EXHIBIT 10.1
OPERATING AGREEMENT
for
PURE GROWSYSTEMSLLC
(a Wisconsinlimitedliabilitycompany)
THIS OPERATINGAGREEMENT("Agreement:") ismadeeffectiveasof May15,2015, byandbetweenSanidorSystemsLLCa Wisconsinlimitedliabilitycompany ("Sanidor") and FastFunds Financial Corporation, a Nevada corporation ("FastFunds"), the present members(the "Members") of Pure Grow Systems LLC (the "LLC"). The LLC was formed pursuant to and is governed by the provisions of the Wisconsin Limited Liability Company Act, as it may be amended from timeto time (the "Act"), the Articles of Organization as filed with the Wisconsin Secretary of State on May 1,2015, as maybe amended fromtime totime(the "Articles"), andthis Agreement.
RECITALS
A. TheMembersdesiretooperate asalimitedliabilitycompanyinaccordancewiththe lawsoftheStateof Wisconsin and otherwise to conduct business in accordancewiththe terms and conditionsof this Agreement.
B. The LLC intends tohave its principalplace of business inWisconsinlocatedat1326 Schofield Avenue, Schofield, Wisconsin 54476.
C. The MembersdesiretoenterintothisOperatingAgreement,to govern the newly formed LLC.
AGREEMENT
IN CONSIDERATION oftheforegoingrecitalsandthe mutualpromisesandbenefits contained herein,theMembersagreeasfollows:
Article 1
Organizational Matters
1.1Formation.TheLLCwasformedpursuanttotheArticles.Thefoundingmembersof theLLC areSanidorand FastFunds.
1.2Name.Thenameof theLLCis"PureGrowSystemsLLC"andallbusinessshallbe conductedinsuchname orinsuch other nameor names as comply with applicable law and as the Members maydesignate.
1.3Intent.The Membersintend toengageinthebusinessoftheLLCinamanner consistentwiththeAct, theArticles, and the terms and conditions of this Agreement. The Members further intend that the LLC be operated in such manner as to qualify for treatment as a partnership for state and federal income tax purposes.
1.4Registered Agent; Principal Office.The principal office shallbe locatedat 1326 SchofieldAvenue, Schofield, Wisconsin54476, or suchother locations as the Members may designate. The registered agent shall be Russell Mitchell, whose address is 1326 Schofield Avenue, Schofield, Wisconsin 54476, or such other person and address within the state of Wisconsin as the Members may designate.
1.5LLCPurpose.ThepurposeoftheLLCshallbe(i)toconduct,engageinor accomplishanylawfulbusiness,activity or purpose permitted under theAct;(ii) to acquire, own, hold,maintain, improve, use, sell, lease, exchangeorotherwise deal in or disposeof real and personal property, or any interest therein; and (iii) to havean exercise all powersnecessary, customary,convenient or incident tothe foregoing.
1.6Term.TheLLCcommenceduponthefilingoftheArticlesofOrganizationandshall continue inexistence until such timeasthe LLCis terminated in accordancewith thisAgreement or theAct.
1.7NoPowertoBindLLCorOtherMembers;NoPartnership.A Membermaynot takeanyactionpurportingtobindtheLLC or anyotherMembers except as provided in this Agreement or other agreements among theMembersor between a Memberand the LLC. By virtue of their executionof thisAgreement, none ofthe Members shall be deemed to be an agent, employee, contractor, vendor, representative, or partner ofany other Member and maynot hold himself orherself out assuch.The Members intendthat the LLCnot be a partnership, limited partnership orjoint ventureand that,by virtue of theexecution of this Agreement, no Member shall bea partneror joint venturer of anotherMemberfor any purposes other than federal and state income tax purposes,andthis Agreement shall not be deemed orconstrued to suggest otherwise.
Article 2
Matters Relatingto Members
2.1MembersandManagers.FastFundsandSanidorareherebyadmittedtotheLLCas Members.Sanidorisdesignatedas Managing Member bythe termsof this Operating Agreement, in Paragraph4.1 below.
2.2AdmissionofAdditionalMembers.Additional Membersmaynotbeadmittedtothe LLCexceptinaccordancewith the following terms: (1)admission requires the unanimous written consent of the Members; (2) admission must be in compliance with applicable federal and state securitieslaws; (3) no admission will be permitted if such admissionwould resultina terminationof the LLC under Section 708(b)(1)(B) of the Internal Revenue Codeof 1986, as amended (the "Code"); and (4) the new Member shall execute this Agreement.
2.3RightofFirstRefusal. (a)The interestofaMemberintheLLC(a"Membership Interest") may not betransferred,assigned, encumbered, or alienated inanyway,voluntarily or involuntarily, without firstgivingtheremaining Membersthe opportunity to purchase such Membership Interest in themannerdescribed in this paragraph. The member proposingthe transfer (the "Transferor") may complywith this Paragrapheither prior to or after theTransferor has offered to sell suchMembership Interesttoa thirdparty or hasreceived abonafideofferfrom a third party to purchase such MembershipInterest.
(b)TheTransferorshallgivenoticeof theproposedtransfer(the "Transfer Notice")totheotherMembers(the"Offerees"), setting forththe name of the proposed transferee (the "Transferee"), the purchase price, andall other materialterms and conditions of theproposed transfer. Any of theOffereeswho so chooseshallhavethe rightto purchase all but not lessthan all ofthe Membership Interest proposed to betransferred(in proportion to theirMembership Interests as definedin Paragraph3.1) at the same price and onthe same termsand conditions setforthin the Transfer Notice. If any Offereedesires to exercise itsright offirstrefusal, itshall give notice(the "Purchase Notice") to theTransferor within 15 business daysfrom the receipt of the Transfer Notice.
(c)IfnoOffereedeliverstotheTransferoraPurchaseNoticewithinthetime specified,theTransferorshall have the right, subject to Paragraph2.4 below,for a period of45days following the expirationof the time for exercise ofthe Offerees' right offirst refusal, totransferthe Membership Interest to the Transferee specifiedin the Transfer Notice, on thetermsspecified therein, ata price specifiedtherein or any higherprice, but not toanyother party or on different termsthan were specified in the TransferNotice.
(d)ThenoticerequirementsandtimeperiodsunderthisParagraphmaybewaived onlybythewrittenconsentofallmembers.
2.4TransferabilityofMembers' Interests.(a)In additionto compliancewithParagraph 2.3, aMembershipInterestmaynotbetransferred,assigned, encumbered, oralienatedin anyway, voluntarily or involuntarily, except in accordance with the following terms: (1) the Membership Interest maybeassigned only with the unanimous written consent ofthe Members; (2) the transferof theMembershipInterest shall be accomplished by aninstrument in writing, in form and substance satisfactory to the Managing Member; (3) an original counterpart of the instrument oftransfer, executed andacknowledged by the transferringMember, shall be delivered to the LLC;(4) any assignment of the Membership Interest must be incompliance with applicable federal and state securities laws; (5)no assignment willbe permitted if such assignment would result in a termination oftheLLCunder Section 708(b)(1)(B) ofthe Internal Revenue Code of 1986 (the "Code"); (6) the transferring member shall pay a fee notexceeding $250 to defray the costs ofeffecting thetransfer of the membership Interest; and (7) the transferee of the Membership Interest shall execute this Agreement.
(b) Notwithstandingtheprovisionsofsubparagraph(a)ofthis Paragraph,the shareofprofitsandthereturnof contributions to whicha Member would otherwise be entitled may be transferred uponcompliance with Paragraph 2.3, Right ofFirstRefusal, andthis Paragraph 2.4 (a)items (2) through (6),Transferability of Members' Interests, provided that the transferee shallbe bound bythe provision of Paragraph3.2 through 3.4of this Agreement. In such event, the transferee shall have no right to participate in the management of thebusinessand affairs of the LLC or to become aMember. Exceptas specifically provided in thissubparagraph, any attempt totransfera Membership Interest without compliance with all the provisions of Paragraph 2.3and subparagraph (a) of thisParagraph 2.4 shall be ineffective and unenforceable.
(c) As between a Member and its assignee, sharesof income, gains, losses, expenses and deductions shall be prorated on the basis of the number of days the Membership Interest in question was held, without regard to the results of the LLC's operations during the periods before and after the effective date of the assignment.
(d)Notwithstandinganythingtothecontrarystated herein,atanytimeuntilthe secondanniversaryofthedate hereof,fromtimetotime,Sanidor may electin its sole discretion to purchase fromFastFunds a specified numberof Units (as defined in Section 3.1 hereof) in exchange for its paymentto FastFunds of$10,416.67 per Unit; provided, however, that the maximum number of Units purchasedpursuant to this Section2.4(d) shallnot exceed 24. For the avoidanceof doubt, forexample only, as a result of such an electionto purchase 24 Units, if given, and purchased pursuant thereto, Sanidor will hold 75Units andFastFunds willhold 25 Units. FastFunds agrees and acknowledges that upon receipt from Sanidor of notification ofanysuch election FastFunds will execute anddeliver such documents and take such actionsas mayberequired toeffect such transfer.
2.5ResignationofMember.(a)AMembermayresignfromtheLLCatanytimeby giving60days' prior written noticeto the otherMembers. If duringsuch60 dayperiod anyother Member objectstothe resignation by written noticetoall of the Members, andiftheresignation is not withdrawn within the 60 day period(or, if later, within 10 days of suchnoticeof objection), then the resignation shall bedeemed a violation ofthis Agreement andtheLLCmay recover fromthe resigningMember damagesfor breachof this Agreement and offset such damagesagainstamounts otherwise distributable to theresigning Member. Notwithstanding such violation, theresignation shall beeffective as ofthe dategiveninthenoticeofresignation.
(b)Fromandafterthedateofresignation,noMemberwhohasresignedfromtheLLC shallbeentitledtoreceive any distribution of operatingincome, any distribution of proceedsfrom the saleor exchangeof LLCassets,orany other distribution whatsoever fromtheLLC subjectto Section 6.6 hereof. Each Member herebywaivesany right upon resignationto receivethe fair value of its Membership InterestunderSection 7-80-603 ofthe Act. Uponresignation, theMembership Interestsof the resigning Member shallbe reducedto zero. TheManaging Membershall distribute the Membership Interest and all rightsand obligation incident thereto of the resigning Member to the remainingMembers inproportion totheirMembership Interests.
2.6LimitedLiabilityofMembersandManaging Member.Membersand theManaging MemberoftheLLCshallnot beliablefor anydebt, obligation orliability ofthe LLC, except forthe amountscommitted to thecapital ofthe LLC andsuch Member's share of undistributed profits of the LLC. Each Member shall have the obligationto the LLC for the amount of any portion of the contribution returned to themember as set forth in Section 7-80-607 ofthe Act.
Article 3
Capital Contributions and RelatedMatters
3.1CapitalContributionsandMembershipInterests.TheequityintheLLCshallbe representedby"Units" asdescribedin this Paragraph.The "Membership Interest" of a Member from timeto timeshallbe determined bydividing the numberofUnits owned by such Member by the total numberofUnitsthatare outstanding. Additional Unitsshallbe issuedpursuant to Paragraph 2.2 and may be issuedas provided in Paragraph 3.2. Thetotal number of Units issued as of the date of this Agreement is 100. The LLC shall be deemed to have issued, uponexecution of this Agreement, 51 Units to Sanidor and 49 Units to FastFunds, for which each Member shall have contributed the LLC the following: (i) Sanidor shall have effected the assignment of proceeds under that certain master supply agreement terms and conditions to the LLC(and subject to theLLC's assumption ofcertain payment obligations thereunder, all in accordance withthe termsand conditions of the Assignment and Assumption Agreement by and between Sanidor and theLLC, dated as of the date hereof) and (ii) FastFunds shall have contributed $250,000 in cash.
3.2AdditionalCapitalContributions.IftheMembersadoptaresolution,bythe affirmative voteofMembersholdingmorethan 50% of the Membership Interests, thatadditional funds are desired to carry out LLC purposes, and that the issue and sale of additional Units at a price specified in such resolution shall be necessary to meet such requirements, the Managing Member shall give notice (the "Notice")of such resolution, the number of Units required tobeissued, the price per Unit, and each Member's proportionate shareof the Unitsto be issued.For a period of30 days from the date such Notice is given,each Member shallhave theprior and preemptive rightto subscribeto all but not less than all of his or her proportionate share of the Units tobeso issued. Any Member affirmatively subscribing topurchase hisorher proportionate shareof Units shall be contractually bound to completesuch purchase subject to theprovisions on defaultsetforth in Section3.3. Any Units not so subscribed by a Membermay, for a period of an additional60 days, be sold, at the same price and terms, to other Members,or to any other person approved by unanimous consent of the Members, and such person shallthereupon be admitted as a Member.
3.3Default.IfaMemberwhohassubscribedtopurchaseadditionalUnitspursuantto Section3.2shallfailtomakepayment ofany amount required under Section 3.2 whendue and payable, the ManagingMember, on behalf oftheLLC, shall have theright in their discretion:
(a) tosuesuchdefaultingMemberfortheamountdueandpayable,andthedefaulting Memberagrees to payalloftheLLC'sactualexpensesincurredinenforcing this Agreement, including without limitation, attorneys' fees andcourt costs;
(b) toterminateallfuturedistributionstothedefaultingMemberand applysuch distributions againstamounts owedtotheLLC bythedefaulting Member;
(c) toborrowsuchsumsasmaybenecessarytomakeupanysuchdefaultsonsuchterms (includingrate of interestand maturity) as are approved by Membersother than the defaulting Member thenholding 50% ofthe Membership Interests,inwhich case the defaulting Member shall beliableto the LLCfor theamount which such defaulting Member has failedto contribute,together with the LLC's actualexpenses incurredin connection withany suchborrowing,includingwithout limitation, interest and attorney'sfees; and
(d) toselltheinterestofthedefaultingMemberintheLLCatpublicorprivatesale,in whicheventthedefaultingMember shallremain liablefor the amount by whichthe amount in default,plus interest at the announced prime rate of interest, fromtime to time in effect plus 5 percent per annum (butin noeventto exceedany applicable usurylimits),including attorneys'fees andexpenseof collection, exceeds the amount realized by the LLC asa result ofsuch sale.
3.4SpecialPowerofAttorney.Each Memberherebyconsentstotheadmissionof any additionalMemberadmitted to the LLC pursuant to theprovisions of Section 3.2or Section 3.3. EachMember herebygrants to the Managing Member anirrevocable, special power of attorney, coupled with an interest, forthe following purposes:
(a)intheeventofasaleofUnitsunderSection3.2toaperson whoisnotaMember,to take allactions necessary to admit such personasa Memberof the LLC;and
(b)intheeventofsuchMember'sdefaultunderSection3.2,totakeonbehalfofsuch Memberallactionsnecessarytotransfer all rights, interests andobligations of such Member in the LLCto suchpersons or entitiesas shallbe entitled toacquireitsinterest in theLLC in accordance with theprovisions of Section3.3.
3.5NoThirdPartyBeneficiaries.The provisionsoft hisAgreement,includingbutnot limitedtoParagraph3.2through3.4,arenotfor the benefit of creditors orother third parties, and maynotberelied upon in extending credit totheLLC.
3.6OtherContributionsandLoans.TheMembersshallnotbeliabletomakeany contributionsorloanstotheLLCother thanas specifically required bythis Agreement. If the Members determine, by the affirmative vote of a majority of the Members, that additional funds are requiredto carry out LLC purposes but do not vote, pursuantto Section 3.2 to require capital contributions,thentheMembers may loanfundstotheLLC forsuchpurposes. Ifany Member advances funds to the LLC other than as provided in Sections3.1 and3.2, unless otherwise agreed, the amount of any such advance shall not increase such Member'sMembership Interests, but shall be a debt due from the LLC to such Member. In the absence of an express agreement governing such debt, it shall be repaidassoonas practicable to suchMember together withinterestthereonat the announcedprime rate of interest. Noloan or advance to the LLC by a Member shall be deemed a contribution.
3.7WithdrawalofCapital.NoMembershallhavetherighttowithdrawanypartof his orhercapitalcontributionpriorto the dissolution ofthe LLC, exceptas providedin thisAgreement. No Membershallbeentitled to interestonhisor her capitalcontribution. Each Member expressly waivestheright, ifany,to bring an actionfor partition ofany propertyin whichthe LLCmay have an interest.
3.8Allocationof GAAPNetIncomeandLoss.Netincome andlossshallbedetermined undergenerallyacceptedaccountingprinciples andshallbeallocated among the Members for purposesof Section 3.14 in accordancewith thisAgreement.Allocations of netincome andloss toa Member for a fiscal yearduring which the Members' Membership Interestschange shall be determined by pro-rating allocations determined pursuant to the preceding sentencebaseduponthe number ofdays in theyear through the dateof thechange in Membership Interests.
3.9TaxAllocations.For federalincometaxpurposes,theincomeandlossoftheLLC shallbeallocatedas follows: Items of LLC income,gain, loss, deductionor credit shall be allocated in the same manner the corresponding items enterinto the calculation of netincome and loss as determined undergenerally acceptedaccounting principles are allocated pursuant to Section 3.8.
3.10Determination ofFundsAvailable for Distribution.The Managing Membershall from timeto time determinewhetherany LLC fundsmay be available for distribution and so notify the Members. After consulting withthe Managing Member, the Members shall determine, by affirmative vote ofa majority of the Members holding more than 50% of the Membership Interests, whether a distribution shall be made and in what amount. In making such determinations, the Members shall consider whetherthe LLC has cash on hand in excessof amount required forfuture operations or any reserves establishedby the Managing Member :fromtime to time. If the Members determine that there is excess cash on hand and voteto distribute such cash, the Managing Member shallbe directed to distribute any such excess cash.
3.11DistributionsofOperatingIncome.Exceptas setforth inthefollowingSectionand inSection6.3,anycash:from operations that is determined to be available fordistribution shall be distributed by the Managing Member tothe Members inproportion to each Member's positive retained earnings account,maintained inaccordance with Paragraph 3.14, untileach member's positive retained earnings account is reduced to zero. Any remainingcash available fordistribution shall be distributed in proportion to eachMember's positive capital contributionaccount,maintained in accordance withParagraph3.15until eachMember's positive capital contribution accountis reduced to zero. Remaining cash available for distribution, ifany, shall be sharedinaccordancewith the Members'Membership Interests at the time of the distribution. If the LLC has cash available after satisfaction of its other obligations, the Managing Member shall,unlessMembers holding at least 50%of the Membership Interests agreeto the contrary,distribute to members anamount sufficient to alloweachsuchMember topay any income taxes assessed against eachsuch Member with respecttoeach such Member's Membership Interest.
3.12DistributionsonSaleofAssetsor onDissolution.Any netproceeds:fromsalesof LLCassetsshallbedistributedfirstinproportion to eachMember's positivecapital contribution account maintained inaccordance withParagraph 3.15, untileach Member's capital contribution accountis reducedto zero. Any remaining net proceeds:from sales of LLC assets shall be distributed inproportion toeachMember's positive retained earnings account,maintained in accordance with Paragraph3.14, until eachMember's retained earningsaccount is reduced to zero, and then in accordance with the Members' Membership Interestsat thetime of the distribution. All proceeds available fordistribution upon the dissolutionof theLLC shallbe distributed by theManager to the Members as providedin Paragraph 6.3.
3.13CapitalAccounts.A separatecapitalaccountshallbemaintainedforeachMember undergenerallyacceptedaccountingprinciples.Ingeneral,aMember'scapitalaccountshall equal the sum ofhis or herretainedearningsaccountplushisor her capital contribution account. Notwithstanding anyotherprovision hereof, capital accountsfor tax purposes ("tax capital accounts") shall also be maintained pursuantto finalTreasury Regulations underSection 704(b)of the Code. The Managing Member may, after consultingwith the Members,make such other adjustments, whether ornotconsistent withthe foregoing,to the tax capitalaccounts as are necessary to complywithsuch final Treasury Regulations.
3.14RetainedEarningAccounts.Aseparate retainedearningaccountshallbemaintained foreachMember. AMember'sretainedearningaccountshallbe increasedbytheMember's share of net income anddecreased bytheMember's shareof lossand distributions made to it pursuant to thefirst and third sentence ofParagraph 3.11andthe second sentence of Paragraph 3.12. For purposes of this Section, net income and loss shall bedetermined pursuant togenerally accepted accounting principles andin accordance with the method ofaccounting pursuant to which the LLC keeps its books under Section 4.11(a).
3.15CapitalContributionAccounts.Separatecapital contributionaccountsshallbe maintainedforeach Member.Ingeneral,aMember's capital contribution account shall be increased by the Member's contributions to the LLC and shallbe reducedby distributions to the Members pursuant to the second sentence of Paragraph 3.11 and thefirst sentence of Paragraph 3.12.
Article 4
Management
4.1Managementby Members.The management of the businessand affairsof the LLC shall be vested inSanidor (the "Managing Member").
4.2DutiesofManager.(a) Subjectto theprovisionsof thisAgreement,theActand otherapplicablelaw, a Managing Member shall have complete and unrestrictedpower and authority to manage and administer the business, properties and activities of the LLC, in its sole and exclusive discretion.
(b)TheManagingMembershallperformitsdutiesastheManagingMemberingood faith,inamanneritreasonablybelievesto be in the best interestsof theLLCand with such care as an ordinarily prudentperson ina like position would use under similarcircumstances. The Managing Member inso performing itsdutiesshall nothave anyliabilitybyreason ofbeing or having been a Managing Member ofthe LLC. The ManagingMember shall have noauthority to do any act in contravention ofthe Articlesor of this Agreement.
4.3SpecificPowersofManagingMember.Subject toanylimitationssetforthinthis SectionorinSection4.4,theManagingMember shall havethe following specific powers, and may expend LLC funds in exercising such powers:
(a) topayorcausetobepaidorreimbursedallcostsandexpensesincurredtothird partiesincurredintheconductof thebusiness of the LLC;
(b) tomaintainor cause to be maintained all financialrecords for the LLC; (c) to maintain or cause to be maintained bank accounts for the LLC;
(c) to maintain or cause to be maintained bank accounts for the LLC;
(d) topayorcausetobepaidobligationsoftheLLCandcollectobligationsowedtothe
(e) topurchaseor cause tobe purchased liability and other insurance to protect the LLC’s propertiesand businessattheexpenseoftheLLC;
(f)tomakeorcausetobemadeall paymentsrequiredof the LLC pursuant tothis Agreementand for all direct and indirect costs and expenses incurredin the conduct of its business, including, without limitation, all costs and expenses for legal, audit, accounting and other technical and professional services, reports and othercommunications to, and costsof maintaining relations with the Members, insurance, interest, taxes and governmental fees;
(g)tocausetheLLCtoemployor toengagepersons orentities from timeto time, at the expenseoftheLLC, to render the types of services generallyneededto assist in the operationof the business and investments of the LLC, including but not limited to, accountants, bookkeepers, attorneys and consultants on such terms and for such compensation as the Manager shall determine;
(h)tocausetheLLCtodemand,suefor,collect,recoverandreceiveall goods,claims, debts, monies,interestanddemandswhatsoevernow due or that may hereafter become due or belong to the LLC, includingthe rightto institute any action,suit or other legalproceedingfor the recovery of any propertyor anypartor parts thereof,thepossession of which the LLC may beentitled,and to make, executeand deliver receipts, releasesorotherdischarges therefor under sealor otherwise;
(i)tocausetheLLCtodefend,settle,adjust,compoundandcompromiseallactions, suits,accounts,claimsanddemandswhatsoever that hereafter shall be pending between the LLC and any person;
(j)toappoint aMembertoactastheLLC's"taxmattersmember"(unlessanother Member isspecificallydesignated as such), and to make orrevoke tax elections on behalf of the LLC, includingthe electionprovided bySection 754 of the Code; and
(k)toexecuteonbehalfoftheLLCanyandalldocumentsorinstrumentsofanykind whichtheManagingmembermay deemappropriatein carryingoutthepurposes of the LLC.
The aboveenumerationofspecificpowersoftheManagingMembershallnotrequiretheexerciseof anysuchpowerbytheManagingMemberexceptintheir sole discretion or as otherwise requiredby this Agreement.
4.4MattersRequiringVote.Notwithstanding theprovisionsoftheprecedingSections
4.2 and4.3,thefollowingactionsshallnotbe takenexceptasapprovedbyMember(s)holdingmore than50%ofthe Membership Interests:
(a)anysaleorothertransfer(in anyformoftransaction)of allorsubstantiallyallof the assets oftheLLC;
(b) theincurringofany indebtedness;
(c)anypayment, ortheincurringofanyobligationtomakeapayment,toorfor the benefit of the Managing Member or any enterprise in which the Managing Member has an interest by ownership or otherwise, other than distributions and expense reimbursements in accordance with the terms of this Agreement;and
(d)alldeterminationsas to the need forfunds for LLC purposes and the method for providing such funds.
4.5OtherEmployees.The ManagingMembershallappointsuchotheremployeesofthe LLCasareapprovedbyamajority of the Members holding more than 50%of the Membership Interests.
4.6ExpenseReimbursements.Subject toSection4.6(1),theManagingMembershallbe reimbursedbytheLLCforallreasonableexpensesincurred byiton behalfof the LLC,including without limitation all expenses incurred by the Managing Member in the organizationof the LLC, in connection with theacquisition of LLCassets, and thepreparation of tax returns.
4.7OtherActivities.The ManagingMembershall devotesuchtimetothebusinessof the LLCasit,initsreasonablediscretion,considers necessaryor advisable.The Managing Member may at any time during the termof the LLCengage and own an interestin any other businessor activity, including ownership ofreal estate, individually orthrough any venture or entity. Nothing contained in this Agreement shall be construedto constitute the Managing Member orany Member as theagent or general partner of any other person or entity,norin any manner to limit theManaging Member or any Memberin the carrying onof their other respective businesses or activities.
4.8BooksandRecords.(a) TheManaging Membershall maintainor causetobe maintainedcompleteandaccuratebooksofaccountoftheLLC'saffairsinaccordance with generally accepted accounting principles,consistently applied, at the LLC's principal place of business. TheLLC's books shall be kepton the cash methodofaccountinggenerally applicable to partnerships, providedthat another method may be applied for financial statement reporting purposes with the advice of the LLC's accountants. TheLLC's accounting period, taxable year and fiscal year shallbethe calendar year.
(b)TheLLCshallkeepattheprincipalofficeoftheLLC,(1)acurrentlistofthefull nameandlastknownbusiness, residence or mailingaddress ofeachMember, both pastand present; (2) a copy of theArticlesand all amendments thereto, togetherwith executed copies of anypowers of attorneypursuantto which any amendment has beenexecuted;(3) copies of the LLC=sfederal, state andlocal incometax returns andreports, if any, for the three mostrecent years; (4) copies of the currentlyeffective Operating Agreement;(5) copies of writings relatingto liability for contributions as required under the Act;(6)copiesoffinancial statements oftheLLC forthe three most recent years; (7) minutes of every annual andspecialmeeting ofMembers andany meeting ordered by a court pursuant to the Act; (8) a statement prepared and certified as accurate by the Managing Member whichcontains information about contributions ofcapital andreturn of contributions as required by the Act;and(9) consentsand action takenby Members without ameeting.
4.9ReportsandInformation.TaxreturnsoftheLLCshallbeprovidedtoallMembers fortheir review as soon as reasonably available beforefiling.By no later than March 30of each year, orsuch laterdateasmay be required bythe LLC'soutside taxservice, theManaging Member shall mail or cause tobemailed to each Membersufficient financial and tax information concerning theresultsof LLC operations asis necessaryforeach member to filehisor herown federal andstate income taxreturn forthe precedingyear, aswell asfinancial statementsprepared in accordance with generally accepted accounting principles, consistentlyapplied. Uponreasonable request, any Member orhis orher duly authorized representative shall have the right toinspect and copyany of the LLC books and records required to bekept pursuant to Section4.11during ordinarybusiness hours.The Member shall payany actual cost of copying suchbooksandrecords, and shall pay any special costs (such as enlargement from microfilm or computer printout) which may berequiredin connection with such inspection. Such inspectionshallbe conducted atatime and ina manner so as not to interfere with the operation of the business of the LLC. In no event shall the Managing Member be compelledto prepare compilations orsummaries which are not customarily maintained inthe conduct ofthe business of theLLC. Intheevent the Member wishesto inspect recordswhich arenot maintained at theprincipal place of business, such asrecords on a sharedorrented computer system, the Managing Membershallhave a reasonable timetoproducesuch recordsat the principal place of business of the LLC.
4.10LimitedLiabilityCompanyReports.The ManagingMembershallfilereportson behalfoftheLLCwiththeSecretaryofStateas required underthe Act.
4.11TaxMattersMember.Pursuant toSection6231(a) oftheCode,thedesignatedtax mattersmemberfor the LLC maytake any actionon behalfof the LLC. If at any time theMembers elect a non-member as the sole Manager of the LLC,the Members shall, by avote of Members holding more than50% of the Membership Interests,selectone of theMembers toserveas the tax matters member for the LLC. Thetax mattersmember shall prepareor supervise the preparation of alltax returnsof the LLC,and shall be entitled toreimbursement ofanyexpenses associated with such preparation.
Article 5
MeetingsandNotices
5.1MeetingsofMembers.Meetingsof Membersmaybeheldatsuchplaceasmaybe statedinthenoticeofmeeting. Ifnoplace isstatedin thenotice ofmeeting, themeetingshallbe heldatthe principal office of theLLC. There shall be an annualmeeting of Members which shall be held on suchdateas the ManagingMembermay designateor as the Members may agree. Special meetings ofthe Members may becalledby the Managing Member or byany Member.
5.2NoticeofMembers'Meetings.Written noticestatingtheplace, dayandhourofthe meetingand,inthecase ofaspecialmeeting, thepurposes forwhich themeeting is called, shallbe delivered not lessthan tendays normore than 30 daysbefore the date of the meeting by oratthe direction of the Manager or thepersons calling the meeting to each Member of recordentitled to vote at such meeting. If threesuccessive notices sentto thelast known addressofa Member are returned asundeliverable, no furthernoticestosuch Member shall be necessaryuntil another address for such Member ismade known totheLLC. A waiver of notice ofmeeting in writing,signedbytheperson entitled to suchnotice, whether before, at orafterthetime stated therein, shall beequivalent to the giving of notice of a meeting or any other matter.
5.3MethodofNotices.Any noticeor documentrequiredtobe giventoanyMemberor totheLLCshallbeinwriting and shallbedeemed given (1)upon personal delivery, (2) upon confirmation telephonically or via e-mail of delivery bytelefaxor e-mail, (3) on thefirstbusiness dayafter receipteddelivery to acourier servicethat guarantees next-business-day delivery, under circumstances where such guaranty is applicable, or (4)onthe third business dayafter mailing, by certified or registered mail, to theappropriate party. Notices giventothe LLC or the Managing Member shall be addressed to the LLCor theManaging Member at the addressof the principal officeof the LLC. The Managing Member shall maintain a record of names and addressesof the Members, and any notice given theMembers shall be givenaccordingto the names and addresses on such record.
5.4VotingRightsofMembers.Inallmatterspresentedtoorrequiringavoteof Members,eachMembershall have one vote.A Member may vote in person or bywritten proxy. Cumulative voting shall not be permitted. A Majority of Membersentitled to vote shall constitute a quorumat anymeeting of Members. Ifa quorum is present, the affirmative vote of a majority of Members shall bethe act of the Members unlessthe voteof a greaternumber is requiredunderthe Actor other provisions of this Agreement.
5.5AdjournedMeetings.IfaquorumisnotrepresentedatameetingofMembers,such meetingmaybe adjourned for a period notto exceed 30 days at any one adjournment. When a meeting is adjourned to another time or place, whether theadjournmentis for lack of quorum or otherwise,notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournmentis taken. At any adjourned meeting,theLLC may transact any business which might havebeen transacted atthe original meeting. If the adjournment is for more than 10 daysafterthedate of theoriginalmeeting, a notice of the adjourned meeting shall be giventoeach Memberentitledtovoteat the meeting.
5.6ActionofMembersWithoutaMeeting.Actionrequired or permittedbytheActto betakenataMembers' meetingmay be taken withouta meeting if the action is evidencedbyoneor more written consents describing the action taken,signed by each Member entitledtovote. Action sotaken shall be effective when all Members entitled tovote have signed the consentunless the consent specifies a different effective date in which case the action shall be effective as of the different effective date. Writtenconsent of Members entitled to vote shall have thesame force and effectas aunanimous vote ofsuch Members.
Article 6
Dissolution andTermination
6.1EventsofDissolution.TheLLC shallbedissolvedupon theoccurrenceofanyofthe followingevents:
(a) Thedeath,retirement,resignation,expulsion,bankruptcy ordissolutionof a member,ortheoccurrenceofanyothereventwhichterminates thecontinued membership of a Member inthe LLC, unless there are at least tworemaining Members andthe businessof the LLC is continued bythe consent of all of the remaining members within 90 days after the event which terminatesthe continued membership of aMember:
(b) theunanimouswritten agreement of all of the Members;
(c) theentryof anorderforreliefinvolvingliquidationoftheLLCunderChapter 7 ofthebankruptcylaw of the UnitedStates;the filing bythe LLCof a voluntary petition for liquidation under Chapter 7 of the bankruptcy law of the United States; thegeneral assignment by the LLC for the benefit of creditors under thelaws of any state; or the appointment of a receiver for all or substantially all of the assets of the LLC, unless such receivership is dissolved within 30 days after the appointment of such receiver. However, the filing of a voluntary petition under Chapter11 of the bankruptcy law of the United States by the LLC, or the entry of an orderfor relief pursuant to a voluntary or involuntary petition by or against the LLC underChapter 11of the bankruptcy law of the United States shall not, in itself, cause dissolution of the LLC;
(d) thedisposition of substantially allof theassets of theLLC;
(e) afinaladjudication thattheapplicationofanyprovisionofthisAgreement impairsthelimitedliabilityofanyMember;
(f) thehappening ofanyeventthat cannot be cured, which makes itunlawful for the LLC business to becontinued;
(g) theexpiration ofthetermoftheLLC;or the Act.
(h) anyothereventthatwouldcausedissolutionofalimitedliabilityLLC under
6.2Filingof Statement.Assoonas possiblefollowingtheoccurrenceofanyeventof dissolution,aManagingMember shall execute and file with the Secretary ofState astatement of intent to dissolve in the form prescribed by the Secretary of State, except that in the eventof a dissolution under Section 6.1(a), the Managerin his or her discretionmay delay the filing of a statementof intentto dissolve until immediatelyafter the 90-day period for continuationof the businessofthe LLC.
6.3Liquidation.Uponthedissolution oftheLLC,theMembersshallactasliquidatorto winduptheaffairsof the LLC.The Managing Member shall have full power and authority towind upthe affairs ofthe LLC inan orderly andbusinesslike manner andon such terms and conditions as it deems necessaryor advisable. The Managing Member shallhave the power and authority to liquidate any orallnon-liquid assets oftheLLConlyto the extent required (1) for payment of debts and liabilities ofthe LLC, including any loans oradvances to theLLC by any Member,andthecosts andexpense of liquidation, (2) to the establishment of such reserves asthe Members deems necessaryor advisable. The proceeds from such liquidation shall be applied in the prioritystated. The balance of the LLC's non-liquid assets, if any, shall bedistributed to the Membersin kind,in accordancewith Section 6.4 below.
6.4DistributioninKind.IfanyLLCassetsaretobedistributedinkindtotheMembers, theManagingMembershall, intheir discretion, either carryout an informalappraisal orobtain an independent appraisal ofthe fair marketvalueofsuch assets ata date reasonablyclose tothedateof liquidation and shall distribute such assets to the Members in undivided interests, as tenants-in-common,in accordancewith their Membership Interests at the time of thedistribution. The gain or lossshallbe determined asifthe assetshadbeen sold for their appraised valueandallocated tothe Members for thepurpose of maintaining capital accountsin accordance with Article 3. Net proceeds shall be determined and theassets shall be distributed in kind to the Members in accordance with Paragraph 6.3 as if theassets had been sold fortheappraised value. The capital account of each Member shall be debited bythe appraised value of the assets distributedto it.
6.5FilingofArticles.Whenall debts,liabilitiesandobligationsoftheLLChavebeen paidanddischargedor adequate provision has beenmadetherefor andallof the remaining property and assets have been distributed totheMembers, the liquidator shall file articles of dissolutionof the LLC withthe Secretary of State.
Article 7
General Provisions
7.1TransactionswithMembers.AMember ortheManagingMembermaylendmoney, actassuretyfor, andtransact otherbusiness with the LLCand, subject to other applicable law, shall have the same rights and obligations with respect thereto as a person who is not a Member or a Managing Member.
7.2IndemnificationofManager,EmployeesandAgents.TheLLCshallindemnifyany personmadeapartytoaproceedingbecausesuch personis or wasa ManagingMember against liabilityincurred in any such proceeding andadvance expenses to such person to the fullestextent permittedunder theAct. The LLC mayindemnify andadvance expenses to any employeeor agent of the LLC who is not a Manager to thesame extent as a Managing Member. The LLC may purchase and maintain insuranceon behalf of a person who is or was a Managing Member, employee, fiduciary or agent of the LLC againstany liability assertedagainst or incurred by such personin any such capacityorarising out of such person's status assuch, whether ornot the LLC wouldhave the power to indemnify such person against such liability.Any indemnification of or advance ofexpenses toa ManagingMemberin accordance with the foregoing,ifarising out ofa proceeding by oron behalf of the LLC, shall bereported in writing to the members withor before the noticeofthe next Members' meeting.
7.3EntireAgreement.TheAgreementembodiestheentireunderstandingandagreement betweenthepartiesconcerningthesubjectmatterhereof,and supersedes any andall prior negotiations, understandings or agreements in regardthereto.
7.4ApplicableLaw.ThisAgreementshallbeconstruedinaccordancewithandgoverned bythelawsoftheStateofWisconsin.
7.5Counterparts.This Agreementmaybeexecutedinanynumberofcounterparts,each ofwhichshallbeconsideredan original.
7.6AdditionalDocuments.TheMembersagreetoexecuteanyadditionaldocumentsand toperformanyadditionalacts as are ormaybecome necessary or convenientto carry out the purposes of this Agreement.
7.7Amendments.AnyamendmentstothisAgreementshallrequiretheunanimous approvaloftheMembers.
Article 8
Member Representations
By executingthisAgreement,eachMemberrepresentsandacknowledgesthat:
(a)Itisaware thattheUnitsoftheLLChavenotbeenregisteredunderthe Securities Actof 1933 or State Blue Sky Laws (the "Securities Acts") because theUnits are being issued inrelianceupon anexemption whichisavailable only iftheMembers acquire themfor investment and not with a view to distribution.Each Member is familiar with the phrase "acquired for investment and not with a view todistribution" as it relates to theSecurities Acts and the special meaninggiven to such terms by the Securities and ExchangeCommission.
(b)ItunderstandsthattheLLCisundernoobligationtoregistertheUnitsunder theSecuritiesActsortoassistany Member incomplying withany exemptionfrom suchregistration if anyMember should at a laterdate wish to dispose of the Units. Each Member realizes thatthe Units are unlikely toqualify forsale orother dispositionunder either Rule144or Rule 237 issued by theSecurities and ExchangeCommission.
(c)Ithasmade asthoroughandcompleteaninvestigationofthisenterpriseasit considersprudentin the circumstances and thatall information has been madeavailable to itthat it needs in order for it to make aninformed and intelligent decision to contribute to and becomea Member of the LLC. EachMember is an experienced andsophisticated investor not in need of the protection afforded investors by the Securities Acts.
EXECUTED tobeeffectiveasofthedatefirstsetforthabove.