llc agreement

8/13/2019 LLC Agreement

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LIMITED LIABILITY COMPANY AGREEMENT

CONTENTS

ARTICLE I Definitions

Section 1.01 Act

Section 1.02 Adjusted Tax Basis

Section 1.03 Affiliate

Section 1.04 Agreement

Section 1.05 Bankruptcy

Section 1.06 Book Depreciation

Section 1.07 Book Gain or Book Loss

Section 1.08 Book Item

Section 1.09 Book Value

Section 1.10 Capital Account

Section 1.11 Capital Contribution

Section 1.12 Capital Transaction

Section 1.13 Closing

Section 1.14 Code

Section 1.15 Contributing Member

Section 1.16 Initial Book Value

Section 1.17 Interim Capital Transaction

Section 1.18 Invested Capital

Section 1.19 LLC

Section 1.20 Major Decision


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Section 1.21 Member

Section 1.22 Members Share of Minimum Gain

Section 1.23 Minimum Gain

Section 1.24 Net Cash Flow

Section 1.25 Optional Loan

Section 1.26 Percentage Interest

Section 1.27 Regulations

Section 1.28 Revenue from Operations

Section 1.29 Secretary of State

Section 1.30 Special Basis Adjustment

Section 1.31 State

Section 1.32 Tax Depreciation

Section 1.33 Tax Gain or Loss

Section 1.34 Tax Item

Section 1.35 Terminating Capital Transaction

Section 1.36 Unrealized Appreciationor Unrealized Depreciation

ARTICLE II Organization

Section 2.1 Formation

Section 2.2 Name

Section 2.3 Fictitious Name Statements

Section 2.4 Term

ARTICLE III Purposes of the LLC

Section 3.1 Purposes


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Section 3.2 Authority of the LLC

Section 3.3 Title to LLC Property

ARTICLE IV Members

Section 4.1 Members

Section 4.2 Authority of Members

Section 4.3 Annual Meeting

Section 4.4 Special Meetings

Section 4.5 Notice of Meetings

Section 4.5.1 Notice of Special Meeting

Section 4.5.2 Major Decision

Section 4.5.3 Declaration of Mailing

Section 4.5.4 Waiver of Notice

Section 4.6 Quorum; Vote Requirement

Section 4.7 Adjourned Meetings

Section 4.8 Action by Members Without a Meeting

Section 4.9 Telephonic Meetings

Section 4.10 Limitation of Liability

Section 4.11 Indemnification

Section 4.12 Admission of Additional Members

Section 4.13 Accounting

Section 4.14 Dissociation of a Member

Section 4.14.1 Withdrawal

Section 4.14.2 Expulsion

Section 4.14.3 Rights Upon Dissociation


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ARTICLE V Managers

Section 5.1 Responsibility of Managers

Section 5.2 Number of Managers; Qualification

Section 5.3 Election; Term of Office

Section 5.4 Vacancies

Section 5.5 Removal

Section 5.6 Resignation

Section 5.7 Action by Managers

Section 5.8 Notice of Meeting

Section 5.9 Quorum of Managers

Section 5.10 Dissent by Managers

Section 5.11 Actions by Managers Without a Meeting

Section 5.12 Telephonic Meetings

Section 5.13 Authority of the Managers

Section 5.14 Restrictions on Authority of Managers

Section 5.15 Duties and Obligations of Managers

Section 5.16 Right to Rely on Managers

Section 5.17 Indemnity of the Managers

Section 5.18 Duty of Loyalty

ARTICLE VI Contributions to the LLC

Section 6.1 Capital Contributions of the Members

Section 6.2 No Withdrawals of Capital

Section 6.3 No Interest on Capital


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Section 6.4 Additional Contributions

Section 6.5 Loans by Members

Section 6.6 Capital Accounts

Section 6.7 Election to Restate Book Values of LLC Assets

ARTICLE VII Allocation of Profits and Losses; Distributions

Section 7.1 Allocation of Profits, Losses and Certain Tax Items

Section 7.2 Distributions

ARTICLE VIII Accounting: Books and Records

Section 8.1 Accounting

Section 8.2 Fiscal Year

Section 8.3 Books and Records

Section 8.4 Periodic Statements

Section 8.5 Tax Returns: Income Tax Information

Section 8.6 Tax Elections

Section 8.7 Bank Accounts

Section 8.8 Duties of Tax Matters Member

ARTICLE IX Transfers of LLC Interests

Section 9.1 Prohibition on Transfer

Section 9.2 Permitted Transfers Without Refusal Rights

Section 9.3 Other Transfers Subject to Refusal Rights

Section 9.4 Purchase or Redemption Price

Section 9.5 Conditions Precedent to Any Transfer or Encumbrance


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Section 9.6 Effect of Transfer

Section 9.7 Substitute Members

ARTICLE X Special and Limited Power of Attorney

Section 10.1 Grant of Power

Section 10.2 Type of Power

ARTICLE XI Dissolution, Winding Up and Termination

Section 11.1 Events Causing Dissolution

Section 11.2 Winding Up

Section 11.3 Distribution of Proceeds of Liquidation

Section 11.4 Statement to Members

ARTICLE XII Miscellaneous

Section 12.1 Notice

Section 12.2 Governing Law

Section 12.3 Successors and Assigns

Section 12.4 Headings

Section 12.5 Entire Agreement; Amendment

Section 12.6 Waiver

Section 12.7 Severability

Section 12.8 Number and Gender

Section 12.9 References

Section 12.10 AttorneysFees

Section 12.11 Counterparts


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Section 12.12 Waiver of Action for Partition

Section 12.13 Further Assurances

Section 12.14 Competing Interests

Section 12.15 Arbitration

LIMITED LIABILITY COMPANY AGREEMENT

OF

______________________________ LIMITED LIABILITY COMPANY

THIS AGREEMENT is entered into as of this _________________ day of

_________________, 20_________________, by and among those persons identified on ExhibitA hereto (the Members).

RECITALS

A. By their mutual consent, the Members formed a limited liability company ( LLC)

under the laws of the State of _________________________________ on _________________,

20_________________, for the purpose of _________________;

B. It has been, and remains, the intention of the Members that the business should be

carried on in the form of a limited liability company duly organized under the laws of the State

of ________________________________; and

C. The Members wish to set forth in writing the terms and conditions on which the LLC

has been formed and on which its business is to be conducted.

NOW, THEREFORE,in consideration of the mutual promises of the parties, each to the

other, and of other good and valuable consideration, the receipt and sufficiency of which is

hereby acknowledged, the parties agree as follows:

ARTICLE I. DEFINITIONS

As used in this Agreement, the following defined terms shall have the meanings specifiedbelow:

Section 1.01. Act means the ______________________________________ [state

statute], as amended.


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Section 1.02. Adjusted Tax Basismeans, with respect to any LLC asset at a particular

date (a) the cost or other basis of such asset for federal income tax purposes, reduced by (b)

accumulated Tax Depreciation with respect to such asset as of that date.

Section 1.03. Affiliatemeans a person who, directly or indirectly, through one or more

intermediaries, controls or is controlled by or is under common control with a Member, eachofficer and director of a Member, and each other person having decision making authority for a

Member. For purposes of this definition, the term control shall mean ownership of greater

than fifty percent (50%) of the equity ownership and voting control of an entity.

Section 1.04. Agreement means this Limited Liability Company Agreement, as

initially executed, or as amended from time to time, as the context may require.

Section 1.05. Bankruptcy shall mean, with respect to any Member, the filing of a

voluntary or involuntary petition in bankruptcy by or against a Member pursuant to Chapters 7 or

11 of the United States Bankruptcy Code, unless such petition is denied or dismissed withinthirty (30) days after filing in the case of a voluntary petition, or within ninety (90) days after

filing in the case of an involuntary petition; the entry of an order of relief in bankruptcy of a

Member; the assignment by a Member of its Percentage Interest for the benefit of creditors; the

appointment of a receiver or trustee for a Members property; and the attachment of a Members

Percentage Interest which is not released within thirty (30) days; or the undertaking by any

Member of any course or action amounting to the commencement of liquidation or dissolution

proceedings.

Section 1.06. Book Depreciation means, with respect to any LLC asset, the

depreciation computed for financial accounting purposes using the Book Value of the asset andeither (i) the same/method and useful life used by the parties for computing Tax Depreciation, or

(ii) any other method or useful life elected by the Managers for financial accounting purposes.

Section 1.07. Book Gain or Book Lossmeans the amount of gain or loss realized by

the LLC for book or financial accounting purposes on the disposition of a LLC asset, which shall

equal the positive or negative difference between the amount realized by the LLC as a result of

the disposition and the Book Value of the asset at the time of disposition.

Section 1.08. Book Itemmeans, with respect to any LLC asset, Book Depreciation,

amortization, Book Gain or Loss, or other similar item computed in accordance with the method

used by the LLC for accounting purposes.

Section 1.09. Book Valuemeans, with respect to any LLC asset at a particular date (a)

the Initial Book Value of the asset, increased by (b) any improvements or additions to such

assets, and reduced by(c) the accumulated Book Depreciation with respect to the asset as of such

date.


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Section 1.10. Capital Accountmeans the account established and maintained for each

Member on the books of the LLC pursuant to Section 6.6.

Section 1.11. Capital Contribution means the total amount of money and the fair

market value of property (net of liabilities secured by such property that the LLC is considered to

assume or take subject to under Code Section 752) actually contributed to the LLC by eachMember pursuant to the terms of this Agreement. Any reference to the Capital Contribution of a

Member shall include the Capital Contribution made by a predecessor holder of the interest of

the Member.

Section 1.12. Capital Transactionmeans (i) the sale, exchange or other disposition,

including casualty or condemnation, of a substantial portion of the LLCs assets, or (ii) the

refinancing of indebtedness encumbering a substantial portion of the LLCs assets.

Section 1.13. Closingmeans the formation of the LLC pursuant to this Agreement.

Section 1.14. Codemeans the Internal Revenue Code of 1986, as amended.

Section 1.15. Contributing Membermeans a Member who (i) has contributed property

to the LLC, or (ii) is deemed to have contributed property to the LLC because it was a Member

immediately before a revaluation of the LLC assets as provided in Section 6.7.

Section 1.16. Initial Book Value means (i) with respect either to any LLC asset

contributed to the LLC by a Member, or to any asset revalued for book purposes pursuant to

Section 6.7, the fair market value of the asset determined as of the date of contribution or

revaluation, as the case may be, or (ii) with respect to any other LLC asset, the cost of the asset

to the LLC.

Section 1.17. Interim Capital Transactionmeans any Capital Transaction other than a

Terminating Capital Transaction.

Section 1.18. Invested Capital means, for any Member at any time, the Members

aggregate Capital Contributions, reduced by the proceeds of any Capital Transaction distributed

to the Member.

Section 1.19. LLC means the _________________________ Limited Liability

Company, formed and operated under the terms and conditions of this Agreement.

Section 1.20. Major Decisionmeans a decision by the LLC to

(a) Make any capital expenditure in any single transaction in excess of

_________________ Dollars ($ _________________);

(b) Incur or refinance any debt in excess of _________________ Dollars ($

_________________);


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(c) Admit one or more additional or substitute Members;

(d) Transfer substantially all of the assets of the LLC;

(e) Merge the LLC into any other entity;

(f) Dissolve the LLC; or

(g) Cause the LLC to seek protection from creditors under federal or state

bankruptcy or insolvency laws.

Section 1.21. Member means each person who executes a counterpart of this

Agreement and makes its Capital Contribution.

Section 1.22. Members Share of Minimum Gainhas the same meaning as the term

Partner Nonrecourse Debt Minimum Gainin Section 1.704-2(i) of the Regulations.

Section 1.23. Minimum Gain has the meaning set forth in Sections 1.704-2(b) to1.704-2(d) of the Regulations.

Section 1.24. Net Cash Flow means, in any fiscal period, (i) all cash (and items

immediately convertible to cash without substantial discount) received by the LLC as Revenue

from Operations; reduced by(ii) all cash expenses incurred by the LLC in connection with the

operation of its business, including, but not limited to, fees and other expenses payable by the

LLC to the Managers or to any other person or entity, and interest payable on indebtedness of the

LLC, if any; and reduced further by(iii) required payments of principal and interest on any LLC

indebtedness, amounts set aside by the Managers as reserves or contingency funds, and the cost

of any capital improvements to the Property.

Section 1.25. Optional Loanmeans any loan made by a Member to the LLC pursuant

to Section 4.5(b).

Section 1.26. Percentage Interestmeans a Members percentage interest in the LLC,

which, unless modified by an amendment to this Agreement, shall be as set forth on Exhibit A.

Section 1.27. Regulations means the Treasury Regulations promulgated under the

Code by the Secretary of the Treasury.

Section 1.28. Revenue from Operationsmeans revenues received by the LLC from thesale or rental of property or the provision of services in the ordinary course of the LLCs

business. The term does not include the proceeds from a Capital Transaction, Capital

Contributions, loan proceeds, repayments of loans previously made by the LLC, amounts

received as security deposits, or any other amounts received other than as a result of the sale or

rental of property or the provision of services in the ordinary course of the LLCs business.


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Section 1.29. Secretary of Statemeans the secretary of state of the State.

Section 1.30. Special Basis Adjustment means, with respect to any LLC asset, the

increase or decrease in the Adjusted Tax Basis of the asset permitted by

____________________________________________ [state statute].

Section 1.31. Statemeans the State of _________________________.

Section 1.32. Tax Depreciationmeans, with respect to any LLC asset, depreciation or

cost recovery deductions computed for federal income tax purposes pursuant to the applicable

provisions of the Code, under such elections as to method and useful life or recovery period as

may be determined by the Managers.

Section 1.33. Tax Gain or Loss means the amount of gain or loss recognized for

federal income tax purposes on the disposition of a LLC asset.

Section 1.34.

Tax Item

means, with respect to any LLC asset, Tax Depreciation,amortization, Tax Gain or Loss, or other similar item as computed for federal income tax

purposes.

Section 1.35. Terminating Capital Transactionmeans the sale or other disposition of

substantially all of the assets of the LLC, resulting in the termination and winding up of the LLC.

Section 1.36. Unrealized Appreciation or Unrealized Depreciation means, with

respect to any asset contributed to the LLC, or any asset revalued in accordance with Section 6.7,

the positive or negative difference, if any, between the Initial Book Value and Adjusted Tax

Basis of such asset, determined as of the time of contribution or revaluation, as the case may be.

ARTICLE II. ORGANIZATION

Section 2.1 Formation.This LLC was formed under and pursuant to the Act by filing, on

_________________, the Certificate of Formation. Consistent with the Act and the Certificate of

Formation, the LLC will be operated pursuant to the terms and conditions contained in this

Agreement.

Section 2.2 Name. The name of the LLC will be the

___________________________________ Limited Liability Company. The Members may

change the name of the LLC at any time, provided all provisions of the Act are satisfied.

Section 2.3 Fictitious Name Statements.The Managers will execute, and cause to be filed

in the appropriate offices, any fictitious-name or doing-business statements or registrations that

may be required by the laws of any state, and any other certificates or documents the Managers

deem necessary or appropriate to comply with the requirements for qualification and operation of

a limited liability company under the laws of the State or of any locality or other jurisdiction in

which the LLC does business or owns property. Any such statement, registration, certificate or


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document may be executed on behalf of any Member by its attorney-in-fact, including any

attorney-in-fact under Article X.

Section 2.4 Term. The LLC will continue in existence until the LLC is terminated

pursuant to the provisions of Section 11.1.

ARTICLE III. PURPOSES OF THE LLC

Section 3.1 Purposes. The primary purpose of the LLC is to _________________. In

addition, the LLC may engage in any other business or activity that is necessary or incidental to

the LLCs primary purpose.

Section 3.2 Authority of the LLC. In order to carry out any of its purposes, the LLC is

authorized to take any lawful action consistent with any such purpose that a partnership is

permitted to take under the laws of the State.

Section 3.3 Title to LLC Property. All property owned by the LLC, whether real orpersonal, tangible or intangible, will be deemed to be owned by the LLC as an entity, and no

Member, individually, will have any ownership of such property. The LLC may hold any of its

assets in its own name or in the name of one or more individuals, partnerships, trusts or other

entities, as nominee for the LLC.

ARTICLE IV. MEMBERS

Section 4.1 Members.The names and addresses of the Members are set forth on Exhibit

A.

Section 4.2 Authority of Members.All Members shall be entitled to vote on any mattersubmitted to a vote for the consent of the Members. In addition to such other actions as may be

brought before the Members from time to time, the following actions require the consent of a

majority of the Members:

(1) the election of Managers;

(2) the removal of any Manager, with or without cause;

(3) the setting or adjusting of compensation or benefits of Managers;

(4) the filling of any position for Manager whether created by resignation,renewal, death or the increase in the number of Managers;

(5) approving any transaction involving an actual or potential conflict of

interest between a member or a Manager and LLC;

(6) admitting an additional Member; or


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(7) taking any action reserved to the Members by the Act, the Certificate of

Formation or this Agreement.

Any action by the Members on any Major Decision shall require the consent of all of the

Members.

Section 4.3 Annual Meeting. The annual meeting of the Members of the LLC for the

election of Managers and for the transaction of such other business as may properly come before

the meeting shall be held each year on _________________ at a place and time to be set by the

Members.

Section 4.4 Special Meetings. Special meetings of the Members for any purpose or

purposes may be called at any time by the Managers or by one or more Members holding not less

than ten percent (10%) of the total Percentage Interests, to be held at such time and place as the

Managers may prescribe.

If a special meeting is called by any Member or Members other than the Managers, then a

written demand, describing with reasonable clarity the purpose or purposes for which the

meeting is called and specifying the general nature of the business proposed to be transacted,

shall be delivered personally or sent by registered mail or by telegraphic or other facsimile

transmission to the Managers of the LLC. Upon receipt of such a demand, the Managers shall

cause notice of such meeting to be given, within thirty (30) days after the date the demand was

delivered to the Managers, to the Members in accordance with the provisions of Section 4.5 of

this Agreement. Except as provided below, if the notice is not given by the Managers within

thirty (30) days after the date the demand was delivered to the Managers, then the Member or

Members demanding the meeting may specify the time and place of the meeting and give noticethereof.

Section 4.5 Notice of Meetings.Except as otherwise provided below, the Managers shall

give, in any manner permitted by law, not less than ten (10) nor more than sixty (60) days before

the date of any meeting of Members, written notice stating the place, day, and time of the

meeting to each Member.

Section 4.5.1 Notice of Special Meeting. In the case of a special meeting, the written

notice shall also state with reasonable clarity the purpose or purposes for which the meeting is

called and the general nature of the business proposed to be transacted at the meeting. No

business other than that within the purpose or purposes specified in the notice may be transacted

at a special meeting.

Section 4.5.2 Major Decision. If the business to be conducted at any meeting includes

any Major Decision, then the written notice shall state that the purpose or one of the purposes is

to consider the Major Decision and shall describe the proposed action with reasonable clarity.


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Written notice of such meeting shall be given to each Member, not less than twenty (20) days

before such meeting, in the manner provided in Section 4.5 above.

Section 4.5.3 Declaration of Mailing. A declaration of the mailing or other means of

giving any notice of any Membersmeeting, executed by one or more Managers, shall be prima

facie evidence of the giving of such notice.

Section 4.5.4 Waiver of Notice.A Member may waive notice of any meeting at any time,

either before or after such meeting. Except as provided below, the waiver must be in writing, be

signed by the Member entitled to the notice, and be delivered to the LLC for inclusion in the

minutes or filing with the corporate records. A Members attendance at a meeting in person or by

proxy waives objection to lack of notice or defective notice of the meeting unless the Member at

the beginning of the meeting objects to holding the meeting or transacting business at the

meeting on the ground that the meeting is not lawfully called or convened. In the case of a

special meeting, or an annual meeting at which fundamental corporate changes are considered, a

Member waives objection to consideration of a particular matter that is not within the purpose orpurposes described in the meeting notice unless the Member objects to considering the matter

when it is presented.

Section 4.6 Quorum; Vote Requirement.A quorum shall exist at any meeting of Members

if Members holding in excess of fifty percent (50%) of Percentage Interests are represented in

person or by proxy. Once a Member is represented for any purpose at a meeting other than solely

to object to holding the meeting or transacting business at the meeting, the Member is deemed

present for quorum purposes for the remainder of the meeting and for any adjournment of that

meeting. In the case of any meeting of Members that is adjourned more than once because of the

failure of a quorum to attend, those who attend the third convening of such meeting, althoughless than a quorum, shall nevertheless constitute a quorum for the purpose of electing Managers,

provided that Members holding in excess of thirty-three percent (33%) of Percentage Interests

are represented in person or proxy.

If a quorum exists, action on a matter is approved if the votes cast favoring the action

exceed the votes cast opposing the action unless a greater number of affirmative votes is required

by the Act, by the Certificate of Formation or by the Agreement.

Section 4.7 Adjourned Meetings. An adjournment or adjournments of any Members

meeting, whether by reason of the failure of a quorum to attend or otherwise, may be taken tosuch date, time, and place as the chairman of the meeting may determine without new notice

being given if the date, time, and place are announced at the meeting at which the adjournment is

taken. However, if the adjournment is for more than one hundred twenty (120) days from the

date set for the original meeting, a new notice of the adjourned meeting shall be given to each

Member, in accordance with the provisions of Section 4.5 of the Agreement. At any adjourned

meeting, the LLC may transact any business which might have been transacted at the original


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meeting. Any meeting at which Managers are to be elected shall be adjourned only from day to

day until such Managers are elected.

Section 4.8 Action by Members Without a Meeting. Any action which may be or which is

required by law to be taken at any meeting of Members may be taken, without a meeting or

notice of a meeting, if one or more consents in writing, setting forth the action so taken, aresigned by all of the Members or, in the place of any one or more of such Members, by a person

holding a valid proxy to vote with respect to the subject matter thereof, and are delivered to the

LLC for inclusion in the minutes or filing with the LLC records. Action taken by unanimous

written consent is effective when all consents are in possession of the LLC, unless the consent

specifies a later effective date. Such consent shall have the same force and effect as a meeting

vote of Members and may be described as such in any articles or other document filed with the

Secretary of State of the State of ______________________.

Section 4.9 Telephonic Meetings.Members may participate in a meeting by means of a

conference telephone or similar communications equipment by means of which all personsparticipating in the meeting can hear each other at the same time, and participation by such

means shall constitute presence in person at a meeting.

Section 4.10 Limitation of Liability.Each Members liability shall be limited as set forth

in this Agreement, the Act and other applicable law. A Member will not be personally liable,

merely as a Member, for any debts or losses of the LLC beyond the Members Capital

Contributions, except as otherwise provided by law.

Section 4.11 Indemnification.The Company shall indemnify the Members, for all costs,

losses, liabilities, and damages paid or accrued by such Member, and advance expenses incurredby the Member, in connection with the business of the LLC, to the fullest extent provided or

allowed by the Act.

Section 4.12 Admission of Additional Members. A person may be added as a Member

upon satisfaction of such terms and conditions approved by the Members. Notwithstanding the

foregoing, a person shall not become an additional Member unless and until such person

becomes a party to this Agreement by signing this Agreement and executing such documents and

instruments as the Managers may reasonably request as additional, necessary or appropriate to

confirm such person as a Member in the LLC.

Section 4.13 Accounting. No additional Member shall be entitled to any retroactive

allocation of losses, income or expense deductions incurred by the LLC. The Managers may at

the time an additional Member is admitted, close the LLC books (as though the LLCs tax year

had ended) or make pro rata allocations of loss, income and expense deductions to an additional

Member for that portion of the LLCs tax year in which such Member was admitted in

accordance with the provisions of Section 706(d) of the Code and the Regulations promulgated

thereunder.


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Section 4.14 Dissociation of a Member.A Member shall cease to be a Member upon the

happening of any of the following events:

(a) the Member voluntarily withdraws from the LLC, or assigns its interest

in the LLC to another person in accordance with the terms of this Agreement;

(b) the Member is removed from the LLC in accordance with the Act or the

terms of this Agreement;

(c) upon the Bankruptcy of a Member;

(d) in the case of a Member who is a natural person, the death of the Member

or the entry of an order by a court of competent jurisdiction adjudicating the

Member incompetent to manage the Members personal estate;

(e) in the case of a Member who is acting as a Member by virtue of being

trustee of a trust, the termination of the trust (but not merely the substitution of anew trustee);

(f) in the case of a Member that is a separate entity other than a corporation,

the dissolution and commencement of winding up the separate entity;

(g) in the case of a Member that is a corporation, the filing of articles of

dissolution or its equivalent, for the corporation or the revocation of its charter; or

(h) in the case of an estate, the distribution by the fiduciary of the estate s

entire interest in the LLC.

Section 4.14.1 Withdrawal.A Member may withdraw voluntarily from the LLC upon not

less than six monthsprior written notice to the other Members and with the consent of the other

Members. Such withdrawal shall be effective upon the latest of the date specified in the notice,

or the date the consent is given.

Section 4.14.2 Expulsion. A Member may be expelled from the LLC upon a

determination by the Managers that the Member has been guilty of wrongful conduct that

adversely and materially affects the business or affairs of the LLC, or has willfully and

persistently committed a material breach of the Certificate of Formation or this Agreement, or

otherwise breached a duty owed to the LLC or the other Members, to the extent that it is notreasonably practicable to carry on the business or affairs of the LLC with the Member. An

expelled Member shall be treated as having withdrawn voluntarily from the LLC in breach of

this Agreement on the date of the Managers determination.

Section 4.14.3 Rights Upon Dissociation. In the event any Member ceases to be a

Member prior to the expiration of the term of the LLC, the following shall apply:


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(a) The person shall be treated as a mere creditor of the LLC from the date of

withdrawal from the LLC until such time as the person has received all distributions

to which the person is or may be due under this Agreement.

(b) If the dissociation of a Member causes the dissolution of the LLC and the

business and affairs of the LLC are wound up under Article XI, the person shall be

entitled to participate in the winding up of the LLC to the same extent as any

Member except that any distributions to which the person would have been entitled

shall be reduced by the damages sustained by the LLC as a result of the dissolution

and winding up.

(c) If the dissociation does not cause the dissolution of the LLC under Article

XI, the person shall be entitled to an amount equal to the value determined in

accordance with Section 9.4 of this Agreement, to be paid within six months of thedate of dissociation. Notwithstanding the foregoing, if the dissociation is other than

as a result of the death or incompetence of the person, the Managers may pay the

value determined in accordance with Section 9.4 of this Agreement over a period not

to exceed five years (plus interest at the prime rate quoted from time to time by

_________________ plus two percent).

ARTICLE V. MANAGERS

Section 5.1 Responsibility of Managers.Except for such matters requiring the vote of the

Members pursuant to the Act, the Certificate of Formation or this Agreement, the Managers will

have the exclusive right and power to manage, operate and control the LLC and to take all

actions and make all decisions necessary or appropriate to carry on the business and affairs of the

LLC. A Manager shall discharge the duties of a Manager, including duties as a member of a

committee, in good faith, with the care an ordinarily prudent person in a like position would

exercise under similar circumstances, and in a manner the Manager reasonably believes to be in

the best interests of the LLC. In discharging the duties of a Manager, a Manager is entitled to

rely on information, opinions, reports, or statements, including financial statements and other

financial data, if prepared or presented by: (a) one or more Members or employees of the LLC

whom the Manager reasonably believes to be reliable and competent in the matters presented; (b)

legal counsel, public accountants, or other persons as to matters the Manager reasonably believesare within the persons professional or expert competence; or (c) a committee of Managers or

Members of which the Manager is not a member, if the Manager reasonably believes the

committee merits confidence. A Manager is not acting in good faith if the Manager has

knowledge concerning the matter in question that makes reliance otherwise permitted above

unwarranted. The creation of, delegation of authority to, or action by a committee does not alone

constitute compliance by a Manager with the standards of conduct imposed by law upon


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Managers. A Manager is not liable for any action taken as a Manager, or any failure to take any

action, if the Manager performed the duties of the Managers office in compliance with this

section.

Section 5.2 Number of Managers; Qualification.The exact number of Managers of the

LLC shall be _________________ (_________________) until amended in accordance with thisAgreement. No reduction of the authorized number of Managers shall have the effect of

removing any Manager before that Managers term of office expires. If a greater or lesser

number of Managers than is specified in this section is elected by the Members, then election of

that number shall automatically be deemed to constitute an amendment to this Agreement. No

Manager need be a Member of the LLC or a resident of __________________________. Each

Manager must be at least eighteen (18) years of age.

Section 5.3 Election; Term of Office.At the first annual meeting of Members and at each

annual meeting thereafter, the Members shall elect Managers. Each Manager shall hold office

until the next succeeding annual meeting, and in each case until his or her successor shall havebeen elected and qualified.

Section 5.4 Vacancies. Any vacancy occurring in the Managers (whether caused by

resignation, death, or otherwise) may be filled by the vote of a majority of the Managers

remaining in office, provided that if there are no remaining Managers, the vacancy shall be filled

by the Members. Notice shall be given to all of the remaining Managers that such vacancy will

be filled at the meeting. A Manager elected to fill any vacancy shall hold office until the next

meeting of Members at which Managers are elected, and until his or her other successor shall

have been elected and qualified.

Section 5.5 Removal. One or more of the Managers may be removed, with or without

cause, at a special meeting of Members called expressly for that purpose. A Manager may be

removed if the number of votes cast in favor of removing such Manager exceeds the number of

votes cast against removal. The removal of a Manager who is also a Member shall not affect the

Managers rights as a Member and shall not constitute a withdrawal of a Member.

Section 5.6 Resignation.A Manager may resign at any time by delivering written notice

to the Members. A resignation is effective when the notice is delivered unless the notice specifies

a later effective date. The resignation of a Manager who is also a Member shall not affect the

Manager

s rights as a Member and shall not constitute a withdrawal as a Member.

Section 5.7 Action by Managers.Unless otherwise agreed to by the Managers, meetings

of the Managers will be held at such place, day, and time as shall from time to time be fixed by

resolution of the Managers without notice other than the delivery of such resolution as provided

in Section 5.8 below, or at such place, day, and time and for such purpose or purposes, as may be

requested by any Manager provided that notice of such meeting has been given to each Manager

in accordance with Section 5.8 herein.


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Section 5.8 Notice of Meeting.Notice of the place, day, and time of any meeting of the

Managers for which notice is required shall be given, at least two (2) days preceding the day on

which the meeting is to be held by the person calling the meeting, in any manner permitted by

law, including orally. Any oral notice given by personal communication over the telephone or

otherwise may be communicated either to the Manager or to a person at the office of the

Manager who, the person giving the notice has reason to believe, will promptly communicate it

to the Manager.

No notice of any regular meeting need be given if the place, day, and time thereof have

been fixed by resolution of the Managers and a copy of such resolution has been delivered to

every Manager at least two (2) days or deposited in the United States mail, as evidenced by the

postmark, with first-class postage prepaid, and correctly addressed at least five (5) days

preceding the day of the first meeting held in pursuance thereof.

Notice of a meeting of the Managers need not be given to any Manager if it is waived by

the Manager in writing, whether before or after such meeting is held. A Managers attendance ator participation in a meeting shall constitute a waiver of notice of such meeting except when a

Manager attends or participates in a meeting for the express purpose of objecting on legal

grounds prior to or at the beginning of the meeting (or promptly upon the Managers arrival) to

the holding of the meeting or the transaction of any business and does not thereafter vote for or

assent to action taken at the meeting. Any meeting of the Managers shall be a legal meeting

without any notice thereof having been given if all of the Managers have received valid notice

thereof, are present without objecting, or waive notice thereof, or any combination thereof.

Section 5.9 Quorum of Managers.A majority of the number of Managers specified in or

fixed in accordance with this Agreement shall constitute a quorum for the transaction ofbusiness, and the affirmative vote of a majority of the Managers present at a meeting at which a

quorum is present shall be the act of the Managers. If the number of Managers in office at any

time is less than the number specified in or fixed in accordance with this Agreement, then a

quorum shall consist of a majority of the number of Managers in office; provided that in no event

shall a quorum consist of fewer than one-third of the number specified in or fixed in accordance

with this Agreement.

Managers at a meeting of the Managers at which a quorum is initially present may

continue to transact business notwithstanding the withdrawal of Managers, provided such

withdrawal does not reduce the number of Managers attending the meeting below the level of aquorum.

A majority of the Managers present, whether or not constituting a quorum, may adjourn

any meeting of the Managers to another time and place. If the meeting is adjourned for more than

forty-eight (48) hours, then notice of the time and place of the adjourned meeting shall be given


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before the adjourned meeting takes place, in the manner specified in Section 5.8 of this

Agreement, to the Managers who were not present at the time of the adjournment.

Section 5.10 Dissent by Managers.Any Manager who is present at any meeting of the

Managers at which action on any matter is taken shall be presumed to have assented to the action

taken unless the Manager objects at the beginning of the meeting (or promptly upon theManagers arrival) to the holding of, or the transaction of business at, the meeting; or unless the

Managers dissent or abstention shall be entered in the minutes of the meeting; or unless the

Manager delivers written notice of the Managers dissent or abstention to the presiding officer of

the meeting before the adjournment thereof. Such right to dissent or abstention shall not be

available to any Manager who votes in favor of such action.

Section 5.11 Action by Managers Without a Meeting.Any action required by law to be

taken or which may be taken at a meeting of the Managers may be taken without a meeting if

one or more consents in writing, setting forth the action so taken, shall be signed either before or

after the action so taken by all of the Managers and delivered to the LLC for inclusion in theminutes or filing with the corporate records. Such consent shall have the same effect as a

meeting vote. Action taken under this section is effective when the last Manager signs the

consent, unless the consent specifies a later effective date.

Section 5.12 Telephonic Meetings. Managers may participate in a meeting of the

Managers by any means of communication by which all Managers participating in the meeting

may simultaneously hear each other during the meeting. Participation by such means shall

constitute presence in person at a meeting.

Section 5.13 Authority of the Managers. Subject to the limitations and restrictions setforth in the Act, the Certificate of Formation and this Agreement, the Managers shall have the

sole and exclusive right to manage the business of the LLC and shall have all of the rights and

powers which may be possessed by Managers under the Act and the Certificate of Formation

including, without limitation, the right and power, on behalf and in the name of the LLC, to:

(a) Institute, prosecute, and defend in all courts in the LLCs name;

(b) Purchase, receive, lease or otherwise acquire, own, hold, improve, use

and otherwise deal in or with any real or personal property or any interest in real or

personal property, wherever situated;

(c) Sell, convey, mortgage, pledge, create a security interest in, lease,

exchange, transfer and otherwise dispose of all or any part of any LLC asset;

(d) Make contracts or guarantees, incur liabilities, borrow money, issue notes

or secure any of the obligations of the LLC by mortgage or pledge of any assets of

the LLC;


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(e) Lend money, invest or reinvest LLC funds or receive and hold real or

personal property as security for repayment of funds so loaned, invested or

reinvested;

(f) Conduct the LLC business, and exercise the powers granted by the Act

and the Articles;

(g) Establish pension plans, profit sharing plans and other benefit or

incentive plans for any and all current or former employees or agents of the LLC;

and

(h) Transact any other lawful business not inconsistent with the Act, the

Certificate of Formation and this Agreement.

Section 5.14 Restrictions on Authority of Managers.

(a) No Manager shall have the authority to do any of the following actswithout the unanimous consent of the Members:

(1) Knowingly do any act in contravention of this Agreement or

without the consent of the Members as required by this Agreement;

(2) Knowingly do any act which would make it impossible to

carry on the ordinary business of the LLC, except as otherwise provided

in this Agreement; and

(3) Knowingly perform any act that would subject any Member

to personal liability in any jurisdiction.

Section 5.15 Duties and Obligations of Managers. In addition to such other duties and

obligations as the Managers may have, the Managers shall take all actions which may be

necessary or appropriate for the continuation of the LLCs valid existence as a limited liability

company under the laws of this state and of each other jurisdiction in which such existence is

necessary to protect the limited liability of the Members or to enable the LLC to conduct the

business in which it is engaged.

Section 5.16 Right to Rely on Managers.

(a) Any person dealing with the LLC may rely upon a certificate signed by

any Manager as to:

(1) The identity of any Manager or any Member;

(2) The existence or nonexistence of any fact or facts regarding

the affairs of the LLC; or


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(3) The Managers and/or Members who are authorized to

execute and deliver any instrument or document on behalf of the LLC.

(b) The signature of any Manager shall be necessary and sufficient to convey

title to any property of the LLC or to execute any promissory notes, deeds of trust,

mortgages, or other instruments of hypothecation, and all of the Members agree thata copy of this Agreement may be shown to the appropriate parties in order to

confirm the same, and further agree that the signature of any Manager shall be

sufficient to execute any statement of companyor other documents necessary to

effectuate this or any other provision of this Agreement.

Section 5.17 Indemnity of the Managers.A Manager is not personally liable for any debt,

obligation or liability of the LLC merely by reason of being a Manager and is not liable to the

LLC or its Members for monetary damages for conduct as a Manager. A Manager who performs

the duties as Manager in accordance with this Agreement shall not have any liability by reason of

being or having been a Manager. The LLC shall indemnify the Managers and make advances forexpenses in accordance with the provisions of the Act and the Certificate of Formation.

Section 5.18 Duty of Loyalty.Each Member and Manager shall be entitled to enter into

transactions that may be considered to be competitive with, or a business opportunity that may be

beneficial to, the LLC, it being expressly understood that some of the Members and Managers

may enter into transactions that are similar to the transactions into which the LLC may enter and

the LLC and each Member waive the right or claim to participate therein. Notwithstanding the

foregoing, Members and Managers shall account to the LLC and hold, as trustee for it, any

property, profit, or benefit derived by the Member or Manager, without the consent of the

Members, in the formation, conduct and winding up of the LLC business or from a use orappropriation by the Member or Manager of any assets of the LLC, including information

developed exclusively for the LLC and opportunities expressly offered to the LLC.

ARTICLE VI. CONTRIBUTIONS TO THE LLC

Section 6.1 Capital Contributions of the Members.Each Member has contributed, or will

contribute, to the capital of the LLC cash or other property in the amount set forth opposite its

name on Exhibit A.

Section 6.2 No Withdrawals of Capital.A Member will have no right to withdraw any

part of its Capital Contributions or Capital Account, or to receive any distribution from the LLC,

except in accordance with the provisions of this Agreement.

Section 6.3 No Interest on Capital.A Member will not be entitled to receive interest on

any portion of its Capital Contributions or Capital Account. A Member will, however, be entitled

to receive interest on any Loans it makes to the LLC pursuant to Section 6.5.


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Section 6.4 Additional Contributions.No Member may contribute additional funds to the

LLC, and no Member shall be obligated to contribute such funds, unless all Members agree on

the terms upon, and proportions in which, such funds will be contributed.

Section 6.5 Loans by Members.

(a) Optional Loans. A Member may, but will not be required to, advance

additional monies to the LLC as a loan upon such terms as the lending Member and

the Managers may agree.

(b) Treatment of Loans.No loan will result in an increase in the Percentage

Interest of the lending Member. The amount of any such loan will not be credited to

the lending Members Capital Account. Any loan will be an obligation of the LLC

to the lending Member, with interest, and will be repaid to the lending Member

before any amount may be distributed to any Member with respect to its Percentage

Interest. Interest on such loans will be payable without regard to the profits or lossesof the LLC and will be treated as a transaction with a Member other than in its

capacity as a member of the LLC pursuant to Section 707(a) of the Code. All such

loans will be repayable solely from the LLCs assets and represented by promissory

notes executed by the LLC.

Section 6.6 Capital Accounts.

(a)Accounts.The LLC will establish on its books a Capital Account for each

Member. Capital Accounts will be determined and maintained in accordance with

the provisions of this Agreement and the requirements of Section 1.704-1(b)(2)(iv)

of the Regulations, which are incorporated by this reference. Should there be any

inconsistency between the provisions for Capital Account maintenance contained in

this Agreement and the more detailed provisions of the Regulations, the provisions

of the Regulations will prevail.

(b) Basic Capital Account Adjustments. A Members Capital Account (1)

shall be increased by (A) the Members Capital Contributions (including the fair

market value of any property contributed to the LLC) net of liabilities assumed by

the LLC and liabilities to which the contributed property is subject, and (B) subject

to subsection (d) below, the Members distributive share of LLC income and gains

(or items thereof), including income or gains exempt from tax; and (2) shall be

reduced by(A) all distributions to the Member of cash or property (computed at the

fair market value of any distributed property and net of liabilities assumed by the

Member and liabilities to which the distributed property is subject), and (B) subject

to subsection (d) below, the Members distributive share of LLC expenses, losses

and deductions (or items thereof), including the Members share of expenses which

are not deductible in computing taxable income; and (3) shall be further adjustedin


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certain circumstances as provided in subsections (c), (d) and (e) below, or as

otherwise may be necessary to satisfy the requirements of Section 1.704-1(b)(2)(iv)

of the Regulations.

(c) Special Adjustments Upon Liquidation. If LLC assets are distributed in

kind to one or more Members as a result of the liquidation and winding up of theLLC or the termination of a Members interest in the LLC, the MembersCapital

Accounts will be adjusted to reflect the manner in which the unrealized gain or loss,

or any other item of income or deduction inherent in the distributed property (that

has not been reflected in the Capital Accounts previously) would be allocated

between the Members if the LLC sold the distributed property for its fair market

value on the date of distribution.

(d) Adjustments to Capital Accounts Where Book Value Differs From

Adjusted Tax Basis.As provided in subsection (b), a Members Capital Account will

be increased by the fair market value of any property the Member has contributed tothe LLC. Additionally, under certain circumstances described in subsection (f), the

LLC may elect to restate the Book Values of LLC assets to reflect the current fair

market values of such assets. In either case, an assets Book Value may differ from

its Adjusted Tax Basis, and the Capital Accounts of the Members will have been

adjusted at the time of the contribution or revaluation to reflect the Book Values of

LLC assets, rather than Adjusted Tax Basis. In those circumstances, in order to

account for the differences between Book Values and Adjusted Tax Basis, the

Members Capital Accounts will be adjusted in accordance with paragraph

(b)(2)(iv)(g) of Section 1.704-1 of the Regulationsfor subsequent allocations to the

Members of Book Items of depreciation, depletion, amortization, and gain or loss,

with respect to the contributed or revalued property. In all other cases, the Capital

Account adjustments required by subsection (b) will be made with reference to Tax

Items. For these purposes, Book Items of depreciation and amortization with respect

to LLC property may be computed in accordance with any reasonable method

selected by the LLC, so long as (1) if the Book Value of LLC property exceeds its

Adjusted Tax Basis, Book Depreciation and Book Items of amortization will be no

less than the corresponding Tax Depreciation and Tax Items of amortization; (2) if

the Adjusted Tax Basis of LLC property exceeds its Book Value, Book Depreciation

and Book Items of amortization will be no greater than the corresponding TaxDepreciation and Tax Items of amortization; and (3) if the Book Value of LLC

property equals its Adjusted Tax Basis, the Book Depreciation and Book Items of

amortization will be equal to the corresponding Tax Items.

(e) Treatment of Special Basis Adjustments. Adjustments made to the

Adjusted Tax Basis of LLC property under Section 743 of the Code, if the LLC has

a Section 754 election in effect, or under Section 732(d) of the Code, if the LLC


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does not have a Section 754 election in effect, will not be reflected in the Capital

Account of the transferee Member. Depreciation, amortization, and gain or loss with

respect to such property for purposes of adjusting Capital Accounts in accordance

with subsection (b), will be computed by disregarding the effect of such Special

Basis Adjustments. The preceding sentence will not apply to the extent that the basis

adjustment is allocated to the common basis of LLC property under paragraph (b)(1)

of Section 1.734-2 of the Regulations.In that case, the Special Basis Adjustment will

give rise to adjustments to the Capital Accounts of the Members in accordance with

their interests in the LLC. If the LLC has a Section 754 election in effect that gives

rise to an adjustment in the Adjusted Tax Basis of LLC property under Section 734,

a Member who receives a distribution from the LLC will have a corresponding

adjustment made to its Capital Account.

Section 6.7 Election to Restate Book Values of LLC Assets.

(a) The Managers may elect to increase or decrease the Capital Accounts ofthe Members to reflect a revaluation of LLC property on the LLCs books for the

reasons provided in subsection (b) below, so long as (1) the adjustments are based

on the fair market value of LLC property on the date of adjustment; (2) the

adjustments reflect the manner in which unrealized income, gain, loss, or deduction

inherent in such property (that has not been reflected in the Capital Accounts

previously) would be allocated between the Members if there were a taxable

disposition of the property for its fair market value on that date; (3) the Members

Capital Accounts are adjusted as required under Section 1.704-1 of the Regulations

for allocations to them of Book Depreciation, amortization, and Book Gain or Loss

with respect to such property, and (4) the Members distributive shares of Tax

Depreciation, amortization, and Tax Gain or Loss with respect to such property is

determined in accordance with paragraph (b)(2) of Section 7.1 so as to take into

account the variation between the Adjusted Tax Basis and Book Value of LLC

property in the manner provided under Section 704(c) of the Code.

(b) The Managers may elect to revalue the LLC property and the Members

Capital Accounts (1) in connection with a contribution of money or other property to

the LLC by a new or existing Member as consideration for an interest in the LLC, or

(2) in connection with a distribution of money or other property by the LLC to a

retiring or continuing Member as consideration for an interest in the LLC or (3)

under generally accepted industry accounting practices, if substantially all of the

LLC property consists of cash equivalents and stock, securities, commodities,

options warrants, futures, or similar instruments that are readily tradeable on an

established securities market.


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ARTICLE VII. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS

Section 7.1 Allocation of Profits, Losses and Certain Tax Items.

(a) Determination of Profits and Losses. Except as otherwise stated, for

purposes of this Agreement, LLC

profits,

gains,

and

losses

will includeboth Book Items (for purposes of certain Capital Account adjustments to be based

on Book Items as required under the provisions of Section 1.704-1 of the

Regulations) and Tax Items (for purposes of determining the Membersdistributive

shares of taxable income, gain, or loss pursuant to Section 704 of the Code and the

Regulations) without regard to any Special Basis Adjustments. Except where Tax

Items differ from Book Items as required under Section 1.704-1 of the Regulations,

all Tax Items and Book Items of profit, gain, or loss will be allocated in the same

proportions.

(b)Allocation of Current Profits and Losses.

(1) Generally.Except as otherwise provided in this Section 7.1,

all profits and losses from LLC operations and all other items of

deduction, credit, preference and the like (both Book Items and Tax

Items) will be allocated between the Members in proportion to their

respective Percentage Interests.

(2) Special Allocation of Tax Depreciation for Contributed or

Revalued Property. If the Initial Book Value of an asset of the LLC

differs from its Adjusted Tax Basis, either because it was contributed to

the LLC at a time when its fair market value differed from its Adjusted

Tax Basis, or because the LLC has elected to restate its Book Value as

permitted by Section 6.7, then Tax Items of income, gain, loss and

deduction will be allocated first between the Members so as to account

for the variation between the Adjusted Tax Basis and the Initial Book

Value of the asset at the time of contribution or revaluation, in

accordance with Section 704(c) of the Code and paragraph (b)(2)(iv)(b)

of Section 1.704-1 of the Regulations.Corresponding Book Items will

nonetheless be allocated in accordance with paragraph (1) above.

(3) Qualified Income Offset.If a Member unexpectedly receives:

(A) A Capital Account adjustment pursuant to Section 1.704-

1(b)(2)(iv)(k) of the Regulations for depletion allowances with respect

to oil and gas properties of the LLC (if any);


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(B) An allocation of LLC deduction or loss pursuant to Section

704(e)(2) or Section 706(d) of the Code, or Section 1.751-1(b)(2)(ii) of

the Regulations; or

(C) A distribution from the LLC that, as of the end of the taxable

year in question, exceeds offsetting increases to such Members CapitalAccount occurring during or prior to the LLC taxable year in question,

Then that Member will be allocated items of LLC taxable income and gain (consisting of

a pro rata portion of each item of LLC income, including gross income, for the year) in an

amount and manner sufficient to eliminate as quickly as possible any portion of a deficit balance

in the Members Capital Account caused or increased by the unexpected adjustment, allocation

or distribution. For purposes of the qualified income offset described in this paragraph (3), the

LLC will ignore any portion of the deficit balance that the Member is obligated to restore under

other provisions of this Agreement. For purposes of applying the provisions of this paragraph

(3), a Members Capital Account will be reduced for the items described under paragraphs (4),(5) and (6) of Section 1.704-1(b)(2)(ii)(d) of the Regulations.The provisions of this paragraph

(3) will be construed consistently and in accordance with Section 1.704-1(b)(2)(ii)(d) of the

Regulations.

(4)Minimum Gain Chargeback.If there is a net decrease in Minimum Gain

during a LLC taxable year, then before any other allocation is made of LLC items

for the year, all Members having a deficit Capital Account balance at the end of the

year (excluding from each such Members deficit Capital Account balance the

Members allocated share of Minimum Gain after the net decrease) will be allocated

items of income and gain for the year (and, if necessary, subsequent taxable years)in the amount and in the proportions needed to eliminate the deficit Capital Account

balances (so adjusted) as quickly as possible. The provisions of this paragraph (4)

will be construed consistently and in accordance with Section 1.704-2(f) of the

Regulations.

(c)Allocation of Income, Gain or Loss Resulting from a Capital Transaction.

All income, gain or loss recognized by the LLC as the result of an Interim Capital

Transaction will be allocated between the Members in the same manner as is

provided for the allocation of current profits and losses set forth in subsection (b).

Income, gain or loss recognized by the LLC as the result of a Terminating CapitalTransaction, after making the allocations of current profits and losses as provided in

subsection (b), will be allocated in the following manner:

(1) Gain. Except for the special allocation of Tax Gain with

respect to contributed or revalued assets provided in paragraph (3) of


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(3)Allocation of Tax Gains or Loss With Respect to Contributed or Revalued

Assets. If a Capital Transaction involves LLC assets having either Unrealized

Appreciation or Unrealized Depreciation, the resulting Book Gain or Loss will be

allocated as provided generally in paragraphs (1) and (2) of this subsection (c).

However, Tax Gain or Loss recognized by the LLC in any such Capital Transaction

will be allocated as follows:

(A) Gain. If gain results from a Capital Transaction involving

an asset with respect to which there is Unrealized Appreciation, then

Tax Gain will first be allocated entirely to the Contributing Members in

the manner contemplated by Section 704(c) of the Code and the

corresponding Regulations, until an amount of Tax Gain has been

allocated which is equal to the amount of the Unrealized Appreciation

or until all Tax Gain is allocated, whichever occurs first. The Capital

Account of a Contributing Member will not be adjusted with respect to

the amount of Tax Gain so allocated. Any Tax Gain in excess of the

amount of the Unrealized Appreciation, and any Tax Gain resulting

from a Capital Transaction involving an asset with respect to which

there is Unrealized Depreciation will be allocated in the same manner as

Book Gain with respect to such asset is allocated pursuant to paragraph

(1) of this subsection (c).

(B)Loss.If loss results from a Capital Transaction involving an

asset with respect to which there is Unrealized Depreciation, then Tax

Loss will first be allocated entirely to the Contributing Members in the

manner contemplated by Section 704(c) of the Code and the

corresponding Regulations, until an amount of Tax Loss has been

allocated which is equal to the amount of the Unrealized Depreciation

or until all Tax Loss is allocated, whichever occurs first. The Capital

Accounts of the Contributing Members will not be adjusted with respect

to the amount of Tax Loss so allocated. Any Tax Loss in excess of the

amount of Unrealized Depreciation, and any Tax Loss resulting from a

Capital Transaction involving an asset with respect to which there is

Unrealized Appreciation will be allocated in the same manner as Book

Loss is allocated pursuant to paragraph (2) of this subsection (c).

(d) Certain Allocation Rules.

(1) Any income recognized pursuant to Sections 1245 or 1250

of the Code, and any investment credit recapture recognized pursuant to

Section 47 of the Code, or successor provisions then in effect, will be

allocated to the Members in the same proportions that the Tax


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Depreciation deductions and investment credits giving rise to such

income or recapture were allocated to such Members and their

respective predecessors in interest, if any.

(2) For the year during which an additional Member is admitted

to the LLC, the additional Member will be allocated a share of theprofits and losses which is calculated using either of the following

methods, in the discretion of the Managers:

(A) ratably on a daily basis with respect to the period that the

additional Member is a Member of the LLC; or

(B) by dividing the LLC fiscal year into two or more segments

and allocating profits and losses in each segment among the persons

who were Members during that segment.

Any allocation under this paragraph (2) must be consistent with the methods authorized

by Section 706 of the Code and the corresponding Regulations. If neither of the methods

described above is consistent with the methods authorized by Section 706 of the Code and the

corresponding Regulations, the Managers may allocate profits and losses to the additional

Member in any manner that is consistent with such methods.

(3) In any year in which a Member sells, assigns or transfers all or any

portion of its Percentage Interest to any person who, during such year, is admitted as

a substitute Member, the share of all profits and losses with respect to the transferred

Percentage Interest will be divided between the assignor and the assignee on the

basis of the number of days in the year before, and the number of days on and after,

the execution by the assignee of this Agreement. The assignor and the assignee may,

by agreement, make special provisions for the allocation of items of profit, gain,

loss, deduction or credit as may from time to time be permitted under the Code and

for the distributions under this Article VII, but such provisions for allocations and

distributions will bind the LLC only after it has received notice from the assignor

and assignee.

Section 7.2 Distributions.

(a) Net Cash Flow. Within thirty (30) days following the end of eachcalendar quarter, the Managers will cause the LLC to distribute all Net Cash Flow

available for distribution as follows:

(1) First, to pay the interest due on any loans made by any of the

Members to the LLC pursuant to Section 6.5;

(2) Next, to repay the principal of any such loans; and


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(3) Then, to each Member pro rata in accordance with its

Percentage Interest.

(b) Distribution of Proceeds of a Capital Transaction.Sale or Refinancing

Proceeds resulting from a Capital Transaction will be applied and distributed as

provided in paragraphs (1) and (2) of this subsection 7.2(b).

(1) Interim Capital Transaction. Sale or Refinancing Proceeds

resulting from an Interim Capital Transaction will be applied and

distributed:

(A) First, to repay all debts and liabilities of the LLC then due

other than loans made by Members to the LLC pursuant to Section 6.5;

(B) Next, to pay any interest due on loans previously made by

Members to the LLC pursuant to Section 6.5;

(C) Next, to repay the principal of such loans;

(D) Next, to set up any reserves which the Managers reasonably

deem necessary for contingent, unmatured and unforeseen liabilities or

obligations of the LLC; and

(E) Finally, the balance, if any, to each Member, pro rata in

accordance with its Percentage Interest.

(2) Terminating Capital Transaction.After making the allocations of gain or

loss required by Section 7.1 and the adjustments to the MembersCapital Accountsrequired by Section 1.704-1 of the Regulations, Sale or Refinancing Proceeds

resulting from a Terminating Capital Transaction will be applied and distributed by

the end of the taxable year in which the LLC is liquidated, or if later, within ninety

(90) days of liquidation, as follows:

(A) First, to repay all outstanding debts and liabilities of the

LLC other than loans made by Members to the LLC pursuant to Section

6.5;

(B) Next, to pay the interest due on any loans made by theMembers to the LLC pursuant to Section 6.5;

(C) Next, to repay the principal of such loans;

(D) Next, to set up any reserves which the Managers reasonably

deem necessary for contingent, unmatured and unforeseen liabilities or

obligations of the LLC;


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(E) Next, to the Members having positive Capital Account

balances, to each such Member in the proportion that its positive Capital

Account balance bears to the positive Capital Account balances of all

such Members until all such Proceeds have been distributed or all

Members Capital Account balances have been reduced to zero,

whichever occurs first; and

(F) Finally, remaining Proceeds will be distributed among the

Members, to each pro rata in proportion to its Percentage Interest.

Any remaining reserves retained under subparagraph (D) shall

be distributed to the Members, at such time as The Managers determine

their retention is no longer necessary, in the same manner as they would

have been distributed had they not been retained.

ARTICLE VIII. ACCOUNTING: BOOKS AND RECORDS

Section 8.1 Accounting. The LLC will keep its accounting records in accordance with

sound accounting principles, consistently applied, and will report for federal income tax purposes

on the cash or accrual basis, as determined by the Managers. All decisions concerning

accounting principles and elections, methods of depreciation or capital cost recovery, and

working capital requirements, whether for book or tax purposes (such decisions may be different

for each such purpose), will be made by the Managers. The Managers will have full authority to

pay or contest any tax or assessment, as it deems to be in the best interest of the LLC.

Section 8.2 Fiscal Year.The fiscal year of the LLC will be the calendar year.

Section 8.3 Books and Records.During the term of the LLC, the Managers will keep, or

cause to be kept, records and books of account in which each transaction of the LLC will be

entered fully and accurately. The books and records will be kept in accordance with sound

accounting principles, consistently applied, and will (i) include separate Capital Accounts for

each Member, and (ii) account separately for Book Items and Tax Items for purposes of making

the Capital Account adjustments required by Section 1.704-1 of the Regulations.The Managers

will maintain the books and records of the LLC, a true and correct copy of the Certificate of

Formation, this Agreement and amendments thereto, a current and past list of names andaddresses of the Members, copies of all federal, state and local tax returns and reports and

financial statements of the LLC for at least the three (3) most recent fiscal years, and any other

records it deems appropriate or are required pursuant to the Act or by the Members. All books

and records of the LLC will be available for reasonable inspection and examination by the

Members or their duly authorized representatives during ordinary business hours.


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Section 8.4 Periodic Statements.The Managers will have prepared, at least annually, at

LLC expense, an annual report which will include (i) a balance sheet, (ii) a statement of the

LLCs income and expense, (iii) a statement of changes in Membersequity, (iv) a statement of

Capital Account balances, and (v) a statement of changes in cash flows. Each item contained in

the annual report will be prepared in accordance with sound accounting principles consistently

applied by the LLC. The Managers will distribute copies of the statements and report to each

Member within one hundred twenty (120) days after the close of each taxable year of the LLC.

The Managers also will prepare and distribute to each Member quarterly operating statements for

the business of the LLC.

Section 8.5 Tax Returns: Income Tax Information.

(a) Tax Returns. The Managers will prepare, or cause to be prepared, all

federal, state, and local income and other tax returns of the LLC. The Managers will

cause the returns to be timely filed and will promptly furnish copies of the returns to

any Member upon request.

(b) Reports. The Managers will prepare and distribute, or cause to be

prepared and distributed, to each Member, within seventy-five (75) days after the

close of each taxable year of the LLC, a report (including Form K-1) informing each

Member of the LLCs taxable income or loss for the preceding taxable year; the

amount of each class of income, profit, loss, or deduction which is relevant to the

reporting of LLC items for federal income tax purposes; and the Members

distributive share of each class of income, gain, loss, or deduction.

Section 8.6 Tax Elections. The Managers are authorized to cause the LLC to make orrevoke such elections for federal income tax purposes as they, in their sole discretion, deem

necessary or advisable. The Managers authority with respect to the making of tax elections

specifically includes, but is not limited to, the authority to elect, pursuant to Section 754 of the

Code (or corresponding provisions of succeeding law), to adjust the basis of LLC assets if there

has been a transfer of a Members interest in the LLC. Each Member agrees to furnish the LLC,

upon request, all information necessary to give effect to any such election.

Section 8.7 Bank Accounts.The LLC will maintain a separate bank account or accounts

in the name of the LLC to be used for the purposes of the LLC. Funds deposited in the LLCs

account or accounts may be withdrawn only by check or other order for payment of moneysigned by a Manager or other authorized representative.

Section 8.8 Duties of Tax Matters Member.The Managers shall elect a Manager that is

also a Member (or if no Manager is a Member, the Members shall elect a Member) to be the

Tax Matters Partnerof the LLC, as that term is defined in Section 6231(a)(7) of the Code. As

such, the Tax Matters Partner will keep all Members informed of all administrative and judicial

proceedings for the adjustment of LLC tax items, as required by Section 6223(g) of the Code and


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the Regulations thereunder. The Tax Matters Partner will represent the LLC in all such

proceedings; provided, however, that other Members may participate in such proceedings to the

extent permitted by Sections 6221 through 6231 of the Code, and the corresponding Regulations.

The LLC will pay all ordinary and necessary expenses incurred in connection with any such

proceedings.

ARTICLE IX. TRANSFER OF LLC INTERESTS

Section 9.1 Prohibition on Transfer.Except as otherwise provided in this Article IX, a

Member may not in any way transfer its interest in the LLC without the prior written consent of

all Members, which consent may be withheld with or without cause. Any purported transfer not

expressly permitted by and in compliance with the provisions of this Article IX will be void and

of no force or effect.

(a) Transfer Defined.As used in this Agreement, the term transfershall

include any sale, assignment, gift, pledge, or other disposition or encumbrance of allor a portion of a Members interest in the LLC, including a deemed transferas

defined in subsection (b), whether voluntary or involuntary.

(b)Deemed Transfers.An act of Bankruptcy by a Member shall be deemed a

transferand shall be subject to the restrictions of this Agreement.

Section 9.2 Permitted Transfers Without Refusal Rights. Subject to the conditions

contained in Section 9.3, any Member may transfer all, but not less than all, of its Percentage

Interest to any corporation which, at the time of such transfer, is a member of an affiliated group

of corporations (within the meaning of Section 1504 of the Code) to which the Member belongs.

Any Member also shall be permitted to pledge its Percentage Interest to a commercial lender to

secure debt in amounts not more than the reasonable value of the Percentage Interest so pledged,

but only on the condition that the pledgee agrees in a written instrument to allow either the other

Members or the LLC, or the LLC and the other Members acting in combination, if the pledgee

becomes entitled to realize on its security interest therein, to purchase all of the pledged

Percentage Interest from the pledgee for an amount equal to the principal amount of the debt

secured by the pledge together with all interest accrued thereon and related fees.

Section 9.3 Other Transfers Subject to Refusal Rights.

(a)Proposed Sales.If a Member (the

transferor

) desires to transfer all orany portion of its Percentage Interest to a third party other than an entity to which

the transferor is expressly permitted to transfer its Percentage Interest pursuant to

Section 9.2 and the transferor has the consent of the other Members, the transferor

shall first give written notice to the LLC and to the other Members of its intention to

do so (Notice of Sale). A pledge of a Percentage Interest consistent with the

provisions of Section 9.2 is not a transfer subject to the refusal rights contained in


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this subsection (a). The Notice of Sale must name the proposed transferee and

specify the Percentage Interest to be transferred, the proposed price, and the

proposed terms of payment. Upon request, the transferor shall provide the LLC

and/or the other Members with documentation to verify that the prospective

transferees proposed price and terms constitute a bona fide offer. Following

delivery of the Notice of Sale and, if requested, documentation, the other Member(s)

shall thereupon have the option, for a period of thirty (30) days from the date of

delivery of the Notice of Sale, to purchase all, but no lesser portion, of said

Percentage Interest at the price and on the other terms and conditions stated in the

Notice of Sale. If more than one (1) other Member desires to purchase the

Percentage Interest identified in the Notice of Sale within such thirty (30) day

period, the Percentage Interest being offered shall be apportioned among those

Members willing to buy in proportion to the Percentage Interests owned by the

buying Members immediately prior to the Notice of Sale. To exercise such options,

the other Member(s) shall notify the transferor of its or their intention, in writing,within the applicable option period. The notice of intention shall be accompanied by

the exercising partys cashiers check in the amount of the greater of five percent

(5%) of the purchase price or $ 50,000, as non-refundable earnest money, provided,

however, that in no event shall the earnest money exceed the purchase price. If no

Member elects to purchase the Percentage Interest identified in the Notice of Sale,

the transferor shall have the right, for a period of sixty (60) days after expiration of

the option period, to transfer such Percentage Interest to the proposed transferee at

the price and on the terms specified in the Notice of Sale. Any Percentage Interest

not so transferred by the transferor at the end of said 60-day period shall again

become subject to the restrictions of this Agreement.

(b) Deemed Transfers. Upon the occurrence of an event constituting a

deemed transferpursuant to subsection (b) of Section 9.1, first the LLC and then

the other Member shall have the same options to purchase the Percentage Interest

which is subject to the deemed transfer as provided in subsection (a) above;

provided, however, that in such event, the other Member(s) shall have the right to

purchase all or any portion of the Percentage Interest of the transferor for cash at the

price determined in accordance with the provisions of Section 9.4. Upon the

occurrence of any such event, the Member whose Percentage Interest is affected

shall give notice of such event to the LLC and the other Member, and the optionperiod referred to in subsection 9.3(a) shall run from the date of delivery of said

notice. If the Member in question fails to give such notice, then the option period

shall commence upon the date on which the LLC and the other Member(s) receive

actual knowledge of the event constituting the deemed transfer.


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Section 9.4 Purchase or Redemption Price. The purchase price to be paid for a

Percentage Interest subject to this Agreement in the event of any deemed transfer pursuant to

subsection 9.3(b) shall be equal to the agreed value of the LLC multiplied by the Percentage

Interest being transferred, without discount based on ownership of a minority interest and

without premium for any reason. In the event of any deemed transfer, the LLC shall engage an

appraiser to determine the value of the LLC. The value determined by such appraiser shall be the

agreed value of the LLC.

Section 9.5 Conditions Precedent to Any Transfer or Encumbrance.Notwithstanding any

contrary provision contained in this Agreement, no Member may transfer its Percentage Interest:

(a) Without first notifying each other Member, in writing, thirty (30) days in

advance of any proposed transfer;

(b) Unless and until the LLC has received an opinion of counsel for the LLC,

prepared at the transferring Member

s expense, stating that the proposed transferwill not cause the termination of the LLC under this Agreement or the Act;

(c) Unless and until the LLC has received an opinion of counsel satisfactory

to such Member, prepared at the expense of the Member proposing the transfer,

stating that the proposed transfer (A) may be effected without registration of the

Percentage Interest under the Securities Act of 1933, as amended, and (B) will not

violate any applicable state securities law (including investor suitability standards);

and

(d) Unless and until the transferor has made all required contributions to the

capital of the LLC.

Section 9.6 Effect of Transfer. If any purported transfer of a Members Percentage

Interest does not comply with the various requirements and restrictions contained in this Article

IX, it will be void and of no force or effect. If any such purported transfer complies with the

various requirements and restrictions contained in this Article IX, then effective on the date of

the transfer, the transferor will cease to be a Member with respect to the transferred Percentage

Interest and, whether or not the transferee is admitted to the LLC as a substitute Member

pursuant to the provisions of this Agreement, the transferee will be entitled to receive all future

distributions to which the transferor would otherwise be entitled. In the case of a transfer of an

interest, the transferee shall succeed to the Capital Account of the transferor, or, in the case of a

partial transfer, a proportionate share thereof. The LLC will be entitled to treat the transferor as

the record owner of the transferred Percentage Interest until the effective date, and no Member

will incur liability for distributions made in good faith to the transferor prior to the effective date.

No such transfer will relieve the transferor of its existing obligations under this Agreement.


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Section 9.7 Substitute Members.A transferee of a Members Percentage Interest will not

be admitted to the LLC as a substitute Member unless:

(a) The transfer complies with all requirements of this Article IX;

(b) The transferor gives the transferee the right to be substituted in its place;and

(c) The transferee has agreed in writing to be bound by all of the terms and

conditions of this Agreement, and has paid all expenses of the LLC incurred in

connection with the transfer.

Upon admission to the LLC as a substitute Member

llc agreement

Documents