Exhibit 10.6

 

AMENDED AND RESTATED OPERATING AGREEMENT

 

of

 

VERB ACQUISITION CO., LLC

 

dated as of

 

September 4, 2020

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS 1       Section 1.01 Definitions 1       Section 1.02
Interpretation 8       ARTICLE II ORGANIZATION 9       Section 2.01 Formation 9
      Section 2.02 Name 9       Section 2.03 Principal Office 9       Section
2.04 Registered Office; Registered Agent 9       Section 2.05 Purpose; Powers 9
      Section 2.06 Term 9       Section 2.07 No State-Law Partnership 9      
Section 2.08 Investment Representations of Members 9       ARTICLE III UNITS 10
      Section 3.01 Units Generally 10       Section 3.02 Authorization and
Issuance of Class A Units 10       Section 3.03 Authorization and Issuance of
Class B Units 10       Section 3.04 Other Issuances 10       Section 3.05
Certification of Units 10       ARTICLE IV MEMBERS 11       Section 4.01
Admission of New Members 11       Section 4.02 No Personal Liability 11      
Section 4.03 No Withdrawal 11       Section 4.04 Death 11       Section 4.05
Voting 12       Section 4.06 Action By Members 12       Section 4.07 Power of
Members 12       Section 4.08 No Interest in Company Property 12       ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS 12       Section 5.01 Initial Capital
Contributions 12

 

 

 

 

TABLE OF CONTENTS

(continued)

 

Section 5.02 No Additional Capital Contributions 12       Section 5.03
Maintenance of Capital Accounts 12       Section 5.04 Succession Upon Transfer
13       Section 5.05 Negative Capital Accounts 13       Section 5.06 No
Withdrawal 13       Section 5.07 Treatment of Loans From Members 13      
Section 5.08 Modifications 13       ARTICLE VI ALLOCATIONS 14       Section 6.01
Allocation of Net Income and Net Loss 14       Section 6.02 Regulatory and
Special Allocations 14       Section 6.03 Tax Allocations 15       Section 6.04
Allocations in Respect of Transferred Units 16       Section 6.05 Curative
Allocations 16       ARTICLE VII DISTRIBUTIONS 16       Section 7.01 General 16
      Section 7.02 Priority of Distributions 17       Section 7.03 Tax Advances
17       Section 7.04 Tax Withholding; Withholding Advances 18       Section
7.05 Distributions in Kind 19       ARTICLE VIII MANAGEMENT 19       Section
8.01 Board 19       Section 8.02 Board Composition; Vacancies. 19       Section
8.03 Removal; Resignation. 20       Section 8.04 Meetings. 20       Section 8.05
Quorum; Manner of Acting; Restrictions. 20       Section 8.06 Action By Written
Consent 21       Section 8.07 Compensation; No Employment. 21       Section 8.08
Officers 21       Section 8.09 No Personal Liability 21

 

ii

 

 

TABLE OF CONTENTS

(continued)

 

ARTICLE IX TRANSFER 21       Section 9.01 General Restrictions on Transfer 21  
    Section 9.02 Drag-along Rights 22       Section 9.03 Exchange of Class B
Units 24       ARTICLE X COVENANTS 24       Section 10.01 Other Business
Activities 24       ARTICLE XI RECORDS; TAX MATTERS 25       Section 11.01
Records and Access to Information 25       Section 11.02 Tax Representative 25  
    Section 11.03 Member Tax Information 26       Section 11.04 Company Funds 26
      ARTICLE XII DISSOLUTION AND LIQUIDATION 26       Section 12.01 Events of
Dissolution 26       Section 12.02 Effectiveness of Dissolution 27       Section
12.03 Liquidation 27       Section 12.04 Articles of Dissolution 28      
Section 12.05 Survival of Rights, Duties and Obligations 28       Section 12.06
Recourse for Claims 28       ARTICLE XIII EXCULPATION AND INDEMNIFICATION 28    
  Section 13.01 Exculpation of Covered Persons 28       Section 13.02
Liabilities and Duties of Managers 29       Section 13.03 Indemnification 29    
  Section 13.04 Survival 30       ARTICLE XIV MISCELLANEOUS 30       Section
14.01 Expenses 30       Section 14.02 Further Assurances 30       Section 14.03
Notices 30       Section 14.04 Headings 31       Section 14.05 Severability 31  
    Section 14.06 Entire Agreement 31

 

iii

 

 

TABLE OF CONTENTS

(continued)

 

Section 14.07 Successors and Assigns 31       Section 14.08 No Third-party
Beneficiaries 31       Section 14.09 Amendment 31       Section 14.10 Waiver 32
      Section 14.11 Governing Law 32       Section 14.12 Submission to
Jurisdiction 32       Section 14.13 Waiver of Jury Trial 32       Section 14.14
Equitable Remedies 32       Section 14.15 Remedies Cumulative 33       Section
14.16 Counterparts 33

 

iv

 

 

AMENDED AND RESTATED OPERATING AGREEMENT

OF

VERB ACQUISITION CO., LLC

 

THIS AMENDED AND RESTATED OPERATING AGREEMENT of Verb Acquisition Co., LLC, a
Nevada limited liability company (the “Company”), is entered into as of
September 4, 2020 (the “Effective Date”) by and among the Company, the Members
executing this Agreement as of the date hereof, and each other Person who after
the date hereof becomes a Member of the Company and becomes a party to this
Agreement by executing a Joinder Agreement.

 

RECITALS

 

WHEREAS, the Company was formed under the laws of the State of Nevada by the
filing of Articles of Organization with the Secretary of State of the State of
Nevada on September 2, 2020 (the “Articles of Organization”);

 

WHEREAS, on September 3, 2020, Verb Technology Company, Inc., a Nevada
corporation (the “Initial Member”), entered into the Operating Agreement of the
Company (the “Prior Agreement”) as the sole member of the Company; and

 

WHEREAS, on the Effective Date, (i) in accordance with that certain Membership
Interest Purchase Agreement, dated as of September 4, 2020 (the “Acquisition
Agreement”), by and among the Company, Ascend Certification, LLC, a Utah limited
liability company (“Ascend”), and the Persons listed on Annex A thereto
(individually, “Seller” and, collectively, “Sellers”), and Steve Deverall solely
in his capacity as the Seller Representative (as defined in the Acquisition
Agreement), the Company purchased from each Seller certain of the issued and
outstanding limited liability company interests in Ascend owned by such Seller,
and (ii) the Company entered into certain contribution and exchange agreements
(collectively, the “Rollover Agreements”), between each Seller and the Company,
pursuant to which the Company received as a contribution from each Seller all of
the issued and outstanding limited liability company interests in Ascend owned
by such Seller and not so purchased in return for certain Class B Units as
contemplated therein, such that following the consummation of the transactions
contemplated by the Acquisition Agreement and the Rollover Agreements, the
Company owns one hundred percent (100%) of the issued and outstanding limited
liability company interests in Ascend.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
made and intending to be legally bound, the Members hereby agree and acknowledge
that the Prior Agreement shall be amended and restated in its entirety to read
as follows:

 

Article I
Definitions

 

Section 1.01 Definitions. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in this Section 1.01:

 

“Acquisition Agreement” has the meaning set forth in the Recitals.

 

“Adjusted Capital Account Deficit” means, with respect to any Member, the
deficit balance, if any, in such Member’s Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments: (a)
crediting to such Capital Account any amount which such Member is obligated to
restore or is deemed to be obligated to restore pursuant to Treasury Regulations
Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i); and (b) debiting to
such Capital Account the items described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

 

“Adjusted Taxable Income” of a Member for a Fiscal Year (or portion thereof)
with respect to Units held by such Member means the federal taxable income
allocated by the Company to the Member with respect to such Units (as adjusted
by any final determination in connection with any tax audit or other proceeding)
for such Fiscal Year (or portion thereof); provided, that such taxable income
shall be computed (i) without regard to any adjustments pursuant to Section 743,
Section 734 or Section 704(c) of the Code and (ii) utilizing any excess taxable
loss or excess taxable credits of the Company for any prior period allocable to
such Member with respect to such Units that were not previously taken into
account for purposes of determining such Member’s Adjusted Taxable Income in a
prior Fiscal Year to the extent such loss or credit would be available under the
Code to offset income of the Member (or, as appropriate, the direct or indirect
members of the Member) determined as if the income, loss, and credits from the
Company were the only income, loss, and credits of the Member (or, as
appropriate, the direct or indirect members of the Member) in such Fiscal Year
and all prior Fiscal Years.

 

1

 

 

“Affiliate” means, with respect to any Person, any other Person who, directly or
indirectly (including through one or more intermediaries), controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control,” when used with respect to any specified Person,
shall mean the power, directly or indirectly, to direct or cause the direction
of the management and policies of such Person, whether through ownership of
voting securities or partnership or other ownership interests, by contract or
otherwise; and the terms “controlling” and “controlled” shall have correlative
meanings.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Applicable Law” means all applicable provisions of (a) constitutions, treaties,
statutes, laws (including the common law), rules, regulations, decrees,
ordinances, codes, proclamations, declarations or orders of any Governmental
Authority; (b) any consents or approvals of any Governmental Authority; and
(c) any orders, decisions, advisory or interpretative opinions, injunctions,
judgments, awards, decrees of, or agreements with, any Governmental Authority.

 

“Articles of Organization” has the meaning set forth in the Recitals.

 

“Ascend” has the meaning set forth in the Recitals.

 

“Bankruptcy” means, with respect to a Member, the occurrence of any of the
following: (a) the filing of an application by such Member for, or a consent to,
the appointment of a trustee of such Member’s assets; (b) the filing by such
Member of a voluntary petition in bankruptcy or the filing of a pleading in any
court of record admitting in writing such Member’s inability to pay its debts as
they come due; (c) the making by such Member of a general assignment for the
benefit of such Member’s creditors; (d) the filing by such Member of an answer
admitting the material allegations of, or such Member’s consenting to, or such
Member’s defaulting in answering a bankruptcy petition filed against such Member
in any bankruptcy proceeding; or (e) the expiration of sixty (60) days following
the entry of an order, judgment or decree by any court of competent jurisdiction
adjudicating such Member bankrupt or appointing a trustee of such Member’s
assets.

 

“Board” has the meaning set forth in Section 8.01.

 

“Book Depreciation” means, with respect to any Company asset for each Fiscal
Year, the Company’s depreciation, amortization, or other cost recovery
deductions determined for federal income tax purposes, except that if the Book
Value of an asset differs from its adjusted tax basis at the beginning of such
Fiscal Year, Book Depreciation shall be an amount which bears the same ratio to
such beginning Book Value as the federal income tax depreciation, amortization,
or other cost recovery deduction for such Fiscal Year bears to such beginning
adjusted tax basis; provided, that if the adjusted basis for federal income tax
purposes of an asset at the beginning of such Fiscal Year is zero and the Book
Value of the asset is positive, Book Depreciation shall be determined with
reference to such beginning Book Value using any permitted method selected by
the Board in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv)(g)(3).

 

2

 

 

“Book Value” means, with respect to any Company asset, the adjusted basis of
such asset for federal income tax purposes, except as follows (a) the initial
Book Value of any Company asset contributed by a Member to the Company shall be
the gross Fair Market Value of such Company asset as of the date of such
contribution; (b) immediately prior to the Distribution by the Company of any
Company asset to a Member, the Book Value of such asset shall be adjusted to its
gross Fair Market Value as of the date of such Distribution; (c) the Book Value
of all Company assets shall be adjusted to equal their respective gross Fair
Market Values, as determined by the Board, as of the following times (i) the
acquisition of an additional Membership Interest in the Company by a new or
existing Member in consideration of a Capital Contribution of more than a de
minimis amount; (ii) the payment by the Company to a Member of more than a de
minimis amount as consideration for all or a part of such Member’s Membership
Interest in the Company; and (iii) the liquidation of the Company within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); provided, that
adjustments pursuant to clauses (i) and (ii) above need not be made if the Board
reasonably determines that such adjustment is not necessary or appropriate to
reflect the relative economic interests of the Members and that the absence of
such adjustment does not adversely and disproportionately affect any Member; (d)
the Book Value of each Company asset shall be increased or decreased, as the
case may be, to reflect any adjustments to the adjusted tax basis of such
Company asset pursuant to Code Section 734(b) or Code Section 743(b), but only
to the extent that such adjustments are taken into account in determining
Capital Account balances pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m); provided, that Book Values shall not be adjusted
pursuant to this paragraph (d) to the extent that an adjustment pursuant to
paragraph (c) above is made in conjunction with a transaction that would
otherwise result in an adjustment pursuant to this paragraph (d); and (e) if the
Book Value of a Company asset has been determined pursuant to paragraph (a) or
adjusted pursuant to paragraphs (c) or (d) above, such Book Value shall
thereafter be adjusted to reflect the Book Depreciation taken into account with
respect to such Company asset for purposes of computing Net Income and Net
Losses.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in the State of California are authorized or required to close.

 

“Capital Account” has the meaning set forth in Section 5.03.

 

“Capital Contribution” means, for any Member, the total amount of cash and cash
equivalents and the Book Value of any property contributed to the Company by
such Member.

 

“Cash Investment per Class A Unit Amount” means $19,822.50, as the same may be
adjusted from time to time to take into account any unit split, unit dividend,
or similar event with respect to the Class A Units.

 

“Change of Control” means: (a) the sale of all or substantially all of the
assets of the Company to a Third Party Purchaser; (b) a sale resulting in no
less than a majority of the Units being held by a Third Party Purchaser; or
(c) a merger, consolidation, recapitalization or reorganization of the Company
with or into a Third Party Purchaser that results in the inability of the
Members to designate or elect a majority of the board of managers (or its
equivalent) of the resulting entity or its parent company.

 

3

 

 

“Class A Units” means the Units having the privileges, preferences, duties,
liabilities, obligations and rights specified with respect to “Class A Units” in
this Agreement.

 

“Class B Units” means the Units having the privileges, preferences, duties,
liabilities, obligations and rights specified with respect to “Class B Units” in
this Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Company” has the meaning set forth in the Preamble.

 

“Company Interest Rate” has the meaning set forth in Section 7.04(c).

 

“Company Minimum Gain” means “partnership minimum gain” as defined in
Section 1.704-2(b)(2) of the Treasury Regulations, substituting the term
“Company” for the term “partnership” as the context requires.

 

“Company Opportunity” has the meaning set forth in Section 10.03.

 

“Contribution Account” means, for a Member, as of any particular date, (a) the
aggregate amount of such Member’s Capital Contributions as of such date, minus
(b) the cumulative amount of all Distributions made by the Company to such
Member pursuant to Section 7.02(b) prior to such date.

 

“Covered Person” has the meaning set forth in Section 13.01(a).

 

“Distribution” means a distribution made by the Company to a Member, whether in
cash, property or securities of the Company and whether by liquidating
distribution or otherwise; provided, that none of the following shall be a
Distribution: (a) any redemption or repurchase by the Company or any Member of
any Units; (b) any recapitalization or exchange of securities of the Company;
(c) any subdivision (by a split of Units or otherwise) or any combination (by a
reverse split of Units or otherwise) of any outstanding Units; or (d) any fees
or remuneration paid to any Member in such Member’s capacity as an Officer,
employee, consultant or other service provider for the Company. “Distribute”
when used as a verb shall have a correlative meaning.

 

“Drag-along Member” has the meaning set forth in Section 9.02(a).

 

“Drag-along Notice” has the meaning set forth in Section 9.02(c).

 

“Drag-along Sale” has the meaning set forth in Section 9.02(a).

 

“Dragging Member” has the meaning set forth in Section 9.02(a).

 

“Effective Date” has the meaning set forth in the Preamble.

 

“Electronic Transmission” means any form of communication not directly involving
the physical transmission of paper that creates a record that may be retained,
retrieved and reviewed by a recipient thereof and that may be directly
reproduced in paper form by such a recipient through an automated process.

 

4

 

 

“Estimated Tax Amount” of a Member for a Fiscal Year means the Member’s Tax
Amount for such Fiscal Year as estimated in good faith from time to time by the
Board. In making such estimate, the Board shall take into account amounts shown
on Internal Revenue Service Form 1065 filed by the Company and similar state or
local forms filed by the Company for the preceding taxable year and such other
adjustments as in the reasonable business judgment of the Board are necessary or
appropriate to reflect the estimated operations of the Company for the Fiscal
Year.

 

“Excess Amount” has the meaning set forth in Section 7.03(c).

 

“Exchange Agreement” means the exchange agreement dated as of the date hereof
among the Company, the Initial Member, and the other Members of the Company from
time to time party thereto.

 

“Exchange Transaction” means an exchange of Class B Units for shares of the
common stock of the Initial Member pursuant to, and in accordance with, the
Exchange Agreement.

 

“Fair Market Value” of any asset as of any date means the purchase price that a
willing buyer having all relevant knowledge would pay a willing seller for such
asset in an arm’s length transaction, as determined in good faith by the Board
based on such factors as the Board, in the exercise of its reasonable business
judgment, considers relevant.

 

“Fiscal Year” means the calendar year, unless the Company is required to have a
taxable year other than the calendar year, in which case “Fiscal Year” shall
mean the period that conforms to the Company’s taxable year.

 

“Forfeiture Allocations” has the meaning set forth in Section 6.02(h).

 

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

“Initial Member” has the meaning set forth in the Recitals.

 

“Joinder Agreement” means the Joinder Agreement in form and substance attached
hereto as Exhibit A.

 

“Liquidator” has the meaning set forth in Section 12.03(a).

 

“Losses” has the meaning set forth in Section 13.03(a).

 

“Manager” has the meaning set forth in Section 8.01.

 

“Managers Schedule” has the meaning set forth in Section 8.02(d).

 

“Member” means each of the Persons from time to time listed as a Member in the
books and records of the Company.

 

“Member Nonrecourse Debt” means “partner nonrecourse debt” as defined in
Treasury Regulations Section 1.704-2(b)(4), substituting the term “Company” for
the term “partnership” and the term “Member” for the term “partner” as the
context requires.

 

5

 

 

“Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if
the Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined
in accordance with Treasury Regulations Section 1.704-2(i)(3).

 

“Member Nonrecourse Deduction” means “partner nonrecourse deduction” as defined
in Treasury Regulations Section 1.704-2(i), substituting the term “Member” for
the term “partner” as the context requires.

 

“Members Schedule” has the meaning set forth in Section 3.01.

 

“Membership Interest” means an interest in the Company owned by a Member,
including such Member’s right (based on the type and class of Unit or Units held
by such Member), as applicable, (a) to a Distributive share of Net Income, Net
Losses and other items of income, gain, loss and deduction of the Company;
(b) to a Distributive share of the assets of the Company; (c) to vote on,
consent to or otherwise participate in any decision of the Members as provided
in this Agreement; and (d) to any and all other benefits to which such Member
may be entitled as provided in this Agreement or the Nevada Act.

 

“Misallocated Item” has the meaning set forth in Section 6.05.

 

“Net Income” and “Net Loss” mean, for each Fiscal Year or other period specified
in this Agreement, an amount equal to the Company’s taxable income or taxable
loss, or particular items thereof, determined in accordance with Code
Section 703(a) (where, for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or taxable loss), but with the following
adjustments: (a) any income realized by the Company that is exempt from federal
income taxation, as described in Code Section 705(a)(1)(B), shall be added to
such taxable income or taxable loss, notwithstanding that such income is not
includable in gross income; (b) any expenditures of the Company described in
Code Section 705(a)(2)(B), including any items treated under Treasury
Regulations Section 1.704-1(b)(2)(iv)(i) as items described in Code
Section 705(a)(2)(B), shall be subtracted from such taxable income or taxable
loss, notwithstanding that such expenditures are not deductible for federal
income tax purposes; (c) any gain or loss resulting from any disposition of
Company property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of the
property so disposed, notwithstanding that the adjusted tax basis of such
property differs from its Book Value; (d) any items of depreciation,
amortization and other cost recovery deductions with respect to Company property
having a Book Value that differs from its adjusted tax basis shall be computed
by reference to the property’s Book Value (as adjusted for Book Depreciation) in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g); (e) if the
Book Value of any Company property is adjusted as provided in the definition of
Book Value, then the amount of such adjustment shall be treated as an item of
gain or loss and included in the computation of such taxable income or taxable
loss; and (f) to the extent an adjustment to the adjusted tax basis of any
Company property pursuant to Code Sections 732(d), 734(b) or 743(b) is required,
pursuant to Treasury Regulations Section 1.704 1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis).

 

“Nevada Act” means the Nevada Limited Liability Company Act, and any successor
statute, as it may be amended from time to time.

 

“New Interests” has the meaning set forth in Section 3.04.

 

6

 

 

“Nonrecourse Liability” has the meaning set forth in Treasury Regulations
Section 1.704-2(b)(3).

 

“Officers” has the meaning set forth in Section 8.08.

 

“Other Business” has the meaning set forth in Section 10.03.

 

“Partnership Representative” has the meaning set forth in Section 11.02(a).

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

 

“Prior Agreement” has the meaning set forth in the Recitals.

 

“Property Investment per Class B Unit Amount” means $0.75, as the same may be
adjusted from time to time to take into account any unit split, unit dividend,
or similar event with respect to the Class B Units.

 

“Quarterly Estimated Tax Amount” of a Member for any calendar quarter of a
Fiscal Year means the excess, if any of (a) the product of (i) one quarter (¼)
in the case of the first calendar quarter of the Fiscal Year, one half (½) in
the case of the second calendar quarter of the Fiscal Year, three-quarters (¾)
in the case of the third calendar quarter of the Fiscal Year, and one (1) in the
case of the fourth calendar quarter of the Fiscal Year and (ii) the Member’s
Estimated Tax Amount for such Fiscal Year over (b) all Distributions previously
made during such Fiscal Year pursuant to Section 7.02(c) to such Member.

 

“Regulatory Allocations” has the meaning set forth in Section 6.02(g).

 

“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.

 

“Rollover Agreements” has the meaning set forth in the Recitals.

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations thereunder, which shall be in
effect at the time.

 

“Seller” has the meaning set forth in the Recitals.

 

“Sellers” has the meaning set forth in the Recitals.

 

“Shortfall Amount” has the meaning set forth in Section 7.03(b).

 

“Subsidiary” means, with respect to any Person, any other Person of which a
majority of the outstanding shares or other equity interests having the power to
vote for directors or comparable managers are owned, directly or indirectly, by
the first Person.

 

“Tax Advance” has the meaning set forth in Section 7.03(a).

 

“Tax Amount” of a Member for a Fiscal Year means the product of (a) the Adjusted
Taxable Income of such Member for such Fiscal Year with respect to its Units,
and (b) the Tax Rate for such Fiscal Year.

 

7

 

 

“Tax Rate” of a Member, for any period, means the highest marginal blended
federal and state tax rate applicable to ordinary income, qualified dividend
income or capital gains, as appropriate, for such period for an individual
residing in Utah, as determined by the Board. The initial Tax Rate is forty
percent (40%).

 

“Taxing Authority” has the meaning set forth in Section 7.04(b).

 

“Third Party Purchaser” means any Person who, immediately prior to the
contemplated transaction, does not directly or indirectly own or have the right
to acquire any outstanding Class A Units.

 

“Total Percentage Interest” means, with respect to any member, the quotient
obtained by dividing the number of Units (Class A Units and/or Class B Units)
then owned by such Member by the number of Units (Class A Units and Class B
Units) then owned by all Members.

 

“Transfer” means to, directly or indirectly, sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, by operation of law or otherwise, or to enter into any contract,
option or other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition of, any
Units owned by a Person or any interest (including a beneficial interest) in any
Units owned by a Person. “Transfer” when used as a noun shall have a correlative
meaning. “Transferor” and “Transferee” mean a Person who makes or receives a
Transfer, respectively.

 

“Treasury Regulations” means the final or temporary regulations issued by the
United States Department of the Treasury pursuant to its authority under the
Code, and any successor regulations.

 

“Unallocated Item” has the meaning set forth in Section 6.05.

 

“Unit” means a unit representing a fractional part of the Membership Interests
of the Members and shall include all types and classes of Units, including the
Class A Units and the Class B Units; provided, that any type or class of Unit
shall have the privileges, preferences, duties, liabilities, obligations and
rights set forth in this Agreement and the Membership Interests represented by
such type or class or series of Unit shall be determined in accordance with such
privileges, preferences, duties, liabilities, obligations and rights.

 

“Withholding Advances” has the meaning set forth in Section 7.04(b).

 

Section 1.02 Interpretation. For purposes of this Agreement, (a) the words
“include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation”; (b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this
Agreement as a whole. The definitions given for any defined terms in this
Agreement shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. Unless the context otherwise
requires, references herein: (x) to Articles, Sections, and Exhibits mean the
Articles and Sections of, and Exhibits attached to, this Agreement; (y) to an
agreement, instrument or other document means such agreement, instrument or
other document as amended, supplemented and modified from time to time to the
extent permitted by the provisions thereof; and (z) to a statute means such
statute as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any
instrument to be drafted. The Exhibits referred to herein shall be construed
with, and as an integral part of, this Agreement to the same extent as if they
were set forth verbatim herein.

 

8

 

 

Article II
Organization

 

Section 2.01 Formation. The Company was formed on September 2, 2020, pursuant to
the provisions of the Nevada Act, upon the filing of the Articles of
Organization with the Secretary of State of the State of Nevada. This Agreement
shall constitute the “operating agreement” (as that term is used in the Nevada
Act) of the Company. The rights, powers, duties, obligations and liabilities of
the Members shall be determined pursuant to the Nevada Act and this Agreement.
To the extent that the rights, powers, duties, obligations and liabilities of
any Member are different by reason of any provision of this Agreement than they
would be under the Nevada Act in the absence of such provision, this Agreement
shall, to the extent permitted by the Nevada Act, control.

 

Section 2.02 Name. The name of the Company is “Verb Acquisition Co., LLC” or
such other name or names as the Board may from time to time designate; provided,
that the name shall always contain the words “Limited Liability Company” or the
abbreviation “L.L.C.” or the designation “LLC.” The Board shall give prompt
notice to each of the Members of any change to the name of the Company.

 

Section 2.03 Principal Office. The principal office of the Company is located at
2210 Newport Boulevard, Suite 200, Newport Beach, California 92663, or such
other place as may from time to time be determined by the Board. The Board shall
give prompt notice of any such change to each of the Members.

 

Section 2.04 Registered Office; Registered Agent. The Board shall cause the
Company to maintain a registered office and registered agent in the manner
provided by the Nevada Act and Applicable Law.

 

Section 2.05 Purpose; Powers. The purpose of the Company is to engage in any
lawful act or activity for which limited liability companies may be formed under
the Nevada Act and to engage in any and all activities necessary or incidental
thereto. The Company shall have all the powers necessary or convenient to carry
out the purposes for which it is formed, including the powers granted by the
Nevada Act.

 

Section 2.06 Term. The term of the Company commenced on the date the Articles of
Organization were filed with the Secretary of State of the State of Nevada and
shall continue in existence perpetually until the Company is dissolved in
accordance with the provisions of this Agreement or as otherwise required by
Applicable Law.

 

Section 2.07 No State-Law Partnership. The Members intend that the Company shall
be treated as a partnership for federal and, if applicable, state and local
income tax purposes, and, to the extent permissible, the Company shall elect to
be treated as a partnership for such purposes. The Company and each Member shall
file all tax returns and shall otherwise take all tax and financial reporting
positions in a manner consistent with such treatment and no Member shall take
any action inconsistent with such treatment. The Members intend that the Company
shall not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Member, Manager or Officer of the
Company shall be a partner or joint venturer of any other Member, Manager or
Officer of the Company, for any purposes other than as set forth in the first
sentence of this Section 2.07.

 

Section 2.08 Investment Representations of Members. Each Member hereby
represents, warrants and acknowledges to the Company that: (a) such Member has
such knowledge and experience in financial and business matters and is capable
of evaluating the merits and risks of an investment in the Company and is making
an informed investment decision with respect thereto; (b) such Member is
acquiring interests in the Company for investment only and not with a view to,
or for resale in connection with, any distribution to the public or public
offering thereof; and (c) the execution, delivery and performance of this
Agreement have been duly authorized by such Member.

 

9

 

 

Article III
Units

 

Section 3.01 Units Generally. The Membership Interests of the Members shall be
represented by issued and outstanding Units, which may be divided into one or
more types, classes or series. Each type, class or series of Units shall have
the privileges, preferences, duties, liabilities, obligations and rights,
including voting rights, if any, set forth in this Agreement with respect to
such type, class or series. The Board shall maintain a schedule of all Members,
their respective mailing addresses and the amount and series of Units held by
them (the “Members Schedule”), and the Board shall update the Members Schedule
upon the issuance or Transfer of any Units to any new or existing Member;
provided, however, that the failure of the Board to update the Members Schedule
or to provide a revised copy of the Members Schedule to the Members shall not
prevent the effectiveness of or otherwise affect the underlying adjustments that
would be reflected in such an update to the Members Schedule. A copy of the
Members Schedule as of the execution of this Agreement is attached hereto as
Schedule A.

 

Section 3.02 Authorization and Issuance of Class A Units. Subject to compliance
with Section 9.01(b), the Company is hereby authorized to issue a class of Units
designated as Class A Units. As of the date hereof, 100 Class A Units are issued
and outstanding and held by the Initial Member.

 

Section 3.03 Authorization and Issuance of Class B Units. Subject to compliance
with Section 9.01(b), the Company is hereby authorized to issue a class of Units
designated as Class B Units. As of the date hereof, 2,642,159 Class B Units are
issued and outstanding and held by the Sellers as set forth on the Members
Schedule.

 

Section 3.04 Other Issuances. In addition to the Class A Units and the Class B
Units, the Company is hereby authorized, subject to compliance with Section
9.01(b), to authorize and issue or sell to any Person any new type, class or
series of Units not otherwise described in this Agreement, which Units may be
designated as classes or series of the Class A Units or Class B Units but having
different rights (collectively, “New Interests”). The Board is hereby
authorized, subject to Section 14.09, to amend this Agreement to reflect such
issuance and to fix the relative privileges, preferences, duties, liabilities,
obligations and rights of any such New Interests, including the number of such
New Interests to be issued, the preferences (with respect to Distributions, in
liquidation or otherwise) over any other Units and any contributions required in
connection therewith.

 

Section 3.05 Certification of Units. The Board in its sole discretion may, but
shall not be required to, issue certificates to the Members representing the
Units held by such Members. In the event that the Board shall issue certificates
representing Units in accordance with this Section 3.05, then in addition to any
other legend required by Applicable Law, all certificates representing issued
and outstanding Units shall bear a legend substantially in the following form:

 

THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE OPERATING AGREEMENT
OF THE COMPANY, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF
THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH OPERATING AGREEMENT.

 

10

 

 

THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES
LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE
UNDER SUCH ACT AND LAWS, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER.

 

Article IV
Members

 

Section 4.01 Admission of New Members.

 

(a) New Members may be admitted from time to time (i) in connection with an
issuance of Units by the Company, subject to compliance with the provisions of
Section 9.01(b), as applicable, and (ii) in connection with a Transfer of Units,
subject to compliance with the provisions of Article IX, and in either case,
following compliance with the provisions of Section 4.01(b).

 

(b) In order for any Person not already a Member of the Company to be admitted
as a Member, whether pursuant to an issuance or Transfer of Units, such Person
shall have executed and delivered to the Company a written undertaking
substantially in the form of the Joinder Agreement. Upon the amendment of the
Members Schedule by the Board and the satisfaction of any other applicable
conditions, including, if a condition, the receipt by the Company of payment for
the issuance of the applicable Units, such Person shall be admitted as a Member
and deemed listed as such on the books and records of the Company and thereupon
shall be issued his, her or its Units. The Board shall also adjust the Capital
Accounts of the Members as necessary in accordance with Section 5.03.

 

Section 4.02 No Personal Liability. Except as otherwise provided in the Nevada
Act, by Applicable Law or expressly in this Agreement, no Member will be
obligated personally for any debt, obligation or liability of the Company or
other Members, whether arising in contract, tort or otherwise, solely by reason
of being a Member.

 

Section 4.03 No Withdrawal. A Member shall not cease to be a Member as a result
of the Bankruptcy of such Member. So long as a Member continues to hold any
Units, such Member shall not have the ability to withdraw or resign as a Member
prior to the dissolution and winding up of the Company and any such withdrawal
or resignation or attempted withdrawal or resignation by a Member prior to the
dissolution or winding up of the Company shall be null and void. As soon as any
Person who is a Member ceases to hold any Units, such Person shall no longer be
a Member.

 

Section 4.04 Death. The death of any Member shall not cause the dissolution of
the Company. In such event the Company and its business shall be continued by
the remaining Member or Members and the Units owned by the deceased Member shall
automatically be Transferred to such deceased Member’s heirs; provided, that
within a reasonable time after such Transfer, the applicable heirs shall sign a
written undertaking substantially in the form of the Joinder Agreement.

 

11

 

 

Section 4.05 Voting. Except as otherwise provided by this Agreement or as
otherwise required by the Nevada Act or Applicable Law, (a) each Member shall be
entitled to one vote per Class A Unit on all matters upon which the Members have
the right to vote under this Agreement; and (b) the Class B Units shall not
entitle the holders thereof to vote on any matters required or permitted to be
voted on by the Members. For avoidance of doubt, the approval of Members holding
a majority of Class B Units is required (together the approval of a Members
holding a majority of Class A Units), is required in respect to a Member
decision to dissolve the Company, as provided in Section 12.01(a), and to amend
this Agreement, as provided in Section 14.09.

 

Section 4.06 Action By Members.

 

(a) No annual meeting of the Members is required to be held. Unless consent or
approval by all or a specifically named subset of the Members is required under
the terms of this Agreement (as set forth in Section 12.01(a), Section 14.09, or
otherwise), the Nevada Act or other Applicable Law, the consent or approval of a
Member or Members holding a majority of the Class A Units held by all Members
shall constitute an act by the Members hereunder.

 

(b) Any matter that is to be voted on, consented to or approved by Members (or a
specifically named subset of Members) may be taken without a meeting, without
prior notice and without a vote if consented to, in writing or by Electronic
Transmission, by a Member or Members holding not less than the minimum number
and class of Units that would be necessary to authorize or take such action
under this Agreement at a meeting at which all Members entitled to vote thereon
were present and voted. A record shall be maintained by the Board of each such
action taken by written consent of a Member or Members.

 

Section 4.07 Power of Members. The Members shall have the power to exercise any
and all rights or powers granted to Members pursuant to the express terms of
this Agreement and the Nevada Act. Except as otherwise specifically provided by
this Agreement or required by the Nevada Act, no Member, in its capacity as a
Member, shall have the power to act for or on behalf of, or to bind, the
Company.

 

Section 4.08 No Interest in Company Property. No real or personal property of
the Company shall be deemed to be owned by any Member individually, but shall be
owned by, and title shall be vested solely in, the Company. Without limiting the
foregoing, each Member hereby irrevocably waives during the term of the Company
any right that such Member may have to maintain any action for partition with
respect to the property of the Company.

 

Article V
Capital Contributions; Capital Accounts

 

Section 5.01 Initial Capital Contributions. The Members have made, on or prior
to the date hereof, Capital Contributions and, in exchange, the Company has
issued to each Member the number of Class A Units or Class B Units, as
applicable, set forth opposite such Member’s name on the Members Schedule.

 

Section 5.02 No Additional Capital Contributions. No Member shall be required to
make any additional Capital Contributions to the Company. Any future Capital
Contributions made by any Member shall only be made with the consent of the
Board. No Member shall be required to lend any funds to the Company and no
Member shall have any personal liability for the payment or repayment of any
Capital Contribution by or to any other Member.

 

Section 5.03 Maintenance of Capital Accounts. The Company shall establish and
maintain for each Member a separate capital account (a “Capital Account”) on its
books and records in accordance with this Section 5.03. Each Capital Account
shall be established and maintained in accordance with the following provisions:

 

12

 

 

(a) Each Member’s Capital Account shall be increased by the amount of (i) such
Member’s Capital Contributions, including such Member’s initial Capital
Contribution; (ii) any Net Income or other item of income or gain allocated to
such Member pursuant to Article VI; and (iii) any liabilities of the Company
that are assumed by such Member or secured by any property Distributed to such
Member.

 

(b) Each Member’s Capital Account shall be decreased by (i) the cash amount or
Book Value of any property Distributed to such Member pursuant to Article VII
and Section 12.03(c); (ii) the amount of any Net Loss or other item of loss or
deduction allocated to such Member pursuant to Article VI; and (iii) the amount
of any liabilities of such Member assumed by the Company or which are secured by
any property contributed by such Member to the Company.

 

Section 5.04 Succession Upon Transfer. In the event that any Units are
Transferred in accordance with the terms of this Agreement, the Transferee shall
succeed to the Capital Account of the Transferor to the extent it relates to the
Transferred Units and, subject to Section 6.04, shall receive allocations and
Distributions pursuant to Article VI, Article VII and Article XII in respect of
such Units.

 

Section 5.05 Negative Capital Accounts. In the event that any Member shall have
a deficit balance in his, her or its Capital Account, such Member shall have no
obligation, during the term of the Company or upon dissolution or liquidation
thereof, to restore such negative balance or make any Capital Contributions to
the Company by reason thereof, except as may be required by Applicable Law or in
respect of any negative balance resulting from a withdrawal of capital or
dissolution in contravention of this Agreement.

 

Section 5.06 No Withdrawal. No Member shall be entitled to withdraw any part of
his, her or its Capital Account or to receive any Distribution from the Company,
except as provided in this Agreement. No Member shall receive any interest,
salary or drawing with respect to his, her or its Capital Contributions or
Capital Account, except as otherwise provided in this Agreement. The Capital
Accounts are maintained for the sole purpose of allocating items of income,
gain, loss and deduction among the Members.

 

Section 5.07 Treatment of Loans From Members. Loans by any Member to the Company
shall not be considered Capital Contributions and shall not affect the
maintenance of such Member’s Capital Account, other than to the extent provided
in Section 5.03(a)(iii), if applicable.

 

Section 5.08 Modifications. The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts are intended to
comply with Section 1.704-1(b) of the Treasury Regulations and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
If the Board determines that it is prudent to modify the manner in which the
Capital Accounts, or any increases or decreases to the Capital Accounts, are
computed in order to comply with such Treasury Regulations, the Board may
authorize such modifications; provided that they are not likely to have a
material effect on the amounts distributed to any Member upon the dissolution of
the Company. The Board also shall (a) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Members and
the amount of capital reflected on the Company’s balance sheet, as computed for
book purposes, in accordance with Section 1.704-1(b)(2)(iv)(q) of the Treasury
Regulations and (b) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Section 1.704-1(b) of the Treasury Regulations.

 

13

 

 

Article VI
Allocations

 

Section 6.01 Allocation of Net Income and Net Loss. For each Fiscal Year (or
portion thereof), except as otherwise provided in this Agreement, Net Income and
Net Loss (and, to the extent necessary, individual items of income, gain, loss
or deduction) of the Company shall be allocated among the Members in a manner
such that, after giving effect to the special allocations set forth in Section
6.02, the Capital Account balance of each Member, immediately after making such
allocations, is, as nearly as possible, equal to (a) the Distributions that
would be made to such Member pursuant to Section 12.03(c) if the Company were
dissolved, its affairs wound up and its assets sold for cash equal to their Book
Value, all Company liabilities were satisfied (limited with respect to each
Nonrecourse Liability to the Book Value of the assets securing such liability),
and the net assets of the Company were Distributed, in accordance with Section
12.03(c), to the Members immediately after making such allocations, minus
(b) such Member’s share of Company Minimum Gain and Member Nonrecourse Debt
Minimum Gain, computed immediately prior to the hypothetical sale of assets.

 

Section 6.02 Regulatory and Special Allocations. Notwithstanding the provisions
of Section 6.01:

 

(a) If there is a net decrease in Company Minimum Gain (determined according to
Treasury Regulations Section 1.704-2(d)(1)) during any Fiscal Year, each Member
shall be specially allocated Net Income for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to such Member’s share of the net
decrease in Company Minimum Gain, determined in accordance with Treasury
Regulations Section 1.704-2(g). The items to be so allocated shall be determined
in accordance with Treasury Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 6.02(a) is intended to comply with the “minimum gain
chargeback” requirement in Treasury Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.

 

(b) Member Nonrecourse Deductions shall be allocated in the manner required by
Treasury Regulations Section 1.704-2(i). Except as otherwise provided in
Treasury Regulations Section 1.704-2(i)(4), if there is a net decrease in Member
Nonrecourse Debt Minimum Gain during any Fiscal Year, each Member that has a
share of such Member Nonrecourse Debt Minimum Gain shall be specially allocated
Net Income for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in
an amount equal to that Member’s share of the net decrease in Member Nonrecourse
Debt Minimum Gain. Items to be allocated pursuant to this paragraph shall be
determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 6.02(b) is intended to comply with the “minimum gain
chargeback” requirements in Treasury Regulations Section 1.704-2(i)(4) and shall
be interpreted consistently therewith.

 

(c) In the event any Member unexpectedly receives any adjustments, allocations
or Distributions described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), Net Income shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit created by such adjustments, allocations or
Distributions as quickly as possible. This Section 6.02(c) is intended to comply
with the qualified income offset requirement in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

(d) In the event any Member has a deficit Capital Account at the end of any
Fiscal Year that is in excess of the sum of the amount such Member is obligated
to restore pursuant to the penultimate sentences of Treasury Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially
allocated items of Company income and gain in the amount of such excess as
quickly as possible; provided, that an allocation pursuant to this Section
6.02(d) shall be made only if and to the extent that such Member would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Article VI have been made as if Section 6.02(c) and this
Section 6.02(d) were not in this Agreement.

 

14

 

 

(e) To the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Treasury Regulations Sections 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
such Member’s interest in the Company, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Members in accordance with
their interests in the Company in the event Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was
made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

(f) Losses allocated pursuant to Section 6.01 hereof shall not exceed the
maximum amount of Losses that can be allocated without causing any Member to
have an Adjusted Capital Account Deficit at the end of any Fiscal Year. In the
event some but not all of the Members would have Adjusted Capital Account
Deficits as a consequence of an allocation of Losses pursuant to Section 6.01
hereof, the limitation set forth in this Section 6.02(f) shall be applied on a
Member-by-Member basis and Losses not allocable to any Member as a result of
such limitation shall be allocated to the other Members in accordance with the
positive balances in such Members’ Capital Accounts so as to allocate the
maximum permissible Losses to each Member under Treasury Regulations Section
1.704-1(b)(2)(ii)(d).

 

(g) The allocations set forth in paragraphs (a), (b), (c), (d), (e) and (f)
above (the “Regulatory Allocations”) are intended to comply with certain
requirements of the Treasury Regulations under Code Section 704. Notwithstanding
any other provisions of this Article VI (other than the Regulatory Allocations),
the Regulatory Allocations shall be taken into account in allocating Net Income
and Net Losses among Members so that, to the extent possible, the net amount of
such allocations of Net Income and Net Losses and other items and the Regulatory
Allocations to each Member shall be equal to the net amount that would have been
allocated to such Member if the Regulatory Allocations had not occurred.

 

(h) The Company and the Members acknowledge that allocations like those
described in Proposed Treasury Regulations Section 1.704-1(b)(4)(xii)(c)
(“Forfeiture Allocations”) result from the allocations of Net Income and Net
Loss provided for in this Agreement. For the avoidance of doubt, the Company is
entitled to make Forfeiture Allocations and, once required by applicable final
or temporary guidance, allocations of Net Income and Net Loss will be made in
accordance with Proposed Treasury Regulations Section 1.704-1(b)(4)(xii)(c) or
any successor provision or guidance.

 

Section 6.03 Tax Allocations.

 

(a) Subject to Section 6.03(b) through Section 6.03(e), all income, gains,
losses and deductions of the Company shall be allocated for federal, state and
local income tax purposes among the Members in accordance with the allocation of
such income, gains, losses and deductions among the Members for computing their
Capital Accounts, except that if any such allocation for tax purposes is not
permitted by the Code or other Applicable Law, the Company’s subsequent income,
gains, losses and deductions shall be allocated among the Members for tax
purposes, to the extent permitted by the Code and other Applicable Law, so as to
reflect as nearly as possible the allocation set forth herein in computing their
Capital Accounts.

 

(b) Items of Company taxable income, gain, loss and deduction with respect to
any property contributed to the capital of the Company shall be allocated among
the Members in accordance with Code Section 704(c) and the traditional method of
Treasury Regulations Section 1.704-3(b), so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its Book Value.

 

15

 

 

(c) If the Book Value of any Company asset is adjusted pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) as provided in clause (c) of the
definition of Book Value, subsequent allocations of items of taxable income,
gain, loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c).

 

(d) Allocations of tax credit, tax credit recapture and any items related
thereto shall be allocated to the Members according to their interests in such
items as determined by the Board taking into account the principles of Treasury
Regulations Section 1.704-1(b)(4)(ii).

 

(e) The Company shall make allocations pursuant to this Section 6.03 in
accordance with the traditional method in accordance with Treasury Regulations
Section 1.704-3(b).

 

(f) Allocations pursuant to this Section 6.03 are solely for purposes of
federal, state and local taxes and shall not affect, or in any way be taken into
account in computing, any Member’s Capital Account or share of Net Income, Net
Losses, Distributions (other than Tax Advances) or other items pursuant to any
provisions of this Agreement.

 

Section 6.04 Allocations in Respect of Transferred Units. In the event of a
Transfer of Units during any Fiscal Year made in compliance with the provisions
of Article IX, Net Income, Net Losses and other items of income, gain, loss and
deduction of the Company attributable to such Units for such Fiscal Year shall
be determined using the interim closing of the books method.

 

Section 6.05 Curative Allocations. In the event that the Partnership
Representative determines, after consultation with counsel experienced in income
tax matters, that the allocation of any item of Company income, gain, loss or
deduction is not specified in this Article VI (an “Unallocated Item”), or that
the allocation of any item of Company income, gain, loss or deduction hereunder
is clearly inconsistent with the Members’ economic interests in the Company
(determined by reference to the general principles of Treasury Regulations
Section 1.704-1(b) and the factors set forth in Treasury Regulations
Section 1.704-1(b)(3)(ii)) (a “Misallocated Item”), then the Board may allocate
such Unallocated Items, or reallocate such Misallocated Items, to reflect such
economic interests; provided, that no such allocation will be made without the
prior written consent of each Member that would be adversely and
disproportionately affected thereby.

 

Article VII
Distributions

 

Section 7.01 General.

 

(a) Subject to Section 7.01(b), Section 7.02, and Section 7.03, the Board shall
have sole discretion regarding the amounts and timing of Distributions to
Members, including to decide to forego payment of Distributions in order to
provide for the retention and establishment of reserves of, or payment to third
parties of, such funds as it deems necessary with respect to the reasonable
business needs of the Company (which needs may include the payment or the making
of provision for the payment when due of the Company’s obligations, including,
but not limited to, present and anticipated debts and obligations, capital needs
and expenses, and reasonable reserves for contingencies).

 

(b) Notwithstanding any provision to the contrary contained in this Agreement,
the Company shall not make any Distribution to Members if such Distribution
would violate Section 86.343 of the Nevada Act or other Applicable Law.

 

16

 

 

Section 7.02 Priority of Distributions. After making all Distributions required
for a given Fiscal Year under Section 7.03 and subject to Section 12.03(c), if
applicable, all Distributions determined to be made by the Board pursuant to
Section 7.01 shall be made as follows:

 

(a) First, to the holders of Class A Units, pro rata in proportion to the
outstanding Class A Units, until the aggregate value of Distributions made
pursuant to this Section 7.02(a) in respect to outstanding Class A Units on a
per Class A Unit basis equals the Cash Investment per Class A Unit Amount.

 

(b) Second, to the holders of Class B Units, pro rata in proportion to the
outstanding Class B Units, until the aggregate value of Distributions made
pursuant to this Section 7.02(b) in respect to outstanding Class B Units on a
per Class B Unit basis equals the Property Investment per Class B Unit Amount.

 

(c) The balance, if any, pro rata in accordance with the Members’ respective
Total Percentage Interest.

 

Section 7.03 Tax Advances.

 

(a) Unless prohibited by Applicable Law, at least five (5) Business Days before
each date prescribed by the Code for a calendar-year corporation to pay
quarterly installments of estimated tax, the Company shall Distribute cash to
each Member in proportion to and to the extent of such Member’s Quarterly
Estimated Tax Amount for the applicable calendar quarter (each such
Distribution, a “Tax Advance”).

 

(b) If, at any time after the final Quarterly Estimated Tax Amount has been
Distributed pursuant to Section 7.03(a) with respect to any Fiscal Year, the
aggregate Tax Advances to any Member with respect to such Fiscal Year are less
than such Member’s Tax Amount for such Fiscal Year (a “Shortfall Amount”), the
Company shall Distribute cash in proportion to and to the extent of each
Member’s Shortfall Amount. The Company shall Distribute Shortfall Amounts with
respect to a Fiscal Year before the seventy-fifth (75th) day of the next
succeeding Fiscal Year; provided, that if the Company has made Distributions
pursuant to Section 7.02, the Board may apply such Distributions to reduce any
Shortfall Amount.

 

(c) If the aggregate Tax Advances made to any Member pursuant to this Section
7.03 for any Fiscal Year exceed such Member’s Tax Amount (an “Excess Amount”),
such Excess Amount shall reduce subsequent Tax Advances that would be made to
such Member pursuant to this Section 7.03, except to the extent taken into
account as an advance pursuant to Section 7.03(e).

 

(d) For the avoidance of doubt, any Distributions made pursuant to this Section
7.03 shall be made to the Members in each class on a pro rata basis in
accordance with the number of Units of such class held by each Member.

 

(e) Any Distributions made pursuant to this Section 7.03 shall be treated for
purposes of this Agreement as advances on Distributions pursuant to Section
7.02(c) and shall reduce, dollar-for-dollar, the amount otherwise Distributable
to such Member pursuant to Section 7.02(c).

 

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Section 7.04 Tax Withholding; Withholding Advances.

 

(a) Tax Withholding. If requested by the Board, each Member shall, if able to do
so, deliver to the Board: (i) an affidavit in form satisfactory to the Board
that the applicable Member (or its members, as the case may be) is not subject
to withholding under the provisions of any federal, state, local, foreign or
other Applicable Law; (ii) any certificate that the Board may reasonably request
with respect to any such laws; and/or (iii) any other form or instrument
reasonably requested by the Board relating to any Member’s status under such
laws. If a Member fails or is unable to deliver to the Board the affidavit
described in Section 7.04(a)(i), the Board may withhold amounts from such Member
in accordance with Section 7.04(b).

 

(b) Withholding Advances. The Company is hereby authorized at all times to make
payments (“Withholding Advances”) with respect to each Member in amounts
required to discharge any obligation of the Company (as determined by the
Partnership Representative based on the advice of legal or tax counsel to the
Company) to withhold or make payments to any federal, state, local or foreign
taxing authority (a “Taxing Authority”) with respect to any Distribution or
allocation by the Company of income or gain to such Member (including payments
made pursuant to Code Section 6225 (as amended) and allocable to a Member as
determined by the Partnership Representative in its sole discretion) and to
withhold the same from Distributions to such Member. Any funds withheld from a
Distribution by reason of this Section 7.04(b) shall nonetheless be deemed
Distributed to the Member in question for all purposes under this Agreement and,
at the option of the Board, shall be charged against the Member’s Capital
Account.

 

(c) Repayment of Withholding Advances. Any Withholding Advance made by the
Company to a Taxing Authority on behalf of a Member and not simultaneously
withheld from a Distribution to that Member shall, with interest thereon
accruing from the date of payment at a rate equal to the prime rate published in
The Wall Street Journal on the date of payment plus two percent (2.0%) per annum
(the “Company Interest Rate”): (i) be promptly repaid to the Company by the
Member on whose behalf the Withholding Advance was made (which repayment by the
Member shall not constitute a Capital Contribution, but shall credit the
Member’s Capital Account if the Board shall have initially charged the amount of
the Withholding Advance to the Capital Account); or (ii) with the consent of the
Board, be repaid by reducing the amount of the next succeeding Distribution or
Distributions to be made to such Member (which reduction amount shall be deemed
to have been Distributed to the Member, but which shall not further reduce the
Member’s Capital Account if the Board shall have initially charged the amount of
the Withholding Advance to the Capital Account). Interest shall cease to accrue
from the time the Member on whose behalf the Withholding Advance was made repays
such Withholding Advance (and all accrued interest) by either method of
repayment described above.

 

(d) Indemnification. Each Member hereby agrees to indemnify and hold harmless
the Company and the other Members from and against any liability with respect to
taxes, interest or penalties which may be asserted by reason of the Company’s
failure to deduct and withhold tax on amounts Distributable or allocable to such
Member. The provisions of this Section 7.04(d) and the obligations of a Member
pursuant to Section 7.04(c) shall survive the termination, dissolution,
liquidation and winding up of the Company and the withdrawal of such Member from
the Company or Transfer of its Units. The Company may pursue and enforce all
rights and remedies it may have against each Member under this Section 7.04,
including bringing a lawsuit to collect repayment with interest of any
Withholding Advances.

 

(e) Overwithholding. Neither the Company nor the Board shall be liable for any
excess taxes withheld in respect of any Distribution or allocation of income or
gain to a Member. In the event of an overwithholding, a Member’s sole recourse
shall be to apply for a refund from the appropriate Taxing Authority.

 

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Section 7.05 Distributions in Kind.

 

(a) The Board is hereby authorized, in its sole discretion, to make
Distributions to the Members in the form of securities or other property held by
the Company; provided, that Tax Advances shall only be made in cash. In any
non-cash Distribution, the securities or property so Distributed will be
Distributed among the Members in the same proportion and priority as cash equal
to the Fair Market Value of such securities or property as would be Distributed
among the Members pursuant to Section 7.02.

 

(b) Any Distribution of securities shall be subject to such conditions and
restrictions as the Board determines are required or advisable to ensure
compliance with Applicable Law. In furtherance of the foregoing, the Board may
require that the Members execute and deliver such documents as the Board may
deem necessary or appropriate to ensure compliance with all federal and state
securities laws that apply to such Distribution and any further Transfer of the
Distributed securities, and may appropriately legend the certificates that
represent such securities to reflect any restriction on Transfer with respect to
such laws.

 

Article VIII
Management

 

Section 8.01 Board. A board of managers of the Company (the “Board”) is hereby
established and shall be comprised of natural Persons (each such Person, a
“Manager”) who shall be appointed in accordance with the provisions of Section
8.02. The business and affairs of the Company shall be exclusively managed,
operated and controlled by or under the direction of the Board, and the Board
shall have, and is hereby granted and vested with, the full and complete power,
authority and discretion for, on behalf of and in the name of the Company, to
take such actions as it may in its sole discretion deem necessary or advisable
to carry out any and all of the objectives and purposes of the Company, subject
only to the terms of this Agreement. The Board shall have the right and
authority to manage the affairs of the Company and to make all decisions with
respect thereto.

 

Section 8.02 Board Composition; Vacancies.

 

(a) The Board shall initially consist of one (1) Manager. The number of persons
constituting the Board may be increased or decreased from time to time upon the
vote or written action of the Board. Each Manager shall serve until a successor
is appointed in accordance with the terms of this Agreement or his or her
earlier resignation, death or removal.

 

(b) Each Member agrees to vote all of his, her or its Units, whether now owned
or hereafter acquired or which such Member may be empowered to, from time to
time and at all times, in whatever manner shall be necessary to ensure that at
each annual or special meeting of the Members at which an election of Managers
is held or pursuant to any written consent of the Members, that number of
individuals designated by the Member(s) holding a majority of the Class A Units
are elected to the Board.

 

(c) In the event of the death, disability, retirement, resignation or removal of
a Manager, a successor Manager or Managers shall be appointed by the Member(s)
consistent with the provisions of Section 8.02(b).

 

(d) The Board shall maintain a schedule of all Managers with their respective
mailing addresses (the “Managers Schedule”) and shall update the Managers
Schedule upon the removal or replacement of any Manager in accordance with this
Section 8.02 or Section 8.03. A copy of the Managers Schedule as of the
execution of this Agreement is attached hereto as Schedule B.

 

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Section 8.03 Removal; Resignation.

 

(a) The Member(s) holding a majority of the Class A Units may remove any or all
of the Managers at any time and for any reason, with or without cause.

 

(b) A Manager may resign at any time from the Board by delivering his or her
written resignation to the Board. Any such resignation shall be effective upon
receipt thereof unless it is specified to be effective at some other time or
upon the occurrence of some other event. The Board’s acceptance of a resignation
shall not be necessary to make it effective.

 

Section 8.04 Meetings.

 

(a) Generally. The Board shall meet at such time and at such place as the Board
may designate. Meetings of the Board may be held either in person or by means of
telephone or video conference or other communications device that permits all
Managers participating in the meeting to hear each other, at the offices of the
Company or such other place (either within or outside the State of Nevada) as
may be determined from time to time by the Board. Written notice of each meeting
of the Board shall be given to each Manager at least five (5) Business Days
prior to each such meeting. Any Manager may waive such notice as to himself.

 

(b) Special Meetings. Special meetings of the Board shall be held on the call of
any Manager upon at least two (2) days’ written notice to the Managers, or upon
such shorter notice as may be approved by all the Managers. Any Manager may
waive such notice as to himself.

 

(c) Attendance and Waiver of Notice. Attendance of a Manager at any meeting
shall 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.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board need be specified in the notice or waiver of notice
of such meeting.

 

Section 8.05 Quorum; Manner of Acting.

 

(a) Quorum. A majority of the Managers serving on the Board shall constitute a
quorum for the transaction of business of the Board. At all times when the Board
is conducting business at a meeting of the Board, a quorum of the Board must be
present at such meeting. If a quorum shall not be present at any meeting of the
Board, then the Managers present at the meeting may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.

 

(b) Participation. Any Manager may participate in a meeting of the Board by
means of telephone or video conference or other communications device that
permits all Managers participating in the meeting to hear each other, and
participation in a meeting by such means shall constitute presence in person at
such meeting. A Manager may vote or be present at a meeting either in person or
by proxy, and such proxy may be granted in writing, by means of Electronic
Transmission or as otherwise permitted by Applicable Law.

 

(c) Binding Act. Each Manager shall have one (1) vote on all matters submitted
to the Board or any committee thereof. With respect to any matter before the
Board, the act of a majority of the Managers constituting a quorum shall be the
act of the Board.

 

20

 

 

Section 8.06 Action By Written Consent. Notwithstanding anything herein to the
contrary, any action of the Board (or any committee of the Board) may be taken
without a meeting if a written consent of a majority of the Managers on the
Board (or committee) shall approve such action. Such consent shall have the same
force and effect as a vote at a meeting where a quorum was present and may be
stated as such in any document or instrument filed with the Secretary of State
of Nevada.

 

Section 8.07 Compensation; No Employment.

 

(a) Each Manager shall be reimbursed for his or her reasonable out-of-pocket
expenses incurred in the performance of his or her duties as a Manager, pursuant
to such policies as are from time to time established by the Board. Nothing
contained in this Section 8.07 shall be construed to preclude any Manager from
serving the Company in any other capacity and receiving reasonable compensation
for such services.

 

(b) This Agreement does not, and is not intended to, confer upon any Manager any
rights with respect to continued employment by the Company, and nothing herein
should be construed to have created any employment agreement with any Manager.

 

Section 8.08 Officers. The Board may appoint individuals as officers of the
Company (the “Officers”) as it deems necessary or desirable to carry on the
business of the Company. The Officers shall have such titles and such powers and
perform such duties as shall be determined from time to time by the Board and
otherwise as shall customarily pertain to such offices. Any individual may hold
two or more offices of the Company. Each Officer shall hold office until his or
her successor is designated by the Board or until his or her earlier death,
resignation or removal. Any Officer may resign at any time upon written notice
to the Board. Any Officer may be removed by the Board (acting by majority vote
of all Managers other than the Officer being considered for removal, if
applicable) with or without cause at any time. A vacancy in any office occurring
because of death, resignation, removal or otherwise, may, but need not, be
filled by the Board. The officers of the Company as of the date of this
Agreement shall be those individuals set forth on Schedule C attached hereto.

 

Section 8.09 No Personal Liability. Except as otherwise provided in the Nevada
Act, by Applicable Law or expressly in this Agreement, no Manager will be
obligated personally for any debt, obligation or liability of the Company,
whether arising in contract, tort or otherwise, solely by reason of being a
Manager.

 

Article IX
Transfer

 

Section 9.01 General Restrictions on Transfer.

 

(a) Each Member acknowledges and agrees that such Member shall not Transfer any
Units except (i) in accordance with the procedures described in Section 9.02 or
Section 9.03, or (ii) with the prior written consent of the Board. Such written
consent may specify the rights and obligations the Transferee shall have,
including whether the Transferee is to be admitted as a Member. No Transfer of
Units to a Person not already a Member of the Company shall be deemed completed
until the requirements of Section 4.01(b) hereof have been satisfied.

 

(b) Notwithstanding any other provision of this Agreement, each Member agrees
that it will not, directly or indirectly, Transfer any of its Units, and the
Company agrees that it shall not issue any Units (i) except as permitted under
the Securities Act and other applicable federal or state securities or blue sky
laws, and then, with respect to a Transfer of Units, if requested by the
Company, only upon delivery to the Company of an opinion of counsel in form and
substance satisfactory to the Company to the effect that such Transfer may be
effected without registration under the Securities Act (provided, however, that
no such opinion shall be required in connection with a Transfer in accordance
with Section 9.02); (ii) if such Transfer or issuance would cause the Company to
be considered a “publicly traded partnership” under Section 7704(b) of the Code
within the meaning of Treasury Regulations Section 1.7704-1(h)(1)(ii), including
the look-through rule in Treasury Regulations Section 1.7704-1(h)(3); (iii) if
such Transfer or issuance would affect the Company’s existence or qualification
as a limited liability company under the Nevada Act; (iv) if such Transfer or
issuance would cause the Company to lose its status as a partnership for federal
income tax purposes; (v) if such Transfer or issuance would cause a termination
of the Company for federal income tax purposes; (vi) if such Transfer or
issuance would cause the Company to be required to register as an investment
company under the Investment Company Act of 1940, as amended; or (vii) if such
Transfer or issuance would cause the assets of the Company to be deemed “Plan
Assets” as defined under the Employee Retirement Income Security Act of 1974 or
its accompanying regulations or result in any “prohibited transaction”
thereunder involving the Company. In any event, the Board may refuse the
Transfer to any Person if such Transfer would have a material adverse effect on
the Company as a result of any regulatory or other restrictions imposed by any
Governmental Authority.

 

21

 

 

(c) Any Transfer or attempted Transfer of any Units in violation of this
Agreement shall be null and void, and no such Transfer shall be recorded on the
Company’s books and the purported Transferee in any such Transfer shall not be
treated (and the purported Transferor shall continue be treated) as the owner of
such Units for any purposes of this Agreement.

 

(d) For the avoidance of doubt, any Transfer of Units made in accordance with
the procedures described in Section 9.02 and purporting to be a sale, transfer,
assignment or other disposal of the entire Membership Interest represented by
such Units, inclusive of all the rights and benefits applicable to such
Membership Interest as described in the definition of the term “Membership
Interest,” shall be deemed a sale, transfer, assignment or other disposal of
such Membership Interest in its entirety as intended by the parties to such
Transfer, and shall not be deemed a sale, transfer, assignment or other disposal
of any less than all of the rights and benefits described in the definition of
the term “Membership Interest,” unless otherwise explicitly agreed to by the
parties to such Transfer.

 

Section 9.02 Drag-along Rights.

 

(a) Participation. If one or more Members holding a majority of all of the Class
A Units (such Member or Members, the “Dragging Member”), proposes to consummate,
in one transaction or a series of related transactions, a Change of Control at
any time after the second anniversary of the Effective Date (a “Drag-along
Sale”), the Dragging Member shall have the right, after delivering the
Drag-along Notice in accordance with Section 9.02(c) and subject to compliance
with Section 9.02(d), to require that each other Member (each, a “Drag-along
Member”) participate in such sale in the manner set forth in Section 9.02(b).

 

(b) Sale of Units. Subject to compliance with Section 9.02(d):

 

(i) If the Drag-along Sale is structured as a sale resulting in a majority of
the Class A Units of the Company being held by a Third Party Purchaser, then
each Drag-along Member shall sell, with respect to each class or series of Units
proposed by the Dragging Member to be included in the Drag-along Sale, the
number of Units of such class or series (with Class A Units and Class B Units
treated as one class for this purpose) equal to the product obtained by
multiplying (i) the number of applicable Units held by such Drag-along Member
(with Class A Units and Class B Units treated as one class for this purpose) by
(ii) a fraction (x) the numerator of which is equal to the number of applicable
Units that the Dragging Member proposes to sell in the Drag-along Sale (with
Class A Units and Class B Units treated as one class for this purpose) and (y)
the denominator of which is equal to the number of applicable Units held by the
Dragging Member at such time (with Class A Units and Class B Units treated as
one class for this purpose); and

 

22

 

 

(ii) If the Drag-along Sale is structured as a sale of all or substantially all
of the assets of the Company or as a merger, consolidation, recapitalization, or
reorganization of the Company or other transaction requiring the consent or
approval of the Members, then notwithstanding anything to the contrary in this
Agreement (including Section 4.05), each Drag-along Member entitled to vote
shall vote in favor of the transaction and otherwise consent to and raise no
objection to such transaction.

 

(iii) The Distribution of the aggregate consideration of any Drag-along Sale
shall be made in accordance with Section 12.03(c).

 

(c) Sale Notice. The Dragging Member shall exercise its rights pursuant to this
Section 9.02 by delivering a written notice (the “Drag-along Notice”) to the
Company and each Drag-along Member no later than fifteen (15) Business Days
prior to the closing date of such Drag-along Sale. The Drag-along Notice shall
make reference to the Dragging Member’s rights and obligations hereunder and
shall describe in reasonable detail: (i) the name of the person or entity to
whom such Units are proposed to be sold; (ii) the proposed date, time and
location of the closing of the sale; (iii) the number of each class or series of
Units to be sold by the Dragging Member, (iv) the proposed amount of
consideration for the Drag-along Sale and the other material terms and
conditions of the Drag-along Sale, including a description of any non-cash
consideration in sufficient detail to permit the valuation thereof and
including, if available, the purchase price per Unit of each applicable class or
series; and (v) a copy of any form of agreement proposed to be executed in
connection therewith.

 

(d) Conditions of Sale. The obligations of the Drag-along Members in respect of
a Drag-along Sale under this Section 9.02 are subject to the satisfaction of the
following conditions:

 

(i) the consideration to be received by each Drag-along Member shall be the same
form and amount of consideration to be received by the Dragging Member per Unit
of each applicable class or series (the Distribution of which shall be made in
accordance with Section 12.03(c)) and the terms and conditions of such sale
shall, except as otherwise provided in Section 9.02(d)(iii), be the same as
those upon which the Dragging Member sells its Units;

 

(ii) if the Dragging Member or any Drag-along Member is given an option as to
the form and amount of consideration to be received, the same option shall be
given to all Drag-along Members; and

 

(iii) each Drag-along Member shall execute the applicable purchase agreement, if
applicable, and make or provide the same representations, warranties, covenants,
indemnities and agreements as the Dragging Member makes or provides in
connection with the Drag-along Sale; provided, that each Drag-along Member shall
only be obligated to make individual representations and warranties with respect
to its title to and ownership of the applicable Units, authorization, execution
and delivery of relevant documents, enforceability of such documents against the
Drag-along Member, and other matters relating to such Drag-along Member, but not
with respect to any of the foregoing with respect to any other Members or their
Units; provided, further, that all representations, warranties, covenants and
indemnities shall be made by the Dragging Member and each Drag-along Member
severally and not jointly and any indemnification obligation of a Drag-along
Member shall be pro rata based on the consideration received by the Dragging
Member and each Drag-along Member, in each case in an amount not to exceed the
aggregate proceeds received by the Drag-along Member in connection with the
Drag-along Sale.

 

23

 

 

(e) Cooperation. Each Drag-along Member shall take all actions as may be
reasonably necessary to consummate the Drag-along Sale, including, without
limitation, entering into agreements and delivering certificates and
instruments, in each case, consistent with the agreements being entered into and
the certificates being delivered by the Dragging Member, but subject to Section
9.02(d)(iii).

 

(f) Expenses. The fees and expenses of the Dragging Member incurred in
connection with a Drag-along Sale and for the benefit of all Drag-along Members
(it being understood that costs incurred by or on behalf of a Dragging Member
for its sole benefit will not be considered to be for the benefit of all
Drag-along Members), to the extent not paid or reimbursed by the Company or the
Third Party Purchaser, shall be shared by the Dragging Member and all the
Drag-along Members on a pro rata basis, based on the consideration received by
each such Member; provided, that no Drag-along Member shall be obligated to make
any out-of-pocket expenditure prior to the consummation of the Drag-along Sale.

 

Section 9.03 Exchange of Class B Units. Notwithstanding anything otherwise to
the contrary in this Article IX, each Member holding Class B Units may Transfer
such Class B Units in Exchange Transactions pursuant to, and in accordance with,
the Exchange Agreement; provided, that such Exchange Transactions shall be
effected in compliance with reasonable policies that the Initial Member may
adopt or promulgate from time to time and advise the Members of in writing
(including policies requiring the use of designated administrators or brokers)
in its reasonable discretion; provided, further, that if such policies conflict
with the terms of the Exchange Agreement, the provisions of the Exchange
Agreement shall apply in lieu thereof to any Exchange Transaction to the extent
of such conflict.

 

Article X
Covenants

 

Section 10.01 Other Business Activities. The parties hereto expressly
acknowledge and agree that: (i) the Initial Member and each of its Affiliates
are permitted to have, and may presently or in the future have, investments or
other business relationships, ventures, agreements or arrangements with entities
engaged in the business of the Company, other than through the Company (an
“Other Business”); (ii) the Initial Member and each of its Affiliates have or
may develop a strategic relationship with businesses that are or may be
competitive with the Company; (iii) none of the Initial Member nor any of its
Affiliates will be prohibited by virtue of the Initial Member’s investment in
the Company from pursuing and engaging in any such activities; (iv) none of the
Initial Member nor any of its Affiliates will be obligated to inform the Company
or any other Member of any such opportunity, relationship or investment (a
“Company Opportunity”) or to present a Company Opportunity, and the Company
hereby renounces any interest in a Company Opportunity and any expectancy that a
Company Opportunity will be offered to it; (v) nothing contained herein shall
limit, prohibit or restrict any director, member or manager of the Initial
Member or any of their respective Affiliates from serving on the board of
directors or other governing body or committee of any Other Business; and
(vi) the other Members will not acquire, be provided with an option or
opportunity to acquire, or be entitled to any interest or participation in any
Other Business as a result of the participation therein of any of the Initial
Member or any of its Affiliates. The parties hereto expressly authorize and
consent to the involvement of the Initial Member and/or its Affiliates in any
Other Business. The parties hereto expressly agree and acknowledge that the
Board shall have the right to cause the Company to enter into any transaction or
contract with any Other Business; provided, that any transaction or contract
between the Company and such Other Business will be on terms no less favorable
to the Company than would be obtainable in a comparable arm’s-length
transaction. The parties hereto expressly waive, to the fullest extent permitted
by Applicable Law, any rights to assert any claim that such involvement breaches
any fiduciary or other duty or obligation owed to the Company or any Member or
to assert that such involvement constitutes a conflict of interest by such
Persons with respect to the Company or any Member.

 

24

 

 

Article XI
Records; Tax Matters

 

Section 11.01 Records and Access to Information. The Company shall maintain at
its principal office the books and records of the Company, which shall show a
true record of its costs and expenses incurred, sources and applications of
funds, charges made, credits made and received, and income derived in connection
with the operation of the Company’s business. Each Member shall have the right,
at the Member’s own expense, to inspect and copy such records upon reasonable
request during ordinary business hours. Except as provided in the immediately
preceding sentence and in Section 11.03, and notwithstanding any provision of
the Nevada Act, the Company shall maintain, and the Members shall have access
to, only such records as the Board determines to be appropriate.

 

Section 11.02 Tax Representative.

 

(a) The Initial Member shall be the “partnership representative” of the Company
within the meaning of Section 6223(a) of the Code (the “Partnership
Representative”). Further, Rory Cutaia shall be appointed as the “designated
individual” in the manner as described in Treasury Regulation Section
301.6223-1(b)(3)(ii).

 

(b) The Partnership Representative shall have the right to make on behalf of the
Company any and all elections and take any and all actions that are available to
be made or taken by the Partnership Representative or the Company under the Code
(including an election under Section 6221(b) or 6226(a) of the Code), and the
Members shall take such actions requested by the Partnership Representative
consistent with any such elections made and actions taken by the Partnership
Representative, including filing amended tax returns and paying any tax due in
accordance with Section 6225(c)(2) of the Code, it being understood that no such
amended tax return shall be filed in accordance with such section with respect
to the Company without the advance written consent of the Partnership
Representative in its sole discretion. The Partnership Representative shall have
the authority to amend this Agreement to make any changes in good faith
consultation with the Company’s tax accountants and tax counsel as are necessary
or appropriate: (i) to reduce any Company level assessment under Section 6226 of
the Code; (ii) to determine any apportionment of any tax; or (iii) to comply
with the Code and administrative, judicial or legislative interpretations
thereof or changes thereto.

 

(c) Each Member shall provide to the Partnership Representative such information
(or, if applicable, certify as to filing of initial or amended tax returns) as
is reasonably requested by the Partnership Representative to enable the
Partnership Representative (i) to reduce any Company level assessment under
Section 6226 of the Code, (ii) to determine the allocation of any item of
income, gain, loss, deduction or credit of any such Company level assessment
among the Members, in good faith consultation with the Company’s tax accountants
and tax counsel, (iii) to take any and all actions that are available to be made
or taken by the Partnership Representative or the Company under the Code, or
(iv) to comply with or be eligible to invoke any aspect of the Code in any other
respect.

 

(d) In the event the Company incurs any liability for taxes, interest or
penalties:

 

(i) The Partnership Representative may, or if such amounts are material, shall,
cause the Members (including any former Member) to whom such liability relates,
as determined by the Partnership Representative, in its sole good faith
discretion and after consulting with the Company’s and the affected Member’s tax
advisors, to pay, and each such Member hereby agrees to pay, such amount to the
Company, and such amount shall not be treated as a Capital Contribution; and

 

25

 

 

(ii) Any amount not paid by a Member (or former Member) within ten (10) days
following the receipt of the request to pay delivered by the Partnership
Representative shall be treated for purposes of this Agreement as a Withholding
Advance governed by Section 7.04(b) hereof.

 

(e) The obligations of each Member (or former Member) under this Section 11.02
shall survive the Transfer or redemption by such Member of its Units and the
termination of this Agreement or the dissolution of the Company.

 

(f) The Partnership Representative shall prepare or cause to be prepared all tax
returns required of the Company, which returns shall be reviewed in advance of
filing by a certified public accountant selected by the Members. The Members
shall file their individual or corporate returns in a manner consistent with the
Company’s tax and information returns.

 

(g) The Partnership Representative may, if it determines that the retention of
accountants or other professionals would be in the best interests of the
Company, retain such accountants or professionals to assist in any audits. The
Company shall indemnify and reimburse the Partnership Representative for all
expenses, including legal and accounting fees, claims, liabilities, losses and
damages to the extent borne by the Partnership Representative, incurred in
connection with any administrative or judicial proceeding with respect to any
audit of the Company’s tax returns. The taking of any action and the incurring
of any expense by the Partnership Representative in connection with any such
proceeding, except to the extent required by Applicable Law, is a matter in the
sole discretion of the Partnership Representative.

 

(h) The Partnership Representative may resign at any time. If the Initial Member
ceases to be the Partnership Representative for any reason, the holders of a
majority of the Class A Units shall appoint a new Partnership Representative.

 

Section 11.03 Member Tax Information. As soon as reasonably possible after the
end of each Fiscal Year, the Board or a designated Officer will cause to be
delivered to each Person who was a Member at any time during such Fiscal Year,
IRS Schedule K-1 to Form 1065 and such other information with respect to the
Company as may be necessary for the preparation of such Person’s federal, state
and local income tax returns for such Fiscal Year.

 

Section 11.04 Company Funds. All funds of the Company shall be deposited in its
name, or in such name as may be designated by the Board, in such checking,
savings or other accounts, or held in its name in the form of such other
investments as shall be designated by the Board. The funds of the Company shall
not be commingled with the funds of any other Person. All withdrawals of such
deposits or liquidations of such investments by the Company shall be made
exclusively upon the signature or signatures of such Officer or Officers as the
Board may designate.

 

Article XII
Dissolution and Liquidation

 

Section 12.01 Events of Dissolution. The Company shall be dissolved and is
affairs wound up only upon the occurrence of any of the following events:

 

(a) An election to dissolve the Company made by the Members holding a majority
of the Class A Units and of the Class B Units, voting separately by class;

 

26

 

 

(b) The sale, exchange, involuntary conversion, or other disposition or transfer
of (other than the grant of a security interest in, the grant of a pledge of or
the imposition of a lien on) all or substantially all the assets of the Company;
or

 

(c) The entry of a decree of judicial dissolution under Section 86-495 of the
Nevada Act.

 

Section 12.02 Effectiveness of Dissolution. Dissolution of the Company shall be
effective on the day on which the event described in Section 12.01 occurs, but
the Company shall not terminate until the winding up of the Company has been
completed, the assets of the Company have been distributed as provided in
Section 12.03 and the articles of dissolution shall have been filed as provided
in Section 12.04.

 

Section 12.03 Liquidation. If the Company is dissolved pursuant to Section
12.01, the Company shall be liquidated and its business and affairs wound up in
accordance with the Nevada Act and the following provisions:

 

(a) Liquidator. The Board, or, if the Board is unable to do so, a Person
selected by the holders of a majority of the Class A Units, shall act as
liquidator to wind up the Company (the “Liquidator”). The Liquidator shall have
full power and authority to sell, assign, and encumber any or all of the
Company’s assets and to wind up and liquidate the affairs of the Company in an
orderly and business-like manner.

 

(b) Accounting. As promptly as possible after dissolution and again after final
liquidation, the Liquidator shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company’s assets,
liabilities and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable.

 

(c) Distribution of Proceeds. The Liquidator shall liquidate the assets of the
Company and Distribute the proceeds of such liquidation in the following order
of priority, unless otherwise required by mandatory provisions of Applicable
Law:

 

(i) First, to the payment of all of the Company’s debts and liabilities to its
creditors (including Members, if applicable) and the expenses of liquidation
(including sales commissions incident to any sales of assets of the Company);

 

(ii) Second, to the establishment of and additions to reserves that are
determined by the Liquidator in its sole discretion to be reasonably necessary
for any contingent unforeseen liabilities or obligations of the Company; and

 

(iii) Third, to the Members in the same manner as Distributions are made under
Section 7.02.

 

(d) Discretion of Liquidator. Notwithstanding the provisions of Section 12.03(c)
that require the liquidation of the assets of the Company, but subject to the
order of priorities set forth in Section 12.03(c), if upon dissolution of the
Company the Liquidator determines that an immediate sale of part or all of the
Company’s assets would be impractical or could cause undue loss to the Members,
the Liquidator may defer the liquidation of any assets except those necessary to
satisfy Company liabilities and reserves, and may, in its absolute discretion,
Distribute to the Members, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 12.03(c), undivided interests in such
Company assets as the Liquidator deems not suitable for liquidation. Any such
Distribution in kind will be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable
and equitable and to any agreements governing the operating of such properties
at such time. For purposes of any such Distribution, any property to be
Distributed will be valued at its Fair Market Value.

 

27

 

 

Section 12.04 Articles of Dissolution. Upon completion of the Distribution of
the assets of the Company as provided in Section 12.03(c) hereof, the Company
shall be terminated and the Liquidator shall cause the filing of articles of
dissolution in the State of Nevada and the filing of any document required to
terminate all qualifications and registrations of the Company as a foreign
limited liability company in jurisdictions other than the State of Nevada and
shall take such other actions as may be necessary in connection therewith.

 

Section 12.05 Survival of Rights, Duties and Obligations. Dissolution,
liquidation, winding up or termination of the Company for any reason shall not
release any party from any Loss which at the time of such dissolution,
liquidation, winding up or termination already had accrued to any other party or
which thereafter may accrue in respect of any act or omission prior to such
dissolution, liquidation, winding up or termination. For the avoidance of doubt,
none of the foregoing shall replace, diminish or otherwise adversely affect any
Member’s right to indemnification pursuant to Section 13.03.

 

Section 12.06 Recourse for Claims. Each Member shall look solely to the assets
of the Company for all Distributions with respect to the Company, such Member’s
Capital Account, and such Member’s share of Net Income, Net Loss and other items
of income, gain, loss and deduction, and shall have no recourse therefor (upon
dissolution or otherwise) against the Board, the Liquidator or any other Member.

 

Article XIII
Exculpation and Indemnification

 

Section 13.01 Exculpation of Covered Persons.

 

(a) Covered Persons. As used herein, the term “Covered Person” shall mean
(i) the Initial Member, (iii) each officer, director, shareholder, partner,
member, manager, controlling Affiliate, employee, agent or representative of the
Initial Member, and each of their respective controlling Affiliates, (v) each
Manager or Officer of the Company, and (vi) such other employee, agent or
representative of the Company that is specifically designated by the Board as a
Covered Person.

 

(b) Standard of Care. No Covered Person shall be liable to the Company or any
other Covered Person for any loss, damage or claim incurred by reason of any
action taken or omitted to be taken by such Covered Person in his, her or its
capacity as a Covered Person, so long as such action or omission does not
constitute fraud or willful misconduct by such Covered Person.

 

(c) Good Faith Reliance. A Covered Person shall be fully protected in relying in
good faith upon the records of the Company and upon such information, opinions,
reports or statements (including financial statements and information, opinions,
reports or statements as to the value or amount of the assets, liabilities, Net
Income or Net Losses of the Company or any facts pertinent to the existence and
amount of assets from which Distributions might properly be paid) of the
following Persons or groups: (i) one or more Officers or employees of the
Company; (ii) any attorney, independent accountant, appraiser or other expert or
professional employed or engaged by or on behalf of the Company; or (iii) any
other Person selected in good faith by or on behalf of the Company, in each case
as to matters that such relying Person reasonably believes to be within such
other Person’s professional or expert competence.

 

28

 

 

Section 13.02 Liabilities and Duties of Managers. In lieu of any duty (including
any fiduciary duty) imposed on the Managers, by the Nevada Act or otherwise at
law or in equity, the sole duty of each Manager in connection with managing the
business and affairs of the Company shall be to comply with the terms of this
Agreement, and no Manager shall have or incur any liability to the Company or to
any Member in connection with managing the business and affairs of the Company,
except for (a) liability for breach of this Agreement and (b) liabilities that
Applicable Law does not permit this Agreement to eliminate.

 

Section 13.03 Indemnification.

 

(a) Indemnification. To the fullest extent permitted by the Nevada Act, as the
same now exists or may hereafter be amended, substituted or replaced (but, in
the case of any such amendment, substitution or replacement only to the extent
that such amendment, substitution or replacement permits the Company to provide
broader indemnification rights than the Nevada Act permitted the Company to
provide prior to such amendment, substitution or replacement), the Company shall
indemnify, hold harmless, defend, pay and reimburse any Covered Person against
any and all losses, claims, damages, judgments, fines or liabilities, including
reasonable legal fees or other expenses incurred in investigating or defending
against such losses, claims, damages, judgments, fines or liabilities, and any
amounts expended in settlement of any claims (collectively, “Losses”) to which
such Covered Person may become subject by reason of (i) any act or omission or
alleged act or omission performed or omitted to be performed on behalf of the
Company, any Member or any direct or indirect Subsidiary of the foregoing in
connection with the business of the Company; or (ii) the fact that such Covered
Person is or was acting in connection with the business of the Company as a
partner, member, stockholder, controlling Affiliate, manager, director, officer,
employee or agent of the Company, any Member, or any of their respective
controlling Affiliates, or that such Covered Person is or was serving at the
request of the Company as a partner, member, manager, director, officer,
employee or agent of any Person including the Company; provided, that the
indemnification obligations in this Section 13.03(a) shall not apply to the
portion of any Losses that results from a breach of this Agreement or to any
liability that Applicable Law does not permit this Agreement to eliminate.

 

(b) Reimbursement. The Company shall promptly reimburse (and/or advance to the
extent reasonably required) each Covered Person for reasonable legal or other
expenses (as incurred) of such Covered Person in connection with investigating,
preparing to defend or defending any claim, lawsuit or other proceeding relating
to any Losses for which such Covered Person may be indemnified pursuant to this
Section 13.03; provided, that if it is finally judicially determined that such
Covered Person is not entitled to the indemnification provided by this Section
13.03, then such Covered Person shall promptly reimburse the Company for any
reimbursed or advanced expenses.

 

(c) Entitlement to Indemnity. The indemnification provided by this Section 13.03
shall not be deemed exclusive of any other rights to indemnification to which
those seeking indemnification may be entitled under any agreement or otherwise.
The provisions of this Section 13.03 shall continue to afford protection to each
Covered Person regardless of whether such Covered Person remains in the position
or capacity pursuant to which such Covered Person became entitled to
indemnification under this Section 13.03 and shall inure to the benefit of the
executors, administrators, legatees and distributees of such Covered Person.

 

(d) Insurance. To the extent available on commercially reasonable terms, the
Company shall purchase, at its expense, insurance to cover Losses covered by the
foregoing indemnification provisions and to otherwise cover Losses for any
breach or alleged breach by any Covered Person of such Covered Person’s duties
in such amount and with such deductibles as the Board may determine; provided,
that the failure to obtain such insurance shall not affect the right to
indemnification of any Covered Person under the indemnification provisions
contained herein, including the right to be reimbursed or advanced expenses or
otherwise indemnified for Losses hereunder. If any Covered Person recovers any
amounts in respect of any Losses from any insurance coverage, then such Covered
Person shall, to the extent that such recovery is duplicative, reimburse the
Company for any amounts previously paid to such Covered Person by the Company in
respect of such Losses.

 

29

 

 

(e) Funding of Indemnification Obligation. Notwithstanding anything contained
herein to the contrary, any indemnity by the Company relating to the matters
covered in this Section 13.03 shall be provided out of and to the extent of
Company assets only, and no Member (unless such Member otherwise agrees in
writing) shall have personal liability on account thereof or shall be required
to make additional Capital Contributions to help satisfy such indemnity by the
Company.

 

(f) Savings Clause. If this Section 13.03 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 each Covered Person
pursuant to this Section 13.03 to the fullest extent permitted by any applicable
portion of this Section 13.03 that shall not have been invalidated and to the
fullest extent permitted by Applicable Law.

 

(g) Amendment. The provisions of this Section 13.03 shall be a contract between
the Company, on the one hand, and each Covered Person who served in such
capacity at any time while this Section 13.03 is in effect, on the other hand,
pursuant to which the Company and each such Covered Person intend to be legally
bound. No amendment, modification or repeal of this Section 13.03 that adversely
affects the rights of a Covered Person to indemnification for Losses incurred or
relating to a state of facts existing prior to such amendment, modification or
repeal shall apply in such a way as to eliminate or reduce such Covered Person’s
entitlement to indemnification for such Losses without the Covered Person’s
prior written consent.

 

Section 13.04 Survival. The provisions of this Article XIII shall survive the
dissolution, liquidation, winding up and termination of the Company.

 

Article XIV
Miscellaneous

 

Section 14.01 Expenses. Except as otherwise expressly provided herein, all costs
and expenses, including fees and disbursements of counsel, financial advisors
and accountants, incurred in connection with the preparation and execution of
this Agreement, or any amendment or waiver hereof, and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.

 

Section 14.02 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, the Company and each Member hereby agree, at
the request of the Company or any other Member, to execute and deliver such
additional documents, instruments, conveyances and assurances and to take such
further actions as may be required to carry out the provisions hereof and give
effect to the transactions contemplated hereby.

 

Section 14.03 Notices. All notices, requests, consents, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been given: (a) when delivered by hand (with written confirmation of
receipt); (b) when received by the addressee if sent by a nationally recognized
overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF
document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after normal
business hours of the recipient; or (d) on the third (3rd) day after the date
mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications must be sent to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 14.03):

 

30

 

 

If to the Company: Verb Acquisition Co., LLC   c/o Verb Technology Company, Inc.
  2210 Newport Boulevard, Suite 200   Newport Beach, California 92663   E-mail:
rory@verb.tech   Attention: Rory Cutaia

 

If to a Member, to such Member’s respective mailing address as set forth on the
Members Schedule.

 

Section 14.04 Headings. The headings in this Agreement are inserted for
convenience of reference only and are in no way intended to describe, interpret,
define, or limit the scope, extent or intent of this Agreement or any provision
of this Agreement.

 

Section 14.05 Severability. If any term or provision of this Agreement is held
to be invalid, illegal or unenforceable under Applicable Law in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other term or provision of this Agreement or invalidate or render
unenforceable such term or provision in any other jurisdiction. Upon such
determination that any term or other provision is invalid, illegal or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.

 

Section 14.06 Entire Agreement. This Agreement, together with the Articles of
Organization and all related Exhibits and Schedules, constitutes the sole and
entire agreement of the parties to this Agreement with respect to the subject
matter contained herein and therein, and supersedes all prior and
contemporaneous understandings, agreements, representations and warranties, both
written and oral, with respect to such subject matter.

 

Section 14.07 Successors and Assigns. Subject to the restrictions on Transfers
set forth herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.

 

Section 14.08 No Third-party Beneficiaries. Except as provided in Article XIII,
which shall be for the benefit of and enforceable by Covered Persons as
described therein, this Agreement is for the sole benefit of the parties hereto
(and their respective heirs, executors, administrators, successors and assigns)
and nothing herein, express or implied, is intended to or shall confer upon any
other Person, including any creditor of the Company, any legal or equitable
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.

 

Section 14.09 Amendment. No provision of this Agreement may be amended or
modified except by an instrument in writing executed by the Company and the
Members holding a majority of the Class A Units and a majority of the Class B
Units, voting separately by class. Any such written amendment or modification
will be binding upon the Company and each Member. Notwithstanding the foregoing,
amendments to the Members Schedule following any new issuance, redemption,
repurchase or Transfer of Units in accordance with this Agreement may be made by
the Board without the consent of or execution by the Members.

 

31

 

 

Section 14.10 Waiver. No waiver by any party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and signed by the
party so waiving. No waiver by any party shall operate or be construed as a
waiver in respect of any failure, breach or default not expressly identified by
such written waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or delay in
exercising, any right, remedy, power or privilege arising from this Agreement
shall operate or be construed as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. For the avoidance of doubt, nothing contained in this
Section 14.10 shall diminish any of the explicit and implicit waivers described
in this Agreement.

 

Section 14.11 Governing Law. All issues and questions concerning the
application, construction, validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Nevada, without giving effect to any choice or conflict of
law provision or rule (whether of the State of Nevada or any other jurisdiction)
that would cause the application of laws of any jurisdiction other than those of
the State of Nevada.

 

Section 14.12 Submission to Jurisdiction. The parties hereby agree that any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby, whether in contract, tort or otherwise, shall be brought in
any state or federal court of competent jurisdiction in the state of nevada.
Each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient form. Service of process, summons, notice or other document by
registered mail to the address set forth in Section 14.03 shall be effective
service of process for any suit, action or other proceeding brought in any such
court.

 

Section 14.13 Waiver of Jury Trial. Each party, for itself and its affiliates,
hereby irrevocably and unconditionally waives to the fullest extent permitted by
applicable law all right to trial by jury in any suit, action or proceeding
SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY MATTER ARISING OUT OF OR IN
CONNECTION with, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, whether
IN contract, tort or otherwise.

 

Section 14.14 Equitable Remedies. Each party hereto acknowledges that a breach
or threatened breach by such party of any of its obligations under this
Agreement would give rise to irreparable harm to the other parties, for which
monetary damages would not be an adequate remedy, and hereby agrees that in the
event of a breach or a threatened breach by such party of any such obligations,
each of the other parties hereto shall, in addition to any and all other rights
and remedies that may be available to them in respect of such breach, be
entitled to seek equitable relief, including a temporary restraining order, an
injunction, specific performance and any other relief that may be available from
a court of competent jurisdiction (without any requirement to post bond).

 

32

 

 

Section 14.15 Remedies Cumulative. The rights and remedies under this Agreement
are cumulative and are in addition to and not in substitution for any other
rights and remedies available at law or in equity or otherwise, except to the
extent expressly provided in Section 13.02 to the contrary.

 

Section 14.16 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Agreement delivered by
facsimile, e-mail or other means of Electronic Transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Agreement.

 

[Signature page Follows]

 

33

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

  COMPANY:       VERB ACQUISITION CO., LLC               By: /s/ Rory Cutaia  
Name: Rory Cutaia   Title: President and CEO

 

  MEMBERS:       VERB TECHNOLOGY COMPANY, INC.         By: /s/ Rory Cutaia    
Rory Cutaia, President and CEO

 

  CORVUS INTERNATIONAL, INC.         By: /s/ Steve Deverall     Steve Deverall,
President

 

  THE H2 MANAGEMENT CORP         By: /s/ Brook Harker     Brook Harker

 

  ECLIPSE ENTERPRISES AND MANAGEMENT, INC.         By: /s/ James Norton    
James Norton, President

 

  KESTREL MANAGEMENT, INC.         By: /s/ Jordan Erickson     Jordan Erickson,
President           /s/ Ben Mosbarger     Ben Mosbarger           /s/ Jason
Etherington     Jason Etherington           /s/ Nate Babbel     Nate Babbel

 

[Signature page to Amended and Restated Operating Agreement]

 

 

 

 

Exhibit A

FORM OF JOINDER AGREEMENT

 

JOINDER AGREEMENT

 

Reference is hereby made to the Amended and Restated Operating Agreement, dated
September 4, 2020 (as amended from time to time, the “Operating Agreement”),
among Verb Acquisition Co., LLC, a Nevada limited liability company (the
“Company”), and the existing members of the Company. Pursuant to and in
accordance with Section 4.01(b) of the Operating Agreement, the undersigned
hereby acknowledges that it has received and reviewed a complete copy of the
Operating Agreement and agrees that upon execution of this Joinder, such Person
shall become a party to the Operating Agreement and shall be fully bound by, and
subject to, all of the covenants, terms and conditions of the Operating
Agreement as though an original party thereto and shall be deemed, and is hereby
admitted as, a Member for all purposes thereof and entitled to all the rights
incidental thereto.

 

Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Operating Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Joinder Agreement as
of [DATE].

 

  [NEW MEMBER]               By:     Name:     Title:  

 

 

 

 

Schedule A

 

Members Schedule

 

Member Name and Address  Total Initial Capital Contribution   Class A Units  
Class B Units  Verb Technology Company, Inc.
2210 Newport Boulevard, Suite 200
Newport Beach, CA 92663  $1,982,250    100    -  Corvus International Inc.
1278 Knittles Kove
Lehi, UT 84043  $708,750    -    585,197  The H2 Management Corp
217 W. Apple Ave.
Saratoga Springs, UT 84045  $708,750    -    585,197  Eclipse Enterprises and
Management, Inc.
1996 W. Nutwood Ct.
Lehi, UT 84043  $708,750    -    585,197  Kestrel Management, Inc.
1702 Range Road
Saratoga Springs, UT 84045  $708,750    -    585,197  Ben Mosbarger
46 W. Apache Rd.
Saratoga Springs, UT 84045  $121,666    -    100,457  Jason Etherington
4473 Wayment Way
Taylor, UT 84401  $121,667    -    100,457  Nate Babbel
2804 W. Shady Bend Lane
Lehi, UT 84043  $121,667    -    100,457  Total:  $5,182,250    100  
 2,642,159 

 

 

 

 

Schedule b

 

MANAGERS Schedule

 

Name

Rory Cutaia

2210 Newport Boulevard, Suite 200

Newport Beach, CA 92663

 

 

 

 

SCHEDULE C

 

Current officers

 

Name   title Rory Cutaia   President, CEO, CFO and Secretary