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EXHIBIT 10.65
 
SECOND AMENDED AND RESTATED
 
OPERATING AGREEMENT
 
OF
 
LIQUIDMETAL COATINGS, LLC
 
A Delaware Limited Liability Company
 
Adopted as of November 30, 2011
 
 
 

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TABLE OF CONTENTS
 
ARTICLE I
FORMATION AND ORGANIZATION
1
 
Section 1.1
NAME AND FORMATION
1
 
Section 1.2
PRINCIPAL PLACE OF BUSINESS
1
 
Section 1.3
REGISTERED OFFICE AND REGISTERED AGENT
2
 
Section 1.4
TERM
2
 
Section 1.5
NO STATE LAW PARTNERSHIP
2
       
ARTICLE II
PURPOSE AND POWERS OF THE COMPANY
2
 
Section 2.1
PURPOSE
2
 
Section 2.2
POWERS OF THE COMPANY
2
       
ARTICLE III
CAPITAL STRUCTURE, CONTRIBUTIONS TO CAPITAL AND CAPITAL ACCOUNTS
2
 
Section 3.1
INITIAL CONTRIBUTIONS
2
 
Section 3.2
ADDITIONAL CAPITAL CONTRIBUTIONS
2
 
Section 3.3
RETURN OF CONTRIBUTIONS
2
 
Section 3.4
CAPITAL ACCOUNTS
2
 
Section 3.5
CAPITAL STRUCTURE AND PERCENTAGE INTERESTS
4
 
Section 3.6
LOANS BY MEMBERS
4
 
Section 3.7
PROFITS INTEREST OF CLASS C HOLDERS
4
 
Section 3.8
RIGHTS OF PREFERRED UNIT HOLDERS
5
       
ARTICLE IV
ALLOCATIONS OF TAXABLE PROFITS AND LOSSES
6
 
Section 4.1
DETERMINATION OF PROFIT OR LOSS
6
 
Section 4.2
COSTS AND EXPENSES
6
 
Section 4.3
ALLOCATION
6
 
Section 4.4
SPECIAL ALLOCATIONS
7
 
Section 4.5
BUILT-IN GAIN OR LOSS
9
 
Section 4.6
INCOME CHARACTERIZATION
9
 
Section 4.7
CREDITS
9
 
Section 4.8
CHANGE IN INTERESTS
9
 
Section 4.9
CREDITING ACCOUNTS
10
       
ARTICLE V
DISTRIBUTIONS
10
 
Section 5.1
DISTRIBUTABLE AMOUNTS
10
 
Section 5.2
ALLOCATION
10
 
Section 5.3
PRIORITY RETURN
10
 
Section 5.4
LIQUIDATING DISTRIBUTIONS
10
 
Section 5.5
MANDATORY TAX DISTRIBUTIONS
11
       
ARTICLE VI
DURATION OF BUSINESS; TERMINATION
12
 
Section 6.1
DURATION OF COMPANY
12
 
Section 6.2
DEATH, ETC., OF MEMBER
12
 
Section 6.3
LIQUIDATION
12

 
 
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ARTICLE VII
RIGHTS AND DUTIES OF MEMBERS
13
 
Section 7.1
LIABILITIES OF MEMBERS
13
 
Section 7.2
LIMITATIONS ON POWERS OF MEMBERS
13
 
Section 7.3
PROHIBITION AGAINST PARTITION
13
       
ARTICLE VIII
MEETINGS OF MEMBERS
13
 
Section 8.1
ANNUAL MEETING
13
 
Section 8.2
SPECIAL MEETING
13
 
Section 8.3
PLACE OF MEETING
13
 
Section 8.4
NOTICE OF MEETING
13
 
Section 8.5
WAIVER OF NOTICE
14
 
Section 8.6
FIXING OF RECORD DATE
14
 
Section 8.7
QUORUM
14
 
Section 8.8
PROXIES
14
 
Section 8.9
VOTING OF MEMBERSHIP UNITS
14
 
Section 8.10
VOTING OF MEMBERSHIP UNITS BY CERTAIN HOLDERS
14
 
Section 8.11
ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE.
15
 
Section 8.12
ANNUAL REPORTS, ETC.
15
       
ARTICLE IX
BOARD OF MANAGERS
15
 
Section 9.1
MANAGEMENT AND CONTROL
15
 
Section 9.2
NUMBER AND ELECTION
16
 
Section 9.3
RESIGNATION
17
 
Section 9.4
REMOVAL OF MANAGER
17
 
Section 9.5
EXPRESSLY AUTHORIZED RIGHTS AND POWERS
17
 
Section 9.6
CERTAIN LIMITATIONS
17
 
Section 9.7
MEETINGS OF MANAGERS
18
 
Section 9.8
COMPENSATION
19
       
ARTICLE X
OFFICERS
19
 
Section 10.1
NUMBER
19
 
Section 10.2
ELECTION AND TERM OF OFFICE
19
 
Section 10.3
REMOVAL AND RESIGNATION
20
 
Section 10.4
VACANCIES
20
 
Section 10.5
CHAIR
20
 
Section 10.6
PRESIDENT
20
 
Section 10.7
VICE PRESIDENTS
20
 
Section 10.8
SECRETARY
20
 
Section 10.9
TREASURER
20
 
Section 10.10
SALARIES
21
       
ARTICLE XI
INDEMNIFICATION OF MEMBERS, managers and directors
21
 
Section 11.1
RIGHT TO INDEMNIFICATION
21
 
Section 11.2
ADVANCES
21
 
Section 11.3
SAVINGS CLAUSE
21

 
 
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ARTICLE XII
ASSIGNMENT OF MEMBERSHIP UNITS
21
 
Section 12.1
GENERAL RESTRICTION ON ASSIGNMENT
21
 
Section 12.2
RIGHT OF FIRST REFUSAL
22
 
Section 12.3
INVOLUNTARY TRANSFER
23
 
Section 12.4
INTENTIONALLY LEFT BLANK
24
 
Section 12.5
WITHDRAWALS
24
 
Section 12.6
RIGHTS OF ASSIGNEE OF MEMBERSHIP UNITS
25
 
Section 12.7
SUBSTITUTED MEMBER
25
 
Section 12.8
SECURITIES LAWS
25
 
Section 12.9
INVALID TRANSFER
25
 
Section 12.10
DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF A TRANSFERRED INTEREST
25
 
Section 12.11
DRAG-ALONG RIGHTS
26
 
Section 12.12
APPLICABILITY OF PROVISIONS TO INVESTOR GROUP
26
 
Section 12.13
APPLICABILITY OF PROVISIONS TO PREFERRED UNIT HOLDERS
27
       
ARTICLE XIII
CONVERSION TO CORPORATE SOLUTION
27
     
ARTICLE XIV
BOOKS AND RECORDS
28
 
Section 14.1
BOOKS AND RECORDS
28
 
Section 14.2
CUSTODY OF MEMBER FUNDS; BANK ACCOUNTS
28
 
Section 14.3
ACCOUNTANTS
28
 
Section 14.4
SECTION 754 ELECTION
29
 
Section 14.5
FISCAL YEAR
29
 
Section 14.6
TAX MATTERS PARTNER
29
 
Section 14.7
ANNUAL FINANCIAL STATEMENTS AND TAX RETURN INFORMATION
29
 
Section 14.8
MONTHLY FINANCIAL STATEMENTS
29
 
Section 14.9
INSPECTION RIGHTS
29
       
ARTICLE XV
[INTENTIONALLY LEFT BLANK]
30
     
ARTICLE XVI
DEFINITIONS
30
 
Section 16.1
DEFINITIONS
30
       
ARTICLE XVII
AGREEMENT PREPARED BY ATTORNEY FOR COMPANY
34
     
ARTICLE XVIII
AMENDMENTS
34
     
ARTICLE XIX
MANAGER AND MEMBER RELATIONS TO THE COMPANY
35

 
 
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ARTICLE XX
CHOICE OF LAW; SUBMISSION TO JURISDICTION; AND WAIVER OF JURY TRIAL
35
 
Section 20.1
LAW
35
 
Section 20.2
WAIVER OF JURY TRIAL
35
       
ARTICLE XXI
MISCELLANEOUS
35
 
Section 21.1
DELAY OR OMISSIONS
35
 
Section 21.2
WAIVER
36
 
Section 21.3
WAIVER OF PARTITION
36
 
Section 21.4
SUCCESSORS AND ASSIGNS
36
 
Section 21.5
NOTICES
36
 
Section 21.6
ENTIRE AGREEMENT
36
 
Section 21.7
PRONOUNS
36
 
Section 21.8
TITLES AND SUBTITLES
37
 
Section 21.9
SEVERABILITY
37
 
Section 21.10
BINDING EFFECT
37
 
Section 21.11
CREDITORS
37
 
Section 21.12
EXECUTION OF ADDITIONAL INSTRUMENTS
37
 
Section 21.13
RIGHTS AND REMEDIES CUMULATIVE
37
 
Section 21.14
COUNTERPARTS
37

 
 
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SECOND AMENDED AND RESTATED
 
OPERATING AGREEMENT
 
OF
 
LIQUIDMETAL COATINGS, LLC

THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT (“Agreement”) is hereby
entered into effective as of the 30th day of November, 2011, by and between the
persons identified as Members on Exhibit “A” attached hereto and executing this
Agreement on the signature pages hereof (each of whom is sometimes hereinafter
referred to individually as a “Member” and collectively as “Members”) and
LIQUIDMETAL COATINGS, LLC, a Delaware limited liability company (the “Company”).
 
RECITALS
 
WHEREAS, the Company was organized in accordance with the Delaware Limited
Liability Company Act upon the filing of a Certificate of Formation (the
“Certificate”) with the Secretary of State of the State of Delaware effective
July 9, 2007;
 
WHEREAS, effective February 22, 2008, the Company and Members entered into a
First Amended and Restated Operating Agreement, dated February 22, 2008, as
amended by Amendment No. 1 thereto dated October 6, 2009, Amendment No. 2
thereto dated April 30, 2010 and Amendment No. 3 thereto dated December 15, 2010
(as amended, the “First Amended and Restated Operating Agreement”); and
 
WHEREAS, the Members desire to amend and restate in its entirety the First
Amended and Restated Operating Agreement and enter into this Agreement in order
to set forth the terms and conditions that will regulate and govern the
operation and management of the Company and to regulate and govern the rights
and obligations of the Members of the Company, it being understood that the
terms and provisions of this Agreement are subject in all respects to the terms
and conditions of the Certificate, and in the event of any conflict between the
Certificate and this Agreement, the provisions of the Certificate shall govern.
 
NOW, THEREFORE, the parties hereby amend, restate and supersede the First
Amended and Restated Operating Agreement in its entirety, and adopt the
following as the Operating Agreement of the Company:
 
ARTICLE I
FORMATION AND ORGANIZATION
 
Section 1.1               NAME AND FORMATION.  The name of the Company
is:  LIQUIDMETAL COATINGS, LLC.  All Company business shall be conducted in the
name of “LIQUIDMETAL COATINGS, LLC” or such other names that comply with
applicable law as the Board of Managers may select from time to time.
 
Section 1.2              PRINCIPAL PLACE OF BUSINESS.  The principal office of
the Company is located in Kingwood, Texas, and may be changed to such other
place within or without the State of Delaware as may be determined from time to
time by the Board of Managers.
 
 
 

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Section 1.3              REGISTERED OFFICE AND REGISTERED AGENT.  The Company’s
registered agent and office in Delaware is CorpDirect Agents, Inc., 160
Greentree Drive, Suite 101, Kent County, Dover, Delaware 19904.  The Company may
change its registered agent or registered office to any other place or places in
the State of Delaware as may be determined from time to time by the Board of
Managers.
 
Section 1.4               TERM.  The term of the Company shall be perpetual,
unless the Company is dissolved in accordance with the provisions of this
Agreement.
 
Section 1.5               NO STATE LAW PARTNERSHIP.  The Members intend that the
Company (i) shall be taxed as a partnership for all applicable federal, state
and local income tax purposes and (ii) shall not be a partnership or joint
venture for any other purpose, and that no Member or any Manager shall, by
virtue of this Agreement, be a partner or joint venturer of any other Member or
Manager.
 
ARTICLE II
PURPOSE AND POWERS OF THE COMPANY
 
Section 2.1                PURPOSE.  The Company is formed for the purpose of
manufacturing and applying metallic coating to various products and engaging in
any other business activity permitted under the Act as the Board of Managers may
determine from time to time.
 
Section 2.2               POWERS OF THE COMPANY.  Subject to the provisions of
this Agreement, the Company shall have the power and authority to take any and
all actions necessary, appropriate, proper, advisable, incidental or convenient
to or for the furtherance of the purposes set forth in Section 2.1, and all
powers reasonably connected with such activities and businesses that may be
legally exercised by limited liability companies under the Act, and may engage
in all activities necessary, customary, convenient, or incident to any of the
foregoing.
 
ARTICLE III
 
CAPITAL STRUCTURE, CONTRIBUTIONS TO CAPITAL
AND CAPITAL ACCOUNTS
 
Section 3.1               INITIAL CONTRIBUTIONS.  The Members have previously
contributed capital to the Company as reflected in the Company’s books and
records on file at the Company’s principal office (the “Initial Capital
Contributions”) in exchange for their respective Membership Units.
 
Section 3.2               ADDITIONAL CAPITAL CONTRIBUTIONS.  The Members shall
have no obligation to contribute any additional capital to the Company, and
except as set forth in the Act, the Members shall have no personal liability for
any obligations of the Company.
 
Section 3.3               RETURN OF CONTRIBUTIONS.  Until the dissolution and
liquidation of the Company, no Member shall have the right to demand or receive
any part of the Member’s capital contribution, and there is no right given to
any Member to demand and receive property other than cash in return for the
Member’s capital contribution.
 
Section 3.4               CAPITAL ACCOUNTS.  An individual Capital Account shall
be maintained for each Member in accordance with Section 704(b) of the Code,
paragraph 1.704-1(b)(2)(iv) of the accompanying Treasury Regulations, and the
following rules:
 
 
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(a)               Computation of Capital Account Balance.  The Capital Account
of a Member shall consist of the amount of money and the fair market value of
any property (other than money) comprising the Member’s proportionate share of
the Initial Capital Contribution pursuant to Section 3.1 hereof, as increased
by:  (i) the amount of money and the fair market value of any property (other
than money) comprising any additional capital contributions made by the Member,
(ii) any amount credited to the Capital Account of a Member pursuant to Section
4.9 hereof as a result of any Company income, profits or gains allocated to the
Member (and as adjusted pursuant to Section 1.704-1(b)(2)(iv) of the Treasury
Regulations), and (iii) the amount of any Company liabilities assumed by the
Member or that are secured by any Company property distributed to that Member,
and decreased by: (i) the amount of money and the fair market value of any
property (other than money) comprising any distributions to the Member pursuant
to Article V hereof, (ii) any amount debited to the Capital Account of a Member
pursuant to Section 4.9 hereof as a result of any Company expenses, deductions,
losses and credits allocated to the Member (and as adjusted pursuant to Section
1.704-1(b)(2)(iv) of the Treasury Regulations), and (iii) the amount of any
liabilities of such Member that are assumed by the Company or that are secured
by any property contributed by that Member to the Company.
 
(b)              Built-In Gain or Loss.  The Capital Account of a Member shall
not be increased or decreased, as the case may be, with regard to any built-in
gain or loss allocated to the Member pursuant to Section 4.5 hereof.
 
(c)              Transferee’s Capital Account.  In the event of a transfer of
any Membership Units, the transferee shall assume the Capital Account balance of
the transferor.
 
(d)              Interest.  No interest shall be paid on any present or future
Capital Account balance.
 
(e)             Conformance with Regulations.  The provisions of this Section
3.4 are intended to comply with Treasury Regulation Section 1.704-1(b) regarding
the maintenance of the Capital Accounts of the Members and this Section 3.4
shall be interpreted and applied in a manner consistent with such Treasury
Regulations.  In the event that the Board of Managers shall determine that it is
prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto, are computed in order to comply with such Treasury Regulations,
the Board of Managers may make such modifications, provided that it is not
likely to have a material effect on any amounts distributable to any Member upon
the dissolution of the Company.  The Board of Managers shall also make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Treasury Regulation Section 1.704-1(b).
 
 
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Section 3.5               CAPITAL STRUCTURE AND PERCENTAGE INTERESTS
 
(a)              Capital Structure.  Ownership rights in the Company are divided
into and represented by membership units (“Membership Units”).  The Membership
Units are further divided into two classes: (i) Preferred Units and (ii) Common
Units.  The Common Units are further subdivided into three subclasses: (i) Class
A Units; (ii) Class B Units; and (iii) Class C Units.  Any Membership Units
represented by a certificate shall constitute a security governed by Article 8
of the Uniform Commercial Code promulgated by the National Conference of
Commissioners on Uniform State Laws, as in effect in Delaware or any other
applicable jurisdiction (the “UCC”).  Any Membership Units not represented by a
certificate shall not constitute a security governed by Article 8 of the UCC.
 
(b)              Percentage Interests.  As of the date of this Agreement, the
Members shall own the number and class of Membership Units and the corresponding
Percentage Interests in the Company as set forth on Exhibit “A” attached hereto.
 
(c)              Adjustments to Percentage Interests.  In the event of the
issuance of any additional Common Units to an existing Member(s), including the
admission of an additional member(s), each Member’s Percentage Interest in the
Company shall be deemed to be equal to a fraction, the numerator of which is the
number of Common Units issued and outstanding to the Member, and the denominator
of which is the number of Common Units then issued and outstanding to all
Members.  All adjustments to a Member’s Percentage Interest in the Company’s
Common Units shall be permanent and shall not otherwise be altered except as
provided in this Agreement.
 
(d)              Effect of Percentage Interests.  The Percentage Interests of
the Members, as determined and adjusted pursuant to this Section 3.5, are
maintained solely for the purposes of determining the amount of certain
allocations of taxable profits and losses and cash distributions allocable to
the Members pursuant to Articles IV and V hereof, and for other purposes set
forth in this Agreement.  The Percentage Interest of a Member shall not reflect
that Member’s proportionate interest in the capital of the Company at any time.
 
Section 3.6               LOANS BY MEMBERS.  A Member may at any time lend funds
to the Company as may be agreed upon by the Board of Managers.  Such funds shall
represent a debt, payable on demand, unless otherwise specifically provided,
from the Company to the Member making the loan, and interest, at a rate agreed
upon by the Board of Managers, shall be paid thereon and charged as an expense
to the Company.
 
Section 3.7               PROFITS INTEREST OF CLASS C HOLDERS.  The Class C
Holders shall own a percentage of the profits of the Company equal to the right
to receive their respective percentage interest as shown on Exhibit “A”,
attached hereto, of the available cash distributed among the Members pursuant to
Section 5.1 and Section 5.2.  In addition, taxable income shall be allocated to
the Class C Holders equal to their respective percentage interest as shown on
Exhibit “A”, attached hereto, of the Net Profits allocated among the Members
pursuant to Section 4.3(a)(v).
 
It is the agreement of the Members that the rights of the Class C Holders under
this Section 3.7 shall be limited to receiving allocations of taxable income and
distributions of cash as described herein, but that the Class C Holders shall
not receive any other rights in and shall not participate in any other
allocations of taxable income, loss, credit, deduction, gain, or other tax items
or distributions of cash from the Company except as specifically provided in
this Section 3.7.
 
 
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Section 3.8               RIGHTS OF PREFERRED UNIT HOLDERS.  Any Member holding
Preferred Units (a “Preferred Unit Holder”) shall be subject to the following:
 
(a)               Preferential Return Account.  A Preferential Return Account
shall be maintained for each Preferred Unit Holder in accordance with this
provision.  The Preferential Return Account of each Preferred Unit Holder shall
consist of an initial balance equal to such Preferred Unit Holder’s Initial
Capital Contributions with respect to its Preferred Units decreased by an amount
equal to the aggregate amount of cash distributed to such Preferred Unit Holder
pursuant to Section 5.2(b) hereinbelow.  Each Preferred Unit Holder’s
Preferential Return Account, as determined and adjusted pursuant to this Section
3.8, shall be separate and distinct from each Preferred Unit Holder’s Capital
Account and will be maintained pursuant to this Section 3.8 solely for the
purpose of determining the amount of cash to be distributed to each Preferred
Unit Holder and the priority of such distributions pursuant to Section 5.2(b)
hereinbelow.  As of the date of this Agreement, C3 Capital Partners, L.P. has a
Preferential Return Account of $1,106,716.47 and accrued and unpaid Priority
Returns (as defined in Section 5.3) in the amount of $156,384.34, and C3 Capital
Partners II, L.P. has a Preferential Return Account of $801,417.15 and accrued
and unpaid Priority Returns (as defined in Section 5.3) in the amount of
$113,244.08.
 
(b)              Redemption.  The Company may, at its option, redeem all or any
of the Preferred Units at any time for a Redemption Price of $1,000.00 per
Preferred Unit (the “Redemption Price”).  However, the Company shall effect
mandatory redemptions of the Preferred Units as follows:
 
(i)           on or before December 31, 2012 (the “First Redemption Deadline”),
the Company shall have redeemed no less than seven hundred fifty (750) of the
aggregate Preferred Units held by the Preferred Units Holders collectively as of
the date of this Agreement by delivering to the Preferred Unit Holders cash in
an amount equal to the Redemption Price for the Preferred Units being redeemed
plus any accrued but unpaid Priority Return on such Preferred Units through the
First Redemption Deadline;
 
(ii)           on or before December 31, 2013 (the “Second Redemption
Deadline”), the Company shall have redeemed an additional seven hundred fifty
(750) of the aggregate Preferred Units held by the Preferred Units Holders
collectively as of the date of this Agreement by delivering to the Preferred
Unit Holders cash in an amount equal to the Redemption Price for the Preferred
Units being redeemed plus any accrued but unpaid Priority Return on such
Preferred Units through the Second Redemption Deadline ; and
 
(iii)           on or before December 31, 2014 (the “Third Redemption
Deadline”), the Company shall have redeemed all remaining Preferred Units held
by the Preferred Unit Holders collectively as of the date of this Agreement by
delivering to the Preferred Unit Holders cash in an amount equal to the
Redemption Price for the Preferred Units being redeemed as of the date of this
Agreement plus any accrued but unpaid Priority Return on such Preferred Units
through the Third Redemption Deadline.
 
The Preferred Unit Holder shall forfeit any and all rights under this Agreement
with respect to the Preferred Units on the date the Third Redemption Payment is
received.  The Preferred Units shall no longer be deemed to be outstanding as of
the date on which each Preferred Unit Holder’s Preferential Return Account has
been reduced to zero and there is no accrued but unpaid Priority Return due to
any Preferred Unit Holder.
 
 
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(c)               Redemption Failure.  In the event that all Preferred Units
held by the C3 Entities are not redeemed in full by the Company on or before the
Third Redemption Deadline, then on the Third Redemption Deadline and on the last
business day of each calendar quarter thereafter while any Preferred Units
remain outstanding and held by either of the C3 Entities, the Company shall
issue to the C3 Entities an aggregate, additional number of Class B Units as
shall be equal to (x) two percent (2%) of the total outstanding Common Units of
the Company (including Class A Units, Class B Units, and Class C Units)
outstanding on such date multiplied by (y) the result obtained by dividing the
number of Preferred Units then still held by the C3 Entity on such date by
1,908.14 (such issuance is referred to as the “Equity Payment”).  The Members
hereby acknowledge that any issuances of additional Class B Units as an Equity
Payment will dilute each Member’s Percentage Interests in the Company, and such
Percentage Interests shall be adjusted pursuant to Section 3.5(c).  The Equity
Payment shall only be made to the C3 Entities and no Equity Payment shall be
payable from and after the date on which the C3 Entities either transfer the
Preferred Units and/or are redeemed.  However, any transferee of Preferred Units
pursuant to Section 12.13 shall take such Preferred Units subject to the rights
to receive a Priority Return and the Redemption Payment.  Notwithstanding
anything to the contrary set forth in this Agreement, the number of Class B
Units issued as an Equity Payment shall at no time comprise more than, and shall
be limited to no more than, twenty percent (20%) of the sum of the total number
of Class A Units, Class B Units, and Class C Units outstanding at such time
(including Units issued as Equity Payments).
 
ARTICLE IV
ALLOCATIONS OF TAXABLE PROFITS AND LOSSES
 
Section 4.1               DETERMINATION OF PROFIT OR LOSS.  The items of income,
gains, expenses, deductions, losses and credits generated by the Company for
federal income tax purposes shall be determined in accordance with a generally
accepted method of accounting as soon as practicable after the close of the
Fiscal Year of the Company.
 
Section 4.2               COSTS AND EXPENSES.  The Company shall pay all
expenses (which expenses shall be billed directly to the Company) of the Company
which may include but are not limited to: (i) legal, audit, accounting, and
other fees; (ii) expenses and taxes incurred in connection with the issuance,
distribution and transfer of documents evidencing ownership of Membership Units
in the Company or in connection with the business of the Company; (iii) expenses
of organizing, revising, amending, converting, modifying or terminating the
Company; (iv) expenses in connection with distributions made by the Company to,
and communications and bookkeeping work necessary in maintaining relations with,
the Members; and (v) costs of any accounting, statistical or bookkeeping
equipment necessary for the maintenance of the books and records of the Company.
 
Section 4.3               ALLOCATION.  The net profits, net gains and net losses
generated by the Company for federal income tax purposes for a year shall be
allocated among the Members as follows:
 
(a)               Profits.  After giving effect to the special allocations set
forth in Section 4.4(e) hereof, any net taxable income and gain (collectively,
“Net Profits”) of the Company for the year shall be allocated among the Members
as follows:
 
(i)            First, 100% of the Net Profits shall be allocated pro rata among
the Members in proportion to and to the extent of any Deficit Capital Account
balances;
 
(ii)           Second, to each Member, in proportion to and to the extent of,
the excess, if any, of (A) such Member’s Preferential Return Account at the end
of such Fiscal Year, over (B) such Member’s Capital Account balance;
 
 
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(iii)          Third, to each Member, in proportion to and to the extent of, the
excess, if any, of (A) the sum of such Member’s Preferential Return Account plus
such Member’s accrued unpaid Priority Return at the end of such Fiscal Year,
over (B) such Member’s Capital Account balance;
 
(iv)          Fourth, to each Member, in proportion to and to the extent of, the
excess, if any, of (A) the sum of such Member’s Unreturned Capital Contributions
plus, in the event a Member holds or has held both Preferred Units and Common
Units, such Member’s accrued unpaid Priority Return at the end of such Fiscal
Year, over (B) such Member’s Capital Account balance; and
 
(v)           Any remaining Net Profits shall be allocated among the Members
according to their respective Percentage Interests in the Company at that time,
as set forth in Section 3.5 hereof.
 
(b)               Losses.   Any net taxable losses and deductions (collectively,
“Losses”) of the Company for the year shall be allocated among the Members in
the following order of priority:
 
(i)            First, to each Member, in proportion to and to the extent of, the
excess, if any, of (A) such Member’s Capital Account balance, over (B) the sum
of such Member’s Unreturned Capital Contributions plus, in the event a Member is
both a Preferred Unit Holder and a Common Unit Holder, such Member’s accrued
unpaid Priority Return at the end of such Fiscal Year;
 
(ii)           Second, to each Member, in proportion to and to the extent of,
the excess, if any, of (A) such Member’s Capital Account balance, over (B) the
sum of such Member’s Preferential Return Account plus such Member’s accrued
unpaid Priority Return at the end of such Fiscal Year;
 
(iii)          Third, to each Member, in proportion to and to the extent of, the
excess, if any, of (A) such Member’s Capital Account balance, over (B) such
Member’s unpaid Priority Return at the end of such Fiscal Year;
 
(iv)          Fourth, to the Members, in proportion to and to the extent of, the
balance of their Preferential Return Account until such Member’s Capital Account
balance is reduced to zero (0); and
 
(v)           Any remaining Losses shall be allocated among the Members
according to their respective Percentage Interests in the Company at that time,
as set forth in Section 3.5 hereof.
 
Section 4.4               SPECIAL ALLOCATIONS.  Notwithstanding any other
provision of this Agreement to the contrary, the following special allocations
shall be made in the following order:
 
(a)               Minimum Gain Chargeback.  Notwithstanding any other provision
of this Section 4.4, if there is a net decrease in the Partnership Minimum Gain
(as described in Article XVI hereof) during any Company Fiscal Year, each Member
will be specially allocated, before any other allocation is made, items of
income and gain for such year (and, if necessary, subsequent years) in an amount
equal to that Member’s share of the net decrease in Partnership Minimum Gain,
determined as provided in Section 1.704-2(g)(2) of the Regulations.
 
 
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Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant
thereto.  The items to be allocated shall be determined in accordance with
Regulations Section 1.704-2(f), and this Section 4.4(a) is intended to comply
with the minimum gain chargeback requirement in that Section of the Regulations
and shall be interpreted consistently therewith.
 
(b)               Partner Minimum Gain Chargeback.  Notwithstanding any other
provision of this Article IV except Section 4.4(a), above, if there is a net
decrease in Partner Minimum Gain (as described in Article XVI hereof)
attributable to a Partner Nonrecourse Debt (as described in Article XVI hereof)
during any Company Fiscal Year, each Member who has a share of the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt (determined as
provided in Section 1.704-2(i)(5) of the Regulations) as of the beginning of the
year shall be specially allocated items of Company income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Member’s share
of the net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, as provided in Section 1.704-2(i)(4) of the Regulations.
 
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant
thereto.  The items to be so allocated shall be determined in accordance with
Section 1.704-2(i)(4) of the Regulations.  This Section 4.4(b) is intended to
comply with the minimum gain chargeback requirement in that Section of the
Regulations and shall be interpreted consistently therewith.
 
(c)               Qualified Income Offset.  In the event any Member unexpectedly
receives an adjustment, allocation or distribution of a nature described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), then each
such Member will be specially allocated items of Company taxable income and gain
in an amount and manner sufficient to eliminate, to the extent required by the
Regulations, that Member’s Deficit Capital Account Balance as quickly as
possible; provided that an allocation pursuant to this Section 4.4(c) shall be
made if and only to the extent that such Member would have a Deficit Capital
Account Balance after all other allocations provided for in this Article IV have
been tentatively made as if this Section 4.4(c) were not in this Agreement.
 
(d)               Partner Nonrecourse Deductions.  Any Partner Nonrecourse
Deductions (as described in Article XVI hereof) for any Fiscal Year or other
period shall be specially allocated to the Member who bears the economic risk of
loss with respect to the Partner Nonrecourse Debt (as described in Article XVI
hereof) to which such Partner Nonrecourse Deductions are attributable in
accordance with Section 1.704-2(i)(2) of the Regulations.
 
(e)               Curative Allocations.  The allocations set forth in this
Section 4.4(e) (the “Regulatory Allocations”) are intended to comply with
certain requirements of Regulations Sections 1.704-1(b) and
1.704-2.  Notwithstanding any other provision of this Article IV (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into account
in allocating other items of profits, losses, income, gains and deductions among
the Members so that, to the extent possible, the net amount of such allocations
of other taxable items and the Regulatory Allocations to each Member shall be
equal to the net amount which would have been allocated to each such Member if
the Regulatory Allocations had not occurred.  For purposes of applying the
previous sentence:
 
 
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(i)           No allocations of Nonrecourse Deductions shall be made pursuant to
this Section 4.4(e) with respect to Regulatory Allocations required pursuant to
(a) hereof prior to the Company Fiscal Year during which there is a net decrease
in Partnership Minimum Gain, and then only to the extent necessary to avoid any
potential economic distortions caused by such net decrease in Partnership
Minimum Gain;
 
(ii)           Allocations pursuant to this Section 4.4(e) shall be deferred
with respect to allocations of Nonrecourse Deductions to the extent the Board of
Managers determine that such allocations are likely to be offset by subsequent
allocations pursuant to (a) hereof;
 
(iii)          No allocations of Partner Nonrecourse Deductions shall be made
pursuant to this Section 4.4(e) with respect to Regulatory Allocations required
under (b) or (d) prior to the Company Fiscal Year during which there is a net
decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
and then only to the extent necessary to avoid any potential economic
distortions caused by such net decrease in Partner Minimum Gain; and
 
(iv)          Allocations pursuant to this Section 4.4(e) shall be deferred with
respect to allocations pursuant to (d) relating to a particular Partner
Nonrecourse Debt to the extent the Board of Managers reasonably determine that
such allocations are likely to be offset by subsequent allocations pursuant to
(b).
 
Section 4.5               BUILT-IN GAIN OR LOSS.  Notwithstanding any other
provision of this Article IV, in accordance with Code Section 704(c) and the
accompanying Treasury Regulations thereunder, income, gain, loss and deduction
with respect to any property other than cash contributed to the capital of the
Company shall, solely for tax purposes, be allocated among the Members so as to
take into account any variation between (i) the adjusted basis of such property
to the Company for federal income tax purposes on the date of contribution and
(ii) the fair market value of such property on the date contributed to the
Company, as determined by the Board of Managers.
 
Section 4.6               INCOME CHARACTERIZATION.  For purposes of determining
the character (as ordinary income or capital gain) of any taxable income of the
Company allocated to the Members pursuant to this Article IV, such portion of
the taxable income of the Company allocated pursuant to this Article IV which is
treated as ordinary income attributable to the recapture of depreciation shall,
to the extent possible, be allocated among the Members in the proportion which
(i) the amount of depreciation previously allocated to each Member bears to (ii)
the total of such depreciation allocated to all Members. This Section 4.6 shall
not alter the amount of allocations among the Members pursuant to this Article
IV, but merely the character of income so allocated.
 
Section 4.7               CREDITS.  Tax credits shall be allocated among the
Members in accordance with Section 4.3 hereof.
 
Section 4.8               CHANGE IN INTERESTS.  Notwithstanding the foregoing,
in the event of a change in the Members’ Percentage Interests in the Company
during a year, whether occasioned by admission of a new Member, additional
contributions, assignments of Membership Units or otherwise, the allocation of
items of income and expense shall be made so as to reflect the Members’ varying
Percentage Interests in the Company during the year. Profits and losses for the
year shall be prorated on a daily basis and allocated among the Members based
upon the period of time during which they held their respective Percentage
Interests.
 
 
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Section 4.9               CREDITING ACCOUNTS.  Items of income, gains, expenses,
deductions, losses and credits shall be credited or debited, as the case may be,
to each Member’s Capital Account created pursuant to Section 3.4 as provided in
this Article.
 
ARTICLE V
DISTRIBUTIONS
 
Section 5.1               DISTRIBUTABLE AMOUNTS.  The Company may make
distributions of any amounts in excess of its reasonable operating requirements
as determined by the Board of Managers.  The amounts available for distribution
may be generated by operations of the Company through sale, condemnation,
financing or refinancing of assets of the Company, by collection of amounts owed
to the Company or by any other transaction.  In the case of amounts attributable
to a Capital Transaction, the net proceeds to be distributed hereunder shall be
the net cash proceeds received by the Company after payment of, or provision
for, all Company debts, obligations and reserves required or permitted to be
paid upon, or incurred or established in connection with, the receipt by the
Company of such proceeds (said reserves to be established in the reasonable
discretion of the Board of Managers), and all expenses incurred by the Company
in connection with the Capital Transaction giving rise to such
proceeds.  Notwithstanding the foregoing, no distribution shall be made unless
after the distribution the Company retains assets sufficient to pay all its
debts as they become due and such distribution, if made, would not cause the
Company to otherwise become insolvent.
 
Section 5.2               ALLOCATION.  Except as otherwise provided in Section
5.4, distributions of available cash pursuant to Section 5.1 and mandatory
distributions of the Tax Distribution Amount under Section 5.5(a) (regardless of
available cash), shall be made within thirty (30) days after the end of each
calendar quarter, in the following order of priority:
 
(a)               First, to the Preferred Unit Holders in proportion and to the
extent of the excess, if any, of (i) the cumulative Priority Return of each such
Preferred Unit Holder from the inception of the Company to the end of such year
or calendar quarter, as applicable, over (ii) the sum of all prior distributions
to such Preferred Unit Holder pursuant to this Section 5.2(a) hereof;
 
(b)               Second, to the Preferred Unit Holders, pro rata, in accordance
with any balance remaining in the Preferred Unit Holders Preferential Return
Account, as defined in Section 3.8, until such Preferred Unit Holder’s
Preferential Return Account is reduced to zero ($0); then
 
(c)               The balance, if any, to the Common Unit Holders according to
their respective Percentage Interests in the Company at that time.
 
Section 5.3               PRIORITY RETURN.  “Priority Return” means a sum equal
to fourteen percent (14%) per annum, determined on the basis of a year of 365,
as the case may be, for the actual number of days occurring in the period for
which the Priority Return is being determined, cumulative to the extent not
distributed in any given quarter pursuant to Section 5.2(a) hereof, of the
average daily balance of the Preferred Unit Holder’s Preferential Return Account
from time to time during the period to which the Priority Return relates,
commencing on the date the Preferred Unit Holder first makes a Capital
Contribution pursuant to Section 3.1 hereof.
 
 
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Section 5.4               LIQUIDATING DISTRIBUTIONS.  After giving effect to all
Member contributions, distributions, allocations, and capital account
adjustments for all taxable years of the Company (including the taxable year
during which the Company is liquidated), the Company shall distribute the
liquidation proceeds derived from the dissolution, winding-up, liquidation, and
termination of the Company (plus any remaining assets of the Company that are to
be distributed in kind to the Members) in the following priority and
proportions:
 
(a)               To pay in the order of priority required by the Act all the
liabilities and obligations of the Company that are then due and payable to
creditors (including Members), including all costs and expenses directly
relating to the liquidation, winding-up, and termination of the Company, but
excluding Capital Contributions and distributions payable to the Members; and
then
 
(b)               To establish any reasonable cash reserve that the Members may
determine unanimously by resolution to be appropriate for any contingent,
conditional, or unmatured liabilities or obligations of the Company and as an
allowance for doubtful accounts receivable or the unrealized portion of any
promissory note, installment obligation, or other deferred revenue payable to
the Company; and then
 
(c)               To the Preferred Unit Holders, if any, in proportion to and to
the extent of the excess, if any, of (i) the sum of the cumulative Priority
Return of each such Preferred Unit Holder from the inception of the Company to
the date on which such distribution is made and any balance remaining in the
Preferential Return Account of each such Preferred Unit Holder, over (ii) the
sum of all prior distributions to such Preferred Unit Holder pursuant to Section
5.2(a) and Section 5.2(b) hereof, and this Section 5.4(c).
 
(d)               To the Members, pro rata, in accordance with the sum of their
Initial Capital Contributions plus any additional Capital Contributions which
have not yet been returned to the respective Member (the “Unreturned Capital
Contributions”), in an amount equal to each Member’s Unreturned Capital
Contributions; and then
 
(e)               To the Members, pro rata, in accordance with the Members’
respective Percentage Interests at the time of such liquidation.
 
The Board of Managers shall use reasonable efforts to cause the proceeds from a
liquidation of the Company to be distributed in the same Fiscal Year in which
the sale of the Company’s assets occurs.
 
Section 5.5               MANDATORY TAX DISTRIBUTIONS.
 
(a)               Within thirty (30) days after the end of each fiscal quarter
of the Company, if Preferred Units are still outstanding on the last day of such
fiscal quarter, the Company shall distribute an amount of cash equal to the Tax
Distribution Amount, regardless of whether the cash is available for such
distribution.  Such distribution shall be allocated in the order of priority set
forth in Section 5.2 above.  The “Tax Distribution Amount” shall be an amount
equal to the product of (i) the cumulative maximum marginal federal and state
income tax rates applicable to an individual taxpayer resident in the United
States multiplied by (ii) the cumulative taxable income of the Company through
the end of such quarter, less the amount of any distributions of a Tax
Distribution Amount made during the Fiscal Year with respect to prior
quarters.  In no event shall the Tax Distribution Amount for a quarter be less
than zero.
 
(b)               From and after the date on which there are no longer any
Preferred Units outstanding, the Company shall, to the extent of available cash,
distribute cash at least annually and no later than 75 days after the end of a
Fiscal Year, an amount which, at the time of such distribution, when added to
all prior distributions pursuant to this Section 5.5, equals the cumulative
maximum tax payable by an individual taxpayer at the highest combined marginal
tax rates of federal and state income taxes imposed on resident individuals in
the United States on the taxable income of the Company.  Such distribution shall
be made ratably to the Members in proportion to their respective Member
Percentages.
 
 
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ARTICLE VI
DURATION OF BUSINESS; TERMINATION
 
Section 6.1               DURATION OF COMPANY.  The Company shall continue until
the earlier of:
 
(a)               The decision of the Board of Managers to dissolve the Company;
 
(b)               The expiration of the term of the Company set forth in Section
1.4 hereof; or
 
(c)               The sale or other disposition of all Company Property and the
distribution of all sales proceeds resulting therefrom to the Members in
accordance with this Agreement.
 
Section 6.2               DEATH, ETC., OF MEMBER.  The Company shall not be
dissolved upon the death, insanity, total disability, bankruptcy, dissolution or
withdrawal of any Member, or by the assignment by any Member of all of the
Membership Units or Economic Interest in the Company.
 
Section 6.3               LIQUIDATION.  In the event of termination of the
Company:
 
(a)               The Board of Managers shall wind up the affairs of the
Company, shall sell all the Company assets as promptly as is consistent with
obtaining the fair value thereof, and shall apply and distribute the proceeds of
liquidation in the following order of priority:
 
(i)           To the payment of debts and liabilities of the Company (including
to Members to the extent otherwise permitted by law) and the expenses of
liquidation; then
 
(ii)           To the setting up of such reserves as the Board of Managers
winding up the Company’s affairs may reasonably deem necessary or appropriate
for any dispute, contingent or unforeseen liabilities or obligations of the
Company; then
 
(iii)           The remainder to the Members in accordance with Section 5.4
above.
 
(b)               Each Member shall look solely to the assets of the Company for
the return of the Member’s capital contribution, and if the Company Property
remaining after payment or discharge of the debts and liabilities of the Company
is insufficient to return the contributions of each Member, a Member shall have
no recourse against any other Member(s).
 
(c)               The proceeds of liquidation shall be distributed to the
Members pursuant to Section 5.3 hereof.
 
(d)               Upon the liquidation of the Company, if any Member has a
Deficit Balance in the Member’s Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year in which such liquidation occurs), that Member shall have no obligation
to make any contributions to the capital of the Company with respect to such
deficit and such deficit shall not be considered a debt owed to the Company or
any other person or entity for any purpose whatsoever.
 
 
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ARTICLE VII
RIGHTS AND DUTIES OF MEMBERS
 
Section 7.1               LIABILITIES OF MEMBERS.  No Member shall be obligated
to make capital contributions to the Company except as provided in Article
III.  No Member shall have any personal liability with respect to the
liabilities or obligations of the Company except as provided in Article
III.  Failure of the Company to observe any formalities or requirements relating
to the exercise of its powers or the management of its business or affairs under
this Agreement or the Act shall not be grounds for imposing personal liability
on the Members for liabilities or obligations of the Company.
 
Section 7.2               LIMITATIONS ON POWERS OF MEMBERS.  Except as expressly
authorized by this Agreement, no Member may, directly or indirectly, (a) resign,
retire or withdraw from the Company, (b) dissolve, terminate or liquidate the
Company, (c) petition a court for the dissolution, termination or liquidation of
the Company, or (d) cause any property of the Company to be subject to the
authority of any court, trustee or receiver (including suits for partition and
bankruptcy, insolvency, and similar proceedings).
 
Section 7.3               PROHIBITION AGAINST PARTITION.  Each Member
irrevocably waives any and all rights the Member may have to maintain an action
for partition with respect to any property of the Company.
 
ARTICLE VIII
MEETINGS OF MEMBERS
 
Section 8.1               ANNUAL MEETING.  The annual meeting of the Members
shall be held between January 1st and December 31st of each year, on such date
and at such hour as may be specified in the Notice of Meeting or in a duly
executed Waiver of Notice thereof, for the purpose of electing Managers to serve
for the ensuing year and the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Delaware, such meeting shall be held on the next
succeeding business day.
 
Section 8.2               SPECIAL MEETING.  Special meetings of the Members, for
any purpose or purposes, may be called by the President or by a majority of the
Board of Managers or by any Member owning Membership Units in the Company.
 
Section 8.3               PLACE OF MEETING.  The Board of Managers may designate
any place, either within or without the State of Delaware, unless otherwise
prescribed by statute, as the place of meeting for any annual or special meeting
of Members. If no designation is made by the Board of Managers, the place of
meeting shall be the principal office of the Company.
 
Section 8.4               NOTICE OF MEETING.  Written or printed notice stating
the place, day and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be delivered to
each Member of record entitled to vote at such meeting not less than ten (10)
nor more than sixty (60) days before the date of the meeting, either personally
or by first-class mail, by or at the direction of the President or the Secretary
or by the Members calling the meeting. If mailed, such notice shall be deemed to
be delivered at the earliest date of the following:  (a) when received; (b) five
days after its deposit in the United States mail addressed to the Member at his
address as it appears on the records of the Company, with the postage thereon
prepaid; or (c) on the date shown on the return receipt if sent by registered or
certified mail, return receipt requested.
 
 
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Section 8.5               WAIVER OF NOTICE.  Members may waive notice of a
meeting before or after the date and time specified in the written notice of
meeting. All waivers of notice must be in writing, be signed by the Member
entitled to the notice and be delivered to the Company for inclusion in the
appropriate records. None of the business to be transacted at, nor the purpose
of, a Members’ meeting must be specified in a written waiver of notice.
Attendance of a Member at a meeting shall constitute a waiver of notice of the
meeting, unless the Member at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting.
 
Section 8.6               FIXING OF RECORD DATE.  The Board of Managers may fix
a date, not less than ten (10) nor more than sixty (60) days before the date set
for any meeting of the Members, as the record date as of which the Members of
record entitled to notice of and to vote at such meeting and any adjournment
thereof shall be determined.
 
Section 8.7               QUORUM.  A majority of the Membership Units of the
Company, represented in person or by proxy, shall constitute a quorum at a
meeting of the Members.  When a meeting is adjourned to another time or place,
it shall not be necessary to give any notice of the adjourned meeting if the
time and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken, and any business may be transacted at the
adjourned meeting that might have been transacted at the original date of the
meeting. If, however, after the adjournment, the Board of Managers fix a new
record date for the adjourned meeting, a notice of the adjourned meeting shall
be given in compliance with Section 8.4 to each Member of record on the new
record date entitled to vote at such meeting. After a quorum has been
established at a Members’ meeting, the subsequent withdrawal of Members, so as
to reduce the Membership Units entitled to vote at the meeting below the
percentage required for a quorum, shall not affect the validity of any action
taken at the meeting or any adjournment thereof.
 
Section 8.8               PROXIES.  Every Member entitled to vote at a meeting
of Members or to express consent or dissent without a meeting, or his duly
authorized attorney-in-fact, may authorize another person or persons to act for
him by proxy. The proxy must be executed in writing by the Member or his duly
authorized attorney-in-fact. Such proxy shall be filed with the Company before
or at the time of such meeting or at the time of expressing such consent or
dissent without a meeting. No proxy shall be valid after the expiration of
eleven (11) months after the date thereof unless provided otherwise in the
proxy.
 
Section 8.9               VOTING OF MEMBERSHIP UNITS.  Except as provided in
Section 9.6, each Member shall be entitled to one (1) vote per one (1)
Membership Unit (and a corresponding fractional vote for each fraction of a
Membership Unit) upon each matter submitted to a vote at a meeting of the
Members. If a quorum is present, the affirmative vote of the Members owning a
majority of the Membership Units represented at the meeting and entitled to vote
on the subject matter shall be the act of the Members unless a greater
percentage is required by the Delaware Statutes, this Agreement or the Company’s
Certificate of Formation.
 
Section 8.10             VOTING OF MEMBERSHIP UNITS BY CERTAIN
HOLDERS.  Membership Units standing in the name of a corporation may be voted by
the officer, agent or proxy designated by the bylaws of the corporate Member or,
in the absence of any applicable bylaws, by such person as the managers of the
corporate Member may designate. Proof of such designation may be made by
presentation of a certified copy of the bylaws or other instrument of the
corporate Member. In the absence of any such designation or, in case of
conflicting designation by the corporate Member, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
Member shall be presumed to possess, in that order, authority to vote such
Membership Units.
 
 
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Membership Units held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such
Membership Units into his name.
 
Membership Units standing in the name of a trustee may be voted by him, either
in person or by proxy, but no trustee shall be entitled to vote Membership Units
held by him without a transfer of such Membership Units into his name.
 
Membership Units standing in the name of a receiver may be voted by such
receiver, and Membership Units held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his name, if authority
so to do be contained in an appropriate order of the court by which such
receiver was appointed.
 
A Member whose Membership Units are pledged shall be entitled to vote such
Membership Units until the Membership Units have been transferred into the name
of the pledgee, and thereafter the pledgee or his nominee shall be entitled to
vote the Membership Units so transferred only in the event the pledgee becomes a
Substituted Member (as defined in Section 12.3 hereinbelow).
 
Section 8.11             ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE.
 
(a)               Any action required or permitted to be taken at any meeting of
Members may be taken without a meeting, without prior notice and without a vote,
if a consent or consents in writing, setting forth the action so taken, shall be
signed by Members having not less than the minimum number of Membership Units
necessary to authorize or take such action at a meeting at which all Members
entitled to vote were present and voted.  A telegram, telex, cablegram or
similar transmission by a Member, or a photographic, photostatic, facsimile or
similar reproduction of a writing signed by a Member, shall be regarded as
signed by the Member for purposes of this Section 8.11.  Prompt notice of the
taking of any action by Members without a meeting by less than unanimous written
consent shall be given to those Members who did not consent in writing to the
action.
 
(b)               The record date for determining Members entitled to consent to
action in writing without a meeting shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Company by delivery to its registered office, its principal
place of business or the Board of Managers.
 
(c)               Members may participate in and hold a meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can speak to and hear each
other.  Participation in such meeting shall constitute attendance and presence
in person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
 
Section 8.12             ANNUAL REPORTS, ETC.
 
  The Company shall file any necessary reports with the State of Delaware and
pay the annual tax for Limited Liability Companies to the State of Delaware.
 
ARTICLE IX
BOARD OF MANAGERS
 
Section 9.1               MANAGEMENT AND CONTROL.  The management and control of
the Company shall be vested in the Board of Managers.  The Board of Managers
shall have, except as specifically limited in this Agreement, full and exclusive
authority in the management and control of the Company, and shall have all the
rights and powers which are otherwise conferred by law or are necessary or
advisable for the discharge of their duties and the management of the business
and affairs of the Company.
 
 
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Section 9.2               NUMBER AND ELECTION.  Subject to the paragraphs below,
the Board of Managers shall consist of three Managers to be elected as follows:
(a) for so long as the Investor Group holds a majority of the issued and
outstanding Class A Units, the Investor Group shall have the right to elect two
Managers, and (b) for so long as the C3 Entities collectively hold a majority of
the issued and outstanding Class B Units, the C3 Entities shall have the right
to elect one Manager.  To the extent that clause (a) above shall not be
applicable, any Manager who would otherwise have been designated in accordance
with the terms thereof shall instead be elected upon the vote or written consent
of the holders of a majority of all of the Membership Units, and to the extent
that clause (b) above shall not be applicable, any Manager who would otherwise
have been designated in accordance with the terms thereof shall instead be
elected upon the vote or written consent of the holders of a majority of all the
Membership Units.  In the event of the death, resignation or removal of a
Manager, the Members who elected such Manager may elect a successor Manager.  On
the date hereof, John Kang and Ricardo A. Salas are serving as the Managers
elected by the Investor Group, and Robert Smith is serving as the Manager
elected by C3 Entities.  Notwithstanding the foregoing:
 
For so long as either C3 Entity continues to hold any Preferred Units or First
Amended and Restated 14% Subordinated Notes payable to the C3 Entities (the
“Notes”), in the event (such an event, a “Payment Default”) that (a) the Company
has not paid any amount of principal or interest on the Notes on the date such
payment is due and until such amount is paid by the Company to the C3 Entities,
(b) the Company does not make a Redemption Payment on or before the applicable
Redemption Deadline to the C3 Entities and until such Redemption Payment is made
by the Company to the C3 Entities, or (c) the Company does not make a
distribution of cash to the Preferred Unit Holders in an amount equal to the
cumulative Priority Return of each such Preferred Unit Holder for the calendar
year on or before December 31st of such calendar year and until such
distribution of cash is made by the Company to the Preferred Unit Holders, the
Board of Managers shall then, and only then (subject to the following
paragraph), consist of three Managers to be elected as follows: the Members
holding Class A Units shall, by the vote or written consent of the holders of a
majority of the Class A Units, have the right to elect one Manager and the C3
Entities shall have the right to elect two Managers (the “Preferred Unit
Managers”).  At such time as a Payment Default ceases to continue and so long as
no other Payment Default is continuing, the Preferred Unit Managers shall
automatically and without any further action on the part of the C3 Entities, the
Company, the Members, or the Board of Managers cease to serve as Managers of the
Company and the manner and method for the election of Managers shall revert to
the manner and method set forth in the preceding paragraph.  The right to elect
Managers upon a Payment Default in accordance with this paragraph shall not
apply to any transferee or subsequent holder of Preferred Units.
 
Upon completion of the computation at the Date of Determination set forth in
Section 3(c) of the Nonrecourse Secured Promissory Note, dated November 30,
2011, issued by the Investor Group and payable to the Company in the original
principal amount of One Million Two Hundred Seventy Two Thousand Eight Hundred
Dollars ($1,272,800), if the C3 Entities collectively own a majority of the
issued and outstanding Membership Units, the Board of Managers shall thereafter
consist of three (3) Managers to be elected as follows:  the Members holding
Class A Units shall, by vote or written consent of the holders of a majority of
the Class A Units, have the right to elect one Manager and the C3 Entities shall
have the right to elect two (2) Managers.
 
 
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Section 9.3              RESIGNATION.  A Manager may resign at any time by
delivering written notice to the Board of Managers or to the Company.  A
resignation is effective when notice is delivered unless the notice specifies a
later effective date.
 
Section 9.4               REMOVAL OF MANAGER.  Each Member may remove its
elected Manager, with or without cause, at any time.
 
Section 9.5               EXPRESSLY AUTHORIZED RIGHTS AND POWERS.  Without
limiting the generality of Section 9.1, but subject to the provisions of Section
9.6, the Board of Managers are expressly authorized on behalf of the Company to:
 
(a)               elect officers to manage the day-to-day operations of the
Company;
 
(b)               procure and maintain with responsible companies such insurance
as may be advisable in such amounts and covering such risks as are deemed
appropriate by the Board of Managers;
 
(c)               take and hold any assets of the Company in the Company name,
or in the name of a nominee of the Company;
 
(d)              execute and deliver on behalf of and in the name of the
Company, or in the name of a nominee of the Company, all instruments necessary
or incidental to the conduct of the Company’s business;
 
(e)               protect and preserve the assets of the Company and incur
indebtedness;
 
(f)               sell, dispose of, trade, exchange, convey, quitclaim,
surrender, release or abandon, upon terms and conditions which the Board of
Managers may negotiate and deem appropriate, personal property of the Company;
 
(g)              execute and deliver documents and instruments on behalf of the
Company in connection with the acquisition and disposition of its assets, and to
execute, terminate, modify, enforce, continue or otherwise deal with any Company
indebtedness and security interests, to sell Company assets, and to take any
other action with respect to agreements made between the Company and a lender or
any affiliate thereof, all subject to the limitations of Section 9.6;
 
(h)              open Company bank accounts in which all Company funds shall be
deposited and from which payments shall be made;
 
(i)                invest Company funds and working capital reserves; and
 
(j)                issue additional Preferred Units or Common Units.
 
Section 9.6              CERTAIN LIMITATIONS.  Notwithstanding the generality of
the foregoing, and in addition to other acts expressly prohibited by this
Agreement or by law, the Board of Managers, without the prior written consent or
approval of the Members holding a Supermajority (as defined in Article XVI) of
the issued and outstanding Membership Units, may not cause the Company to do any
of the following:
 
(a)              amend or restate the Certificate of Formation;
 
 
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(b)              sell, lease, exchange or otherwise dispose of all or
substantially all the Company’s property and assets;
 
(c)              be a party to (i) a merger, (ii) interest exchange or (iii)
other transaction affecting the ownership or structure of the Company;
 
(d)              do any act in contravention of this Agreement;
 
(e)              do any act which would make it impossible to carry on the
ordinary business of the Company, except as expressly provided in this
Agreement;
 
(f)               confess a judgment against the Company;
 
(g)              file a bankruptcy petition on behalf of the Company;
 
(h)              execute or deliver any general assignment for the benefit of
the creditors of the Company;
 
(i)               convert the Company to a Corporation pursuant to Article XIII;
 
(j)               assign rights in specific Company property for other than a
Company purpose; or
 
(k)              knowingly or willingly do any act (except an act expressly
required by this Agreement) which would cause the Company to become an
association taxable as a corporation.
 
Section 9.7               MEETINGS OF MANAGERS.
 
(a)               Following Annual Meeting of Members.  In connection with any
annual meeting of Members at which Managers were appointed, the Board of
Managers may, if a quorum is present, hold its first meeting for the transaction
of business immediately after and at the same place as such annual meeting of
the Members.  Notice of such meeting at such time and place shall not be
required.
 
(b)               Regular Meetings.  Regular meetings of the Board of Managers
shall be held at such times and places as shall be designated from time to time
by resolution of the Board of Managers.  Notice of such regular meetings shall
not be required after the initial notice of the schedule of meetings.
 
(c)               Special Meetings.  Special meetings of the Board of Managers
may be called by the President or by any Manager on at least forty-eight (48)
hours notice to each Manager.  Such notice shall state the purpose or purposes
of, or the business to be transacted at, such meeting.
 
(d)               Attendance and Place of Meeting.  Meetings of the Board of
Managers may be held at such place or places as shall be determined from time to
time by resolution of the Board of Managers.  The chair of the Board of
Managers, if one has been designated by the Board of Managers, shall preside
when present at meetings of the Board of Managers.  Attendance of a Manager at a
meeting shall be presumed to constitute a waiver of notice of such meeting,
except where a Manager attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened or unless he or she shall file a written objection to such
action with the Person acting as secretary of the meeting before the adjournment
thereof on the ground that the meeting is not lawfully called or convened.
 
 
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(e)               Quorum and Action.  A quorum for the transaction of business
of the Board of Managers shall require the presence of a majority of the number
of Managers fixed pursuant to Section 9.2 of this Article.  At all meetings of
the Board of Managers, business shall be transacted in such order as shall from
time to time be determined by resolution of the Board of Managers.  The act of
the majority of the Managers present at a meeting at which a quorum is present
shall be the act of the Board of Managers. A Manager who is present at a meeting
of the Board of Managers at which action on any Company matter is taken shall be
presumed to have assented to the action unless he or she shall either voice his
or her dissent at the meeting or unless he or she shall file a written dissent
to such action with the person acting as secretary of the meeting before the
adjournment thereof.  Such right to dissent shall not apply to a Manager who
voted in favor of such action.
 
(f)               Action by Written Consent or Telephone Conference.  Any action
permitted or required to be taken at a meeting of the Board of Managers or of
any committee designated by the Board of Managers may be taken without a
meeting, without prior notice and without a vote if a consent or consents in
writing, setting forth the action so taken, is signed by a quorum of the
Managers as set forth in Section 9.7(e).  Such consent shall have the same force
and effect as a vote taken at a meeting and may be stated as such in any
document or instrument filed with the Secretary of State of Delaware, and the
execution of such consent or consents shall constitute attendance or presence in
person at a meeting of the Board of Managers or any such committee, as the case
may be.  A telegram, telex, cablegram or similar transmission by a person, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a person, shall be regarded as signed by that person for the purposes of this
Section 9.7(f).
 
Subject to the requirements of the Act, the Certificate of Formation or this
Agreement, the Board of Managers, or members of any committee designated by the
Board of Managers, may participate in and hold a meeting of the Managers or any
committee of Managers, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can speak to and hear each other, and participation in such meeting
shall constitute attendance and presence in person at such meeting, except where
a person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
 
Section 9.8               COMPENSATION.  The compensation of any Manager,
officer or employee of the Company who is an affiliate of a Member must be
approved by the C3 Entities.
 
ARTICLE X
OFFICERS
 
Section 10.1            NUMBER.  The Officers of the Company shall be the
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Managers.  Such other Officers and assistant Officers and agents as may
be deemed necessary may be elected or appointed by the Board of Managers.  Any
two (2) or more offices may be held by the same person.
 
Section 10.2             ELECTION AND TERM OF OFFICE.  The Officers of the
Company shall be elected annually by the Board of Managers at the regular
meeting of the Managers held after each annual meeting of the Members.  If the
election of Officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be.  Each Officer shall hold office
until his successor shall have been duly elected and shall have qualified or
until his earlier resignation, removal from office or death.
 
 
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Section 10.3             REMOVAL AND RESIGNATION.  Any Officer or agent elected
or appointed by the Board of Managers may be removed by the Board of Managers
with or without cause, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.  Election or appointment of
an Officer or agent shall not of itself create contract rights.  Any Officer of
the Company may resign at any time by giving written notice to the Board of
Managers.  Any such resignation shall take effect after time specified therein,
or, if the time is not specified therein, upon its acceptance by the Board of
Managers.
 
Section 10.4             VACANCIES.  A vacancy, however occurring, in any office
may be filled by the Board of Managers for the unexpired portion of the term.
 
Section 10.5             CHAIR.  The Chair of the Board of Managers, if one is
elected or appointed, shall preside at all meetings of the Board of Managers and
shall have such other powers and duties as may from time to time be prescribed
by the Board of Managers, upon written directions given to him or her pursuant
to resolutions duly adopted by the Board of Managers.
 
Section 10.6             PRESIDENT.  The President shall be the principal
executive Officer of the Company and, subject to the control of the Board of
Managers, shall in general supervise and control all of the business affairs of
the Company.  The President shall, when present, preside at all meetings of the
Members and of the Board of Managers, unless the Board of Managers has elected a
Chair of the Board of Managers and the Chair is present at such meeting.  The
President may sign deeds, mortgages, bonds, contracts, or other instruments
which the Board of Managers has authorized to be executed, except in cases where
the signing and execution thereof shall be expressly delegated by the Board of
Managers or by this Agreement to some other Officer or agent of the Company, or
shall be required by law to be otherwise signed or executed; and in general
shall perform all duties as from time to time may be assigned to him by the
Board of Managers.
 
Section 10.7             VICE PRESIDENTS.  If a Vice-President is elected or
appointed, in the absence of the President or in the event of his death,
inability or refusal to act, the Vice-President shall have the duties of the
President, and when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the President.  The Vice-President shall perform such
other duties as from time to time may be assigned to him by the President or the
Board of Managers.
 
Section 10.8             SECRETARY.  The Secretary shall:  (a) keep the minutes
of all the meetings of the Members and the Board of Managers in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of this Agreement or as required by law; (c) be
custodian of the Company records; (d) keep a register of the post office address
of each Member; (e) have general charge of the Membership Unit transfer books of
the Company, if the Company issues certificates representing such Membership
Units; and (f) in general perform all duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him by the
President or by the Board of Managers.
 
Section 10.9             TREASURER.  The Treasurer shall:  (a) have charge and
custody of and be responsible for all funds and securities of the Company;
receive and give receipts for moneys due and payable to the Company from any
source whatsoever, and deposit all such moneys in the name of the Company in
such banks, trust companies or other depositories as shall be selected by the
Board of Managers; and (b) in general perform all of the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Managers.  If required by the Board
of Managers, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Managers
shall determine.
 
 
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Section 10.10           SALARIES.  The salaries of the Officers shall be fixed
from time to time by the Board of Managers and no Officer shall be prevented
from receiving such salary by reason of the fact that he is also a Manager of
the Company.  Reference is made to the limitation in Section 9.8 with respect to
compensation of Managers, officers and employees who are affiliates of a Member.
 
ARTICLE XI
INDEMNIFICATION OF MEMBERS, MANAGERS AND DIRECTORS
 
Section 11.1             RIGHT TO INDEMNIFICATION.  The Company shall indemnify
the Members, Managers and Officers to the fullest extent allowed by law from all
claims brought by third parties relating to or arising out of the Company’s
business.  The Company shall indemnify and hold harmless the Members, Managers
and Officers to the fullest extent permitted or authorized by the Act or future
legislation or by current or future judicial or administrative decision (but, in
the case of future legislation or decision, only to the extent that it permits
the Company to provide broader indemnification rights than permitted prior to
the legislation or decision), against all fines, liabilities, settlements,
losses, damages, costs and expenses, including attorneys’ fees, asserted against
the Member, Manager and/or Officer or incurred by any of them in their capacity
as Member, Manager and/or Officer or arising out of their status as Member,
Manager an/or Officer, as the case may be.  The foregoing right of
indemnification shall not be exclusive of other rights to which those seeking
indemnification may be entitled.  The Company may maintain insurance, at its
expense, to protect itself and the indemnified persons against all fines,
liabilities, costs and expenses, including attorneys’ fees, whether or not the
Company would have the legal power to indemnify him directly against such
liability.
 
Section 11.2             ADVANCES.  Costs, charges and expenses (including
attorneys’ fees) incurred by a person referred to in Section 11.1 in defending a
civil or criminal suit, action or proceeding shall be paid by the Company in
advance of the final disposition thereof upon receipt of an undertaking to repay
all amounts advanced if it is ultimately determined that the person is not
entitled to be indemnified by the Company as authorized by this Article.
 
Section 11.3             SAVINGS CLAUSE.  If this Article XI or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify and hold harmless
the Members, Managers, Officers or any other person indemnified pursuant to this
Article XI as to costs, charges and expenses (including attorneys’ fee),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative to the
full extent permitted by any applicable portion of this Article XI that shall
not have been invalidated and to the fullest extent permitted by applicable law.
 
ARTICLE XII
ASSIGNMENT OF MEMBERSHIP UNITS
 
Section 12.1             GENERAL RESTRICTION ON ASSIGNMENT.  Except as expressly
permitted hereunder, no Member or Economic Interest Owner may Transfer all or
any portion of, or any interest or rights in, their Membership Units or Economic
Interest without the prior written consent of the Board of Managers (excluding
Managers who are Affiliates of the transferring Member) (the “Non-Affiliated
Managers”) or, if there are no Non-Affiliated Managers, then the consent of all
of the Members other than the transferring Member (the “Non-Affiliated
Members”).  Each Member hereby acknowledges the reasonableness of this
prohibition in view of the purposes of the Company and the relationship of the
Members.
 
 
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The Transfer of any Membership Units or Economic Interests in violation of the
prohibition contained in this Section 12.1 shall be deemed invalid, null and
void, and of no force and effect.  Any Person to whom Membership Units are
attempted to be Transferred in violation of this Section 12.1 shall not be
entitled to vote on matters coming before the Members, participate in the
management of the Company, act as an agent of the Company, receive distributions
from the Company or have any other rights in or with respect to the Membership
Units.  Any person to whom an Economic Interest is attempted to be transferred
in violation of this Section 12.1 shall not be entitled to receive distributions
from the Company or have any other rights in or with respect to the Economic
Interest.
 
For purposes of this Agreement, the term “Transfer”, or “ Transferred”, when
used in this Agreement with respect to the Membership Units or Economic
Interests, includes a sale, assignment, gift, pledge, encumbrance or any other
disposition, whether voluntary, by operation of law or otherwise, and
“transferee” and “transferor” have corresponding meanings. Further, any such
proposed Transfer must be accomplished by written instrument satisfactory in
form and content to the Non-Affiliated Managers or Non-Affiliated Members (as
the case may be), accompanied by such assurances of genuineness and
effectiveness of signatures and the obtaining of any governmental approvals or
legal opinions as the Non-Affiliated Managers or Non-Affiliated Members (as the
case may be) may reasonably require and payment of any reasonable costs of
transfer as the Non-Affiliated Managers or Non-Affiliated Members (as the case
may be) may require and all transfer taxes as may be imposed.
 
Section 12.2            RIGHT OF FIRST REFUSAL.  In addition to the general
restrictions contained in Section 12.1 above, no Member or Economic Interest
Owner may voluntarily Transfer any right, title or interest in its Membership
Units or Economic Interest, or any part thereof, to any Person, unless the
Member or Economic Interest Owner desiring to make the transfer, hereinafter
referred to as the “Transferor”, shall (a) have received a bona fide written
offer to purchase such interest in the Company by an unrelated third party (the
“Proposed Transferee”) and (b) have made an offer to tender to the Company for
redemption all of the Transferor’s interest in the Company which the Transferor
desires to sell, give or otherwise transfer to the Proposed Transferee (the
“Offered Interest”) in the manner hereinafter described in this Section 12.2,
and the offer shall not have been accepted.
 
(a)              Offer by Transferor.  The offer by a Transferor shall be given
in writing to the Company and shall be accompanied by a copy of the written
offer, proposal or contract, between the Transferor and the Proposed Transferee
(hereinafter referred to as the “Written Offer”), and shall set forth the nature
of the transaction (whether sale, gift, or other transfer), the name and address
of the Proposed Transferee and the terms of the transaction, including an
identification of the interest involved, the number of Membership Units
involved, the purchase price, and the payment terms (hereinafter referred to as
the “Proposed Transaction”).  The offer by the Transferor shall consist of an
offer to tender to the Company for redemption all of the Offered Interest at the
price and upon the terms set forth in this Section 12.2 below.
 
(b)              Exercise of Option.  Within fifteen (15) days after the receipt
of the offer, the Company shall have the option, but not the duty, to redeem all
or any portion of the Offered Interest; provided, however, that the Company’s
decision to accept or reject the offer shall be made by a vote of a majority of
the Non-Affiliated Managers or, if there are no Non-Affiliated Managers, then by
a Majority Vote of the Non-Affiliated Members.  The election to redeem shall be
exercised by the giving of notice thereof to the Transferor.
 
The notice of exercise of option shall specify a date for the closing of the
redemption of the Offered Interest (hereinafter referred to as the “Closing” or
the “Closing Date”), which shall not be less than thirty (30) days nor more than
sixty (60) days after the expiration of the time within which the Company may
exercise its option.
 
 
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(c)              Redemption/Purchase Price.  If the Company elects to redeem all
of the Offered Interest, the price for each Membership Unit of the Offered
Interest shall be the price per Membership Unit set forth in the Written Offer.
 
(d)              Payment of Redemption/Purchase Price.  Upon any redemption
under this Section 12.2, the redemption price shall be paid in accordance with
the terms provided in the Written Offer.
 
(e)              Closing.  The Closing of a purchase under this Section 12.2
shall take place at the principal office of the Company on a date specified in
writing in the written acceptance by the Company to the Transferor, unless the
Transferor and the Company otherwise mutually agree on another place or
date.  At the Closing, the Transferor shall deliver, in exchange for the total
purchase price, whether in cash or partially in cash and partially by promissory
notes, as the case may be, the certificate, if any, representing the Offered
Interest being transferred, duly endorsed, and such other documents as shall be
necessary and reasonably required to conclude the transfer.
 
(f)               Release from Restriction.  If the Transferor’s offer to tender
or sell is not accepted by the Company as to the entire interest of the
Transferor, the Transferor may make a transfer to the prospective bona fide
transferee of the entire Offered Interest, the transfer to be made only in
strict accordance with the terms of the Written Offer.  If the Transferor shall
fail to make the transfer within thirty (30) days following the expiration of
the time hereinabove provided for the exercise of the election to purchase by
the Company, the Membership Units of the Transferor shall again be subject to
all the restrictions of this Agreement.
 
(g)              Continuance of Restrictions Upon Subsequent Owners.  In the
event the Transferor makes a bona fide transfer of the Offered Interest under
the provisions of this Section 12.2, then the Offered Interest transferred to
the Proposed Transferee shall be subject to all the provisions of this
Agreement.  No Membership Units or Economic Interest shall be transferred on the
books of the Company and no certificate evidencing such Membership Units or
Economic Interest shall be issued to the Proposed Transferee unless and until
the Proposed Transferee has executed a counterpart to this Agreement, the
original of which shall be retained as part of the Company’s records.  Failure
of the Proposed Transferee to execute a counterpart of this Agreement, however,
shall not affect the applicability of this Agreement to the Offered Interest, it
being the intention of each Member and the Company that any and all subsequent
owners of Membership Units and Economic Interests voluntarily transferred shall
only receive and own the Membership Unit or Economic Interest subject to the
same restrictions upon transfer and encumbrance as set forth in this Agreement,
to which the Transferor was subject, including, without limitation, all of the
provisions of this Article XII.
 
Section 12.3             INVOLUNTARY TRANSFER.  In the event any Membership
Units or Economic Interest are the subject of an involuntary Transfer, whether
due to bankruptcy, assignment for benefit of creditors, judicial order, legal
process, divorce, execution, attachment, enforcement of a pledge or other
encumbrance, or otherwise (hereinafter referred to as the “Affected Interest”),
the Member or Economic Interest Owner owning the Affected Interest shall be
deemed to have made, immediately prior to such involuntary transfer, an offer
first to tender to the Company for redemption all of the Affected Interest in
the manner hereinafter described in this Section 12.3.  There shall be no
obligation or requirement that the Company redeem any of the Affected Interest
under this Section 12.3, any redemption of the Affected Interest being solely
upon election to do so.  The Company may redeem all or any portion of the
Affected Interest.
 
 
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(a)              Exercise of Option.  If the Company elects to redeem all or any
portion of the Affected Interest in accordance with this Section 12.3, the
Company shall serve notice in writing of its election upon the Member owning the
Affected Interest and the creditor(s) of the Member, spouse (in the event of a
divorce) or other person or entity who is to be the recipient of the Affected
Interest (hereinafter referred to collectively as the “Transferor”) within
ninety (90) days after the Board of Managers shall have received actual notice
of the involuntary transfer.  The Company’s decision to accept or reject the
offer shall be made by a majority vote of the Non-Affiliated Managers or, if
there are no Non-Affiliated Managers, then by a Majority Vote of the
Non-Affiliated Members.
 
The notice of exercise of option shall specify a date for the closing of the
redemption of the Affected Interest (hereinafter referred to as the “Closing” or
the “Closing Date”), which shall not be less than thirty (30) days nor more than
ninety (90) days after the expiration of the time within which the Company may
exercise its option.
 
(b)              Redemption/Purchase Price.  If the Company elects to redeem all
or any portion of the Affected Interest, the price for each Membership Unit of
the Affected Interest shall be the lesser of: (i) the Fair Market Value (as
defined in Article XVI hereinbelow) of the Affected Interest, or (ii) the total
amount, including acquisition costs, if any, which had been due to the creditor
of the Member who was to be the recipient of the Affected Interest.
 
(c)              Payment of Redemption/Purchase Price.  Upon any redemption
under this Section 12.3, the redemption price shall be paid in the same manner
provided in Section 12.2(d) above.
 
(d)              Closing.  The closing of a purchase under this Section 12.3
shall take place at the principal office of the Company on a date specified in
writing in the written acceptance by the Company to the Transferor, unless the
Transferor and the Company otherwise mutually agree on another place or
date.  At the Closing, the Transferor shall deliver, in exchange for the total
purchase price, whether in cash or partially in cash and partially by promissory
notes, as the case may be, the certificate, if any, representing the Affected
Interest being transferred, duly endorsed, and such other documents as shall be
necessary and reasonably required to conclude the transfer.
 
(e)              Continuance of Restrictions Upon Transferor.  In the event the
“deemed offer” of the Transferor is not accepted by the Company as to all of the
Affected Interest, then the portion of the Affected Interest not redeemed under
this Section 12.3 may be transferred to the transferee/creditor subject to all
of the provisions of this Agreement.  The transferee/creditor shall execute a
counterpart of this Agreement, the original of which shall be retained as part
of the Company’s records.  The failure of the transferee/creditor to execute a
counterpart to this Agreement shall not affect the applicability of this
Agreement to the Affected Interest, it being the intention of each Member and
the Company that any and all subsequent owners of Membership Units or Economic
Interests acquired pursuant to an involuntary transfer shall only receive and
own the Membership Units or Economic Interests subject to the restrictions upon
transfer and encumbrance as set forth in this Agreement to which the Original
Member was subject.
 
Section 12.4             INTENTIONALLY LEFT BLANK.
 
Section 12.5            WITHDRAWALS.  No Member may withdraw from the Company,
except upon the prior written consent of the Board of Managers.
 
 
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Section 12.6            RIGHTS OF ASSIGNEE OF MEMBERSHIP UNITS.  Unless the
assignee of a Membership Unit is admitted as a Substituted Member as provided in
Section 12.7, the assignee will be merely an Economic Interest Owner, and the
assignee’s rights shall be limited to sharing in the profits to which the
assignor would otherwise have been entitled and to receiving the assignor’s
share of any proceeds and an accounting upon dissolution.  The assignee shall
have no right to vote on Company matters, exercise any purchase rights granted
to Members hereunder, inspect Company books and records or otherwise participate
in Company affairs and the interest of the assignee shall be disregarded for
purposes of determining whether Members owning the required Membership Units
have voted on any matter requiring a vote of the Members or in determining the
total of the Membership Units outstanding for voting purposes.  For example, in
the event a judgment creditor obtains a charge against a Member’s Membership
Unit, pursuant to Section 608.433(4) of the Act, or any successor provision,
then unless the judgment creditor is admitted as a Substituted Member, the
judgment creditor will be merely an Economic Interest Owner and will not acquire
any other rights of a Member.  All remaining rights and interest in the
Membership Units which were owned by the Transferring Member immediately prior
to the Transfer and that were associated with the assigned Economic Interest
(including, without limitation, the rights of the Transferring Member to
participate in the management and affairs of the Company) shall immediately
lapse until the Managers, in their sole discretion, reinstate such rights to the
Economic Interest Owner or to a successor or transferee of such Economic
Interest Owner.
 
Section 12.7            SUBSTITUTED MEMBER.  An assignee of the whole or any
portion of a Member’s Membership Interests in the Company, validly assigned
under this Article XII, may become a Substituted Member in the place of his
assignor(s), to the extent of the Membership Interests validly assigned, if all
of the following conditions are satisfied:
 
(a)              A fully executed and acknowledged written instrument of
assignment has been filed with the Company which sets forth the intention of the
assignor(s) that the assignee become a Substituted Member in his/their place, to
the extent of the Membership Interests assigned.
 
(b)             The assignee executes, acknowledges and delivers to the Managers
a written acceptance and adoption of the provisions of this Agreement, in form
and substance acceptable to the Managers in their sole discretion.
 
(c)              The assignee pays a transfer fee to the Company in an amount
sufficient to cover all reasonable expenses connected with the admission of such
person as a Substituted Member.
 
Section 12.8            SECURITIES LAWS.  The Membership Units have not been
registered under the Federal or state securities laws of any state and,
therefore, may not be resold unless appropriate Federal and state securities
laws, as well as the other provisions of this Article XII have been complied
with.
 
Section 12.9            INVALID TRANSFER.  No Transfer of a Membership Unit or
Economic Interest that is in violation of this Article XII shall be valid or
effective, and the Company shall not recognize any improper transfer for the
purposes of making allocations, payments of profits, return of capital
contributions or other distributions with respect to such Membership Unit or
Economic Interest.  The Company may enforce the provisions of this Article XII
either directly or indirectly or through its agents by entering an appropriate
stop transfer order on its books or otherwise refusing to register or transfer
or permit the registration or transfer on its books of any proposed transfers
not in accordance with this Article XII.
 
Section 12.10         DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF A TRANSFERRED
INTEREST.  If any Member Transfers any part of a Membership Unit or Economic
Interest in the Company during any accounting period in compliance with the
provisions of this Article XII, Company income, gain, deductions and losses
attributable to such interest for the respective period shall be divided and
allocated between the transferor and the transferee by taking into account their
varying interests during the applicable accounting period in accordance with
Code section 706(d), using the daily proration method.  All Company
distributions on or before the effective date of such transfer shall be made to
the transferor and all such Company distributions thereafter shall be made to
the transferee.  Solely for purposes of making Company tax allocations and
distributions, the Company shall recognize a transfer on the day following the
day of transfer.  Neither the Company nor any Member shall incur any liability
for making Company allocations and distributions in accordance with the
provisions of this Section 12.10.
 
 
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Section 12.11          DRAG-ALONG RIGHTS
 
(a)              Notwithstanding anything in this Agreement to the contrary, in
the event that either the Investor Group or the C3 Entities elect to sell all of
their Membership Units in a single transaction to a bona fide third party
purchaser, either the Investor Group or the C3 Entities, as the case may be, may
require all of the other Members other than the Preferred Unit Holders (the
“Affected Members”) to sell all of their Membership Units for the same price and
on the same terms as those to be received by either the Investor Group or the C3
Entities, as the case may be.  In such case, the provisions of Sections 12.1 and
12.2 hereof shall not apply to such Transfer and the Affected Members shall be
deemed to have made an offer to sell all of their Membership Units on such terms
and conditions as those under which either the Investor Group or C3 Entities, as
the case may be, will sell its Membership Units; provided, however, that the
Affected Members shall have no liability regarding any representations made by
either the Investor Group or the C3 Entities, as the case may be, except
representations relating to the Affected Members’ ownership of the Membership
Units, their ability to deliver marketable title to such Membership Units and
similar representations.
 
(b)              Notwithstanding anything in this Agreement to the contrary, in
the event that either the Investor Group or the C3 Entities elect to sell all of
their Membership Units in a single transaction to a bona fide third party
purchaser, the Investor Group or the C3 Entities, as applicable, shall require
the bona fide third party purchaser to offer to the Affected Members to purchase
all their Membership Units for the same price and on the same terms as those to
be received by either the Investor Group or the C3 Entities, as applicable.  If
the third party purchaser will not make such offer to the Affected Members, then
the Investor Group or the C3 Entities, as applicable, shall not be allowed to
sell their Membership Units to such third party purchaser.
 
Section 12.12          APPLICABILITY OF PROVISIONS TO INVESTOR GROUP
 
(a)              The provisions of Sections 12.1 and 12.2 shall not apply to the
Membership Units owned by the Investor Group, and the Investor Group may
transfer any or all of its Membership Units without the consent of the Board of
Managers or the Members, subject to the provisions of Section 12.12(b) below.
 
(b)              At any time the Investor Group reasonably anticipates that it
has a good faith desire to sell some or all of its Membership Units, the
Investor Group shall notify the C3 Entities of that desire and determine whether
the C3 Entities have an interest in purchasing all the Membership Units owned by
the Investor Group (the “Offered Units”).  If the C3 Entities, or either of
them, have such an interest, they shall make an offer to purchase the Offered
Units, and the parties will negotiate in good faith to enter into a definitive
purchase agreement with respect thereto.  If the parties have not entered into a
definitive purchase agreement within ninety (90) days after the original notice
from the Investor Group, the Investor Group may offer and sell the Offered Units
to a third party purchaser (the “Third Party Purchaser”).  If the Investor Group
shall fail to locate a Third Party Purchaser to purchase the Offered Units
within one hundred eighty (180) days following the expiration of the time
hereinabove provided for, the Offered Units shall again be subject to all the
restrictions of this Agreement.
 
 
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(c)              Restrictions Upon Subsequent Owners.  In the event the Investor
Group sells the Offered Units to a Third Party Purchaser under the provisions of
this Section 12.12, then the Offered Units transferred to the Third Party
Purchaser shall be subject to all the provisions of this Agreement other than
this Section 12.12.  No Membership Units or Economic Interest shall be
transferred on the books of the Company and no certificate evidencing such
Membership Units or Economic Interest shall be issued to the Third Party
Purchaser unless and until the Third Party Purchaser has executed a counterpart
to this Agreement, the original of which shall be retained as part of the
Company’s records.  Failure of the Third Party Purchaser to execute a
counterpart of this Agreement, however, shall not affect the applicability of
this Agreement to the Offered Units, it being the intention of each Member and
the Company that any and all subsequent owners of Membership Units and Economic
Interests voluntarily transferred shall only receive and own the Membership
Units or Economic Interests subject to the same restrictions upon transfer and
encumbrance as set forth in this Agreement, to which the Investor Group was
subject, including the applicable provisions of this Article XII.
 
Section 12.13           APPLICABILITY OF PROVISIONS TO PREFERRED UNIT HOLDERS
 
(a)              In addition to the provisions of Sections 12.1 and 12.2, a
Preferred Unit Holder is prohibited from transferring any Preferred Units in the
Company except to the extent provided in this Section 12.13.
 
(b)              Investor Group  may, in Investor Group’s sole discretion and
without the necessity of any consent or approval by the Board of Managers or any
Member, at any time purchase all or any portion of a Preferred Unit Holder’s
Preferred Units for an amount equal to the Redemption Payment.  Investor Group
may exercise this option by delivering to the Preferred Unit Holder a notice
(the “Notice”) of its intent to purchase the Preferred Units.  The Notice shall
set forth a closing date no later than thirty (30) days from the date of the
Notice whereby Investor Group shall deliver to the Preferred Unit Holder cash
equal to the Redemption Payment in exchange for the Preferred Units.
 
(c)              In the event Investor Group exercises its option to purchase a
Preferred Unit Holder’s Preferred Units, Investor Group shall retain any and all
rights that the Preferred Unit Holder had under this Agreement; provided,
however, that Investor Group shall have no right to receive any Equity Payment
hereunder.  Investor Group hereby acknowledges and agrees that it is the intent
of the Company and its Members that only the initial owner of Preferred Units
shall have any right to Equity Payments.
 
ARTICLE XIII
CONVERSION TO CORPORATE SOLUTION
 
Subject to Section 9.6, the Board of Managers shall have the power and authority
to effect the conversion of the Company’s business form from a limited liability
company to a corporation (for any reason whatsoever, including without
limitation, a public offering of the Company’s Capital Securities) or the merger
of the Company with or into a new or previously-established but dormant
corporation having no assets or liabilities, debts or other obligations of any
kind whatsoever other than those associated with its formation and initial
capitalization (such a conversion or merger is referred to as a “Conversion” and
such corporation is referred to as “Newco”).
 
 
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Upon the consummation of a Conversion, the Units held by each holder thereof
shall thereupon be converted into a number of shares of Newco’s Capital
Securities containing the economic and other terms and rights relative to each
other holder of Units as the Board of Managers shall determine to be as nearly
as practicable in all material respects the same as such holder’s Units as
provided herein.  The Board of Managers’ determination of the class (and the
terms thereof and rights associated therewith) and number of shares of Newco
Capital Securities that each Member receives upon a Conversion shall be final
and binding on the holders of Units absent manifest arithmetic error.
 
In connection with a Conversion, each Member hereby covenants and agrees to take
any and all such action and execute and deliver any and all such instruments and
other documents as the Board of Managers may reasonably request in order to
effect or evidence such Conversion.  Without limiting the generality of the
foregoing, no Member shall have or be entitled to exercise any dissenter’s
rights, appraisal rights or other similar rights in connection with such
Conversion.
 
ARTICLE XIV
BOOKS AND RECORDS
 
Section 14.1             BOOKS AND RECORDS.  The Board of Managers shall keep or
cause to be kept complete books and records of the Company and supporting
documentation of the transactions with respect to the conduct of the Company’s
business.  These and all other records of the Company, including information
relating to the Company’s activities, information with respect to the sale by a
Member or any Affiliate of goods or services to the Company, and a list of the
names and business addresses of all Members shall be kept at the offices of the
Company, or at such other location as may be determined by the Board of
Managers, and shall be available for examination there by any Member, or his
duly authorized representative, at reasonable times upon reasonable notice.  Any
Member, or his duly authorized representative, upon paying the costs of
collection, duplication and mailing, shall be entitled to a copy of the list of
names and addresses of the Members.  The books and records shall be maintained
in accordance with sound accounting practices.
 
The Company will also cause Liquidmetal Coatings Solutions, LLC, a Delaware
limited liability company (“LMCS”), its wholly owned subsidiary, to keep
complete books and records in the same manner as required above.
 
Section 14.2             CUSTODY OF MEMBER FUNDS; BANK ACCOUNTS.
 
(a)               The Board of Managers shall have fiduciary responsibility for
the safekeeping and use of all funds and assets of the Company, whether or not
in the immediate possession or control of the Board of Managers.  The funds of
the Company shall not be commingled with the funds of any other person and the
Board of Managers shall not employ, or permit any other person to employ, such
funds in any manner except for the benefit of the Company.
 
(b)              All funds of the Company not otherwise invested shall be
deposited in one or more accounts maintained in such banking institutions as the
Board of Managers shall determine, and withdrawals shall be made only in the
regular course of Company business on such signature or signatures as the Board
of Managers may, from time to time, determine.
 
Section 14.3             ACCOUNTANTS.  The accountants for the Company shall be
such certified public accountants as shall be selected by the Board of Managers.
 
 
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Section 14.4            SECTION 754 ELECTION.  In the event of a distribution of
Company Property (other than money) to a Member or upon a transfer of all or any
part of the Membership Units of a Member, the Board of Managers may in their
sole and absolute discretion, upon the written request of the Member receiving
the distribution or the transferee of the Membership Units, as the case may be
(the “Electing Member”), elect pursuant to Section 754 of the Code, to adjust
the basis of the Company’s property in the manner provided in Sections 734 and
743 thereof, respectively.  Each Member agrees to furnish the Company with all
information necessary to give effect to such election.  The election will be
filed with the Company information tax return for the first taxable year to
which the election applies.  If the Board of Managers decide to make the Section
754 election, the Electing Member will be responsible for all additional
accounting costs incurred by the Company as a result of the Electing Member’s
request to make the election under Code Section 754.
 
Section 14.5             FISCAL YEAR.  The Fiscal Year of the Company shall be
the calendar year.
 
Section 14.6            TAX MATTERS PARTNER.  The Investor Group shall be the
“Tax Matters Partner” of the Company for purposes of Section 6231(a)(7) of the
Code.  The Tax Matters Partner shall have the power and authority, subject to
the review and control of the Board of Managers, to manage and control, on
behalf of the Company, any administrative proceeding at the Company level with
the Internal Revenue Service relating to the determination of any item of
Company income, gain, loss, deduction or credit for federal income tax purposes.
The Tax Matters Partner may be removed, and a new Tax Matters Partner appointed,
by the Board of Managers in accordance with the Code and the Treasury
Regulations.
 
Section 14.7            ANNUAL FINANCIAL STATEMENTS AND TAX RETURN
INFORMATION.  The Company shall provide to the C3 Entities as soon as available,
and, in any event, within one hundred and twenty (120) days after the end of
each Fiscal Year of the Company, beginning with the Fiscal Year ending December
31, 2007, a copy of the annual consolidated financial statements of the Company
and LMCS for such Fiscal Year containing balance sheets, statements of income,
retained earnings and cash flows at the end of such Fiscal Year, in each, except
for the Fiscal Year ending December 31, 2007, setting forth in comparative form
the figures for the preceding Fiscal Year (if any), all in reasonable detail and
audited and certified by independent certified public accountants of recognized
standing reasonably acceptable to the C3 Entities, to the effect that such
report has been prepared in accordance with GAAP.  Within ninety (90) days after
the end of each Tax year, Company shall provide sufficient information with
respect to the Company for such Tax year necessary for the C3 Entities to
prepare their federal, state and local income Tax Returns.  The Company shall
provide copies of the federal, state and local income Tax Returns of the Company
for each Tax year promptly after the filing thereof.
 
Section 14.8             MONTHLY FINANCIAL STATEMENTS.  The Company shall
provide to the C3 Entities as soon as available and, in any event, within thirty
(30) days after the end of each month, a copy of an unaudited consolidated
financial report of the Company and LMCS as of the end of such month and for the
portion of the Fiscal Year then ended, including balance sheets, statements of
income, retained earnings and cash flows, setting forth in each case comparisons
to the Company’s and LMCS’s Annual Budget and to the corresponding period in the
preceding Fiscal Year and a brief narrative explaining the results of the
Company’s and LMCS’s operations for such period; all such statements shall have
been prepared in accordance with GAAP (absent footnotes and customary year-end
adjustments) and fairly present the financial condition and results of
operations of the Company and LMCS at the date and for the periods indicated
therein.
 
Section 14.9             INSPECTION RIGHTS.  At any reasonable time and from
time to time, the Company shall permit representatives of the C3 Entities to
examine, copy and make extracts from its books and records, to visit and inspect
the Company’s and LMCS’s properties, and to discuss Company’s and LMCS’s
business, operations, and financial condition with Company’s or LMCS’s officers,
employees and independent certified public accountants, provided that the C3
Entities agree to keep such information confidential and to use such information
solely in connection with its investment in the Membership Units.
 
 
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ARTICLE XV
[INTENTIONALLY LEFT BLANK]
 
ARTICLE XVI
DEFINITIONS
 
Section 16.1             DEFINITIONS.  Unless the context otherwise requires,
the terms defined in this Article XVI shall, for the purposes of this Agreement,
have the meanings herein specified.
 
“Act” means the Delaware Limited Liability Company Act, as amended.
 
“Affiliate” or “Affiliated Party” means, with respect to any Member, a partner
of a Member; any member of the immediate family of any Member; any shareholder,
officer or director of a Member or any member of their respective immediate
families; any person, firm or entity which, directly or indirectly, controls, is
controlled by, or is under common control with a Member, any partner of any
Member or any shareholder, officer or director of a partner of any Member or
their respective families; or any person, firm or entity which is associated
with a Member, any partner of a Member, any officer, director or shareholder of
a Member or any member of their respective immediate families in a joint
venture, partnership or other form of business association.  In this definition,
the term “control” shall mean the ownership of ten percent (10%) or more of the
beneficial interest in the firm or entity referred to, and the term “immediate
family” shall mean the spouse, ancestors, lineal descendants, brothers and
sisters of the person in question, including those adopted.  To the extent the
term “Affiliate” or “Affiliated Party” is used in the context of an affiliation
with a Person (the “Subject”) other than a Member then such term shall have the
same meaning above; however, the term “Member” within such definition shall be
replaced with the Subject.
 
“Agreement” means this Limited Liability Company Operating Agreement, as
amended, modified, supplemented or restated from time to time in accordance with
the terms hereof.
 
“Business Day” means any day other than a Saturday, a Sunday, or a holiday on
which national banking associations in the State of Delaware are closed.
 
“Capital Account” means, with respect to any Member, the account maintained for
such Member in accordance with the provisions of Section 3.4.
 
“Capital Contribution” means, with respect to any Member, the aggregate amount
of money and the initial Gross Asset Value of any property (other than money)
contributed to the Company pursuant to Section 3.2.
 
“Capital Securities” means as to any Person that is a corporation, the
authorized shares of such Person’s capital stock, including all classes of
common, preferred, voting and nonvoting capital stock, and, as to any Person
that is not a corporation or an individual, the ownership or membership
interests in such Person, including, without limitation, the right to share in
profits and losses, the right to receive distributions of cash and property, and
the right to receive allocations of items of income, gain, loss, deduction and
credit and similar items from such Person, whether or not such interests include
voting or similar rights entitling the holder thereof to exercise control over
such Person.
 
 
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“Capital Transaction” means any of the following events:  (A) any sale or other
disposition of all or any part of any capital assets of the Company, (B) any
loans secured by all or any part of the capital assets of the Company, (C) the
refinancing of any Company indebtedness, (D) the condemnation of all or any part
of the capital assets of the Company, or (E) any insurance recovery relating to
any capital assets owned by the Company.
 
“Class A Holder” means a Member holding Class A Units.
 
“Class B Holder” means a Member holding Class B Units.
 
“Class C Holder” means a Member holding Class C Units.
 
“Class A Percentage Interest” means, with respect to a Class A Holder at any
time and from time to time, a percentage equal to a fraction, the numerator of
which is the number of Class A Units owned by such Class A Holder and the
denominator of which is the aggregate number of Common Units owned by all
Members.
 
“Class B Percentage Interest” means, with respect to a Class B Holder at any
time and from time to time, a percentage equal to a fraction, the numerator of
which is the number of Class B Units owned by such Class B Holder and the
denominator of which is the aggregate number of Common Units owned by all
Members.
 
“Class C Percentage Interest” means, with respect to a Class C Holder at any
time and from time to time, a percentage equal to a fraction, the numerator of
which is the number of Class C Units owned by such Class C Holder and the
denominator of which is the aggregate number of Common Units owned by all
Members;
 
“Class A Common Unit” means a Unit representing a fractional part of the Member
Interests of the Members and having the rights and obligations specified with
respect to the Class A Units in this Agreement.
 
“Class B Common Unit” means a Unit representing a fractional part of the Member
Interests of the Members and having the rights and obligations specified with
respect to the Class B Units in this Agreement.
 
“Class C Common Unit” means a Unit representing a fractional part of the Member
Interests of the Members and having the rights and obligations specified with
respect to the Class C Units in this Agreement.
 
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
 
“Common Unit Holder” means a Member holding either a Class A Holder, Class B
Holder or Class C Holder.
 
“Company” means the Delaware limited liability company that is the subject of
this Agreement.
 
 
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“Company Property” means all real and personal property acquired by the Company
and any improvements thereto, including, without limitation, any tangible or
intangible property of the Company.
 
“Conversion” has the meaning specified in Article XIII of this Agreement.
 
“Deficit Capital Account Balance” means, with respect to any Member, the deficit
balance, if any, in such Member’s Capital Account as of the end of the relevant
Fiscal Year, after giving effect to the following adjustments:
 
(a)              A credit to such Capital Account of any amount which such
Member is obligated to restore or is deemed to be obligated to restore pursuant
to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5); and
 
(b)              A debit to such Capital Account of the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
 
“Economic Interest” shall mean a Member’s or Economic Interest Owner’s pro rata
share of the Company’s profits and distributions of the Company’s assets
pursuant to this Operating Agreement and the Act, but shall not include any
right to participate in the management of affairs of the Company, including, the
right to vote on, consent to or otherwise participate in any decision of the
Members or Managers.
 
“Economic Interest Owner” shall mean the owner of an Economic Interest who is
not a Member.
 
“Fair Market Value” of a Membership Interest shall mean the amount the Selling
Member or Transferor would receive with respect to its Membership Interest upon
the dissolution and termination of the Company assuming (A) such dissolution or
termination occurred on the date of the Notice, and (B) the assets of the
Company were sold for their fair market value without compulsion for the Company
to sell such assets.  The fair market value of the Company’s assets shall be
agreed upon by the Selling Member or Transferor, as the case may be, and the
Company.  If they are unable to agree upon a value within ten (10) days, then
they shall agree upon an appraiser who shall determine the value.  However, if
they are unable to agree upon an appraiser within five (5) working days after
either party serves written demand on the other, then each shall select one
appraiser and the two appraisers so selected shall select a third appraiser
whose determination shall be conclusive and binding for this purpose.  In the
event that the Company or the Selling Member or Transferor, as the case may be,
fails to designate an appraiser pursuant to the preceding sentence within five
(5) working days after either party serves written demand on the other, then the
appraisal shall be performed by the one appraiser who was timely
designated.  The cost of the appraisal shall be divided equally between the
Company and the Selling Member or Transferor, as the case may be.
 
“Fiscal Year” means the fiscal year of the Company which shall be the calendar
year unless otherwise required by the Code.
 
“Investor Group” means Rockwall Holdings, Inc., a Nevada corporation.
 
“Lien” means (a) any encumbrance, mortgage, pledge, lien, charge or other
security interest of any kind upon any property or assets of any character, or
upon the income or profits therefrom; (b) any acquisition of or agreement to
have an option to acquire any property or assets upon conditional sale or other
title retention agreement, device or arrangement (including a capitalized
lease); or (c) any sale, assignment, pledge or other transfer for security of
any accounts, general intangibles or chattel paper, with or without recourse;
excluding in each instance the lien of this Agreement.
 
 
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“Manager” has the meaning specified in Article IX of this Agreement.
 
“Member” means the persons listed on Exhibit “A” hereto, and includes any Person
admitted as an additional Member or a substitute Member pursuant to the
provisions of this Agreement, in such Person’s capacity as a member of the
Company, and “Members” means two (2) or more of such Persons when acting in
their capacities as members of the Company.
 
“Membership Rights” means all legal and beneficial ownership interests in, and
rights and duties as a Member of, the Company, including, without limitation,
the right to share in Profits and Losses, the right to receive distributions of
cash and other property from the Company, and the right to receive allocations
of items of income, gain, loss, deduction and credit and similar items from the
Company.
 
“Membership Units” shall mean the units into which the ownership interests of
the Members in the Company are divided, including such Member’s Economic
Interest and the right of such Member to any and all benefits to which such
Member may be entitled as provided in this Agreement or under the Act, together
with the obligation of such Member to comply with all of the provisions of this
Agreement and of the Act.
 
“Newco” has the meaning specified in Article XIII of this Agreement.
 
“Nonrecourse Deductions” has the meaning set forth in Sections 1.704-2(b) and
1.704-2(c) of the Regulations.  The amount of Nonrecourse Deductions for a
Company Fiscal Year equals the net increase in Partnership Minimum Gain during
that Fiscal Year determined pursuant to Section 1.704-2(d) of the Regulations
reduced (but not below zero) by the aggregate distributions during that Fiscal
Year of proceeds of a Nonrecourse Liability that are allocable to an increase in
Partnership Minimum Gain, determined according to the provisions of Sections
1.704-2(h) of the Regulations.
 
“Nonrecourse Liability” has the meaning set forth in Section 1.752-1(a)(2) of
the Regulations.
 
“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse
Debt, equal to the Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Section 1.704-2(i) of the Regulations.
 
“Partner Nonrecourse Debt” has the meaning set forth in Section 1.704-2(b)(4) of
the Regulations.
 
“Partner Nonrecourse Deductions” has the meaning set forth in Section
1.704-2(i)(2) of the Regulations.  The amount of Partner Nonrecourse Deductions
with respect to a Partner Nonrecourse Debt for a Company Fiscal Year equals the
net increase during the year in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt reduced (but not below zero) by proceeds of the
liability distributed during that Fiscal Year to the Member bearing the economic
risk of loss for the liability that are both attributable to the liability and
allocable to an increase in Partner Minimum Gain attributable, determined
according to the provisions of Section 1.704-2(h) of the Regulations.
 
“Partnership Minimum Gain” has the meaning set forth in Regulations Sections
1.704-2(b)(2) and 1.704-2(d).
 
 
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“Percentage Interest” means, with respect to a holder of Common Units at any
time and from time to time, the Class A Percentage Interest, Class B Percentage
and/or Class C Percentage held by such holder.
 
“Person” includes any individual, corporation, association, partnership (general
or limited), joint venture, trust, estate, limited liability company, or other
legal entity or organization.
 
“Preferential Return Account” means, with respect to any Member holding
Preferred Units, the account maintained for such Member in accordance with the
provisions of Section 3.8(a).
 
“Preferred Unit” means a Unit representing a fractional part of the Preferred
interest having the rights and responsibilities specified with respect to the
Preferred Units in this Agreement.
 
“Preferred Unit Holder” means a Member holding Preferred Units.
 
“Supermajority” means the approval or vote of the holders owning at least
eighty-five percent (85%) of the Company’s issued and outstanding Membership
Units at any given time.
 
 “Tax Matters Partner” has the meaning specified in Section 14.6.
 
“Transfer” means any sale, assignment, encumbrance, hypothecation, pledge,
conveyance in trust, gift, transfer by bequest, devise or descent, or other
transfer or disposition of any kind, including, but not limited to, transfers to
receivers, levying creditors, trustees or receivers in bankruptcy proceedings or
general assignees for the benefit of creditors, whether voluntary or by
operation of law, directly or indirectly.
 
“Treasury Regulations” means such regulations implemented by the Internal
Revenue Service pursuant to the Code.
 
ARTICLE XVII
AGREEMENT PREPARED BY ATTORNEY FOR COMPANY
 
The parties acknowledge that the counsel for the Investor Group, Foley &
Lardner, prepared this Agreement on behalf of and in the course of its
representation of the Company, and that:
 
(a)              Each Member and Manager has been advised that a conflict of
interest may exist among the Members, the Board of Managers and the Company; and
 
(b)              Each Member and Manager has been urged and has had the
opportunity to seek the advice of independent legal counsel.
 
ARTICLE XVIII
AMENDMENTS
 
Except as otherwise expressly provided herein, the written approval of the
Members holding a Supermajority, as that term is defined herein, of the
Membership Units in the Company shall be required to alter, modify or amend this
Agreement; provided, however, that no alteration, modification or amendment of
Articles III, IV, V, VI or VII hereof or this Article XVIII which would
materially and adversely affect the economic interest of one or more Members, or
their successors or assigns, may be made without the unanimous written consent
of all such Members so adversely affected.  The issuance or grant of additional
Membership Units by the Board of Managers (and any corresponding amendment to
this Agreement) shall not, in itself, be deemed to adversely affect the economic
interest of one or more Members for purposes of the preceding
sentence.  Notwithstanding the above, this Agreement may be amended from time to
time by the Board of Managers, without the consent of any of the Members, (i) to
add to the representations, duties or obligations of the members of the Board of
Managers, (ii) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provisions with respect to
matters or questions arising under this Agreement and (iii) to delete or add any
provision of this Agreement required to be so deleted or added by the staff of
the Securities and Exchange Commission or by any state securities commission or
similar official, which addition or deletion is deemed by such commission or
official to be for the benefit or protection of the Members.
 
 
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ARTICLE XIX
MANAGER AND MEMBER RELATIONS TO THE COMPANY
 
No Manager or Member shall be restricted in any way from engaging in any other
business venture or activity and no Manager or Member shall be accountable to
the Company or to any other Manager or Member because of any activity or venture
which does not directly involve the Company.  Neither the Company nor the
Members shall have any right under this Agreement in and to the other activities
of any Manager or Member or to their income or profits from such business
venture or activity.
 
ARTICLE XX
CHOICE OF LAW;
SUBMISSION TO JURISDICTION; AND WAIVER OF JURY TRIAL
 
Section 20.1             LAW.  This Agreement shall be governed by and construed
under the laws of the State of Delaware.  The parties agree that any action
brought by any party under or in relation to this Agreement, including without
limitation to interpret or enforce any provision of this Agreement, shall be
brought in, and each party agrees to and does hereby submit to the jurisdiction
and venue of, any state or federal court located in Delaware.
 
Section 20.2            WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR OTHER
PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT, ANY OF THE RELATED
AGREEMENTS, DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
 
ARTICLE XXI
MISCELLANEOUS
 
Section 21.1             DELAY OR OMISSIONS.  It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of any kind or
character on any party’s part of any breach, default or noncompliance under this
Agreement or any waiver on such party’s part of any provisions or conditions of
the Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
 
 
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Section 21.2             WAIVER.  No waivers of any breach of this Agreement
extended by any party hereto to any other party shall be construed as a waiver
of any rights or remedies of any other party hereto or with respect to any
subsequent breach.
 
Section 21.3             WAIVER OF PARTITION.  The Members hereby agree that no
Member, nor any successor in interest to any Member, shall have the right, while
this Agreement remains in effect, to have any Company property partitioned, or
to file a complaint or institute any proceeding at law or in equity to have such
property partitioned, and all Members, on behalf of themselves and their heirs,
successors and assigns, hereby waive any such right.
 
Section 21.4             SUCCESSORS AND ASSIGNS.  Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon the parties hereto and their respective successors, assigns, heirs,
executors and administrators and shall inure to the benefit of and be
enforceable by each Person who shall be a holder of the Capital Securities of
the Company from time to time; provided, however, that prior to the receipt by
the Company of adequate written notice of the transfer of any Capital Securities
of the Company specifying the full name and address of the transferee and such
transferee’s satisfaction of all requirements to be a Permitted Transferee
hereunder, the Company may deem and treat the person listed as the holder of
such Capital Securities of the Company in its records as the absolute owner and
holder of such Capital Securities of the Company for all purposes.
 
Section 21.5             NOTICES.  All notices required in connection with this
Agreement shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient; if not, then on the next business day, (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written notification of receipt. All
communications shall be sent to the Company at the address below and to each
Member at the address as set forth on Exhibit “A” hereto or at such other
address as such party may designate by ten (10) days advance written notice to
the other parties hereto:
 
If to the Company, addressed to:
 
LIQUIDMETAL COATINGS, LLC
900 Rockmead Drive, Suite 240
Kingwood, Texas 77339
Attention: Legal Department
Fascimile: (281) 359-1185
 
Section 21.6             ENTIRE AGREEMENT.  This Agreement and the Exhibits
hereto, along with the other documents delivered pursuant thereto, including but
not limited to that certain Membership Unit Purchase Agreement of even date
herewith by and between the Company and the buyers indicated therein, constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof and no party shall be liable or bound to any
other in any manner by any oral or written representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
Each party expressly represents and warrants that it is not relying on any oral
or written representations, warranties, covenants or agreements outside of this
Agreement.
 
Section 21.7             PRONOUNS.  All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neutral, singular or plural, as to the identity of the parties hereto may
require.
 
 
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Section 21.8             TITLES AND SUBTITLES.  The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
 
Section 21.9             SEVERABILITY.  In the event one or more of the
provisions of this Agreement should, for any reason, be held by any court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
 
Section 21.10           BINDING EFFECT.  Except as provided to the contrary, the
terms and provisions of this Agreement shall be binding upon and shall inure
solely to the benefit of all the Members, their personal representatives, heirs,
successors and assigns.
 
Section 21.11           CREDITORS.  The provisions of this Agreement are not for
the benefit of and may not be specifically enforced by any creditors of the
Company.
 
Section 21.12           EXECUTION OF ADDITIONAL INSTRUMENTS.  Each Member hereby
agrees to execute such other and further statements of interest and holdings,
designations, powers of attorney, and other instruments necessary to comply with
any applicable laws, rules, or regulations.
 
Section 21.13           RIGHTS AND REMEDIES CUMULATIVE.  The rights and remedies
provided by this Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive the right to use any or all other
remedies.  Said rights and remedies are given in addition to any other rights
the parties may have by law, statute, ordinance, or otherwise.
 
Section 21.14           COUNTERPARTS.  This Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but all of which
together shall constitute one instrument. Counterparts of this Agreement (or
applicable signature pages hereof) that are manually signed and delivered by
facsimile transmission shall be deemed to constitute signed original
counterparts hereof and shall bind the parties signing and delivering in such
manner.
 
[Signature Page to Immediately Follow]
 
 
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IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated
Operating Agreement as of the date first set forth hereinabove.
 

 
COMPANY:
     
LIQUIDMETAL COATINGS, LLC
      By  

  Print Name:  

  Title:  

 

 
PREFERRED MEMBERS:

C3 CAPITAL PARTNERS, L.P.
 
By: Its General Partner
 
C3 Partners, LLC, a Delaware 
limited liability company
      By  /s/ R. L. Smith

  Print Name: Roberth L. Smith 

  Title: Manager  

 

 
C3 CAPITAL PARTNERS II, L.P.
 
By: Its General Partner
 
C3 Partners II, LLC, a Delaware 
limited liability company
  By  /s/ R. L. Smith

  Print Name:  Roberth L. Smith

  Title: Manager 

                                      
 
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  COMMON MEMBERS:

CLASS A HOLDERS:

LIQUIDMETAL TECHNOLOGIES, INC.
 
  By /s/ Tony Chung

  Print Name: Tony  Chung  

  Title: Chief Financial Officer   

 

 
ROCKWALL HOLDINGS, INC.
 
  By /s/ John Kang

  Print Name: John Kang  

  Title: Chairman 

 
 
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CLASS B HOLDERS:

C3 CAPITAL PARTNERS, L.P.
 
By: Its General Partner
 
C3 Partners, LLC, a Delaware 
limited liability company
 
  By  /s/ R. L. Smith

  Print Name: Robert L. Smith  

  Title: Manager 

                                                   

 
C3 CAPITAL PARTNERS, L.P.
 
By: Its General Partner
 
C3 Partners II, LLC, a Delaware 
limited liability company
 
  By  /s/ R. L. Smith

  Print Name: Robert Smith  

  Title: Manager 

 

 
LARRY BUFFINGTON
 
  /s/ Larry Buffington   Larry Buffington

 

 
GLOBAL STRATEGY & CAPITAL GROUP, INC.
D.B.A CRESO CAPITAL PARTNERS
 
  By /s/ Thomas Papa

  Print Name: Thomas Papa 

  Title: Principal  

[Signatures Continue on Following Page]
 
 
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CLASS C HOLDERS:
 
LARRY BUFFINGTON
 
  /s/ Larry Buffington   Larry Buffington

 

 
GLOBAL STRATEGY & CAPITAL GROUP, INC.
D.B.A CRESO CAPITAL PARTNERS
 
  By /s/ Thomas Papa

  Print Name: Thomas Papa 

  Title: Principal  

 
 
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Exhibit “A”

 
Members
 
Number and Class of
Units
 
 
Percentage Interest
PREFERRED UNIT HOLDERS
         
C3 Capital Partners, LP, a Delaware limited partnership
 
C3 Partners, LLC
4520 Main Street
Suite 1600
Kansas City, Missouri 64111
Attn:  Robert L. Smith
Facsimile: 816-756-5552
1,106.72 Preferred Units*
NONE**
     
C3 Capital Partners II, LP, a Delaware limited partnership
 
C3 Partners II, LLC
4520 Main Street
Suite 1600
Kansas City, Missouri 64111
Attn:  Robert L. Smith
Facsimile: 816-756-5552
801.42 Preferred Units*
NONE**
     
TOTALS
 
    Preferred Units*  
COMMON UNIT HOLDERS
         
Rockwall Holdings, Inc., a Nevada corporation
 
16121 Carmenita Road
Cerritos CA 90703
Attention:  Kevin Wheeler
Fax No.:  562.926.3003
22,728,000
Class A Common
Units***
75.067%
     
Liquidmetal Technologies, Inc., a Delaware corporation
 
30452 Esperanza
Rancho Santa Margarita, California 92688
Attention:  Legal Department
Fax No.:  813.314.0270
201,878.23
Class A Common
Units****
0.667%

 
 
 

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Members
 
 
Number and Class of
Units
 
Percentage Interest
     
C3 Capital Partners, LP, a Delaware limited partnership
 
C3 Capital, LLC
4520 Main Street
Suite 1600
Kansas City, Missouri 64111
Attn:  Robert L. Smith
Facsimile: 816-756-5552
38,956.52
Class B Common
Units*****
 
4,218,000
Class B Common
Units***
14.060%
     
C3 Capital Partners II, LP, a Delaware limited partnership
 
C3 Capital, LLC
4520 Main Street
Suite 1600
Kansas City, Missouri 64111
Attn:  Robert L. Smith
Facsimile: 816-756-5552
28,209.90
Class B Common
Units*****
 
3,054,000
Class B Common
Units***
10.180%
     
Larry Buffington
 
25422 Vinechase Drive
Porter, TX 77365
Fax No. (281) 348-0863
5,850.00
Class B Common
Units******
 
1,000
Class C Common Units
0.022%
     
Global Strategy & Capital Group, Inc. d.b.a. CRESO Capital Partners
 
660 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Fax No. (949) 209-5441
Attn:  Thomas Papa
1,023.75
Class B Common Units*******
 
175
Class C Common Units
0.004%
     
TOTALS
 
30,277,093.40
Common Units
100.00%

* Issued pursuant to that certain Securities Purchase Agreement, dated July 24,
2007, between the Company, C3 Capital Partners, L.P., and C3 Capital Partners
II, L.P.  (as amended by that certain Amended and Restated Securities Purchase
Agreement, dated November 30, 2011), and reflects the redemption of 221.08 and
161.10 Preferred Units owned by C3 Capital Partners, L.P.  and C3 Capital
Partners II, L.P., respectively, by the Company pursuant to that certain
Amendment No. 3 to First Amended and Restated Operating Agreement of Liquidmetal
Coatings, LLC, dated December 15, 2010.
 
 
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**Preferred Unit Holders shall have zero percentage interests in the
Company.  All of the Preferred Unit Holders’ rights to certain allocations and
distributions are provided for in the Operating Agreement.
 
*** Issued pursuant to that certain Membership Unit Purchase Agreement, dated
November 30, 2011, between the Company and the buyer indicated therein.
 
****Issued pursuant to that certain Asset Purchase and Contribution Agreement,
dated July 24, 2007, between the Company and Liquidmetal Technologies, Inc.,
Amendment No. 1 to First Amended and Restated Operating Agreement of Liquidmetal
Coatings, LLC dated October 6, 2009 and Amendment No. 3 to First Amended and
Restated Operating Agreement of Liquidmetal Coatings, LLC dated December 15,
2010.
 
***** Issued pursuant to that certain Securities Purchase Agreement, dated July
24, 2007, between the Company, C3 Capital Partners, L.P., and C3 Capital
Partners II, L.P. (as amended by that certain Amended and Restated Securities
Purchase Agreement, dated November 30, 2011), Amendment No. 1 to First Amended
and Restated Operating Agreement of Liquidmetal Coatings, LLC dated October 6,
2009, Amendment No. 3 to First Amended and Restated Operating Agreement of
Liquidmetal Coatings, LLC dated December 15, 2010 and the Second Amended and
Restated Operating Agreement of Liquidmetal Coatings, LLC dated November 30,
2011.
 
******Issued pursuant to that certain Employment Agreement, dated July 24, 2007,
between the Company and Larry Buffington and Amendment No. 1 to First Amended
and Restated Operating Agreement of Liquidmetal Coatings, LLC dated October 6,
2009.
 
*******Issued as consideration for placement agent services and Amendment No. 1
to First Amended and Restated Operating Agreement of Liquidmetal Coatings, LLC
dated October 6, 2009.
 
 
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