PZ - Operating Agreement The Pointe at Meridian LLC FIFTH AMENDED AND RESTATED OPERATING AGREEMENT
FOR
THE POINTE AT MERIDIAN LLC
FORMALLY NAMED
MV PROPERTY LLC
A NEVADA LIMITED LIABILITY COMPANY
4814-5432-5522.1
TABLE OF CONTENTS
Page
ARTICLE1 DEFINITIONS...................................................................................................2
1.1 Act............................................................................................................................2
1.2 Affiliate....................................................................................................................2
1.3 Agreement........................................................................•.......................................2
1.4 Articles.....................................................................................................................2
1.5 Assignee...................................................................................................................2
1.6 Capital Account.......................................................................................................2
1.7 Capital Contribution................................................................................................2
1.8 Code.........................................................................................................................3
1.9 Company..................................................................................................................3
1.10 Company Minimum Gain......................................•.................................................3
1.11 Distributable Cash....................................................................................................3
1.12 Economic Interest.....................................................................................•...............3
1.13 Excess Nonrecourse Liability..................................................................................3
1.14 Fiscal Year...............................................................................................................3
1.15 Former Member.......................................................................................................3
1.16 Former Member's Interest....................................................................•..................3
1.17 Majority Interest ................................................................................•.....................3
1.18 Manager...................................................................................................................3
1.19 Member....................................................................................................................3
1.20 Member Nonrecourse Debt......................................................................................4
1.21 Member Nonrecourse Deductions...........................................................................4
1.22 Membership Interest................................................................................................4
1.23 Net Profits; Net Losses............................................................................................4
1.24 Nonrecourse Liability..............................................................................................4
1.25 Percentage Interest...................................................................................................4
1.26 Person.......................................................................................................................4
1.27 Regulations ..............................................................................................................4
1.28 Relative....................................................................................................................4
1.29 Remaining Members...............................................................................................4
1.30 Tax Matters Partner .................................................................................................5
4814-5432-5522.1 i
TABLE OF CONTENTS
(continued)
Page
ARTICLE 2 ORGANIZATIONAL MATTERS....................................................................5
2.1 Formation....................................................•............................................................5
2.2 Name........................................................................................................................5
2.3 Term.........................................................................................................................5
2.4 Office and Agent......................................................................................................5
2.5 Addresses of the Class A Members and the Manager.............................................5
2.6 Purpose and Business of the Company....................................................................5
2.7 Approval of Transfers..............................................................................................5
ARTICLE 3 CAPITAL CONTRIBUTIONS and percentage interests..................................6
3.1 Capital Contributions...............................................................................................6
3.2 Additional Capital Contributions.............................................................................8
3.3 Dilution of Class A Membership Interests ..............................................................8
3.4 Capital Accounts..........................................................................•...•.......................8
3.5 No Interest................................................................................................................9
ARTICLE4 MEMBERS...........................................................................................................9
4.1 Limited Liability......................................................................................................9
4.2 Admission of Additional Members..........................................................................9
4.3 Withdrawals or Resignations...................................................................................9
4.4 Termination of Membership Interest.......................................................................9
4.5 Competing Activities...............................................................................................9
4.6 Transactions With The Company..........................................................................10
4.7 Remuneration To Members...................................................................................11
4.8 Members Are Not Agents......................................................................................11
4.9 Voting Rights.........................................................................................................I I
4.10 Approval by Members...........................................................................................12
ARTICLE 5 MANAGEMENT AND CONTROL OF THE COMPANY...........................13
5.1 Management of the Company Generally...............................................................13
5.2 Tenure........................................•...........................................................................14
5.3 Performance of Duties; Liability of Manager........................................................14
5.4 [Reserved.].............................................................................................................15
5.5 Transactions between the Company and the Manager..........................................15
481.4-5432-5522.I ii
TABLE OF CONTENTS
(continued)
Page
5.6 Limited Liability....................................................................................................15
5.7 Membership Interests of Manager.........................................................................15
ARTICLE 6 ALLOCATIONS OF NET PROFITS AND NET LOSSES AND
DISTRIBUTIONS ...........................................................................................15
6.1 Allocations of Net Losses......................................................................................15
6.2 Net Income.............................................................................................................15
6.3 ........... Special allocations ...............................................................16
6.4 Code Section 704(c) Allocations...........................................................................18
6.5 Allocation of Net Profits and Losses and Distributions in Respect of a
Transferred Interest................................................................................................18
ARTICLE 7 DISTRIBUTIONS
7.1 Distributions of Operating Cash by the Company................................................19
7.2 Definition of Distributable operating Cash............................................................19
7.3 Distribution of Net Cash From Sale Refinancing..................................................19
7.4 Definition of Net Cash from Sale or Refinancing .................................................20
7.5 Holders of Record..........................................................................21
7.6 Form of Distribution.......................................................................21
7.7 Restriction on Distributions............................................................ 21
ARTICLE 8 TRANSFER AND ASSIGNMENT OF INTERESTS ....................................21
8.1 Transfer and Assignment of Interests....................................................................21
8.2 Further Restrictions on Transfer of Interests.........................................................22
8.3 Substitution of Members........................................................................................22
8.4 Permitted Transfers................................................................................................22
8.5 Effective Date of Permitted Transfers ...................................................................23
8.6 Rights of Legal Representatives............................................................................23
8.7 No Effect to Transfers in Violation of Agreement................................................23
8.8 Right of First Refusal.............................................................................................24
ARTICLE 9 RIGHTS AND OBLIGATIONS UPON TERMINATION OF CLASS
A MEMBERSHIP INTEREST........................................................................25
9.1 Purchase and Sale of Membership Interest............................................................25
4814-5432-5522.l iii
TABLE OF CONTENTS
(continued)
Page
9.2 Purchase Price........................................................................................................26
9.3 Notice of Intent to Purchase...................................................................................26
9.4 Election to Purchase Less Than All of the Former Member's Interest .................26
9.5 Payment of Purchase Price ....................................................................................27
9.6 Closing of Purchase of Former Member's Interest................................................27
9.7 Purchase Terms Varied by Agreement..................................................................27
ARTICLE 10 ACCOUNTING, RECORDS, REPORTING BY CLASS A
MEMBERS......................................................................................................27
10.1 Books and Records ................................................................................................27
10.2 Delivery to Members and Inspection.....................................................................28
10.3 Annual Statements.................................................................................................29
10.4 Financial and Other Information............................................................................29
10.5 Filings....................................................................................................................29
10.6 Bank Accounts.......................................................................................................29
10.7 Accounting Decisions and Reliance on Others......................................................29
10.8 Tax Matters for the Company Handled by Manager and Tax Matters
Partner....................................................................................................................29
ARTICLE 11 DISSOLUTION AND WINDING UP............................................................30
11.1 Dissolution.............................................................................................................30
11.2 Certificate of Dissolution.......................................................................................30
11.3 Winding Up............................................................................................................30
11.4 Distributions in Kind.............................................................................................31
11.5 Order of Payment Upon Dissolution .....................................................................31
11.6 Limitations on Payments Made in Dissolution......................................................32
11.7 Certificate of Cancellation.....................................................................................32
11.8 No Action for Dissolution......................................................................................32
ARTICLE 12 INDEMNIFICATION AND INSURANCE....................................................32
12.1 Indemnification of Agents.....................................................................................32
12.2 Insurance................................................................................................................33
ARTICLE 13 MISCELLANEOUS........................................................................................33
4814-5432-5522.1 iv
TABLE OF CONTENTS
(continued)
Page
13.1 Complete Agreement........................................•............................•.......................33
13.2 Binding Effect........................................................................................................33
13.3 Parties in Interest ...................................................................................................33
13.4 Pronouns; Statutory References.............................................................................33
13.5 Headings ................................................................................................................34
13.6 Interpretation..........................................................................................................34
13.7 References to this Agreement................................................................................34
13.8 Jurisdiction.............................................................................................................34
13.9 Exhibits..................................................................................................................34
13.10 Severability............................................................................................................34
13.11 Additional Documents and Acts............................................................................34
13.12 Notices........................................................................................... ...................34
13.13 Amendments..........................................................................................................3 5
13.14 Reliance on Authority of Person Signing Agreement ...........................................35
13.15 No Interest in Company Property; Waiver of Action for Partition........................35
13.16- Multiple Counterparts............................................................................................35
13.17 Time is of the Essence.............................................................................•.............35
13.18 Remedies Cumulative............................................................................................35
4814-5432-5522.1 v
FIFTH AMENDED AND RESTATED OPERATING AGREEMENT
FOR
THE POINTE AT MERIDIAN LLC
A NEVADA LIMITED LIABILITY COMPANY
This Fifth Amended and Restated Operating Agreement ("Agreement"), is effective as of
June 15, 2020 (the "Effective Date"), and made by and among the parties listed on the signature
page hereof("parties"), with reference to the following facts:
A. On March 2, 2009, Articles of Organization for MV Property LLC (the
"Company'), a limited liability Company organized under the laws of the State of Nevada, were
filed with the Nevada Secretary of State, and the Members of the Company entered into an
operating agreement (the "Original Agreement") for the Company on March 2, 2009. On
November 13, 2018 the Company name was changed from MV Property LLC to THE POINTE
AT MERIDIAN LLC.
B. The Company and Members previously adopted an Amended and Restated
Operating Agreement with an effective date of March 1, 2010.
C. The Company and Members previously adopted a Second Amended and Restated
Operating Agreement with an effective date of February 1, 2011.
D. The Company and Members previously adopted a Third Amended and Restated
Operating Agreement with an effective date of January 1, 2013.
E. The Company and Members previously adopted a Fourth Amended and Restated
Operating Agreement with an effective date of January 1, 2019.
D. As of the end of business on December 31, 2010, the Members of the Company,
their Percentage Interests and Capital Contributions were as follows:
Class A Members Capital Contributions Percentage Interest
Wellington Family Limited Partnership $134,000 17%
SP trust $133,000 16%
James Ran Petersen $133,000 17%
TRU Investments LLC $250,000 14%
Shupe Investment Ltd. $400,000 22%
Tom Gossett U/W Cathryn R. Gossett $125,000 7%
Richard& Marilyn Lewin Trust $125,000 7%
For clarity, Maple Leaf Family Limited Partnership is not listed because the Membership
Interest, including the Percentage Interest of Maple Leaf Family Limited Partnership in the
Company, was transferred effective as of February 16, 2011, to James Ryan Petersen, as shown
in Article 3. Subsequently James Ryan Petersen transferred his Membership Interest and others
transferred their Membership Interest such that the Membership composition is currently as
stated herein.
4814-5432-5522.1
E. The Percentage Interests of the Members has again changed and the parties hereto
desire to update this Agreement to provide the current Member composition of the Company,
among other things.
NOW, THEREFORE, the parties by this Agreement set forth the operating agreement for
the Company under the laws of the State of Nevada upon the terms and subject to the conditions
of this Agreement.
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings set forth
below (all terms used in this Agreement that are not defined in this Article I shall have the
meanings set forth elsewhere in this Agreement):
1.1 Act. "Act" shall mean Chapter 86 of Nevada Revised Statutes, NRS Sections
86.011 et. seq., relating to limited liability companies, as the same may be amended from
time to time.
1.2 Affiliate. "Affiliate" of a Member or Manager shall mean any Person (which
Person may include a Relative of such Member or Manager, or a trust for the benefit of such
Member or Manager and/or his or her Relatives), directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with a Member or
Manager, as applicable. The term "control," as used in the immediately preceding sentence,
shall mean with respect to a corporation or limited liability Company the right to exercise,
directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the
controlled corporation or limited liability Company, and, with respect to any individual,
partnership, trust, other entity or association, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the controlled entity.
1.3 Agreement. "Agreement" shall mean this Amended and Restated Operating
Agreement, as originally executed and as amended from time to time.
1.4 Articles. "Articles" shall mean the Articles of Organization for the Company
originally filed with the Nevada Secretary of State and as amended from time to time.
1.5 Assignee. "Assignee" shall mean the owner of an Economic Interest who has
not been admitted as a substitute Member in accordance with Article 8.
1.6 Capital Account. "Capital Account" shall mean with respect to any Member
the capital account that the Company establishes and maintains for such Member pursuant to
Section 3.3.
1.7 Capital Contribution. "Capital Contribution" shall mean the total amount of
cash and fair market value of property or services contributed to the Company by Members.
4814-5432-5522.1 2
1.8 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, the provisions of succeeding law, and to the extent applicable, the
Regulations.
1.9 Company. "Company" shall mean THE POINTE AT MERIDIAN LLC, a
Nevada limited liability Company.
1.10 Company Minimum Gain. "Company Minimum Gain" shall have the
meaning ascribed to the term "Partnership Minimum Gain" in the Regulations Section 1.704-
2(d).
1.11 Distributable Operating Cash. "Distributable Operating Cash" shall mean the
amount of cash as defined at 7.2 on page 19 .
1.12 Economic Interest. "Economic Interest" shall mean the right to receive
distributions of the Company's assets and allocations of income, gain, loss, deduction, credit
and similar items from the Company pursuant to this Agreement and the Act, but shall not
include any other rights of a Member, including, without limitation, the right to vote or
participate in the management of the Company or, except as provided in Section 86.241 of
the Act, any right to information concerning the business and affairs of the Company.
1.13 Excess Nonrecourse Liability. "Excess Nonrecourse Liability" shall mean a
nonrecourse liability not allocated under Section 1.752-3(a)(1) or(2) of the Regulations.
1.14 Fiscal Year. "Fiscal Year" shall mean the Company's fiscal year, which shall
be the calendar year.
1.15 Former Member. "Former Member" shall have the meaning ascribed to it in
Section 8.1.
1.16 Former Member's Interest. "Former Member's Interest" shall have the
meaning ascribed to it in Section 8.1.
1.17 Majority Interest. "Majority Interest" shall mean a Member or Members who
hold, in the aggregate, a majority (i.e. more than 50 percent) of the aggregate Percentage
Interests that all Members hold.
1.18 Manager. "Manager" shall mean a Person, whether or not a Member, who is
designated a Manager in accordance with Section 5.
1.19 Member. "Member" shall mean each Person who (a) is an initial signatory to
this Agreement, has been admitted to the Company as a Class A Member or Class B Member
in accordance with the Articles or this Agreement or is an Assignee who has become a
Member in accordance with Article 7, and (b) has not ceased to be a Member in accordance
with Section 4.4 or for any other reason.
4814-5432-5522.1 3
1.20 Member Nonrecourse Debt. "Member Nonrecourse Debt" shall have the
meaning ascribed to the term "Partner Nonrecourse Debt" in Regulations Section 1.704-
2(b)(4).
1.21 Member Nonrecourse Deductions. "Member Nonrecourse Deductions" shall
mean items of Company loss, deduction, or Code Section 705(a)(2)(B) expenditures which
are attributable to Member Nonrecourse Debt.
Class A and Class B Membership Interest. "Class A Membership Interest" shall mean a
Member's entire interest in the Company including the Member's Economic Interest, the right to
vote on or participate in the management, and the right to receive information concerning the
business and affairs of the Company. "Class B Membership Interests" are issued as profits-only
interest held by each Class `B' Member listed on Exhibit "B". The Class `A' Memberships in
aggregate will represent a Fifty Five (55%) Percentage Interest and the Class B Membership
Interest in aggregate will represent a Forty Five (45%) Percentage Interest.
1.22 The preferred return in an annual rate of 6% calculate on the paid in portion of
the capital committed for the class A Membership Interests in the Company, commencing at
the time funds are received by the Company.
1.23 Net Profits; Net Losses. "Net Profits" and "Net Losses" shall mean the
income, gain, loss and deductions of the Company in the aggregate or separately stated, as
appropriate, determined in accordance with the method of accounting at the close of each
Fiscal Year on the Company's information tax return filed for federal income tax purposes.
1.24 Nonrecourse Liability. "Nonrecourse Liability" shall have the meaning set
forth in Regulations Section 1.752-1(a)(2).
1.25 Percentage Interest. "Percentage Interest," with respect to a Member, shall
mean the percentage set forth opposite the name of such Member as set forth in Article 3, as
such percentage may be adjusted from time to time pursuant to the terms of this Agreement.
1.26 Person. "Person" shall mean an individual, partnership, limited partnership,
limited liability Company, corporation, trust, estate, association or any other entity.
1.27 Regulations. "Regulations" shall, unless the context clearly indicates
otherwise, mean the regulations in force as final or temporary that have been issued by the
U.S. Department of Treasury pursuant to its authority under the Code, and any successor
regulations.
1.28 Relative. "Relative," with respect to any Member, shall mean the spouse,
parent, sibling, in-law, child or grandchild of such Member. In the case of a Member that is a
family trust, "Relative" shall mean the spouse, parent, sibling, in-law, child or grandchild of
any trustee of such trust.
1.29 Remaining Members. "Remaining Members" shall have the meaning ascribed
to it in Section 8.1.
4814-5432-5522.l 4
1.30 Tax Matters Partner. "Tax Matters Partner" (as defined in Code Section
6231) shall be the Manager or its successor as designated pursuant to Section 9.8.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 Formation. The Company was formed by filing the Articles with the Nevada
Secretary of State. The rights and liabilities of the Manager and Members shall be
determined pursuant to the Act and this Agreement. To the extent that the rights or
obligations of any Manager or Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, this Agreement shall, to the
extent permitted by the Act, control.
2.2 Name. The name of the Company at formation was MV Property LLC and
was changed on November 13, 2018 to be "THE POINTE AT MERIDIAN LLC." The
business of the Company may be conducted under that name or, upon compliance with
applicable laws, any other name that the Manager deems appropriate or advisable. The
Manager shall file any fictitious name certificates and similar filings, and any amendments
thereto, that the Manager considers appropriate or advisable.
2.3 Term. The term of this Agreement commenced on the Effective Date and
shall continue until terminated as hereinafter provided.
2.4 Office and Agent. The Company shall continuously maintain an office and
registered agent in the State of Nevada. The registered office of the Company in Nevada
shall be located at Suite 100, 7473 West Lake Mead Boulevard, Las Vegas, Nevada 89128,
or as the Manager may otherwise determine. The Company may also have such offices,
anywhere within and without the State of Nevada, as the Manager may determine from time
to time, or the business of the Company may require. The registered agent shall be as stated
in the Articles or as otherwise determined by the Manager.
2.5 Addresses of the Class A and B Members and the Manager. The addresses of
the Class A Members, Class B Members are available from the manager and the Managers
are set forth on Exhibit B hereto. A Member may change its address upon notice thereof to
the Manager.
2.6 Purpose and Business of the Company. The purpose of the Company is to
engage in any lawful activity for which a limited liability Company may be organized under
the Act.
2.7 Approval of Transfers. Approval of Transfers. Each of the parties, by
execution of this Agreement, acknowledges, ratifies, and approves (a) any and all issuances
and/or transfers of Class A Membership Interests and Class B Memberships Interests since
the Company's formation, (b) the accuracy of the respective Percentage Interests set forth in
Article 3 below; and (c) the Class A Membership composition of the Company as stated in
Sections 3.1 and Exhibit A and Class B Membership composition of the Company as stated
in Sections 3.1 and Exhibit A hereto and hereby ratifies and approves each such transfer,
whether known or unknown, prior to the date of this Agreement.
4814-5432-5522.1 5
Class `B' Members
as at June 15, 2020 are:
The Pointe Senior Living LLC 34.5%
ILJ, LLC 5.0%
Lee E. Cory Living Trust 5.0%
White Peak Properties LLC 0.5%
45.0%
3.2 Additional Capital Contributions. Upon the request of the Manager the Class
`A' Members may, but are not required to, make additional contributions of capital to the
Company in such amounts and at such times as the Manager requests. All requests shall be
pro-rata in the proportions which the Percentage Interests bear to one another, but nothing
herein shall prevent a Class `A' Member from making .a contribution disproportionate to
Percentage Interests to the extent one or more Class `A' Members elect not to make a
proportionate contribution. When a capital call is requested, the Manager shall send a written
notice to each Class `A' Member of the amount of the capital call and the purpose of the
capital call. If a Class `A' Member elects to contribute, such contributing Class `A'
Member(s) shall contribute the capital called for under the notice within 30 days of the
mailing of the notice. The failure of a Class `A' Member to contribute the capital called for
under the notice within the applicable period shall constitute an election on the part of each
such non-contributing Class `A' Member not to make an additional capital contribution.
3.3 Dilution of Class A Membership Interests.
If any Class A Member elects not to make an additional Capital Contribution when due,
either as requested by the Manager pursuant to Section 3.2 or by the unanimous consent of the
Class `A' Members, then so long as at least one Member makes an additional capital
contribution, the Class `A' Membership Interest of each Class `A' Member shall be adjusted as
follows: (i) the fair market value of the Company shall be equal to the Company's book value
("Fair Market Value"), shall be determined as of the date the additional capital contribution was
first requested and shall be allocated among the Class `A' Members based on their respective
Percentage Interest as of such date (which resulting allocation among the Class `A' Members
shall hereinafter be referred to as a "Member's Fair Market Value"); and (ii) each Class `A'
Member's new Percentage Interest shall be determined by dividing (x) the sum of a Member's
Fair Market Value plus such Class `A' Member's additional contribution, if any, by (y) the sum
of the Fair Market Value of the Company plus the additional contributions of all Class `A'
Members to date.
3.4 Capital Accounts. The Company shall establish and maintain an individual
Capital Account for each Member in accordance with Regulations Section 1.704-1(b)(2)(iv).
If a Member transfers all or a part of its Membership Interest in accordance with this
Agreement, such Member's Capital Account attributable to the transferred Membership
4814-5432-5522.1 g
Interest shall carry over to the new owner of such Membership Interest pursuant to
Regulations Section 1.704-1(b)(2)(iv)(1).
3.5 No Interest. No Member shall be entitled to receive any interest on its Capital
Contributions other that the 6% preferred return accruing the Class "A" per the Confidential
Private Placement Summary dated February 1,2019.
ARTICLE 4
MEMBERS
4.1 Limited Liability. Except as expressly set forth in this Agreement or required
by law, no Member shall be personally liable for any debt, obligation, or liability of the
Company, whether that liability or obligation arises in contract, tort, or otherwise. The
Company may issue one or more certificates evidencing a Member's Membership Interest in
the Company.
4.2 Admission of Additional Members. The Manager may admit to the Company
additional Members. The percent each interest of each Member in a particular Class of
Membership and in the Company as a whole may change each time there is a change in the
total number of issued and outstanding Membership Interests of a particular Class and /or of
all Classes. Any additional Members shall obtain Membership Interests and will participate
in the management, Net Profits, Net Losses, and distributions of the Company on such terms
as are determined by the Manager. Notwithstanding the foregoing, Assignees may only be
admitted as substitute Members in accordance with Article 7.
4.3 Withdrawals or Resignations. No Member may withdraw, retire or resign
from the Company. No Member may withdraw any part of such Member's Capital
Contribution or receive any distributions, whether of money or property, from the Company
except as provided in this Agreement.
4.4 Termination of Membership Interest. Upon (a) the transfer of a Member's
Membership Interest in violation of Article 7, or (b) the withdrawal or resignation of a
Member in violation of the provisions of Section 4.3, the Membership Interest of a Member
may be terminated by the Manager and thereafter that Member shall be an Assignee only,
unless such Membership Interest shall be purchased by the Company and/or remaining
Members as provided in Article 8. Each Member acknowledges and agrees that such
termination or purchase of a Membership Interest upon the occurrence of any of the
foregoing events is not unreasonable under the circumstances existing as of the date hereof.
4.5 Competing Activities.
(a) It is hereby acknowledged that the Manager and the Members and their
respective Affiliates have extensive business interests of various types. Nothing in this
Agreement shall be deemed to restrict in any way the rights of the Manager or any Member, or
of any Affiliate thereof, to conduct any other business or activity whatsoever, including, without
limitation, businesses which may be competitive with the business of the Company, and the
Manager and the Member shall not be accountable to the Company or to any other Member with
respect to that business or activity. The organization of the Company shall be without prejudice
4814-5432-5522.1 9
to the Manager and Members' respective rights (or the rights of their respective Affiliates) to
maintain, expand, or diversify such other interests and activities and to receive and enjoy profits
or compensation therefrom. The Manager and each Member hereby waives any rights it might
otherwise have to share or participate in such other interests or activities of the Manager or any
other Member or any Affiliate thereof.
(b) As used herein, the term "Confidential Information" means information
(including but not limited to information created or developed in whole or in part, by any
Member) that is not generally known about the Company or its business, and that specifically
and solely relate to the Company's business, including without limitation, information about the
Company's products, projects, pricing information, relationships with tenant referral or, training
information and/or manual services, designs, computer programs, databases, know-how,
processes, suppliers, business plans, marketing plans and methods, financing practices,
strategies, finances, personnel, customer or tenant contact information and information obtained
from third parties under confidentiality agreements. The Manager and the Members agree that
during their association with the Company as a Member or Manager and thereafter, they will
hold any and all Confidential Information in the strictest of confidence and will not divulge,
disclose, furnish, transmit, transfer, convey, communicate or make accessible, any Confidential
Information to any person or entity that is not entitled to possess or have access to such
Confidential Information.
(c) The Manager and the Members further agree that, except in promoting the
business of the Company, and as necessary in performing their duties as Manager of the
Company, they shall not use in any manner directly or indirectly, any Confidential Information.
The Manager and the Members acknowledge and agree that all Confidential Information is the
exclusive property of the Company, and the Manager and Members have no independent or
individual claim to such Confidential Information for any purpose except as may be mandated by
law.
(d) The Manager and the Members acknowledge and agree that the
restrictions set forth in this Section 4.5 are necessary to preserve, promote and protect the
business and good will of the Company and impose no greater restraint than is reasonably
necessary to secure such protection. If any provisions of this Section 4.5 are held unenforceable,
the remaining provisions shall, nevertheless, remain enforceable, and the court making such
determination shall modify, among other things, the scope or duration, as described in this
Section 4.5,to preserve the enforceability hereof to the maximum extent then permitted by law.
(e) In the event of a breach or a threatened breach hereof by the Manager or a
Member of the Company who has executed this Agreement, the Company shall be entitled,
without limitation upon its other remedies herein, to seek and obtain injunctive relief without the
necessity of posting a bond, except as may otherwise by compelled by applicable law.
4.6 Transactions With The Company. Subject to any limitations set forth in this
Agreement and with the prior approval of the Manager, a Member and its Affiliates may lend
money to and transact other business with the Company. Subject to other applicable law,
such Member has the same rights and obligations with respect thereto as a Person who is not
a Member.
4814-5432-5522.1 10
4.7 Remuneration To Members. Except as otherwise specifically provided in this
Agreement, no Member is entitled to remuneration for acting in the Company business;
provided, however, that this Section 4.7 shall not be applicable to any services agreement
between the Company and the Manager.
4.8 Members Are Not Agents. Pursuant to Section 5.1 and the Articles, the
management of the Company is vested in the Manager and the officers of the Company
designated by the Manager and acting pursuant such authority as may be delegated to them
from time to time by the Manager. The Members shall have no power to participate in the
management of the Company except as expressly authorized by this Agreement or the
Articles and except as expressly required by the Act. No Member, acting solely in the
capacity of a Member, is an agent of the Company nor does any Member, unless expressly
and duly authorized in writing to do so by the Manager, have any power or authority to bind
or act on behalf of the Company in any way, to pledge its credit, to execute any instrument
on its behalf or to render it liable for any purpose.
4.9 Voting Rights. Except as expressly provided in this Agreement or the
Articles, Members shall have no voting, approval or consent rights. Members shall have the
right to approve or disapprove matters as specifically stated in this Agreement, including the
following on the basis specified:
(a) Approval by Members Holding a 66-2/3 Interest. The following matters
shall require the vote, approval or consent of the Members holding sixty-six and two-thirds (66
2/3%) of the Percentage Interests of the Company. Class A Members total 55% of the
Membership interest of the Company and Class B Members total 45% of the Membership
Interest of the Company. Both Class A and Class B have equal voting rights.
(1) Any amendment of the Articles or this Agreement, in accordance with
Section 12.13 of this Agreement;
(2) A decision to compromise the obligation of a Member to return money
or property paid in violation of the Act;
(3) Any change in the authorized number of Managers of the Company, as
set forth in Section 5;
(4) the decision to compel all of the Class A and Class B Members to sell
their Membership Interests in the Company (herein "Drag Along Right"), to a third party, in the
event of which approval all Members shall be required, to sell their Membership Interests to a third
party on such terms as determined by the owners of at least 66-2/3% of all of the Percentage
Interests, provided, however, that all of the Members shall be treated equally with respect to the
terms of sale, including price and payment terms; provided further, however, that the price to be paid
for each Member's Membership Interest shall take into account on a proportionate basis, the
difference, if any, in the Members' respective Percentage Interests; or
(5) A decision to liquidate or dissolve the Company, including a decision
to sell or otherwise dispose of all or substantially all of the Company's assets or any of the
Company's assets other than in the ordinary course of business.
4814-5432-5522.1 11
(b) Approval by Members Holding a Majority Interest. Except as provided in
Section 4.9(a) and Section 5.2(b), in all other matters in which a vote, approval or consent of the
Members is required, a vote, consent or approval of a Majority Interest shall be sufficient to
authorize or approve such act.
(c) Approval Standard. Except as otherwise specifically provided in this
Agreement, all votes, approvals or consents of the Members may be given or withheld,
conditioned or delayed as the Members may determine in their sole and absolute discretion.
4.10 Meetings of Members. Meetings of Members may be held at such date, time
and place within the United States as the Manager may fix from time to time. No annual or
regular meetings of the Members are required to be held.
(a) Power to Call Meetings. Meetings of the Members may be called by the
Manager, or upon written demand of Members holding a majority of the Membership Interest,
for the purpose of addressing any matters on which the Members may vote.
(b) Notice of Meeting. Written notice of a meeting of Members shall be sent
or otherwise given to each Member not less than five (5) business days before the date of the
meeting. If the meeting involves any matter of urgency as determined solely by the Manager,
notice shall be at least twenty-four (24) hours prior to the time of the meeting. The notice shall
specify the place, date and hour of the meeting and the general nature of the business to be
transacted. No other business may be transacted at this meeting. Upon written request to the
Manager by any person entitled to call a meeting of the Members, the Manager shall
immediately cause notice to be given to the Members entitled to vote that a meeting will be held
at a time requested by the person calling the meeting.
(c) Manner of Giving Notice; Affidavit of Notice. Notice of any meeting of
Class A Members shall be given either personally or by first-Class mail, express mail, overnight
mail or telegraphic (charges prepaid), or other written communication (including e-mail) or by
fax (with a confirming copy sent by first-Class mail) addressed to the Member at the address of
that Member appearing on the books of the Company or given by the Member to the Company
for the purpose of notice. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by fax or other means of written communication.
(d) Quorum. The presence of Members either in person or by proxy holding a
Majority Interest shall constitute a quorum at a meeting of Members. The Members present at a
duly called or held meeting at which a quorum is present may continue to do business.
(e) Adjourned Meeting; Notice. Any Members' meeting, whether or not a
quorum is present, may be adjourned to another time or place by the vote of the majority of the
Membership Interests represented at that meeting, but in the absence of a quorum, no other
business may be transacted at that meeting. When any meeting of Members is adjourned to
another time or place, notice need not be given of the adjourned meeting if the time and place are
announced in the presence of all Members of the Company at a meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is subsequently fixed.
4814-5432-5522.I 12
At any adjourned meeting, the presence of Members either in person or by proxy holding a
Majority Interest shall constitute a quorum and the Company may transact any business which
might have been transacted at the original meeting.
(f) Waiver of Notice or Consent. The actions taken at any meeting of
Members, however called and noticed, and wherever held, have the same validity as if taken at a
meeting duly held after regular call and notice, if a quorum is present either in person or by
proxy, and if either before or after the meeting each of the Members entitled to vote, who was
not present in person or by proxy, signs a written waiver of notice or consents to the holding of
the Meeting or approves the minutes of the meeting. All such waivers, consents or approvals
shall be filed with the Company records or made a part of the meeting.
(g) Action by Written Consent without a Meeting. Any action that may be
taken at a meeting of Members may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by Members holding the requisite percentage of Membership
Interest required.to approve action, and shall be valid and effectual in the same manner as a
resolution passed at a meeting of Members duly convened and held. All such consents shall be
maintained in the Company records.
(h) Telephonic Participation by Member at Meetings. Members may
participate in any meeting of the Members through the use of any means of conference
telephones or similar communications equipment as long as all Members participating can hear
one another. A Member so participating is deemed to be present in person at the meeting.
ARTICLE 5
MANAGEMENT AND CONTROL OF THE COMPANY
5.1 Management of the Company Generally.
(a) Exclusive Management by Manager. The Company will be managed by
one or more Managers (collectively the "Manager'). The Manager need not be a Member. The
initial Manager of the Company is North American Management LLC, a Utah limited liability
Company. Except as otherwise required in any management or services agreement between the
Company and the Manager, the Manager shall devote such amount of time to the Company's
activities as is reasonably necessary to discharge its responsibilities. The Manager is entitled and
empowered to exercise all powers conferred by this Agreement, by the Act, and by applicable
law. Except as otherwise provided herein, all decisions pertaining to the management of the
Company shall be made by the Manager (or a majority vote or written consent of all the
Managers if more than one Manager). The approval by the Members of any act or decision made
hereunder by the Manager is required only to the extent specifically provided for in this
Agreement or the Act.
(b) Compensation. The Manager may be compensated by the Company for
services rendered to or on behalf of the Company on terms established from time to time by
written services agreements approved by the Manager and by a vote of a Majority Interest. The
Company will in any event reimburse the Manager for all expenses reasonably incurred on the
Company's behalf in connection with the conduct of its business.
4814-5432-5522.1 13
(c) Officers. The Manager may appoint one or more officers of the Company
as the Manager may determine, which may be a Chief Executive Officer, a Chief Financial
Officer, a President, one or more Vice Presidents, a Secretary, or a Treasurer. One person may
hold two or more offices. No officer shall have any authority whatsoever as an agent of the
Company except as may specifically have been delegated to such officer by the Manager, and
then only to the extent of such delegation and to the extent remaining in effect. Any appointment
of an officer or delegation of authority to an officer may be terminated or revolted by the
Manager at any time for any or no reason. Officers shall not be entitled to receive or be paid any
compensation for service as an officer.
5.2 Tenure.
(a) Term. Each Manager will serve until the earlier of. (1) the Manager's
resignation; (2) the Manager's Bankruptcy; or (3) the Manager's dissolution, provided that with
respect to an administrative dissolution, such dissolution is coupled with the lapse of any period
allowed for reinstatement. Any successor Manager will serve until the earlier of: (1) the
Manager's resignation; (2) the Manager's Bankruptcy; (3) as to a Manager who is a natural
person, the Manager's death or adjudication of incapacity; and (4) as to a Manager that is an
Entity, such Manager's dissolution, provided that with respect to an administrative dissolution,
such dissolution is coupled with the lapse of any period allowed for reinstatement.
(b) Removal. Members may remove a Manager at any time with or without
cause upon the affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the Members'
Percentage Interests.
(c) Vacancy. if the Manager for any reason ceases to act, the Members shall
promptly elect a successor by vote or consent, to serve until a successor is elected and qualified.
5.3 Performance of Duties; Liability of Manager. Notwithstanding any other
provision of this Agreement, whether express or implied, no Manager or officer shall be
liable to the Company or any Member or any agent or Affiliate of any Member for any act or
omission taken or omitted in good faith by such Manager or officer or their respective
Affiliate, unless and then only to the extent that such act or omission constituted fraud,
willful violation of applicable law, or willful violation of this Agreement. Under no
circumstances will any Member, Manager, officer, employee, agent, or other Affiliate of a
Manager have any personal liability for any liability or obligation of such Manager (whether
on a theory of alter ego, piercing the Company veil, or otherwise) and any recourse permitted
under this Agreement or otherwise of the Members, any former Member, and the Company
against the Manager shall be limited to the assets of the Manager. To the extent that, at law
or in equity, any Manager or officer or their respective Affiliates has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to a Member, such
Manager or officer acting under this Agreement and any other Affiliates of such Manager or
officer acting in connection with the Company's business or affairs shall not be liable to the
Company or to any such Member for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they restrict the duties and
liabilities of the Manager or officer or any of their respective Affiliates otherwise existing at
law or in equity, are agreed by the Members to replace such other duties and liabilities of the
4814-5432-5522.l 14
Manager or officer or their respective Affiliates. The Manager or officer or any of their
respective Affiliates shall be fully protected in relying in good faith upon information,
opinions, reports, or statements presented to the Company by any person as to matters the
Manager or officer or any of their respective Affiliates reasonably believe are within such
other person's professional or expert competence and who has been selected with reasonable
care by or on behalf of the Company.
5.4 jReserved.l
5.5 Transactions between the Company and the Manager. Subject to any
limitations set forth in this Agreement, a Manager and its Affiliates may lend money to and
transact other business with the Company. Subject to other applicable law, such Manager
has the same rights and obligations with respect thereto as a Person who is not a Manage
5.6 Limited Liability. No person who is a Manager or officer or both a Manager
and officer of the Company shall be personally liable under any judgment of a court, or in
any other manner, for any debt, obligation, or liability of the Company, whether that liability
or obligation arises in contract, tort, or otherwise, solely by reason of being a Manager or
officer or both a Manager and officer of the Company.
5.7 Membership Interests of Manager. Except as otherwise provided in this
Agreement, Membership Interests held by the Manager as Member, if any, shall entitle the
Manager to all the rights of a Member, including without limitation the economic, voting,
information and inspection rights of a Member.
ARTICLE 6
ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS
6.1 Net Losses. For each taxable year, except as otherwise specifically provided
in this agreement, all net losses (including all expense items separately stated on the
Company's tax return) of the Company shall be allocated as follows
6.1.1 First, until each Member's Capital Account balance is zero, net
losses shall be allocated to the Class A Members in accordance with
their respective Capital Account balances.
6.1.2 Thereafter, net losses shall be allocated to all Members in accordance
with their percentage interests.
6.2 Net Income. For each taxable year, except as otherwise specifically provided in
this agreement, all net income of the Company, including all income items
separately stated on the Company's tax return, shall be allocated first to the
Members to the extent of cumulative net losses allocated to each Member for all
year's prior to the allocation of such net income, and then to Members as follows:
6.2.1 Net income derived from allocations shall be allocated:
481.4-5432-5522.1 15
6.2.1.1 First, to the Class B Members in an amount equal to all
distributions of cash made to the Class "B" Members
pursuant to section 7.1 for such year and any prior year (to
the extent net income was not allocated to the Class `B'
Members pursuant to this section for such prior year); and
6.2.1.2 Then, to the Class `A' Members in accordance with their
percentage interests
6.2.2 Net income derived from a disposition of the real property or other
capital assets:
6.2.2.1 First, to Class `B' Members in an amount equal to all
distributions of cash made to the Class `B' Members pursuant
to section 7.3 for such year and any prior year (to the extent
net income was not allocated to the Class `B' Members
pursuant to this section for such prior year) ; and
6.2.2.2 Then to the Class `A' Members in accordance with their
percentage interests.
6.3 Special Allocations. Notwithstanding Section 6.1 and 6.2 hereof-.:
6.3.1 Minimum Gain Chargeback. If there is a net decrease in Company
Minimum Gain during any Fiscal Year, each Member shall be
specially allocated items of Company income and gain for such Fiscal
Year (and, if necessary, in subsequent Fiscal Years) in an amount
equal to the portion of such Member's share of the net decrease in
Company Minimum Gain that is allocable to the disposition of
Company property subject to a Nonrecourse Liability, which share of
such net decrease shall be determined in accordance with Regulations
Section 1.704-2(g)(2). Allocations pursuant to this Section 6.2(a) shall
be made in proportion to the amounts required to be allocated to each
Member under this Section 6.2(a). The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f).
This Section 6.2(a) is intended to comply with the minimum gain
chargeback requirement contained in Regulations Section 1.704-2(f)
and shall be interpreted consistently therewith.
6.3.2 Chargeback of Minimum Gain Attributable to Member Nonrecourse
Debt. If there is a net decrease in Company Minimum Gain
attributable to a Member Nonrecourse Debt, during any Fiscal Year,
each Member who has a share of the Company Minimum Gain
attributable to such Member Nonrecourse Debt (which share shall be
determined in accordance with Regulations Section 1.704-2(i)(5)) shall
be specially allocated items of Company income and gain for such
Fiscal Year (and, if necessary, in subsequent Fiscal Years) in an
4814-5432-5522.1 16
amount equal to that portion of such Member's share of the net
decrease in Company Minimum Gain attributable to such Member
Nonrecourse Debt that is allocable to the disposition of Company
property subject to such Member Nonrecourse Debt (which share of
such net decrease shall be determined in accordance with Regulations
Section 1.704-2(i)(5)). Allocations pursuant to this Section 6.2(b)
shall be made in proportion to the amounts required to be allocated to
each Member under this Section 6.2(b). The items to be so allocated
shall be determined in accordance with Regulations Section 1.704-
2(1)(4). This Section 6.2(b) is intended to comply with the minimum
gain chargeback requirement contained in Regulations Section 1.704-
2(i)(4) and shall be interpreted consistently therewith.
6.3.3 Nonrecourse Deductions. Any nonrecourse deductions (as defined in
Regulations Section 1.704-2(b)(1)) for any Fiscal Year or other period
shall be specially allocated to the Class A Members in proportion to
the ratio in effect at such time as the allocation of such nonrecourse
deductions are made to the Class A Members.
6.3.4 Member Nonrecourse Deductions. Those items of Company loss,
deduction, or Code Section 705(a)(2)(B) expenditures which are
attributable to Member Nonrecourse Debt for any Fiscal Year or other
period shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to
which such items are attributable in accordance with Regulations
Section 1.704-2(i).
6.3.5 Oualified Income Offset. If a Member unexpectedly receives any
adjustments, allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), or any other event creates a
deficit balance in such Member's Capital Account in excess of such
Member's share of Company Minimum Gain, items of Company
income and gain shall be specially allocated to such Member in an
amount and manner sufficient to eliminate such excess deficit balance
as quickly as possible. Any special allocations of items of income and
gain pursuant to this Section 6.2(e) shall be taken into account in
computing subsequent allocations of income and gain pursuant to this
Article 6 so that the net amount of any item so allocated and the
income, gain, and losses allocated to each Member pursuant to this
Article 6 to the extent possible, shall be equal to the net amount that
would have been allocated to each such Member pursuant to the
provisions of this Section 6.2(e) if such unexpected adjustments,
allocations, or distributions had not occurred.
6.3.6 Allocation of Excess Nonrecourse Liabilities. For purposes of
determining each Member's share of any Excess Nonrecourse
Liabilities of the Company, each Member's interest in Company
4814-5432-5522.1 17
profits, within the meaning of Section 1.752-3(a)(3) of the
Regulations, shall be determined according to the ratio in effect under
Section 6.1(b) at such time the allocation of such nonrecourse
deductions is made to the Class A Members.
6.4 Code Section 704(c) Allocations. Notwithstanding any other provision in this
Article 6, in accordance with Code Section 704(c) and the Regulations
promulgated thereunder, income, gain, loss, and deduction with respect to any
tD
property contributed to the capital of the Company shall, solely for tax purposes,
be allocated among the Class A Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income tax
purposes and its fair market value on the date of contribution. Allocations
pursuant to this Section 6.3 are solely for purposes of federal, state and local taxes.
As such, they shall not affect or in any way be taken into account in computing a
Member's Capital Account or share of profits, losses, or other items or
distributions pursuant to any provision of this Agreement.
6.5 Allocation of Net Profits and Losses and Distributions in Respect of a Transferred
Interest. If any Economic Interest is transferred, or is increased or decreased by
reason of the admission of a new Member or otherwise, during any Fiscal Year of
the Company, Net Profits or Net Losses for such Fiscal Year shall be assigned pro
rata to each day in the particular period of such Fiscal Year to which such item is
attributable (i.e., the day on or during which it is accrued or otherwise incurred)
and the amount of each such item so assigned to any such day shall be allocated to
the Member or Assignee based upon its respective Economic Interest at the close
of such day.
6.5.1 For the purpose of accounting convenience and simplicity, the
Company shall treat a transfer of, or an increase or decrease in, an
Economic Interest that occurs at any time during a semi-monthly
period (commencing with the semi-monthly period including the date
hereof) as having been consummated on the last day of such semi-
monthly period, regardless of when during such semi-monthly period
such transfer, increase, of decrease actually occurs (i.e., sales and
dispositions made during the first fifteen (15) days of any month will
be deemed to have been made on the 15th day of the month).
6.5.2 Notwithstanding any provision above to the contrary, gain or loss of
the Company realized in connection with a sale or other disposition of
any of the assets of the Company shall be allocated solely to the
parties owning Economic Interests as of the date such sale or other
disposition occurs.
4814-5432-5 522.1 18
ARTICLE 7.
DISTRIBUTIONS
7.1 Distributions of Operating Cash by the Company. To the extent available, the
Company shall, distribute quarterly an amount equal to all the distributable operating cash (as
defined below) in the following priority:
7.1.1 First, ten percent (10%) to the Class `B' Members and ninety (90%) to the
Class `A' Members, as a Class, until the cumulative amount distributed to Class `A' Members
equals all accrued 6% Priority Return for the accounting period with respect to which the
distribution is made and all prior accounting periods and the Class `A' Members adjusted capital
contributions are zero (0); and
7.1.2 Then to Members in accordance with their percentage interests.
7.2 Definition of Distributable Operating Cash. Jor the purposes of this article,
Distributable Operating Cash shall be defined as gross receipts from other than a sale,
refinancing and other disposition of assets (other than the sale of inventory the ordinary course of
business), less:
7.2.1 operating expenses of the Company, including but not limited to the
following: (i) all rents, salaries, supplies, professional fees, commissions, closing costs,
lease up expenses, and general and administrative expenses;(ii) all costs of obtaining the
necessary permits and approvals to develop, manage, preserve and/who are maintained
the Company's business and assets; and (iii) reasonable expenses and manager has
incurred on behalf of the Company for which it has not been reimbursed;
7.2,2 current principal and interest payments on finance and
7.2.3 reasonable amounts reserved by the manager in its sole discretion for other
anticipated expenses or contingencies, provided that any amounts released from such
reserve during any year shall be added to the Company's gross receipts from operations
for such year for the purposes of this section 7.2.
7.3 Distribution of Net Cash From Sale Refinancing. Subject to the limitations set
forth in section 7.3.3, net cash from sale or refinancing(as defined below) shall be applied or
distributed, as the case may be, in the following order of priority:
7.3.1 first, ten percent (10%) to the Class `B' Members and Ninety (90%) to the
Class `A' Members, as a Class, until the cumulative amount distributed to the Class `A'
Members equals all accrued Priority return for the accounting period with respect to which the
distribution is made and all prior accounting periods, in the Class `A' Members' adjusted capital
contributions are zero (0); and
7.3.2 second, to the Members in accordance with their percent each interests.
4814-5432-5522.1 19
7.3.3 Notwithstanding sections 7.3.1 and 7.3.2 , if after allocating all gain or
loss recognized or to be recognized in connection with a taxable disposition of the real
property at its fair market value and all special allocations may or to be made pursuant to
the provisions of Section 6.3 hereof, the Members capital accounts are not, we're
following the taxable disposition will not be, in proportion to their percentage interests,
distribution shall be made to the Members in accordance with the actual are projected
positive balances of the Members capital accounts until all capital accounts/projected
capital accounts are zero(0) and thereafter in accordance with their percentage interests.
7.3.4 Alternative Allocations After Property Sold. Notwithstanding sections 7.3.1
and 7.3.2, upon the sale of the real property in its entirety the Manager, with approval of
the majority interest of the Class `A' Members, may elect to acquire replacement
properties. The replacement properties may be allocated to separate divisions(each a
"Division") of the Company based upon what each Member would have received as
distributions if no replacement property had been acquired (`Deemed Investment"). All
benefits, burdens, allocations and distributions, as well as Members' obligations to make
additional capital contributions, if any, shall be on a division by division basis. If more
than one Member has Deemed Investment in a division, all allocations, distributions, and
obligations of the Members with respect to that division shall be pro-rated based upon the
amount of each Member's deemed Investment and any additional capital contribution in
the division and there will be no distinction between Class `A' Members and Class `B'
Members, unless the Members in such Division otherwise agree in writing. In the event
the tax deferred exchange into replacement property fails to close or is disrespect in any
way, resulting in taxable income "boot" to the Company, the Members of the division in
which the replacement property was to be held shall be distributed the uninvested
proceeds, shall be a allocated all such boot to the extent permitted under the Treasury
Regulations and shall indemnify, defend and hold the other Members and the company
harmless from and against, any tax liability and the costs and expenses associated with
the failure of the exchange to qualify as tax deferred under Section 1031 of the code. The
manager, with the approval of the majority interest of Members in a division she, may
delegate management of the property of the division to a company selected by the
manager. On dissolution, the property of the division will be distributed to Members in
the division pro rata based what each Member would receive if the property were sold for
cash and the proceeds distributed as provided in section 7.3.1 through 7.3.3.
7.4 Definition of Net Cash From Sale or Refinancing. For the purpose of this article, net
cash from sale or refinancing shall be defined as gross receipts from any sale, refinancing or
other disposition of assets, other than sale of inventorying the ordinary course of business, less:
7.4.1 all selling, financing and other expenses of the company not theretofore paid from
the operating income, including but not limited to the following;(i) all commissions, fees and
closing costs,(ii) all rents, salaries, supplies, professional fees in general and administrative
expenses and (iii) and reasonable expenses manager hasn't heard on top of the company for
which has not been reimbursed:
7.4.2 the principal and interest payments due with respect to any debt or financing of the
Company.
4814-5432-5522.1 20
7.4.3 Reasonable amounts reserved by the manager in its sole discretion for
reinvestment in preserve protect or enhance the value of Company's the investment in real
property and anticipated expenses or contingencies, provided any amounts released from such
reserve during any year shall be added to the Company's gross receives from sales, refinancing
or other dispositions of assets for such year for purposes of this section 7.4.
7.5 Holders of Record. All such distributions shall be made only to the persons who, according
to the books and records of the company, are the holders of record of the economic interests in
respect of which such distributions are made on the actual date of distribution. Neither the
company nor any manager or members shall incur any liability for making distributions in
accordance with this article 7. Allocations to Members, as a Class, shall be allocated among
Members of such Class pro rata in accordance with the members respective Percentage Interests.
7.6 Form of Distribution. A member, regardless of the nature of the members capital
contribution has no right to demand and receive any distribution from the company in any form
other than money. No member may be compelled to accept from the company a distribution of
any asset in kind in lieu of proportion and distribution of money being made to other members.
Except upon the dissolution in the winding up of the company, no member may be compelled to
accept a distribution of any asset in kind.
7.7 Restriction on Distributions. No distribution shall be made if, that the time of the making
such distribution, would be unlawful under the provisions of the Act. The person that receives a
distribution knowing that the distribution was made in violation of the Act is personally liable to
the company for the amount of the distribution that exceeds what would have been distributed
with no violation of the act and is personally liable to the company for the amount of distribution
that exceeds what could have been distributed without violating the Act. Any Member or
Members who are so liable shall be entitled to compel contribution from each other Member or
Members who also are so liable and shall have all further rights provided in the Act.
8
TRANSFER AND ASSIGNMENT OF INTERESTS
8_I Transfer and Assignment of Interests.
8.1.1 Subject to Section 7.4, no Member shall be entitled to transfer, assign,
convey, sell, encumber, pledge or in any way alienate all or any part of
its Membership Interest or Economic Interest (collectively, for the
purposes of this Article 8, "transfer") except with the prior written
consent of a Majority Interest; provided that such consent requirement
shall not apply with respect to a transfer made in accordance with
Section 8.8. Transfers in violation of this Article 8 shall only be
effective to the extent set forth in Section 8.7.
8.1.2 After the consummation of any transfer of any part of a Membership
Interest, the Membership Interest so transferred shall continue to be
subject to the terms and provisions of this Agreement and any further
4814-5432-5522.1 21
transfers shall be required to comply with all the terms and provisions
of this Agreement.
8.1.3 Without limiting the generality of the foregoing, except as provided in
Section 8.4, the following will be deemed to constitute a transfer of a
Membership Interest subject to the provisions of this Article 8: (i) the
sale or exchange of at least fifty percent (50%) of the voting stock of a
Member, if a Member is a corporation; (ii) the transfer of an interest or
interests of at least fifty percent (50%) in the capital or profits of a
Member (whether accomplished by the sale or exchange of interests or
by the admission of new partners or Members), if a Member is a
partnership or limited liability Company; or (iii) the cumulative
transfer of such interests in a Member which effectively equal the
foregoing (including transfer of interests followed by the incorporation
of a Member and subsequent stock transfers, or transfers of stock
followed by the liquidation of a Member and subsequent transfers of
interests).
8.2 Further Restrictions on Transfer of Interests. In addition to other restrictions
found in this Agreement, no Member shall transfer, assign, convey, sell,
encumber, pledge or in any way alienate all or any part of its Membership
Interest if the Membership Interest to be transferred, when added to the total of
all other Membership Interests transferred in the preceding twelve (12)
consecutive months prior thereto, would constitute a taxable termination of the
Company under Code Section 708(b)(1)(B).
8_3 Substitution of Members. An Assignee of a Membership Interest shall have the
right to become a substitute Member only if(i) the requirements of Sections8.1
and 8.2 relating to consent of a Majority Interest and tax requirements hereof
are met, (ii) the Assignee executes an instrument satisfactory to the Manager
accepting and adopting the terms and provisions of this Agreement, and (iii) the
Assignee pays any reasonable expenses in connection with its admission as a
new Member. The admission of an Assignee as a substitute Member shall not
result in the release of the Member who assigned the Membership Interest from
any liability that such Member may have to the Company.
8_4 Permitted Transfers. Without the prior written consent of the Manager and
without compliance with Section 8.8, but otherwise subject to the other
provisions of this Agreement: (i) the Membership Interest of any Member may
be transferred to any Person who at the time of such transfer is an Affiliate of
such Member, provided that in the event the transferee ceases for any reason to
be an Affiliate of the original Member, there shall at that time be deemed to
have occurred a transfer of the Membership Interest that shall be subject to all
the provisions of this Article 8 unless such transfer is permitted under any other
clause under this Section 8.4; and (ii) any repurchase of Membership Interest
pursuant to an option or right acquired by the Company in connection with any
employment or consulting arrangement between the Company and a Member
4814-5432-5522.1 22
who is an employee of, or consultant to, the Company, or a Member who is an
employee of, or consultant to, the Manager and the services of such Member are
used primarily in the Company's business. Each Member hereby acknowledges
that by its execution of this Agreement, such Member has consented to such
transfers.
8_5 Effective Date of Permitted Transfers. Any permitted transfer of all or any
portion of a Membership Interest or an Economic Interest shall be effective as
of the date provided in Section 6.4 following the date upon which the
requirements of Sections 8.1, 8.2 and 8.3 have been met to the extent required.
The Manager shall provide the Members with written notice of such transfer as
promptly as possible after the requirements of Sections 8.1, 8.2 and 8.3 have
been met. Any transferee of a Membership Interest shall take subject to the
restrictions on transfer imposed by this Agreement.
8_6 Rights of Legal Representatives. If a Member who is an individual dies or is
adjudged by a court of competent jurisdiction to be incompetent to manage the
Member's person or property, the Member's executor, administrator, guardian,
conservator, or other legal representative may exercise all of the Member's
rights for the purpose of settling the Member's estate or administering the
Member's property, including any power the Member has under the Articles or
this Agreement to give an assignee the right to become a Member. If a Member
is a corporation, trust, or other entity and is dissolved or terminated, the powers
of that Member may be exercised by its legal representative or successor.
8_7 No Effect to Transfers in Violation of Agreement. Upon any transfer of a
Membership Interest in violation of this Article 8, the transferee shall have no
right to vote or participate in the management of the business, property and
affairs of the Company or to exercise any rights of a Member. Such transferee
shall only be entitled to become an Assignee and thereafter shall only receive
the share of one or more of the Company's Net Profits, Net Losses and
distributions of the Company's assets to which the transferor of such Economic
Interest would otherwise be entitled. Notwithstanding the immediately
preceding sentences, if, in the determination of the Manager, a transfer in
violation of this Article 8 would cause the tax termination of the Company
under Code Section 708(b)(1)(B), the transfer shall be null and void and the
purported transferee shall not become either a Member or an Assignee. Upon
and contemporaneously with any transfer (whether arising out of an attempted
charge upon that Member's Economic Interest by judicial process, a foreclosure
by a creditor of the Member or otherwise) of a Member's Economic Interest
(other than in accordance with Section 8.4) that does not at the same time
transfer the balance of the rights associated with the Membership Interest
transferred by the Member (including, without limitation, the rights of the
Member to vote or participate in the management of the business, property and
affairs of the Company), the Company shall purchase from the Member, and the
Member shall sell to Company for a purchase price of$100, all remaining rights
and interests retained by the Member that immediately before the transfer were
4814-5432-5522.t 23
associated with the transferred Economic Interest. Such purchase and sale shall
not, however, result in the release of the Member from any liability to the
Company as a Member.
8_8 Right of First Refusal. Notwithstanding the provisions of this Agreement, each
time a Member proposes to transfer all or any part of its Membership Interest
(or as required by agreement, operation of law or other involuntary transfer to
do so) other than pursuant to Section 8.4 or a sale to the Company, such
Member shall first offer such Membership Interest to the Company and the
other Members in accordance with the following provisions:
8.8.1 Such Member shall deliver a written notice ("Option Notice") to the
Company and the other Members stating (i) such Member's bona fide
intention to transfer such Membership Interest, (ii) the Membership
Interest to be transferred, (iii) the purchase price and terms of payment
for which the Member proposes to transfer such Membership Interest
and (iv) the name and address of the proposed transferee.
8.8.2 Within thirty (30) days after receipt of the Option Notice, the
Company shall have the right, but not the obligation, to elect to
purchase all or any part of the Membership Interest upon the price and
terms of payment designated in the Option Notice. If the Option
Notice provides for the payment of non-cash consideration, the
Company may elect to pay the consideration in cash equal to the good
faith estimate of the present fair market value of the non-cash
consideration offered as determined by the Manager. If the Company
exercises such right within such thirty (30) day period, the Manager
shall give written notice of that fact to the transferring and non-
transferring Members.
8.8.3 If the Company fails to elect to purchase the entire Membership
Interest proposed to be transferred within the thirty (30) day period
described in Section 7.8(b), the non-transferring Members shall have
the right, but not the obligation, to elect to purchase any remaining
share of such Membership Interest upon the price and terms of
payment designated in the Option Notice. If the Option Notice
provides for the payment of non-cash consideration, such purchasing
Member each may elect to pay the consideration in cash equal to the
good faith estimate of the present fair market value of the non-cash
consideration offered as determined by the Manager. Within sixty
(60) days after receipt of the Option Notice, the non-transferring
Members shall notify the Manager in writing of their desire to
purchase a portion or all of the Membership Interest proposed to be so
transferred that is not being purchased by the Company. The failure of
a non-transferring Member to submit a notice within the applicable
period shall constitute an election on the part of that Member not to
purchase any of the Membership Interest that may be so transferred. If
4814-5432-5522.1 24
the notices of purchase from non-transferring Members represent an
amount greater than the total amount of the Membership Interest
proposed to be transferred available for purchase by the non-
transferring Members, the amount each non-transferring Member will
purchase will be equitably apportioned among them based upon their
relative Percentage Interests.
8.8.4 If the Company or the non-transferring Members elect to purchase or
obtain any or all of the Membership Interest designated in the Option
Notice, then the closing of such purchase shall occur within ninety
(90) days after receipt of such notice and the transferring Member, the
Company and/or the non-transferring Members shall execute such
documents and instruments and make such deliveries as may be
reasonably required to consummate such purchase.
8.8.5 If the Company and the other Members elect not to purchase or obtain,
or default in their obligation to purchase or obtain, all of the
Membership Interest designated in the Option Notice, then the
transferring Member may transfer the portion of the Membership
Interest described in the Option Notice not so purchased, to the
proposed transferee, providing such transfer (i) is completed within
thirty (30) days after the expiration of the Company's and the other
Members' right to purchase such Membership Interest, (ii) is made on
terms no less favorable to the transferring Member than as designated
in the Option Notice, and (iii) complies with Sections 8.1 and 8.2
relating to consent of Members and tax requirements if the provisions
in these Sections are applicable; it being acknowledged by the
Members that compliance with Section 7.8(a)-(d) does not modify any
of the transfer restrictions in Article 8 or otherwise entitle a Member to
transfer its Membership Interest other than in the manner prescribed by
Article 8. If such Membership Interest is not so transferred, the
transferring Member must give notice in accordance with this Section
prior to any other or subsequent transfer of such Membership Interest.
9
RIGHTS AND OBLIGATIONS UPON TERMINATION OF MEMBERSHIP
INTEREST
9_1 Purchase and Sale of Membership Interest. If the Membership Interest of any
Member is terminated pursuant to the provisions of Section 4.4, the Company
and/or the Members whose Membership Interest have not so terminated (the
"Remaining Members") shall have the right to purchase, and if such right is
exercised, the Member whose actions or conduct resulted in such termination
("Former Member") or such Fonner Member's legal representative shall sell,
the Former Member's Membership Interest ("Former Member's Interest") as
provided in this Article 8.
4814-5432-5522.1 25
9_2 Purchase Price. The purchase price for the Former Member's Interest shall be
the Capital Account balance of the Former Member; provided, however, that if
the Former Member, such Former Member's legal representative or the
Company, deems the Capital Account balance to vary from the fair market
value of the Former Member's Interest by more than twenty percent (20%),
such party shall be entitled to require an appraisal by providing notice of the
request for appraisal within twenty (20) days after the Manager gives notice to
the Former Member that the Membership Interest is terminated under Section
4.4. In such event, the value of the Former Member's Interest shall be
detennined by three (3) independent appraisers, one (1) selected by the Former
Member or such Fonner Member's legal representative, one selected by the
Company, and one (1) selected by the two. (2) appraisers so named. The fair
market value of the Former Member's Interest shall be the average of the two
(2) appraisals closest in amount to each other. If the fair market value is
determined to vary from the Capital Account balance by less than twenty
percent (20%), the parry requesting such appraisal shall pay all expenses of all
the appraisals incurred by all the parties. In all other events, the party
requesting the appraisal shall pay in advance one-half of the estimated cost of
such expense (as determined by the appraisers, and the other party shall pay in
advance one-half of the estimated cost of such expense. Notwithstanding the
foregoing, if the Former Member has breached this Agreement, the purchase
price shall be reduced by an amount equal to the damages suffered by the
Company or the Remaining Members as a result of such breach.
9_3 Notice of Intent to Purchase. Once the Purchase price is determined, the
Manager will promptly give written notice thereof to the Remaining Members.
Within thirty (30) days after the Manager has notified the Remaining Members
as to the purchase price of the Former Member's Interest determined in
accordance with Section 9.2, the Remaining Members shall notify the Manager
in writing of their desire to purchase a portion of the Former Member's Interest.
The failure of the Remaining Member(s) to submit a notice within the
applicable period shall constitute an election on the part of the Remaining
Member(s) not to purchase any of the Former Member's Interest. If the notices
of purchase from Remaining Members represent an amount greater than the
total amount of the Former Member's Interest being sold, the amount each
Remaining Member will purchase will be equitably apportioned among them
based upon their relative Percentage Interests.
9.4 Election to Purchase Less Than All of the Former Member's Interest. If the
Remaining Member(s) elects to purchase none or less than all of its pro rata
share of the Former Member's Interest, then the Company may purchase any
remaining share of the Former Member's Interest. If the Remaining Member
and the Company do not elect to purchase all of the Former Member's Interest,
such Interest shall be that of an Economic Interest only.
4814-5432-5522.l 26
9_5 Payment of Purchase Price. On the Closing Date, as defined in Section 9.6, the
Company and/or the Remaining Members, as the case may be, shall pay in cash
their respective portion of the total purchase price for the Former Member's
Interest. If any Member fails to pay its respective portion of the total purchase
price ("Non-Paying Member") at Closing, each Non-Paying Member shall be
deemed to have waived the right to purchase it's portion of the Former
Member's Membership Interest and the other electing Members may elect to
purchase a pro rata share of the unpaid portion of the Former Member's
Membership Interest. If the other electing Member's do not elect to purchase
all of the Non-paying Member portion of the Former Member's Membership
Interest, the Company may elect to purchase such portion. Such electing
Member(s) or the Company, as the case may be, shall pay in cash their
respective portion of the unpaid portion of the purchase price within 30 days of
the Closing Date.
9_6 Closing of Purchase of Former Member's Interest. The closing for the sale of a
Former Member's Interest pursuant to this Article 9 shall be held at 10:00 a.m.
at the principal office of Company no later than one-hundred twenty (120) days
after the determination of the purchase price ("Closing Date"), except that if the
closing date falls on a Saturday, Sunday, or Utah legal holiday, then the closing
shall be held on the next succeeding business day. At the closing, the Former
Member or such Former Member's legal representative shall deliver to the
Company or the Remaining Members an instrument of transfer (containing
warranties of title and no encumbrances) conveying the Former Member's
Interest. The Former Member or such Former Member's legal representative,
the Company and the Remaining Members shall do all things and execute and
deliver all papers as may be necessary fully to consummate such sale and
purchase in accordance with the terms and provisions of this Agreement.
9=7 Purchase Terms Varied by Agreement. Nothing contained in this Article 9 is
intended to prohibit Members from agreeing upon other terms and conditions
for the purchase by the Company or any Member of the Membership Interest of
any Member in the Company desiring to retire, withdraw or resign, in whole or
in part, as a Member.
10
ACCOUNTING, RECORDS, REPORTING BY CLASS A MEMBERS
10.1 Books and Records. The books and records of the Company shall be kept,
and the financial position and the results of its operations recorded, in
accordance with the accounting methods followed for federal income tax
purposes in compliance of any applicable law. The books and records of the
Company shall reflect all the Company transactions and shall be appropriate and
adequate for the Company's business. The Company shall maintain at its
principal office all of the following:
4814-5432-5522.1 27
10.1.1 A current list of the full name and last known business or residence
address of each Member and Assignee set forth in alphabetical order,
together with the Capital Contributions, Capital Account and
Percentage Interest of each Member and Assignee;
10.1.2 A current list of the full name and business or residence address of
each Manager;
10.1.3 A copy of the Articles and any and all amendments thereto together
with executed copies of any powers of attorney pursuant to which the
Articles or any amendments thereto have been executed;
10.1.4 Copies of the Company's federal, state, and local income tax or
information returns and reports, if any, for the six (6) most recent
taxable years;
10.1.5 A copy of this Agreement and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to
which this Agreement or any amendments thereto have been executed;
10.1.6 Copies of the financial statements of the Company, if any, for the six
(6) most recent Fiscal Years; and
10.1.7 The Company's books and records as they relate to the internal affairs
of the Company for at least the current and past four(4) Fiscal Years.
10.2 Delivery to Members and Inspection.
10.2.1 Upon the request of any Member or Assignee for purposes reasonably
related to the interest of that Person as a Member or Assignee, the
Manager shall promptly deliver to the requesting Member or Assignee,
at the expense of the Company, a copy of the information required to
be maintained under Section 10.1 (a), (b) and (d), and a copy of this
Agreement.
10.2.2 Each Member, Manager and Assignee has the right, upon reasonable
request for purposes reasonably related to the interest of the Person as
Member, Manager or Assignee,to:
10.2.2.1 inspect and copy during normal business hours any of the
Company records described in Sections 10.1(a) through (g);
and
10.2.2.2 obtain from the Manager, promptly after their becoming
available, a copy of the Company's federal, state, and local
income tax or information returns for each Fiscal Year.
4814-5432-5522.1 28
10.2.3 Any request, inspection or copying by a Member or Assignee under
this Section 10.2 may be made by that Person or that Person's agent or
attorney.
10.3 Annual Statements.
10.3.1 The Manager shall cause to be prepared at least annually, at Company
expense, information necessary for the preparation of the Members'
and Assignees' federal and state income tax returns. The Manager
shall send or cause to be sent to each Member or Assignee within
ninety (90) days after the end of each taxable year such information as
is necessary to complete federal and state income tax or information
returns, and, if the Company has thirty-five (35) or fewer Members, a
copy of the Company's federal, state, and local income tax or
information returns for that year.
10.3.2 The Manager shall cause to be filed, as and when required by the Act
or any other applicable law, any annual or other statement required to
be filed by the Act or such other law.
10.4 Financial and Other Information. The Manager shall provide such
financial and other information relating to the Company or any other Person in
which the Company owns, directly or indirectly, an equity interest, as a Member
may reasonably request.
10.5 Filings. The Manager, at Company expense, shall cause the income tax
returns for the Company to be prepared and timely filed with the appropriate
authorities. The Manager, at Company expense, shall also cause to be prepared
and timely filed, with appropriate federal and state regulatory and administrative
bodies, amendments to, or restatements of, the Articles and all reports required
to be filed by the Company with those entities under the Act or other then
current applicable laws, rules, and regulations
10.6 Bank Accounts. The Manager shall maintain the funds of the Company in
one or more separate bank accounts in the name of the Company, and shall not
permit the funds of the Company to be commingled in any fashion with the
funds of any other Person.
10.7 Accounting Decisions and Reliance on Others. All decisions as to
accounting matters, except as otherwise specifically set forth herein, shall be
made by the Manager. The Manager may rely upon the advice of its
accountants as to whether such decisions are in accordance with accounting
methods followed for federal income tax purposes.
10.8 Tax Matters for the Company Handled by Manager and Tax Matters
Partner. The Manager shall from time to time cause the Company to make such
tax elections as it deems to be in the best interests of the Company and the Class
A Members. The Tax Matters Partner shall represent the Company (at the
4814-5432-5522.1 29
Company's expense) in connection with all examinations of the Company's
affairs by tax authorities, including resulting judicial and administrative
proceedings, and shall expend the Company funds for professional services and
costs associated therewith. The Tax Matters Partner shall oversee the Company
tax affairs in the overall best interests of the Company. The Manager may
appoint a successor Tax Matters Partner if for any reason the Tax Matters
Partner can no longer serve in that capacity, ceases to be a Member or Manager
or has been removed as Tax Matters Partner with or without cause, as the case
may be.
11
DISSOLUTION AND WINDING UP
11.1 Dissolution. The Company shall be dissolved, its assets shall be disposed
of, and its affairs wound up on the first to occur of the following:
11.1.1 The happening of any event of dissolution specified in the Articles.
Notwithstanding any provisions of this Agreement to the contrary,
neither the death, bankruptcy, retirement, resignation, expulsion or
dissolution of any Member or Manager shall cause the dissolution of
the Company, it being agreed that upon the occurrence of any such
event, the business of the Company shall continue unless and until the
Company is dissolved pursuant to the provisions of this Section 11.1;
11.1.2 The entry of a decree of judicial dissolution pursuant to Section 86.491
of the Act;
11.1.3 The vote of all Members; or
11.1.4 The occurrence of any other event that makes it impossible to carry on
the business of the Company.
11.2 Certificate of Dissolution. Upon the occurrence of any of the events
specified in Section 11.1: if the Manager has not wrongfully dissolved the
Company, it shall execute a Certificate of Dissolution in such form as may be
prescribed by the Nevada Secretary of State and file the Certificate as required
by the Act; or if the Manager has wrongfully dissolved the Company, the Class
A Members shall execute a Certificate of Dissolution in such form as may be
prescribed by the Nevada Secretary of State and file the Certificate as required
by the Act.
11.3 Winding Up. Upon the occurrence of any event specified in Section 11.1,
the Company shall continue solely for the purpose of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its creditors.
The Manager shall be responsible for overseeing the winding up and liquidation
of Company, shall take full account of the liabilities of Company and assets,
shall either cause its assets to be sold or distributed, and if sold, shall cause the
proceeds therefrom, to the extent sufficient therefor, to be applied and
4814-5432-5522.1 30
distributed as provided in Section 11.5; provided, however, if the Manager has
wrongfully dissolved the Company such responsibilities shall be undertaken by
the Members. The Persons winding up the affairs of the Company shall give
written notice of the commencement of winding up by mail to all known
creditors and claimants whose addresses appear on the records of the Company.
The Manager or Members winding up the affairs of the Company shall be
entitled to reasonable compensation for such services.
11.4 Distributions in Kind. Any non-cash asset distributed to one or more
Members shall first be valued at its fair market value to determine the Net Profit
or Net Loss that would have resulted if such asset were sold for such value, such
Net Profit or Net Loss shall then be allocated pursuant to Article 6, and the
Members' Capital Accounts shall be adjusted to reflect such allocations. The
amount distributed and charged to the Capital Account of each Member
receiving an interest in such distributed asset shall be the fair market value of
such interest (net of any liability secured by such asset that such Member
assumes or takes subject to). The fair market value of such asset shall be
determined by the Manager or by the Members or if any Member objects by an
independent appraiser (any such appraiser must be recognized as an expert in
valuing the type of asset involved) selected by the Manager or liquidating
trustee and approved by the Members.
11.5 Order of Payment Upon Dissolution.
11.5.1 After determining that all known debts and liabilities of the Company,
including, without limitation, debts and liabilities to Members who are
creditors of the Company, have been paid or adequately provided for,
the remaining assets shall be distributed to the Members in accordance
with their positive Capital Account balances, after taking into account
income and loss allocations for the Company's taxable year during
which liquidation occurs. Such liquidating distributions shall be made
by the end of the Company's taxable year in which the Company is
liquidated, or, if later, within ninety (90) days after the date of such
liquidation.
11.5.2 The payment of a debt or liability, whether the whereabouts of the
creditor is known or unknown, has been adequately provided for if the
payment has been provided for by either of the following means:
11.5.2.1 Payment thereof has been assumed or guaranteed in good
faith by one or more financially responsible persons or by the
United States government or any agency thereof, and the
provision, including the financial responsibility of the Person,
was determined in good faith and with reasonable care by the
Members or Manager to be adequate at the time of any
distribution of the assets pursuant to this Section; or
4814-5432-5522.1 31
11.5.2.2 The amount of the debt or liability has been deposited in
trust in a manner provided for by applicable law for such
purposes or substantially similar purposes.
This Section 11.5(b) shall not prescribe the exclusive means of making adequate
provision for debts and liabilities.
11.6 Limitations on Payments Made in Dissolution. Except as otherwise
specifically provided in this Agreement, each Member shall only be entitled to
look solely at the assets of the Company for the return of its positive Capital
Account balance and shall have no recourse for its Capital Contribution and/or
share of Net Profits (upon dissolution or otherwise) against the Manager or any
other Member.
11.7 Certificate of Cancellation. The Manager or Members who filed the
Certificate of Dissolution shall cause to be filed in the office of, and on a form
prescribed by, the Nevada Secretary of State, a Certificate of Cancellation of the
Articles upon the completion of the winding up of the affairs of the Company.
11.8 No Action for Dissolution. Except as expressly permitted in this
Agreement, a Member shall not take any voluntary action that directly causes a
dissolution of the Company. The Members acknowledge that irreparable
damage would be done to the goodwill and reputation of the Company if any
Member should bring an action in court to dissolve the Company under
circumstances where dissolution is not required by Section 11.1. This
Agreement has been drawn carefully to provide fair treatment of all parties and
equitable payment in liquidation of the Economic Interests. Accordingly,
except where the Manager has failed to liquidate the Company as required by
this Article 11, each Member hereby waives and renounces its right to initiate
legal action to seek the appointment of a receiver or trustee to liquidate the
Company or to seek a decree of judicial dissolution of the Company on the
ground that (a) it is not reasonably practicable to carry on the business of the
Company in conformity with the Articles or this Agreement, or (b) dissolution
is reasonably necessary for the protection of the rights or interests of the
complaining Member. Damages for breach of this Section 11.6 shall be
monetary damages only (and not specific performance), and the damages may
be offset against distributions by the Company to which such Member would
otherwise be entitled.
12
INDEMNIFICATION AND INSURANCE
12.1 Indemnification of Agents. The Company shall defend and indemnify any
Member, Manager and officer, and may indemnify any other Person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that it is or was a
Member, Manager, officer, employee or other agent of the Company or that,
481.4-5432-5522.1 32
being or having been such a Member, Manager, officer, employee or agent, it is
or was serving at the request of the Company as a manager, director, officer,
employee or other agent of another limited liability Company, corporation,
partnership, joint venture, trust or other enterprise (all such persons being
referred to hereinafter as an "agent"), to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater extent as
applicable law may hereafter from time to time permit. The Manager shall be
authorized, on behalf of the Company, to enter into indemnity agreements from
time to time with any Person entitled to be indemnified by the Company
hereunder, upon such terms and conditions as the Manager deem appropriate in
its business judgment.
12.2 Insurance. The Company shall have the power to purchase and maintain
insurance on behalf of any Person who is or was an agent of the Company
against any liability asserted against such Person and incurred by such Person in
any such capacity, or arising out of such Person's status as an agent, whether or
not the Company would have the power to indemnify such Person against such
liability under the provisions of Section 12.1 or under applicable law.
13
MISCELLANEOUS
13.1 Complete Agreement. This Agreement and the Articles constitute the
complete and exclusive statement of agreement among the Members and
Manager with respect to the subject matter herein and therein and replace and
supersede all prior written and oral agreements or statements by and among the
Members and Manager or any of them, including the Original Agreement. No
representation, statement, condition or warranty not contained in this Agreement
or the Articles will be binding on the Members or Manager or have any force or
effect whatsoever. To the extent that any provision of the Articles conflict with
any provision of this Agreement,the Articles shall control.
13.2 Binding Effect. Subject to the provisions of this Agreement relating to
transferability, this Agreement will be binding upon and inure to the benefit of
the Members, and their respective successors and assigns.
13.3 Parties in Interest. Except as expressly provided in the Act, nothing in this
Agreement shall confer any rights or remedies under or by reason of this
Agreement on any Persons other than the Members and Manager and their
respective successors and assigns nor shall anything in this Agreement relieve
or discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any party to this Agreement.
13.4 Pronouns; Statutory References. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, singular or plural,
as the context in which they are used may require. Any reference to the Code,
4814-5432-5522.1 33
the Regulations, the Act or other statutes or laws will include all amendments,
modifications, or replacements of the specific sections and provisions
concerned.
13.5 Headings. All headings herein are inserted only for convenience and ease
of reference and are not to be considered in the construction or interpretation of
any provision of this Agreement.
13.6 Interpretation. If any claim is made by any Member relating to any
conflict, omission or ambiguity in this Agreement, no presumption or burden of
proof or persuasion shall be implied by virtue of the fact that this Agreement
was prepared by or at the request of a particular Member or its counsel.
13.7 References to this Agreement. Numbered or lettered articles, sections and
subsections herein contained refer to articles, sections and subsections of this
Agreement unless otherwise expressly stated.
13.8 Jurisdiction. Each Member hereby consents to the exclusive jurisdiction
of the state and federal courts sitting in Utah in any action on a claim arising out
of, under or in connection with this Agreement or the transactions contemplated
by this Agreement. Each Member further agrees that personal jurisdiction over
it may be effected by service of process by registered or certified mail addressed
as provided in Section 13.12 of this Agreement, and that when so made shall be
as if served upon it personally within the State of Utah.
13.9 Exhibits. All Exhibits attached to this Agreement are incorporated and
shall be treated as if set forth herein.
13.10 Severability. If any provision of this Agreement or the application of such
provision to any person or circumstance shall be held invalid, the remainder of
this Agreement or the application of such provision to persons or circumstances
other than those to which it is held invalid shall not be affected thereby.
13.11 Additional Documents and Acts. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to effectuate, carry out and
perform all of the terms, provisions, and conditions of this Agreement and the
transactions contemplated hereby.
13.12 Notices. Any notice to be given or to be served upon the Company or any
party hereto in connection with this Agreement must be in writing (which may
include facsimile) and will be deemed to have been given and received when
delivered to the address specified on Exhibit B hereto. Such notices will be
given to a Member or Manager at the address specified in this Agreement. Any
party may, at any time by giving five (5) days' prior written notice to the other
parties, designate any other address in substitution of the foregoing address to
which such notice will be given.
481.4-5432-5522.1 34
13.13 Amendments. All amendments to this Agreement shall be in writing and
signed by Members holding sixty-six and two-thirds (66 2/3%) of the
Percentage Interests.
13.14 Reliance on Authority of Person Signing Agreement. If a Member is not a
natural person, neither the Company nor any Member will (a) be required to
determine the authority of the individual signing this Agreement to make any
commitment or undertaking on behalf of such entity or to determine any fact or
circumstance bearing upon the existence of the authority of such individual or
(b) be responsible for the application or distribution of proceeds paid or credited
to individuals signing this Agreement on behalf of such entity.
13.15 No Interest in Company Property; Waiver of Action for Partition. No
Member or Assignee has any interest in specific property of the Company.
Without limiting the foregoing, each Member and Assignee irrevocably waives
during the term of the Company any right that he or she may have to maintain
any action for partition with respect to the property of the Company.
13.16 Multiple Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
13.17 Time is of the Essence. All dates and times in this Agreement are of the
essence.
13.18 Remedies Cumulative. The remedies under this Agreement are
cumulative and shall not exclude any other remedies to which any person may
be lawfully entitled.
[Signatures appear on following pages.]
4814-5432-5522.1 35
MANAGER: COMPANY:
North American Management LLC The Pointe At Meridian, LLC
$y: North American Management LLC
Its: ' , ! -; It�M n er
Robertson —
4814-5432-5522.1 41
EXHIBIT `B' 7�1
NAMES OF CLASS W MEMBERS AS AT TUNE 15, 2020-45%OWNERSHIP OF THE COMPANY
Member Percentage Interest
THE POINTE SENIOR LIVING LLC 34.5%
ILJ, LLC 5.0%
LEE E. CORY LIVING TRUST 5.0%
WHITE PEAK PROPERTIES LLC 0.5%
TOTAL 45.0%
TOTAL MEMBERSHIP INTEREST OF
THE POINTE AT MERIDIAN LLC
TOTAL CLASS " A" MEMBERSHIP INTEREST 55.0%
TOTAL CLASS " B" MEMBERSHIP INTEREST 45.00/t,
100.0%
Manager's Address: North American Management LLC
197 West 4860 South
Salt Lake City, Utah 84107
4814-5432-5522.1 44