Sample LLC Operating Agreement

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This sample has been provided in conjunction with Meyerdirk Consulting. MeyerdirkConsulting.com

Below is a sample of an Operating Agreement for an LLC. An operating agreement is an agreement between the managers as to their duties for the organization and how the organization will be governed both financially and operationally. Without an operating agreement, the LLC is governed by the law of the forum state, although some states require an operating agreement. An operating agreement can be edited as often as the managers desire.

[Draft ________]


LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF [COMPANY], LLC,
A [STATE] LIMITED LIABILITY COMPANY

Dated as of [Month] 1, [Year]

Contents

TABLE OF CONTENTS

ARTICLE I Definitions

  • 1.1 Definitions
  • 1.2 Other Definitional Provisions

ARTICLE II Organization of the Company

  • 2.1 Formation
  • 2.2 Name
  • 2.3 Registered Office; Agent
  • 2.4 Term
  • 2.5 Purposes and Powers

ARTICLE III Management of the Company

  • 3.1 Managing Member
  • 3.2 Officers
  • 3.3 Fiduciary Duties
  • 3.4 Performance of Duties; Liability of Managing Member and Officers
  • 3.5 Indemnification

ARTICLE IV Members; Voting Rights

  • 4.1 Meetings of Members
  • 4.2 Voting Rights
  • 4.3 Registered Members
  • 4.4 Limitation of Liability
  • 4.5 Withdrawal; Resignation
  • 4.6 Death of a Member
  • 4.7 Authority
  • 4.8 Outside Activities

ARTICLE V Units; Membership

  • 5.1 Units Generally
  • 5.2 Issuance of Units
  • 5.3 New Members from the Issuance of Units
  • 5.4 Preemptive Rights

ARTICLE VI Capital Contributions and Capital Accounts

  • 6.1 Capital Contributions; Capital Calls
  • 6.2 Capital Accounts
  • 6.3 Negative Capital Accounts
  • 6.4 No Withdrawal
  • 6.5 Loans From Members
  • 6.6 Status of Capital Contributions

ARTICLE VII Distributions

  • 7.1 Generally
  • 7.2 Mandatory and Discretionary Distributions
  • 7.3 Tax Advances
  • 7.4 Indemnification and Reimbursement for Payments on Behalf of a Member

ARTICLE VIII Allocations

  • 8.1 Allocations of Profits and Losses
  • 8.2 Regulatory and Special Allocations
  • 8.3 Curative Allocations
  • 8.4 Tax Allocations

ARTICLE IX Elections and Reports

  • 9.1 Generally
  • 9.2 Tax Status
  • 9.3 Reports
  • 9.4 Tax Elections
  • 9.5 Tax Controversies

ARTICLE X Dissolution and Liquidation

  • 10.1 Dissolution
  • 10.2 Liquidation

ARTICLE XI Transfer of Units

  • 11.1 Restrictions
  • 11.2 General Restrictions on Transfer
  • 11.3 Procedures for Transfer
  • 11.4 Legend
  • 11.5 Limitations
  • 11.6 Additional Transfer Restrictions

ARTICLE XII Miscellaneous Provisions

  • 12.1 Notices
  • 12.2 Governing Law
  • 12.3 No Action for Partition
  • 12.4 Headings and Sections
  • 12.5 Amendments
  • 12.6 Number and Gender
  • 12.7 Binding Effect
  • 12.8 Counterparts; Facsimile
  • 12.9 Severability
  • 12.10 Remedies
  • 12.11 Business Days
  • 12.12 Waiver of Jury Trial
  • 12.13 No Strict Construction
  • 12.14 Entire Agreement
  • 12.15 Parties in Interest
  • 12.16 Initial Public Offering
  • 12.17 Mergers and Consolidations
  • 12.18 Arbitration

EXHIBITS:

  • Exhibit A Form of Joinder to Limited Liability Company Agreement

SCHEDULES:

  • Schedule A Officers of the Company
  • Schedule B Members Schedule

LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF [COMPANY], LLC.

This LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) dated as of [Month] 1, [Year] of [Company], LLC (the “Company”), a [State] limited liability company is by and among each of the Persons who is a party to or otherwise bound by this Agreement and is listed on the Members Schedule (as herein defined).

WHEREAS, the Members desire to enter into this Agreement (“Operating Agreement” or “Agreement”) for the purposes of governing the Company, to and for the purpose of any lawful activity permitted under the [State] Limited Liability Company Act (the “Act” or “[State] Act”).

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and other good and valuable consideration, the Members hereby agree as follows:

ARTICLE I

Definitions

1.1 Definitions. The following terms used in this Agreement shall have the following meanings (unless otherwise expressly provided in this Agreement):

“Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Taxable Year, after giving effect to the following adjustments:
(i) Crediting to such Capital Account any amount which such Member is obligated to restore or is deemed to be obligated to restore pursuant to Treasury Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2 (g)(1), and 1.704-2(i); and
(ii) Debiting to such Capital Account the items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
“Adjusted Taxable Income” of a Member for a Fiscal Year (or portion thereof) with respect to Units held by such Member means the federal taxable income (or alternative minimum taxable income, as the case may be) allocated by the Company to the Member with respect to such Units (as adjusted by any final determination in connection with any tax audit or other proceeding) for such Fiscal Year (or portion thereof); provided that such taxable income (or alternative minimum taxable income, as the case may be) shall be computed (i) as if all excess taxable losses and excess taxable credits allocated with respect to such Units were carried forward (taking into account the character of any such loss carryforward as capital or ordinary), and(ii) taking into account any special basis adjustment with respect to such Member resulting from an election by the Company under Code Section 754.
“Available Cash” shall have the meaning set forth in Section 7.1(a).
“Bankruptcy” means, with respect to a Member, that (i) such Member has (A) made an assignment for the benefit of creditors; (B) filed a voluntary petition in bankruptcy; (C) been adjudged bankrupt or insolvent, or had entered against such Member an order of relief in any bankruptcy or insolvency proceeding; (D) filed a petition or an answer seeking for such Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation or filed an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Member in any proceeding of such nature; or (E) sought, consented to, or acquiesced in the appointment of a trustee, receiver or liquidator of such Member or of all or any substantial part of such Member’s properties; (ii) 120 days have elapsed after the commencement of any proceeding against such Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation and such proceeding has not been dismissed; or (iii) 90 days have elapsed since the appointment without such Member’s consent or acquiescence of a trustee, receiver or liquidator of such Member or of all or any substantial part of such Member’s properties and such appointment has not been vacated or stayed or the appointment is not vacated within 90 days after the expiration of such stay.
“Book Value” means, with respect to any Company asset, the adjusted basis of such asset for federal income tax purposes, except as follows:
(a) The initial Book Value of any Company asset contributed by a Unitholder to the Company shall be the gross Fair Market Value of such Company asset as of the date of such contribution;
(b) The Book Value of each Company asset shall be adjusted to equal its respective gross Fair Market Value, as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Unitholder in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Unitholder of more than a de minimis amount of Company assets (other than cash) as consideration for all or part of its Units unless the Managing Member determines that such adjustment is not necessary to reflect the relative economic interests of the Unitholders in the Company; and (iii) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); provided that an adjustment described in clauses (i) and (ii) of this paragraph shall be made only if the Managing Member reasonably determines that such adjustment is necessary to reflect the relative economic interests of the Members in the Company;
(c) The Book Value of a Company asset distributed to any Unitholder shall be the Fair Market Value of such Company asset as of the date of distribution thereof;
(d) The Book Value of each Company asset shall be increased or decreased, as the case may be, to reflect any adjustments to the adjusted basis of such Company asset pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Account balances pursuant to Treasury Regulations Section § 1.704-1(b)(2)(iv)(m); provided, that Book Values shall not be adjusted pursuant to this subparagraph (d) to the extent that an adjustment pursuant to subparagraph (b) above is made in conjunction with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d); and
(e) If the Book Value of a Company asset has been determined or adjusted pursuant to subparagraphs (a), (b) or (d) above, such Book Value shall thereafter be adjusted to reflect the Depreciation taken into account with respect to such Company asset for purposes of computing Profits and Losses.
“Capital Account” means the capital account maintained for a Member pursuant to Section 6.2.
“Capital Contribution” means any contribution to the capital of the Company in cash or property by a Member, whenever made.
“Certificate” means the Certificate of Formation of the Company under the [State] Act.
“Code” means the United States Internal Revenue Code of 1986, as amended from time to time.
“Company Minimum Gain” has the meaning set forth for “partnership minimum gain” in Treasury Regulation Section 1.704-2(d).
“Contributing Member” shall have the meaning set forth in Section 6.1(c).
“[State] Act” means the [State] Limited Liability Company Act, as the same may be amended from time to time.
“Depreciation” means for each Taxable Year, an amount equal to the depreciation or other cost recovery deduction allowable with respect to an asset for such Taxable Year, except that (i) with respect to any asset whose Book Value differs from its adjusted tax basis for federal income tax purposes and which difference is being eliminated by the “remedial method” defined in Treasury Regulation Section 1.704-3(d), Depreciation for such Taxable Year shall be the amount of book basis recovered for such Taxable Year under the rules prescribed by Treasury Regulation Section 1.704-3(d)(2), and (ii) with respect to any other asset whose Book Value differs from its adjusted tax basis at the beginning of such Taxable Year, Depreciation shall be the amount which bears the same ratio to such beginning Book Value as the federal income tax depreciation, amortization or other cost recovery deduction for such Taxable Year bears to such beginning adjusted tax basis, provided, however, that if the adjusted tax basis of an asset at the beginning of such Taxable Year is zero, Depreciation shall be determined with reference to such beginning Book Value using any reasonable method selected by the Tax Matters Partner.
“Estimated Tax Amount” of a Member for a Fiscal Year means the Member’s Tax Amount for such Fiscal Year as estimated in good faith from time to time by the Managing Members. In making such estimate, the Managing Members shall take into account amounts shown on Internal Revenue Service Form 1065 filed by the Company and similar state or local forms filed by the Company for the preceding taxable year and such other adjustments as in the reasonable business judgment of the Managing Members are necessary or appropriate to reflect the estimated operations of the Company for the Fiscal Year.
“Fair Market Value” of any asset or the Units as of any date means the purchase price which a willing buyer having all relevant knowledge would pay a willing seller for such asset or Units in an arm’s-length transaction, as determined in good faith by the Managing Members based on such factors as the Managing Members, in the exercise of its reasonable business judgment, considers relevant.
“Financing Pledge” means the pledge by any Member of all or any portion of its Units to a bona fide lending institution in connection with the borrowing of funds by such Member and/or any of its Affiliates for any purpose other than the sale of Units.
“Fiscal Year” means the Company’s Taxable Year.
“GCL” means the General Corporation Law of the State of [State], as the same may be amended from time to time.
“Losses” means items of loss and deduction of the Company determined according to Section 6.2.
“Member” means each Person identified on the Members Schedule as of the date hereof who is a party to or is otherwise bound by this Agreement and each Person who may hereafter be admitted as a Member in accordance with the terms of this Agreement. The Members shall constitute the “members” (as that term is defined in the [State] Act) of the Company.
“Member Minimum Gain” with respect to each Member Nonrecourse Debt, means the amount of Company Minimum Gain (as determined according to Treasury Regulation Section 1.704-2(d)(1)) that would result if such Member Nonrecourse Debt were treated as a nonrecourse liability, determined in accordance with Treasury Regulation Section 1.704-2(i)(3).
“Member Nonrecourse Debt” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4), substituting the term “Company” for the term “partnership” and the term “Member” for the term “partner” as the context requires.
“Member Nonrecourse Deduction” has the meaning set forth in Treasury Regulation Section 1.704-2(i), substituting the term “Member” for the term “partner” as the context requires.
“Membership Interest” means the interest acquired by a Member in the Company, including such Member’s right (based on the type and class and/or series of Unit or Units held by such Member), as applicable, (A) to a distributive share of Profits, Losses, and other items of income, gain, loss, deduction and credits of the Company, (B) to a distributive share of the assets of the Company, (C) to vote on, consent to or otherwise participate in any decision of the Members, and (D) to any and all other benefits to which such Member may be entitled as provided in this Agreement or the [State] Act.
“Noncontributing Member” shall have the meaning set forth in Section 6.1(c).
“Nonrecourse Deductions” has the meaning set forth in Treasury Regulation Section 1.704-2(b) (substituting the term “Company” for the term “partnership” as the context requires).
“Person” means any individual, corporation, partnership, limited liability company, trust, joint venture, governmental entity or other unincorporated entity, association or group.
“Profits” means items of income and gain of the Company determined according to Section 6.2.
“Public Offering” means an underwritten public offering and sale of common stock or Units pursuant to an effective registration statement under the Securities Act; provided that a Public Offering shall not include an offering made in connection with a business acquisition or combination pursuant to a registration statement on Form S-4 or any similar form, or an employee benefit plan pursuant to a registration statement on Form S-8 or any similar form.
“Quarterly Estimated Tax Amount” of a Member for any calendar quarter of a Fiscal Year means the excess, if any of (i) the product of (A) ¼ in the case of the first calendar quarter of the Fiscal Year, ½ in the case of the second calendar quarter of the Fiscal Year, ¾ in the case of the third calendar quarter of the Fiscal Year, and 1 in the case of the fourth calendar quarter of the Fiscal Year and (B) the Member’s Estimated Tax Amount for such Fiscal Year over (ii) all distributions previously made during such Fiscal Year to such Member.
“Tax Advances” means any distributions made by the Company pursuant to Section 7.3 hereof.
“Tax Amount” of a Member for a Fiscal Year means the product of (A) the Tax Rate for such Fiscal Year and (B) the Adjusted Taxable Income of the Member for such Fiscal Year with respect to its Units.
“Tax Matters Partner” has the meaning set forth in Code Section 6231 and the Treasury Regulations thereunder.
“Tax Rate” of a Member for any period means the highest marginal blended federal, state and local income tax rate applicable to any Member of the Company for the applicable period, taking into account for federal income tax purposes, the deductibility of state and local taxes. If higher, federal Tax Advances will be based on federal alternative minimum taxable income (taking into account solely Company items and the principles contained in the definitions of Adjusted Taxable Income) and rates (using the highest marginal federal alternative minimum tax rate applicable to an individual).
“Taxable Year” means the Company’s taxable year ending on or about December 31 (or part thereof in the case of the Company’s first and last taxable year), or such other year as is (i) required by Section 706 of the Code or (ii) determined by the Managing Members (if no year is so required by Section 706 of the Code).
“Transfer” means any direct or indirect sale, transfer, conveyance, assignment, pledge, hypothecation, gift, delivery or other disposition other than a Financing Pledge.
“Treasury Regulations” means the final or temporary regulations that have been issued by the U.S. Department of Treasury pursuant to its authority under the Code, and any successor regulations.
“Unit” means a unit representing a fractional part of the Membership Interests of all of the Unitholders and shall include all types and classes and/or series of Units; provided that any type or class or series of Unit shall have the designations, preferences and/or special rights set forth in this Agreement and the Membership Interests represented by such type or class or series of Unit shall be determined in accordance with such designations, preferences and/or special rights.
“Unitholder” means with respect to any Unit, the record holder thereof as evidenced on the Members Schedule.

1.2 Other Definitional Provisions. Capitalized terms used in this Agreement which
are not defined in this Article I have the meanings contained elsewhere in this Agreement.
Defined terms used in this Agreement in the singular shall import the plural and vice versa.

ARTICLE II

Organization of the Company

2.1 Formation.

(a) This Agreement shall constitute the “limited liability company operating agreement” (as that term is used in the [State] Act) of the Company. The rights, powers, duties, obligations and liabilities of the Members shall be determined pursuant to the [State] Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any 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 [State] Act, control.
(b) Any officer of the Company as an “authorized person” within the meaning of the [State] Act, is hereby authorized, at any time that the applicable Member(s) have approved an amendment to the Certificate in accordance with the terms hereof, to promptly execute, deliver and file such amendment in accordance with the [State] Act.
(c) The Company shall, to the extent permissible, elect to be treated as a partnership for federal, state and local income tax purposes, and each Member and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment and no Member shall take any action inconsistent with such treatment. The Company shall not be deemed a partnership or joint venture for any other purpose.

2.2 Name. The name of the Company is “[Company], LLC” or such other name or names as the Managing Members may from time to time designate; provided, that the name shall always contain the words “Limited Liability Company”, “LLC” or “L.L.C.”

2.3 Registered Office; Agent. The Company shall maintain a registered office and agent in the State of [State] as determined by the Managing Members.

2.4 Term. The term of existence of the Company shall be as stated in the Certificate, unless the Company is dissolved in accordance with the provisions of this Agreement.

2.5 Purposes and Powers. The purposes and character of the business of the Company shall be to transact any or all lawful business for which limited liability companies may be organized under the [State] Act. The Company shall have any and all powers which are necessary or desirable to carry out the purposes and business of the Company, including the ability to incur and guaranty indebtedness, to the extent the same may be legally exercised by limited liability companies under the [State] Act. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the state of its organization.

ARTICLE III

Management of the Company

3.1 Managing Members.

(a) Powers. The business and affairs of the Company shall be managed by or under the direction of the Managing Members and the Managing Members shall, subject to any Member consent required by Section 3.1(d), have all necessary powers to manage and carry out the purposes, business, property, and affairs of the Company without the consent or approval of any Member. Each Managing Member shall have an equal vote in decisions governing the business by the Managing Members, with a majority vote required for such decision to be affirmed.
(b) Replacement or Removal of Managing Members. The Company shall have three Managing Members, who shall initially be [Member 2], [Member 3] and [Member 1]. The Managing Members shall hold such position until a successor shall have been elected and qualified, or the Managing Members’s earlier resignation or removal. The Managing Members shall be removed, or a replacement elected, only by the affirmative vote or written consent of Members holding in the aggregate not less than a majority of the total outstanding Units. A Managing Member need not be a Member, an individual, a resident of the state of the Company’s organization or a citizen of the United States.
(c) Compensation of the Managing Members. The Managing Members, in his, her or its capacity as such, shall not receive any stated salary or compensation for such service as a Managing Member except to the extent approved in accordance with Section 3.1(d); provided, however that Managing Members may receive guaranteed payments (or salaries) for their employment as an Officer of the Company. The Managing Members shall be entitled to reimbursement for the reasonable out-of-pocket expenses, if any, incurred in carrying out its duties as Managing Members.
(d) Special Approvals. The Company will not, and will cause all of its subsidiaries not to, without first obtaining the approval (by vote or written consent, as provided herein) of the holders of not less than a majority of the total outstanding Units:
(i) redeem, purchase or otherwise acquire from any Member or any of its Affiliates any Units; provided, however, that this restriction shall not apply to the repurchase of Units from any Member who is also an employee of the Company pursuant to any repurchase or similar agreement upon the termination of such person’s employment with the Company; or
(ii) approve or enter into (or make any material amendment to) any transaction or agreement to which any officer, employee or holder of more than five percent (5%) of any class of Units or Subsidiary Units, member of the family of any such person, or any corporation, partnership, trust or other entity in which any such person, or member of the family of any such person, is a director, officer, trustee, partner or holder of more than five percent (5%) of the outstanding capital stock or equity interest thereof (each an “Affiliated Entity”) is directly or indirectly a party or beneficiary (other than the payment of salary or related compensation in the ordinary course of business), except where the terms of any such transaction are no less favorable to the Company or any Subsidiary than the terms such entity could have reasonably obtained from an unrelated third party or to Contributing Members pursuant to Section 6.1(c).
(iii) take any actions, expensing of sums, incur any obligations on behalf of the Company in regards to;
(a) Any significant and material purchase, receipt, lease, exchange, or other acquisition of any real or personal property or business in excess of $25,000;
(b) Any single business transaction, occurring as a normal part of the affairs of the business, that is in excess of $25,000;
(c) The sale, exchange, lease or other transfer of all or substantially all of the assets and property of the Company;
(d) Any mortgage, grant of security interest, pledge or encumbrance upon all or substantially all of the assets and property of the Company;
(e) Any merger, consolidation, sale, or dissolution of the Company;
(f) The commission of any act which would make it impossible for the Company to carry on its ordinary business and affairs;
(g) Any act that would contravene any provision of the Articles or of this Operating Agreement.

3.2 Officers.

(a) Appointment of Officers. The Managing Members may appoint individuals as officers (“officers”) of the Company, which may include a President, a Chief Executive Officer, a Chief Financial Officer, a Secretary and such other officers (such as a Chief Operating Officer, a Treasurer or any number of Vice Presidents) as the Managing Members deems advisable. No officer need be a Member. An individual may be appointed to more than one office. No officer of the Company shall have any rights or powers beyond the rights and powers granted to such officer in this Agreement. The officers of the Company as of the date hereof are listed on the attached Schedule A.
(b) Duties of Officers Generally. Under the direction of and, at all times, subject to the authority of the Managing Members, the officers shall have the discretion to manage the day-to-day business, operations and affairs of the Company in the ordinary course of its business, to make all decisions, except those expressly reserved or requiring the approval of the Managing Members hereunder, affecting the day-to-day business, operations and affairs of the Company in the ordinary course of its business and to take all such actions as they deem necessary or appropriate to accomplish the foregoing, in each case, unless the Managing Members shall have previously restricted (specifically or generally) such powers. In addition, the officers shall have such other powers and duties as may be prescribed by the Managing Members or this Agreement. The President shall have the power and authority to delegate to any agents or employees of the Company rights and powers of officers of the Company to manage and control the day-to-day business, operations and affairs of the Company in the ordinary course of its business, as the President may deem appropriate from time to time, in each case, unless the Managing Members shall have previously restricted (specifically or generally) such powers. Notwithstanding the foregoing, no officer shall enter into or consummate any of the following transactions without the prior approval of the Managing Members: (i) any transaction outside of the ordinary course of the Company’s business consistent with past practice; (ii) the issuance of any Units or other security of the Company; including any security convertible into any security; (iii) any sale of any material portion of the Company’s assets (whether by asset purchase, stock purchase, merger or otherwise), except in the ordinary course of the Company’s business; (iv) declare or pay any dividend or make any other distributions in respect of any Units; (v) redeem or purchase or otherwise acquire any Units; (vi) incur any liabilities, obligations, including guarantees, or indebtedness in excess of $25,000 individually, or as otherwise expressly provided in the Company’s employment agreement with the President of the Company; (vii) approve any material deviation from the then current operating budget as approved by the Managing Members; or (viii) any other acts requiring the consent or approval of the Managing Members under this Agreement.
(c) Authority of Officers. Subject to Section 3.2(b), any officer of the Company shall have the right, power and authority to transact business in the name of the Company or to act for or on behalf of or to bind the Company. With respect to all matters within the ordinary course of business of the Company, third parties dealing with the Company may rely conclusively upon any certificate of any officer to the effect that such officer is acting on behalf of the Company.
(d) Removal, Resignation and Filling of Vacancy of Officers. The Managing Members may remove any officer, for any reason or for no reason, at any time, subject to the terms of any then-existing employment agreement. Any officer may resign at any time by giving written notice to the Managing Members, and such resignation shall take effect at the date of the receipt of that notice or any later time specified in that notice; provided, that unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any such resignation shall be without prejudice to the rights, if any, of the Company or such officer under this Agreement or any employment or unit repurchase agreement then in effect. A vacancy in any office because of death, resignation, removal or otherwise shall be filled in the manner prescribed in this Agreement for regular appointments to that office.
(e) Compensation of Officers. The officers shall be entitled to receive compensation from the Company as determined by the Managing Members, subject to any limitations imposed thereon as provided in the Company’s employment agreement with the President of the Company.
(f) President. Under the direction of and, at all times, subject to the authority of the Managing Members and the limitations imposed by Section 3.2(b), the President shall have general supervision over the day-to-day business, operations and affairs of the Company and shall perform such duties and exercise such powers as are incident to the office of president under the GCL. The President shall have such other powers and perform such other duties as may from time to time be prescribed by the Managing Members.
(g) Chief Financial Officer. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Company, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital and Units, and, in general, shall perform all the duties incident to the office of the chief financial officer of a corporation organized under the GCL. The Chief Financial Officer shall have the custody of the funds and securities of the Company, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company. The Chief Financial Officer shall have such other powers and perform such other duties as may from time to time be prescribed by the Managing Members and/or the President, subject to the limitations imposed by Section 3.2(b).
(h) Secretary. The Secretary shall (i) keep the minutes and resolutions of any meetings of the Members and of the Managing Members in one or more books provided for that purpose; (ii) see that all notices to be given by the Company are duly given in accordance with the provisions of this Agreement and as required by law; (iii) be custodian of the company records; (iv) keep a register of the addresses of each Member which shall be furnished to the Secretary by such Member; (v) have general charge of the Members Schedule; and (vi) in general perform all duties incident to the office of the secretary of a corporation organized under the GCL. The Secretary shall have such other powers and perform such other duties as may from time to time be prescribed by the Managing Members and/or the President, subject to the limitations imposed by Section 3.2(b).
(i) Other Officers. All other officers of the Company shall have such powers and perform such duties as may from time to time be prescribed by the Managing Members and/or the President, subject to the limitations imposed by Section 3.2(b).

3.3 Fiduciary Duties. The Managing Members, in the performance of its duties as such, shall owe to the Members duties of loyalty and due care of the type owed by the directors of a corporation to the stockholders of such corporation under the laws of the State of [State] and shall discharge such duties in good faith, with the care an ordinary prudent person in a like position would exercise under similar circumstances, and in a manner the Managing Members reasonably believes to be in the best interests of the Company. Notwithstanding anything contained herein to the contrary, subject to the terms of any written agreement with the Managing Members to the contrary, the Managing Members shall not have any duty or obligation to bring any “corporate opportunity” to the Company or any of its subsidiaries. The officers, in the performance of their duties as such, shall owe to the Members duties of loyalty and due care of the type owed by the officers of a corporation to the stockholders of such corporation under the laws of the State of [State].

3.4 Performance of Duties; Liability of Managing Members and Officers. In performing his, her or its duties, each of the Managing Members and the officers shall be entitled to rely in good faith on the provisions of this Agreement and on information, opinions, reports, or statements (including financial statements and information, opinions, reports or statements as to the value or amount of the assets, liabilities, Profits or Losses of the Company or any facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid), of the following other Persons or groups: (A) one or more officers or employees of the Company; (B) any attorney, independent accountant, or other Person employed or engaged by the Company; or (C) any other Person who has been selected with reasonable care by or on behalf of the Company, in each case as to matters which such relying Person reasonably believes to be within such other Person’s professional or expert competence. No person who is a Managing Member or an officer of the Company, or any combination of the foregoing, 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 Managing Member or an officer of the Company or any combination of the foregoing, except to the extent of their gross negligence or willful misconduct.

3.5 Indemnification. Notwithstanding Section 3.3, neither the Managing Members nor any officer shall be liable, responsible or accountable for damages or otherwise to the Company, or to the Members, and, to the fullest extent allowed by law, the Managing Members and each officer shall be indemnified and held harmless by the Company, including advancement of reasonable attorneys’ fees and other expenses from and against all claims, liabilities, and expenses arising out of any management of Company affairs; provided that (A) such person’s course of conduct was pursued in good faith and believed by him or it to be in the best interests of the Company and was reasonably believed by him or it to be within the scope of authority conferred on such person pursuant to this Agreement and (B) such course of conduct did not constitute gross negligence or willful misconduct on the part of such Managing Members or officer and otherwise was in accordance with the terms of this Agreement. The rights of indemnification provided in this Section are intended to provide indemnification of the Managing Members and the officers to the fullest extent permitted by the GCL regarding a corporation’s indemnification of its directors and officers and will be in addition to any rights to which the Managing Members or officers may otherwise be entitled by contract or as a matter of law and shall extend to his heirs, personal representatives and assigns. The absence of any express provision for indemnification herein shall not limit any right of indemnification existing independently of this Section. The Managing Members’s and each officer’s right to indemnification pursuant to this Section may be conditioned upon the delivery by such person of a written undertaking to repay such amount if such person is determined pursuant to this Section or adjudicated to be ineligible for indemnification, which undertaking shall be an unlimited general obligation.

ARTICLE IV

Members; Voting Rights

4.1 Meetings of Members.

(a) Generally. Meetings of the Members may be called by (i) the Managing Members or (ii) by a Member or Members holding 20% or more of the then outstanding Units. All meetings of the Members shall be held telephonically or at the principal office of the Company or at such other place within or without the state of the Company’s organization as may be determined by the Managing Members. A record shall be maintained by the Secretary of the Company of each meeting of the Members.
(b) Notice of Meetings of Members. Written or printed notice stating the place, day and hour of the meeting and, in the case of a special meeting of the Members, describing the purposes for which the meeting is called shall be delivered not fewer than ten days, but not more than sixty days, before the date of the meeting, either personally or by any written method by which it is reasonable to expect that the Members would receive such notice not later than the business day prior to the date of the meeting, to each holder of Units (with a copy to the Secretary of the Company), by or at the direction of the Member(s) calling the meeting or the Managing Members, as the case may be. Such notice may, but need not, specify the purpose or purposes of such meeting and may, but need not, limit the business to be conducted at such meeting to such purpose(s).
(c) Quorum. Except as otherwise provided herein or by applicable law, at any time, Units representing not less than 65% of the total outstanding Units represented in person or by proxy, shall constitute a quorum of Members for purposes of conducting business. Once a quorum is present at the meeting of the Members, the subsequent withdrawal from the meeting of any Member prior to adjournment or the refusal of any Member to vote shall not affect the presence of a quorum at the meeting. If, however, such quorum shall not be present at any meeting of the Members, the Members entitled to vote at such meeting shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until Members which own Units representing not less than 65% of the total outstanding Units shall be present or represented. Except as otherwise required by applicable law or as required herein, resolutions of the Members at any meeting of Members shall be adopted by the affirmative vote of Members holding not less than a majority of the total outstanding Units.
(d) Actions Without a Meeting. Unless otherwise prohibited by law, any action to be taken at a meeting of the Members may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by a Member or Members holding not less than a majority of the total outstanding Units, or such higher percentage of Units as is expressly required hereunder to take such action. A record shall be maintained by the Secretary of the Company of each such action taken by written consent of a Member or Members.

4.2 Voting Rights. Except as specifically provided herein or otherwise required by
applicable law, for all purposes hereunder, including for purposes of Article III hereof, each
Member shall be entitled to one vote for each Unit held by such Member. A Member which
owns Units may vote or be present at a meeting either in person or by proxy.

4.3 Registered Members. The Company shall be entitled to treat the owner of
record of any Units as the owner in fact of such Unit for all purposes, and accordingly shall not
be bound to recognize any equitable or other claim to or interest in such Unit on the part of any
other person, whether or not it shall have express or other notice of such claim or interest, except
as expressly provided by this Agreement or applicable law.

4.4 Limitation of Liability. No Member will be obligated personally for any debt,
obligation or liability of the Company or of any of its subsidiaries or other Members by reason of
being a Member, whether arising in contract, tort or otherwise. Except as otherwise provided
under applicable law or expressly in this Agreement, no Member, in his or its capacity as such,
will have any fiduciary or other duty to another Member with respect to the business and affairs
of the Company or of any of its subsidiaries. No Member will have any responsibility to restore
any negative balance in his or her Capital Account or to contribute to or in respect of the
liabilities or obligations of the Company or of any of its subsidiaries or return distributions made
by the Company.

4.5 Withdrawal; Resignation. A Member shall not cease to be a Member as a result
of the Bankruptcy of such Member. So long as a Member continues to own or hold any Units,
such Member shall not have the ability to resign as a Member prior to the dissolution and
winding up of the Company and any such resignation or attempted resignation by a Member
prior to the dissolution or winding up of the Company shall be null and void. As soon as any
Person who is a Member ceases to own or hold any Units, such Person shall no longer be a
Member.

4.6 Death of a Member. The death of any Member shall not cause the dissolution of
the Company. In such event the Company and its business shall be continued by the remaining
Member or Members and the Units owned by the deceased Member shall automatically be
transferred to such Member’s heirs (provided that, within a reasonable time after such transfer,
the applicable heirs shall sign a joinder to this Agreement substantially in the form of Exhibit A
attached hereto). The heirs receiving the transferred Units shall be considered Members under
the terms of this Agreement, but shall not be entitled to voting rights. As Non-Voting Members
the heirs are fully entitled to (A) a distributive share of Profits, Losses, and other items of
incomes, gain, loss, deduction and credits of the Company, and (B) to a distributive share of the
assets of the Company; but are not entitled to any voting rights, consent to or otherwise
participate in any decision of the Members. In order for the heirs to be considered for voting
rights of their Units they must present a written request to the Managing Members within 60
days of the estate award to the heirs petitioning for the voting rights reinstatement of their Units.
Upon such request the remaining Members will have up to 60 days to vote upon such request,
and the remaining Members may grant such request upon not less than a majority vote in the
affirmative. Upon a vote by the remaining Members to grant the request, then such heirs Units
shall be considered Units with voting rights. Upon a vote by the remaining Members to deny the
request, then the heirs Units shall be considered as Non-Voting Member Units.

4.7 Authority. No Member, in its capacity as a Member, shall have the power to act
for or on behalf of, or to bind the Company.

4.8 Outside Activities. Subject to the terms of any written agreement by any
Member to the contrary (including the non-competition agreements with employees of the
Company or any of its subsidiaries), a Member may have business interests and engage in
business activities in addition to those relating to the Company, including business interests and
activities which compete with the Company, and no Member (unless such Member is an
employee of the Company or one of its subsidiaries) shall have any duty or obligation to bring
any “corporate opportunity” to the Company. Subject to the terms of any written agreement by
any Member to the contrary, neither the Company nor any other Member shall have any rights
by virtue of this Agreement in any business interests or activities of any Member.

ARTICLE V

Units; Membership

5.1 Units Generally. The Membership Interests of the Members shall be represented by issued and outstanding Units, which may be divided into one or more types, classes or series, with each type or class or series having the rights and privileges, including voting rights, if any, set forth in this Agreement. Upon execution of this Agreement, the Members hold the Units set forth on the Members Schedule attached hereto and each Member hereby acknowledge and agrees that the Unit reflected as owned by such Member on such schedule represents such Member’s entire Membership Interest as of immediately after the date hereof. The Secretary of the Company shall maintain a schedule of all Members from time to time, their respective mailing addresses, the Units held by them and the Capital Account balance associated therewith (as the same may be amended, modified or supplemented from time to time, the “Members Schedule”), a copy of which as of the execution of this Agreement is attached hereto as Schedule B. Ownership of a Unit (or fraction thereof) shall not entitle a Member to call for a partition or division of any property of the Company or for any accounting.

5.2 Issuance of Units. Subject to the limitations contained in this Agreement, including Section 5.4 and 11.5 hereof, the Company (with the approval of the Managing Members) shall have the right from time to time to issue additional Units to such persons on such terms and for such consideration as the Managing Members shall determine in its discretion; provided, that any such issuances shall require the consent of Members holding not less than a majority of the total outstanding Units. Notwithstanding the foregoing, the Company shall not issue any Units to any Person unless such Person has executed and delivered to the Secretary of the Company the documents described in Section 5.3 hereof. Upon the issuance of Units, the Managing Members shall adjust the Capital Accounts of the Members as necessary in accordance with Section 6.2.

5.3 New Members from the Issuance of Units. In order for a Person to be admitted as a Member of the Company pursuant to the issuance of Units to such Person, such Person shall have executed and delivered to the Company a written undertaking to be bound by the terms and conditions of this Agreement substantially in the form of Exhibit A hereto. Upon the amendment of the Members Schedule by the Company and the satisfaction of any other applicable conditions, including, if a condition, the receipt by the Company of payment for the issuance of the applicable Units, such Person shall be admitted as a Member and deemed listed as such on the books and records of the Company and thereupon shall be issued his or its Units. The Managing Members shall also adjust the Capital Accounts of the Members as necessary in accordance with Section 6.2.

5.4 Preemptive Rights.

(a) If at any time after the date hereof and prior to the consummation of an Initial Public Offering the Company wishes to issue any Units or any options, warrants or other rights to acquire Units or any notes or other securities convertible or exchangeable into Units (all such Units and other rights and securities, collectively, the “Equity Equivalents”) to any Person or Persons, the Company shall promptly deliver a notice of intention to sell or otherwise issue (the “Company’s Notice of Intention to Sell”) to each Member setting forth a description and the number of the Equity Equivalents and any other securities proposed to be issued and the proposed purchase price and terms of sale. Upon receipt of the Company’s Notice of Intention to Sell, each Member shall have the right to elect to purchase, at the price and on the terms stated in the Company’s Notice of Intention to Sell, a number of the Equity Equivalents equal to the product of (i) the percentage determined by dividing the number of Units then owned by such Member by the number of Units then outstanding multiplied by (ii) the number of Equity Equivalents proposed to be issued (as described in the applicable Company’s Notice of Intention to Sell); provided that, notwithstanding anything contained herein to the contrary, if the Company is issuing Equity Equivalents together as a unit with the issuance of any debt or other equity securities of the Company or any of its subsidiaries, then any Member who elects to purchase such Equity Equivalents pursuant to this Section must also purchase a corresponding proportion of such other debt or equity securities, all at the proposed purchase price and on terms of sale as specified in the applicable Company’s Notice of Intention to Sell. Such election shall be made by the electing Member by written notice to the Company within ten (10) business days after receipt by such Member of the Company’s Notice of Intention to Sell (the “Acceptance Period”).
(b) To the extent an effective election to purchase has not been received from a Member pursuant to subsection (a) above in respect of the Equity Equivalents proposed to be issued pursuant to the applicable Company’s Notice of Intention to Sell, the Company may, at its election, during a period of one hundred and eighty (180) days following the expiration of the applicable Acceptance Period, issue and sell the remaining Equity Equivalents to be issued and sold to any Person at a price and upon terms not more favorable to such Person than those stated in the applicable Company’s Notice of Intention to Sell; provided, however, that failure by a Member to exercise its option to purchase with respect to one issuance and sale of Equity Equivalents shall not affect its option to purchase Equity Equivalents in any subsequent issuance and sale. In the event the Company has not sold any Equity Equivalents covered by a Company’s Notice of Intention to Sell within such one hundred and eighty (180) day period, the Company shall not thereafter issue or sell such Equity Equivalents, without first offering such Equity Equivalents to each Member in the manner provided in this Section.
(c) If a Member gives the Company notice, pursuant to the provisions of this Section, that such Member desires to purchase any Equity Equivalents, payment therefor shall be by check or wire transfer of immediately available funds, against delivery of the securities (which securities shall be issued free and clear of any liens or encumbrances) at the executive offices of the Company no later than the last closing date fixed by the Company for the sale of the applicable Equity Equivalents, which last closing date shall be no earlier than 15 business days after the date the Company delivers the applicable Company’s Notice of Intention to Sell. In the event that any proposed sale is for a consideration other than cash, such Member may pay cash in lieu of all (but not part) of such other consideration, in the amount determined reasonably and in good faith by the Managing Members to represent the fair value of such consideration other than cash.
(d) The preemptive rights contained in this Section shall not apply to (i) the issuance of shares or units of Equity Equivalents as a stock or unit dividend or other distribution or upon any subdivision, split or combination of the currently outstanding Units (or any such Units the original issuance of which was conducted in accordance with this Section); (ii) the issuance of Equity Equivalents upon conversion, exchange or redemption of any currently outstanding convertible or exchangeable securities (or any Equity Equivalents the original issuance of which was conducted in accordance with this Section); (iii) the issuance of Equity Equivalents upon exercise of any currently outstanding options or warrants (or any such options or warrants the original issuance of which was conducted in accordance with this Section); (iv) the issuance of Equity Equivalents to any employee, former employee, consultant or director of the Company or any of its subsidiaries as compensation or as an incentive for services; (v) the issuance of Equity Equivalents as consideration (whether partial or otherwise) for the purchase by the Company or any of its subsidiaries of assets constituting a business unit or of the stock or other equity securities of any Person or Persons; (vi) the issuance of Equity Equivalents pursuant to a Public Offering; (vii) the issuance of Equity Equivalents in connection with the conversion of the Company from a limited liability company into a corporation; and (viii) the issuance of Units to Contributing Members pursuant to Section 6.1(c).

ARTICLE VI

Capital Contributions and Capital Accounts

6.1 Capital Contributions; Capital Calls.

(a) On or prior to the date hereof, each Person who is a Member as of the date hereof has made, or is deemed to have made, the Capital Contributions giving rise to such Member’s Capital Account as of the date hereof and, as of the date hereof, is deemed to own the number, type and class of Units in the amounts and with the Capital Account balance associated therewith set forth opposite such Member’s name on the Members Schedule attached hereto.
(b) Except as provided in Section 6.1(c), no Member shall be required to make any additional contributions to the Company with respect to such Member’s Units. Except as expressly provided herein, no Member, in its capacity as a Member, shall have the right to receive any cash or any other property of the Company.
(c) The Members acknowledge that the Company may require additional capital infusions from time to time and as such hereby agree that upon the written request of the Managing Members (a “Capital Call Notice”) from time to time each Member shall pay to the Company, as an additional Capital Contribution, its pro rata share (based on Units) of any additional capital infusions required by the Company as specified in any such Capital Call Notice. To the extent any Member (a “Noncontributing Member”) fails to contribute its pro rata share of any capital call (such amount, the “Unfunded Amount”), the remaining Members shall have the right to contribute (the Members who contribute the Unfunded Amount being referred to herein as the “Contributing Members”) the amount required to be contributed by the Noncontributing Member in exchange for the issuance to such Members of additional Units (with a corresponding increase to such Member’s Capital Account) based on the Fair Market Value of such Units at such time. In addition, the Capital Account of the Noncontributing Member shall be reduced, and the Capital Account of the Contributing Members shall be increased (pro rata among the Contributing Members based on the portion of the Default Amount contributed by each), by an amount equal to 100% of the Unfunded Amount.

6.2 Capital Accounts.

(a) Maintenance Rules. The Company shall maintain for each Member a separate capital account (a “Capital Account”) in accordance with this Section 6.2(a), which Capital Account balances as of the date hereof are set forth on Schedule B hereto. Each Capital Account shall be maintained in accordance with the following provisions:
(i) Such Capital Account shall be increased by the cash amount or Book Value of any property contributed by such Member to the Company pursuant to this Agreement, such Member’s allocable share of Profits and any items in the nature of income or gains which are specially allocated to such Member pursuant to Section 8.2 or Section 8.3 or pursuant to Section 6.1(c), and the amount of any liabilities of the Company assumed by such Member or which are secured by any property distributed to such Member.
(ii) Such Capital Account shall be decreased by the cash amount or Book Value of any property distributed to such Member pursuant to this Agreement, such Member’s allocable share of Losses and any items in the nature of deductions or losses which are specially allocated to such Member pursuant to Section 8.2 or Section 8.3, or pursuant to Section 6.1(c), and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company.
(iii) If all or any portion of a Unit is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Unit (or portion thereof).
(iv) If a new or existing Member contributes money or property to the Company (other than a de minimis amount as determined by the Managing Members) as consideration for the issuance by the Company of any Units after the date hereof, the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f).
The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 1.704-1(b) of the Treasury Regulations and shall be interpreted and applied in a manner consistent with such Treasury Regulations. If the Managing Members determines that it is prudent to modify the manner in which the Capital Accounts, or any increases or decreases to the Capital Accounts, are computed in order to comply with such Treasury Regulations, the Managing Members may authorize such modifications.
(b) Definition of Profits and Losses. “Profits” and “Losses” mean, for each Taxable Year or other period, an amount equal to the Company’s taxable income or loss, respectively, for such Taxable Year or other period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
(i) The computation of all items of income, gain, loss and deduction shall include tax-exempt income and those items described in Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not includable in gross income or are not deductible for federal income tax purposes.
(ii) If the Book Value of any Company property is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property.
(iii) Items of income, gain, loss or deduction attributable to the disposition of Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the Book Value of such property.
(iv) Items of depreciation, amortization and other cost recovery deductions with respect to Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the property’s Book Value in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(v) To the extent an adjustment to the adjusted tax basis of any Company property pursuant to Code Sections 732(d), 734(b) or 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis).

6.3 Negative Capital Accounts. If any Member has a deficit balance in its Capital Account, such Member shall have no obligation to restore such negative balance or to make any Capital Contributions to the Company by reason thereof, and such negative balance shall not be considered an asset of the Company or of any Member.

6.4 No Withdrawal. No Member will be entitled to withdraw any part of his or its Capital Contribution or Capital Account or to receive any distribution from the Company, except as expressly provided in this Agreement.

6.5 Loans From Members. Loans by Members to the Company shall not be considered Capital Contributions.

6.6 Status of Capital Contributions.

(a) No Member shall receive any interest, salary or drawing with respect to its Capital Contributions or its Capital Account, except as otherwise specifically provided in this Agreement.
(b) Except as otherwise provided herein (including Section 6.1(c)), no Member shall be required to lend any funds to the Company or to make any additional Capital Contributions to the Company. No Member shall have any personal liability for the repayment of any Capital Contribution of any other Member.

ARTICLE VII

Distributions

7.1 Generally.

(a) Subject to Sections 7.2 and 7.3, the Managing Members shall have sole discretion regarding the amounts and timing of distributions to Members, in each case subject to the retention and establishment in good faith of reserves of, or payment to third parties of, such funds as it deems reasonably necessary with respect to the reasonable business needs of the Company which shall include the payment or the making of provision for the payment when due of the Company’s obligations, including the payment of any management or administrative fees and expenses or any other obligations (the amount of cash on hand in excess of such reserves at any given time being referred to herein as the “Available Cash”).
(b) Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any distribution to Members (x) if such distribution would violate Sections 86-341, 86-343 or 86-346 of the [State] Act or other applicable law, or (y) to the extent that, immediately following such distribution, such Member’s Capital Account would be negative.

7.2 Mandatory and Discretionary Distributions. Subject to Section 7.3, Available Cash or other assets (taking such other assets into account at their Fair Market Value at the time of distributions) shall be distributed, at such times and in such amounts as the Managing Members determine in their sole discretion, to the Members pro rata based upon the number of Units held by each such Member as it relates to the total outstanding Units; provided, however, the Managing Members shall distribute quarterly to the Members not less than 80% of the Company’s Available Cash above the amount anticipated to fulfill the Company’s business purposes (including needs for operating expenses, debt service, acquisitions, working capital reserves, and mandatory distributions) and, for purposes of this Section 7.2, the reserves established shall be reasonably acceptable to each Member who holds 15% or more of the total outstanding Units.

7.3 Tax Advances. Subject to the restrictions of any of the Company’s and/or its subsidiaries’ then applicable debt financing agreements and subject to the retention of any other amounts necessary to satisfy the Company’s and/or the subsidiaries’ obligations, at least five days before each date prescribed by the Code for a calendar year corporation to pay quarterly installments of estimated tax, the Company shall use commercially reasonable efforts to distribute to each Member cash in proportion to and to the extent of such Member’s Quarterly Estimated Tax Amount for the applicable calendar quarter. If, at any time after the final Quarterly Estimated Tax Amount has been distributed pursuant to the previous sentence with respect to any Fiscal Year, the aggregate Tax Advances to any Member with respect to such Fiscal Year are less than such Member’s Tax Amount for such Fiscal Year (a “Shortfall Amount”), the Company shall use commercially reasonable efforts to distribute cash in proportion to and to the extent of each Member’s Shortfall Amount. The Company shall use commercially reasonable efforts to distribute Shortfall Amounts with respect to a Fiscal Year before the 75th day of the next succeeding Fiscal Year (provided that if the Company has made distributions other than pursuant to this Section 7.3, the Managing Members may apply such distributions to reduce any Shortfall Amount). If the aggregate distributions made to any Member pursuant to this Section 7.3 for any Fiscal Year exceed such Member’s Tax Amount (an “Excess Amount”) such Excess Amount shall reduce subsequent distributions that would be made to such Member pursuant to this Section 7.3, except to the extent taken into account as an advance pursuant to the next sentence. Distributions made pursuant to this Section 7.3 shall be taken into account as advances on distributions payable pursuant to Section 7.2, and shall (to the extent not previously taken into account pursuant to this sentence) reduce the distributions to be made to any Member under Section 7.2, when and as paid by the Company. No Member shall be liable to the Company for any amount distributed to it pursuant to this Section 7.3, or for any interest on such amount.

7.4 Indemnification and Reimbursement for Payments on Behalf of a Member. Except as otherwise provided in this Agreement, if the Company is required by law (as determined by the Tax Matters Partner based on the advice of legal or tax counsel to the Company) to make any payment on behalf of a Member in its capacity as such (including in respect of withholding taxes, personal property taxes, and unincorporated business taxes, etc.), then such Member (the “Indemnifying Member”) will indemnify the Company in full for the entire amount paid, including interest, penalties and expenses associated with such payment. At the option of the Managing Members, the amount to be indemnified may be charged against a Capital Account of the Indemnifying Member, and, at the option of the Managing Members, either:

(a) promptly upon notification of an obligation to indemnify the Company, the Indemnifying Member will make a cash payment to the Company in an amount equal to the full amount to be indemnified (and the amount paid will be added to the Indemnifying Member’s Capital Account but will not be deemed to be a Capital Contribution), or
(b) the Company will reduce distributions which would otherwise be made to the Indemnifying Member until the Company has recovered the amount to be indemnified (and the amount of such reduction will be deemed to have been distributed for all purposes, but such deemed distribution will not further reduce the Indemnifying Member’s Capital Account).

A Member’s obligation to make contributions to the Company under this Section 7.4 will survive the termination, dissolution, liquidation and winding up of the Company, and for purposes of this Section 7.4, the Company will be treated as continuing in existence. The Company may pursue and enforce all rights and remedies it may have against each Member under this Section 7.4, including instituting a lawsuit to collect such contribution with interest calculated at a rate equal to the Company’s and its subsidiaries’ effective cost of borrowed funds.

ARTICLE VIII

Allocations

8.1 Allocations of Profits and Losses. The Company’s Profit and Loss for any fiscal period shall be allocated among the Members in such a manner that, as of the end of such fiscal period and to the extent possible, the Capital Account of each Member shall be equal to the respective net amount which would be distributed to such Member under this Agreement, determined as if the Company were to (a) liquidate the assets of the Company for an amount equal to their Book Value as of the end of such fiscal period and (b) distribute the proceeds in liquidation in accordance with Section 10.2.

8.2 Regulatory and Special Allocations. Notwithstanding the provisions of Section
8.1:

(a) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or 743(b) is required to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated, as provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m), as an item of Profit (if the adjustment increases the basis of the asset) or Loss (if the adjustment decreases such basis) and such Profit or Loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.
(b) If there is a net decrease in Company Minimum Gain (determined according to Treasury Regulation Section 1.704-2(d)(1)) during any Taxable Year, each Member shall be specially allocated Profits for such Taxable Year (and, if necessary, subsequent Taxable Years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulation Section 1.704-2(g). The items to be so allocated shall be determined in accordance with Treasury Regulation Section 1.704-2(f)(6) and 1.704-2(j)(2). This paragraph is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(c) Member Nonrecourse Deductions shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). Except as otherwise provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Member Minimum Gain during any Taxable Year, each Member that has a share of such Member Minimum Gain shall be specially allocated Profits for such Taxable Year (and, if necessary, subsequent Taxable Years) in an amount equal to that Member’s share of the net decrease in Member Minimum Gain. Items to be allocated pursuant to this paragraph shall be determined in accordance with Treasury Regulation Section 1.704-2(i)(4) and 1.704-2(j)(2). This paragraph is intended to comply with the minimum gain chargeback requirements in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(d) In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), Profits shall be specially allocated to such Member in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit created by such adjustments, allocations or distributions as quickly as possible. This paragraph is intended to comply with the qualified income offset requirement in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(e) Nonrecourse Deductions for any Taxable Year or other period shall be specially allocated among the Members in proportion to their interests in the Company as set forth in Schedule B.
(f) The allocations set forth in paragraphs (a), (b), (c), (d) and (e) above (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations under Code Section 704. Notwithstanding any other provisions of this Article VIII (other than the Regulatory Allocations), the Regulatory Allocations shall be taken into account in allocating Profits and Losses among Members so that, to the extent possible, the net amount of such allocations of Profits and Losses and other items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to such Member if the Regulatory Allocations had not occurred.

8.3 Curative Allocations. If the Tax Matters Partner determines, after consultation with counsel experienced in income tax matters, that the allocation of any item of Company income, gain, loss, deduction or credit is not specified in this Article VIII (an “unallocated item”), or that the allocation of any item of Company income, gain, loss, deduction or credit hereunder is clearly inconsistent with the Members’ economic interests in the Company (determined by reference to the general principles of Treasury Regulation Section 1.704-1(b) and the factors set forth in Treasury Regulation Section 1.704-1(b)(3)(ii)) (a “misallocated item”), then the Managing Members may allocate such unallocated items, or reallocate such misallocated items, to reflect such economic interests; provided that no such allocation will be made without the prior consent of each Member that would be affected thereby (which consent no such Member may unreasonably withhold) and provided further that no such allocation shall have any material effect on the amounts distributable to any Member, including the amounts to be distributed upon the complete liquidation of the Company.

8.4 Tax Allocations.

(a) Subject to Section 8.4(g) below, all income, gains, losses, deductions and credits of the Company shall be allocated, for federal, state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and credits among the Members for computing their Capital Accounts, except that if any such allocation for tax purposes is not permitted by the Code or other applicable law, the Company’s subsequent income, gains, losses, deductions and credits shall be allocated among the Members for tax purposes, to the extent permitted by the Code and other applicable law, so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts. Each item of income, gain, loss, deduction and credit realized by the Company in any taxable year shall be allocated pro rata to the Members according to the amount of Profit or Loss, as the case may be, allocated to them in such year. Notwithstanding the foregoing, if as a result of the difference in timing of Capital Contributions by the Members to the Company and the contribution, loan or other transfer by the Company to any of its subsidiaries of funds or other property contributed to the Company by such Members, the Company realizes short-term capital gain or both long-term and short-term capital gain for purposes of the Code, then the Tax Matters Member may allocate such short-term capital gain to the Members whose Capital Contributions resulted (directly or indirectly) in the recognition of such short-term capital gain.
(b) Items of Company taxable income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall be allocated among the Members in accordance with Code Section 704(c) and the remedial method of Treasury Regulation Section 1.704-3(d), or such other method elected by the Tax Matters Partner, 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 Book Value.
(c) If the Book Value of any Company property is adjusted pursuant to Section 6.2(a)(iv), subsequent allocations of items of taxable income, gain, loss and deduction with respect to such property shall take account of any variation between the adjusted basis of such property for federal income tax purposes and its Book Value in the same manner as under Code Section 704(c).
(d) Allocations of tax credit, tax credit recapture, and any items related thereto shall be allocated to the Members according to their interests in such items as determined by the Managing Members taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).
(e) Allocations pursuant to this Section 8.4 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses, distributions or other items pursuant to any provisions of this Agreement.
(f) Solely for the purpose of determining each Member’s share of Company “excess nonrecourse liabilities” pursuant to Treasury Regulation Section 1.752-3(a)(3), each Member’s interest in Company profits is hereby specified to be such Member’s interest as set forth in Schedule B.
(g) To the extent permitted by the Code or other applicable law, notwithstanding anything contained herein to the contrary, allocations of taxable income realized by the Company as a result of distributions or dividends from (or redemptions of securities held by the Company of) any subsidiary, the proceeds of which are used to fund distributions to Members, shall be made to the Members receiving such distributions in proportion to such distributions.

ARTICLE IX

Elections and Reports

9.1 Generally. The Company will keep appropriate books and records with respect
to the Company’s business, including all books and records necessary to provide any
information, lists and copies of documents required to be provided pursuant to Section 9.3.

9.2 Tax Status. The Members intend that the Company be treated as a partnership
for federal, state and local income tax purposes and the Company and each Member shall file all
tax returns on the basis consistent therewith.

9.3 Reports. The Company will use reasonable efforts to deliver or cause to be
delivered, by March 15 (and, in any event, will deliver not later than July 31) of each year, to
each person who was a Member at any time during the previous Taxable Year, all information
reasonably necessary for the preparation of such person’s United States federal income tax
returns and any state, local and foreign income tax returns which such person is required to file
as a result of the Company being engaged in a trade or business within such state, local or
foreign jurisdiction, including a statement showing such person’s share of income, gains, losses,
deductions and credits for such year for United States federal income tax purposes (and, if
applicable, state, local or foreign income tax purposes).

9.4 Tax Elections. The Tax Matters Partner will determine whether to make or
revoke any available election (including the election provided under Code Section 754) for
federal, state, local and foreign tax purposes. Each Member will upon request supply the
information necessary to give proper effect to any such election.

9.5 Tax Controversies. The Managing Members are specifically authorized to act as
the Tax Matters Partner under the Code and in any similar capacity under state or local law. The
Tax Matters Partner is authorized and required to represent the Company (at the Company’s
expense) in connection with all examinations of the Company’s affairs by tax authorities,
including resulting administrative and judicial proceedings, and to expend Company funds for
professional services and costs associated therewith. Each Member agrees to cooperate with the
Tax Matters Partner and to do or refrain from doing any or all things reasonably requested by the
Tax Matters Partner with respect to the conduct of such proceedings. Subject to the foregoing
proviso, the Tax Matters Partner will have sole discretion to determine whether the Company
(either in its own behalf or on behalf of the Members) will contest or continue to contest any tax
deficiencies assessed or proposed to be assessed by any taxing authority. Any deficiency for
taxes imposed on any Member (including penalties, additions to tax or interest imposed with
respect to such taxes) will be paid by such Member, and if required to be paid (and actually paid)
by the Company, will be recoverable from such Member as provided in Section 7.4.

ARTICLE X

Dissolution and Liquidation

10.1 Dissolution. The Company shall be dissolved and its affairs wound up only upon the happening of any of the following events:

(a) Upon the election to dissolve the Company by action of Members holding not less than a majority of the outstanding Units.
(b) The entry of a decree of judicial dissolution under applicable law; provided, that, notwithstanding anything contained herein to the contrary, no Member shall make an application for the dissolution of the Company pursuant to applicable law without the unanimous approval of the Members. Dissolution of the Company shall be effective on the day on which the event occurs giving rise to the dissolution, but the Company shall not terminate until the winding up of the Company has been completed, the assets of the Company have been distributed as provided in Section 10.2 and the Certificate shall have been canceled.

10.2 Liquidation.

(a) Liquidator. Upon dissolution of the Company, the Managing Members will appoint a person to act as the “Liquidator,” and such person shall act as the Liquidator unless and until a successor Liquidator is appointed as provided in this Section 10.2. The Liquidator will agree not to resign at any time without 30 days’ prior written notice to the Managing Members. The Liquidator may be removed at any time, with or without cause, by notice of removal and appointment of a successor Liquidator approved by the Managing Members. Any successor Liquidator will succeed to all rights, powers and duties of the former Liquidator. The right to appoint a successor or substitute Liquidator in the manner provided in this Section 10.2 will be recurring and continuing for so long as the functions and services of the Liquidator are authorized to continue under the provisions of this Agreement, and every reference in this Agreement to the Liquidator will be deemed to refer also to any such successor or substitute Liquidator appointed in the manner provided in this Section 10.2. The Liquidator will receive as compensation for its services (1) no additional compensation, if the Liquidator is an employee of the Company or any of its subsidiaries, or (2) if the Liquidator is not such an employee, such compensation as the Managing Members may approve, plus, in either case, reimbursement of the Liquidator’s out-of-pocket expenses in performing its duties.
(b) Liquidating Actions. The Liquidator will liquidate the assets of the Company and apply and distribute the proceeds of such liquidation, in the following order of priority, unless otherwise required by mandatory provisions of applicable law:
(i) First, to the payment of the Company’s debts and obligations to its creditors (including Members), including sales commissions and other expenses incident to any sale of the assets of the Company, in order of the priority provided by law.
(ii) Second, to the establishment of and additions to such reserves as the Managing Members deems necessary or appropriate.
(iii) Third, to the Members, in accordance with Section 7.2.
The reserves established pursuant to clause (ii) above will be paid over by the Liquidator to a bank or other financial institution, to be held in escrow for the purpose of paying any such contingent or unforeseen liabilities or obligations and, at the expiration of such period as the Managing Members deems advisable, such reserves will be distributed to the Members in accordance with Section 7.2 in the manner provided above in this Section 10.2(b). The allocations and distributions provided for in this Agreement are intended to result in the Capital Account of each Member immediately prior to the distribution of the Company’s assets pursuant to this Section 10.2(b) being equal to the amount distributable to such Member pursuant to this Section 10.2(b).
(c) Distribution in Kind. Notwithstanding the provisions of Section 10.2(b) which require the liquidation of the assets of the Company, but subject to the order of priorities set forth in Section 10.2(b), if upon dissolution of the Company the Managing Members determines that an immediate sale of part or all of the Company’s assets would be impractical or could cause undue loss to the Members, the Managing Members may, in its sole discretion, defer the liquidation of any assets except those necessary to satisfy Company liabilities and reserves, and may, in its absolute discretion, distribute to the Members, in lieu of cash, as tenants in common and in accordance with the provisions of Section 10.2(b), undivided interests in such Company assets as the Liquidator deems not suitable for liquidation. Any such distribution in kind will be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operating of such properties at such time. For purposes of any such distribution, the Managing Members will determine the Fair Market Value of any property to be distributed in accordance with any valuation procedure which the Managing Members reasonably deems appropriate.
(d) Reasonable Time for Winding Up. A reasonable time will be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 10.2(b) in order to minimize any losses otherwise attendant upon such winding up. Distributions upon liquidation of the Company (or any Member’s interest in the Company) and related adjustments will be made by the end of the Fiscal Year of the liquidation (or, if later, within 90 days after the date of such liquidation) or as otherwise permitted by Treasury Regulation Section 1.704-1(b)(2)(ii)(b).
(e) Termination. Upon completion of the distribution of the assets of the Company as provided in Section 10.2(b) hereof, the Company shall be terminated and the Liquidator shall cause the cancellation of the Certificate in the State of <State> and of all qualifications and registrations of the Company as a foreign limited liability company in all applicable jurisdictions and shall take such other actions as may be necessary to terminate the Company.

ARTICLE XI

Transfer of Units

11.1 Restrictions. Each Member acknowledges and agrees that such Member shall not Transfer any Unit(s) except in accordance with the provisions of this Article XI. Any attempted Transfer in violation of the preceding sentence shall be deemed null and void for all purposes, and the Company will not record any such Transfer on its books or treat any purported transferee as the owner of such Unit(s) for any purpose.

11.2 General Restrictions on Transfer.

(a) Notwithstanding anything to the contrary in this Agreement, no transferee of any Unit(s) received pursuant to a Transfer (but excluding transferees that were Members immediately prior to such a Transfer, who shall automatically become a Member with respect to any additional Units they so acquire) shall become a Member in respect of or be deemed to have any ownership rights in the Unit(s) so Transferred unless the purported transferee is admitted as a Member as set forth in Section 11.3.
(b) Following a Transfer of any Unit(s) that is permitted under this Article XI, the transferee of such Unit(s) shall succeed to the Capital Account associated with such Unit(s) and shall receive allocations and distributions under Articles VI, VII, VIII and X in respect of such Unit(s). Notwithstanding the foregoing, Profits, Losses and other items will be allocated between the transferor and the transferee according to Code Section 706.
(c) Any Member who Transfers all of his or its Units (i) shall cease to be a Member upon such Transfer, and (ii) shall no longer possess or have the power to exercise any rights or powers of a Member of the Company.

11.3 Procedures for Transfer. Subject in all events to the general restrictions on Transfers contained in this Article XI, no Transfer of Unit(s) may be completed until the prospective transferee is admitted as a Member of the Company by executing and delivering to the Company a written undertaking to be bound by the terms and conditions of this Agreement substantially in the form of Exhibit A hereto. Upon the amendment of the Members Schedule by the Company, such prospective transferee shall be admitted as a Member and deemed listed as such on the books and records of the Company and thereupon the Company shall reissue the applicable Units in the name of such prospective transferee. The provisions of this Section 11.3 shall not apply with respect to the Transfer of any Unit(s) to a transferee that is a Member immediately prior to such Transfer.

11.4 Legend. Any certificates or instruments representing the Units will bear the following legend:

“THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT IS SUBJECT TO THE CONDITIONS SPECIFIED IN A LIMITED LIABILITY COMPANY OPERATING AGREEMENT AMONG THE ISSUER AND ITS MEMBERS. A COPY OF SUCH LIMITED LIABILITY COMPANY OPERATING AGREEMENT AS IN EFFECT FROM TIME TO TIME WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

11.5 Limitations.

(a) In order to permit the Company to qualify for the benefit of a “safe harbor” under Code Section 7704, notwithstanding anything to the contrary in this Agreement, no Transfer of any Unit shall be permitted or recognized by the Company (within the meaning of Treasury Regulation Section 1.7704-1(d)) and the Company shall not issue any Units if and to the extent that such Transfer or issuance would cause the Company to have more than 100 partners (within the meaning of Treasury Regulation Section 1.7704-1(h), including the look-through rule in Treasury Regulation Section 1.7704-1(h)(3)).
(b) Notwithstanding anything to the contrary in this Agreement, no Unit may be Transferred and the Company may not issue any Unit unless (i) such Transfer or issuance, as the case may be, shall not affect the Company’s existence or qualification as a limited liability company under the state of its organization, (ii) such Transfer or issuance, as the case may be, shall not cause the Company to be classified as other than a partnership for United States federal income tax purposes (unless the Company has elected to be taxed as a corporation for federal income tax purposes), (iii) such Transfer or issuance, as the case may be, shall not result in a termination of the Company under Code Section 708, unless the Managing Members determines that any such termination will not have a material adverse impact on the Members and (iv) such Transfer or issuance, as the case may be, shall not cause the application of the tax-exempt use property rules of Code Sections 168(g)(l)(B) and 168(h) to the Company or its Members.

11.6 Additional Transfer Restrictions.

(a) General. Subject to the other provisions of this Article XI, a Member may Transfer Units only if such Member has complied with the terms and requirements of Section 11.6(b), 11.6(c) and 11.6(d), as applicable.
(b) Right of First Refusal. In the event that a Member (the “Transferring Member”) proposes to sell or otherwise Transfer (other than pursuant to a Public Offering or pursuant to an Approved Company Sale) any Units pursuant to a bona fide offer from a third party (the “Proposed Transferee”), the Transferring Member must first give the other Members (the “Non-Transferring Members”) written notice (the “ROFR Notice”) of the number of Units to be transferred, the price, terms and conditions of the proposed sale, including the identity of the Proposed Transferee, and a copy of any written proposal, term sheet, letter of intent or other agreement relating to the proposed sale. Within twenty (20) days after the receipt of the ROFR Notice, the Non-Transferring Members may elect to purchase (pro rata in accordance with their ownership interest in the Company or in such other proportions as they shall agree), and the Transferring Member agrees to sell to the Non-Transferring Members, at the price and on the terms specified in the ROFR Notice, all or any portion of the Units. In the event the Non-Transferring Members elect to purchase all or part of the Units proposed to be transferred, the closing of such purchase will take place five (5) days after the expiration of such twenty (20) day period or such other date as the parties shall agree. To the extent that the terms of payment set forth in the ROFR Notice consist of property other than cash against delivery, the Non-Transferring Members may substitute cash of equivalent value in lieu thereof. To the extent the Non-Transferring Members do not exercise in full this right of first refusal within the twenty (20) day period specified above (collectively, the “ROFR Notice Period”), the Transferring Member will, subject to Section 11.6(c), have sixty (60) days thereafter to sell the Units not elected to be purchased by the Non-Transferring Members at the price and upon the terms and conditions no more favorable to the purchasers of such Units than specified in the ROFR Notice. In the event the Transferring Member has not sold such Units within such sixty (60) day period, the Transferring Member may not thereafter sell any Units without first offering such Units to the other Members in the manner provided in this Section 11.6(b). The restrictions set forth in this Section 11.6(b) shall not apply in the following cases: (i) any Member may sell or transfer Units to the Company pursuant to a repurchase or similar right (including any transfer upon a forfeiture of Units pursuant to any subscription or similar agreement pursuant to which such shares were acquired); and (ii) any Member may sell or transfer any Units to a Permitted Transferee (as defined below) subject to Sections 11.3 and 11.5.
(c) Tag-Along Rights. In the event not all of the Units proposed to be transferred in the ROFR Notice delivered pursuant to Section 11.6(b) are purchased by the Non-Transferring Members, then the Non-Transferring Members who did not elect to acquire any Units pursuant to Section 11.6(b) (the “Remaining Members”) may elect to participate in such contemplated Transfer by delivering written notice to the Transferring Member within 10 business days after the expiration of the ROFR Notice Period. Each Remaining Member who elects to participate in the proposed Transfer (the “Tagging Members”, and collectively with the Transferring Member, the “Participating Members”) shall be entitled to sell in such contemplated Transfer, at the same price and on the same terms, up to a number of Units to be sold in such contemplated Transfer (after reduction for any Units transferred to any Members pursuant to Section 11.6(b)) equal to the product of (x) the quotient determined by dividing the number of Units owned by such Tagging Member by the aggregate number of Units owned collectively by all of the Participating Members and (y) the aggregate number of Units to be sold in such contemplated Transfer (after reduction for any Units transferred to any Members pursuant to Section 11.6(b)).
(d) Permitted Transfers. The restrictions contained in Sections 11.6(b) and 11.6(c) shall not apply with respect to any Transfer of Units by any Member (A) in the case of a Member who is an individual, pursuant to applicable laws of descent and distribution or, if such Transfer is made for bona fide estate planning purposes (which bona fide estate planning purposes, if requested by the Managing Members, shall be verified by a legal opinion from counsel experienced in such matters), then to any member of such Member’s immediate family, (B) in the case of a non-individual Member, to its Affiliates or current or former stockholders, partners, including limited partners, or members, (C) if such Units are subject to a Financing Pledge, then to the applicable bona fide lending institution in connection with such bona fide lending institution’s foreclosure on such Units pursuant to the terms of such Financing Pledge; provided, in each case, that any such transferee shall have complied with the requirements of Section 11.3 and 11.5. The transferees permitted by this Section 11.6(d) are referred to herein as “Permitted Transferees”.
(e) Approved Company Sale. If the Members holding a majority of the outstanding Units, approves a sale of all or substantially all of the Company’s assets determined on a consolidated basis or a sale of all (or a lesser percentage, if necessary, as determined by the Managing Members for accounting, tax or other reasons) of the Company’s outstanding Units or equivalents (in either case, whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) or any other transaction which has the same effect as any of the foregoing, to an Independent Third Party or group of Independent Third Parties (each such sale or transaction, an “Approved Company Sale”), then each holder of Units will vote for, consent to and raise no objections against the Approved Company Sale or the process. If the Approved Company Sale is structured as a merger or consolidation, then each holder of Units shall waive any dissenter’ rights, appraisal rights or similar rights in connection with such merger or consolidation. If the Approved Company Sale is structured as a Transfer of Units, then each holder of Units shall agree to sell all of his or its Units and rights to acquire Units on the same terms and conditions, in all material respects, as applicable to the respective types of Units to be Transferred in such Approved Company Sale. Each holder of Units shall take all necessary or desirable actions in connection with the consummation of an Approved Company Sale as requested by the Managing Members, including, without limitation, executing the applicable purchase agreement. If the Managing Members, the Company or any of the holders of Units enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), each holder of Units who is not an “accredited investor,” as that term is defined in Regulation D as promulgated under the Securities Act, will, at the request of the Company, appoint either a purchaser representative (as such term is defined in Rule 501 under the Securities Act) designated by the Company, in which event the Company will pay the fees of such purchaser representative, or another purchaser representative (reasonably acceptable to the Company), in which event such holder will be responsible for the fees of the purchaser representative so appointed.

ARTICLE XII

Miscellaneous Provisions

12.1 Notices.

(a) All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally against written receipt or by facsimile transmission against facsimile confirmation or mailed by internationally recognized overnight courier prepaid, to (i) any Member, at such Member’s address set forth on the Members Schedule, and (ii) the Company, to the Company’s Secretary at the Company’s principal place of business (or in any case to such other address as the addressee may from time to time designate in writing to the sender).
(b) All such notices, requests and other communications will (i) if delivered personally to the address as provided in Section 12.1(a) be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided for in Section 12.1(a), be deemed given upon facsimile confirmation and (iii) if delivered by overnight courier to the address as provided in Section 12.1(a), be deemed given on the earlier of the first business day following the date sent by such overnight courier or upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice is to be delivered pursuant to this Section 12.1).

12.2 Governing Law. All issues and questions concerning the application, construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules to this Agreement shall be governed by, and construed in accordance with, the laws of the State of [State], and specifically the [State] Act, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of [State] or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of [State].

12.3 No Action for Partition. No Member shall have any right to maintain any action for partition with respect to the property of the Company.

12.4 Headings and Sections. The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent of this Agreement or any provision of this Agreement. Unless the context requires otherwise, all references in this Agreement to Sections, Articles, Exhibits or Schedules shall be deemed to mean and refer to Sections, Articles, Exhibits or Schedules of or to this Agreement.

12.5 Amendments. Except as otherwise provided in this Section 12.5, this Agreement may be amended, in whole or in part, only through a written amendment executed by the the Members holding a majority of the outstanding Units. Each Member shall be promptly notified of any amendment to this Agreement made pursuant to this Section.

(b) An amendment to any provision of this Agreement that calls for a higher level of approval of the Members or the approval of certain specified Members shall, in addition to the execution percentage set forth in Section 12.5, require the same form of approval as is set forth in such provision. Any amendment to Section 12.5(b) or 12.5(c) shall require the unanimous consent of the Members.
(c) Notwithstanding anything to the contrary contained in this Section 12.5, there shall be no amendment to this Agreement that (i) increases a Member’s obligation to make capital contributions to the Company, unless the amendment is consented to by such Member, (ii) imposes personal liability upon a Member for any debts or obligations of the Company, unless the amendment is consented to by such Member, (iii) reduces a Member’s Capital Account or rights of contribution or withdrawal or materially adversely affects such Member’s rights to distributions under Section 7.2, unless the amendment is consented to by such Member or (iv) results in the Company being treated as an association taxable as a corporation for federal income tax purposes.
(d) Notwithstanding the foregoing provisions of this Section 12.5, the Managing Members may, without the consent of any Members, amend this Agreementto (i) reflect changes validly made in the membership of the Company and the Capital Contributions of the Members; (ii) reflect a change in the name of the Company; (iii) make a change that is necessary or, in the opinion of the Managing Members, advisable to qualify the Company as a partnership for tax purposes or an entity in which the Members have limited liability under the laws of any state; (iv) subject to Section 12.5(c), cure any ambiguity, correct or supplement any provision in this Agreement that would be inconsistent with any other provision in this Agreement, make any other provision with respect to matters or questions arising under this Agreement that will not be inconsistent with the provisions of this Agreement or make any other change that does not materially and adversely affect the Members; (v) make a change in any provision of this Agreement that requires any action to be taken by or on behalf of the Managing Members or the Company pursuant to the requirements of applicable law if the provisions of applicable law are amended, modified or revoked so that the taking of such action is no longer required; (vi) prevent the Company or the Managing Members from in any manner being (A) deemed an “investment company” subject to the provisions of the Investment Company Act, (B) treated as a “publicly traded partnership” for purposes of Code Section 7704 or (C) subject to federal income tax as an association taxable as a corporation; (vii) cause the Company to elect to convert the Company into a “Section 3(c)(7)” fund under the Investment Company Act; or (viii) make any other amendments similar to the foregoing. A Member’s right to object to an amendment pursuant to Section 12.5(d)(iv) on the grounds that such amendment is materially adverse to such Member shall expire at the close of business on the 30th day following notice to such Member of such amendment.

12.6 Number and Gender. Where the context so indicates, the masculine shall include the feminine, the neuter shall include the masculine and feminine, and the singular shall include the plural.

12.7 Binding Effect. Except as otherwise provided to the contrary in this Agreement, this Agreement shall be binding upon and inure to the benefit of the Members, their distributees, heirs, legal representatives, executors, administrators, successors and permitted assigns.

12.8 Counterparts; Facsimile. This Agreement may be executed in multiple counterparts (and may be transmitted via facsimile), each of which shall be deemed to be an original and shall be binding upon the Member who executed the same, but all of such counterparts shall constitute the same agreement.

12.9 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

12.10 Remedies. Each of the parties to this Agreement shall be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorney’s fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The Members agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

12.11 Business Days. If any time period for giving notice or taking action under this Agreement expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

12.12 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.

12.13 No Strict Construction. The parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties to this Agreement, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

12.14 Entire Agreement. Except as otherwise expressly set forth in this Agreement, this Agreement and the other agreements referred to in this Agreement embody the complete agreement and understanding among the parties to this Agreement with respect to the subject matter of this Agreement and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter of this Agreement in any way. This Agreement amends and restates the Prior Agreement in its entirety.

12.15 Parties in Interest. Nothing herein shall be construed to be to the benefit of or enforceable by any third party including, but not limited to, any creditor of the Company.

12.16 Initial Public Offering.

(a) If at any time, with the written consent of the Members holding a majority of the outstanding Units, the Members desire to cause (i) a transfer of all or a substantial portion of (x) the assets of the Company or any of its subsidiaries or (y) the Units to a newly organized corporation or other business entity (“Newco”), (ii) a merger or consolidation of the Company or any of its subsidiaries into or with a Newco as provided under applicable law, (iii) a distribution to the Members (in accordance with the provisions of Section 7.2 hereof) of all of the issued and outstanding shares of common stock or limited liability interests of any subsidiary (or any of its successors) then owned by the Company or (iv) another restructuring of all or substantially all of the assets or Units of the Company into a Newco, including by way of the conversion of the Company into a corporation (any such corporation, also “Newco”), in any case in anticipation of or otherwise in connection with a registered initial public offering of securities of a Newco, any subsidiary or any of their respective affiliates (an “Initial Public Offering”), each Member shall take such steps to effect such transfer, merger, consolidation, distribution or other restructuring as may be requested by the Managing Members, including, without limitation, transferring or tendering such Member’s Units to a Newco in exchange or consideration for shares of capital stock or other equity interests of Newco, determined in accordance with the valuation procedures set forth in Section 12.16(b).
(b) In connection with a transaction described in Section 12.16(a), the Managing Members shall, in good faith, determine the fair market value of the assets and/or Units transferred to or merged into Newco, the aggregate fair market value of Newco and the number of shares of capital stock or other equity interests to be issued to each Member in exchange or consideration therefor. Notwithstanding the foregoing, in determining the Fair Market Value of the Units, (i) the offering price of the applicable Initial Public Offering will be used by the Managing Members to determine such Fair Market Value, and (ii) the impact of the provisions of Sections 7.2 and 10.2(b) will be taken into account.
(c) Each Member hereby agrees (i) not to effect any sale or distribution of any Units (or any equity securities issued in exchange for, or distributed with respect to, Units, including any equity securities of Newco or any subsidiary) or any securities convertible into or exchangeable or exercisable for Units (or any equity securities issued in exchange for, or distributed with respect to, Units, including any equity securities of Newco or any subsidiary), during the seven days prior to and the 180-day period beginning on the effective date of an Initial Public Offering (except as part of such Initial Public Offering, if otherwise permitted), unless the underwriters managing such Initial Public Offering otherwise agree (which agreement shall be equally applicable to all Members) and (ii) to execute and deliver any reasonable agreement which is consistent with the provisions of clause (i) of this Section 12.16(c) and which may be required by the underwriters managing such Initial Public Offering.
(d) Each Member hereby makes, constitutes and appoints the Company, with full power of substitution and resubstitution, its true and lawful attorney, for it and in its name, place and stead and for its use and benefit, to act as its proxy in respect of any vote or approval of Members required to give effect to this Section 12.16, including any vote or approval required under applicable law. The proxy granted pursuant to this Section 12.16(d) is a special proxy coupled with an interest and is irrevocable.

12.17 Mergers and Consolidations, and Sale of the Company. Except in connection with an Initial Public Offering, in which case the provisions of Section 12.16 hereof shall apply, any (x) merger or consolidation of the Company or any subsidiary with or into another entity, or (y) sale of all or substantially all of the Company’s assets shall require the approval only of the Members holding a majority of the outstanding Units. The approval of any such merger , consolidation or sale as provided in the immediately preceding sentence shall be deemed to meet all of the requirements of Member approval of a merger, consolidation or sale, as the case may be, for purposes of the [State] Act.

12.18 Arbitration. Except as specifically provided herein, any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator (to be mutually agreed upon) in the State of [State], in accordance with the rules of the American Arbitration Association then in effect. If the parties cannot agree on a single arbitrator, each party shall appoint one arbitrator who shall then jointly appoint a single arbitrator. Judgment shall be final and may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator shall have the authority to allocate between the parties the expense of any such arbitration based on his determination of the relative fault, if any, of the parties. The parties may enforce any final determination in any state or federal court having jurisdiction over the dispute. For the purpose of any action or proceeding instituted with respect to any final determination, the parties hereby irrevocably submits to the jurisdiction of such courts, irrevocably consents to the service of process by registered mail or personal service and hereby irrevocably waives, to the fullest extent permitted by law, any objection which he may have or hereafter have as to personal jurisdiction, the laying of the venue of any such action or proceeding brought in any such court and any claim that any such action or proceeding brought in any court has been brought in an inconvenient form.

IN WITNESS WHEREOF, the undersigned, have executed this Limited Liability Company Operating Agreement of [Company], LLC as of the date first written above.

MEMBERS:


Name: [Member 2]
______________________________________
Name: [Member 3]
_______________________________________
Name: [Member 1]
_______________________________________

Exhibit A

FORM OF JOINDER TO
LIMITED LIABILITY COMPANY OPERATING AGREEMENT

THIS JOINDER to the Limited Liability Company Operating Agreement of
[Company], LLC, a [State] limited liability company (the “Company”), dated as of [Month] 1,
[Year], as amended or restated from time to time, by and among the Members of the Company
(the “Agreement”), is made and entered into as of _________ by and between the Company and
________________ (“Holder”). Capitalized terms used herein but not otherwise defined shall
have the meanings set forth in the Agreement.

WHEREAS, on the date hereof, Holder has acquired ______ Units from
_____________ and the Agreement and the Company requires Holder, as a holder of such Units,
to become a party to the Agreement, and Holder agrees to do so in accordance with the terms
hereof.

NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Joinder hereby agree as follows:

1. Agreement to be Bound. Holder hereby (i) acknowledges that it has received and
reviewed a complete copy of the Agreement and (ii) agrees that upon execution of this
Joinder, it shall become a party to the Agreement and shall be fully bound by, and subject
to, all of the covenants, terms and conditions of the Agreement as though an original
party thereto and shall be deemed, and is hereby admitted as, a Member for all purposes
thereof and entitled to all the rights incidental thereto.
2. Members Schedule. For purposes of the Members Schedule, the address of the Holder is
as follows:

[Name]
[Address]

3. Governing Law. This Agreement and the rights of the parties hereunder shall be
interpreted in accordance with the laws of the State of [State], and all rights and
remedies shall be governed by such laws without regard to principles of conflicts of
laws.

4. Counterparts. This Joinder may be executed in separate counterparts each of which shall
be an original and all of which taken together shall constitute one and the same
agreement.

5. Descriptive Headings. The descriptive headings of this Joinder are inserted for
convenience only and do not constitute a part of this Joinder.

IN WITNESS WHEREOF, the parties hereto have executed this Joinder to the
Limited Liability Company Agreement of [Company], LLC as of the date set forth in the
introductory paragraph hereof.

[Company], LLC
By:
Name:
Title:

[HOLDER]
By:
Name:
Title:

Schedule A

Officers of [Company], LLC (as of [Month] 1, [Year])

[Member 2], President

[Member 3], Vice President

[Member 1], Secretary

Schedule B

[Company], LLC’s Members Schedule (as of [Month] 1, [Year])

Member Units Capital Account Balance
[Member 2] 33.34 units $
[Member 3] 33.33 units $
[Member 1] 33.33 units $

Members’ Addresses & Contact Information

1. [Member 2]

2. [Member 3]

3. [Member 1]