1
.
&
m endm entorM odi
thc M anagcrheretlrlderto artw cd EX IIIBIT A ttlthi.
sAgreemeotfrom timr to tgm e withoutthc
nx essity ofaformalamendmentto thisAgtecmcnt,tl
)ctermsa:1dgrovisionsofthisAgroemoutmay
notboadopted,altetodaameaded,orrepcalc,
dacdanew om ratingagreementadopted witltoutth
.
.. .
approvalbyah/
faorityittIntcrestofthcMcmbers.
13.
2. AmtndmentorM oditicataorArticlo.efOrganization.Excoptfortheauthority
r anted to the M aflagcr hereuqder to afrlcad or cofrect thc Articlel fgf Orgmlization, and
notwithstanding any tlther provision to tl)c contn cy in ttto Articles of O rgmtization or this
Ar ccmentain uo eventshallthcAlticle,
s f,fOrganization be amendcd withoutthe appitwalby a
MajorityialnfcrostogtheM'
efubers.
ARTICLE 14
,B'A 1,VFJR
. O F NOTICE
N 0 TICES'
.
lltrouadcrghallboinwttmgandnuyl'
voither(i)mrsoaally(Ielivef'
odvwluchshallbcdcezned
receiye,
datthotim'eofactualreccigtthereof;ortii)sentbyregistetvtlorcortifiedmnii,withpom go
andchargosplvpaid,whichshalllx deemeddclivcaxiseventy-two(72)hoursaftcrdepositintim
UniteedStatosmail;ortiii)drlivrr/,dbyfaccifnile(rdnsmissitm,wlliclzahalltxh
receive,don
'
tlm dato and at tho timc of oloctronic ctmtm natiou of such tranumiqsion,provided aa orislnal
mechanicalsignedcopyofsuchnoticoorothcrcommunicatiouisalsoirnmediattlyX positeditl'
le
UnitcdSutesmailwjfllfirst-claspostageandcharge,sprrpaid;ot(iv)dlivoredbymrsgrnjez'
,
'
c'rmppidTrchnologiea,LIT
Attn:W arre,
nTrpp,11 M anagzmentCommittea C '' n
590Lakeshoa Boulcvard
tfwlilteVillagc,Nevlfh 89451
M ailitlzAddreass:
P.O.Box4964
InclillcVillq e,jNevada89450
'Pacsiznile:(775)831.439j
'x
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CJ/F:
''M)!1) J. rl/g,
tSk. 644-12 Filed 05/28/08 F0'fll
' '
/17
Case PLMD
3:06-cv-00056-PMP-VPC
Document
Page 53Pof
110
J'h.It.
I
W ittyaCqtlrtesyCopyto:
'
R ye& ltsielu LLP
Atln: DouzlasJ.Fryc.Ilsq.
24955 PacificCoastHighway,Sute A20l
M alibu,Califom ia90265-* 47
Pacsimilc;(310)456-0308
Ifttlthe M em bers:
-
ftlfthouEVITIPIT /tattaclledhemtoatld
rimdc a part of this grecmenttwhich
exhibitm ity be amcnded from timc to
tim c asapgropriate.
kepta'
vailabl:forthatMemberat01cLlf 'sprincipalplaccofbusinossforone(1)yeltr.
14.2. W alverofNoticm Notwithstandingthforegoing'
,wlzea,purgu.
anttotho provisions
ofthc NRS,dlc Articles ofOrgnniz>tion orthisAgroem ent,notice i,
s reqtlitrd to bc giveg to a
M em bororto thcM anagerofdlo l.
fr,awaivcrin writing signedby tllc Pel'
son orPet:f
arlsentitled
to tlm notice,whetberbd ofc oraftertho time statcd init,isequivalcntto the givillgofnoticc.
'
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. .
ARTICLE 15
M LSCELLANEOUSPROVISIONS
.
orsubsectionhimun&risdcclaredbyacoullofcomytcntjurlsdictiontoI)evoidcrm ordbrceable,
sucllRctiou,sqbsc tiontltscntoncmsluallbodomd xycrcedfrom themm ittlorofthisAgroomeat
U Jthobxlnnceortlli:Agroomcnt#hallrrrnninin/1111fomeandffoct
N
q
:1
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azxvw.
wvusanxvxwyr .zxwvv- waxmfatlofsvoaplzzxfezfmzzfRuatdtyem/l-g/greemrzsl-'37
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dpkt /:?1
LIICS J. Ff
i. ES9. 644-12 Filed 05/28/08 8Page
.'19l54 ?.
28/bS
.
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15.7. Additionalbtuuments.EachMemtxx,upontherequestofanothcrMember.aprm
to peerfonn a1lfurther acB aRd exccutc,acknowleedge aftd dclivcraIIdocum cnts whieh m ay bc
remsoaubly nccessary,apjxopriato ordcsirable to c'
arry outtho grovisioas()ftllis Agreemenl,
connxtionwithcachandcve!'
yproviionofthisAgreement.
15.10.FurtherActlgqs.Eachoftlw M emborsagreestoo'xccute,acknowledgeanddelive,
r
suchadditionaldtxummtts,andtstkesuchfluthoractions,agmayreasonablyberm uiredfrom time
totimetof)>rryouteachofthcptovisions.andthointent,ofthisAgrromoukimdeveryagtc mcntor
docum ontrd hting helrto,orcntorcd into in ooanedicm hrwitll.
AGRB
'
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PROVISEONSOND D
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DIG ION.
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15.12.%
. AIVER OFJURY TIUAL W ITH RESPEG D ANY DISPW E ARISING
UNDF.RORINO NNEC7XONWITHTM AGREEMO ORANYQRI.ATEDACA BFM O
EM YU RX
AU ON OFFACPD W DUCEN
W AM
OFe
fRIAI.BY
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...
JURY 0PJIN ANY W AY TO M ODIFY OR NULLIFY ITS EFFECT. THB M EM BERS EACR
FURTIIF,R ACKNOW f.RDGE THAT IT HAS BEEN PUEPRESENTED (OR HAS HAD erlm
OPPORTUNW YTO BE REPRIBENTED)INTHESIGNING OFTIIIS AOREEX NTAND IN
TI'IB M AFJN G 0F TIUS W AW ER BY IN DEPENDEINPPLEG AL COIJN SEL.SEIeBCTBD OF
1Ts OW N FRFA W H,I,,AND THAT IT HAS IIAD Tiv OPPORTONITY TO D ISC USS THIS
W AIVFX W ITHCOUNSEL.'W IEM EMJ3ERSEXCIIN RTM RACD OW IJRDGESTHATIT
15.14.NoPartitiam TheMcmbcrsar,
recthztthProm dythattlloI.1,C mayowntlrhav'
e
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IN W ITNESS W HEREOF,tids Amended and Re4tatd Oporatiag AgtoemofttPostEfrcctivcExecqtioaPagohasbecaexccutcd by theuadetsigned aof I1Fc 1 7p#f .2m 1.
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No.CV06-00114
ETREPPID TECHNO LOG IES,INC.
VS.
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bruae.
,,accu
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.LO NGTI JR.,CLERK
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By
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Po serelum eecordedto:
AW DK :> 250320261933
Pll
sburywinthrop Lt.p
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ClientRet E'
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ASSIGNM EN T
ofU .S.Orim'n PatentApplication
W'TIEREAS, tlAe undelsignez, to wit: DEN NIS L M ONTGOM BRY, (hereinaer
ASSIGNOR),has madcan invention entitledauopticatEltcoding of Audio Data'' forwhich an
.
application for Letters Patent of the United States was filed irl the United States Patent mzd
Trademark O fliceon October3ly2001,underSerialNo. 10/033,537 and
W HEREA S,efreppid Tecllnologies,LLC,ASSIGNEE, a corporation duly organize,
d and
existing underthe lawsofthe State ofN evadaand having itsprincipaloffice and place ofbusiness
at9410 PrototypeDrive,Suite 18,Reno,N V 8951l, desiresto acquire an interesttherein;
** *
NOW , TH EREFO RB, for good and valuable considerationy the receipt and sufliciency of
which are hcreby acknowledged, said ASSIGNOR doe-s hereby sell, assign and tlansfer unto
ASSIGNEE.itssuccessors,assipas and legalrepresentatives, the fulland exclusive righk title and
interG tto the said fnvention in tlle Urtite,d State.s and allforeign countries, as described in the
aforesaid application.and to the said application and to allcontinuatioro, divisionsyreissues and
substim tes ofsaid applicatioq togctherw ith the rightofpriority underthe lntem ationalConvention
forthe Protection ofIndustrialProperty. Inter-Am erican ConventiortRelating to PateatsyDcsigtts
and lndustrial M odels, and ariy other international agreem el
m to which the Urtited States of
A m erica adhcres,and ASSIG NOR hereby authorizesand requesLs the Com missionerofPatents to
issue said Letters Patentto A SSIGN EE for iLs interestasA SSIGN EE itssuccerssols, assigns and
legalrepresenu tives.
AN D A SSIGNOR hereby agrees to execute any papers requested by ASSIGN EE, its
successols.assir s and legalrepresentatives,deem ed essentialto A SSIGN EE'S fullprotezction and
titlc in and to the invention hereby transferred.
ASSIG N OR furthorm ore agrees upon request of said ASSIGNEE and without furdzer
rem unem tion,to executc any and allpapc:s desired by said M SIGNEE forthe filing and granng
offoreir applicationsand theperfecting oftitle thereto in said ASSIGNEE.
NO-f'
E rn e tmdersigrled hereby authorizes Pillsbury W intluop LLP. ofthe above address,to
insertfurtheridcntitication necessaryordesirableforrecordationofthisdocument
.
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(43)Pul).Date:
M ay 1,2003
PublicationClassification
(51) Int.C1.V......................H(
14N 5/91;H04N 7/04
(52) U.
5.Cl. ... ........................345/482;348/484
(57)
ABSTIG CT
A nwtbodforrepresentzngaudiodatainaformatt
latcaabe
mergedwilhvicl
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odala wuere tileaudio dataincludesa
sequencc of audio information clomenls. n e mcthod
(21) Appl.No.:
1:/033537
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o informatiou elemenlinlbe
(22) Filed:
Oct.31 2X 1
palctte.
sequcnce w1
th a unique eoKOpond1g colorfronza color
Rmad1 cunvnt
digitalaudio signal
element
300
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thisampjtude.
lo tllesub-palette
398
signalelement
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Advarmetonext
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RY izzcuzrent
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M ay 1,2003 Sheet:
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US 2003/(,081146A 1
Read in current
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distalaudiocolor
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FIG .4
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US 2003/0081l46 A l
M ay ly
DETAILED DLS
' CRiPTION OFTllll
(
1*91) 'l'
l!epresentil
wenti
oarelate.
sloencodingdataarl
d
morepafticularlytomanipulatingaudiodalasolbati!canbo
PREFERRED IEMBODI
MENTSOFTHE
NVENM ON
g0013I Methodsardapparattl
sformauipulafingaudiodala
so(lati
tmaybeencodedanddsccded alongwithvideodata
ar:described.Ioihefoll
owmgdexriplion forpuqysesof
cxplanati
on numorousspeciflcJelailsare:
't4forthlnorder
s
lo providea
'tborough underManding oftlm presenlinven.
lhepresentinveoti
onmaylx pra'
clicedwilhavarietyofdata'
cspeciallyaudio andvideo,wilhoutli
lr
,sespccifk douils.In
olherinstance.s well-kuown optralions steps,functi
otlsand
tlcrnents are n'otshown in orderto *
avoid obscttring tlhe
fnveutfon.
1lbeevidenl,howtvortooncskilled in1beaz'
ttha.
t
framps(i.
c.>avideo trackandanaudiottack).Synchroni- lion 11w4.
z.
alion oftlltr,
e frameson playba.
ck i
s crucialforan audience's. apprecatiorloftllemovfo.However'thesesequrtjccs
art generzllyprocesscdseparztelylxcaure ofcharact
eristc
deerenccsbetwoeavideoandaudiodata.Compreasionisan
rxampleofaIvocessipgslcptilalism ffermedsopatatel
yfor
vi
tleo aad audi
o data.
(t*03) Thcnatureofvideodatarequircstbatcomptession
(1014) Variousoperationswi11l
x doscrilxd asmultiplc
discrez stpsperformed in tttru in amaanerthatismost
lhcseoperationsareneces
xsarilymrformodintl
zeorderthat
helpfulinundefstandfngthoprexntil
tventfon.Howrvcr,lhe
orderofder
pcriptionsNouldnottv coastrucd astoimplytbal
lhcyarcprrrepletjortvenorderdopondont.Lastly repoaled
= a'
usageofthe pbra%
ses..
inoue emlyodiment,.
ltcrnatjvs
'''an
embodiment*'or an ,alternatccmbodimcnt
doesnotncc-
(I
*IMIJ Audiodataonthe:otherhand istypicallylime- erx
saci
lyrefert
o tbcsamecmbodirnctfkalthouglzitt
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signal.
ratherthancolor.'
11x:datacanbe16-b1tvaluesorhigherbit B
valums tbztm rrcspond to lI
m voltagc or currcntthatW II
driveaspeakcr.
(1
*05) Bccattseoftbesecharacteristicdl
ffcreuces sepa- cally ocsuron audio signals thathavtprcviously been
rate encodersand decodcrs are u>d forvideo and audio
1(p
0 inlo a digtalsknal audio signal1X is typkall
y
zatioftbetkveea4beseparatcencodersanddecode:srnayno(
bcmaintained.11would tbereforc bedesirableto ttscorle
encoderand docoder forbot
h vi
doo and audi
o dat
a.The
prcsentioventionprovidesamechanisnforallowingaudio
datatobemanipulatedsotha.
ttcanbeconcurrcnl
lycncoded
inecicrj
luseofresource.sandcostly.Furthor. sylychroni-
anddcctxledwitbvideodata.
SUM MARY OF THE INVEN'HON
samP1edbyaoanalogtodigjtalcxmverloralaprcdetermiue.
d
n esequencr ofdigil
alaudio sgna.
lelcmentscanbo rcpresenl
ed in atwo columnabltitkwbi
cb each row contains
thf;tifrle a safl
v le Was takea aa:
ltbe digitalvalue of1be
Sample'
d audio signalattbesampl
e time.Table 1e6sbows
suctla tableordala.
e
xang
mpl
e,aa
d
notil
mwhi
itzt
o
.
nlh
igeu
resof
tbea
c
ommy
- Dtos.
maspujatjngaudiodausotha!ltcaalxappende,
d
uyi
dr
wo
ings
nl
ci
hn
lii
ke
re
ff
er
mxs
denot
ec
si
lla
ar
EDclss
vi
eo dataforlaletcncodmg cox-urrentlywththcvideo
.
'
datz.
((*()#J FIG.tailustratesarepresentativcaudiosignal;
((*(jj) WG. 1# illustrates a represetttativo digitally
I)
t*1#J FIG. 2 illustralcs graplzically a digilally sample.d
audiosignalbeogmappedtocoloa soloctedfrom apaktte
basedupon4heacler(notsbown)thatindl
:
catestheplayback
a
oss
gn
alcb
oufdpio
si
ble
oeli
onrg
s;mappedtocolorsseiocle,dfrom apalettt
g(*lll FIG.3illustralesaproceasformappingadgiully
sampl
ed audio signalto colorswlccted f'
rom a palctte of
porx
si
blecol
ors'arzd
rat
e!wbichtben allowsplaybac.
k oftbtsoqucnceofdi
Fital
audlo signalek menls attim appropriate time.A1lo:lbe
dfgitalaudiosfgoalckmentsflatoccuratdiFerentpoi
tlf
.
sin
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US 2003/0081146 A 1
M ay 1,2003
2
trl
appiflg,eacboflhrdi
gilalaudi
o signalcleamn!sinslrad
lhet
kplalaudiosknalcler
ncutst
oprocess.i17lbcrearc.E
nore
(00221 Tl
uls metllods and apparatvs fortnanipulalirlg
difcren!polrltintl'
no ass* wnat204 Afterlbeproccssof
othaving anassociated anlplibadc hasan associat
ed color
obtained from acolorlook'
up table.Audiosignalsthalhave
the same amplitudes willthus ave tllc samc color.For
example t l.
z,and tzaallbavethe samc col
orarx
sigaed lo
pointer,1.ar
xsl
gnr.
d to thcm.'Ihccolorasslgncd to a parti
cularamplitude L
sthusafunctiooof'hoallplitude'Palctte
2% isasub-paletteofti
m pal
ett ofpossiblecolors.
whelhertbert:afeanymoredigitalcol
opvalue.
sropresfmting
mcul
s itw'
illbcevidesttotmetkfardizlaryskillizll:earllbat
various modiscations and cbanges may bo made to tbese
tfnl
xldi
m entswithoutdeparling frorn tlm broaderspirilaod
scopeoftheinventionassetforlhintbeclaims.Accordingiy.
l
he specitieation arl
d drawin s are to be regarded in an
Jlustraliv'
e talllrrlhaaarcstnctivrscose.
W halsclaimedi:;:
1. A raelbcd foryepresenling audfodata in aformattttal
caa be mcrged with vi
dco data wberein t*e audio dau
includcsasoquenceofdgitalau>dio iaformationclements,
'btDmtltbotlt.
-ompdsinF
rcPlaciug each digitalaudio informauon elementin the
sequeucewitjlacorrespondiug digilalcolorrTprosrn.
(atioafrom acoIorpajett
o.
2. 'I1)e mzllx)d accordir?g 1t)claim 1 wblsrein j))eslt:p of
'
replacing includcstbc;stepsof2
o
oar
resf
x
atl
dc
io
vi
dc
en
ocod
rrae
me
ceca
adu.gIme
voicn
l
s
o
fr
mc
t
ha
t
ag
rlbe
dat
uo
dpr
laod
terude
oa
de
noal
cdc
edrl
ot
(e2tq n ccoloraudioframeofprocess300i'
lacldedtoa
.
obscure tbeprosef)
tirlvention rnethodsandapparatusof
dedcrulinil
zg w'betl
zeradigilalcolorre?resenlalon has
wntationt
otheo'i
w digitalzudi
oioformati
ontleinent;
colorPalettes
'and
WftldnAdjacentBlocksOfDatabearfngattonmyrcfcrrnce
bcenprcviot
zsly assfgned to ancdlzerdi
gilalal
zdio
il
dbrznationtlcmenlc.
o
ndingtotlw onedigit4l
audio informalion clemcct,
VCPIQYV tbe fml digi
lalaudio information elomeut
Witb th*Prcviotusly assipwd anolhtrdigitalcolor
rtpresentztioo from lbcdi
gitalcolorpaleltt:.
ogloclaim 2.furtberiacludingthe
3.n emethod accordi
stelysof:
sequrnlialiy retrieving cacjj(jjgjtajcojorrepxwnuuoo
correseol
xffug to each digit
alaudio iuformation clcment'
(
Y21J Aflorl
im aagmoated
videofnuw istloctxdled
plle
eoloraudio can be separale.
d fzom 11x:augmenlr.
video
traaslatfngeachdpc
.alcol
orreprescntationintcthrcor-
4illustratvsaprocessforrecovcriqgthedijitalAudiosignal
oulputogcacbcorrespondngdgftalaudfoinformation
framoandthedi
gitalaudiosignalmlol
notltsrecovered.FIG.
eloments.According to procer.
s400 thedlgitalcolorvalue
l'
x lbe;tlurreoldip'laludio sgnalelemtinti
sre4d in at402
&ndthecorrespcmdingdigita!andio valucisretrievedbased
>
No.CV06-00114
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fral
zles,each frame compfksed of a plurality of bits.n e
mettk
odcomprisescompariug apluralityofdl
'tfercntwarcb
bl
ockswithin areferetmo f
zamc to aIargetframe to obtaio
apluralityofcotupared blocks,t
lx referenceframebeingwt
lo an initialframeofthepluralilyofsequentialfzamesand
thelargetframeinitiallybeing setto asubsequenlfram eof
ttle pl
urality ofsequent
ialframes.n e st
ep ofcomparing
uscsa pluratityofdifrerentthreads forcomparing,and ll
w
searcublocksvdthi
n eacb ofthe throadshaving a unlonn
sizepsucblhatttlecorrespondingcomparcdblocksalso have
within a rsfcrenceframc t
o a targtlframe to obtain a E0Q15) Inanotheraspecqtbeprem
sentiuvenlionprovides
p
beiiv setto aa iaitiaifrau,eofttle plurality ofsequentiai
frames ancltize largelframe ipilially being setlo asubsafr e of tlx plttrality of scquential framcs.'
l'
he
quenl
mfcomparr.
luralityao
d blocks isused to obtain a represcnp i fthe targetframctbatiscom presx d.'
n ereafler t:e
ta(
fton
cer(l>ce framtisrodesigaatodasthosubsequontfraa)e.tbat
re
tlae largetframeaodthetargotframo isredesignatcd as
W aS
tlxrsubsequentframetbatfollowstllesubsequendfxamep
anO
ab ubr slepsofconapaHng and using refrat
ed.
W
(Y12) Inanotheraspectptbereisprovi
ded ametlx)d of tlxuniform sizz.n ismethodusestlwplural
ilyofcompared
oblaiuing alinked lLM ofrcdundantpatternsthatexi
stin a
targetframc from arrferenceframe eacb oftbereferenct
met
llodcomprtsesI
heslcpsofcomparingttachofaplurality
of
ca
ckthp
onrt
i
en
th
raeme
ftrelr
o
l
it
ofs
l
o
cr
ac
lh
iobl
nsowi
xi
t
h
ostao
rf
ge
te
fr
oxx
dcf
lr
ca
rme
minl
ea
ap
pl
lu
ur
ra
al
i
ty
y
blockslooblain areprcsentati
on ofthetargetframetbati
s
compressad from aa original statc.n e step of using
ad
etnt
compa
bbloc
kksotha
ca-n
bie
omp
ws
ed
ola
ing
a
tj
la
cc
as
on
esupcre
rsdct
lc
fnton
un
focr
m sir
ze
er
th
at
'ic
nrc
ul
de
s
ofmatchts,Andxforcachmatch,rcprtsentingthatportionof
luoccrtainadjacentcomparcdblockslercin.
identifierthatislimkedtothesearchblockportion.
(00161 Inanotherasptct.tbeprmsentiuventionprovidcsa
thetarge.
tframe corresponding lo t
lx matchwithalocation
to an initialframeofthepluralit
y ofscquenrialframesalld
1he targttframeicdtiallybeing sctto asubscquentframeof
lhc plurality ofxquentialframes.n cstep ofcomparing
includes obtaining,fora li1stsearcttblockpa fu'
stweight
indfcali
vc ofapcrcentageofcomparir
so% thatcxfstwitilin
thetarge!framcandoblainitlg,forasecoudsearchblockthat
overlapstho(i1'
stsearcbblock aryecondweightindicatlveof
anotber percentage of comparisoas tha:existwil
hin tbe
withintbetargelframeandtraversingthetargelframeina
targetframm Iftherstwekbtandthesecondweigbtthoth
:rstgroupofsearchblocksptocorrcspondfngvcrticalt
argct
blocl:switbin lhe largd frame.
thcfu'
staudwcond searclzblocks1athasaIowerperceufagcofcomparisons.
verticaldircctioo lo compat'
e atleasla seoond gfoup of
se.arch bloclcs which ay orm ay notbe diFerenlthan tbe
blocksizeandapredictedmovementt
lirectitm tf
artbelargct (0:211 Inauotheraspectplheprcserttil
nrnlicm provides,a
ftamo.lhestepofcompariugalso inttates4(raversalofthe
tavd fxartm in adircaiea correspondiag lo lbe prediczd
movcrpcpldirecton with a scarch block baving a size
corrcsponcling lo1bepredict
ed optimum bltyck size.
mcthcxlofcompressingabil-sizeofapluraiityotscquenlial
framc.
s cacb fzzme comprised of a pluratily ofbits.Tl
ze
mcthod compristscomparingaplurality ofdfl
kcentsearcb
bl
ockswithiqa rcfeleccc framcto alargetframeto obtaie
aplura.
lityofcomparcdblocks lbereferel
zceframeinilially
(* 1:) Inanol
beraspectoftl
w presentirl
vention>thcreis beiug .% 1to an inllialtrazno a*nd the targetframeiaitialy
plovidod a method ofsearcbing forpatterus withiu apiu- being sctto a subsequentframe.'
I'
lm step ofcompariag
rality of sequontial frames,eac;
h frame comprtsed of a includesdctcrmining whetberadtsired cotnpression ratio
pluralily ofbits atraaged in a matdx array.n e mcthod belweeu tbe refereace h'ame and the subsequentframe is
ocratioLsfeacbed*tbenttm
comprisescomparisg a pluralityofdi
Ferclalscarcb blocks reacbed. lfthedesfredcomprcssi
rzminated.Iflbedesireclcomprmssion
wilbin a refortmce frame to a largetframo to oblaiu a stepofcompariagisl
pturalityofcompated blocks* tbttreferenceframebt:ingset rationisrlotreacbed thcn lhe plurality ofcomparedbloclr.s
to arjiaitialfrauw ofthcpluratily ofsequentialfranxsand areused t
o obtain are
'presentation ofthetargctfraam tbalLs
Il)rurge;
tframeiaitiallytleirigr'e!to asubscqucnlfrAmccf compresscd ascotnpart,d to an erigina.lstate.
tl
tepluralify ol.sequeclialfralnes.Tbesltp ofcomparing
incll
zde.sirl
ilialingapredicivet
hreadtha!f
zompares&num. (00221 Olberaspectsadvautage.
sandobjectofthe?resenl
berofdijerentptodkctive slzarcb bltxks haviag difrerent inventlonwillbecoam apparcntAsizerefnafterdoscnbod.
blocksizesztvariomspcxsitiottswithiu11w matrixarcayofthc
BRIEF DESCRIPTION OF THE DRAW INGS
r
fe
os
uci
c
rl
a
awta
wi
th
rme
iotusl
coi
s
ol
ua
di
u:epr
cr
de
it
cl
ti
vel
tan
rum
ge! 2
belo
crk
rsft
le
rgc
tva
fra
o
axbt
apiz
pr
dic
op
h
9823) '
Iheaboveandotlwrfealurcs,aad advantagesof
blocksizeandapredictod movementdirectionfortbelarget tbeprescatinveutiooyamoagotbers.areft
lrtberdescrbediu
frame.'Ihe step of comparing al
e.
o includms initiating a thedetaileddescri
ptionwtdcltfollows.writllrefcrenc:eto tlze
traversalof
tjeurgetframeio adircctioncorwspoadic to dcawcingsbyw'aycfrl
on.limitingexsmplaryembodiuxntsof
tbe prediczd movemeuldirocioawitlascarcllbbckllav- 110presentinvention wlxreiul
ikerefcreacetmaxralsrtpit:g a sirz cortesl
xmdiag lo tbe predicled optimum block rers
entsknilar parts of the presentinvel
xiou throughout
severalviewsaudwbersi
a:
si
ze. J
(t*19
ItIarntheraspet
a,112epraserz!izl
vrntionproviesa (0924) FIG-1 illusttatesablockdiagram ofthepresent
melhod of searchi
ng for patterns willzin a plurality of
invrnlion.
sequcntialframe
,s eacbfrart
m compdsedofaphlralilyof
(80274 FIG.4ilustratesanexemplaryinitialsearchbloc.k
wirsj
a 41, jsjtialo-fraaw maslr: block a corresm nding
pO-frame master
inilialsearc.
b area witbin a subsequtnt
verticaldircctiossatincrtmtntstizatarcgreaterthaaasiugle
.nattedin,
bit.
sarranged in a. matrix array tizatczu belraverscd in at (
(!;ilu futa fon
to framesaccording to thepresent
g
.
kasthodzontal:ud verticatdirectio%. I'he mcthcxlcocu- uvertlou.
pr
i
s
c
gat
po
lur
l
yt
of
frret
n
thi
n 18826) FIG.3 i
ar
eefsez
eonmp
crafrriaumc
aallair
g
tfJrialme
otsorbatracihnbl
aopclks
urawi
iity
of
ll
ussratesiufurtlxrdetailmw erblxlcs
c
o
mp
a
r
e
d
bl
o
c
ks
.
t
k
k
e
r
e
f
o
r
o
nc
e
f
r
a
me
l
xi
u
g
s
d
t
o
a
n
i
n
i
t
i
a
l within a frame o data aci
d search bl
ocks thatoperal
ed
.
frame ofthc plurality ofsequenti.lframes and tbe urgct thertloflaccordicg 1
t7llr prcsrn!invralion.
bitcoiumnorbitrow,respectively,tocomparewarchblocks dircctiorususedacclrdiuglothepresentirj
veutioa.
l
o
x
g
tarpe
b
wi
h
i
n
targt
fr
s
tec
pol
ofsp
tro
an
vd
ci
tn
si
ng
tcct
lu
do
cc
sl
,csfo
rt1
1)
4
:
e.th
:e
se
cbtb
la
oc.
ck.sna
ne
d :90251 FIG.5 illustrates a portion of a subxqusnt
corrcsm pdina largrlblocksatanedgtoflhe malrix m'
zay. O-frzmt master block witlin an oxeuplary video data
padditv bitposilions within tlw searcb blocksand corres
p
o
n
d
i
u
g
t
a
r
z
c
t
b
l
o
c
k
.
s
l
b
a
t
a
r
e
o
u
t
s
i
t
k
of
t
l
lc refeaacc
'
on.
srarchirjg usrd accordk)g lo lbr prmscnljnvenlj
frameandlavgetframe.respect
ively,with idettlicaliqfor- (9029J FIG.6 illusfrate-s cxemplary rotationalpatt
cm
f0Q30J FIGS.TA-'
TD illuslrattdau and Imaderstllatare
used fttobtaiaiag tbe pallem recognljon zccording to the
(*20) Inauomcrasptctoft
boprtselginveotioc,tbrris prosenfinvootioa, autltlw rosulting data Brmat,wtkich
lrw elsittg.
n
g
a
p
l
u
r
a
l
i
t
y
of
s
e
q
u
o
n
t
i
a
l
a
t
mf
e
r
datetlframms
eacb cornptsed ofapluraltyofntddts
ll
a-t
roprosentvide:
oinfermatitm arldartetherpluralityofbitslhal
represep!audio ioformalion.Comparing aplurality ofdif-
1t11gtlit
a formatcarltl
wn be furtl
w rcomprmc
xxd.
resu
!
#X1) RGS.SA-BC illus
trato a flow diagram oflhc
Overalloperation oftlw palt
era recognition system according toR Prtfen'
edembodimentofIbcinvtntion.
f
orentsearch blocl:
s withina refereuce framelo aurget (ntkuut
jivIcqcs
yA and 9B illustratercprcxnutiveampframeoccuts toobtain apluralityofcompared blor'kK tlm
ssahralilyofsequentialaotltizne-rdatodframes.Tbeplutality
of
ocksksuse.
dtoobunarepresentationofthe
P comparedbl
(0033) n eprexntfnvontiouprovde.
sapattkrnmatclzing
reforenc.
r franw ini
tiallybeingsetto An irl
itialframeorftlte
p
laume
ralit
olfiasneq
inaglascl
d!tilme
esdeqfrut
ame
art
lmt
dthcol
arg
!
fr
m
yue
bn
et
i
e
oaml
sa
ut
b
ntsf
a
f
t
hee
targelframttbatiscomprossed.
rescn
M ay 1,2 3
tJS 2* 3/0081685 Al
'
becpcrated upozlwilboulany dz
x ereot
iationtberebctween
altbougb as wittbe described ereinafter certain advas.
lages cau be obtai
ned by partitioning the audio and video
datawithina givon frzcne.
t
cof
tll
d
a-s
v
y
yip
di
git
trascia
be
l'
hepresentinventiondc'
e.
s'bowever>wbonworkcy
op
mp
arcd
dig
ti
o
ol
bz
ct
r
digi
l
t
ax
lda
au
t
a-t
tei
sof
of
pa
ra
tl
i
cda
ula
gn
ci
ii- (0037) '
cancoforapplicalioasitlw'hkh11
2e exi
stenceofpallwrqsin
dalaislzi
ghlyprobable' suchasasequcnceofvide.
oAmagcs
from a digiul masterofa.movit' a sequeucc ofimagcs
oblainedfrom 3.teal-timtdigitzlcamcrafccd'asequonecof
related medicalimageG a sequence ofdata repcescglting
'
audiocontcatorredfzatlant
da/astoragedevicoslbalRyoeach
intende.
d bcacopy oft
heolher.
ingwilhsequencesofframosthatconufnaudi
o faformation'
mostpreferatyly oper4les.butcolucccssarily' wirb azl
di/
dalalhalhasbetn l
ranslaled using tbetechtliqutsdescribed
ia U.
S.PatentApplieation tnlitlcd gdOpticalEncoding of
Audio Data,
.,liled byttm samcinveototonllm ryamedayas
thisapplicalion and bearing appcm tpsattoruey refereuce
number+ 2503/0261933. n isolberiavcatiop drscla'basa
Secl
m itluo lbat cooverts audio digitaldata to cobr-space
(*34) ltisalsoIl
oledtllaloperaliotlof1bepaltem recog- tligitaldata.
nitionaspr'
ctoftbeprmlentZventiouforrelaledsequeuces> (!
)t
).
3*1 Asclescri
bediutbeOpdcalEncxydingapplicalion,
sucbasvide,
oimagr-s,prcferablyoperatesuponframt:softhe
o
r
i
gi
n
a
l
d
i
gi
tal
ato
a.t
ilat
caf
nusedtodisplay tht il
nageand
rcproducetim
auddi
n
us
'orinstgcce'afeedfrom adigilal
> a digital
v
.d
cao
me
ramov
wiml
ealzm
rd
vy
e
rr
so
ion
fa
iebcear
orbe
oli
pz
e
rato
ed
ue
pl
oayc
n.dIf'obrowe
ver>a
'
prtvlotlslyknowncopression techni
qut hasbeon ktsetlto
stof
v lbedat.assodatedforasequence.suchasMPEG'thc
prrreut invcstfon will prcferably dccodc !bc M PEG lo
obtainacorrcsponding sezp enceofframcslkatmosclow ly
correspotk
d lo tlw originalmastersequeuceofframe.
s>and
operate upou that althougtltbalis noIneccsxsary'and the
>
MP
c
de
ta
ea
nor
bdi
erogpc
t
pworl
ilsoc
foriEG
m anedrt
ao
dv
ad
rltda
age
sa
cc
lorat
becdpt
r
r
nlin
irwo
ln
iocnod
se
tid
ll
derivcd.
a dl
.gitally sampled audio signalis a sequonct of digital
valucs'zlso referred to as digital audio signalelemouts'
whictlarc spaqrd apartby tl)e samc time iuterval.Siuc.e
audioafldvldeodalabavedifferrnlformats audiodalakspol
convontionally appeude:
d to vide
.odataalld'encode.
d< 11it.
'
The OpticalErjcoding ptovvdesa meebanism formanipulating audiodataso thatitcaubeappended to videodatafor
laterencoding ccmcurlentfy wtlfllovideo dau 111parti
ctl' ppedlo a
lar,adigilally sampl
cdaudiosignalelemenlisma
colorseleclcd from apaletteofpossiblecolots.Audiotlata
fxom variouspootsiutimcis t
racked in tinebascd upona
heatlertootsbowu)tbatindicatesthepiayback rato*wicil
then allows playback of the srqucnce of digilal al
tditk
el
emenl
.
sa!tbeapproprialolime.Al1oftheaudiosignalslbal
(
(*3.
5j zts lW1
lt
mcoatr app
arrnlpooe zeascm t
hal tbe occuraldl
'tl'
crentpoinlsinst
imotbathavcthesameampli
tuck
prrreotiuveut
ionhastheabilit
y tooperate upon dataofany hlve tbe;same color arx
ignezl to them.n e proce..
k
s of
type.whetlxertbatdata is randomly col
lectod pveviousiy
compreswd,orpreviouslyplacetlinto&knowndataforma!
1 that the patttrn rccognion opcrarioas arr prcferably
perf
ormed atthebi1level comparing bils in one fTamc of
datawith bilsioaaottt
erframeofdu.n us forexamplo
ifasearchbtockcoutairsdatathatreprestntsanim ageusiug
pixelw andeach pixelisrepfescntcdas24bitsand Lsin oue
framo.ifacorresponding search blockareasctmlair?.
spixds
tnappiag assi
guscolols to thecorrespol
drl
g audiodat at
each differeotpoinlictimc.Aftcrtl
acI'rocc.
ssofrnapping.
cacb of!be audio hgnals insltad ofbavag an assod atod
amplilude has an assodated colorobtailwd from a color
tookup tabl
e.Digitataudio signaleltment
s llmtbave (he
same amplitude.s svz'l1thus have he sam e color.And the
obtained palelre is asub-palelt
c ofthe palclle t)
fpossible
colorswhicb can bc ar
xsi
gned.
lhatareracideat'
tsedashaving22oflbc24bit
sixitigtim
(0036Q Theproixssformappingadfgil
allysampledaudio
aodsfnccalleast22ofev'
cV 24Nl
sis11Y same'crealea
lhen dctermit
wd wbetil
er a col
or Ilas been prevotely
sigaalelrmenllo acolopsclecte
.d from apaletteofm raiblt
colorsintheOpticalEocodiugp plicationbeginsbyreading
tl
zeamplitudeforacurrenldigitalaudiosigtt'tlelement.lti
s
coasiderzblocommession,andstillrttainagreztert
lzan90%
Accuracy.
assigr
led to tbe amplimde.Ifa colorhxsbeen paviously
asi
goet
l to the amplitudo,tbe greviously assigned colot
,gAr
x
signed to tll
e currentszmplt.lfa
lookup fortbt colori
colortlasnolbet.
n previouslyasysignedto thc amplitude a
(36) Fordatalhalistelatedtel
njxlraly suchasavitleo
oew colorSookupiswsfgnedlolxlthr
llecol
orandamplimdc
oraudio amiationshipexistsbetwtenthcvzdousframes.Iu
tlm coatextofamovic thalconlainsbolh vsdeo and audio,
corresjxmdi
ng tocacbknageinILemovieisalsolhaim rlion
ofsound thatmustbesynchrontzed with Qm movie.'
Wkile
ln a systcm such as MPEG thore is an ntiroly separatc
comprrasioa ofti
m audio til
atrequkr.
s a.Rparatc audio
strcarn thatisseparatelyep ded azlddoccde-d ll.
i
opreseo:
ilwenti
on ebos notdstinguishbetwoou the Gtype''ofdata
thatLsoperated uponaasooted above.n us ntbe:prcseut
invvntion.tlmro isno netd foraRparatestream ofaudio
dal.whendetermlingwlmlherpatfrasrxislwkhinaframe
tllatclmlaiasbcthaudioD Jvideodala.T'
bepresentinvenlioncanrecognizepRttetnsin botb by operatingupottlxlll
typesof(lalatlzatexistwithitjthesamefrznw.Thisdatacan
alxl1
hecolt:ri:iaddcdloasub-palcll
r.Tbcsub-palottetsthe
setofcololst
hatbzvcbteoassigned lotbeamplittldesoftho
digitaliy sampl
ed autlio signal dement
s.ltLs theu delermioed whether llmrc are any more digita audio signal
tleuwntsto proecss.If (hercaro moredigilalqudie sigaal
elemcotsloprtxess,lbeprx r.
ssadvanceslolbeIxx!saple
aptsthcamplitudeforlllc currentsampltisread iu.Attiw
t;
lxlofprocess.tlzc sub-palette contAinsallthe colorslbat
wererlce
xledtodescribetl
x amplitudesatalIthe.limesofalI
oftlm digiul
lysampledatl
di
osignalelecnts.AL* forracb
sample i
zl
sleadofazlamplilut!etbercisan wxociated color
from thesub-palctle.'
Ilm outpu!oftbeproccssareaframe
lbAtcxmlaitlsthesub-palelleandtbesequencedigitalaudio
signalelements in theittramsfonncd cgllorfonnal.
.w .
US 2003/* 81685 A1
M ay 1,2 3
5
1)
* 4% At
'
tcrtheaugmcnled video frameisdccodcd,tbe
coloraudio can be scparated from tbe augmoutcd video
fraam and 11:/ digitalaudio sigualelemcnts Eecovtrtd as
dscribedi
ntheOpticaiEncodingagplication.Wbenrectwering tlze digitalaudio signalclements,tbc digitalcolor
valueforrhe currentdigilalaudio signalclementLsrcad in
andthecorrespondingdigitalaudiovalueLsrclrievedbased
upon lbecolorlookup.ltislben determinod wbctherthere
audiodalawitlpreferablybaveilsownfracae althougbthal
t'gnota nece-ssity.
(00441 FIG. J.A illuslralesrepresenlaliveframcs220 parl
itionedsvithsameyjjycksz'
JatjlatcoutaiudalaUatis
placcd into tbcframeblocks230. Thisdatamayortnaynot
be temporally related.
areany moredigjtalcolorval
uesrepresontinglbe digital 108451 FIG.2B(1)illustratcs an cxarnpleofscqllences
210-1,210-2...210-n,wbichcould lx adjgitalmovietba!
conlaiosdala foreach image'wbicb im agcsarctcmporally
relaled lo CaclRotber>a'.iwellas tbe corresponding audo
dala'w bich temporallytelateslo tbe inlagesa.
swell.Each
sequeucc 210 willcontain fTam es220thataretlztustem po-
:(*414 '
I'
lc colo'rspacc converzd audio digilaldatais
Prefcrablyorganizodwili
linaframoin:siilarmanncrfor
ailframe.sin such f
rames witN(berebcing zmarker as
described furttlerbelow,tbalindicatcswhicboft
ll
cframe
bloclcswithina framecontainthisaudi
o dau,aswillbei
cxplainedfurlherbtrein.
(*42) FIG.1illustrattsanexomplarysystem 100accord-
rallyrclatedlotwbotbcr,asshowobytbetlretframes220
illttslfatedinFIG.2B(2).n eseframos220areshownas
having some numberofframe blocks 230 (20 fortlm
illustlativepurposesherein)ofwbich15(230V1,2.
3V2...
23Vn)artshownasbeingforvidooknagedata,and5of
wbi
cb(230M ,Z'
OM :130An)arcshownasbeingforaudi
o
information.OncsignificantaspectistbattbeovcrallmMrix
arrayoftl
w framebloclus2:
M)V correspondsto tbeimage
ofanytyl
x inastram loadownstream device1.
20.Dcvicc
120 asillustrated ispreferably acomputerlhatincludcsa
.
.
processor tlzatcan perform multi-tizreaded parallelopera-
grameimageji.
amebl
ock (shown as2301 and thtfust
a
u
di
o
f
z
a
me
bl
o
c
k
(
s
hown as 230M ).'
l'
llis
gallows,as
de
1*43) Wl
ziletbeabovesyst
cm isprovidedloilltzstrate
oacmanueriowlzichlheadvantagesofthepresentinveution (00471 FIGS.2q1)-(2)illuslratcthemannerinwhicbdata
descnw .
d berein can be used, tlis is exemplary. I7or
CXaITIPlcoacbofthediflerenlcomputlrdcvices120atld140
could bo implonzented as a sagle connputcrand dcvices
implemenlthe irlvtnti
oas descri
'lxd htre.
in czn be ttsed
iastead.Many ether variants are pcex
sible.And wble a
device sucbas mentionrd willyypically iacl
udcaprocessor
ofrome type,such asan IntelPcatium 4 microprocessoror
a DSP inconjuncti
onwilh program instructiorkslhatarc
writlrnbasedum nlheteacbingsberein'otherhardwarctbai
implemontstbepresenlinvenlion c'
an also beused'sucbas
anfkcldprogrammablcgatoarray.'
l'
lm program izzstnzctions
are prcferably written irk C++ or som oier computtr
program mirlglanguage.ForreG titiveroutinesthalareused
repoatetliystlzore can bc wriumn in arxx mbler for fasler
ism sitionedintoaframcblock230.Dataforawholeframe
is thus parlilionod to be placed into frame blocks tbal
lyPicallycao cacbbold uao saaloaaaounlofdata.
(t)1481 FIG. 2C1 illustrates a fraaw block ltlatcontaios
datz lhalisnoltcmporally related. Asshown in tis parlictzlarexample.thedalaisforcoed of16bitwor
' ds,andthe
variouswordsareposjtkoned starting attbeupperleflhantl
corneroftbeframeblock 230acd inserteduutilcompleted,
witheachdotinFIG. 2C1represenlingasinglebitm sition
wherestoragcLsavailablc.llluslratod inthisFigureisthat
forbitpositiorlsatthettld ofa frametbatdo notcontain
data. illustrated as underlinr.d bi! positions, tbe prosent
inventionwillpreferablypadtbe.sepositions aswellasany
olhcrcmply bitpositioas vvith abitlevcl0'valuc.
'
processing.Asmontionr,
dabove.!beproxntinventionofp
er- (0049) FIG.2(72illtuslrate.
safratneblock thalcontains
atr.
s upon data prcferably forlm tted inlo a matrix array
wibinaframe asdcscri
'
bedfurtherbeminafter.Fordalathat
ksnottemporally relaled,tbcblocksc&abeformaued into
fram es tbatmayormay notlzavttheabilily to stored lhe
samc amountofdata.Fordata tbatks t
eporally related
M ay 1,2 3
6
K hcraescaoofcoursebelboughtu.EachdolinFIG.2C2
oradjacentO-frame,whicbwilltbcnbecomethenew tarret
(Y 51) Havingdescri
bedlhemanneril
zwlaicbdatalbatis
(0054) FIG.3illustralesinfurtlerdetailfourrepcexutativefract
m bl
ocks230 withina represeot
ativeO-frameof
andllereinafl
cr,ofthetargctframe.Matchesaroprefcrably
certainoflllesknift
cauladvantagesoftlzepresenlinvention
lo be operat
e.
d isinitialym siti
onedwltllin frames ax
spects
oftbe preseutirtverllion tialallow fortbe recognitieuof
patlemstha.tcxistlxtwetuframesw111tlow bedesctibed.In
particuhr.btfort providing a.moredelailed descriptioaof
(heopcl-ationoflbepattcrnrecognitiousystem accordingto
thc presenlinvention ccrtain aspecls oftlle searching arld
patlern recognition strategies,wbich a:e individually and
togethrr patentably signilicant,*411bc discvssed.As bas.
bceumentioned.lhepresentinventi
onoperatesupondalaat
abil-level.Search blocksofdatain areference framc aro
eacllcomparedwilhvariousblocks.asdescribedprcviotusly
detcnnined, al 1he bitlevel,although tllcy can also be
dctcnuined atrrmlli-bit.byte,and multi-bytc lcvclsaswcll.
Determ iaingmatche.sisbase.duponpatternm atchingopera-
bekej)ttogetbcriupropersequenceandsynchronism>aswas
mestlotmdabove asingleframccanstorcbothIypesofdata.
t
argelframe,using a combination of vcrt
icak lzorizoatal,
diagonaland rotationalsearchtechniqucs.preferablyoperating ia parallrland using diffemntthreads as descri
bed
bereinafter.
(*52) Forpul
w sesofdescription,ti
leoriginalframesof 1#:55) FIG.3 also illuslratesgentrally lbattle search
datawillthereferrodto asoriginalfnmes,orO-frart
les,and
tbose fzames in whicllthe data needed lo represem lhat
framehasbecnrcduce.dislessinovcrallsizeduetopatterus
block310basasmallersizelhanthefrzmeblock230.W hile
thesi
zeoflhcstarchblock310canvaryindependcnceul
yon
tlx sizeoflbe O-frame aswcllastl
x particularpt
m ion of
asdescn'
bedhcreinar'
tmrformcd willlxcomeareducedor
R-frame,sincc the repfesentalion of the dala within thal
frame will,n mostinstances,be reduced from il.
s original
forvari
ousframrsizesareprovidedbelow inTable1.
O-frameywitb thedata(kscribingtbatframeidtnticaltolm
data that exkslcd prior to any of tht pattern m atching
operatioastakingphce.SuchanoriginalO-framctbatisnot
redutxd is also referred t
o as a key frame imrein.'
T'
bl
zs
according to a proferred embodimen!of!be iuventkon an'
initialO-framc is usetlasa rcfcrcnct framc.from wbich
s
arch blocks are taken and compared with arladjacent
tt
argetO-frpme.'
flm ZitialO-framewillretain ils original
dalain ilsoriginalform.
NeurgetO-framewilllikely
' and t
bedescribablcwitbaredu
ccd(jataxt,orR-frame.
TABI.E y
Frimetype
Sealc.
bblock
m.yux.k
32x 32bylr:ssea.
'rztlx<% byzsvi* pame az4x64byttsscarcilbloc.k
1
*40x96nbyzsvi
deofrazoe 128
x12:by:tsKrarcdblca
xudioblx u
sx8byesse-arc.i,ux k
32t1x 240byttsvG ctLeem.r
'
sequencessuc.
bas210A-210D asslmwninFIG.2B1,thcrc
Wi
xistframcs220 lhalwillneedto beom raledupon to
d llC'
elcrminc iflbcrrare pall
emstilatexistwitbin the frames
once del
ermioetlwiB lypically remain the ruame forframe
blocks230lbatconlait
zthesame tylx ofdata.n us,while
M ay 1,2 3
7
blocksizeswhenscarching frameblocksthatcontainimage
data,andanoherdetermined searcllblocksizewht
znsearching frameblockslhatcontain imagedata.-l1m immcdiatdy
orac:ossforthcrespccti
vevcrticalorborizontalmovement
di
rectioqs prcferablyoncbiti!all
m columnorrow'df
recli
os
at a ttme for tbe corresponding vefli
cal and horizontal
dotermincdtotx unrclat
ed howevcrforpurposesofpattern
downonebitwhi
chcanbcrcftrredtoas(11)diagonal
recogniti
onaccording l
o thepresenlinvcntton.Forcxamplc
movement.Diagonalmovmcnlscorresponding lo various
as'
ubsequenyframe aflerthesequenceofframesmay be otllerangl
escanbeachievedusi
ng,forexample(12) (13)
dctcrmined to bc ati
ew koy fralnepsinls
e ilwillnotbe (1.4)...(1n)movementsaswellas(2 1),(3,1)(4 1)...
reduczd due to tbe paucrn recognition (lescribed l
mreirl. (n 1) movements.h.
% al
so showu by tLe wrap-around
typfcallynotthccase.
(*571 FIG.3 also shows arrows corrospondiog lo tho
o
lirear
e
ncrtcbOfr
amc
balv
dadesc
tawi
ineher
achep
orfti
np
tto
scd
sef
aer
sca
bl
oc
k.wi
A,.
ll
wi
le
be
rt
ih
bcd
fna
to
er
p:6
) iAt
ese'bi
ifltho movementoflhe search bl
ock
wind1
ow
sae
sd
ig
ngl
searchwindow willtbengo I
.
otl
zeoppositesideofthcframe
22:'1'auJbegnanothercofnparison. Ifyhowever.tbe search
mastrrblock pi
xeldata i
susr
-d,and,once altbe edge ofa
frlmeptbefurtherSearcbing asaresultofthewrap around
js Peryormetj.
,
numl
x rofbi
ts a.
swellasbyteand multi-byte movcmcnls,
wbichprovideforlerx
sorevenaooverlapofselectedsearch
((*5:1 M showninFIG.4,wbenaparticularxarcbblock
haudbilpositioa,wlzicbc&nl>eusedloidenlifylhexarch
window locati
ononthe largetO-framc220 l
xingpositions
O-fr&me22.
01,thcsearchblock310isinitiallyappl
iedata (36.
24) (37,24),and (M 24) res%ctively.Similarsuch
searclzblock aroa 410 within the frzmo block 2301 oftbe search areasareobtained fortbehorizontaldirection m ovetargetO-frame22A tbatcorrea
spoodslo thesameposition ments,such as from tlw (36J4)m sition t
o the (36,
25)
withintbeframeblock 230R aftbesamepositionwilhintho
posilion anddiagonaldirectiorlmovomcnl
s such asthc1-1
d
atathatisatthaltimewnilh
inlbescebar
chbkloc
k310N'X'
Ithc yoiectivcly.T(
)erolatioualpall
ernseafchingbasedonkhese
correslxmdiagdal.withi
thcscal'
blcx;
area410 ofthei Principuscan bc implementetl such thatrotationspatdiftargelO-framc23$)3-asdeascribcdfurtberbereinaflcr.Once
tllatinitialcopartson Lscomplete,the se-arch block310 is
lbenmovedinvariotusothermovementdircctionswilbintbe
frame2211R.
*includingvertical420'horizoutal430,diagona!
conjunetionwiththeflowchartofFIGS.8A-C
uw
U .S 2003/0081685 Al
M ay 1,2003
8
(* 651 FIGS. 8A-C llitkstraleaflowchartofapreferred
(* 66) n coverallcomprrssioatargetrali
o Lt;adesired
blockaftcrjjeprrviouslyusedwarchblocklasfini
sbedi!s
ernbodtoeotoftheinvention.Asulustratcclinstep10. initial
conditioasareset.Thoscirkitialconditionsincludcllleovcrallcompressi
on urgetratio, apredelesmi
sed coulllvalue.
defaultsearci
) block sizes,a lorx
sy pclcerltage if Ioasy
CompressiOI;isinvolvedp adefaultpatternJirection.vertical
aud borizontalsearch block traversalollsels both antlverticalandborizontallargetsearcharcasoffscts.Eacboflhcse
Willbccliscusscdnow insomcdeuil.
overallcofnprc% ioooftht.targctframc.'I-itisOverallcompreu ion includesthatcomprerusitm obtzinedbytbepallern
recognition according !
43 tbt PfeRntirlvfntiotlxbu1 also
inlude.
sfurtbercomprei
% ionoperatioO lhalare inlended to
takoplacc,whichfurlhercompressionoperalionsareoul
side
lhescopeoflhepresentinvtntion.ln certancircumstar
xxs.
ascxplained bereinaher,ifalargernumberofpaltrrns afc.
recognized, tlw palters recognitiondescribed bercinwillbe
stopped and tl
x furtbercompressiou operatioasmentioued
abovoarc instead usedfora1Icomprmssion.Forexample.in
ascquenccofframoswitikinamovie.iftwoadjacenlfracs
ttolallyblackimages(forirlstanceasapreculsorlo
contair
tl
w inoductorycredits),theovcrallcocapressiontargetratio
w ill bc exceedetlbecamse tbese lwo imagcs am in fact
idcntical.
(1
*57: n e predelermined countvalue Lsused by the
difereolcombinalionofsearchblocktraversaloEsc.tscanbe
used forcach Jilfertuthorizoatal vertical. diagotlal.atld
routl
ooalsearcb.Also,differentsearcbblocklravcrsalotll
setscanbt u.
sedwbrnscarchingdiokronllypesofiaformatloflwithlndiFeren:framcblocks> sucblsvidcointofm alion
within cerlain fram eblocks and audio infoanation wlthin
otherframeblocks.n eoEsotsset,witbbotbhorizostalaod
verticalcompolwnls,willdclcrmine t
beshiftingpropession
withintherefcrcrmcframcthatLsusedtoobtainanew search
comparisonsofthe;targctfram e.Variousprogrtssionscaabc
ttrr(j> w ith tho progrcssion preferably irlcluding tbe maxim um numbtrof(k'akxntscarcllblocks, cofrlsjxm ding lo
tachofthevadotlsjxl
ssiblc jxjsitioilswithinthc rcferencc
framt.suchlhatlkle.ji
kcli
jjoodofmatchesbeingfouridwilh
ltletargetframeisincroasccl.Tlm s,lhesearchblocktlaversal
OEscts willdctcrmi:le tlw location w itbirlthe reference
fraIne of. and tj:us tjw conlcntsof, tl)e nexlsearch block
witbin tlzc rcference frame afterthe pxviousxarch block
sonoperationsw ith tbetargetfram e.
lias perform ed compari
n emovemtatoflllesearcbblock baseduponthesearch
bjock traversaloFsets can be bit'
,mdlli-bit
s, a byte, or
yytes,asuwntiol
'
wdpreviously.
multi
-t
(00721 TbeIargetsearcbareaoo'
setsal
soneedtobcsetin
amannersim ilarto thtsearch block trw trsalotscl.s n e
urgotsearchareatraversajogsej
s(jezrrnuotjloamouottbat
aparticularsearclablock Lsmovea w itjjirltlx largotframe
afte;rperformingacomparisonolx ratjockoftjw soarcbblock
wilhaparticularsearcbblockareaatthelargetframe.n us
f
jj takeu'
oroxamfrle,aftoranioi
tialcomparisonoperatioo ars
p
l
a
c
e
u
s
mg
a
t
b
r
o
a
d
e
l
a
l
i
s
o
>
r
a
t
i
n
g
i
n
a
h
o jzontaj
direct*ion,the horizontaloFsetwilldetcrm ine the amount
thatt
hescarc,
b blockwillt)esjjjjutjw jtgjstbe(argetframe
so tbatllzenexlcomparison operation can takeplace.n al
same searcb block, afterbaving been shiftcd witbia tbe
targctfratrlew luata1lcomparisonoperatiomsatagivcnrow
lor
ssy mcde.Whenopcratiagiu:lossymodt.tbepmrent (* 74) lI1Mcp12,l.f1hishasnolb=npreviotuslydone,the
invention allows tbesettingofalossy perccnbagelo determine the amountof 1$:e.s lbatcan be tolerated within tbe
Patternrtcogtlition operationsasdcscn-bed bcrein.Accordingly,thel
orssypercentagecanbesetasan icdtialcondition,
so thatwhentbcsearchblt
xk ismakm
'gitscomparisons ylnsj Instep14yapredictorLhread Lsstartotltl
atwil1
upon thesearcbblock areaofthotargelframe artlatcbcan
bt idcutifie.
d iflhcnumberofbitswitbin tl
zc searci
zbiock
areathalare t
hcsame rezcbc;
sI
helouypercentage.
((m 0) Tlledefaultpalterl
zdiroctioninitialcondilionis=:
inllzedirruionthalw111beusetllo lravelsclbetArgetframe
absentthepredictorlhread determ ininglhal1dpatterndirectionotbertNarlti
x defaultpallerndirectiooshould I
x msed
rortbe Erstthread.
(*71.
) searchblock traversalosetsare al
sosetasan
st
oredsothatminlerswhhinolherframescanreforeucetb.
i
s
inialcondition.ilispreferabletbalacornbinationofotsets
'
'w '
US 2003/0081685 A 1
M ay 1,2003
9
mcmory(l.e.lhcframeID oftbcnexlfranle)andtlleframe
blocksizevvcrticalandhorizontalsearcbblocktravclsaland
quonturgelfrauw forsocaeIkniledarcasoftheseframes.In
I
yaoslq Asshown in step26,asearchblock countcris
size willbe addtd and associatc.d witb lbe frame tlata for
eacb frame T'
tm frame data Lspreerably fonnatted into a
targe!scarcbarcoffsets'andaprtldicledmovemeotdirecliou
fortbattbrcad
fottows.
Particular.cornparisonswilltakeplacobasedupoudiFcrcnt
Poruonsofthe referonccframe and operaz usog dillkrent
sizesearcbblocks.Tbesize oftbeksoarcbblocltscanvary
considerably,with a range ofdi/ereotsizes lbatspatlthe
raugeofpotentialporx
si
bililies.from 8x8 bytesto 128x128
byl
csand Iarger,depooding upon tl)o sizeofthe frame.In
entral,theIargertbcframe,lhe;largortbcscarchblocksizzs
tbatrouxd.Asarcsult.ti
lcprcdictortbreadc&ndet
ennine
apreferrodmovementdirectionofan inklialsearcbblockxa
Predict
cdsearchblock sizclbalsbouldlx ured,audamatch
parisoastbaltookplacc.
otlowsaadtttesearclblockobtainedfroultlzoiniti
alsearch
pOsilj
on iscompared againstthc initialsearcl
zarea in tlle
targctpamcto determincifa matcbexistsusing tlm AND
olyeraton for lorxsle;
ss comparisons,and tl
m AI
Nr , OR,
multiply dlvidcandotheroperalioasforparpckse.sofdetttr,
satcllesflossycompariso% are being performed,
m izjiog I
ed abovc.
asnot
runningiflParalle1witholherthrcadstbatarcti
mnaddcd.as (00821 Depeading upon tht type ofcompari
son lhalis
described i
mreinafter.
g(*774 Asindtoat.dabove,tbepretlictottureadwillobtaiu
apredidodmovementdirectiooaswellasapredicledsearch
blocksize.Tbeseareusedto initiatetheseltingsfoItbelirst
tbread ltlatis sct for oomparisons betweeo lhe refercnce
framc arsd the large! f
n me.Furthermore. the predictor
tlwez.
d a1<1obtal!
ls a Ktatch peictlltage baRd upoa thc
searchsamplesthatwereobtained.'
fhus.fbrexample,if20
dilrerentsa plesfrom thereferenceframtwerematchocl(
o
1hetargotframe,prtfcrablyatlocationscorrespondiagto the
spcca'tic arems ofthe rcferencc framc antlsome boundary
arouudtlloseareaslot'tbecntiretargtframe).anumberof
predictive matche.
s can be delermined.'
Fypically,if lhal
numlxrofprcdictivc matche.sislow,itisIike;
lythatthel'
e
will sot be a large cofrrsponding numbir of matches
b
etwern lh twr
o frames.In conlrast,*
1
f thalJmrcenlagt is
bi
gll.such as14 outof20 ofthe sam plcs matchingpthan
Qmm is a much bigher probability lhere V II bc m any
dt
xerenlmatching arrasbetween thefraes.Intbisregard,
:54:,hor3ze
4cn$
1
1
low.InMep MJ,iftheRarch block
tv
ic
a1
)fol
matc es
i
tldicating tbata11tbebilsaretbcsearcil
block were fouot,jwjthip tlw x rrespordi
ng searcb bl
ock
f
t
l
x
u
area o
rgotframo.tlw n 1he searcb block couuteris
incremented indicatiug tbatan identicalInatcb took plac.c
ant!aunk js'cm atcd showing tborclationsbip behveen he
searcjuockasdthereferencefrmeintbeseazcbblock area
Ojttjetargetframe. Ifyhoweverpa lossy comparison operatkonisIxrmitted, jjptjjesearchblockmalcbcswithtbelossy
rangc,tjlesearchblockcountortsalsoincrementedassbown
by strp .:4, aud alink iscreatedshowiag the relationsbip
be refereoceframe. in bt.
between tbe siarctjuock asu t
scafCjjbjock area oftlle (algetframe. Ifabowever,itlsfep
34c.tj
lcxarchblockdoesnotmatchwitllit
zthelor
x
syrange.
then'tjle search block areawilhin the targetframeforthat
u
c
u
l
a
par rseaw hblock ismafkedasnopauem .Accordingly,
su lx anitjsurwieutvehtouslkipbetwexutbt;soarctkblock of
tIw retecosc.cframe atldthesearcb block Areaoftbe targel
framewasfound,thisistreated asI
'
flhcrewtreIlomat
chand
1he compari
son process wijl tlwn cxmtinue between tbat
starchblockand anotberseatcbblockareawithintbcurgct
frame.
sequcncc.n cnumberorperceatageofpredi
cti
vtmatches (0083) Totbatendastep36followssothattllescarchblock
CAD bo wse.
d,as dewcibod hereinafler,to detennint tbc
Immlxrofthreadstosetinapanicularmovelxmntdiroction.
((*714) Upcm completion ofMep 16, h is dettmiaed
wlwi
lcrthe predimorlhread providod mformati
oaon the
prodicted movemenldircction and thc predicted search
bl
ock size fortbe targetframc.Ifyes,then lhe predi
cted
search block size and predkzd movementdirection are
Pxsst ontobeimved bytbtinitizltbroad ttia.lissot.Ifnot,
tbf
:iaitialtbreadtbalissclxw111usetbedefaultslarchblock
si
zc aud adefaultpredicle.
d movemcn!direction.Slep 20
followsand t
hc firstthread is set.also Ktting the search
cantraversethomrgetframe,andlbesearcb blt
x kissbifted
to the nextsearch position witbin tbe targetframc.'
rbb is
doueusingtlm targptsearchareaief
l
s
e
t
s
t
b
a
t
h
a
v
c
me
n
tiooed
previously.n ms,forcxample, fthe nitiallhread ksse!to
jtion
blockto1henoxtadjaceutpos withintbourgetframe.
(00841 Thereaherst
ep38follows,wblcllstepuse,dagain,
dependingupon (helypcofmalchthalisfoundandtbetype
ofmatchingopcrationthzltspcrmiltcd.If lbtscarchblock
<w
US 2003/0081685 A l
M ay 1,2 3
10
the.
tttlisparlicularsearcbblockareaisrecordedasbaving
(rnatche;
shavingnotbecnfound)*stcps'al'eusedtotcrminate
directionofllistlreadptbentbisqanicularthreadandotber
getjgl) Lastly,iftbeovoralcompressiontargctratioas
ofszpstbatartuR>dtolecm inateaparticulartbreadtbathas
becn sel.Asdiscucxsecihcrtinafteq m ultiple threacls w itb
dlfferentscarcbesm llbe nm ning in parallel.In orderto
term inatecertain ofthe tbreadstbalarelx ing ttnproductive
lbread.
shaving asam ecorrespondlngdirectionalmovemont
arc lciminaled.
t;
(00901 Inasorrtewhatsimilartypcoforration.instep4 .
after llle:minimum searcb arel has been covered if all
'
threadssearchingintbesam edirectionyield le'ssthansome
p:edelermned couotvaluo whlchcounlvalue could tpe zero
or
sot
uc numberbighcr a'
s setin tbe initialconditions as
descr.
lbc.d above,the.n aI1 threads baving llzl particular
scarcb directionare term inatod.
describedabovewithrespcclcktbeinitialconditioasismet,
thc.u al!the tbread.s induding Llarcurreutthrtad is tsnniualed. w ith respectto step 50,ifstep 50 results then tbe
target frame is saved in its original state and st
ep 62
descri
bed btreinafter foll
ows.hs notcd above the target
subsequentcompression routiues oulskle the scom oftbe
prcscnlitwenlioncan beused.
irlstep42 ifauserpresctnuml
xrofidenti
calmatchesocc'ur
20092j Oncrthelllreadtcrminatesasdcscribe.
dbystep40
movedtoaninitialpysilioaofanextframeblockwithinthe
blockwithintl
rurgetblock.Ifmatcbesoccuriaeachfipsl
mati
ontbatwillbeulat
edanduse.
ddursugtheoperalions
tbcinitialpasitioasoftbeseadjaoentframeblockswillalso
r
e.
fcrerjceorkeyframe Dd thepoiuterto the reduce.d R
framc Can 1Fe :ddc.d KS thtkr I0CI1iODS arl detsrrflilmdy
targetframe.Iftbatmitialpositi
onofttle.nextframeblock
witttin the targetfrnmetlw uproduces a match,instead of
m ovemeut can be repoate.d to tbe subxquont noxt fram e
positionofma.
cbframcblock,*1,
4indicatt.
wtoahl
'
ghdcgree
oeruinty,thatalloftheconu ponding bitpositioasbetween
bem1.tclms.
phcr whiletbeslliftingaudsearchingoperationsaretaldng
place.Nooetbeleas> they are sel fortb bere for ease of
disczlrsion,tbougbitisrlotc.
dthzttl
xscsteps,orothersteps
discttri
scdhrrein,oeed nolIakeplaceioth1 describedordcr
posilion.
(*88) Asselforth, in step 44.ifthesbiflofthe largct
searchartainthetargetframeisattl
x odgesoftheurgel
frameaad isgreatertban asingle-bilposition (sincrno
overlapwilloccurifllm shifting isonly Asinglebitrow or
singlebilcolumn),thentbetargetsearchzreaoflhctargel
(rame wi
llhave empt
y bilpositous in lhose ltxalions
'
dmscri
lxdlwrcin.'IhtfrnmcID istbc samcastlzerrfercnce
framenumbcrfortlcTypt O frame.'
l'btpoirjlerlo lhencxt
potenlially althe conclusion ofoperatiotl
s on subsequont
frames. n e oumbcr ofrcduccd framc blocks w'ithin the
framecanbemsedforkoeping trackofoperationsstatasvn e
blocksofdatu lbcreafterillustraled in FIGS.78 and 742
repeatforeacb frameblock witbin tbe same.with those
blocp.sincluding:
(*931 apoin
trlothenextR-framobl
ock,
.l
(xg4j zuID orreferencenumberforll)e R-framc
blockv
(00951 amat
cbtyN indicatingwhetbcrlosw
syorloss.
lrrxs malches are permitt
ed,and if lorw
sy a Ioasy
'
US 2003/0081685 A 1
M ay 1,2 3
11
Percentagc.whichcanbcbcnehcialifusedtoarx
stst (01051 IEIslep 62,afterhaving oblaiacd thc superset
inallow ingtilesystem toprocosstheslopsdcsc'ribed
bepsinnaorequickly
>
'
*
tbeanotberframeis,,t:1astbonew targetfram esolhatsteps
20
through66can L<.repealed.'Ihcroafter'asillustratedby
step 68 if anotber fzame does notexist*
then 1hc end is
obtaiaed.Accordingly.astrtam ofdatathatincludesoriginal
framesa.
swellasrtducmdframes,asindicated in FIG.7D.
in11whereamatch(wbetherlossyorIossless)bas Wi1lresull.
occurredv for that search block wi
lhin tl
c target
frame.ThisL%then repealed foreacbsearcNblock. (01061 Withrcspccttolhe above,itisnol
ed thatmany
a
flcrKtlingtbtt
ilm tbrcadashasberndtscribedabovt.a otue/manrjersofst
oringtbedatacaabeimplemented.
ntxblocksearcbsizeoffretsand direction are also delcrminedfrom tbepredictivetltread asdescribedabovcanda
(0099) tbatingeneralanew tl
x'
eadissetspacedapar: PCfmi
ttfdaWhichis90% inlhisexample.
fmm tbepreviouslysctthreadintbesaruedirection (0108) The abevedescription described both lorx
sy and
bcforesetting anotbertbread in adillkmnldirection>'
l
oasles.spattcrn recognitioolecbuiques,aadthccomparison
data(thedistincti
onbel
weon 1
ow motion andbigh
moli
on video being obtainablo from thc prcdicli
ve
tllroadreferred toabovcl;
(01:1J tbalaftersettiagtllethreadscorrespondingto
using anAND operation.W llite forlosslesspallern recognton and AND operalionv or its Iogical oquivalentxLs
oeedcljforl
osslmsscompression,othorojxratioss,sucbas
xoR o'R subtraction,ormultiplication,m ay in factobuin
bcll
er'resu
Wl
ts
(01091 ReferdngbacktoFIG. 1 tbe above-operationsas
p
described can take placc witbin any one ofthc computtrs
189,B.
nd 'ben tberesullingstream be furtherencoded.Such
furl
her encoding can,for instance:use theimultiplo pan.
q
eacodingdoscribe.dinU.S.applicalion Ser.No.09/727,096
en(zexl.
dvcthtxlAndApparatusForEucodingInformation
1becomputcr14eillustratcdinFIG.1 deccdingthatLs(be
Iq
01141 Instep60.theIinkodlis!lbalhasbeenobtaiuedas
Ez'
blOfthedctaileddcscriplioiirclatingtothe;obtainingof
searchareapositioosillustratedinFIG.7C arecollarxdlo
obtaintbesupersctblocks.n us,whiletbercmayprevaously
betweenlbesesmaIiblocks.alargesuperselblock(wbicb
embodiamntaropossi
blewitboutmatcriallydopartingfrom
seednotnccerxsari
lyhavetl
zcsbapeofablockcanbofouucl.
ll)c novelt
eachingsand advantagcsofthisinvontion.
havingpreviol
zslybeenrtzrminginparalld ifalllbetbreads
arc trrminated step 68 tben follows.Olhefwise,thecontinuation of tbe dilh rcntshifting,searching and lhrrad
crtationandltrmiaationom rati
onsandlw arx
socialtdsttps
asdcscribe.
d above continut.
are
toftbecomparedbloclcstbalwerefoundasmatcbes
.sul
bdwteu lhc searc: block oftlzr rcferoace bame and lhe
srarcl
zblock areaofthe argetlamc arc tbca update.
d to
obtain supersotbloclcs representing the matcbod data In
particatlar tbe filsl sscoutl,and ntlllocatexllarge:fram e
bavt been a number of dilforrut relatively small size
rrmtche-d blocp.s' to tbc extent that tber: is ac overlap
rrciprocaloftheenccxli
ngw111brMsed,and,astlm 1+ stop
ofthatdecodingprxeas,thcoriginalse(ofO-frame.
scanbc
reproduccdfrom tbecombinationofO-framosandR-framos
thatresultfrom thcusageoftheprescntinvention. througb
ungeof11
;
K:Iinked listy andpoiuzrsasdew ibed horein.In
US
3/0081685 A1
M ay 1,2 3
12
Iclaim :
1.A mothod ofcompxssing abil-si
ze ofapluralityof
sequenlialframe,
s oacllframe comprised ofaplurali'yof
bits tbem cthod comprising tlw Mcpsof:
comparinga pluralityofdiferet)tseaz'
cb blocksw'
ilhin a
referenceh'am eto alargelframetool4taiuaplurallyof
comparedblocks*tborefercncoframeiaitiallybcingsc:t
lo an initialframloftbtpluralityofsequentialfram cs
and thotargctfram cinitiallybeing se:lo asubsoquent
frameofllx pluralityofsequeatiall.rames'
>
usingthcpluralityofcor
nparedbl
ockslooblainareprescntationofthc targetfranaedRatiscom presscd'
.
redoignatingastherefercnc:framethesubxqucntframe
tbatwastbctargctframcandredesignatingasthotargot
framc anothersubsequcntframcthatfollows thesubsequentframe;and
;.'
n e method acrdi
ng loclaim 5 wberein thcstep of
comparing furtherincludestlm step oftravolsing tlw target
fraam tocom parceacbofafowrtllgroupofthepluralityof
diforentsearclzbloclkstodifferontpositionswithinthetazgct
fra e a.
tdl
x erentrotationd positions.
7.'Thcmetlod accordingto claim 6wherein tbe stepsof
travorsing tl
zcIi1'
stgroup,tlm secondgroup.thetbirdgroup
alxlthcfourtbgroup areoperatedou inparalleloN ratioas.
:.'lhemctbod accordingtoclaim 7furtherincludinglh
step oflorminating the step of traversingone ofiho fir-;l
secood,tlzirdand fourtbgroup beforelcrminating tbesteps
oftraversingtheother.iofthe irst,secxmd,third and fourth
group.
9.n emethod according to claim 7wlmrein theste.!'of
comm dngt
-omparesse.
arc:
bblocltswitbag.e.
tblocltswtbn
l)
etargetframe and furthcrincludinglhestepofterminal-
ingspecicone.
softborm rchblockstksedby tbe szpsof
l
n versitlg theft
rst second tikirdand fourthpoups if aftcr
&pmtletermine.
d portionoftbetargelframeiscompared a
predeLermined number matcbes I
xlween lhe oue searcb
block and tbc;corresw nding largelblocksisno!reached.
'
3/0081685 A l
M ay 1,2X 3
13
26' 'l
'be mothod according l
o claim 23 wbcrein the
matchescaa introduceloss.
27.'Ihe m ethod accordingloclakn 21th:step ofcomPariogcomparesscarchblockswith targelblecllsw-itizin tbe
targelframc'and fut
lberincluding thc slepofterrninating
specific onos of the searcb bloclts used by tbe slcps of
travcrsing lheflrstand scconclgroups if.aflrr apredetermiaed pol
lioaoftbetargetframeiscompared,otbr'
roncsof
thcscarcbblocksrcsultin apredeterm inrdgroate:rpcrcentage of matcles belween thc one search block and llle
corresponding targetblocks.
2,
8.n cmethod accordingloclaim 4wberTin thestepsof
travelsirlg travcrse thc targetfrafne such thatsequenlial
difcrcnl positions within tbe targcl frzm ovtrlap onc
anolher. '
29. '
I'
be melhod according lo claim 28 wherein t
he
sequentialdi/crenllyositiousdifferby atmosta prcdeterminodnurnlx rotrowsofbitsand predeterminednumberof
columtk
sofbits.
% .n e mothod according lo claim 29 wtlercin thepre.
deltrminednumberofrowsofbil
s Lsoneand1hcpredetermined numtxrofcolumn ofbitsisone.
31.n em etllodaccordingtoclaim 4whertin atlcastone
ofthe stepsoflraversing the:targetframein theborizontal
directiou aad traversing the targetframe in tl
c vertical
diroctioa traverxstbcentire targetframe.
32 'Ihemetbcd accordiag to claim 31wberein:
laversing tbe eotire largelframe in thcborizontaldireclionincludcsmaking repeatr.d passe.sin thchorizontaI
directionatdillkrrntvcrticalpcksitiorsswilhiuthetarget
frame., and
lraversing thetnti
retargetframe in 1heverticaldirection
incluclesmakiag repoatcd passes iu ttw verticaldkection atuiFcrentborizontalpositiortswitbin thc target
frame'
33.Ti!cmethodaccordingtoclakn32wlmrei
n adjacenl frame.
diikreatverticalpositions&txIadjacontdiffereutboriztmtal
51 n emetbodaccording toclaim 50 whcreiustepof
Positi
onswilhintheurgetframedifferbyatmostaprede- trackigisusedtoprovideadynami
c indicati
onofan
lermined numbcrofrowsofbitsand preddttminednlmber
ofcolumnsofbit
s.
34.Ihe metbod according to claim 33 wbereio tlx pretktcrmincd numbtrofrowsofbitsisolw alld til
e prrdctormilmd numlxrofcolumrlofbitsisonc.
amountofcomprerx
siou achievabl
c bctwten lhe rcftreuce
frameand tbetargetframeand whereintbesl
ep ofcomparizlB fltrther ilzcltldes the slep ofselecting a comprerxsion
targetratio.
52 '
nm metbodaccordingtoclzim 50wbercintbestcpof
36.'f'
lX mttlzodaccordiagtoclaim 35wherdneachof111t.
SlCW Of travelsing is implemented using a plurality of
diFta ntprocessorthreads.
53 n o metNodaccofdingtoclzkn52whcmintlm slepof
'rjng furtberiucludestlze step ofselecting adecomp&
sired
amountofl
orw
sthtcan betolerated wilbin tbe reprcseota-
tion.
54 n o mctl)cd accordiug yo claim 53whtrcintlw com.
35 Tbcmethodaccordingloclalm 32worineacbofthe
comp'aringLsslopqodwbentbedynamicindi
calionindicalcs
c
omparoreferonceframevitl
eodata<111targe;
lframe'
vidro Pareiblockiscotusiderodidenticaltolhescarchblockifa
data and atleastorle audi
o procmssor thrcad is IksGl to per ntagvofbitswithin tbetargclblock isalIeastequalte
comparoreferencefraam audio dataw1t11targetframeaudio
data.
38.n em cthcxlAccordingtoclaim 1wlmfein atleastone
pmceasorthreadisusedintheslepofcompafingtocompare
referencefraam videodatawith l
argetframevideodataand
als3#
orefrrenceframeaudiodatawithlargetfrzitl
eaudiodata.
. n eme
thod accordingto claim 1wbcreinthestep of
tlsing obtaio tbe rcpresentati
on oftlm targotframethalis
compreased ascompare.
d to t
iic originalstatcwitboutany
lor
xsI
x ing introduced.
'
003/008
*1685 A 1
t;s 2
M ay l 2 3
,
14
arx
sinzlhceslimateonto atleastooecompariag proceslal i
s used to compare tl
:e plutanty of
P sor lbread li
cli
fferentsearchbl
ocksw'ithintberofereaceframet
othe
tlicroferetxxf
zameloapluralilyoflocali
onswitbinthc comjiriagiacludestbestepsof;
les
obtaiqag anotbertargsFa e;
f luralityofsracclzblock Iaarliorzsof
th arff
ranawptoaplurautyoflocationswitkinthe
comp
neareea
ac
ce
:fo
uetermine a pluratity of
C rc
aaom er larget frame to
INalchrs.
.and
groupareoperatet
lonin?aralleloperations.
blockJonioasot11x rderenceframcaresavtllasremaining
datatbatisasocialedwitbtlm targetframe.
66.'
Themctbodaccordngtoclafm 59wlmrcintbcstepof
comparing comparos< 111introducti
onoflossbeingpermittcd.
6'
T n emethod zccording (o daim 66wll
erefnft
vl
c?
catiossofthetargetframethatdo notmatchwith tbesearch
blockportiotl
sofllm roferenct framewithinapermizdloss
prrcrntagr art,savr.
d as remaining dala lbalisaw lciale
xl
with thetazgd trame.
M ay 1,2003
15
andseomdgroupbdorrlerminaliz)g!beslepsoftraverslng
thcotlwrsofthe ft
r-;
tand second group.
#4.n emethodaccordingto daicu82 w'
hrcel
zdl:estd;pof
comparingcompare.sscarc:hblockswitbtargetblockswitbin
lbe targelframo and furtcrfncludiog tllestc.
p oferminating specifle onesofthe searcb blocksmsedbylhe stepsof
traversiug the frstand sectmd groupsif after apredeterined m rtioooftl
x targctframe iscompared a predotermiued nttrnbermalcbesbelween tho onc scarc,b bltlck and
l:e corrcsN sdiag fargrlblpcksLszlotrcached.
85.'
Tkc mcthod according to claim 84 wbereio tl
ae predctermflmd numlxrisonc.
86.Thc metbod according lo claim 84 wheroin the
mhlclms arercquired to be idtnticzlmatches.
87.n e melhod according to claim 84 whercin t
lle
mat
chescan introducc loss.
M .T'
be mdbod according Io claim 82 tbt step ofcompari
ngcomparessearcbblockswithtargotbl
ockswithiuthe
targetframc' and fuftbcfirfcludisks
g 11
= sdtti
p
tc
rl
i
tin
g
boftb
erfs
snpas
of
specific oncs of tbe r/
oarcb bloc tl
se y
trwelsing tf
w firstand second groups ff'afterj
ajpredeterf
mined portionofllm targetframeiscopared ot efoneso
'
t
beRa
hbt
l
c
teiu
pr
ermi
'
reo
ac
le
ue
ofrcma
co
lz
eks
sr
bees
lul
we
natl
leed
oe
nt
t
seanrv
cd
hgbl
krp
ac
or
dcrn
tbte
cerrespondiug targetblocl
cs.
d#.n e met
bod accordi
ng lo daim 73 wberein lbc:stcps
oftravcrsing travorse tlm targetframo wch thatsequtntial
ditlkrerjt posilions widlin thc targel frazz?r ovcrl
ap one
Ano
t
b
e
r
.
90.'
l'
be metbod according to claim 89 wbereiu thc
sequtntialdiitrentpositioas diii'
erby almostapredeterminetlnumberofrowsofbitsandpredetermined t
zumberof
colum asofbits.
91.'
flm rnethod according lo claim 90 wNerein the predetraninrd nutcbrrofrowwofbillLsouk'and 1beprcdrtrrmined numlxrofcolumu ofbitsLsoue.
92.n emvtttodaccordingtoclaim 73wl
mreilal
eastoae
ofthestepsoftrwtrsingthotargetfxameinthe borizoutal
direction aad traversing tbe urget frame io thc vertical
dkt
cliTb
onttrme
avttb
t
vodsa
Il
mcoes
ti
rg
el
arg
tim
framc
93
c
rdi
n
to
ce
la
92.wllerrioz
blocks whicbmayorm&ynotbcdferentlhanthe;fust
di
mctiooatditerootverticalptxsitionswitbintbolargct
fzame'and
i. thecntire largetfzameintbevertimldirection
l
w sinlhtverticaldirecl
rwcr.
ide
ng.smaking Rw ated pas.
i
iz
lcu ldifrercza horizonlalm slioaswithin tlm target
1
a.
froa
amc
a
od secotz groupsofsearch blocks tocorrospoading
ao osalyargelblock-swithio ttkotar'getfraum.
g
102.'1Xemethcd accordiagtochim 1(K)wherointhoMep
Of COEBPaI'
Z: is fCP6&Ifd On tl3e Plurality ol srquential
#4.'
fh mctbodxccotdicg loclaim 93wlwrekladjacer?!
difercatvort
icalpositio% and adjaccntdiffmrcnthorizotltai
oatwas(lwurgetframe&sdrcdcxiguatingast
lletargel
ffm ca!
lot
bersubsequentframethatfollowslbomzb-
p
orsai
ti
swi
t
bin
&rget
fra
iTe
yla
mo
ecl
ete
z
io
nn
e,
d
numb
lrtb
oe
ft
rows
of
bme
il
sad
nd
pr
reb
de
et
rmi
ns
et
danp
ur
mbe
r
ofcol
umnsofbit
s.
% .Tbcmelbod according lo claim 94 wberein tbepredclermint;
d numberofrowsofbitsLsofl
eand tbepredetcrmncdnumlxrofcolumn ofbil.
sisoae.
'
ffht
mt
zio
c
or
di
ng
tonc
3gwht
ci
aeca
of
bsestc9
p6.
so
tra
vct
rl
s
nd
gai
sci
mp
l
eme
ll
ea
dimms9
fu
adr
i
kr
nc
tb
pr
oct
e
sorli
zread.
97.n emel
hodaccordingloclaim 96wherrineachofthe
slem of lzuvezsing is iulpleamnred usng a pluralily of
diferentprocers
caortbreatts.
Rquenl(ramt'
.an(j
repeating tlm step ofcomparin:
103.'rbemethodaccording toclaim 1* turtberiucluding
thestepsof:
redesignatiag as the targtt fnme another sazbsequeut
frame thatfollowsthomzbsequentframe aud'
?
repcaling tlm steps redcsiguat
ing and repeating so that
each oftbe remaiaing plarality ofsequentialframes
tmcomc the talgelframe oue ti
m e while tbe step of
compariagispedbrmed.
fr'me'
s:aDd furtbcrindl
ldestherb
tepsof:
reaesiguatiugmstberefcrenceframetbesubsequrntfxame
US 2003/0081685 A l
M ay 1,2* 3
16
pl
urality ofJiferetu search bl
oclts to dil
rereut!1ositions
corresponuingtargetblocks.
gt
xmp azr om zultd on in paralleloperatious.
iht
rSIC#oflerminatingtbestegoftraversingoneoftbefi1st
alxlseooudgrol!pbeforetermmaling ll)cstepsoftraversing
tbeolbe:l;Q)fthefifstAnclsecond group.
123.'f'
hemetbodaccordingloclaim 121whereintlx stcp
ofcompazfng comparos Rareh bltxl
cs witlltargetblocks
wilhin 1he largetframc,and furtberinclttding tlm step of
tenninalzg specific ouesoftllc searcb blocka use.
d by the
129.Tim umt
bod according to daim 1:
28 wbcreio tbo
tcrminatingsmci
liconesoflbescatchblxksusedbythe one oi(l
x stepsoftrlversing the urgelframein lbt
stepsof(ravtrmngtl
x Erst,secondandtltirdgrou;sif,aft
er jjorfzostaldfrectfouandtravelsiry tlw targc.
lframeicllle
a palelerminr.
d portion oftbe tzrgetframeiscompared,a
predelcrrnined number matcbe.
s betweeu the one searcb
blo1
c1
k7.
atx
eme
cor
spon
di
gintg
argle
oc
c
l
led.
nlt
ett
tbr
oed
Acc
on
rd
otbl
chi
mks1is
16not
wtr
le
ea
re
n
lbe
pmdctermnetlnumberisone.
1.
18.Tbc method according to claim 116 whelein lhe
marclles ascrcqtlicod ltybtsidcrlticalm atches.
vorticaldimctioatravel
sesthecntu'
tlargotframe.
Fbe mcthod according to daim 131wherrin:
132. '
travctsing lhcealirelargclfzatrl:in tbehorizonta!dkectioniocludesmakingrepeatedpassesintl
x'
borizonta.
l
dirtction atditftrentverticalpositfotzsw'illiulleurgel
frame'Ant!
'
..
M ay 1,2 3
US 2003/0081685 A 1
17
lraversingtbctotiretargctframeiolheverticaldi
rectlon
iucludcsm aking ropeated passesiotheverlicaidftection aldiffereafhot'
izofdalpesilioas withi
zlthe Iargel
frame.
wherciathestepofusingcocnbinesoverlappingcmesoftlc
plurafityoftxlerlpaa dblcclcslc.tkblain aszlpcraelblock lbal
isused forthe fcprosetltation
150.n tmethcxlaccordiagIoclaijn 1G)wi
lereintheslep
133.Tt
w mothodaccordingtoclaim t32wbcrtinadjaecul ofcompariugtucludesthestcpoflfackfngcomparedblocl
ks
dtllcrentverticalposilfonsandadjaceutditfcrccdtO rizoi
atal thatrcprascraani aticalmalcbbelwcenthcsearcbblock
'
o
c
l
u
de
s
t
l)ostepofseltctfng adesirrd
rng.
lo corapare mferezzcr fzamevideo data witb targelframt artloucklo
loss lha!cao bo St
llcralc.
d within lberrptesentavideodataand atleastoueaudioprocrawrthread isesed to tiou.
com parereferrnccftam eaudiotlatawitbtargelftameaudio
154 n emelhod accordi
aq to claim 153 wlwrtin tbe.
data.
compa.rcd block isconsidcred ldcatical(o tltcsearch bl
ock
138-3Rw mttbodaccording L
o claim lG)wbtrein atleast ifaperceulageofbilswitbinthotatgetblock isatleastequal
one proccrs
x fthrtad is used in tht step ofcomparictg to to thedesired amouatofloss
l'hemerbod accordingtoclako1fX)whtrefntlm stop
comparcreferenceftamcvde,
o datawithtargetftamev'
idco
155.'
dataaad aLso refrrrnceframe audio datawith targctftame of comparing furlhcr iclcludcs thc slee of seleclizlg ap
audiodata.
amountoflossthatcanbe tolcrazd witilin the reprexnla139.'
Ibemethodaccordiog todai
m 1t
X)ft
lrtherinclttding tion.
thestepofusing thepluralilycfctllzlp4re,dbl
ocks!f7oblaizl
156.Thcmethcd accordiagtoclaim 100wtleroin(hcstcp
a represrntAlion of tl
w tatgct flame tbatis cornprtrxsed otcwcpparir)
g eclude.sliw slrps ofr
wil
ut
nyIn
lc
qs
ncgcor
i
ndtr
ec
d.
1h4o0.
'la
he
e
s
bobdei
a
io
ndu
g te
olam 1(K1whereintlm stcp
inilating a pxdictfve processorlbrcad 1t)clblaia an esliefcomparityg compares lhe search block w itllltle target
male of :likelihood ofmatchesbotweea tbe w azch
rramo usingAND operatioms.
block arid tbe b'
trgetframe;ancl
141.'
l'
hcmotilodaccordingtoclaim 1(X)whereinthestep
parw
singthtr
m imzte onto tlemstonecomparingprocesofusingoblaiasflm reptme utatior
nioffl
tcstat
r
gwi
rtt
fb
rai
r
ns
est
llai
lnig
s
1
c
o
be
W f 01fCA(
l tbat Z tlsed t
o compare tht plurality of
comprrasedascornparcdtotheo gina
difrercntscarchbl
oclcswidlin(Lcrefrrescefraam toIhe
introduecd.
Izrgctframet
oobuiu thcpluralityofcomparcdbloclcs.
142.Themdhodaccording loclAimbl1
letr
nbelbe
:aMe
pl
o41
ckwi
wi
hei
1
l
rge
1S7.'l'
lw amtbtxlRccordiagtoclaim 100wlmreintheslop
of comparing
AND
comg
oae
re
ra
sti1
o
11
n
42
s.search
Oft
ximlMri
tlg compares atabitlcvel.
43.
158.Tim melbcd Kcordingtoclaim 1(O wheroinl1m step
fra1
me
unsinegmetiloda
pccordingtoclaim 141whereinthostep
ofcomparing compares tlm seartt
lblock w'
ftlztl
m targct ofcomparing compacesalabyteleve).
framo l
zsing OR opozati
orxs.
159.A metbodofsearchiogforpatornswithinapluralily
..v
M ay 1,2* 3
US 2* 3/0081685 A 1
18
detcrminit!gwhctbc.
rlheIraversalsrttsullit
'
lasullicfcal
I
lumbcooflzlalcbt.
sbeing foupd belweelsthe target
frameandthel'
ofeteac,
esracrle'aad
ttnrfcatmg ccrtaiucflhcpluralily diffelc.
DlIhreal
is'tbe
sltp ofterminating occurringfora patli
culartbread if
itisdetcrmined tllatthetravern lrelatedto t
beparticu1arthread is notrcsulting in tbesumccrdtnutnbcrof
m atches.
161).n emelhodaccordingtoclaim l59whereintbestep
oftravsIsitjg isclude.
sthe stepsof:
'
oftraversingindudeslravtrsingtbetargtframriuadiago-
17* '
1'
1w mell
kcsdaccordipgloclaim 161wbereinthesteps
of traversing tbe hrstgroup.tbt:second poup,tbe third
group a:e oporatedonin paralcloperations.
171 Tbernethodaccordiugloclam 17O wbereintlleslep
ofterfuirlaliag lrrtzyiaalrslheslcp oflravorsng oncoflllc
fifsqsecond aad tird groupbeforeterm matingtlw stepsof
lraversiuz thcothersoftbeNfst secondand li
zird group.
172 ''
l''
1'
)0tnelhodaccordngto'
ciaim 170wtjercintlm step
fcom arirlg compares w arcb bltxk.s wilb lalgelblocks
twj
tttin t
phetargtlframe anJ wbereis tbestepoflerminatiag
terminate.
s speciflc oac'soflt
w search bloeksuret
lby the
slepsoftraversinglberft
rsl sccond audtbird groups1,afttr
*the largelfrarr
apredct
ermisedIzodionof
x iscompared a
prodelcrmiued number l
natchr.
s betwcen tbe one sear'
cb
block and th1correspooding targelblockstsnetreacbod.
173.n e mtthod 4ccordlug to claim 172 wbercin the
prcdetermine
.d numberisone
174.n r Izml
hod according lo claim 172 whercin the
matcbes arerequired to beidentic-almatchos.
175.'
l'
bo melbod according lo claim 172 wbcroin tbc
matches can iutroduceloss
sa!directi
ontocompareeachofatbirdgroupoflhcpluralily
ofdiJcrxmlse:rch bloaks t
o dxerentposilions witbin tbe
urgotframe.
162 '
Thcmethi
xlaccordingloclaim l6twbereinthestep
oftraversingfurtberincludestbest
opoftraversirtg tketxrget
framefo coitlparecachofafourth group oflbc luralilyof
? tilotarjret
dlferentsearchblxkst
o di
lereutpositiorowithm
frame atdilerom rotalioardpositions.
163 Tim methodaccordingtoclaim 162whereirsllx steos
flrav.ersing tlm firstgroup,tllr second gwupxtlle tlii
A
rd
sd 11,, foura group are operatcd on is parallel
O
gK'
'P a
0PeZ
iocks.
1r6at
4.
'
n emet
bod accordiog todaim l63whercin thestep
oft
enuinatiag lermilutestbest
ep oftraversing one ofttle
firsq sef
co
lr
nad,
vex
ts
l3in
f
dga
th
ae
do
fou
the
rr
ls
bo
gf
rcu
tho
pf
bir
cs
ft
or
,xc
e leorn
mi
dat
ablir
nd
ga
lhe
nd
17K.'
Ihe mcthod accordirl
g lc claizn 170 tbe sle?of
ctpmparing comparrssrarchblccltswitlztarge;tblockswllhiu
tbctargetframe andwbereathestepoflcrmiuating tcrminalesspecificonesoftbesearchbltxksusct
lby tbeslepsof
travcrsing the Erst stcond and fbird grotlps if after a
Prcdelermine.
dponionoflhelargelframeLscomparedpother
Oneit)ftbtsearcb bloclcs resultin Rpredelennined gxaler
cbesbctsvceutbeonesearcbblockaadtbe
pcfs
xatageofmal
corresponuing targetblxlcs.
177.'
1X4Ilmlht
?dacording 10claim 160whcreinlcMops
of lravelsing tbe rst gtoup and the secood zroup are
operat
qd on inparaneloperatious.
178.'nltmethodaccordfngto clairn 177whcrefutll
estep
oflcrtzlfnatiz)g terminat
e.
s1best
ep oftraversing oncoflbc
firsl aud second group beforo lepmiuatiug the stops of
traversing tbe othcl
s oftbe t
irstandsecond group.
'V9.'Tbenfthfxlat
lcotdingtoclaim l77wbercintilesttp
ofcomparfng coav4rcs scacc: block.
s writh largelbltxlr
.
s
sl
jstogroup.
,
oeur
witbin lbcurgc;
lframe andwhercin t
lw sttpoftermituting
j 16k
k
5.'Ikemtthodaccordingtoclaim 163wimreinttlestep lermioatesspecilic one'softhe search blocl
tsusec
lby tbe
steps ofttaversing the f
1r.
:1aad second groups if afte:a
o
f
c
ompa
r
i
n
g
c
o
mp
a
r
c
s
xa
r
c
i
l
bl
o
c
ks
wi
t
.
t
t
t
a
r
ge
t
b
l
o
c
k
s
witlliatlTeurgrtframe,andwhrrein11
)5slepoflerminaliug
>ared a
redctefmf
ncd portion oftlm targct'
atne iscomp
tcrmiuate.s sm cmc onr
,s oft
llescarch blocksused by tho p
.ch
predrtermled nllmber matcbes brlween lbe one war
frt
t
ttf
is block *nd 21f O tTCSPODdiP:tatgetblf
xksLsnotreached.
stem oftravmrshagll
x fit
'
sqsecotld' thi
dllarl
dar
foe
ur
bra
gme
roups
lm metbod according to daicn 179 wlmrcin tbe
1. afler a prexl
elermined portion o e g
180. T'
pared a predwtrrm inr,d numbe.rmalcbe-s between qle prtcktermfned numerisone.
' *
oneRarch
block and t
heconmpondingtargctblocksisnot
1:1. n e melhod ac rding lo claim 179 wbexeip tlm
reacbed.
malclxs arerequired to bedenlic'
almatcbe-s.
166.'l'
be method ac rding to claim 165 wherein tbe
182. n e mettiod accordi
ng to claim 179 wtterein lhe
ptmdetennine.
d numberisone.
matcbescan introducolors.
1K7.'lhe method accordng to clai;n 165 whereizllhe:
183 Tbe methtxlatxordiag to cla.im l77 tlm slep of
mal
cbasartroquire,
d lo beidcnlicalmatcms.
compa.riagcomparessearcbNx kswtblargetblockswititin
168.e
fhe method aecordiog t
o chiro 165 wherein the the targetframc,aud whereintlw sltpofterminatin:terrnima
che.
scan intrcducclou.
nale.
s ed:coatsoftlx warcbblocl:
susr
.dbytlx stepsof
.t
169.n e metbcd accotding to claim 165 the ste of travtfN'
smgtbe fi1st&nd second groupsif aftcrA pmdetercompariugcomplressearctkblockswitlllargetblocl
cswl
?tbin miaedprlrliotleflbelargrlframeiscompa're..d olborooe.sof
ttl
otargetframo,andwbereia theslepoflorminalingletmi- tbesearcbblock.
srcsultin aprexletermined grcaterpercent-
naleaslxcificoaesefthosozrc:
hblocltsusedbytbestepsof agt ofmatcbo betwoca tbc one starcb block and tbe
traverangtbtftrst.secondalbirdAndfourth poups117,After
Apredetcrmiaedport
ionoftlm targetframt iscomparcd,
otbcrories olllIe search block.
srcsulliu a prcdelerminr,d
gmaterpercesugsofmatcheslxtweentheoncsearchblock
and thc corresponding targetblocks.
corrtspondingtargr.tblt
x ts.
1#4.'
f'
bcmetbodzccordicl
gloclaim 1f:0w'
hcrrintbcste#s
'
'w
US 2003/0081685 A 1
M ay ly2 3
19
185.'
lYe Inetbod according lo clakn 184whereklthe
sequcntialditfcrenlpesitionsdi#cr by a!rl
csla pledeter-
thatcaa be cofupressed'and
mineklBuml
xrofr
owsofbitsant
lprodeteruAioednt
llnberof
f()ratleaslcerta.
lnoflheadjaceatcompartdblockstbat
columasofbits.
186.Tlx method according t
o claim 185 wberrin the
predetermit
wd number of rows of bits t
s one :nd the
Iprrdelennincfloumberofcolumnofbitsisoue.
187' n emetbotsaccording t
oclaim !60 wbeiein atlea'u
one of
the seps of lraversit?g llw targel framo io thr
borizof
lta.
ldirectioa and lravtr
sing tbe urgctframein the
vorticaldirectiontraversestlzeenlfre targegframo.
188.n emelbod according o claim l87wberein:
'
adjacenlcomparedbl
ockstbereia
certainatl
jaccntcomparr.dblt
x;ksincludesallcerlainzdjaccn1t9c
artd bl
ocks
7omp
Tbe method '
according to chim 195 wberei
na
plurali.tyofsupersc!bl
ock ofnon-unifon'
n size arecrezted*
traversingtl
x entiretzrgetframeint
hohoi
izontaldifectioniucludesmakingrepeatedpaase.sint
lw borizontal
ll
za!rachizlcllltl
e.
scerlainadjacen!cornparetlblocksthereia
and wbtreinlheccrtainadjacentcomparodbl
ockswittlin
machoffll
epluralityofsupcfryetbl
ocksarc:notadjaceal1
0
tsksctiosatdiflkrenlvorticalposilienswithinthetargel
frarac;and
each ot
ber.
198.The mcthod Accordisg lo elaim l95 whcrein tbt
189.11tmetbodaccordingtodaim 188wbereiuadjacetli
tliftrentvorticalpositionsandadjacentdiTerci
n:horizoual
posionswitbiu tk
m targelfrRmodifcrby a,mtk
staprctletermitmd nl
tmberofrowsofbitsandptedetcrminednumlxr
ofcolumns ofbit
s.
191).n e metbod according lo chim 189 wheft:
ittthe
predetermined nvtmbor of rows of bits i
s ot
x aud thc
predetormined numberofcolumn ofbitsisonc.
191.'
rhemethod accordil!
g loclaim 188wberei:teach of
tlzr ster oftravr
ersiag is impl
erzmzged ttsing a di
fereol
mssorthread.
Proc
192.Tbcmethod accordfng to elafm 191w lmreineachof
inithlframeoftim plqrajityofsoqutatialframmsAnd
cerlaisdjacentcomparedblocksthalcanbecompressedare
represeot
ed using almke
. ,
d Iist.
199. 'Ihc mclhod acct
xdi
ng to claim 195 wbcrein 1bc
certaiozdl
.zceotcomparedblockstbatcanbecompresse.
dare
reprtscnled using a binarytrec.
2* .A methodofsearcbingforpalteraswithinaplurali
ty
ofscquentialfrzmes eachframecoruprisedofapluralityof
'lrix array,themel
bit
s arranged ia a ma
hod compzisog:
2
mz
n
n
e
r
z
pl
ur
a
t
i
t
yofdilfcrentsearch
cotnpariogna10%-.
blockswithin & refererlce frae to a targetframe to
obtain a plurality ofcxympared blocks,lhtlrcfercnc'
e
framebcingsetto afliniti
alframe oftbe pluralily of
sequentialfzames atld tbe targetfv.mc inftially tjcirlg
se;
tto asubsequeutframeoftbepluralily ofsequential
frames,tbe stepofcompe ng inclttding.'
obtaind
.ng forafirstscarchblock afilstwefg:lindfca'vmstbatoxistwilllin
tiveefaapetcentageofcomparL
thclarz
e
t
f
r
a
me'
''
'
obtaining,forasccond searcb bll
xk thatovcrlam tbe
firsl search block. a second weight intlicative of
anotherperceutage ofcomparisonsthatexistwil
bin
thc tafgetframe;and
. iflbe Iirslweigblancslbeseccmdwoiglg bol
.
b bave a
pcrceuugoofcomparisomstha!txcoed adetermined
tllrtshold discardingthatcompartdblockoft
llrfsl
'dw arcbblockst
andsecon
hatbasalowerpercvatage
ofcompArisotks.
201.n e method acoordir
zg t
o clajrs 7.G)wl
w rein tbt
compared blocks tbztcau l
x mpmssed are reprfa nte,d
usiag ali
nkodlist.
202. n e method according to daim 2 wbcrein the
compartd blocks elztcan bccomprtrx
scd are rmprescgr,
d
using abinary tKe.
203.'f'
he method according lo claim 2.
* wberein tbe
defermf
aodlhreslml
d Lsscl
ecablyadjuslable.
hw
V ay 1,2 3
US 2003/0081685 A 1
20
initiatiagaprcdiclivelbrcad lhalcomparcsartumbcrof
differeritprcdiclive search blocks baving ditfcreut
block sizes alvarious positious withkltim m atrix
anuy of tlm rcference framc with vari
otss corrcsporldiogprcdiclivelargclblocksin lhelargelframc
lo oblain a predicted optimum block size and a
predicted movemenldlrccti
on forthe targetframe'
and
initiating atraversaloflbetargelfrarrl
c in adkection
corrcsN nding lothcpredimed movemcntdimction
w'itlla scarch block having asizecorresponding to
lbrpretlicted optimmn bloc.
ksizo.
295.n c mcthod ac rding to claim 204 wbelein thc
prcdictcdopti
mum blocksizeiswitlliaaraogeof8x8bytcs
and i% xl?.ilbytes.
2:6.'
I7le melbod accortling lo claim 205 wbectin the
predicted movemcntdifection i
stmeofborizontal,vertical
anddiagoual.
zf)7.n e mcthod according lo claf
m 211wtwrein thc
predi
cted mov'
emdntdirectit)n i
.
soneofbori
zonlal> vortical
and tliagonal.
208.Themcthodaccording loclaim 2+1wbctei:l(
hcrzep
of iaitiating tbe traversal iaitiate.
s tb< traversal ttsag a
processortbread.
2&9.n emelhcd accortlisg toclaim 204whereint
bestep
of inithting the trw ersalinitiate.
s the traversal usiag a
pluralityofprocessorthreads'eacbprocerx
sortbreadlravcl
'
siog tbc targd framclbe prediclod movemeutdiroctkoc wilh
(ht prrdictcdcptilnum bltxk si
ze.
219.n emethod zccordiagtoclaim 209furtherinciuding
thestepofinitialicg furthertravcrsalsof1betargetframeitj
apotberdimctionlhatdtxsnotcorrespond to tbe ptedfctcd
moveamutdrcclion'
211.n emelhodaccordingtoclaim 210 furt
htrincluding
thestep ofttrmiuating ontoftbe initialtraversalsand tbe
furtbertraversalsbeforcttlaltraversalLscomplettt.
'f'hem ctllodaccordingto clairu21Owllcreirllhestep
of212.
lermi
tl
atiag ot
xmrs wbon a prtdclemincd oumtyor of
matchesofcomparedblocksisnotreacbedaflertravepsfng
lurali
tyofdieerestxarcbNocksl
odifferentposilions
P
wilhin 1)r.largc:
lframe;zsd
ia tbexepsof;
cotnparing apluralityofdt
fltrerl
tsearch blocksn'ithil a
mferrocr frame(o:targetframeleotnain4pluralilyof
compared blxlts.lbe refcrencefrauw being setto an
ilzitia!frame ofthe plurality ofsequentialframe.
sand
tbe targetframc initially beirlg setto a subscqucut
frameoftbepi
urziityofsequentlalframcs> thcstep of
compari!zg ipcludingt
travGlsing tlze targotframe in a.
Il
easthorizonlaland
trzversint ll
zt target frame,ilmluding bol
11 (Ne video
iDformation arid tbo zuuio inforroatioa i.
n a vettical
dinzcdon to conaparc oacb ofa second group oftbe
plulalityofdiEcmntseartbblockslodiFertntpositioas
wtjn tjx ufgu frzme.
21#. n emcflicd acmrdingtoclaim 218 wherein lla slep
o g kmludes travvrsiog tbo target (rame in a
of compzy
di
deo information and
agooaldk.
ection,irjdudingboththevi
tjw audio iaformalionato compareeachofathirtlpoup of
orss
tbopl
uraltyofdilereutxarchblocksto di/ereulpositi
wksjygjelargetframr.
220.'
rim metiltxlaccor
dingto claim 219 wberoiatl
x sttp
verticalJimctiorzsalioczrrntmlslbalaregreatertbau
ofcxh
mparing furti
mrinelude.sthe ste? oftravcrsiag tbe
a singte bit colttmn or bi1 row, respcctiveiy,to targetframe,inclading thoth tlw vidoo mformatonand tht
compare searcb blocks Io corrcspoacling urget audio informalfom tocomparcoachofafeurll
zgroupoftbe
bloclcswitbin lhetargetframe,lhestepoftravelsing pluralily t)f diFcrenlscarcb Nocks lo differtntpositions
rl
cludiag.forthos.
cscarchblock.
sandcorrrslxml
it)g witl
zin tlze targetframe &tdieerenlrotati
onalpcsitions.
targrtbloc.
k'
salan r
xlgcoflhGmatrix array.paddiug
221.*
11m melbodaccordingtoclaizn220whereiutbeszps
bitpositoas witio be search bloclcs aBd corro- oftraveoiug the firstgroupxllx xcoud groupytlm lbird
spouaiagtargetblocltsthalareoutsideoflbe refer- group al
xlflie fourth group arc operated on ia pazallel
onceframoandtapgetframe,rospectively wilhfdcn- operatioas.
US 2003/0081685 A1
M ay 1,2 3
2l
222.'lhemctbodaccordlngtoclaim 22lfurtheriucludiag
flm stcpt?flcrminaling1beaepofI
ravtrsiugoneofthefirsl
second thirtiaodfour
th greupbeforetermiciating tltsteps
Qftravcrsingtl
x othcrsofthcfl
fsl secood thirdant
sfourlh
22p.
3.XYrmrlhooaccording loclaim 221vbereintestop
g
orfou
couapacuag eoulparzs search blocks 4/1th targetblocks
within lbe Iarge!frame aod furtberincluding tbe ste;p of
ttrminatfng speciflc ot
ws of!hc search Ntxks ursc.
pby l
bc,
slepsoftraxorsing lheNl
'
st
asocond third and fourth groups
if after a predctermined porti
on,of tbe target f
lame is
compared a ptedctermine;d number matches betw er;n tbe
orl
escarcllblockand1becormsfxmdiag largelblockxisnot
vewbcd.
224.n t method accotding lo clAim 223 wberein thc
predeterm irled numberisonc.
225.T'
bc mel
ll
od according lo claim 223 wbertin the
matcl
ws arerequirod lobeideuli
calmatcbes.
226.n e metbc'
d accoltling lo clajm 223 wberein tbe
malcbes can inlroduceloss.
227.Tbe mel
ie accordizlg le daim 221 lbc stop of
comparngcomparessearchbiockswithtzrgotblockswithil
z
arl
dseceadgToup l
xforeltrmioaling1beslcpsoftraversing
tbcotbersoftheEr-;t4nd secondgroup.
237.T'
hemelllodaccordingto claim 235wbertinthcslcp
ofcol
rlparfng compares search blocks w'ilh urgetNock.
s
Avitlzi
zl!hr l
azgclframe and fuftberinduding the step of
1nuAalAg sptciEc ones ofthcsearcb blocks used by tbe
stcps oftravoa1g the rstand secoad groups if afler a
pfcdetcrm ioed poftion ofthe targetframc is copared a
preclermincd number malcbes betwetu 1x one search
bl
ock aud tbe corrtsm ndin targotblocksisnotrcached.
%mg to claim 237 wherein tlw
238 n e metod &ccord
prcdeterruinoclcumberisoae
239.n e met
bod according lo daim 237 wberein the
matcbesaro requircd to beidenticalmatchcs.
24G n e method 4ccording to clafm 237 whcrein (lm
Izlalches caa ialroduceIoss.
241.The metbod accordiug to claim 235 tbo stcp of
comparingcomparessearclzblockswithlargetblockswitNm
thotargetframc,aod furthcrincludiag tf
x stopoftermitlatingspeci
fico< softbesearcb blocks te.
exlbylbostepsof
travtrsing tlx firs:and secod gcoups if,afte;
raprcdetcr.
mmedportiocoflbttargetfrAmeiscomparcdsotl
x ronesof
sequentialdiffercotposit
onsdilfrcbydtmostaprexhler-
ingspecitk onesoftl
zesvarck
lblocksusedby llm st
cpsof
yaversirtg tllctirs'.secondvlbirdandfourthgroupsifzafter
a predelcrmiued portioa of tl
e targelframe iscompared
otberonesofthex arch blocksresultia a predclermiuod
greaterperceutagcofmatchesl
xt
wernthctmestarcbblock
azl
d
1
h
e
c
o
r
r
c
s
p
o
n
d
i
n
g
l
a
r
ge
k
b
l
o
. 219whermin41)esleps
12:.T'
1m mel
ilf
xiaccordingtocc
lk
as
im
groap are operated on in paraleloperatio%.
229.n emrthodaccordiog toclaim 228fk
trtherincluding
tbestepofterminatingtbestopoflraversiugooeofthefkrsl
second arltl t
hird group before t
erminating the stops of
traversiog (hcothtk'
soflhe Iirslscct?rld al
ydthirdgroup.
230.n tnaelhodacoordingtoclai 228 vebercintbestep
of coBpadng conapares seanch blocks vfth targetblocks
vdthin tbe targetfI.nAe aud funheraefudag ube Mep of
(orminating speciconcsefltlesearc: blocksused by 1be
slel:
s oftraversingtheflrst,second and lbirdgroum if,after
apvedettrmirked poltiou oftbourgetfrAmoLscompared,a
predetermtaed uumlxr malciws G tween ll
w;oti
e scarch
block azad tlw cozzespx aingitargel
to cbl
lai
cvm..kszxl
iszlol
wber
reaecbod.
in ttte
z31.x o awthcpd accord ng
pre
ter'
mi
rmmb
son
&de2.
f'
i
wneu
me
tlloder
zcial
rde
in.g to claim 230 wherTia dm
m.l
c'
hesam roquire.
d lobcidenlicalmalcbes.
233.n e mol
hod acttordng to daim 230 wherein the
m ztcbe.scan inlroducc1css.
234.'
llx methcd ccording to claim 228 tbt step of
'
comparinzcotnpare.
sscarcllblockssWtblargclblocksw'
ithitl diffoftntvcrticalpositionsandAdjaccnldiietentborizontll
tbeurgetframc.:nd furt
berincludng tbcstop oftcrminatjngs'pecificoae.
sof$h:sezrch blocks used by tbe stepsof
posi
totk
switNintbc targetfzamedilerbyalmostaprexhtennkl
odaumbcroftowsofbfe'andprtdotonnined nvtmt-r
--
predetermiaodporticm ofthclargetfzameiscompareU,otber
248.'
I'
bo metbod accor
ding to claim 247 whereic lhe
onesofthestarcb blocksresultin .predermine,
zlgreator predotormiue.
d numbor of rows of bits is ooe and lbe
ptrcetktageofmatcbesbetweenthconescarchblock anqlthe prodelcrined numberofcoluan ofbitjisone.
corres> nding tatgetblocks.
24# n c1
:6f
1)% accordiog lochirzl246.whcrrineachof
235.TberzlelhY aco rdinglocl.
zim 2)8hvberrinlbc;stgps lhe strps og tr&versktg s implemenle.d usirtg a dijtkrcut
'
of travcrsug t
he first group znd tbe second gtoup are processorthread.
operated on in paralleloperatious.
250.n emet
hod zccordiug toclaim 249wbcreineach of
236.'
Iheimcthodaccordil!:toclan 235fttrfhcrincludng theslepsoflravcrsii
ag is ialpkrucaled using agluralily of
thestepofterrflinalir
!g 1b(:slep oflraversing oocoflhefjysl difcrcf)tprocessortbrcads.
'w
US 2003/0081685 A 1
M ay 1,2* 3
22
267.'l-befnetbodaccordingtoclan266 wherefntlycstcp
ofmparirigfuElheri
ncludeslhostepofseloctiugadesired
amountofIoss tbateanbololerated wittkiu the repteseat
ali
o26
n.8.Tbe metimd according lo claim 267 whctein tbe
compared block iscoasideredidouticalto the searchbbck
ifdPercmntai;eOfbit.
wilbinlbolargelblock isalleastegual
totlw desired amountofloss
269.Tlm methtxlaccordinglocta;m 214wlmrcintlestcp
o compaziug flrtbtr includes tbe slep of selecting an
amtmnoflosstbatcanbelolerated within tbe represenlatior
2i.
70 R'
be rrl
fthtxlaccordingto claim 214wberciilthestcp
ofcomparing includoslhesttpsof:
irgtiating apredlctivoprocessorttwead to obtaia anestiwate ofa likeliboocloftnatcbe,
s bctwoen tbe sezrcb
block alcltbetargetf
zame:
'and
passingtbemqimattonto atleastouccompzringprocessor throad tbatfs uscd (o comparG (
he plurajty of
differeutsearchblockswithintlm referencefraa)oto(he
bargctrametoobLain tbtpluralityoft'omparedbloclls.
:.
71 n erj
w rhk
.
xjaccordingl
o claim 214wr
berelzllheslcp
ofcom'pariag compzrosalabitlevel.
z72.'
nm mclhcxlaccordingloclaim 214wheroi
ntbeste:
p
ofcomparing comparrs al3bylelevel.
273.A mell
odofcomprcssingabitsizeofapluralityof
sequsntialframes eac.
llframe comprir,d ofa plurality of
bits llzemetboclcomptising tbestepsof:
comparing apluralityofdi
ffertntsearcb blockswitkiu a
refereuc.
eframetoalargetfrzmetoobtainaplurahtyof
comparcdblocks llxlrcfrrenczframriniliallybringsel
to ao initizlfram'e and tlw targotframeinitiallybeing
xt to a substquent ftat
ne the step of coavaring
'
j
nautsng 1heslcpsof: '
260.e
n emetbod accordingtoclaim 255wbereinthestep
ofcompariog compares the search block with th: targel
frame usiz)gsublractoperations'
261.'n emothod accordingtoclaim 255whcreinthestep
fthedtsit'
edcotnprtssiorlratic isrcacbcd.thca lerminllti
ng tbestcpofcomparing;and
ift
llecjcsiredcomgrossiourationisnotreacbed,tben
tar&tlf
.rame.
'
US 2003/0081685 Al
M ay 1.2003
23
procrsslbe EIZCr
..
CIlistto obtain asupersetblock thal
includcsoverlapping comparison m atcbe..
s aildstorc a
rcsultiug couapressed franae'and
amemory forMoring tllcresultfag compcessed ff'
axrlc'
276.A computerradablcm edium operablc witb aprocesa?rcomprisiog:
a computerprogram store.
d on the compule.
! readable
medium om ratlle (o pcrforrrtpattem rctxkgfuli
on lbat
initiates a prctlictive thread to dctcrmlw a dtfallll
patlerndirection makcscomparistlusbelweenvazious
search blocksfz'om arefereucefralnewilhcorrespood.
Zg targclsea:ch areas ofa target 9ame a aliemst
horizontal and verticaldirectioas using a diffcrcnt
thread foreachdirection obtainscompafisou matches
as a linked lisl,process' Ihe linked listto obtain a
supersetbl
ock ttlatndudes oveflagpiug comparist)cl
matcbes andstoresa rosullingcompressed frame
+ @. # + *'
No.()V06-00114
ETREPPID TECHNOLOGIES,INC.
VS.
Ad
Ex.
t/tted:Fvbruaa 7 2006
ml
RONAL
ONGTIN R.,CLEX U-
By
.
,'
J'
-,Deptlt;
AW Ci
kt:(142* 3/0261929
Cl
e tReh EW .(X)2
M SIGNM ENT
OfU .S.O rizin PatentApplication
existingtmderthelawsoftheStateofNevadaandhavingitsplinciyalomceandplaceofbtlsiner,s
at94l0 Prototm eDrive,Suitc 18s Reno,N V 8951l,desiresto acqulre an interestthereini
* *+
N O W . THEREFORE,for good and valuable comsidmatiow the receipt and suffk ierkcy of
which arc hereby acknow ledgeds said A SSIGN OR does hereby sell, assign and tnan.
qfer unto
ASSIGNEE,itssuccessors,assignsand lcgalrepruentatives, the tillland exoltusive right title and
intercstto the said invention in theUnited Statcsatld allforeijn countries, as described in the
aforesaid application,and to the said application and to a11contum ations, divisions,reissues and
substitutesofsaid application, togctherwith the riglztofpriolity underthe lntcm aticnalConvention
for the Protection ofIndustrialPropmly, Inter-Am erican Convention Relating to Patents Desin s
,
a
And lndusttial M odels, and any other intem ational agreem ents to which the United States of
im erica adheressand M SIGN OR hereby authorizes and requests the ComrnissioncrofPatentsto
sue said I-etters Patentto A SSIGN EE, for itq interestas ASSIGN EE, its succe-ssors assigns and
lrx
,
egalrepresrntatives.
NOTE C'
l'he undersigned hereby authorizesPillsbuzy W inthrop LLP, ofthe above addresszto
Se'
I4 fuzthcridentification neceswary ordesirableforrecordation ofthisdocum ent.
Executed on the datebclow indicated.
K
Sl ature
' '''
Date Siane,d
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US 20020141590A 1
(43)Pub.Date:
O ct.3,2002
(52) IJ-s.cI....................-..........................380/277
(57)
(76) Itlvenor' DennisL.Montgoluery.Rono,NV
(US)
CotresrxlsdelyceAddrer:
Pill
sbury W lthrop LLP
1.
600 .PysousBoulevard
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SIpartment
ABSTRACT
A mcthodofprcdudngast
ream ofdigitaldata.'n emetNod
fncIudes dcznuiuf
llg 4 pl
urality of porriocls w'itllia lhc
streatn ofdigitaldata,such ttutaporlioa ofllestream of
digitai data fs cncryjlt
ed wfth arlence'pfon kcy tllal i
s
(21) Appl.No.E
09/823:278
decryptingasubxquentportionoftlzestrcam ofdigitaldata,
(z2) l7iled:
Mar.29,2.
(Kj1
Publication Clarxsification
(51) nt.CLT.................................--.......H> L 9/
bein:dtcrypted bythe:Anothtrdecryptioakey.'l'l
m metli
txl
atsoincludeslrasmittinglm strcazn ofdigitaldata,includ-
fngtheportionandthcstibsrquentporti
oo.
190
Set-up
decrypterkey
192
Encrypted
decoder
194
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User
US 2002/0141590 A1
Server
510
'
Obtain testsequence,encaderand
decoder,and encodedtestsequence
532
Encfyptdecoderand encodedtest
sequence usingset-up encryption key
534
Transmitset-up stream
536
FlG .5A
- :
x-
Oct.3,2002 Sheet6 of 9
U ser
US 2003/0141590 A 1
SOW O r
- -
Recei
ve setup stream
540
Transmitmonitored result
550
FIG .58
PatentApplication Publicatitln
User
US 2002,/0141590 A1
Server
558
No
Go to 510
Yame Machine?
562
Yes
FIG .5C
PatentApplication Publication
US 2003/0141590 A1
User
Server
Encryptdecoderand initialportion of
encodeddata slream using set-up
encryption key
566
568
Forsubsequentpackets,include headers,
m arkersand subsequentdecryptionkeys
572
Transmitsubsequentpackets asrequired
574
Decryptdecoderusing set-updecryption
keyandinstall
582
FIG .50
US
w ..
2/0141590 A1
()ct.3,2002
1
asptct,comprcssioolcchoqucsaretypicaElyusedinorderlo
elcaivclyMream more conlsnlon aper-transmissioo urzit
basis.
R0(j?) Takingintocnsidcrali
onaIloflhe7% issue.
srtsull
in cor
uplcx sctlemes lo ensurc jyotjjtj
io qualjty oj ybe
ffprfdtxcd es
vtntandRcttrity oftbe trausmi
xsion
( )
p
'
ratusforstroamfngdatausfngrotatingcryptogzaphfckeys. ptjtk:! I(Ijbe context of digital collular plones,for
iostance.asequcntx ofoblained digitaldata which rcprc-
encryptionalgorithmsarcwollknownwtt
icbtbecapacitylo
encrypt data'which encryplod data can then be safdy
t
aaas
in
rleb
drt
aryspl
ccc
ur
tiz
nia
ae
tio
wigl
wh
t
map
cra
lr
l
zi
e
doec
delode
os
bl
ation
bacl
koc
lh
or
nae
lrd
tao.rtit
'lation
to tl
change
.rswil
b lberebe'ing=acorre
aorolationoftbe
pseudoraudom numbcrand thctimethatbaselapsed.Ifthis
scbcmcLSl
ooked alfrom tbcx
rsl
xctiveofoucrvo
on tbat
gk
'
*bti
pseudotandom nufutrrisaslc
key.siryceotzce't
atk'
eyis
((*03) EncryptionofdigitaldataLsal
sowellknowo and
determined traasmasiocl
swhicbxcurtllereaftercanjyol
ea-
wlzatisknownasa.ukcy,-whicbisasocrttsoqucnceofbits
Lsttsedto encrypltbedigitalclala.Tbatsam ekcy.orversioo
ofil can tben lx:trausforred lo thesecuccdestinatioo Rnd
IASCJlodocrypl1bedalalbalbasbexn transm ittodafteritllas
lyeenencrypte.
dusiegacorrespondingdtcryptionkey.
(00091 Furtherconveoti
onally.whcnaudioandvideoarc
((*()4J Separat
canddtstinctfrom encrypti
onistbtstrei
am- slreamedfrom ascrvertoanead-usorcomputertbercmay
ingtranstnix
ssionarld reproductiou ofascquence ofrel4t
od
digitaldata also called an eveuttloroifl.Any sequenceof
ligilaldata wlwlhcrtllatdau ispartofalorx
slessotlorssy
transmission.can be considered to ma
.kv;up aa tvent.
Examplesoftberesultsoflypif
zalevents&r:movitsbaving
srqucnces of visualimages w'
ftllorw'
ilNoulcontiauously
cbangiog audible sounds and songs witb cootinuously
changing audibles'
ongs.Conlinuousevents suchasastrtam
oftoxtdat.tizatc:angesfrcquently,stock markctquotcsfor
examplepcrealso porx
sible.Standardssuch asMPEG havt
beeadevelope.
dr,othatdoviceswhich receivethestreamng
traasm iu ions typcally an end-usorscodnputer.can pzcog-
bepasswordprotectfou aodolbcrregtstratiooproccdaresto
verify t
battbeentlty recei
ving and reproducing the trausEui.
uiotli
sautborizefl.Tberemay zlsotyecodesombedded iu
tllc digitalclata which only allow thatdigilaldata to be
mproduced on a ccrtain typc of player,or cven more
spccilicailyon aspccilicplayetofacerlaintype.W bilethis
can prtven!unautborizzd accesstosomc cxtent thodigiul
data lhatmakes up the eventis in alostitwtauces I
x)ncg
lcfyptod.And ifcoctypti
oaexists lhateru ypti
on isprt
vidcd basod upon akcy tha!resides althe end-usercomPutcr.Accordiagly.such assyslem carlbe umpered with
Particularly lo the sopG licate -backen
nQe.
CIthctypeofsequenc.cofdigitaldata and t
ucy
eitto
g0010) Also,encryptionofstreamcddigitaldataisalso
tectmiqur.
s art used,then dtcompression mustafso take
placcvm tentialiy along with cncfyption,before the digital
dalaisavailablcrorrcadering.Iaconventionalreproduclion
procea s,tbcdccryplion,decompxrxsion and readering a:e
performed in asequentialmarmeron eacb packet.In tl
ze
conL
extof a digilalvideo rtproduction each packet is
lypically oneframolkalisreccivcd.Tl
w entire proccr
.soa
thatpacketmtkstbocompletebeforeasubstquentpackotcan
thcOlleralrd ttlxm .
caupot
oatiallygainunauthorizcdaccesslothertmaindtrof g0t)11) Accordinglypiftbeteproductionprocessbccomcs
theevma'pwlliclzcanbedamaging.Forilzstattcc,d
-duringtl
w
fit
m fiveminutesofamovie'cluriugwbichtimecommercials
arebdngrzasmittedytkterminetbesecuritymeasurestrn
t
o prevea'unautborized accessxthatunautborized usercan
polentiallygainunauthorizcdacceasto theentiremoviothat
willtxkshown thercafter.
(*061 Anothorchallengehasbeenthebandwidtbrequircd
j0012) Itwould be l
hereforr.desirable t
o implement
mooods asd systems'lilatcould more rcadily roproduce
anyspeedandtbenviewed.lhotsmpor4laspectinheret
!tin
(0013) Itisa!lobjectoflbepreseutinventi
ostoprovide
the(wentexperienccmuslbecimsidered.M aresultoftbis
'
>
US 2002/0141590 Al
OCt.3,2002
2
transmi
ssi
onsofencryptcddigitaldatathatmayormaynot (08231 FIG.4illustratesablockdiagram oflbeend-user
also be eucoded wilh sometypeofcomprc% iou routiue.
I
)(*t41 Iti
s afurtberobjcctofthe presentinvcnlionto
Withcon=
v'tntional'snd-usercompule'rsoftwaremodujes.'aulj
(1*24) FIGS.5A-5EIll
ustrateflow chartsoflbeprocesses
accorf
jug t
heplesentiuvention.
.l
ol
DETA II-ED DEscRlFn(.
)N OF 'ITIE
PRISIZRREIIEMBOIMMEN'I'
S
1#925) Il
zaccordanccwithtbepresentinvrntiou. astream
g(*161 Oncmeihod accordingtothepreseatinventionof ofdigiuldau isdescribr,d asbeiug traasmittod in tbe
producing aslream efdigilaldataroquiresdettrtzli
naliouof
apluralityofpol
li
oaswithi
nlhestream ofdigitaldalaysuch
lhal:portionofthrstteam ofdigitaldalaisencrypted with
anoncryption koy tha!Ls capablo ofbeiog decrypled by a
doclyption keyatld tlm portionincludesanolberdecryption
kcycapableofdecryptingasubsequentportion ofthestream
ofdigitaldata.A subsequentportionoftbestreanlofdigital
dalaiscucryptedwilllanotberencryptionkcythaliscapable
ofbeing decryptod by tbe anothcrdocryption key.M so
enclryple-d.tlm strtam ofdigitaldatai
stransmitted,includ-
ingthcportionandtbcsubr
equeatportion.
E(*17) A mtthodofdtcryptiug astrcam ofdigitaldata
IDacl
neaudacomplteroftboirownerbank-
!r
K 18) Otbermcllzodsandapparalusarelescrlbed asset
to40:-n pacticularlyoveranetworksucbastbelnterl
wtor
lhati
snotneccssarilyncedod.AswithconvGntionalstrtam-
foflhbrrein.
according to theptcscntinvention;
yccd notlyrfurtbc;
rdescfibed.
PIace alth1slcvclI
scveraIviewsandwl
wrein'
.
(20) FIG.1llustratesanovcrviewoftl
m overallsyslem
(00261 ilsbouldbenottd ll
zaltbopmrenlinventionoperatesataltvelthatLson top ofthetransportlaycrprotocol.
such as TCP/IP orVPN.Accordingly,operations tal
cing
(*21) FIGS.:
lA and28 illustratcdiagramsofaslreams
soflwaremodul
esthatwillIiIA witbthedecoderthalwillbe
and.inpadicular'lbevarioussoftwartmodulcsusodforthe
cncodng andcncryptionopcralionsaccordingto Ibf:prcscnt
transmi
tlrdwithtbeinitialportionoflbedigitaldataslream,
a.
sdescribed furtherhercinafter.
inveoti
on and theirrelatioaslip with conveationalserver
(0030) n edocryptionsoft
ware asisknown isoperable
softwaremodttlesi
US 2002/0141590 A l
'
OcL 3,2002
3
dccryplloflkeyassocialedwrhicbmuslberomcknown l
o lhe
decryplioasoft
ware.Accordingtothepreseutirl
vefztiou itis
aottbecctcryption/decryption soflwapetbatisnovcl sioce
manydilcreutlypesofeucryption/docryptiou softw areean
beust.
d asdescribez:
lberein butapanicularlyadvaalageous
teatttre of the prtsenlfnvention is the fnanner fn whfcN
decryptionkeysare used zndwhere theyaIelocated aswi2
bc dcscri
tvd furtllerhcreiaafler.
decryptioakeys252each hzvcacotrcsppudiflgsubscquenl
elz
clyption key aud wil have acorresgondiug key lenglh
suchtbaltbc encfyptioa keyaodcorresporl
dingdecryptiou
key witlcbange t
o operatc upon the samc corresponding
dala.Thiskoylengtisdcttrttlirledbascd tzponflctoissucb
as (6e desired lovelof sek-ugity,exjx)rlrestriclicms anJ
lypie:1processmg power aud cau thus varycoasiderably
szl
sllas fzom 29 Io 256 blts,orhighor.
()
(#B1) n e xftware moclules tbat w1
11lnk with the (0036) Inoncspeciik aspeaoftbepteseatinventioa the
decodqrarealsoconvcnti
onafaad asiscouveutfonalpractice,arcpreftrablyJavabased modulestl
zatareprogrmmed
to illstalltlm lransmilled stkflaarc-basot
lt
lectyder,aad lhea
allow fortheopcration,througl
zrunning tbtoxecuablcfkle
lbalmakcsuptbedccoderasdescribed bcreinaher.Itisalso
uotedthatwhilethepreferred embodimeatcontemplatcs!he
usyag<ofdataencoded by an encoder,whfcl
zisthen subse-
quentlydecododbyadoi
zoder,asdescritxtdlmreirltNattho
end-uxrcl
ietttcomputcr4% lslower,thenlsbortecsub-
dedlndll
zusrequf
ringd=odfng.
CRCO
sequentdecryplioakeylength isprcferably lz
sed such tbat
fortleperformance(llaf(I
m parti
ctdacctl
d-tl
sv compul
er
400 can provide tbc decryptioncan take plweattbe rate
(
il
u
srt
ra
e
e
amlar1y90
h
e- nccded':sire,as'
iskrh
own,foralongerI
bekryltngth'more
c*3
cdo2)
stl
w FI
diG.
gitaZ
lA
dat
al
sz
o
at
r
os2a
%xt
anup
d es
xt
or
mp
pot
r
ta
iot
np
sr
of
thccig
iilaidatastrcam 2$
)0areiilustralcdiuFIG.211.
P
fcxfssifl
: L%refluircd.F0rc'
xllmpkpWhilta
XW/ffUI
Pentiuax bascdcomputermaylx ablctouseJ
tmaximum
ofz56bitl
.andthuslmve(btkeylengthvarybetwerrl128
belwoen20 alxl40bits.
(00371 And,witbrespecttotbkssaam aspect,ifasl
zorter
decodetbltestdatasequence196,willcachbernonitorod
E(jtjzt;j Iurjuer(
joscspuou regardingthcencrypti
otl&nd
d
ec
ryspet
io
kceey1
ncencsr
yput
e
te
s
dpt
ecio
r
xihaat
sat uan
25
6b
lalt
ss4p0ow
fu
M6
pu
le
nyayIcb
ahbvle
to
da
ta
q
un
en
19
9z
6.a
Th
updd
ccl
ry
od
nt
k1
e9
y41a
9t
2
se
wda
ma
xi
it
mum
of
bie
tsr
,
al
nd
th*
usc
ho
am
ve
tl
cr
kr
e
no
gt
ar
y
erformaace epd-user compulezs lo proce.
ss tbe lestdata
p uence1.96.n elestdatasequencet96 i
sapredet
ermised
s ueoce ofencrypted datatbatisused to testtbe enc
l-tu
ser
comp
cst
eq utcr's4(* abilitytodocryptlm recdveddau.n ist
data soquezce t96 is prcferably of a flxod lenjtth and
inciude
.sacorresporzinglestcl
ecryptiou kev.'
n e tfmetuat
theenduxrcomputer4oarequirestoinstal1
-thetestclectypIioflkey 192 tkcq'
pltheles!dccederl94 acddecryplarl
d
and used to obl&in amoniyorinform ltionthatirldlcalesthe
performanceofthatend-usercomputer which LsSbencommuaicated10thcserver1e0antltusedindotcrmioinghow to
encrypttbe data packcts240 as willbo described f'urther
bercinaftcr. 'J'bc biam tbat titc cad-ux r com pulor 4(*
requiresfofustalltllctesldtscrypfoakcyl#2canaLe;obcparl
(0039) '
Tlm clecoder220dtcodesthedatawil
hinthepackets240 thatcontains tlecontentrecognfzedby tlzedecoder.
'l'hedecoder22Bcanlx foroxamplo anM PEG doooderin
lllrcasctkfvide.o anM p3deccderinlhoc.aseofaudio aGIF
sx nding dot;
cdcoperatkoa,asjsknown.
po
nion 21
2#*a
idc
rllie
tuof
arzl
(c
sk
t
lc
s
MPEG
MP
orlWI
NZI
Psa1
nhdott
hyp
ein
mbs
el
rreof
pa
el
tl
sa
ia
E(Kk*) Alsosbownal'
etbedatayackotsM()-1 248-2...
tkcedingtbedatapackots240-1240-2...240..
nwltl
ziullw
pqrlioa242 isanunoxryptodbitsequcnce,pmferablytwo
(*35) Atvo df
sposedwithfn tlw digitaldatasrcam 200
aremarkers250lbatidenl
fyasubsequontdecryptionkeys
'
US 2002/0141590 A1
Od.3,2 2
4
Packeta.
tsome afbitrary location.Thi
s markcr250 is a
redetermincdbitsequcnce w'
Izi
ch willEl
cqelherwi.
cr occur
P
in tNt uncncrypted digitaltlata wbich cloes nottlavt arjy
'
tbodatathallho ruatker250
c
lzadri
a
eci
st
ha
t.
ar
i
mi
(or
is
sc
pt
os
es
dtic
wi
l
Nin
'e
l'
hs
s
I
nla
ar
rkc
250,asdcscribed further
hereiuafter tsused lo identify thattbe nextstringIafdau p
baviag a bit-longth corresponding to the lengtb of lbe
decryplionkcy witlbothesubscquentdecryptionkey252so
(00451 Tbepresentmveationincludcssoftwarcmodules
ll
zatarepreferablyJavacopliauland zllow for1h0various
modulosto interact,inam anncrasw111bedcscribodherein.
Wilhin(heend-usercomputer.aaativodecodermodulewill
bepre-inslalled by a userin A conveationalmarmer.n e
nati
vedecodermodule indudts llle hooksinto otlmrprogralusllaatallowstbeproreutinvcntiontocom muuicalewitlz
otbsrstyftwa:cprogfams.asnoted alxweaod L%known.
thattllcond-uscrcomputcr40bcanrecogniz.
etbesubwequent (8046) Stillhmbermore,inauyend-usercomputer400,a
decrypti
oa kgy.W hil? the localion oftbt markcr25@ and
(*42) From tl
ztabovedcscriptioapitwillIx apparentthat decodcrard thatkeyisremoved suchtbatthcsubsequent
oneaspec'
tofIlm prcsentinvcntion isll
x usage ofd'
derent
kty isej
fectivelydcstroyod.
decryptionkeysfordecryptirtgvariousporti
onsofthedata
Mream.Inanotherasped .themultiplekeysaronolresideul
cm tlx ond-usercomputer110' butarcresidentatsolneother
looalion,whetbcrtbatisaserver100,wlu.chisprcfcrrrxl,or
a CD> as describe.d above.Furthennore> itf
s prcfcrableto
use A real-time tncrypting operation asdescril
x d hereinp
w hich can thcrcby take inlo coizsideratiou the processing
capabililics oflhe cnd-usercomputef4:0'alllmugh itis
apparco!lhalmaz)yaspoctsoflheprcsonlnventioncouldbc
implemcnled if lhe enclyption wtre preproccssed.In a
furtherxspect,subseqtientkeyscan bo transm illed atarbitrary locatioas.Real-timeeneodingcan also be performed.
tion tvingPerfonued.
i)
tjtj4gj Illitially,assbownbyslep51@inHG.5.theuser
Wgjxntlamessagctowcvcr300requostingservice.Iuthat
mlrh
sagcy W hj
oljcas bean HTML merssage,forcxampl
c,it
Ls proferabjc to iucludc ideutifying information,sucb as
rlamcy a.ddrr.ss1buliug uformatioaycrtditcardnumberznd
the likc. Atso. svitun thatmcssage w.
11be tbeTCP/IP or
otI)er oet
work addreas thatcorresporuts to the end user
computer4f)()tjkatwfllcorfjmuicatowifllflm xrvrr3t*.
'
28$1491 M S'
IDWRbyMep520,tbeserver.upoareceiptof
the merxsageiaMep 5t()a willprocesstbe requestantlwBl
memory,interfaeochipsandlllelike.Anillustrationofthe
(t/(j50) '
1Xeendusercomputer4* asshoFnbystep522,
.
w111rcccivtdecryptionxlftwaro and'linkl
ngmodulr.
strarrm
mittedduringslep520andiustalltllcrn.Preferably,end-uxr
c
omputer4* (lleasend amessdgeiadi
callgto tbeserver
in
step524 indkatingtintthisiasullation wassuccessfui.
irnplcmentedusingcallsloconveotionalsoftware.'
IXeead- E0051) n ereafter.tbeservor3t
)0 instep&% ,willdel
eruscrcomputrr4% can operalo using aconventioaalojxrating system,such asWindowm Liuux oremY dde,d oG rating systems. along with couventoaal software
applications.Havag parucular perncncc to the preseut
wentioa are soflware applicatioms tltatalow fora.
u coduxrto trark
smit aod recei
vc data in aecordancr witb an
eslabl
ishod protocol.such asTCP/IP.as nottd abovc.n e
pmsrntinvention is lhus ablclo hook into and lhascommunicato wilb sucb softw&re appl
k ations using known
teclmiques,in orderlo ol
xrate in conjt
mction withsucb
sofek
varc applicatfons.
196 as set-upstream 1O .
'
<> .
US 2002/0141590 A 1
OCt-3,2 2
5
(
(P5Z) '
l'bccuduKrcomlmter400willtllenpas.show'uin
step 540 rocseivelbt:sctup stream 199.'fherl assllown in
s
lrtaln2* isdecrypttd.Afterdecryption.docisiotlStcj
l566
follows and thcoud-tzsercomputez'x arclles fora marker
step542,itwtlldetecttheunencryptcddecryptionkey 192
andthedecrypteddecodor194aodsel-uplvstsequeacc196
inamannectha!isconventional.Step544follows,atldthc
(00571 ztsshownby586ifno(narker250isfound,tben
ecduseroemputer400willtbeniustaillt
lesd-updecryption
key l92*mooitoring thl time needod perform lbemstallation.n ereaftsr*theendusercom puter400witl'instep546>
dccryptthodecoder194usingthcrm -updecryptionkcy.and
monitor the timc taken.S2p 548 fol
low, and end uscr
computer400willdecryplanddecodethetestsequence l96
similarlyIrlcmil
oringlbelimrzredet
llf
)df,thW.A.
DJDSlef' g005:1 1f,bowever.aarker2.
50isfoundirlstep5#t;tbe!l
550, lheend ttsercompuler4* willtransmit11
w rtsalltsof
llw decodtriastallatioa asdoperationsasdescribexlon the
tcstscqueacetotbeserver3th0.
(s31 Thereafler.server3* wilkinstcp552,receivethc
kryarclocatcdioordcrloobuintllc:subs/uenldecryptioa
key,and tbalsubsequentdecryption key ls lben installed.
Prefefably jnpaz'
ajj
tuwk:tl
w oporalion ofstep590,stop
rotationpcriodthatsllouldbeassociatedwithltt
isparticular (0059) Once11w dalailmsbeeodecodmlfortlw packelas
e
lxw e.
a
aresultofS4.
eIy586'theend-usercomputer400 wiilawaita
Subsequrntly lransmitted packetfrom tbe server M 0.As
sbown by step 592 w ben roceived asubsequenlly trans-
aod kry rotalien perfod wilh lhc particwlaread-ttscrcnm puler4% and slorethisinfonnationforusagewben (
ll
eend
userdcsirestoobtainastrcam ofdigitaldala2% .Whenlhat
occurs,lheenduscrwilltransm itam crxsageviaanend-user
computerZIOIIto tlm server3* roquestiag asN citicMrtam
ofdigiu)dala,asshownbyslep558.Insttp560.lbeservor
recognizos tbc user aad the requost,and tben itlstep 562
checksto see i
fthe rcquestsLsfrorntl
'
l
e samecomputeras
'hecompulertha!forwhiclltlokeylengthandkey rotation
peri
odbasbeondetermioed.Ifsolhcnslcp564follows.If W06B) n ereaftef.llleprocrr
ssreptatsfrom stop586'with
not.thea thekey length and kty rotation mustbe recom-
!;uted,and lheuscr s
,
zpformaliooalready sl
oredwillprefcrably notnecdto be
entered again.
(* 56) n eendusercomputer400willtimnrcceivethe
tb* CBd-ttscfCOl
I1PIItCE Rarching for a markerwithin thc
decrypted datalbathasIxen transm itted.
pri
sing tbc step of:
det
rnnirting aplurality ofportions w'
ithin tlm strem of
digitaldata,suchtbat
am rtionofthcstream ofdigilaidataisencryplr
.dwit
h
anencryptionkeythatiscapablcofbeing X crypted
byadecrypti
onkeyandfbm rtion includingtletrin
ariothordrcrptionkcycapabk ofdecryptingasub-
>x-
tJ$ 2002/0141590 A l
ON.3,2* 2
6
withiocachofthepluralilyofsubsequentportions,cxcepla
lastsubsequentm rtion,tberc is inciuded tberein acorrespondiag anotberdecryplioukoycapablo()fdecrypting tlze
corrospondiag subsequcntporrioa oflhostream ofdigilal
dala.
3 A motbod accordingtoclaim 2wll
erointheencryplion
key'and cacb anothercncryption key isdiilkrentand lhe
docryplion key aud each auotberdcce plion key iscorrespondingly dilferent.
4 A methodaccordiagtoclaim 3whcre;
incackenernltion
k 'eac:banotlwrcncryptioa key,eaeldccryptionkey and
tc
.
yb
,decrypl
a
ioa kcybavea samekcy leaglh.
e
5.A m orhodac
cl
einat
eucr
icor
kding toa
iaimn3
eswohe
ftrl
m
nbe
otl
w
reypt
ncri
yon
pkoyanddecl
yplon oy
ccr! t
n
o
d
i
o
n
k
e
y
s
h
a
v
e
a
d
/
e
r
e
n
t
k
e
y
tioakeysard another ecryp
length.
6.A mothod accordiog tochim 2wherein111cdecryption
keyandeacbanotberdeclyptionkeyisIocat
edatadifferent
locatiortwi111in elc:portiotz.
7.A motlxxlaccording to claim 2 wberein each portion
basadiffertntbitsize.
:.A metbodaccordingto claim 2whemin t
bepluralityof
por
t
i
c
ps
a
r
o
t
r
a
a
s
mi
t
t
e
d
i
n
a
n
or
d
e
r
c
o
r
r
e
s
pondiag to a
layback sequcnce.
P
9.A mctbod accordingtoclaim 8 whem inthecllcryptiou
key
and each anothereoclyption key is deerentand (
he
d
tion key and eaclauotlwrdecryption key iscorreO P
spondinglydiforenl.
1@.A method accordiag to claim 9 wberein eacb ofthe
portions coatains a pluralily ofpackef
s' and eacb of the
packetsconl
ainsanon-encrypcd hezderidontifyingwhich
decryplion key to useto decryptthatpacket.
H .A methoclaccordf
ng to claim 2.furfbcrincluding a
marlmrlhatim mediately preiccdos the dccryption key and
tach znotherdecryplionkey lo allow idenliflc4tionofeacb
anotberdecryption key within tlle m rtion and subx quent
portions respectively.
12.A metbod accordinglo daim ltwbcrcineachmarker
and thecorme ondingdecrypti
oukeyoranotbtrdecryption
keyiseucrypted n (110same mannerasdleportfon iow'
hicll
itiscontaioed.
t
ostep oflransmittfnglhcsream ofdigjfaldata tbt:stcpsof:
transmllting aset-up stream includiog anencryptod tesl
decoderand an encrypled aud encoded tcstsequeuce;
alld
rocciviagan acknowledgemcntwitb monitorinformation
indi
cativeofperformanccofaucnd-uscrcomputcr'And
determining ake lerlgthand akey rotationperiodbased
I
upc)n the monltor iofbrmation
2.8.A method according lo claim 27 wberein themonitor
infprmalionprovidesa!
lzmotmloflimerequiredtodccrypt
all(
jiugtallthe deception key anddecryptand decode the
testsequenc .
zk Amethodaccordingtoclaim 26whoren,anencrypte.d
15.A umtik
odaccordfnglocla.
im 13whereutheeocryp- e
ucttabledecedtrisiocluXdfntimjyortionoftll
estream
ofdglal data, ll1e eucrypted cxea table decocl
er,wben
tionkeyandeachanothercncryptionkeyisdilerontand the
doctyptioo key and each Raotberdecryption key Lscormsm ndinglydi/erent.
16.A methodaccording lo clakn 14wberein eachofthe
portions contains a plurality ofpackcts,and oach oftbe
Packotscontainsarlon-encxyptedheaderidentifyingwhicb cxecqllabledecodcrcanbodeeryptedusingtbedecryption
docryption kty o tlse(o decryptthatpacktt.
17.A metbod according toclaim 16 furl
berincluding a
markerthalirnmediately precede
.s tho decryption key and
cachanolherdccryptionkey toali
ow idenlift
catioa ofeach
atkotberdecryption kcy within tlm portion anclsubsequent
porlions,respedivdy.
18.A Elwthod accordingtoclaim 17wbereineach markcr
audthecorrespondingdecryptionkeyorauotherdecryption
keyLseacrypte.
diutbesamemannerastheportioninwhich
iliscontained.
key.
31 A method according toclaim 26wbereialht portion
audapluralityofsubsequentponionscompri
re ti
m pl
urality
ofporlonsgaodeachoftbeplurality ofsubsequonlportiol
zs
ksoncrnAle
.d with aeorresm nding znothercncryptionkey.
and within each oflho pluratily of subsoquentportioas,
exceptaIastsubsequcntportiou,thcrti
siocludingtil
fl'
ein a
correspondinganotherdecryptf
onkeycapableofdecrypting
thecorrespoodingsubsequeutportionoftbestream ofdigital
data.
u s 2002/0141590 A 1
Oct.3,2(02
7
mukr:
rand thocorrcspondin!:dccryptionkeyoranothcr dxryptionkeystoallow idemicationofeachofIheplu-
'
tion key Ls encrypted lrl tho same manller as the
portion m w lxicllitiscontailzod.
'
'v
US 2002/0141590 A 1
Oct.3,2002
8
recelving atlot
he.
rporlion of the stream of packets of
digitaldala the anotberporliou being eucryptod witb
another encrypli
on key lbal i
s capablo of being
dccryptcdby thosubx quentdecryption key;arkd
decryrptlngtbeanotherportionof(bt.stream ofdigitaldata
using the subscquentdecryptionkey.
7;. A melbod according to claim 69 wbereintheportion
arl
d tbeanolberpoflioneach includt aplurality ofpackels
and eacizof lhc packots contains a Ilon-ectcrypted lloador
idcntifyiog that thc decryption key and the subscquont
decryptioo key, respectively.should be used during the
respecliveslepofdecrypting.
71 A m ethodaccordingto claim 70 wbereintlx step of
.
idelltifying includes tbe step of Iocating a m arker tbal
im medialely precedeslhesubsequentdeczyption key.
72.A mcthodaccording to claim 71 whertin llm step of .
installingstorestbe,subsequcutdecryptionkeyatamemoi'y
addfer'
.
ilocation tbati
'
scl
iTerentfrom thotl
ocryptionkey.
73.A metbod zccording lo chim 71 furlher including
addltionalsteps ofrecciving and decrypting the another
portion and for cach addilionalanother portion tberc is
includcd
a stcp ofidentifying each additionalsubsequentdecryption key:and
astepofinslalliugcachaddilionalsubsequeatdecryplion
kcy,lhestepofinstalliog includiagthestepofstoring
eacbadditionalsubsequealdecryptionkeyatamcmory
addressl
ocationthatisdt
ffereatfrom tbeimmediatdy
PfcG dinijSllbsequcntdecryptionkey.
74.Amttbodaccordi
ngtoclaim 73whereineacbmomory
addrerxslocalion foreach addilionalsubsequentdecryptiou
tcstsequerxx .
key is dilferent.
traasm iuingaclocryptionkoythatiscapabloofdecrypting
aa ilzitialportionoftheslream ofdigitaldata'
'aod
receiving anacksowledgementindicatinglhatthodocryption key hms be-en properly installed on an erld-user
com puterlhatwillrecsive tlm tralxsmittetlstrcam of
digitaldata.
65. A m ctbod according to daim 50 ftl
rtberincluding.
Pri
o
r
t
o
s
t
e
p
of
t
r
a
a
s
mi
t
t
i
n
g
t
h
e
s
t
r
e
a
m
o
f
digitaldata, tlw
.
slepsof:
transm itting aset-up stream includiug anetlcrypte.d test
decodorand ancncrypted andenrrde,d testsequencc'
(j
'
aa
exemzlabl
e docoderLs included ia an iatialm rlion oftbo
recciving a porti
on oftbe stream digitaldata'the Iirsl
portiorlbeingcncryptedwitbanencryptionkeycapable
ofbeingdocrypted by adecryption keyand includng
a subsequontdecryption key capablc ofdeclypling a
subscqucntporliou oflbestrcam ofpackels ofdigital
*
data.
x
decrypting tbeportion oftlm slream ofdigilaldatausing
tbe decryptioo key'
US 2002/0141590 A 1
Oc1. 3,2002
9
dilrercutde.cryptionkeyatamcm oryadtlressIoca!iofl(l)atis
tliikrefltErom tbe from tbc imnediat
elyprecedlng certain
tlilferentdecryptionkey.
79.Atnotbodaccordingloclaim 78whcreineachmecuory
a
dld
orlkeyis
di
frmssIocation (oreacbccftain diltkrellt(lecrypti
erect.
80
hod according Io claim 79 whereineacbportion
i . A mot
nclude
.s a plurality of packds,and cac.
b of !l1o packets
c
zryptt;tltwadeidentifying tbt.ikcryption
kontaias &oon-ont
ey
tsbouldbe uredduring the step ofdocrypting.
81tha
. A met
hod according toclaim 75whereia thestepof
r
iving furtherincludesthe stop ofstoring each certaiu
de
ic
Tc
ntdocryptionkoyalamcmoryaddre.sslocationtbatis
diTor
cre
entfrom lh from theirl
amcdiat
ol
y prcceding certain
diFrenldtcryptionkey.
&2.A metllod accotd
t)gtoclaim 81. wbereiaeachmtmory
acl
tlressIocatioaforoach cerlain di/erctl!decrypttonkey is
tliferent.
#3. An apparams forproducing a sa am ofdigitaldata
com pcising:
meamsfordoterm ining aplurality ofN rtionsvvithinthc
stream ofdigitaldata sucb lhat
apoctionoftlestream ofdigitaldalaisencryptcdwth
anoncryptioakey tbatiscapableofbeingdccryptcd
byadeQTyPtionkeyand(bem rti
onincludiagtbereia
aoote rueoeptionkey capable ofdecryptiogasut,scquentportion ofthcslroam ofdigitaldara and
lhesubsequeutportion oftlx slream ofdigiraldalais
erk
cxypted wftlz laotlw eu yption koy tllz.t is
capableofbeingdecryptedbycr
theanotherdectyption
key'
and
*
means fortransmittiug tl
x stream otdigiuldatap indud-
encryptionkeyand ewlzauotberencryptionkeyLsdilcront
decryptionkeyandeacbanotbcrdecjyptionkcyislocaledat
adiFerealj
ocalion wilhinoachportlon.
% .Aa zpparatus according to claim 84 wbcroin oach
ortioo basadifereobitsize.
P
US 2002/0141590 A1
Oct.3>2002
10
'
decryplion key.
112.An apparatus according to claim 1t)7 wherrin tho
portion andapluralilyofsubsequenlportionscom prisethe
pluralityofportioos,andeachofthepluralityofsubsequent
portionsisoncryptcd with acorresponding anotbcrtncrj'ption key,and witbin eacb ofthe plurality ofsubscquent
portions'except&1- subsequentIxm ion>tbereLsmcluding
llwrein acorrespoudipg anotberdecrypliorlkeyeapabltof
decrypting tbe corresm nding subseqttenl ponion of the
stream ofdigitaldatz.
H 3.Azlapparatusac rding to claim 112 wherein
'
tl
zeanotberdecrypti
on kcyislocatcdwithintheportionat
a locat
ion thalpre des lhe cud tbe portion by an
amount tbal will easure tlx rom aining travusm ission
timo of lhe portion afler transmission of tbc another
decryption key Lsgrcaterthan alatelm ym'easurem mut
indicati
ng au amounlof tinw required to dccryptand
inslalltbe decryption key;and
oach znollzc:
rdecryption key is located willin each subwquetl
tportion atanother location llatprecexles the
endtbesubsequentportionbyanotheramounttbatwill
easure the rcmaining transmissioa timc ofthatsubx qucntportion aftertraasmission ofr
llecorrcsr nding
arrtllcr ckcryption key is grcater than tbe latency
m easuxm ent.
114.An a.
pparamsaccording to claim 112wherein eactl
cncryption kty is diFerent and eacb decryption key is
corrcspoadingly diferent.
115.An apparatuszccording to claim 114wherein cacb
enclyptioa key,each aaotherencryption key.tach dccryptonkry and eachdecryption key baveasame keyk nglb.
16.An apparatus according to claim 114 whertin the
.1
encryption key and decryptionkey andccrtaiaonr.
softbo
auotbcrencrypli
oukeysandanothcrdecvyptionkeyshavea
dlferentkey leogtb.
correspondjng(
jxgysionkoyiaoachdiFeren!portionisnot
located atasam epan oft1:oportion.
!26. Anapparatusactording to clam 1zswherein each
portion basaditfcrcntbitsizz.
1.27.An apparatus accordiag to cIaku jzrjwherein tlw
pluralityofpor!jorlsaretraosmittediu anordercorrespondingtoaplaybacksequence.
128.Anapparatusaccordingtoclaim 123w bereincacbof
lheportionscontainsapluralityofpackess aud eacboflbe
packelscoatainsanon-encrypled headorid'cnl
ifyingwhkc1)
decryption keytousc to decrypllhatpackct.
129.An apparatusaccordinglo claim 83 wberein:
tbeportjon kmmedjat
elyprrcetl
esthesubsequentportion;
and
theanotlzor(kcryptionkeyisIocatodwithiotbeportion at
. location tbA.
tProcedu tbe ttld the portion by =
amotm tthatwill enmzre the rcm aining lransm ission
time oftbe portion aftertransfnissioa of tbe anotlmr
xjoftiam aeede,d
cryption key isgrcatertjlanaoerit
todecrypt41 installtbtanotbt'
rdt;
cryjltoa kcy.
13:.Anapparattl
saccordingtoclaim 129wbereinoachof
theportionscontainsapluralilyofpackcts,andcachofthe
packetscontains& I
xm-encrypted headeriderdfying wu ch
decryptionkey touseto deceptti
la:packrt.
131.. A trans.m ucxsjx apparattlscomprisingr
meansforsegmeuting asl
rlam ofdi
gitalcontcntinto 3
Pluralilyofm rtioas;
.yofportions
meansforinserting,into eachoftbcplutaht
exccpla1* Iyortion,oneof&plurality oj.decrypuon
keys tbat*111be usable fordocrypting asubsequenl
x rtion toobtaina mocl'fie.dstream .
A
'
meansforeocryptingeacl
zportionofthemodifie,
.
dstrcam
witllanencryption key capableofIxingdecrypte.
d by
*> .
US 2002/0141590 A l
Oct.3,2002
1l
acorrejpondingoneofthcpluraiilyofdccrypllonkeys
to obtam a.pluralily ofencrypled portions'
132.Ana?paratusacoordingloclaim 131whtleincon-
rncansforrccclvinganacknowledgementindicatingt
bat
thedecryptioa key hasbeen plojm flyinstallexlon an
end-user cornputer tbalwillroeeive thc;trarjsmittcd
stream ofdigitaldata.
146. Anappatarus According to claim 131 farther:
mcaas for traremitting a set-up stroam includiug an
cnce pted lcsldeeoderand anencovttd andrncodcd
ltulSeqtlcllf7
c:
.and
y
secuti
vcportlousare enccyptedwith aditlh enlencryplioa
keyand capableofbei
tlgdccryplcdwilhadifferentdccryptionkey.
133.Anapparatusa ordingtoclaim l32wbcroineacbof
tbeportionscorttainsapluralityofpackcts.andeachofthe
ingamarkortbalimmediatclyprecedeseachoftbeyurality
ofdecrypt
ion keysto all
ow idcnliticati
on ofcacb of tl
w
lurality ofdocryptionkeyswitbin cacbportion.
P
135.A.
tu
ssac
di
tooc
13
1wb
crc
cain
of
tiuappara
la
in
acpolr
u
ranlg
ity
flz
pi
amcke
ls
aud
clt
aa
ocfbt
h
e
thcIxjr onscon
'uch dccrm tion
packets contains the headericlcnlifying w
kcy lo uso l
o deczyptl
halpacket
136..
M apparalusaccordiugtoclaim 135wbereineacl
of
thcm rtionscontaiusapluralityofpackcts'alxleachoftbo
packets coulains the headoriderltifying which decryptiorl
key to ux to decrj'ptr
hatpackeL
137.Azlapparatsaccolxliilg (odaim 13t;ftrtllorincludingamarkertbalimmediatelyprecedeseachoftheplurality
ofdecryplion kcys lo allow idcntification ofeacb of lbc
pluralityofdecryplioo kcyswithin each N rtioa.
138.Anapparatusaccordingtoclaim 131wberelneacitof
tbem rti
onsccmtainsa pluralftyofpackets andeachofthe
packet
s contains the beaderidentifying whi
ch decryption
kcy lo use to decryptthatpackcl.
139.An apparat
usaccording t
o claim 138 furthcrincludirtgamarker(latimmedialelyprecedeseachofthepluraliw
of decryption keys to allow identitication ofealzh of the
lurality ofdccryption keys witbin oacb porlion.
encryptioakey,eachznotbtrcncrypti
otlkoy,eacl
zd
12aldata'
stream ofdipt
'
141.M apparatusaccordi
ng toclaim 131whcmin the
eacryptioa key and dccryption koy certain onrsof the
moausforinstallin!thesubscquentdecryptionkeydata
Priorto com?Ielhon ofdecf
ypting tbeportionofthe
thoIjuralftyofdccryptfonkcysfsIocatedata.difrerent
e
ncxl
ymg
yloddewi
tl
zanotborc
ncruybpstci
o
nkeythaliscapablc
ofl
crypttclby ll
w s'
queatdecvyption key;
anotbrencryplionkoysand anotherdecryptionkeyshavca
di/ertntkey lengtb.
142..
* apparatusaccordinglochim 131s
vbereinei
acb of
locatmn within eachm rtion.
143.Aa apparalusaccording to daim 131 wbereia each
portion bas atllrerentbitsizs.
144 M apparatusaccordin to claim 131whorein tbe
lerali.tyoflxkrtionsare (l-aasml
!,
ttedinarlordercorrcspoud?
lng to aphlz
backsequcnce.
145. Aa apparatmsaccording to claira 131furttmn
meansforlransmittin.jadeqypt
iookeythatiscapabltof
decrypting an i
lzitzalportlon ofthe stream ofdigiul
data;and
stteam ofdigltaldata'and
means for receiving anotherportion ofllze strtam of
packcts of di
gital data, the Auottler poltion boing
aa(j
mC:atl%f0fdecrypting tbeanollmrportionoflitestream of
digilaldala using 1% su
enldcczypt
ion key.
151.An apparalus according to claim 15O whorein lhe
Porliol
laDd tlle aoothtrportion eacb include aplurRlily of
Packcts.aad each ofthcpacketscontaiusa non-encryplcd
US 2002/0141590 A1
Oct.3,2002
12
153.An a.
p?aratusaccording toclaial152whorci
n lhe
slep ofinstallmg r
'
tore,
s thesubscquentdecryptioakey ala
.
memoty addressIocation thatLsdlffertntfrom thedecryp.
tionkey.
154..
An apyarattusaccordin! l
o cl
aim 152 furtberthe
mtansforrecmvingand decryptlugarccapablcofrecei
ving
anddecryryptingaddllionalanotberporllons,anfltbemeans
foIloslall
ingstorescacb additioualsubsc ueutdecryptiou
key atamemoryddresslocationthattsdx erentfrom the
i
mmcdiatelyproccdingsubscquel
u decryplionkey.
No.CV06-00114
Ex./&
,Deputy
'
'v
Al
tyDktJ042503/02/3332
Cli
entRef' e7'
V-O12(U)
M SIG
V.P S.Orip'aPatmitApplication
W H EREA S,theundm'
si
p led
ceonNevember21,2001,underSmalNo.09/991,531'
, and
existiWHEREM ,G reppid Teclmoloses,LLC,ASSIGNEE. a cofporatitm duly organized atd
ng underthelaws oftheState ofNevadaand haviag itsprincipalo ce a
94 10 Prototype Di
ive.Suite 1B
***
arehcreby acknowledgc said M SIGNOR dou hereby sdl, assign and transfer1111t0 M SIGN EE
,
its succcssors
,a
ssigns mld legalrepresentativcs, the fulland excltzsive rght tide and interestto the
said iaveation in the United Stata and allforeign countries, as(I= CZIXIIin t.be
aforcaid applicxation
mld to the said application and to all contilluatioas, diviorts. reissues aad substitutes of said,
a
Ipplication,togetherw ith thelightofIxicxity undcrthelntem ationalConvcntion fortheProtection of
ndustlialProperty,lnter-A mezican Convcntion Relating to Patcnt,Designs and 111(1% tz1a1M odek
and atty otlm ' intem ational v 'eernents to which the Unted States of Am elioa adheres ,
M SIGNOR hcreby authorizesand requese theComm issionerofPatcntqto issate
, acd
to ASSIGN EE.foritsinterestasASSIGNEE
said Lette:s Patent
tss'uccusors,assigns and legalrepro entativo
,i
AN D A SSIGNOR hcrebyagreesto executeany papms requestedby M SIGN EE
assigns alld legalrepresentativcs
tssucc& sors,
.i
ialto A SSIGNEE'
S fullprotection mld title in and to
, deem ed cscnt
the invention hereby transferred.
NO'l'
E:
n e undelsigned hmrby authodzcsPillsbury W iatlu'
op LLP oftheabove address
,t
inseftfilrtheridcntilication necessaryordesirableforrecordationofthiqdocu,me
o
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.
DateSigned
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us 2003* 96643A1
(43)Pub.Date:
M ay 22,2003
PublicationClassilication
(51) lnt.C1.7 ........................................f;Ih6F 17/00
(52) U.& t7l..................................................463/11
CIIANCE
(76) Iavcnt
or: DcvlnisL.Morll
gomery.Rcno,NV
(US)
(5X
ConrspoodenceAddreas:
PILI-SBURY W INTIIROP LLP
,
RO. BOX 10,500
ABSTRAW
M CLEAN VA 221@2(U&
tbaliacludrsarll
valilyofrtpelitivoaclifmsslored thtreon
relatingtotbegamcofchanco aadautomaticallyparsingthe
(21) Appl.No.:
(19/991,531
strtamofdatatocounltlzeplur&lityofrcpetitiveactioas,thc
(22) Filed:
Nov.21 2.
01
)1
gameofcbanct.
countobtaised providinganindicatorusabletomooitorthe
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Table No.
12345
124N
23456
12m
20
22
78998
126'
N
30
30
74
28
Total
US2,
003/0096643A1
M gure 7A.
TableNm
Ha
ndsplayed ... Ha
od:playedduringperiod Ha
afksplayed
darin erod 1
z:
forentire da
124N
24
:$3
55Q
125N
20
25
602
126N
30
28 '
435
ToL<
' 74
86
1587
Fgure78
lJs 2003/0096643 A1
M ay 22,2 3
1
ofcNal
zcc.M oreparticulatlyxllm pl
rsentInventi
onrelalesto
methods and apparattm for gatheriug dara on games of
chancc playe.d in'forexam ple'casincks.
tleme:
nl
.and iawbich:
ftml9l FIG. 1illustraresagam ingtablo accofdingto onc
'
' xldi
em enloftilepresentinventioa.
emt
2'BACKGROUND
(
(K
ntedsga
armb
e mu
bi
li
la
i
ndnugst
ri
os.Evon
lh
o*2)
ugh IoCa
gas
lii
z
lnl
gti
is
al
ro
en
lald
i
vol
el
yr
you
i
ft*tll FIG.2illustratcsaplayerplaccrettingllavingabtl
reaand aplayarea.
(8012) F'IG. 3 illusfrates axquenceofrepetitiveactions
ndust:y in
(
*03) A ck
ecessarytlcmcntforzncleclivccasinoojxra(i
nis.asecienlcasinomanagementandxcuritysystem.
Co
asinos sperd subsfaqlial amounls ofum cley to observe
gamblvas.tleahrs and ot* ts in tttticasix using txyttl
ticctronicsurveiilatux cquipmeatand liv:persormcl. El
ectronic survcillance usually takos I
he form of dectrouic
(0Q141 FIG.rvlillustralesarouletlelayoulandmaskfor
usagcwitb !he roulttle hyout;
cameraglobesorvisiblccamcras (coll=tivsl! cameras) (t*15) FIG. 5b illustrAtesa rouletle wheeland m ask for
wlzich blanketI
lm wallsand cdlingsoftheca nos.
usagcwith theroulettc wbeel'
(G*5J n edealer/phycrinl
eracsionis forthemom par'
q
monit
ore.
d using elcctronic sulvcillance monitorsthatare
vicwe.d by individuals ata centrall
ocatioo and by roving
olv rvers.W hile videocassetterecordi offrom lbecamerasexistsailcanaotbeeTectivclyusedm arsscssingdealer's
performance,orinotherwi.
semonitoring garnesofchance.
((*06) Existingmoaitoriagsyst
cmsdo notailow tbem f
'
bore,casinosto know objectvelybow many gamcsbave
cenplayed byaccrtainpointintimeataparticulargaming
(017) RGS.7A-7B i
llustrateexemplary reporl
sgenerate..d fzom repetitiveactionsbeing monitored
purposes ofcxphnation.numcrousspecic l
ktaklsarc ret
fortb in order Io provide a tborouglzuaderstanding oflhe
prcsentinvoation.Itwilibecvident bowover tooneskille.d
in thc arttllallllcprcnscntirlvcntion may bc practiccd in a
varieit
y ofgames,cs%cially card games.witbouttbe:
se
sm c ju (jetags. In otlwrinstances,well-known operations.
steps,functioasAodektncnts&ruotsboo.
k
j
d
e
r
t
o
a
v
oi
d
cl or
()twcuru goejl
wexon.
l
mmanRmnitoliag,wbicbisnoyonl!pronetomislakcs,but EO19) Part
s oftbedescription wil bepresented using
addsanotlzerdegrecofuacertainty,szneetllo bumanEnonltor
canbo irlEumnced.
.s
, xt
. a
a
ucbaa
spariawhp
attcr
nr
l
i
onns,d
ca
me
cn
*an
ou
sec
oo
mgu
rai
t
i
o
w1
1l
1c
br
et
descg
rbc
do
af
s
fldx fort
.W ri
monitorcerlain aclivitie.
s thalrelale to games ofcbaoce
3.SUMMARY
US 2003/0096643 A l
M ay 22,2 3
2
anddnlcrsetling 112.'
fhecamera 114 Lspreferablyfixed,
and Ls prefcrably set a: a samc zoom position for aI1
comparison cvorationsperfofmod as doscribed Neteio so
thatasmucbconsistoncytvtwccnadjacealframesin the
compariscm opcrations i
scsscntiallyancxterilalpattcrntbat
asbetarea202andplayatea2.
> .Duringacardgamesuch
msblackjaclqforexamplc'aplaytrwillplacebelss,uchas
c
psorjrlonsinbetarca202andcardsof1bcplayershand
inhi
play area2> .Astbe card game devclops.a()d acard is
addedtotbebandorthelzarl
dLssplit,activilytakesplace in
play arra 204 and m u ibly in bd area202.Similarly,thc
dcaler.shandwillboplaccdindoaler,shandarca206.% thc
c
ardgamtdcvrlopssacardorcardsmaylx addcdtodoaler's
hand arez206.1..IG.3 illustralr
.s a sequel
w.
e ofrepetilive
thc mask402beingwitbi
n lhcstream ofdigil
aldatathatis
obtaioed.Furtber'themaskarGacan bcfuirtherrequked to
a
astbavtrecognizedwitl
inilanobjectofsigncanceto
ittle
'sucb a,a card ora cNipeia orderto prevenlaa crrant
o
,suchasahaud'lhatappr-af
sinthemmskareafrom
ibjoct
ncorrcct
lyindi
catinglbatagameisundcrwrayorhasI
x cn
complcted.
aclionstllalaropoasibleinagameplayedinaccordancewith
otberplayerplacesottings.
(()(u7) n eabovedewripl
oowasmadeintl
zecontextof
OnGPlayerplayingwithadealer.Itshouldbeappredate.
d
dezler.lnlllrcventofEnult
iplepla.
ytl'
sareplayinga.
latable
aod aplaytr'shand fmisbesbeforotlza.tofotberplayelsylbe
Playet's hand whiclzEnisbes isdetecle.d wlzea tbe player
clears tbeplayer'sbetarea and play area.Eaclltime itLs
'
Inannerofcomparlson forpatternrecognitionptkrposes,itis
noltheonly(nanncrinwllichthecomparlsonscanbemade.
Colnparisortsbetwepea frzmcscaa zlr,
o bcmadc,sucl
xtbat
continucddurationsofan zctivitycau gtnerateacount.For
Zstanco,white space oa a dealercard area thatexistsfor
greatertbaaapredeterminedperiodoftknecouldboused t
o
generat
c acounq with anotbercountnotbcing geuerate.d
unlilaherelatdcallrcardarcahasbadc'atclsplacedtlwreon
foranothcrpredel
ermil
wdperiod oftimc.
lhatmorelhanoneplayorcanbeplagngatonetimewitllthc
botweeabands(.
e..theendofabandorlbebeginninzofa
n
edwicahta
ned)
war
cmb
ll
l
w m2k is
in
iv
o.
fAc
apl
cdi
en
sg
ctlt
io
ngon
incwb
ichod
ni
ome
car
r
d'
st
and txtsare
Of
twareregister,no1shown)canbeincxmontcdatcomPulertl5.n ekinfonnation aboulhandsplayed atagaming
mar
.
kforagaminglablaccordiagloonecmbodimoalofthc
presentinveution.Mask2 includcsmasl
csforplaycrplacc
seltings21(k-g andmask fordcalerplacesetting 2l2.
117orotbefterminals(notsbown).Network116canl:
petl
m
lrltcrnfl
valzotberdislributcditltenmlnctwork,oradrdicatcd
nNWCKI:.
di
vided inlo50areasforplacingbtts.n e fundamrntalaroa
of layoul .
* e Ls the alternating area of red and black
numt'el.
s1-36anddigits0and(x)tintarecolore.d groerun e
rem ainiag areasare m rm utationsoflhe fundam eatalarea:
aroasforrvcn numbcrs'txklnumbers'rcd numlyerrsblack
numbcrs,Erst12 numbers'SOI
JOCKI12 numl
xrsxthird 12
ntunbcts.fkrst18num lxm>andIast18 aum brs.Onecanbet
on
number(slraightup),acombinationofnumb anyxingl
erw rod,black*oddorcven.Faclloftbeox losixplayers
attlw routettrtable ksgivon diferent-coloredcbipsso thal
kxpingtrackoftlx numberson theh youtorkeisbrtting on
(X24) Forcxample,bycomparingmask402to3024itLs
cleartbatahand isaboutto bcgim Ifthcprogrerx
softhe
Lsm rx
sibl:using arcftrtocctotbmcolor.
(
j
a
zp
j Fjc stpgltjstrate.saroulcltewboel.wlzeel51:is'
(
dividod kjto .
38 slots 512 for a ball lo Iand i
n aad i
nu
mbcmd 1Iuoug:36 0 aod(x).Eacbroulcltcgam'ebogins
jleojjx (joaurspkjs,tlw whocjinolw direcuon and tlmn
'
rojlsasmallballzlongtbeilmoredge514 ofwbee1510 in
ljw oppcsiledirectioa. n ebaleventually fallsitgooaeof
lj)enumtmredsloks512.n a!nurntyeristhedeclarodwinner
t'Oftjjatgame.
w-
'
t;s 2003/0096643 A 1
M ay22,2* 3
3
rollcd>thewhee;lisspun>andltlenlbcballland/inolw of
theslotq.512.A camerasucbascamera11.4isplaccdtovicw
lbewheel5l0andisused locapturelherepetitiveactionsof
1beroulettcwbeel4ndball.Inparticular'each timo tbeball
rollsintoaslot*thisindicateslbalthegamciscomplete'aud
cac bc recordcd as a repctitivc R quence.n atc-amora'or
anotlwrcamrra'can also beuscd lo capture thereprlitive
acti
onofchip.beingplayedoathetable witbeaclloftl
4e
separatotttliog ateas baving itsow nm as'
k area'wbichcaa
be quoried fqr rcpetitivo clivity using the techniques
descn'
.
lmdatxwo.Similarly.thc actiorksofclup
slxingtakcn
awayfrom losing1
7c1bythcdcalerandotbcrchi
psbeing
eficiencyoftheroulettedealercanbetrackod.Furthcrby
tracking botlztbe mask 520 aud tbe mask associated witlz
each scparate bolting aroa,itcan be determ inod lhatthc
cxpcctedposftionmoncyLsthetllaidouttbere.Iftboro isa
deviationfroln lltis wbicb cau al.
so laetilue based an alort
caobe trigsgered.
(00361 Asanothcrcxamplo, camerasia ballwayscan bc
u
od oflimotl
zata lauadrycart
ixd to kccp trackoftlw jyeri
sirlfroulofaspecilic r* m'using a mask thalcontains a
piclurtoftheroom witboutacartinfronl.Wbeaanobject
appcafs fora por
.iod oflirne grealertllatt3 m iautes'for
cxamplcsthe oblrclcan be ioterpreted lo be tile cart.'Ihe
periodoftimcunliltbatobjeclLsrcmovedfrom thesccne
c
fan beused to monitortbeamoustoftimethe.cartwasin
ronloftf
m room.andtbereforeobtain anesllmatcoftbe
limeyljatwas neodr.d loclean tlleroot
u.
(0(B7) In Millanot
lmrlxamplc.tbe t
rpttitive acti
onof
makiagmoneypayoutsbyaealercan beusedto couotthe
amountoftnoneypaidout.SincetypicallyacameraLsabove
atablc am cspcctivoview oflheracktbatcontainslhcchips
tbatareusedforpayoutscannotbeobtained.Si1)c.
e bowever.itislypi
calte place asilvcrcoinbctwccn cve%
l
y five
.
chim ,Eacb l'me asilvcrcoinsceainan Areacorrcsm ading
to zparticularcolumnofcbipsbeingpaidoutappear.ic-anbe
usedtoeslmatethatfivechipstimosthevalueofllxlsochips
hasbeenpaid out. 'Ihtts counting the instances ofrccog-
sizing thalsilvercoin i
Pn an aroa corresponding to tbat
colum uofchim allowsalotalestimate ofan amountpaid
out(obeobtainod.n us>lhc:rtpetilive actionislool
dug for
t
b
e
i
n
s
t
a
n
c
e
s
t
h
a
t
s
i
l
v
e
r
a
p
p
e
a
r
s
i
n
a
ma
s
k
a
r
o
a
c
or
r
c
sponding to thalcolumnofchim .
ga
l mesofchancc>aswrllasothcrropctitivc adions*lzave
zeen Jescribed.Althougb tlle presenl inventioa has been
1)
* 321 n lprv ntinvention can be adapted forother describod with reference lo spoci
fic exemplary cmbodirepctitivr gamcs.such as poker 3-card m ker pai-gow
Canw an stud baccara Aodolherganaes.
(33) Futtber'relyorl
scanbogeuerate.d basr.d upon the
statisti
csoblailzedbytbeprcsentinvention.Bykeepingtrack
ofqie paliculardealtr aloacb ublo fora predetermined
period thc nunaberof hands dca1ta ti< peHod can bo
obtained.Andbycom bitting periodsforaparticulardealers
tbaldealer'saveragec ciencycaubedelerm ined.Furtber'
sttisticscanbekeptforaIablclocationbasis'forexample,
so thatitcan l
x) tcnnined which lable.
sarebusimstdtll
ing
varbus G ri
ods oflime,which can then allow agaia for
examplevslaKngoftbebusiestubleswilbtbemosteKcicnt
Gealep-;.FIGS.74 and '
;B illtkslrAte two differenlreporl
s.
direclod to ztIcaleraad auble Ixati
on,respoctivcly.illustratingtlw statisticsobtained ovorasingleshiftofaprr l
rrmne.
d ducatbn.Added security a!so is obtalncd sincr
mcnts itwilltyocvidenttooncofordinarys1.111iuthoarttbal
vari
ous n,od'
dcations and changes uaay bc nxado to thcsc
emtxldknentswithoutdcpartingfrom thcbroaderspiritand
scopcoftbeinventionassetforthintlx:clairns.Accordingly,
t
speciEcalion and drawings are to be rcgartled io an
il
ll
le
uMraliverauierlhaa arestdclivcsensc.
W cclaim:
1.
A mctlxxlofmoniloringagal
noofcbancethatcontains
a mpelitiveaction'llm melbodcomprising:
obtaiaing a stroam ofdigitalimage data tbatinclude.sa
pluralilyoftborepctilivcactioasstoredtheteonrelating
lo tlx gaam ofcbancc;aad
AutornRlicaily mfsing tbesl
ream ofdigitalimagodau lo
veec
ationthalpayoutswertmadetoadualwinnisczn
r
OU
Dttb*PlltrzlilyfKlmtitivcactions.tbrcount
obtairle.d prodding an iodicatorusablr to moitortbe
(
) vnw metbcxjofclaim 1.wbercin lb step ofautomati-
gameofchance.
usil
v the tecbaiqueseftl
w presentinvention.
cally
' parsing tl)e stroam I
xrfonns pattem recognition on
flMdlxations.
in tbcsamemanntr,withmoncylvingIaidoutonatablein
exactl
yt
hesamemanncr,typicallyinincrtmentsof&20IKK)
in lhe Unile.
d Slales.Eacb action can bclracked ifdmsiretl,
sucb tlzalateachposilionw herethe nextam ountofmoney
islaid tbatLstracked and then i
tistracked tbatallhenext
'
'
US 2003/0096643 A l
M ay 22,2 3
4
o
t
x
of
bj
alt
l
a.
ndiugofamarblei
naslolofawlleelina
gf
al
nl
eo
ro
odulo
o
12 n em ellx)dofclaim lifurtheriacludioztbcsteo of
(
nelh'
cd comprisiog:
obtaising 1stroam ofdigitalimage dala tl
atincludes a
pluralilyoftho repetitivo aclionsskzred thereon.and
'
automaticailyParsing tbcstrcam ofdigitalimagedatato
C'
AI'Dtth* Plurality of refhclitive aclioas, tbo couol
Obtained Providing an indicalorusablo to monitortlle
re> titfve acfcm.
25.'
f1m melbtd ofclaim 1 wbereintbestcpofautomatically parsing the:stream pcrforms pattero recogsitioa on
EXC
IIlocatiol
bsofframes.
2
6
.
'
1
l
l
t
n
e
ali
mra2
3
fn
ll
e
mpo
of
d
i-zit
afl
imagedata inl
cb
lo
ut
dl
eo
sf
acl
p
u
li
tywb
ofer
fo
ra
me
so
ys
at
or
da
a
rt
ion
o
tach frame iscomparedlo amask.
compariI!g1slotwberctlw marblelaodswitk-kplaceme
*ul iodicatearepctitiveaction.
ofAmarkerotlatabloposition.
28.A rrmthodofcountingapluralityofobjeclscompris-
13.'rhersell
x:
,clofclaii
w 12 fact
eriaaudicg tlzesl
ep or
triggerknga:lovontalarm iftheslotwhevethemarblcIaaded
and11x tablcpx itionw horc llw markerwasplaceddo uol
corrc-slxmdtocac.
lzotl
mr.
inz;
obtainisg z stream ofdigital im age data thatinclude.s
therein arepetitivosequence tuatexistsw its respectto
thepluralityofobjects.and
14.'
l'
lm I
tmf
llod ofclaim 10 lllerojxlfitvc acti
on ofthe
objtctLstbtmarblebeinglocaledataninncrodgeperlion
of.wbeolin agameofroulottc.
ls '
Ihemetl)ca ofchim 1 wbereis t
ilegameofchauce
couoj11
. apejitjvesequeac.ethalexistv and
*
usin: theeountodrepctitiv:sequeac.
e thatexis!
s to esti-
isa
rd
me.odofclaim ls'ywlmrointl
leeame
zmmt
rc
,b
eim
plu2r7
al
vo
oi
b
et
cl
ts.plttralityof
1:cj'
I
'
hoga
mdb
xrepetitjveactioa
29ma
'Th
tbo.
dz.
Oof
la
,it
il
zef
re
ii
w
isa
nkbxnceofcardsatapreaeterminodlxationofatable. t'bjrctsincludezpluralilyofvortica
llystackeuchipsxpa.
17 n emetl)odofaaim ls wllcksintbcrcpctitivcacuoo rated by a spaccr .t repotilivc nt
ervau anu tlw stop of
.
isari'existenc.eofobl
ectsata-predetermued l
ocalioo ofa
yabu
18'
Tlm meftx)dofclaim 15 whereinthecardgameLsooe
'
ofblackjack, pai..gow,3card,pokcr,andbaccarat.
2:'Tbornotbodofcla
m 15 furtberiocluding hexep of
ri
Iorofacardag*ainx acolorofadeckbeing
com
pa
deatt
tong
aa
isco
tiaensurinetlattueeardksa10.1.9.
-,-.--..
,
anotherxqucntizlobjectIocation.
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# U.S.fhiginPatentApphcaon
h W H ERBAS,thetmdersigned.tow itDENNIS L MONTGOMERY,(hereinaftrrASSIGNOR),
.
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,and
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W HEREA S,erfreppid Teclm ologiea Ltf . M SIGNEE,a cerpotatiotk duly organizod and
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P tmderthe lawsofthe State ofllevadaand having itsprincipaloK ce and place ofbusiness at
rototypeD riveaSuite l8.RcnoyNV 895ll,desirestoaoquirean iuteresttherein'
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(43)Pub.Date:
(22) Fued:
M ay 22y2003
Nov.21,2001
Publication Classi
lication
Corresm ndenf
x Addrerxs:
lani
resystcms,areproseotedvn esizeofadigitaldatafranw
is reduccd when moti
on acror
xs Kquential frames is not
PILLSBURY W INTHROP,LLP
bbsen'
ed so thatdata st
orage is misimized.'fbe uci
que
RO.BOX 10r*0
(21) Appl.No.:
09/991528
sourceofaframtorastroam ofsequentialframcs.
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US 2003/0095180 A 1
Initialdevice
set-up
310
5134initializing
devicetum -ort
step
320
Obtain difference
fram cs
340
350
lfcyclicnoisepattozn
Ifcyclicnoiseyattern not
5W
VWW YCVS'CDC
uncoveredst11G1store
uncovered m crease
FIG.3
'
lnitialization
period
410
Sm cbronizc
fram esto cyclic
noisepattem and
rem ove cyclic
noise
430
WG 4
US 2003/0095180A 1
US 2003/0095180 A 1
M ay 22, 2003
l
tequiromcnts ithas!beundesircdeffectofnotprovi
dingfor
acootinuouscaplureotlheeveutsthatlheparticulardigilal
camefa recorded.
(0(*7J 'Ihus itwzould bedcsirableto bavelbe.capabilisy
to rcducclhc amounlofslorage oecessary to bouse monitoI.jagsurvcjjuucedalaw itboulcompromksing theintegrity
(X01) '
l'h: presentinvcntion gonrrally relatcs l
o data Ofthemonitoringsystem.
commuaicalion and transmissbn systtms.More particu- y(
)()j yurtbcr, (lata oblainod from
larly.thepresentiuveutiourelatesm ekbodsandsystemsfor
adapting lhe siz.eof adigitaldataframe to minim lz.edata
s
ftorage,forcorrecting sourceooiseresicleulinadigitaldata
rame.znd foraulbenticating lhc sourceofa digitaldzta
frame.
2.BACKGROUND
v
>c
didualframesapy ardifrercnlfrom eacbolber.1(would l
esirable t
o bavethecapability t
o eliminaleormducesuch
seurcenoix prcscntin data.
3 SUMMARY
(00091 n cpresentiuveutiousdescribed l
wreiaprovide
(t*0.'
d
elv
d
veell
rl
yand
vice source autbcnticatioa i11'forexample>a
JJ Analogsystenssarewidel
yuscdatpresenl.Thisis s
mr
c,e
inlargcpar!ductoloworcoslofa
e slstem.
nalogequipmcnt,i:llerms
ofcamcrasasw'
ellasoverallcostperframeofimagedata.
Accordingly,mostsurvoillafxx systemstha!arecurrentlyin
use,ovtnifthoy bavedtgi
taldeliverydevimssucbasJigitai
atastorage,forcaocelingscmrcenoseresitientin adigiul
dalaframe andforaulbenti
catingthcsourceofadigitaldala
frame.
re
ar
lime vicwirzg on an analog monilor'orforanalog
s
to
&l
gc
.Thus,i
nconvcntionalsystems'tlzerctypicallycxists
an aaalegswit
ch ol
'swtctle
.sthatconfigurc thedatabeing
recrived froua uaany diFertntcznacraslo lheitrcspcuive
nlositorforviexvingand/orvideocassetterecorueruuit.
ternsforadaptingtbesizeofadigitaldatafralnetomirtnize
(
) /dIdgitalsysteuu.vzheavazablrin prolotypo E:ajzj axeayovcandothcrfealurcs.and advanlages:f
f:
o00
rm4
doly implem ented due lo practical
. havl no!boen wi
costconsiderations,IAOtIIin (:11m ofthe digilaldelivery
milations.
j' jljcof'
oljows
' ,wthroforence o tbe
dthedetaileddescriptonw
rawing,sbywayofnon-limitiogxem plazycmbodimcotsof
thepresentinvcntion whereinlikorofcreacenumeralsregreRat similar parts'ot tlw prcs
etlt iaveuticm tlkrougtk
ovtt
Rvcralviewsand wberein'
.
((
K05) '
Ihcaclivitythatiscapmre,
dbyavideosunr
eillazlce (00131 FIG. 1 isablock diagram illastrating a transmiss
stom in geueralwilldepend on the envronmentthatis
by
oing monitorod.For mauy enviroamouts lhere areoftra
areastbalrequiremonitoringforactivityovoranext
ordod
pcriodbuttha!donotcxhibi!agroatdealofactivityoverlllc
cour.
V oftbooxcadedImriod-Formxamplc acat
m raInigtlt
befocused onthedx rlo abankvaullfor24 hoursaday'
butmighloaly captum relativclyfow iodividuaisent
ering
the vaultor m erely walking by tbc vault door.
Uoder
conventional arrangemcnts, the surveillance data for !be
monitoring are typicallystored in &numberofmanners. In
am log systems.thesurvcillancedataistypicallystored in
anal
ogform on avideocarx
sclterecordcr asnoted abovo
(* 064 Indigitalsyszms, in or rtoredum tbc memory
.
rtquircmeuts, prtiposatsbavcbeon madcia whz
cb :l
)csys-
molioa i
s orisrlotpresontio an areabeiatmorlitored.
g
X1
low diagram ill
ustratinganexcmplafy
noi
s5) FIG-3is&f
noisecorrectioaprocer,
saccording t
o tim prescntinvcntioa.
'
5.DETAII.
ED DF-SCRIPTION OFTHE
tem M IIscndtomemofydatathatoocul
suponlheirlitiatioa (0017) Tl
w prexntinvenl
ioas described hcreiu provide
of motioa.W hilc initiating the saviug ofdala ujxm tilt
irliliation of moti
on bas the ciffe
.ctof reducing memory
advantageouslechniquesfordataframe adaptatioa to ulinimiz.e storage sizc data frame nosc colhrectiortto aid iu
''
US 2003/0095180 A 1
M 3y 22.2* 3
2
lemsforadapliagthesiz.sofadigitaldataframetomiaimize
tlao slorage.forcorrectingsourcenoiseresidentirtadigiul
dataframc,aodforaulhenlicatingthesourocofadigitaldata
framc.
digital(A/D)convcrttraftettbeanalogswitchsothatanalog
((x)1.8j n eprcsentinvcntiondescn-besmctlodsandsys-
illustrating antxtmplarytransmissio
'nsystcm 1* according
to tla.epresentinvoatios and variousdi/ercntdcviccs that
beundol
stood,altbottgbli
sundecsloodtbatlhi,.ekeanplary
transmissionsystem 1* should notbeconstruedaslirniting
ttm prcsentiuvention.n esysl
em lt* irwludessourcodala
dclivery dovices 11(j, forexample conventionalcamoras
11B-1to u o-N each ofwhicb isco
'nnected to acomputer
analogswachlhcreexistsadigitalloanalog(D/A)converter
thAtconvertsttm digitalsigaalstoanalog form ,so thatthoy
can be opcrazduponbythe analog switcb.11isapparentv
therfort..lhatia addilion lo thesource noise thalisgencrated from lhorocording device 110.thattho lransm ission
d
evicr12:atJdaraintefface118viarespectivetraasmi
s- ml
dlum 1l6willalsoccmlribulenoiseaswell,particularly
sion oquipruent116-1 to 11&N.
from signzl Xgradation and ampliEer dislortion in the
analog costext,aud from digitalto analog cotrvetsioa and
analogtodigilaleonvorsionintbddigitalcontext.
(:025) Anclwhiletbesystem asabovo-tlescribedwillbe
usedfortberemaisderofthediscurx
si
onbtrein,itsbould be
underuood tlxattbese are illustralive cxamples and m any
otborarrangementsarepossiblo.
(z1) Furtlyersourcedoli
verydcvices110generateooise (t*26(1 .
Asmontione,dprcviomsly,device
.s110 andparlicuthatbegzome.s.overlaid oalotberocertledsignal.AXKIdelivery
device.
sthata:emostsusceptibl
otoproducinglargeamounr
s
ofnoise are lhost devices110thatrocord imagew inother
wordsacaamra.Anclwht
'lethoreexistsbigbquzl
itycamcras
tl
za.
lproduce only slightamountsofsucb noi
se' cameras
uscd in mauy sutvellanceenvironment
s areofteaofa1ow
gradc quality.M sucb,thecamerasoften geoerat
c asubsuntialamount ofnoi
se t
ha!isovcrlaid onto thc actual
im age tbatisbeing recordcd.
(*22) Fordevicc,
s 1.
1: thatrecord imagcs,tbisnoisc
rmsultsfrom acombination oftbcint
crnalelemonl
slhatare
usod lo record lhe imagc.
,includiog thc opticalsystems
u'
arsducers,digitalcircuiw lhepowerxurceandAC/DC
(YMJ n eenvironmentirkwhichadevice11@isplaced
(*27) Asmentionedabove,thoprcseutinventionexploil
s
theexistcnccofthiscyclicnoisepropertyloetiminatccyclic
noiscfrom therecordedim age and low itdoestbatwillnow
be descde d Mdth respect10 the :ov/chan ofFIG .3./ks
iodicatr.d by stcp 310 an iaitialw t-up L% tirstprefcrably
done so thattherecordingdtvi 110 and lb< tramsmiuiou
mcdium 116 ao ciated witb tbaldevice are in place.n is
tmsuresstabil
ityoftbcitdtializing rouline.0= stcp 310 is
complele,1be iaitializing steps are begun, with the flzst
iniliah'dngstep328bcingtoturnoutbedevicc110 afterthe
cornputerH(4isconEguredtorecord11
:
1
eoufpu!oftlmdcvice
tl. Itisnotc.dthalin 1111 initialconfgttralion.tbeamouDt
oftime tlntthedevice 1.1(jwillrequireto beatu'pbeforel
exhibiLsacychc
. IX)LR patl
ern L&unknown.
k0028) '
Wlmaiaitiallylumod on.tlm camerarccordstlm
1.
10includes(11/11transmissionequipmcntH6D lbatlyfi- againstaslorcdNvizic''imagcthalcontainspixelrcprcstn-
US 2003/0095180 A 1
'
M ay 22, 2003
3
pattcrnsbetweenlbetn.Wllileconveutionalpatt
ernrccog- (0034) In anothcr aspccloflbe presentiuvcati
on the
nilionalgocithmscaubouscd preferablythepallernrccogniti
onalgoritbm described in U.
S.Appti
cali
ouNo. bearing
attorncy refcrtace numbec 042503/0:59665 entitled
tMelbod And Apparattl
sFor Dctermining Patlerns Witlin
1(
* 301 Ifhowevcrac'
yclicnoisepauem wasnoluncov-
presentinvention exploitslheobtainedcyclicnoiscpatlem .
M tlescribed above the cyclicooise pa1tern is preferably
dclected wilhil
zcach frame and climinalcd or minnized.
Accordingto anotberasprctoftbeprcscntinventioq,w aler-
intirneverifytbespeciliccamera.lhatrocordcd aspedfic
sequcnce,wheusloringrbespecifk sequence,itL
sproferable
(hatthecyclicnoisepattesnalsobestorodw ilblbesequence.
tocnsure tbalsucb verifkalion can bem ade laterintime
'
C
FCdythenlberecord'ingdevice118isoporatedinslep370 1.
00i3
51 Itshouldalsolx;nolcdtbalaltbougbthecyclic
foraporiod oflimelongertban itwasproviouslv aad the Eht'
F'
eEtmovaloftbePrm%ntinvention ksdescn'bed interms
recordiagstorod.n eroafter-step3.* fs'repeated-/lqiagti'e t'i'roal-timeeliminationofthoc'
yclicnoisepaltern.thaltbe
largcrnumbe.rofrecorde.dframeslouncovefthecyclicnoise Cyclicnoir,e rcmovalcan operate ujyou data thathasIxon
Pattorn.szps36t). 370,and 350 tlmn rojxatuntilacyclic
noisepauernisfound.
Limeofapproximately1wominutesandtflxtilecyclicnoJe roquiremeslscanbequitelargeandexperl
sive.Minimizing
patterarepeatsinacasgeoftypicallyevely 250-35/fram es.
Forolde'ranalogm odels, bowcver,tlzcl
xatuptimeroquiced
canbeootheordorofJays,allbougbthecaclicnoiscpattern
onceexablishod willstillbe on tlle ordcrofz(x)().4t)(x)
fratnes.
' '
frammsofdi
gitaldata is a common objective ofdata
ddiverysystcms.xsnoted previotzuy wbile systemscxkst
whichwil!nolslorcdaladuringperiodswbenmotionisIlot
detectedp tbatfac!thalacontii
m ousrecord isunavailable is
stuvel
'
llancesyst
rm 1% dcpenclson 1hccnviroumentthatLs
being monilored. Formany tnvironments tlwrc arc oftoo
areas thalrequiremooitoring foracti
vity overanexlended
pe-riodbu1thaldouo!exhibitap'
ealdealofactivityovertbe
courseoftlzcexttndedperiod.Fortxample t
llecamera110
mightbofocuxdon!bcdoorlo abaak vaulltbr24hoursa
day,buImightonlycaplurcrclativtlyfew individualsentering tbt vaullormorelywalkingbytl
:evaul!door. 'Ihiscan
easily beconlrastr.
d witlztbecaseofframesfrom amotion
thocyclic noim
.ctherofrom.Accortlinglyyassbown bystep
pictureorfrom avidcocarnerathalistraine.donabusyarea
(()(Bs1 Exemplaryaspcctsoftbepre-sentinventionuploil
monilopingofenvironuxutstllaldo tloloxbibitagrealdu l
ofactivity ove.rthecoulv ofanexleode.
d m ricxlofmoailoring. Rather than storing all of lhe surveillance data
recordedaaaothcfaspectofttt
:preKetiuveutiouxducesthe
al
uountofst
orage byreducing tbe stored image rcsolulion
for frames of dat
a corresponding lo Do moLiou being
delectod.
US 2003/0095l80 A 1
M ay22,2003
4
(@B9J Framcsofdigilalimagedataaretypicallynladcup
ofpixels svitlleach pixelhavirtg,forexamplepa16 24 or
32 bitRGB rcproscntation.Since the resolution ofa particularframe in incrcascs asthc Immberofpixel
s used lo
represeciltbeframeincreascs tocxmservcdalastoragespace
that would otllerw'ise be laken up by film ing of lhesc
e'uviroaments exhibiting no activity forcxtended periott'
g
aftcrapredetermine,
tlpcciodoftimeofstoringafull-sized
frameduringwhicb nomotiou i
sobservcd'theresol
utiotlof
the Morcd frame isreduced to somc fractiow forcxample'
oae-quarttr.oftbesizz ofthefull-sized frzme.Tbesmaller
framesizeisusetlunlilaframc witbm otiooappears Then,
thestore.
d frame siz.
e isincrcar
ed l
o alargerframesize.It
should beundelstood lbatthe lowerthcfraction,thcgrcatcr
tbereducl
ion in storagespace lypimlly neodcd tosloredle
dala.W llile lesserorgreaterthaa 7.5% resolution can be
slored>thisamounlhasbeenfound tolx agoodcompromise
between maiataining clarityoftheimage aod redudagdala
stored@whicthjaswillbcapprcciated'arecompeliagrequirc.
menls.
ano.motionregerenceframe214catlnolbeobtained,anda
recor(jetlas&aztlx4go reducedframeiscomparedwitha
64:.480targetframc219ofdigitaldata,whichcapturesa
subsequen!sceno h thatfalls wilhic tt
ae predetormine,
d
thrcslmld Sincesubsequen!scc'ncA falIswithintbcprcde-
indicateh eiatroductioaofmotiostoasoorle.11Lsnotodthat
auivilyoccurring intlleeavironmentorareaaremollitored.
Prcferably,tl
zecomputerdevicc 120 pcrforms a frame by
frame comp&riscm fora particularcamera oftlle cam eras
110.11is uuderstood thatevcn witb cyclic noise patterns
thepredctcrmincd lbresholdbelwe
-enadjacxntframescon- compredwit
b asubsequex 640x480targetframc21.6of
lafning motion willbeei
xcecded bccausetllenew object digitaldata.whichcapturesasubsequeotscepeAthatdfers
contairled in the fram o willsignificantly altercertain bits
wtllinbeframe. Furtl
xr ilLsprcferablcthattl
w compari
sx
occuls.n us,tbemcordedframesizeLstlusadjtustodtothe
opcratioasoperateuponlhefullrosolutioafrauxsize,and Conclude.
dthattl
zereisnoJisccraibleaclivityormotionthat
thatmotoubclwoen adjaoeatframesfjoesootcxix .
canbedet
eqnine.
dusingpattern rccognitiontocl
m iqucs,and
preferablytbepattcramcogniticko tecbniquedescribe.d inthe
U.s.applicatioubearingattoruey reforenceImmber042503/
02.59665 mlationed above.Gencrally.and particularly for
FIGS.2A tllrougllZD ttm refcrcucefra eisiuitiallysetlo
an initialframe ofa sequence ofh>mo vzbile tbe target
rcforrodtoabovehasclapscd.Iftbcwindow oftimchasnot
elapse.dbutb
e subsequentscrneA
issrored as a 640x480
tacountercorrespo