Exhibit 10.34

 

OPERATING AGREEMENT

 

OF

 

AMINO NUTRITIONALS, LLC

 

Dated as of November 6, 2015

 

 

 

 

TABLE OF CONTENTS

 

          Page ARTICLE I   DEFINITIONS   Section 1.1 Definitions 1 Section 1.2
Construction 5       ARTICLE II   ORGANIZATION       Section 2.1 Formation 5
Section 2.2 Name 5 Section 2.3 Registered Office; Registered Agent; Principal
Office; Other Offices 5 Section 2.4 Purposes 6 Section 2.5 Powers 6 Section 2.6
Power of Attorney 6 Section 2.7 Term 7 Section 2.8 Title to Company Assets 7    
  ARTICLE III   MEMBERS; CERTIFICATES; RECORD HOLDERS; TRANSFERS OF UNITS      
Section 3.1 Members 7 Section 3.2 Rights of a Member 8 Section 3.3 Certificates
8 Section 3.4 Record Holders  9 Section 3.5 Registration and Transfer of Units
 9 Section 3.6 Restrictions on Transfer  10 Section 3.7 Citizenship Requirements
 11 Section 3.8 Splits and Combinations  11 Section 3.9 Redemption of Units  11
      ARTICLE IV   DESIGNATION OF CLASS A UNITS; CAPITAL CONTRIBUTIONS      
Section 4.1 Designation of Class A Units  12 Section 4.2 Issuances of Additional
Units  12 Section 4.3 Preemptive Rights  13 Section 4.4 Fully Paid and
Non-Assessable Nature of Units  13 Section 4.5 Purchases of Units  13

 

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ARTICLE V   ALLOCATIONS AND DISTRIBUTIONS       Section 5.1 Capital Accounts  13
Section 5.2 Allocations  13 Section 5.3 Distributions to Record Holders  14    
  Section 5.4 Withholding on Distributions  14 Section 5.5 Return of
Distributions  14 Section 5.6 Restriction on Distributions  15 Section 5.7
Limitation on Authority While Loan Outstanding  15       ARTICLE VI   MANAGEMENT
AND OPERATION OF BUSINESS       Section 6.1 Power and Authority of Board of
Directors  16 Section 6.2 Number, Qualification and Term of Office of Directors
 17 Section 6.3 Election of Directors  17 Section 6.4 Removal  17 Section 6.5
Resignations  17 Section 6.6 Vacancies  17 Section 6.7 Chairman of Meetings  17
Section 6.8 Place of Meetings  17 Section 6.9 Meetings; Notice  18 Section 6.10
Action Without Meeting  18 Section 6.11 Conference Telephone Meetings  18
Section 6.12 Quorum  18 Section 6.13 Committees  18 Section 6.14 Alternate
Members of Committees  18 Section 6.15 Remuneration  18 Section 6.16
Exculpation, Indemnification, Advances and Insurance  18 Section 6.17 Resolution
of Conflicts of Interest; Standards of Conduct and Modification of Duties  22
Section 6.18 Certificate of Formation  23 Section 6.19 Officers  23 Section 6.20
Duties of Officers and Directors  23 Section 6.21 Reliance by Third Parties  24
Section 6.22 Manager  24       ARTICLE VII   BOOKS, RECORDS, ACCOUNTING AND
REPORTS       Section 7.1 Records and Accounting  24 Section 7.2 Fiscal Year  25
Section 7.3 Reports  25       ARTICLE VIII   TAX MATTERS       Section 8.1 Tax
Returns and Information  25 Section 8.2 Tax Elections  25 Section 8.3 Tax
Controversies  25 Section 8.4 Withholding  25 Section 8.5 Election to be Treated
as a Corporation  26

 

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ARTICLE IX   DISSOLUTION AND LIQUIDATION       Section 9.1 Dissolution  26
Section 9.2 Liquidator  26 Section 9.3 Liquidation  26 Section 9.4 Cancellation
of Certificate of Formation  27 Section 9.5 Return of Contributions  27 Section
9.6 Waiver of Partition  27 Section 9.7 Capital Account Restoration  27      
ARTICLE X   AMENDMENT OF AGREEMENT       Section 10.1 General  27 Section 10.2
Specified Amendments  27 Section 10.3 Amendments to be Adopted Solely by the
Board of Directors  28       ARTICLE XI   MERGER, CONSOLIDATION OR CONVERSION  
    Section 11.1 Authority  29 Section 11.2 Procedure for Merger, Consolidation,
Conversion or Other Business Combination  29 Section 11.3 Approval by Members of
Merger, Consolidation, Conversion or Other Business Combination  30 Section 11.4
Certificate of Merger, Conversion or Consolidation  30 Section 11.5 Amendment of
Operating Agreement  31       ARTICLE XII   MEMBER MEETINGS       Section 12.1
Member Meetings  31 Section 12.2 Notice of Meetings of Members  31 Section 12.3
Record Date  31 Section 12.4 Adjournment  31 Section 12.5 Waiver of Notice;
Approval of Meeting  32 Section 12.6 Quorum; Required Vote for Member Action;
Voting for Directors  32 Section 12.7 Conduct of a Meeting  32 Section 12.8
Action Without a Meeting  32 Section 12.9 Voting and Other Rights  33 Section
12.10 Proxies and Voting  33       ARTICLE XIII   GENERAL PROVISIONS      
Section 13.1 Addresses and Notices  34 Section 13.2 Further Action  34 Section
13.3 Binding Effect  34 Section 13.4 Integration  34 Section 13.5 Creditors  34
Section 13.6 Waiver  34 Section 13.7 Counterparts  34 Section 13.8 Applicable
Law  35 Section 13.9 Invalidity of Provisions  35 Section 13.10 Consent of
Members  35 Section 13.11 Facsimile Signatures  35

 

EXHIBITS

 

EXHIBIT A – FORM OF CLASS A UNIT CERTIFICATE

 

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OPERATING AGREEMENT

OF

AMINO NUTRITIONALS, LLC

 

This OPERATING AGREEMENT OF AMINO NUTRITIONALS, LLC, is dated as of November 6,
2015. Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in Section 1.1.

 

WHEREAS, the Company was formed under the California Uniform Limited Liability
Company Act pursuant to a Certificate of Formation filed with the Secretary of
State of the State of California on November 6, 2015.

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definitions.

 

The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.

 

“Additional Member” means a Person admitted as a member of the Company in
accordance with Article IV as a result of an issuance of Units to such Person by
the Company.

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries Controls, is Controlled by or is
under common Control with the Person in question; provided, that no Investment
Fund or Portfolio Company shall be an “Affiliate” of the Company or of any
Subsidiary thereof.

 

“Agreement” means this Operating Agreement of the Company, as it may be amended,
supplemented or restated from time to time.

 

“Beneficial Owner” means a Person who is deemed to beneficially own a Unit, as
determined pursuant to Section 13 of the Exchange Act.

 

“Board of Directors” has the meaning assigned to such term in Section 6.1(a).

 

“Business Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the State of California shall not be regarded as a Business Day.

 

“California Act” means the California Uniform Limited Liability Company Act, as
amended, supplemented or restated from time to time, and any successor to such
statute.

 

“Capital Account” has the meaning assigned to such term in Section 5.1.

 

“Capital Contribution” means any cash or cash equivalents or the fair market
value (as determined by the Company) of any property or other asset, in such
form as may be permitted by the California Act, that a Member contributes to the
Company pursuant to this Agreement.

 

“Carrying Value” means, with respect to any Company asset, the asset’s adjusted
basis for U.S. federal income tax purposes, except that the initial carrying
value of assets contributed to the Company shall be their respective gross fair
market values on the date of contribution as determined by the Company, and the
Carrying Values of all Company assets shall be adjusted to equal their
respective fair market values, in accordance with the rules set forth in United
States Treasury Regulation Section 1.704-1(b)(2)(iv)(f), except as otherwise
provided herein, as of: (a) the date of the acquisition of any additional Unit
by any new or existing Member in exchange for more than a de minimis Capital
Contribution; (b) the date of the distribution of more than a de minimis amount
of Company assets to a Member; (c) the date a Unit is relinquished to the
Company; or (d) any other date specified in the United States Treasury
Regulations; provided, however, that adjustments pursuant to clauses (a), (b),
(c) and (d) above shall be made only if such adjustments are deemed necessary or
appropriate by the Company to reflect the relative economic interests of the
Members. In the case of any asset that has a Carrying Value that differs from
its adjusted tax basis, Carrying Value shall be adjusted by the amount of
depreciation calculated for purposes of the definition of “Net Income (Loss)”
rather than the amount of depreciation determined for U.S. federal income tax
purposes, and depreciation shall be calculated by reference to Carrying Value
rather than tax basis once Carrying Value differs from tax basis.

 

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“CCC” means the California Corporations Code for the State of California, as
amended, supplemented or restated from time to time, and any successor to such
statute.

 

“Certificate” means a certificate (a) substantially in the form of Exhibit A to
this Agreement, (b) in global form in accordance with the rules and regulations
of any depositary or (c) in such other form as may be adopted by the Board of
Directors, issued by the Company evidencing ownership of one or more Units.

 

“Certificate of Formation” means the Certificate of Formation of the Company
filed with the Secretary of State of the State of California as referenced in
Section 6.18, as such Certificate of Formation may be amended, supplemented or
restated from time to time.

 

“Chairman” has the meaning assigned to such term in Section 6.7.

 

“Citizenship Certification” means a properly completed certificate in such form
as may be specified by the Company by which a Member certifies that it (and if
it is a nominee holding for the account of another Person, that to the best of
its knowledge such other Person) is an Eligible Citizen.

 

“Class A Holder” means any entity or entities that is or becomes the Record
Holder of one or more Class A Units.

 

“Class A Unit” means a Unit in the Company that is a common unit designated as a
“Class A Unit.”

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended and in effect
from time to time. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
any successor law.

 

“Company” means Amino Nutritionals, LLC, a California limited liability company,
and any successors thereto.

 

“Company Group” means the Company and each Subsidiary, if any, of the Company.

 

“Control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

 

“Current Market Price” means, with respect to any Unit of any class or series as
of any date of determination, the fair market value of a Unit as determined by
an independent appraiser selected in good faith by the Holders of a majority in
interest of the Units then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.

 

“Director” means a member of the Board of Directors of the Company.

 

“electronic transmission” has the meaning assigned to such term in Section
12.10(a).

 

“Eligible Citizen” means a Person qualified to own interests in real property in
jurisdictions in which any Group Member does business or proposes to do business
from time to time and whose status as a Member the Company determines in its
sole discretion does not or would not subject such Group Member to a significant
risk of cancellation or forfeiture of any of its properties or any interest
therein.

 

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended, supplemented or restated from time to time, and any successor to such
statute, and the rules and regulations promulgated thereunder.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended,
supplemented or restated from time to time, and any successor to such statute,
and the rules and regulations promulgated thereunder.

 

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“Fiscal Year” has the meaning assigned to such term in Section 7.2.

 

“Governmental Entity” means any court, administrative agency, regulatory body,
commission or other governmental authority, board, bureau or instrumentality,
domestic or foreign and any subdivision thereof.

 

“Group Member” means a member of the Company Group.

 

“Indemnified Person” means (a) any Person who is or was a Director, Officer or
Tax Matters Partner of the Company, (b) any Person who is or was an officer,
director, member, manager, partner, Tax Matters Partner, agent, fiduciary or
trustee of any Group Member or any Affiliate thereof, (c) any Person who is or
was serving at the request of the Company or an Affiliate as an officer,
director, member, manager, partner, Tax Matters Partner, agent, fiduciary or
trustee of another Person (including any Subsidiary); provided, that a Person
shall not be an Indemnified Person by reason of providing, on a fee-for-services
basis, trustee, fiduciary or custodial services, (d) the Manager, and (e) any
Person the Board of Directors in its sole discretion designates as an
“Indemnified Person” for purposes of this Agreement.

 

“Law” means any federal, state, local, non-U.S. or other law (including common
law), statute, code, ordinance, rule or regulation or other requirement enacted,
promulgated, issued, entered or put into effect by a Governmental Entity.

 

“Liquidator” means one or more Persons selected by the Board of Directors to
perform the functions described in Section 9.2 as liquidating trustee of the
Company within the meaning of the California Act.

 

"Loan" that certain loan contemplated to be made by YTR Capital, LLC (or any
other entity under the control of Shlomo Rechnitz) as evidenced by a promissory
note and/or ancillary loan documents (collectively, the "Loan Documents").

 

"Lender" YTR Capital, LLC (or any other entity under the control of Shlomo
Rechnitz

 

“Manager” means Kim Giffoni, the Company’s Chairman and President, or any
successor Manager designated or elected pursuant to Section 6.22(b).

 

“Member” means each Record Holder of a Unit, including, unless the context
otherwise requires, each Substitute Member and each Additional Member, in each
case in such Person’s capacity as a member of the Company.

 

“Merger Agreement” has the meaning assigned to such term in Section 11.1.

 

“Net Income (Loss)” means for any fiscal period the taxable income or loss of
the Company for such period as determined in accordance with the accounting
method used by the Company for U.S. federal income tax purposes with the
following adjustments: (a) any income of the Company that is exempt from U.S.
federal income taxation and not otherwise taken into account in computing Net
Income (Loss) shall be added to such taxable income or loss; (b) if the Carrying
Value of any asset differs from its adjusted tax basis for U.S. federal income
tax purposes, any depreciation, amortization or gain resulting from a
disposition of such asset shall be calculated with reference to such Carrying
Value; (c) upon an adjustment to the Carrying Value of any asset, pursuant to
the definition of Carrying Value, the amount of the adjustment shall be included
as gain or loss in computing such taxable income or loss; and (d) any
expenditures of the Company not deductible in computing taxable income or loss,
not properly capitalizable and not otherwise taken into account in computing Net
Income (Loss) pursuant to this definition shall be treated as deductible items.

 

“Officers” has the meaning assigned to such term in Section 6.19(a).

 

“Outside Director” means any Director who is not an employee of the Company, any
Subsidiary of the Company or any of their respective Affiliates Controlled by
the Principals.

 

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“Outstanding” means, with respect to any Unit, a Unit that is issued by the
Company and reflected as outstanding on the Company’s books and records as of
the date of determination.

 

“Percentage Interest” means, as of any date of determination, as to any Units,
the quotient obtained by dividing (x) the number of such Units by (y) the total
number of all Outstanding Units.

 

“Person” means any individual, corporation, firm, partnership, joint venture,
limited liability company, estate, trust, business association, organization,
Governmental Entity or other entity.

 

“Plan of Conversion” has the meaning assigned to such term in Section 11.1.

 

“Preferred Units” means a class of Units that entitles the Record Holders
thereof to a preference or priority over the Record Holders of any other class
of Units in (a) the right to share profits or losses or items thereof, (b) the
right to share in Company distributions or (c) rights upon dissolution or
liquidation of the Company.

 

“President” means the president of the Company appointed by the Board of
Directors in accordance with Section 6.19.

 

“Principal” means any individual who may from time to time be designated by the
Board of Directors as a Principal of the Company, in each case until his or her
death, disability, resignation or removal by the Board of Directors. The
Principal as of the date of this Agreement is Kim Giffoni.

 

“Quarter” means, unless the context requires otherwise, a fiscal quarter.

 

“Record Date” means the date established by the Company for determining (a) the
identity of the Record Holders entitled to notice of, or to vote at, any meeting
of Members or entitled to vote by ballot or give approval of Company action in
writing without a meeting or entitled to exercise rights in respect of any
lawful action of Members or (b) the identity of Record Holders entitled to
receive any report or distribution or to participate in any offer.

 

“Record Holder” means (a) with respect to any Class A Unit, the Person in whose
name such Class A Unit is registered on the books of the Transfer Agent as of
the close of business on a particular Business Day, and (b) with respect to any
Unit of any other class or series, the Person in whose name such Unit is
registered on the books that the Company has caused to be kept as of the close
of business on such Business Day.

 

“Redeemable Units” means any Units for which a redemption notice has been given,
and has not been withdrawn, pursuant to Section 3.9.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended, supplemented
or restated from time to time, and any successor to such statute, and the rules
and regulations promulgated thereunder.

 

“Securities Exchange” means an exchange registered with the SEC under Section
6(a) of the Exchange Act or any successor thereto and any other securities
exchange (whether or not registered with the SEC under Section 6(a) of the
Exchange Act) that the Board of Directors in its sole discretion designates as a
Securities Exchange for purposes of this Agreement.

 

“Secretary” means the secretary of the Company appointed by the Board of
Directors in accordance with Section 6.19.

 

“Similar Law” means any state, local, non-U.S. or other laws or regulations that
would cause the underlying assets of the Company to be treated as assets of an
investing entity by virtue of its investment (or any beneficial interest) in the
Company and thereby subject the Company, the Directors or the Manager to laws or
regulations that are similar to the fiduciary responsibility or prohibited
transaction provisions contained in Title I of ERISA or Section 4975 of the
Code.

 

“Subsidiary” means, with respect to any Person, as of any date of determination,
any other Person as to which such Person owns or otherwise controls, directly or
indirectly, more than 50% of the voting shares or other similar interests of
such Person or holds a sole general partner interest or managing member or
similar interest in such Person; provided, that no Investment Fund or Portfolio
Company shall be a “Subsidiary” of the Company or any Subsidiary thereof.

 

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“Substitute Member” means a Person who is admitted as a Member of the Company
pursuant to Section 3.5(e) as a result of a transfer of Units to such Person.

 

“Surviving Business Entity” has the meaning assigned to such term in Section
11.2(b).

 

“Tax Matters Partner” has the meaning assigned to such term in the Code.

 

“transfer” has the meaning assigned to such term in Section 3.5(a).

 

“Transfer Agent” means, with respect to any class or series of Units, the bank,
trust company or other Person (including the Company or one of its Affiliates)
appointed from time to time by the Company to act as registrar and transfer
agent for such class or series; provided, that if no Transfer Agent is
specifically designated for a class or series of Units, the Company shall act in
such capacity for such class or series.

 

“Unit” means a unit issued by the Company representing a limited liability
company interest in the Company, including the right of the Record Holder of
such Unit to any and all benefits to which a Record Holder may be entitled as
provided in this Agreement, together with the obligation of such Record Holder
to comply with all the terms and provisions of this Agreement. Units may be
common units or Preferred Units, and may be issued in different classes or
series.

 

“Unit Designation” has the meaning assigned to such term in Section 4.2(b).

 

“U.S. GAAP” means United States generally accepted accounting principles
consistently applied.

 

“Voting Units” means the Class A Units and Units of any other class or series
issued after the date of this Agreement that entitle the Record Holder thereof
to vote on any matter submitted for consent or approval of Members under this
Agreement.

 

Section 1.2 Construction. Unless the context requires otherwise: (a) any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa; (b) references to “Articles” and “Sections” refer to
articles and sections of this Agreement; (c) the term “include” or “includes”
means includes, without limitation, and “including” means including, without
limitation; (d) the term “or” means, inclusively, and/or; and (e) the terms
“herein,” “hereof” and “hereunder” (and terms of similar import) are references
to this Agreement in its entirety, and not to any particular provision.

 

ARTICLE II

ORGANIZATION

 

Section 2.1 Formation. The Company has been formed as a limited liability
company pursuant to the provisions of the California Act. Except as expressly
provided to the contrary in this Agreement, the rights, duties (including
fiduciary duties), liabilities and obligations of the Members and the
administration, dissolution and termination of the Company shall be governed by
the California Act. All Units shall constitute personal property of the owner
thereof for all purposes, and a Member has no interest in specific Company
property.

 

Section 2.2 Name. The name of the Company shall be “Amino Nutritionals, LLC”.
The Company’s business may be conducted under any other name or names, as
determined by the Board of Directors. The words “Limited Liability Company,”
“LLC” or similar words or letters shall be included in the Company’s name where
necessary for the purpose of complying with the laws of any jurisdiction that so
requires. The Board of Directors may change the name of the Company at any time
and from time to time by filing an amendment to the Certificate of Formation
(and upon such filing, this Agreement shall be deemed automatically amended to
change the name of the Company) and shall notify the Members of such change in
the next regular communication to the Members.

 

Section 2.3 Registered Office; Registered Agent; Principal Office; Other
Offices. Unless and until changed by the Board of Directors by filing an
amendment to the Certificate of Formation (and upon such filing, this Agreement
shall be deemed automatically amended to change the registered office and
registered agent of the Company), the registered office of the Company in the
State of California shall be located at 2980 Beverly Glen Circle, Suite 100, Los
Angeles, California 90077, and the registered agent for service of process on
the Company in the State of California at such registered office shall be Kim
Giffoni. The principal office of the Company shall be located at2980 Beverly
Glen Circle, Suite 100, Los Angeles, California 90077, or such other place as
the Board of Directors may from time to time designate. The Company may maintain
offices at such other place or places within or outside the State of California
as the Board of Directors determines to be necessary or appropriate.

 

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Section 2.4 Purposes. The purposes of the Company shall be to (a) promote,
conduct or engage in, directly or indirectly, any business, purpose or activity
that lawfully may be conducted by a limited liability company organized pursuant
to the California Act, (b) acquire, hold and dispose of interests in any
corporation, partnership, joint venture, limited liability company or other
entity and, in connection therewith, to exercise all of the rights and powers
conferred upon the Company with respect to its interests therein, and (c)
conduct any and all activities related or incidental to the foregoing purposes.

 

Section 2.5 Powers. The Company shall be empowered to do any and all acts and
things necessary and appropriate for the furtherance and accomplishment of the
purposes described in Section 2.4 and for the protection and benefit of the
Company.

 

Section 2.6 Power of Attorney. Each Member hereby constitutes and appoints the
Company and, if a Liquidator shall have been selected pursuant to Section 9.2,
the Liquidator (and any successor to the Liquidator by merger, transfer,
assignment, election or otherwise) and each of their respective authorized
officers and attorneys-in-fact, as the case may be, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power
and authority in his name, place and stead, to:

 

(a) execute, swear to, acknowledge, deliver, file and record in the appropriate
public offices:

 

(i) all certificates, documents and other instruments (including this Agreement
and the Certificate of Formation and all amendments or restatements hereof or
thereof) that the Board of Directors or the Liquidator determines to be
necessary or appropriate to form, qualify or continue the existence or
qualification of the Company as a limited liability company in the State of
California and in all other jurisdictions in which the Company may conduct
business or own property;

 

(ii) all certificates, documents and other instruments that the Board of
Directors or the Liquidator determines to be necessary or appropriate to
reflect, in accordance with its terms, any amendment, change, modification or
restatement of this Agreement;

 

(iii) all certificates, documents and other instruments (including conveyances
and a certificate of cancellation) that the Board of Directors or the Liquidator
determines to be necessary or appropriate to reflect the dissolution,
liquidation and termination of the Company pursuant to the terms of this
Agreement;

 

(iv) all certificates, documents and other instruments (including this Agreement
and the Certificate of Formation and all amendments and restatements hereof or
thereof) relating to the admission, resignation, removal or substitution of any
Member pursuant to, or other events described in, this Agreement;

 

(v) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or series
of Units issued pursuant to Section 4.5; and

 

(vi) all certificates, documents and other instruments (including agreements and
a certificate of merger, conversion or consolidation or similar certificates)
relating to a merger, conversion or consolidation of the Company pursuant to
Article XI; and

 

(b) execute, swear to, acknowledge, deliver, file and record all ballots,
consents, approvals, waivers, certificates, documents and other instruments that
the Board of Directors or the Liquidator determines to be necessary or
appropriate to (i) make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the Members
hereunder or is consistent with the terms of this Agreement or (ii) effectuate
the terms or intent of this Agreement; provided, that when required by Section
10.2 or any other provision of this Agreement that establishes a percentage of
the voting power of all Outstanding Voting Units of any class or series required
to take any action, the Company or the Liquidator may exercise the power of
attorney made in this Section 2.6(b) only after the necessary vote, consent,
approval, agreement or other action of the Members or of the Members of such
class or series, as applicable.

 

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Nothing contained in this Section 2.6 shall be construed as authorizing the
Company, the Board of Directors or the Liquidator to amend, change or modify
this Agreement except in accordance with Article X or as may be otherwise
expressly provided for in this Agreement. The foregoing power of attorney is
hereby declared to be irrevocable and a power coupled with an interest, and it
shall survive and, to the maximum extent permitted by Law, not be affected by
the subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Member and the transfer of all or any portion
of such Member’s Units and shall extend to such Member’s heirs, successors,
assigns and personal representatives. Each such Member hereby agrees to be bound
by any representation made by the Company or the Liquidator, acting in good
faith pursuant to such power of attorney, and each such Member, to the maximum
extent permitted by Law, hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the Company or the
Liquidator, taken in good faith under such power of attorney in accordance with
this Section 2.6. Each Member shall execute and deliver to the Company or the
Liquidator, within 15 days after receipt of the request therefor, such further
designations, powers of attorney and other instruments as the Company or the
Liquidator determines to be necessary or appropriate to effectuate this
Agreement and the purposes of the Company.

 

Section 2.7 Term. The Company’s term commenced upon the filing of the
Certificate of Formation in accordance with the California Act and shall
continue, unless and until it is dissolved in accordance with the provisions of
Article IX. The existence of the Company as a separate legal entity shall
continue until the cancellation of the Certificate of Formation as provided in
the California Act.

 

Section 2.8 Title to Company Assets. Title to Company assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Company as an entity, and no Member, Director or Officer,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof. Title to any or all of the Company assets may be
held in the name of the Company, one or more of its Affiliates, or one or more
nominees, as the Board of Directors may determine. All Company assets shall be
recorded as the property of the Company in its books and records, irrespective
of the name in which record title to such Company assets is held.

 

ARTICLE III

MEMBERS; CERTIFICATES; RECORD HOLDERS; TRANSFERS OF UNITS

 

Section 3.1 Members.

 

(a) Upon the execution of this Agreement, each Person who is a member of the
Company shall become bound by the terms of this Agreement when such Person
purchases or otherwise lawfully acquires a Unit and becomes the Record Holder of
such Unit, with or without execution of this Agreement. A Person may become a
Record Holder without the consent or approval of any of the Members. A Person
may not become a Member without acquiring a Unit.

 

(b) The name and mailing address of each Member shall be listed on the books and
records of the Company maintained for such purpose by the Company or the
Transfer Agent. The Company shall update the books and records from time to time
as necessary to reflect accurately the information contained therein (or shall
cause the Transfer Agent to do so, as applicable).

 

(c) Except as otherwise provided in the California Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and the
Members shall not be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Member of the Company.

 

(d) Subject to Articles XI and XIII, and except as provided in Sections 3.6, 3.7
and 3.9, Members may not be expelled from or removed as members of the Company.
Members shall not have any right to resign from the Company; provided, that when
a transferee of a Member’s Unit becomes a Record Holder of such Unit, such
transferring Member shall cease to be a member of the Company solely with
respect to the Unit so transferred.

 

7

 

 

(e) Except to the extent expressly provided in this Agreement (including any
Unit Designation): (i) no Member shall be entitled to the withdrawal or return
of its Capital Contribution, except to the extent, if any, that distributions
made pursuant to this Agreement or upon dissolution of the Company may be
considered as such by Law and then only to the extent provided for in this
Agreement; (ii) no Member shall have priority over any other Member either as to
the return of Capital Contributions or as to profits, losses or distributions;
(iii) no interest shall be paid by the Company on Capital Contributions; and
(iv) no Member, in its capacity as such, shall participate in the operation or
management of the Company’s business, transact any business in the Company’s
name or have the power to sign documents for or otherwise bind the Company.

 

(f) Any Member shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Company, including
business interests and activities in direct competition with the Company Group,
and none of the same shall constitute a breach of this Agreement or any duty
(including fiduciary duties) otherwise existing at law, in equity or otherwise
to any Group Member or Member; provided, that this Section 3.1(f) shall not
excuse a breach of any provision of this Agreement binding upon a Person, or
limit or otherwise modify any duties (including fiduciary duties) owed by a
Person at law, in equity or otherwise (including by contract) to the Company or
its Affiliates, in each case arising other than from such Person’s capacity as a
Member. Neither the Company nor any of the other Members shall have any rights
by virtue of this Agreement in any such business interests or activities of any
Member.

 

Section 3.2 Rights of a Member.

 

(a) In addition to other rights provided by this Agreement or by applicable Law,
and except as limited by Section 3.2(b), each Member shall have the right, for a
purpose reasonably related to such Member’s interest as a Member, upon
reasonable written demand stating the purpose of such demand and at such
Member’s own expense:

 

(i) promptly after their becoming available, to obtain a copy of the Company’s
U.S. federal, state and local income tax returns for any of the six years
preceding such Member’s written demand, provided that such Member was a Member
during any part of such year; and

 

(ii) to obtain a copy of this Agreement and the Certificate of Formation and all
amendments thereto, together with a copy of the executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate of Formation and all
amendments thereto have been executed.

 

(b) The Company may keep confidential from the Members, for such period of time
as the Company determines in its sole discretion, (i) any information that the
Company reasonably believes to be in the nature of trade secrets or (ii) other
information the disclosure of which the Company believes (A) is not in the best
interests of the Company Group, (B) could damage the Company Group or its
business or (C) that any Group Member is required by Law or by agreement with
any third party to keep confidential (other than agreements with Affiliates of
the Company the primary purpose of which is to circumvent the obligations set
forth in this Section 3.2).

 

Section 3.3 Certificates.

 

(a) Upon the Company’s issuance of Units of any class or series to any Person,
the Company may, in its discretion, issue or cause to be issued one or more
Certificates in the name of such Person evidencing the Units being so issued.
Any Certificates shall be executed on behalf of the Company by any two Officers.
In the event that a Unit is to be evidenced by a Certificate, no such
Certificate shall be valid for any purpose until it has been countersigned by
and registered on the books of the Transfer Agent. If any Officer or Transfer
Agent who shall have signed or whose facsimile signature shall have been placed
upon any such Certificate shall have ceased to be such Officer or Transfer Agent
before such Certificate is issued by the Company, such Certificate may
nevertheless be issued by the Company with the same effect as if such Person
were such Officer or Transfer Agent at the date of issue. Certificates for any
class or series of Units shall be uniquely numbered and shall be entered on the
books and records of the Company as they are issued and shall exhibit the Record
Holder’s name and number and type of Units.

 

(b) If any mutilated Certificate is surrendered to the Transfer Agent, the
appropriate Officers on behalf of the Company shall execute, and the Transfer
Agent shall countersign and deliver in exchange therefor, a new Certificate
evidencing the same number and class or series of Units as the Certificate so
surrendered. The appropriate Officers on behalf of the Company shall execute,
and the Transfer Agent shall countersign and deliver, a new Certificate in place
of any Certificate previously issued if the Record Holder of the Units evidenced
by the Certificate: (i) makes proof by affidavit, in form and substance
satisfactory to the Company, that a previously issued Certificate has been lost,
destroyed or stolen; (ii) requests the issuance of a new Certificate before the
Company has notice that the Certificate has been acquired by a purchaser for
value in good faith and without notice of an adverse claim; (iii) if requested
by the Company, delivers to the Company a bond, in form and substance
satisfactory to the Company, with surety or sureties and with fixed or open
penalty as the Company may direct, to indemnify the Company and the Transfer
Agent against any claim that may be made on account of the alleged loss,
destruction or theft of the Certificate; and (iv) satisfies any other reasonable
requirements imposed by the Company. If a transfer of Units evidenced by a lost,
stolen or destroyed Certificate is registered before the Transfer Agent receives
notification in writing from the Record Holder regarding such loss, destruction
or theft, the Record Holder shall be precluded from making any claim against the
Company or the Transfer Agent for such transfer or for a new Certificate. As a
condition to the issuance of any new Certificate under this Section 3.3(b), the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Transfer Agent) reasonably
connected therewith.

 

8

 

 

(c) The Company may, in its sole discretion, issue one or more uncertificated
classes or series of Units and may, with respect to any class or series of Units
(unless otherwise provided in the applicable Unit Designation), issue
Certificates with respect to some Units of such class or series and issue other
Units of such class or series on an uncertificated basis.

 

Section 3.4 Record Holders. The Company shall be entitled to recognize the
Record Holder as the owner with respect to any Unit and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such Unit
on the part of any other Person, regardless of whether the Company shall have
actual or other notice thereof, including in connection with any distribution
pursuant to Section 5.3 or 9.3 or the exercise of any voting or other rights
pursuant to Section 12.9, except as otherwise provided by Law or any applicable
rule, regulation, guideline or requirement of any Securities Exchange on which
such Units are listed for trading. Without limiting the foregoing, when a Person
(such as a broker, dealer, bank, trust company or clearing corporation or an
agent of any of the foregoing) is acting as nominee, agent or in some other
representative capacity for another Person in acquiring or holding Units, as
between the Company, on the one hand, and such other Person, on the other, such
representative Person shall be deemed the Record Holder of such Unit.

 

Section 3.5 Registration and Transfer of Units.

 

(a) The term “transfer,” when used in this Agreement with respect to a Unit,
shall be deemed to refer to a transaction by which the Record Holder of a Unit
assigns such Unit to another Person, and includes a sale, assignment, gift,
exchange or any other disposition by Law or otherwise, including any transfer
upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.

 

(b) No Unit shall be transferred, in whole or in part, except in accordance with
this Article III. To the fullest extent permitted by Law, any transfer or
purported transfer of a Unit not made in accordance with this Article III,
including any transfer in violation of Section 3.6, shall be null and void.

 

(c) The Company shall keep or cause to be kept on behalf of the Company a
register which, subject to such reasonable regulations as the Board of Directors
may prescribe and subject to Section 3.5(d), will provide for the registration
and transfer of Units. The Transfer Agent is hereby appointed registrar and
transfer agent for the purpose of registration of Class A Units and transfers of
such Class A Units as herein provided. In the absence of manifest error, the
register kept by or on behalf of the Company shall be conclusive as to the
identity of the holders of Units. With respect to certificated Units issued by
the Company, if any, upon surrender of a Certificate for registration of
transfer of any Units evidenced by such Certificate, the Company shall deliver,
and in the case of certificated Class A Units, the Transfer Agent shall
countersign and deliver, in the name of the Record Holder or the designated
transferee or transferees, to the extent and as required pursuant to the Record
Holder’s instructions, one or more new Certificates evidencing the same
aggregate number and type of Units as were evidenced by the Certificate so
surrendered. In the case of any transfer of Units permitted by this Agreement, a
transferor shall provide the address and other contact information for each such
transferee as contemplated by Section 13.1.

 

9

 

 

(d) The Company shall not recognize any purported transfer of Units until the
transfer is registered on the books of the Transfer Agent; provided, that in the
event that any Units are represented by Certificates, notwithstanding Section
5.3 or the registration of the transfer of such certificated Units pursuant to
this Section 3.5(d), no distributions shall be paid in respect of any such
transferred certificated Units until the Certificates evidencing such Units are
surrendered to the Transfer Agent. No charge shall be imposed by the Company for
such transfer; provided, that as a condition to the issuance of any new
Certificate or the registration of any transfer, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed with respect thereto.

 

(e) By acceptance of the transfer of any Unit in accordance with this Article
III or the issuance of any Unit in accordance with this Agreement (including in
a merger, consolidation or other business combination pursuant to Article XI),
each transferee of a Unit, including any nominee holder or agent or
representative acquiring such Unit for the account of another Person, (i) shall
become the Record Holder of the Unit so transferred or issued, (ii) shall be
admitted to the Company as a Substitute Member or Additional Member with respect
to the Unit so transferred or issued to such transferee or other recipient when
any such transfer or admission is reflected in the books and records of the
Company, with or without execution of this Agreement, (iii) shall become bound
by the terms of, and shall be deemed to have agreed to be bound by, this
Agreement, with or without execution of this Agreement, (iv) represents that the
transferee or other recipient has the capacity, power and authority to enter
into this Agreement, (v) grants the powers of attorney as specified herein, and
(vi) makes the consents, acknowledgements and waivers contained in this
Agreement. Neither the transfer of any Unit nor the admission of any new Member
shall constitute an amendment to this Agreement.

 

(f) No transfer of a Unit shall entitle the transferee to share in the profits
and losses, to receive distributions, to receive allocations of income, gain,
loss, deduction or credit or any similar item or to any other rights to which
the transferor was entitled until the transferee becomes a Member pursuant to
Section 3.5(e).

 

(g) Subject to (i) the foregoing provisions of this Section 3.5, (ii) Section
3.4, (iii) Sections 3.6 and 3.7, (iv) with respect to any series or class of
Units, the provisions of any Unit Designation or amendment to this Agreement,
(v) any contractual provisions binding on any Member and (vi) provisions of
applicable Law, including the Securities Act, Units shall be freely
transferable.

 

Section 3.6 Restrictions on Transfer.

 

(a) Notwithstanding the other provisions of this Article III, no transfer of any
Units shall be made if such purported transfer would:

 

(i) violate applicable law, including the then-applicable U.S. federal or state
securities laws or rules and regulations of the SEC, any state securities
commission or any other Governmental Entity with jurisdiction over such
transfer;

 

(ii) terminate the existence or qualification of the Company under the laws of
any jurisdiction;

 

(iii) cause the Company to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for U.S. federal income tax purposes (to
the extent not already so treated or taxed); or

 

(iv) require the Company to be subject to the registration requirements of the
Securities Exchange Act of 1934.

 

(b) The Board of Directors may impose additional restrictions on the transfer of
Units if it receives advice of counsel acceptable to the Board of Directors (who
may be regular counsel to the Company or its Affiliates) that such restrictions
are necessary or advisable to avoid a significant risk of (i) the Company
becoming taxable as a corporation or otherwise becoming taxable as an entity for
U.S. federal income tax purposes or (ii) the Company being subject to the
registration requirements of the Securities Exchange Act of 1934. The Board of
Directors may impose such restrictions by amending this Agreement without the
approval of the Members.

 

(c) To the fullest extent permitted by Law, any transfer in violation of this
Section 3.6 shall be null and void. In the event that any Person would otherwise
become the Record Holder of a Unit through a purported transfer in violation of
this Section 3.6, the Company may, in its sole discretion, require that the
purported transferor take any steps deemed appropriate by the Company or the
Transfer Agent to unwind, cancel or reverse such purported transaction. With
respect to the purported transferee, such Person shall have no rights or
economic interest in such Units or otherwise, including any consent rights, any
rights to receive notice of, or attend, a meeting of the Members and any rights
to receive distributions with respect to the Unit. In addition, the Company may,
in its sole discretion, redeem the Unit in the manner provided in Section 3.9 or
cause the transfer of such Unit to a third party in a transfer permitted by this
Agreement and, if such Unit is sold or redeemed, the Company shall distribute
the proceeds of such sale (net of any costs or expenses incurred by the Company)
to the purported transferor.

 

10

 

 

(d) Without prejudice to any remedies available to the Company as a result of
such transactions, nothing contained in this Agreement shall preclude the
settlement of any transactions involving Units entered into through the
facilities of any Securities Exchange on which such Units are listed for
trading.

 

Section 3.7 Citizenship Requirements. If any Group Member is or becomes subject
to any Law that, in the determination of the Company in its sole discretion
creates a substantial risk of cancellation or forfeiture of any property in
which the Group Member has an interest based on the nationality, citizenship or
other related status of a Member, the Company may request that any Member
furnish to the Company an executed Citizenship Certification or such other
information concerning its nationality, citizenship or other related status (or
if the Member is a nominee holding for the account of another Person, the
nationality, citizenship or other related status of such other Person) as the
Company may in its sole discretion request. If a Member fails to furnish to the
Company such Citizenship Certification or other requested information within 30
days after receipt of such a request or if, upon receipt of such Citizenship
Certification or other requested information, the Company determines, with the
advice of counsel, that a Member is not an Eligible Citizen, the Company may, in
its sole discretion (i) require that such Member immediately transfer its Units
to an Eligible Citizen or (ii) redeem such Units in the manner set forth in
Section 3.9. Pending such transfer or redemption, with respect to such Record
Holder of such Units, the Company may, in its sole discretion, suspend the
exercise of any voting or consent rights, any rights to receive notice of or
attend meetings of the Members and any rights to receive distributions in
respect of such Units.

 

Section 3.8 Splits and Combinations.

 

(a) The Company may make a pro rata distribution of Units to all Record Holders,
or may effect a subdivision or combination of Units, so long as, after any such
event, each Member shall have the same Percentage Interest in the Company as
before such event, and any amounts calculated on a per Unit basis or stated as a
number of Units are proportionately adjusted.

 

(b) Whenever such a distribution, subdivision or combination of Units is
declared, the Board of Directors shall select a Record Date as of which the
distribution, subdivision or combination shall be effective and shall send
notice thereof at least 10 days prior to such Record Date to each Record Holder.

 

(c) Promptly following any such distribution, subdivision or combination, the
Company may issue Certificates to the Record Holders of Units as of the
applicable Record Date representing the new number of Units held by such Record
Holders, or the Board of Directors may adopt such other procedures that it
determines to be necessary or appropriate to reflect such changes. If any such
combination results in a smaller total number of Units Outstanding, the Company
shall require, as a condition to the delivery to a Record Holder of any such new
Certificate, the surrender of the Certificate(s), if any, held by such Record
Holder immediately prior to such Record Date.

 

(d) The Company may issue fractional Units upon any distribution, subdivision or
combination of Units.

 

Section 3.9 Redemption of Units. Any redemption of Units by the Company
permitted under Article III shall be conducted in accordance with this Section
3.9.

 

(a) The Company shall, not later than 30 days before the date fixed for
redemption, give notice of redemption to the Member at its last address
designated on the records of the Company or the Transfer Agent, by registered or
certified mail, postage prepaid, or overnight courier of national reputation.
The notice shall be deemed to have been given when so mailed. The notice shall
specify the Redeemable Units, the date fixed for redemption, the place of
payment, that payment of the redemption price will be made upon the redemption
of the Redeemable Units (or, if later in the case of Redeemable Units evidenced
by Certificates, upon surrender of the Certificates evidencing such Redeemable
Units) and that on and after the date fixed for redemption no further
allocations or distributions to which the Member would otherwise be entitled in
respect of the Redeemable Units will accrue or be made.

 

(b) The aggregate redemption price for Redeemable Units shall be an amount equal
to the Current Market Price (the date of determination of which shall be the
date fixed for redemption) of Units of the class to be so redeemed multiplied by
the number of Units of each such class included among the Redeemable Units, net
of any costs or expenses incurred by the Company in connection with such
redemption. Subject to the California Act, the redemption price shall be paid,
as determined by the Company in its sole discretion, (i) in cash, (ii) by
delivery of a promissory note of the Company in the principal amount of the
redemption price, bearing interest at the rate of 8% annually and payable in
three equal annual installments of principal together with accrued interest, the
first such installment commencing one year after the redemption date (or, if
later in the case of Redeemable Units evidenced by Certificates, upon surrender
of the Certificates evidencing such Redeemable Units) or (iii) a combination of
cash and a promissory note having the terms described in clause (ii).

 

11

 

 

(c) The Member or its duly authorized representative shall be entitled to
receive the payment for Redeemable Units at the place of payment specified in
the notice of redemption (i) in the case of uncertificated Redeemable Units, on
the redemption date or (ii) in the case of Redeemable Units evidenced by
Certificates, upon surrender, on the redemption date or thereafter, by or on
behalf of the Member, of the Certificates evidencing the Redeemable Units, duly
endorsed in blank or accompanied by an assignment duly executed in blank.

 

(d) After the redemption date, Redeemable Units shall no longer constitute
Outstanding Units.

 

ARTICLE IV

 

DESIGNATION OF CLASS A UNITS; CAPITAL

CONTRIBUTIONS

 

Section 4.1 Designation of Class A Units. As of the date of this Agreement, one
class of Units has been designated: Class A Units. Each Class A Unit shall
entitle the Record Holder thereof to one vote on any and all matters submitted
for the consent or approval of Members generally. Except as specifically
provided for in this Agreement, Class A Units shall vote as a single class on
any and all matters submitted for the consent or approval of Members.

 

Section 4.2 Issuances of Additional Units.

 

(a) The Company may issue any number of Units, and options, rights, warrants and
appreciation rights relating to Units, for any Company purpose at any time and
from time to time to such Persons for such consideration (which may be cash,
property, services or any other lawful consideration) or for no consideration
and on such terms and conditions as the Board of Directors shall determine;
however, any additional issuances shall require the approval of the holders of
Units representing the voting power of all Outstanding Voting Units, voting as a
single class.

 

(b) Additional Units authorized to be issued by the Company pursuant to Section
4.2(a) may be issued in one or more classes, or one or more series of any such
classes, with such designations, preferences, rights, powers and duties (which
may be junior to, equivalent to or senior or superior to any existing classes or
series of Units), as shall be fixed by the Board of Directors and reflected in a
written action or actions approved by the Board of Directors in compliance with
Section 6.1 (each, a “Unit Designation”), including (i) the right to share in
Company profits and losses or items thereof; (ii) the right to share in Company
distributions, the dates distributions will be payable and whether distributions
with respect to such class or series will be cumulative or non-cumulative; (iii)
rights upon dissolution and liquidation of the Company (including any payments);
(iv) whether, and the terms and conditions upon which, the Company may redeem
such Units (including sinking fund provisions); (v) whether such Units are
issued with the privilege of conversion or exchange into Units of any other
class or series or any other security issued by the Company or another entity
and, if so, the terms and conditions of such conversion or exchange; (vi) the
terms and conditions upon which such Units will be issued, evidenced by
certificates and assigned or transferred; (vii) the method for determining the
Percentage Interest, if any, applicable to such Units; and (viii) the right, if
any, of the Record Holder of any such Unit to vote on Company matters, including
matters relating to the relative rights, preferences and privileges of such
Units. A Unit Designation (or any action of the Board of Directors amending any
Unit Designation) shall be effective when a duly executed original of the same
is delivered to the Secretary for inclusion in the permanent records of the
Company, and shall be annexed to, and constitute a part of, this Agreement.

 

12

 

 

(c) The Board of Directors is hereby authorized to take all actions that it
determines to be necessary or appropriate in connection with (i) each issuance
of Units and options, rights, warrants and appreciation rights relating to Units
pursuant to this Section 4.2, including the admission of Additional Members in
connection therewith and any related amendment of this Agreement, and (ii) all
additional issuances of Units and options, rights, warrants and appreciation
rights relating to Units. The Board of Directors shall determine in its sole
discretion the relative rights, powers and duties of the holders of Units or
options, rights, warrants or appreciation rights relating to Units being so
issued. The Board of Directors is authorized to do all things that it determines
to be necessary or appropriate in connection with any future issuance of Units
or options, rights, warrants or appreciation rights relating to Units, including
compliance with any statute, rule, regulation or guideline of any Governmental
Entity or any Securities Exchange on which Units or options, rights, warrants or
appreciation rights relating to Units are listed for trading.

 

Section 4.3 Preemptive Rights. Unless determined otherwise by the Board of
Directors, no Person shall have any preemptive, preferential or other similar
right with respect to the issuance of any Units, whether unissued, held in the
treasury or hereafter created.

 

Section 4.4 Fully Paid and Non-Assessable Nature of Units. All Units issued
pursuant to, and in accordance with the requirements of, this Article IV shall
represent fully paid and non-assessable limited liability company interests in
the Company, except as such non-assessability may be affected by the California
Act or this Agreement.

 

Section 4.5 Purchases of Units. The Company or any other Group Member may
purchase or otherwise acquire Units or options, rights, warrants or appreciation
rights relating to Units. The Company or any of its Affiliates may also purchase
or otherwise acquire and sell or otherwise dispose of Units or options, rights,
warrants or appreciation rights relating to Units for their own account, subject
to the provisions of Articles III and IV. Any Units purchased or otherwise
acquired by the Company may be canceled in the discretion of the Board of
Directors.

 

ARTICLE V

 

ALLOCATIONS AND DISTRIBUTIONS

 

Section 5.1 Capital Accounts. There shall be established for each Member on the
books of the Company as of the date such Member becomes a Member a capital
account (each being a “Capital Account”). Each Capital Contribution by any
Member, if any, shall be credited to the Capital Account of such Member on the
date such Capital Contribution is made to the Company. In addition, each
Member’s Capital Account shall be (a) increased by (i) such Member’s allocable
share of any Net Income of the Company, and (ii) the amount of any Company
liabilities that are assumed by the Member or secured by any Company property
distributed to the Member, (b) decreased by (i) the amount of distributions (and
deemed distributions) to such Member of cash or the fair market value of other
property so distributed, (ii) such Member’s allocable share of Net Loss of the
Company and expenditures of the Company described or treated under Section
704(b) of the Code as described in Section 705(a)(2)(B) of the Code, and (iii)
the amount of any liabilities of the Member assumed by the Company or which are
secured by any property contributed by the Member to the Company and (c)
otherwise maintained in accordance with the provisions of the Code and the
United States Treasury Regulations promulgated thereunder. Any other item which
is required to be reflected in a Member’s Capital Account under Section 704(b)
of the Code and the United States Treasury Regulations promulgated thereunder or
otherwise under this Agreement shall be so reflected. The Company shall make
such adjustments to Capital Accounts as it determines in its sole discretion to
be appropriate to ensure allocations are made in accordance with a Member’s
interest in the Company. Interest shall not be payable on Capital Account
balances. The Company shall maintain the Capital Accounts of the Members in
accordance with the principles and requirements set forth in Section 704(b) of
the Code and the United States Treasury Regulations promulgated thereunder.

 

Section 5.2 Allocations.

 

(a) Net Income (Loss) of the Company for each fiscal period shall be allocated
among the Capital Accounts of the Members in a manner that as closely as
possible gives economic effect to the manner in which distributions are or would
be made to the Members pursuant to the provisions of Sections 5.3 and 9.3.

 

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(b) All items of income, gain, loss, deduction and credit of the Company shall
be allocated among the Members for U.S. federal, state and local income tax
purposes consistent with the manner that the corresponding constituent items of
Net Income (Loss) shall be allocated among the Members pursuant to this
Agreement, except as may otherwise be provided herein or by the Code.
Notwithstanding the foregoing, the Company in its sole discretion shall make
such allocations for tax purposes as may be needed to ensure that allocations
are in accordance with the interests of the Members in the Company, within the
meaning of the Code and United States Treasury Regulations. The Company shall
determine all matters concerning allocations for tax purposes not expressly
provided for herein in its sole discretion. For the proper administration of the
Company and for the preservation of uniformity of Units (or any portion or class
or classes thereof), the Company may (i) amend the provisions of this Agreement
as appropriate (x) to reflect the proposal or promulgation of United States
Treasury Regulations under Sections 704(b) or 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of Units (or any portion or class or
classes thereof), and (ii) adopt and employ or modify such conventions and
methods as the Company determines in its sole discretion to be appropriate for
(A) the determination for tax purposes of items of income, gain, loss, deduction
and credit and the allocation of such items among Members and between
transferors and transferees under this Agreement and pursuant to the Code and
the United States Treasury Regulations promulgated thereunder, (B) the
determination of the identities and tax classification of Members, (C) the
valuation of Company assets and the determination of tax basis, (D) the
allocation of asset values and tax basis, (E) the adoption and maintenance of
accounting methods and (F) taking into account differences between the Carrying
Values of Company assets and such asset adjusted tax basis pursuant to Section
704(c) of the Code and the United States Treasury Regulations promulgated
thereunder.

 

(c) Allocations that would otherwise be made to a Member under the provisions of
this Article V shall instead be made to the beneficial owner of Units held by a
nominee in any case in which the nominee has furnished the identity of such
owner to the Company in accordance with Section 6031(c) of the Code or any other
method determined by the Company in its sole discretion.

 

Section 5.3 Distributions to Record Holders. Subject to applicable law and to
the limitations contained elsewhere in this Agreement, the Manager, in the
Manager’s sole and absolute discretion, may, from time to time, distribute
Distributable Cash to the Members, which distributions shall be in the following
order of priority:

 

(a) Allocations First, Distributable Cash shall be distributed to and among the
Members who have made loans to the Company, pro rata, in proportion to the
principal loan balances outstanding, up to the amount of principal and interest
then due and payable; provided, however, that this provision shall not apply
with respect to the principal or interest on any loans that, at the time of such
distribution, may not be paid by the Company under the terms of any
subordination agreement applicable to such loan, or as otherwise set forth in
the loan document.

 

(b) Second, Distributable Cash shall be distributed to and among the Members,
pro rata, in accordance with their respective Percentage Interests.

 

(c) All distributions to Members hereunder shall be made only to the Persons
who, according to the books and records of the Company, are the holders of
record of Interests in respect of which such distributions are made on the
actual date of distribution. Neither the Company nor any Member, Manager or
officer shall incur any liability for making distributions in accordance with
this Section 5.3.

 

Section 5.4 Withholding on Distributions. Each Member acknowledges and agrees
that the Company may be required to deduct and withhold tax or to fulfill other
obligations of such Member on any amount distributed or allocated by the Company
to such Member or to any assignee of a Member’s Interest (or the related
Economic Interest). Each Member shall promptly furnish the Tax Matters Partner
with an Internal Revenue Service Form W-8, Form W-9 or Form 1001, as applicable.
All amounts so withheld with respect to such Member shall be treated as amounts
distributed to such Person pursuant to Section 5.3(c) for all purposes under
this Agreement.

 

Section 5.5 Return of Distributions. Except for distributions made in violation
of the Act or this Agreement, no Member shall be obligated to return any
distribution to the Company or pay the amount of any distribution for the
account of the Company or to any creditor of the Company. The amount of any
distribution returned to the Company by a Member or paid by a Member for the
account of the Company or to a creditor of the Company shall be added to the
account or accounts from which it was subtracted when it was distributed to such
Member.

 

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Section 5.6 Restriction on Distributions. No distribution shall be made if,
after giving effect to such distribution:

 

(a) The Company would not be able to pay its debts as they become due in the
usual course of business; or

 

(b) The Company’s total assets would be less than the sum of its total
liabilities.

 

Section 5.7 Limitations on Authority While Loan Outstanding. Notwithstanding any
other provision in this Agreement, or in any other document governing the
formation, management or operation of the Company, or any provision of law that
otherwise so empowers the Company, until such time as all obligations of the
Company under the Loan from the Lender are indefeasibly paid in full, the
Manager shall not cause or permit the Company to and the Company shall not:

 

(a) Incur, create or assume any indebtedness or liabilities other than
indebtedness and liabilities incurred in the ordinary course of its business
that are related to the ownership and operation of the Company and are expressly
permitted under the Loan Agreement;

 

(b) To the fullest extent permitted by law, engage in any dissolution,
liquidation, consolidation, merger, sale or other transfer of any of its assets
outside the ordinary course of the Company’s business;

 

(c) File or consent to the filing of any bankruptcy, insolvency or
reorganization case or proceeding; institute any proceedings under any
applicable insolvency law or otherwise seek relief under any laws relating to
the relief from debts or the protection of debtors generally;

 

(d) Seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or any similar official for the Company.

 

(e) In addition, the Manager and/or Company shall not:

 

(1) Engage in any business activity unrelated to the Company;

 

(2) Encumber any of its assets;

 

(3) Take any action that is reasonably likely to cause the Company to become
insolvent;

 

(4) Except as contemplated by the Loan Documents, guarantee or become obligated
for the debts of any other entity or person;

 

(5) Except as contemplated by the Loan Documents, hold out its credit as being
available to satisfy the obligations of any other person or entity;

 

(6) Except as contemplated by the Loan Documents, distribute funds to its
members, other than to pay allocable taxes as provided in this Agreement;

 

(7) Make loans to any other person or entity or buy or hold evidence of
indebtedness issued by any other person or entity (other than cash and
investment-grade securities);

 

(8) Except as contemplated by the Loan Documents, pledge its assets to secure
the obligations of any other person or entity;

 

 

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(9) Incur any indebtedness other than the debt secured by the Instruments, trade
debt and other ordinary operating expenses incurred in the ordinary course of
the Company’s business.

 

(10) Except as contemplated by the Loan Documents, transfer any membership
interest in the Company without Lender’s express consent.

 

ARTICLE VI

 

MANAGEMENT AND OPERATION OF BUSINESS

 

Section 6.1 Power and Authority of Board of Directors.

 

(a) Except as otherwise expressly provided in this Agreement, the business and
affairs of the Company shall be managed by or under the direction of a board of
directors (the “Board of Directors”). As provided in Section 6.19, the Board of
Directors shall have the power and authority to appoint Officers of the Company.
The Directors and Officers shall constitute “managers” within the meaning of the
California Act. No Member, in its capacity as such, shall have any management
power over the business and affairs of the Company or actual or apparent
authority to enter into, execute or deliver contracts on behalf of, or to
otherwise bind, the Company. In addition to the powers that now or hereafter can
be granted to managers under the California Act and to all other powers granted
under any other provision of this Agreement, the Board of Directors shall have
full power and authority to do, and to direct the Officers to do, all things and
on such terms as it determines to be necessary or appropriate to conduct the
business of the Company, to exercise all powers set forth in Section 2.5 and to
effectuate the purposes set forth in Section 2.4, including the following:

 

(i) the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness, including indebtedness
that is convertible into Units, and the incurring of any other obligations;

 

(ii) the making of tax, regulatory and other filings, or rendering of periodic
or other reports to governmental or other agencies having jurisdiction over the
business or assets of the Company;

 

(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of any or all of the assets of the Company or the merger,
conversion, consolidation or other combination of the Company with or into
another Person (subject, however, to any prior approval of Members that may be
required by this Agreement);

 

(iv) the use of the assets of the Company (including cash on hand) for any
purpose consistent with the terms of this Agreement, including the financing of
the conduct of the operations of the Company and its Subsidiaries; the lending
of funds to other Persons (including other Group Members); the repayment of
obligations of the Company and its Subsidiaries; and the making of capital
contributions to any Member of the Company or any of its Subsidiaries;

 

(v) the negotiation, execution and performance of any contracts, conveyances or
other instruments (including instruments that limit the liability of the Company
under contractual arrangements to all or particular assets of the Company);

 

(vi) the declaration and payment of distributions of cash or other assets to
Members;

 

(vii) the selection and dismissal of Officers, employees, agents, outside
attorneys, accountants, advisors, consultants and contractors and the
determination of their compensation and other terms of employment or hiring, and
the creation and operation of employee benefit plans, employee programs and
employee practices;

 

(viii) the maintenance of insurance for the benefit of the Company Group and the
Indemnified Persons;

 

(ix) the formation of, or acquisition or disposition of an interest in, and the
contribution of property and the making of loans to, any limited or general
partnership, joint venture, corporation, limited liability company or other
entity or arrangement;

 

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(x) the control of any matters affecting the rights and obligations of the
Company, including the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation, arbitration or remediation, and
the incurring of legal expense and the settlement of claims and litigation;

 

(xi) the indemnification of any Person against liabilities and contingencies to
the extent permitted by Law;

 

(xii) the issuance, sale or other disposition, and the purchase or other
acquisition, of Units or options, rights, warrants or appreciation rights
relating to Units;

 

(xiii) the undertaking of any action in connection with the Company’s interest
or participation in any Group Member;

 

(xiv) the filing of a bankruptcy petition; and

 

(xv) the execution and delivery of agreements with Affiliates of the Company to
render services to a Group Member.

 

(b) In exercising its authority under this Agreement, the Board of Directors
may, but shall be under no obligation to, take into account the tax consequences
to any Member of any action taken (or not taken) by it. The Directors and the
Company shall not have any liability to a Member for monetary damages or
otherwise for losses sustained, liabilities incurred or benefits not derived by
such Member in connection with such decisions except to the extent set forth in
Section 6.16(a)(ii).

 

(c) Notwithstanding any other provision of this Agreement, the California Act or
any other applicable Law, the Members and each other Person who may acquire an
interest in Units hereby (iii) agree that the execution, delivery or performance
by the Company, any Group Member or any Affiliate of any of them, of this
Agreement or any agreement contemplated by this Agreement (including the
exercise by the Company of the rights accorded pursuant to Article XIII), shall
not constitute a breach by the Board of Directors of any duty that the Board of
Directors may owe the Company or the Members or any other Persons under this
Agreement (or any other agreements) or of any duty (fiduciary or otherwise)
existing at law, in equity or otherwise.

 

Section 6.2 Number, Qualification and Term of Office of Directors. The number of
Directors which shall constitute the whole Board of Directors shall be
determined from time to time by the Manager. Each Director shall hold office as
provided in Sections 6.3 to 6.5.

 

Section 6.3 Election of Directors. Directors need not be Members. Directors
shall be designated by the Manager.

 

Section 6.4 Removal. Any Director or the whole Board of Directors may be
removed, with or without cause, at any time, by the Manager. The vacancy in the
Board of Directors caused by any such removal shall be filled as provided in
Section 6.6.

 

Section 6.5 Resignations. Any Director may resign at any time by giving notice
of such Director’s resignation in writing or by electronic transmission to the
Company. Any such resignation shall take effect at the time specified therein,
or if the time when it shall become effective shall not be specified therein,
then it shall take effect immediately upon its receipt by the Company. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. The vacancy in the Board of Directors caused by
any such resignation shall be filled as provided in Section 6.6.

 

Section 6.6 Vacancies. Any vacancy on the Board of Directors will be filled by a
designee of the Manager.

 

Section 6.7 Chairman of Meetings. The Board of Directors may elect one of its
members as Chairman of the Board of Directors (the “Chairman”). At each meeting
of the Board of Directors, the Chairman or, in the Chairman’s absence, a
Director chosen by a majority of the Directors present, shall act as chairman of
the meeting.

 

Section 6.8 Place of Meetings. The Board of Directors may hold meetings, both
regular and special, either within or without the State of California.

 

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Section 6.9 Meetings; Notice. Meetings of the Board of Directors may be called
by the Chairman, the President or upon the written request of two Directors, on
24 hours’ notice to each Director, either personally or by telephone or by mail,
telegraph, telex, cable, wireless or other form of recorded or electronic
communication, or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances. Notice of any
such meeting need not be given to any Director, however, if waived by such
Director in writing or by telegraph, telex, cable, wireless or other form of
recorded or electronic communication, or if such Director shall be present at
such meeting.

 

Section 6.10 Action Without Meeting. Any action required or permitted to be
taken at any meeting by the Board of Directors or any committee thereof, as the
case may be, may be taken without a meeting if a consent thereto is signed or
transmitted electronically, as the case may be, by a majority of the members of
the Board or of such committee, as the case may be, and the writing or writings
or electronic transmission or transmissions are filed with the minutes of
proceedings of the Board of Directors or such committee. Such filing shall be in
paper form if the minutes are maintained in paper form and shall be in
electronic form if the minutes are maintained in electronic form.

 

Section 6.11 Conference Telephone Meetings. Members of the Board of Directors,
or any committee thereof, may participate in a meeting of the Board of Directors
or such committee by means of conference telephone or other communications
equipment by means of which all Persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at such meeting.

 

Section 6.12 Quorum. At all meetings of the Board of Directors, a majority of
the then total number of Directors in office shall constitute a quorum for the
transaction of business. At all meetings of any committee of the Board of
Directors, the presence of a majority of the total number of members of such
committee (assuming no vacancies) shall constitute a quorum. The act of a
majority of the Directors or committee members present at any meeting at which
there is a quorum shall be the act of the Board of Directors or such committee,
as the case may be. If a quorum shall not be present at any meeting of the Board
of Directors or any committee, a majority of the Directors or members, as the
case may be, present thereat may adjourn the meeting from time to time without
further notice other than announcement at the meeting.

 

Section 6.13 Committees. The Board of Directors may by resolution from time to
time designate one or more committees consisting of one or more Directors which,
to the extent provided in such resolution or resolutions, shall have and may
exercise, subject to the provisions of this Agreement, the powers and authority
of the Board of Directors granted hereunder. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors. The Board of Directors shall have power to
change the members of any such committee at any time to fill vacancies, and to
discharge any such committee, either with or without cause, at any time.

 

Section 6.14 Alternate Members of Committees. The Board of Directors may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee, or if
none be so appointed the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.

 

Section 6.15 Remuneration. Unless otherwise expressly provided by resolution
adopted by the Board of Directors, none of the Directors shall, as such, receive
any stated remuneration for their service as a Director, but the Board of
Directors may at any time and from time to time by resolution provide that a
specified sum shall be paid to any Director, payable in cash or securities,
either as such Director’s annual remuneration as such Director or member of any
special or standing committee of the Board of Directors or as remuneration for
such Director’s attendance at each meeting of the Board of Directors or any such
committee. The Board of Directors may also provide that the Company shall
reimburse each Director for any expenses paid by such Director on account of
such Director’s attendance at any meeting. Nothing in this Section 6.15 shall be
construed to preclude any Director from serving the Company or any of its
Affiliates in any other capacity and receiving remuneration therefor.

 

Section 6.16 Exculpation, Indemnification, Advances and Insurance.

 

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(a) Subject to other applicable provisions of this Article VI, to the fullest
extent permitted by applicable Law:

 

(i) a Director or Officer shall have liability to the Company, any Subsidiary of
the Company, any Director, any Member or any holder of an equity interest in any
Subsidiary of the Company, for any act or omission, including any mistake of
fact or error in judgment, taken, suffered, or made only if such act or omission
constitutes a breach of the duties of such Director or Officer imposed pursuant
to Section 6.20(a) and such breach is the result of (A) willful malfeasance,
gross negligence, the commission of a felony or a material violation of
applicable Law (including any federal or state securities Law), in each case,
that has resulted in, or could reasonably be expected to result in, a material
adverse effect on the business or properties of the Company or (B) fraud; and

 

(ii) all other Indemnified Persons shall have liability to the Company, any
Subsidiary of the Company, any Director, any Member or any holder of an equity
interest in any Subsidiary of the Company, for any act or omission arising from
the performance of such Indemnified Person’s duties and obligations in
connection with the Company, any Subsidiary of the Company, this Agreement or
any investment made or held by the Company or any Subsidiary of the Company,
including with respect to any act or omission made while serving at the request
of the Company as an officer, director, member, partner, tax matters partner,
fiduciary or trustee of another Person or any employee benefit plan, including
any mistake of fact or error in judgment, taken, suffered or made only if such
act or omission constitutes a breach of the duties of such Indemnified Person
and such breach is the result of (A) willful malfeasance, gross negligence, the
commission of a felony or a material violation of applicable Law (including any
federal or state securities Law), in each case, that has resulted in, or could
reasonably be expected to result in, a material adverse effect on the business
or properties of the Company or (B) fraud.

 

The provisions of this Section 6.16(a) are intended and shall be interpreted as
only limiting the liability of an Indemnified Person and not as in any way
expanding such Person’s liability.

 

(b) The Indemnified Persons shall be indemnified by the Company, to the fullest
extent permitted by Law, against all expenses and liabilities (including
judgments, fines, penalties, interest, amounts paid in settlement with the
approval of the Company and counsel fees and disbursements) arising from the
performance of any of their respective duties or obligations in connection with
their respective service to the Company, to any Subsidiary of the Company or
pursuant to this Agreement, or in connection with any investment made or held by
the Company or any of its Subsidiaries, including in connection with any civil,
criminal, administrative, investigative or other action, suit or proceeding,
whether by or in the right of the Company, to which any such Indemnified Person
may hereafter be made party by reason of being or having been an Indemnified
Person, except:

 

(i) with respect to a Director or Officer, to the extent that it shall have been
determined in a final non-appealable judgment by a court of competent
jurisdiction that such expenses and liabilities arose primarily from acts or
omissions, including any mistake of fact or error in judgment, taken, suffered
or made, that constituted a breach of the duties of such Director or Officer
imposed pursuant to Section 6.20(a) and such breach was the result of (A)
willful malfeasance, gross negligence, the commission of a felony or a material
violation of applicable Law (including any federal or state securities Law), in
each case, that resulted in, or could reasonably be expected to result in, a
material adverse effect on the business or properties of the Company or (B)
fraud; and

 

(ii) with respect to all Indemnified Persons (other than Directors, Officers and
Amino Nutritionals Holdings), to the extent that it shall have been determined
in a final non-appealable judgment by a court of competent jurisdiction that
such expenses and liabilities arose primarily from acts or omissions, including
any mistake of fact or error in judgment, taken, suffered or made, that
constituted a breach of the duties of such Indemnified Person and such breach
was the result of (A) willful malfeasance, gross negligence, the commission of a
felony or a material violation of applicable Law (including any federal or state
securities Law), in each case, that resulted in, or could reasonably be expected
to result in, a material adverse effect on the business or properties of the
Company or (B) fraud.

 

Without limitation, the foregoing indemnity shall extend to any liability of any
Indemnified Person, pursuant to a loan, guaranty or otherwise, for any
indebtedness of the Company or any Subsidiary of the Company (including any
indebtedness which the Company or any Subsidiary of the Company has assumed or
taken subject to), and the Company is hereby authorized and empowered to enter
into one or more indemnity agreements consistent with the provisions of this
Section 6.16 in favor of any Indemnified Person having or potentially having
liability for any such indebtedness. It is the intention of this Section 6.16(b)
that the Company indemnify each Indemnified Person to the fullest extent
permitted by Law except as specifically provided in this Section 6.16(b).

 

19

 

 

(c) The termination of any action, suit or proceeding relating to or involving
an Indemnified Person by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a presumption
that the Indemnified Person breached any duty or committed (i) willful
malfeasance, gross negligence, a felony or a material violation of applicable
Law (including any federal or state securities Law) that has resulted in, or
could reasonably be expected to result in, a material adverse effect on the
business or properties of the Company or (ii) fraud.

 

(d) The provisions of this Agreement, to the extent they limit or eliminate the
duties and liabilities of an Indemnified Person otherwise existing at law or in
equity, including Section 6.20, are agreed by each Member to modify such duties
and liabilities of the Indemnified Person to the extent permitted by Law.

 

(e) Any indemnification under this Section 6.16 (unless ordered by a court)
shall be made by the Company unless the Board of Directors determines in the
specific case that indemnification of the Indemnified Person is not proper in
the circumstances because such Person has not met the applicable standard of
conduct set forth in Section 6.16(b). Such determination shall be made by a
majority vote of the Directors who are not parties to the applicable suit,
action or proceeding. To the extent, however, that an Indemnified Person has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
such Indemnified Person shall be indemnified against expenses (including
attorneys’ fees) actually and reasonably incurred by such Indemnified Person in
connection therewith, notwithstanding an earlier determination by the Board of
Directors that the Indemnified Person had not met the applicable standard of
conduct set forth in Section 6.16(b).

 

(f) Notwithstanding any contrary determination in the specific case under
Section 6.16(e), and notwithstanding the absence of any determination
thereunder, any Indemnified Person may apply to any court of competent
jurisdiction in the State of California for indemnification to the extent
otherwise permissible under Section 6.16(b). The basis of such indemnification
by a court shall be a determination by such court that indemnification of the
Indemnified Person is proper in the circumstances because such Indemnified
Person has met the applicable standard of conduct set forth in Section 6.16(b).
Neither a contrary determination in the specific case under Section 6.16(e) nor
the absence of any determination thereunder shall be a defense to such
application or create a presumption that the Indemnified Person seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 6.16(f) shall be given
to the Company promptly upon the filing of such application. If successful, in
whole or in part, the Indemnified Person seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.

 

(g) To the fullest extent permitted by Law, expenses (including attorneys’ fees)
actually and reasonably incurred by an Indemnified Person in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Company in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
Indemnified Person to repay such amount if it shall ultimately be determined
that such Indemnified Person is not entitled to be indemnified by the Company as
authorized in this Section 6.16.

 

(h) The indemnification and advancement of expenses provided by or granted
pursuant to this Section 6.16 shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under this Agreement or any other agreement, vote of Members or
disinterested Directors or otherwise, and shall continue as to an Indemnified
Person who has ceased to serve in such capacity and shall inure to the benefit
of the heirs, successors, assigns and administrators of the Indemnified Person
unless otherwise provided in a written agreement with such Indemnified Person or
in the writing pursuant to which such Indemnified Person is indemnified. The
provisions of this Section 6.16 shall not be deemed to preclude the
indemnification of any Person who is not specified in Section 6.16(b) but whom
the Company has the power or obligation to indemnify under the provisions of the
California Act.

 

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(i) The Company may, but shall not be obligated to, purchase and maintain
insurance on behalf of any Indemnified Person against any liability asserted
against such Indemnified Person and incurred by such Indemnified Person in any
capacity in which such Indemnified Person is entitled to indemnification
hereunder, or arising out of such Indemnified Person’s status as such, whether
or not the Company would have the power or the obligation to indemnify such
Indemnified Person against such liability under the provisions of this Section
6.16.

 

(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section 6.16 shall, unless otherwise provided when authorized
or ratified, inure to the benefit of the heirs, executors and administrators of
any Person entitled to indemnification under this Section 6.16.

 

(k) The Company may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Company and to the employees and agents of the
Company Group similar to those conferred in this Section 6.16 to Indemnified
Persons.

 

(l) If this Section 6.16 or any portion of this Section 6.16 shall be
invalidated on any ground by a court of competent jurisdiction, the Company
shall nevertheless indemnify each Indemnified Person as to expenses (including
attorneys’ fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit, proceeding or investigation, whether civil, criminal or
administrative, including a grand jury proceeding or action or suit brought by
or in the right of the Company, to the full extent permitted by any applicable
portion of this Section 6.16 that shall not have been invalidated.

 

(m) Each Indemnified Person may, in the performance of such Indemnified Person’s
duties, consult with legal counsel and accountants, and any act or omission by
such Indemnified Person on behalf of the Company, any Subsidiary of the Company
or any investment held by the Company or any Subsidiary of the Company in
furtherance of the interests of the Company, any Subsidiary of the Company or
any investment held by the Company or any Subsidiary of the Company in good
faith in reliance upon, and in accordance with, the advice of such legal counsel
or accountants will be full justification for any such act or omission, and such
Indemnified Person will be fully protected for such acts and omissions, provided
that such legal counsel or accountants were selected with reasonable care by or
on behalf of the Company or such Subsidiary.

 

(n) An Indemnified Person shall not be denied indemnification in whole or in
part under this Section 6.16 because the Indemnified Person had an interest in
the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.

 

(o) Any liabilities which an Indemnified Person incurs as a result of acting on
behalf of the Company (whether as a fiduciary or otherwise) in connection with
the operation, administration or maintenance of an employee benefit plan or any
related trust or funding mechanism (whether such liabilities are in the form of
excise taxes assessed by the U.S. Internal Revenue Service, penalties assessed
by the U.S. Department of Labor, restitutions to such a plan or trust or other
funding mechanism or to a participant or beneficiary of such plan, trust or
other funding mechanism, or otherwise) shall be treated as liabilities
indemnifiable under this Section 6.16, to the maximum extent permitted by Law.

 

(p) A Director shall, in the performance of such Director’s duties, be fully
protected in relying in good faith upon the records of the Company and on such
information, opinions, reports or statements presented to the Company by any of
the Officers or employees of the Company or any other Group Member, or
committees of the Board of Directors, or by any other Person as to matters the
Director reasonably believes are within such Person’s professional or expert
competence.

 

(q) Any amendment, modification or repeal of this Section 6.16 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the liability of any Indemnified Person under this Section 6.16 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted and provided such Person became an Indemnified Person
hereunder prior to such amendment, modification or repeal.

 

(r) The provisions of this Section 6.16 shall survive the termination of this
Agreement with respect to the acts and omissions of an Indemnified Person
occurring prior to such termination.

 

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Section 6.17 Resolution of Conflicts of Interest; Standards of Conduct and
Modification of Duties.

 

(a) Unless otherwise expressly provided in this Agreement, whenever an actual or
potential conflict of interest exists or arises between one or more Directors or
their respective Affiliates, on the one hand, and the Company, any Group Member
or any Member, on the other, any resolution or course of action by the Board of
Directors or its Affiliates in respect of such conflict of interest shall be
permitted and deemed approved by all Members, and shall not constitute a breach
of this Agreement, of any agreement contemplated herein or of any duty stated or
implied by Law or equity, including any fiduciary duty, if the resolution or
course of action in respect of such conflict of interest is (i) on terms no less
favorable to the Company, Group Member or Member, as applicable, than those
generally being, provided to or available from unrelated third parties, (ii)
fair and reasonable to the Company taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Company, Group Member or,
as applicable) or (iii) approved or ratified by a majority of the Outside
Directors. For the avoidance of doubt, the Company shall be authorized but not
required to seek the approval or ratification of the Outside Directors pursuant
to clause (iv) of the preceding sentence and the Board of Directors may also
adopt a resolution or course of action that has not received the approval of the
Outside Directors. Failure to seek such approval shall not be deemed to indicate
that a conflict of interest exists or that such approval could not have been
obtained. If the Board of Directors determines that the resolution or course of
action taken with respect to a conflict of interest satisfies either of the
standards set forth in clauses (i) and (ii) above, then it shall be presumed
that, in making its determination, the Board of Directors acted in good faith,
and in any proceeding brought by any Member or by or on behalf of such Member or
any other Member challenging such determination, the Person bringing or
prosecuting such proceeding shall have the burden of overcoming such
presumption.

 

(b) Notwithstanding any other provision of this Agreement or otherwise or any
applicable provision of Law or equity, whenever in this Agreement or any other
agreement contemplated hereby or otherwise the Manager, the Board of Directors,
the Company or an Affiliate of the Company is permitted or required to make a
decision in its “sole discretion” or “discretion” or that it deems “necessary or
appropriate” or “necessary or advisable” or under a grant of similar authority
or latitude, then, to the fullest extent permitted by Law, the Board of
Directors, the Company or such Affiliate, as the case may be, may make such
decision in its sole discretion (regardless of whether there is a reference to
“sole discretion” or “discretion”), and shall be entitled to consider only such
interests and factors as it desires, including its own interests, and shall have
no duty or obligation (fiduciary or otherwise) to give any consideration to any
interest of or factors affecting the Company or the Members, and shall not be
subject to any other or different standards imposed by this Agreement, any other
agreement contemplated hereby, under the California Act or under any other Law
or in equity, but in all circumstances shall exercise such discretion in good
faith. Whenever in this Agreement or any other agreement contemplated hereby or
otherwise, the Board of Directors or the Company is permitted to or required to
make a decision in its “good faith,” then for purposes of this Agreement or
otherwise, the Board of Directors or the Company, as the case may be, shall be
conclusively presumed to be acting in good faith if such Person or Persons
subjectively believe(s) that the decision made or not made is in or not opposed
to the best interests of the Company.

 

(c) Notwithstanding anything to the contrary in this Agreement, the Board of
Directors and the Company shall have no duty or obligation, express or implied,
to permit any Group Member to use any facilities or assets of the Directors,
except as may be provided in contracts entered into from time to time
specifically dealing with such use. Any determination by an Affiliate of the
Company to enter into such contracts shall be in such Person’s sole discretion.

 

(d) Except as expressly set forth in this Agreement, to the fullest extent
permitted by Law, neither the Board of Directors nor any other Indemnified
Person shall have any duties or liabilities, including fiduciary duties, to the
Company, any Member or any other Person bound by this Agreement, and the
provisions of this Agreement, to the extent that they restrict or otherwise
modify or eliminate the duties and liabilities, including fiduciary duties, of
the Company or any other Indemnified Person otherwise existing at law or in
equity, are agreed by the Members to replace such other duties and liabilities
of the Company or such other Indemnified Person.

 

(e) The Members expressly acknowledge that the Board of Directors is under no
obligation to consider the separate interests of the Members (including the tax
consequences to Members) in deciding whether to cause the Company to take (or
decline to take) any actions, and that the Board of Directors or any Director
shall not be liable for monetary damages for losses sustained, liabilities
incurred or benefits not derived by Members in connection with such decisions.

 

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(f) The Members hereby authorize each of (i) the Board of Directors and (ii) the
Outside Directors, on behalf of the Company as a partner or member of any Group
Member, to approve of actions by the board of directors, managing member or
general partner of such Group Member similar to those actions permitted to be
taken by the Board of Directors pursuant to this Section 6.17.

 

Section 6.18 Certificate of Formation. The Certificate of Formation and
amendments thereto have been filed with the Secretary of State of the State of
California as required by the California Act, such filings being hereby
confirmed, ratified and approved in all respects. The Board of Directors shall
use all reasonable efforts to cause to be filed such other certificates or
documents that it determines to be necessary or appropriate for the formation,
continuation, qualification and operation of a limited liability company in the
State of California or any other state in which the Company may elect to do
business or own property. To the extent that the Board of Directors determines
such action to be necessary or appropriate, the Company shall file amendments to
and restatements of the Certificate of Formation and do all things to maintain
the Company as a limited liability company under the laws of the State of
California or of any other state in which the Company may elect to do business
or own property, and any such Officer so directed shall be an “authorized
person” of the Company within the meaning of the California Act for purposes of
filing any such certificate with the Secretary of State of the State of
California. The Company shall not be required, before or after filing, to
deliver or mail a copy of the Certificate of Formation, any qualification
document or any amendment thereto to any Member.

 

Section 6.19 Officers.

 

(a) The Board of Directors shall have the power and authority to appoint such
officers with such titles, authority and duties as determined by the Board of
Directors. Such Persons so designated by the Board of Directors shall be
referred to as “Officers.” The Officers shall have the titles, power, authority
and duties as determined by the Board of Directors.

 

(b) Each Officer shall hold office until his or her successor is elected and
qualified or until his or her earlier death, disability, resignation or removal.
Any number of offices may be held by the same Person. The compensation of
Officers elected by the Board of Directors shall be fixed from time to time by
the Board of Directors or by such Officers as may be designated by resolution of
the Board of Directors.

 

(c) Any Officer may resign at any time upon written notice to the Company. Any
Officer, agent or employee of the Company may be removed by the Board of
Directors with or without cause at any time. The Board of Directors may delegate
the power of removal as to Officers, agents and employees who have not been
appointed by the Board of Directors. Such removal shall be without prejudice to
a Person’s contract rights, if any, but the appointment of any Person as an
Officer, agent or employee of the Company shall not of itself create contract
rights.

 

(d) The Board of Directors may from time to time delegate the powers or duties
of any Officer to any other Officers or agents, notwithstanding any provision
hereof.

 

(e) Unless otherwise directed by the Board of Directors, the Chairman, the
President or any other Officer of the Company shall have power to vote and
otherwise act on behalf of the Company, in person or by proxy, at any meeting of
members of or with respect to any action of equity holders of any other entity
in which the Company may hold securities and otherwise to exercise any and all
rights and powers which the Company may possess by reason of its ownership of
securities in such other entities.

 

Section 6.20 Duties of Officers and Directors.

 

(a) Except as otherwise expressly provided in this Agreement or required by the
California Act, (i) the duties and obligations owed to the Company by the
Officers and Directors shall be the duty of care and duty of loyalty owed to a
corporation organized under CCC by its officers and directors, respectively, and
(ii) the duty of care and duty of loyalty owed to the Members by the Officers
and Directors shall be the same as the duty of care and duty of loyalty owed to
the stockholders of a corporation under the CCC by its officers and directors,
respectively.

 

23

 

 

(b) The Board of Directors shall have the right to exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through the duly authorized Officers of the
Company, and the Board of Directors shall not be responsible for the misconduct
or negligence on the part of any such Officer duly appointed or duly authorized
by the Board of Directors in good faith.

 

Section 6.21 Reliance by Third Parties. Notwithstanding anything to the contrary
in this Agreement, any Person dealing with the Company shall be entitled to
assume that the Board of Directors and any Officer authorized by the Board of
Directors to act on behalf of and in the name of the Company has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Company and to enter into any authorized contracts on behalf of the Company,
and such Person shall be entitled to deal with the Board of Directors or any
Officer as if it were the Company’s sole party in interest, both legally and
beneficially. Each Member hereby waives, to the fullest extent permitted by Law,
any and all defenses or other remedies that may be available against such Person
to contest, negate or disaffirm any action of the Board of Directors or any
Officer in connection with any such dealing. In no event shall any Person
dealing with the Board of Directors or any Officer or their respective
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expediency of any act or
action of the Board of Directors or any Officer or their respective
representatives. Each and every certificate, document or other instrument
executed on behalf of the Company by the Board of Directors or any Officer or
their respective representatives shall be conclusive evidence in favor of any
and every Person relying thereon or claiming thereunder that (a) at the time of
the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Company and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Company.

 

Section 6.22 Manager.

 

(a) The Manager shall have only the powers expressly set forth herein to
designate and remove members of the Board of Directors, fill vacancies on the
Board of Directors, determine from time to time the number of Directors which
shall constitute the whole Board of Directors, resign and designate a substitute
Manager, in each case as provided in this Article VI. To the fullest extent
permitted by Law, in exercising its authority under this Agreement, the Manager
may, but shall not be obligated to, take into account the consequences to any
Member of any action taken (or not taken) by it. Notwithstanding anything to the
contrary contained in this Agreement, to the fullest extent permitted by Law,
the Manager shall owe no duties (including any fiduciary duties) to the Company,
any Member or any other Person bound by this Agreement and shall have no
liability to the Company, any Member or any other Person bound by this Agreement
for monetary damages or otherwise for losses sustained, liabilities incurred or
benefits not derived by such Member in connection with such decisions. The
Manager shall not be responsible or liable to the Company or any Member or other
Person bound by this Agreement for the misconduct or negligence of any Director
duly appointed by the Manager hereunder.

 

(b) The Manager may resign at any time by giving notice of such resignation in
writing or by electronic transmission to the Board of Directors. Any such
resignation shall take effect at the time specified therein. The acceptance of
such resignation by the Board of Directors shall not be necessary to make it
effective. The Manager may at any time designate a substitute Manager, which
substitute Manager shall, upon the later of the acceptance of such designation
and the effective date of such resignation of the resigning Manager, be subject
to the terms and conditions set forth in this Agreement and be deemed the
“Manager” for all purposes hereunder. In the event the Manager resigns and does
not designate a substitute Manager in accordance with the terms of this
Agreement, a substitute Manager shall be elected by the holders of Units
representing a majority of the voting power of all Outstanding Voting Units,
voting as a single class. Further, the holders of Units representing a majority
of the voting power of all Outstanding Voting Units, voting as a single class,
may remove the Manager and elect a substitute Manager for any reason or no
reason.

 

ARTICLE VII

 

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 7.1 Records and Accounting. The Board of Directors shall keep or cause
to be kept at the principal office of the Company appropriate books and records
with respect to the Company’s business, including all books and records
necessary to provide to the Members any information required to be provided
pursuant to this Agreement. Any books and records maintained by or on behalf of
the Company in the regular course of its business, including the record of the
Members, books of account and records of Company proceedings, may be kept on, or
be in the form of, computer disks, hard drives, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; provided,
that the books and records so maintained are convertible into clearly legible
written form within a reasonable period of time. The Company shall maintain
books and records for tax and financial reporting purposes on an accrual basis
in accordance with U.S. GAAP.

 

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Section 7.2 Fiscal Year. The fiscal year of the Company (each, a “Fiscal Year”)
shall be a year ending December 31. The Board of Directors in its sole
discretion may change the Fiscal Year at any time and from time to time, in each
case as may be required or permitted under the Code or applicable United States
Treasury Regulations, and shall notify the Members of such change in the next
regular communication by the Company to the Members.

 

Section 7.3 Reports.

 

(a) The Company shall use its commercially reasonable efforts to mail or make
available to each Record Holder of a Unit, as of a date selected by the Board of
Directors, within 120 days after the close of each fiscal year, unaudited
financial statements of the Company for such Fiscal Year, presented in
accordance with U.S. GAAP, including a balance sheet and statements of
operations, equity and cash flows and such other financial information as the
Company deems appropriate.

 

(b) The Company shall be deemed to have made a report available to each Record
Holder of a Unit as required by this Section 7.3 if it has made such report
available by email attachment, or sent by a nationally recognized overnight
courier service addressed to each Record Holder at the email address or address
of the Record Holder appearing on the books of the Company.

 

ARTICLE VIII

 

TAX MATTERS

 

Section 8.1 Tax Returns and Information. The Company shall use its commercially
reasonable efforts to timely file all returns of the Company that are required
for U.S. federal, state and local income tax purposes on the basis of the
accrual method and its Fiscal Year. The Company may, in its sole discretion,
furnish to Members estimates of all necessary tax information prior to the
availability of definitive tax information; provided, however, that each Member
hereby agrees that there can be no assurance that such definitive information
will be the same as such estimates, and that the Company shall not be liable to
any Member or to any other Person for any information contained in any such
estimates or for any differences between such estimates and such definitive
information. The classification, realization and recognition of income, gain,
losses and deductions and other items shall be on the accrual method of
accounting for U.S. federal income tax purposes.

 

Section 8.2 Tax Elections. The Company shall, in its sole discretion, determine
whether to make or refrain from making the election provided for in Section 754
of the Code and any and all other elections permitted by the tax laws of the
United States, the several states and other relevant jurisdictions.

 

Section 8.3 Tax Controversies. The Board of Directors shall designate one Member
as the Tax Matters Partner. The initial Tax Matters Partner shall be the
Manager. The Tax Matters Partner is authorized to represent the Company (at the
Company’s expense) in connection with all examinations of the Company’s affairs
by tax authorities, including resulting administrative and judicial proceedings,
and to expend Company funds for professional services and costs associated
therewith. Each Member agrees to cooperate with the Tax Matters Partner and to
do or refrain from doing any or all things reasonably required by the Tax
Matters Partner to conduct such proceedings.

 

Section 8.4 Withholding. Notwithstanding any other provision of this Agreement,
the Company is authorized to take any action that may be necessary or
appropriate to, or cause the Company and other Group Members to, comply with any
withholding requirements established under the Code or any other U.S. federal,
state or local or non-U.S. Law including pursuant to Sections 1441, 1442, 1445
and 1446 of the Code. To the extent that the Company is required or elects to
withhold and pay over to any taxing authority any amount resulting from the
allocation or distribution of income to any Member (including by reason of
Section 1446 of the Code), the Board of Directors may treat the amount withheld
as a distribution of cash pursuant to Sections 5.3 or 9.3 in the amount of such
withholding from such Member.

 

25

 

 

Section 8.5 Election to be Treated as a Corporation. Notwithstanding anything to
the contrary contained herein, if the Board of Directors determines in its sole
discretion that it is no longer in the best interests of the Company to continue
as a partnership for U.S. federal income tax purposes, the Board of Directors
may elect to treat the Company as an association or as a publicly traded
partnership taxable as a corporation for U.S. federal (and applicable state)
income tax purposes. In the event that the Board of Directors determines that
the Company should seek relief pursuant to Section 7704(e) of the Code to
preserve the status of the Company as a partnership for U.S. federal (and
applicable state) income tax purposes, the Company and each Member shall agree
to adjustments required by the tax authorities, and the Company shall pay such
amounts as required by the tax authorities, to preserve the status of the
Company as a partnership.

 

ARTICLE IX

 

DISSOLUTION AND LIQUIDATION

 

Section 9.1 Dissolution. The Company shall not be dissolved by the admission of
Substitute Members or Additional Members. The Company shall dissolve, and its
affairs shall be wound up:

 

(a) upon an election to dissolve the Company by the Board of Directors that is
approved by the holders of Units representing a majority of the voting power of
all Outstanding Voting Units;

 

(b) upon the entry of a decree of judicial dissolution of the Company pursuant
to the provisions of the California Act; or

 

(c) at any time when there are no Members of the Company, unless the business of
the Company is continued in accordance with the California Act.

 

Section 9.2 Liquidator. Upon dissolution of the Company, the Board of Directors
shall select one or more Persons (which may be the Board of Directors or a
Member) to act as Liquidator. The Liquidator (if other than the Board of
Directors) shall be entitled to receive such compensation for its services as
may be approved by holders of Units representing a majority of the voting power
of all Outstanding Voting Units. The Liquidator (if other than the Board of
Directors) shall agree not to resign at any time without 15 days’ prior notice
and may be removed at any time, with or without cause, by notice of removal
approved by holders of Units representing a majority of the voting power of all
Outstanding Voting Units. Upon dissolution, death, incapacity, removal or
resignation of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and duties of the original Liquidator)
shall within 30 days thereafter be approved by holders of Units representing a
majority of the voting power of all Outstanding Voting Units. The right to
approve a successor or substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such successor or substitute Liquidator approved
in the manner herein provided. Except as expressly provided in this Article IX,
the Liquidator approved in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the parties hereto,
all of the powers conferred upon the Board of Directors under the terms of this
Agreement (but subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers) necessary or appropriate to carry
out the duties and functions of the Liquidator hereunder for and during the
period of time required to complete the winding up and liquidation of the
Company as provided for herein.

 

Section 9.3 Liquidation. The Liquidator shall proceed to dispose of the assets
of the Company, discharge its liabilities and otherwise wind up its affairs in
such manner and over such period as determined by the Liquidator, subject to the
California Act and the following:

 

(a) Subject to Section 9.3(c), the assets may be disposed of by public or
private sale or by distribution in kind to one or more Members on such terms as
the Liquidator and such Member or Members may agree. If any property is
distributed in kind, the Member receiving the property shall be deemed for
purposes of Section 9.3(c) to have received cash equal to its fair market value
as determined by the Board of Directors or the Liquidator in its sole
discretion, and contemporaneously therewith appropriate cash distributions must
be made to the other Members. Notwithstanding anything to the contrary contained
in this Agreement, the Members understand and acknowledge that a Member may be
compelled to accept a distribution of any asset in kind from the Company despite
the fact that the percentage of the asset distributed to such Member exceeds the
percentage of that asset which is equal to the percentage in which such Member
shares in distributions from the Company. The Liquidator may defer liquidation
or distribution of the Company’s assets for a reasonable period of time if it
determines that an immediate sale or distribution of all or some of the
Company’s assets would be impractical or would cause undue loss to the Members.
The Liquidator may distribute the Company’s assets, in whole or in part, in kind
if it determines that a sale would be impractical or would cause undue loss to
the Members.

 

26

 

 

(b) Liabilities of the Company include amounts owed to the Liquidator as
compensation for serving in such capacity (subject to the terms of Section 9.2)
and amounts owed to Members otherwise than in respect of their distribution
rights under Article V. With respect to any liability that is contingent,
conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it deems appropriate or
establish a reserve of cash or other assets to provide for its payment.

 

(c) Subject to the terms of any Unit Designation, all property and all cash in
excess of that required to discharge liabilities as provided in Section 9.3(b)
shall be distributed to the Members in accordance with their respective
Percentage Interests as of a Record Date selected by the Liquidator.

 

Section 9.4 Cancellation of Certificate of Formation. Upon the completion of the
distribution of Company cash and property as provided in Section 9.3 in
connection with the liquidation of the Company, the Certificate of Formation and
all qualifications of the Company as a foreign limited liability company in
jurisdictions other than the State of California shall be cancelled and such
other actions as may be necessary to terminate the Company shall be taken.

 

Section 9.5 Return of Contributions. Neither the Manager nor any Director or
Officer shall be personally liable for, or have any obligation to contribute or
loan any monies or property to the Company to enable it to effectuate, the
return of the Capital Contributions of the Members, or any portion thereof, it
being expressly understood that any such return shall be made solely from
Company assets.

 

Section 9.6 Waiver of Partition. To the maximum extent permitted by Law, each
Member hereby waives any right to partition of the Company property.

 

Section 9.7 Capital Account Restoration. No Member shall have any obligation to
restore any negative balance in its Capital Account upon liquidation of the
Company.

 

ARTICLE X

 

AMENDMENT OF AGREEMENT

 

Section 10.1 General. Except as provided in Sections 10.2 and 10.3, the Board of
Directors may amend any of the terms of this Agreement, but only in compliance
with the terms, conditions and procedures set forth in this Section 10.1.
Amendments to this Agreement may be proposed only by or with the consent of the
Board of Directors. If an amendment to any provision of this Agreement other
than pursuant to Section 10.3 has been proposed by or with the consent of the
Board of Directors, then the Board of Directors shall first adopt a resolution
setting forth the amendment proposed, declaring its advisability, and then (a)
call a meeting of the Members entitled to vote in respect thereof for the
consideration of such amendment or (b) seek the written consent of the Members.
Such meeting shall be called and held upon notice in accordance with Article XII
of this Agreement. The notice shall set forth such amendment in full or a brief
summary of the changes to be effected thereby, as the Board of Directors shall
deem advisable. At the meeting, a vote of Members entitled to vote thereon shall
be taken for and against the proposed amendment. A proposed amendment shall be
effective upon its approval by holders of Units representing a majority of the
voting power of all Outstanding Voting Units, unless a greater percentage is
required under this Agreement or by the California Act.

 

Section 10.2 Specified Amendments.

 

(a) Notwithstanding the provisions of Sections 10.1 and 10.3, no provision of
this Agreement that establishes a percentage of the voting power of Outstanding
Voting Units required to take any action shall be amended, altered, changed,
repealed or rescinded in any respect that would have the effect of reducing such
percentage unless such amendment is approved by the affirmative vote of holders
of Outstanding Voting Units whose aggregate Outstanding Voting Units represent
not less than the voting requirement sought to be reduced.

 

27

 

 

(b) Notwithstanding the provisions of Sections 10.1 and 10.3, no amendment to
this Agreement may (i) enlarge the obligations of any Member without its
consent, unless such shall be deemed to have occurred as a result of an
amendment approved pursuant to Section 10.2(c), (ii) change Section 9.1(a),
(iii) change the term of the Company or (iv) except as set forth in Section
9.1(a), give any Person the right to dissolve the Company.

 

(c) Except as provided in Sections 10.3 and 11.3, any amendment that would have
a material adverse effect on the rights or preferences of any class or series of
Units in relation to other classes or series of Units must be approved by the
holders of not less than a majority of the Outstanding Units of the class or
series affected. The issuance by the Company of securities having rights
superior to those of Outstanding Units or Units having a dilutive effect on
Outstanding Units shall not be deemed to have material adverse effect on the
rights or preferences of any class or series of Units.

 

(d) Notwithstanding Section 10.1, the affirmative vote of the holders of Units
representing at least two-thirds of the voting power of all Outstanding Voting
Units shall be required to alter or amend any provision of this Section 10.2.

 

Section 10.3 Amendments to be Adopted Solely by the Board of Directors.
Notwithstanding Section 10.1, each Member agrees that the Board of Directors,
without the approval of any Member or any other Person, may amend any provision
of this Agreement, and execute, swear to, acknowledge, deliver, file and record
whatever documents may be required in connection therewith, to reflect:

 

(a) a change in the name of the Company, the location of the principal place of
business of the Company, the registered agent of the Company or the registered
office of the Company;

 

(b) the admission, substitution, resignation or removal of Members or the
Manager in accordance with this Agreement;

 

(c) a change that the Board of Directors determines in its sole discretion to be
necessary or appropriate to qualify or continue the qualification of the Company
as a limited liability company under the laws of any state or to ensure that the
Group Members will not be treated as associations taxable as corporations or
otherwise taxed as entities for U.S. federal income tax purposes;

 

(d) a change that the Board of Directors determines in its sole discretion to be
necessary or appropriate to address changes in U.S. federal income tax
regulations, legislation or interpretation;

 

(e) a change that the Board of Directors in its sole discretion determines (i)
does not adversely affect the Members considered as a whole (including any
particular class or series of Units as compared to other classes or series of
Units) in any material respect, (ii) to be necessary, desirable or appropriate
to satisfy any requirements, conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any U.S. federal or state or non-U.S.
agency or judicial authority or contained in any U.S. federal or state or
non-U.S. statute (including the California Act), (iii) to be necessary,
desirable or appropriate to facilitate the trading of Units (including the
division of any class or classes or series of Outstanding Units into different
classes or series to facilitate uniformity of tax consequences within such
classes or series of Units) or comply with any rule, regulation, guideline or
requirement of any Securities Exchange on which Units are or will be listed for
trading, (iv) to be necessary or appropriate in connection with action taken by
the Board of Directors pursuant to Section 3.8 or (v) is required to effect the
intent expressed in the Registration Statement or the intent of the provisions
of this Agreement or is otherwise contemplated by this Agreement;

 

(f) a change in the Fiscal Year or taxable year of the Company and any other
changes that the Board of Directors determines to be necessary, desirable or
appropriate as a result of a change in the Fiscal Year or taxable year of the
Company;

 

(g) an amendment that the Board of Directors determines in its sole discretion
to be necessary or appropriate in connection with the authorization or issuance
of any class or series of Units pursuant to Section 4.2 and the admission of
Additional Members;

 

28

 

 

(h) an amendment expressly permitted in this Agreement to be made by the Board
of Directors acting alone (including pursuant to Sections 3.6(b) or 5.2(b));

 

(i) an amendment effected, necessitated or contemplated by a Merger Agreement or
Plan of Conversion approved in accordance with Section 11.3;

 

(j) an amendment that the Board of Directors determines in its sole discretion
to be necessary or appropriate to reflect and account for the formation by the
Company of, or investment by the Company in, any corporation, partnership, joint
venture, limited liability company or other entity, in connection with the
conduct by the Company of activities permitted by the terms of Sections 2.4 or
6.1(a);

 

(k) a merger, conversion, conveyance or other business combination pursuant to
Section 11.3(d), including an amendment permitted pursuant to Section 11.5; or

 

(l) any other amendment substantially similar to one or more of the foregoing.

 

ARTICLE XI

 

MERGER, CONSOLIDATION OR CONVERSION

 

Section 11.1 Authority. The Company may merge or consolidate or otherwise
combine with or into one or more corporations, limited liability companies,
statutory trusts, business trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including a partnership
(whether general or limited (including a limited liability partnership or a
limited liability limited partnership)), or convert into any such entity, formed
under the laws of the State of California or any other state of the United
States of America, pursuant to a written agreement of merger, consolidation or
other business combination (a “Merger Agreement”), or a written plan of
conversion (a “Plan of Conversion”), as the case may be, in accordance with this
Article XI.

 

Section 11.2 Procedure for Merger, Consolidation, Conversion or Other Business
Combination. Merger, consolidation, conversion or other business combination of
the Company pursuant to this Article XI requires the prior consent of the Board
of Directors; provided, however, that to the fullest extent permitted by Law,
the Board of Directors shall have no duty or obligation to consent to any
merger, consolidation, conversion or other business combination of the Company
and, to the fullest extent permitted by Law, may decline to do so free of any
duty (including any fiduciary duty) or obligation whatsoever to the Company, any
Member or any other Person bound by this Agreement and, in declining to consent
to a merger, consolidation, conversion or other business combination, shall not
be required to act pursuant to any other standard imposed by this Agreement, any
other agreement contemplated hereby or under the California Act or any other Law
or at equity. If the Board of Directors shall determine, in the exercise of its
sole discretion, to consent to the merger, consolidation or other business
combination, the Board of Directors shall approve the Merger Agreement or Plan
of Conversion, which shall set forth:

 

(a) the names and jurisdictions of formation or organization of each of the
business entities proposing to merge, consolidate, convert or combine;

 

(b) the name and jurisdiction of formation or organization of the business
entity that is to survive the proposed merger, consolidation, conversion or
other business combination (the “Surviving Business Entity”);

 

(c) the terms and conditions of the proposed merger, consolidation, conversion
or other business combination;

 

(d) the manner and basis of converting or exchanging the equity securities of
each constituent business entity for, or into, cash, property or interests,
rights, securities or obligations of the Surviving Business Entity; and (i) if
any interests in or securities or rights of any constituent business entity are
not to be converted or exchanged solely for, or into, cash, property or
interests in or rights, securities or obligations of the Surviving Business
Entity, the cash, property or interests in or rights, securities or obligations
of any general or limited partnership, corporation, trust, limited liability
company, unincorporated business or other entity (other than the Surviving
Business Entity) which the holders of such interests, securities or rights are
to receive upon conversion of, or in exchange for, their interests, securities
or rights, and (ii) in the case of securities represented by certificates, upon
the surrender of such certificates, which cash, property or interests in or
rights, securities or obligations of the Surviving Business Entity or any
general or limited partnership, corporation, trust, limited liability company,
unincorporated business or other entity (other than the Surviving Business
Entity), or evidences thereof, are to be delivered;

 

29

 

 

(e) a statement of any changes in the constituent documents or the adoption of
new constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of limited
partnership, operating agreement or other similar charter or governing document)
of the Surviving Business Entity to be effected by such merger, consolidation,
conversion or other business combination;

 

(f) the effective time of the merger, consolidation, conversion or other
business combination, which may be the date of the filing of the certificate of
merger or consolidation or similar certificate pursuant to Section 11.4 or a
later date specified in or determinable in accordance with the Merger Agreement
or Plan of Conversion; provided, that if the effective time of such transaction
is to be later than the date of the filing of such certificate, the effective
time shall be fixed at a date or time certain at or prior to the time of the
filing of such certificate and stated therein; and

 

(g) such other provisions with respect to the proposed merger, consolidation,
conversion or other business combination that the Board of Directors determines
in its sole discretion to be necessary or appropriate.

 

Section 11.3 Approval by Members of Merger, Consolidation, Conversion or Other
Business Combination.

 

(a) Except as provided in Section 11.3(d), the Board of Directors, upon its
approval of the Merger Agreement or Plan of Conversion, shall direct that the
Merger Agreement or Plan of Conversion, as applicable, and the merger,
consolidation, conversion or other business combination contemplated thereby be
submitted to a vote of the Members, whether at an annual meeting or special
meeting, in either case in accordance with the requirements of Article XII. A
copy or a summary of the Merger Agreement or Plan of Conversion shall be
included in or enclosed with the notice of meeting.

 

(b) Except as provided in Section 11.3(d), the Merger Agreement or Plan of
Conversion and the merger, consolidation, conversion or other business
combination contemplated thereby shall be approved upon receiving the
affirmative vote of the holders of a majority of the voting power of Outstanding
Voting Units.

 

(c) Except as provided in Section 11.3(d), after such approval by vote of the
Members, and at any time prior to the filing of the certificate of merger,
consolidation, conversion or similar certificate pursuant to Section 11.4, the
merger, consolidation, conversion or other business combination may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger Agreement, or
the Plan of Conversion, as the case may be.

 

(d) Notwithstanding anything else contained in this Article XI or in this
Agreement, the Board of Directors may, without Member approval, (i) convert the
Company or any Group Member into a new limited liability entity or (ii) merge
the Company or any Group Member into, or convey all of the Company’s assets to,
another limited liability entity, which entity shall be newly formed and shall
have no assets, liabilities or operations at the time of such conversion, merger
or conveyance other than those it receives from the Company or other Group
Member; provided, that (A) the Company has received an Opinion of Counsel that
the merger or conveyance, as the case may be, will not result in the loss of the
limited liability of any Member, (B) the sole purpose of such conversion, merger
or conveyance is to effect a mere change in the legal form of the Company into
another limited liability entity and (C) the governing instruments of the new
entity provide the Members and the Board of Directors with substantially the
same rights and obligations as are herein contained.

 

(e) Members are not entitled to dissenters’ rights of appraisal in the event of
a merger, consolidation or conversion pursuant to this Article XI, a sale of all
or substantially all of the assets of the Company or the Company’s Subsidiaries
or any other similar transaction or event.

 

Section 11.4 Certificate of Merger, Conversion or Consolidation. Upon the
required approval by the Board of Directors and the Members of a Merger
Agreement or Plan of Conversion and the merger, consolidation, conversion or
business combination contemplated thereby, a certificate of merger, conversion
or consolidation or similar certificate shall be executed and filed with the
Secretary of State of the State of California and any other applicable
Governmental Entity in conformity with the requirements of the California Act
and other applicable Law.

 

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Section 11.5 Amendment of Operating Agreement. Pursuant to the California Act,
and notwithstanding Article X hereof, an agreement of merger, consolidation or
other business combination approved in accordance with this Article XI may (a)
effect any amendment to this Agreement or (b) effect the adoption of a new
operating agreement for a limited liability company if it is the Surviving
Business Entity. Any such amendment or adoption made pursuant to this Section
11.5 shall be effective at the effective time or date of the merger,
consolidation or other business combination.

 

ARTICLE XII

 

MEMBER MEETINGS

 

Section 12.1 Member Meetings.

 

(a) All acts of Members to be taken hereunder shall be taken in the manner
provided in this Article XII. Meetings of the Members holding any class or
series of Units may be called only by a majority of the Board of Directors. For
the avoidance of doubt, the Class A Units and Units of any other class or series
issued after the Date of this Agreement that entitle the Record Holder thereof
to vote on any matter submitted for consent or approval of Members under this
Agreement shall not constitute separate classes for this purpose. A meeting
shall be held at a time and place determined by the Board of Directors in its
sole discretion on a date not less than 10 calendar days nor more than 60
calendar days after the mailing of notice of the meeting.

 

(b) The Company shall not be required to have an annual meeting unless otherwise
required by applicable Law.

 

Section 12.2 Notice of Meetings of Members. Notice, stating the place, day and
hour of any annual or special meeting of the Members, as determined by the Board
of Directors, and (a) in the case of a special meeting of the Members, the
purpose or purposes for which the meeting is called or (b) in the case of an
annual meeting, those matters that the Board of Directors, at the time of giving
the notice, intends to present for action by the Members, shall be delivered by
the Company not less than 10 calendar days nor more than 60 calendar days before
the date of the meeting, in a manner and otherwise in accordance with Section
13.1, to each Record Holder who is entitled to vote at such meeting. Such
further notice shall be given as may be required by the California Act. Only
such business shall be conducted at a meeting of Members as shall have been
brought before the meeting pursuant to the Company’s notice of meeting. Any
previously scheduled meeting of the Members may be postponed, and any meeting of
the Members may be cancelled, by resolution of the Board of Directors upon
public notice given prior to the date previously scheduled for such meeting of
the Members.

 

Section 12.3 Record Date. For purposes of determining the Members entitled to
notice of or to vote at a meeting of the Members or to give approvals without a
meeting as provided in Section 12.8, the Board of Directors may set a Record
Date, which shall not be less than 10 calendar days nor more than 60 calendar
days before (a) the date of the meeting or (b) in the event that approvals are
sought without a meeting, the date by which Members are requested in writing by
the Board of Directors to give such approvals. If no Record Date is fixed by the
Board of Directors, then (i) the Record Date for determining Members entitled to
notice of or to vote at a meeting of Members shall be at the close of business
on the day immediately preceding the day on which notice is given and (ii) the
Record Date for determining the Members entitled to give approvals without a
meeting shall be the date the first written approval is deposited with the
Company in accordance with Section 12.8. A determination of Members of record
entitled to notice of or to vote at a meeting of Members shall apply to any
adjournment or postponement of the meeting; provided, however, that the Board of
Directors may fix a new Record Date for the adjourned or postponed meeting.

 

Section 12.4 Adjournment. In the absence of a quorum, any meeting of Members may
be adjourned from time to time by the affirmative vote of Members holding at
least a majority of the voting power of the Outstanding Units entitled to vote
at such meeting represented either in person or by proxy, but no other business
may be transacted, except as provided in this Section 12.4. When a meeting is
adjourned to another time or place, notice need not be given of the adjourned
meeting and a new Record Date need not be fixed, if the time and place thereof
are announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting, the
Company may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 45 days or if a new Record
Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given in accordance with this Article XII.

 

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Section 12.5 Waiver of Notice; Approval of Meeting. The transactions of any
meeting of Members, however called and noticed, and whenever held, shall be as
valid as if they had occurred at a meeting duly held after regular call and
notice if a quorum is present either in person or by proxy. Attendance of a
Member at a meeting shall constitute a waiver of notice of the meeting, except
(a) when the Member attends the meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business at such meeting
because the meeting is not lawfully called or convened, and (b) that attendance
at a meeting is not a waiver of any right to disapprove the consideration of
matters required to be included in the notice of the meeting, but not so
included, if the disapproval is expressly made at the meeting.

 

Section 12.6 Quorum; Required Vote for Member Action.

 

(a) The Members holding a majority of the voting power of the Outstanding Units
of the class or classes or series for which a meeting has been called
represented in person or by proxy shall constitute a quorum at a meeting of the
Members of such class or classes or series unless any such action by the Members
requires approval by Members holding a greater percentage of the voting power of
such Units, in which case the quorum shall be such greater percentage. For the
avoidance of doubt, the Class A Units and Units of any other class or series
issued after the Date of this Agreement shall not constitute separate classes
for this purpose.

 

(b) At any meeting of the Members duly called and held in accordance with this
Agreement at which a quorum is present, the act of Members holding Outstanding
Units that in the aggregate represent a majority of the voting power of the
Outstanding Units entitled to vote at such meeting and which are present in
person or by proxy at such meeting shall be deemed to constitute the act of all
Members, unless a greater or different percentage is required with respect to a
matter under the California Act or under the provisions of this Agreement, in
which case the act of the Members holding Outstanding Units that in the
aggregate represent at least such greater or different percentage of the voting
power shall be required. The Members present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Members to leave less than a quorum, if
any action taken (other than adjournment) is approved by the required percentage
of the voting power of Outstanding Units specified in this Agreement.

 

Section 12.7 Conduct of a Meeting. The Board of Directors shall have full power
and authority concerning the manner of conducting any meeting of the Members or
solicitation of approvals in writing, including the determination of Persons
entitled to vote, the existence of a quorum, the satisfaction of the
requirements of this Article XII, the conduct of voting, the validity and effect
of any proxies and the determination of any controversies, votes or challenges
arising in connection with or during the meeting or voting. The Board of
Directors shall designate a Person to serve as chairman of any meeting and shall
further designate a Person to take the minutes of any meeting. All minutes shall
be kept with the records of the Company maintained by the Board of Directors.
The Board of Directors may make such other regulations consistent with
applicable Law and this Agreement as it may deem advisable concerning the
conduct of any meeting of the Members or solicitation of approvals in writing,
including regulations in regard to the appointment of proxies, the appointment
and duties of inspectors of votes and approvals, the submission and examination
of proxies and other evidence of the right to vote and the revocation of
approvals, proxies and votes in writing.

 

Section 12.8 Action Without a Meeting. Any action that may be taken at a meeting
of the Members may be taken without a meeting, without a vote and without prior
notice, if an approval in writing setting forth the action so taken is signed by
Members holding not less than the minimum percentage of the voting power of the
Outstanding Voting Units that would be necessary to authorize or take such
action at a meeting at which all the Members were present and reasonable notice
of the taking of action without a meeting shall be given to the Members who have
not approved in writing. The Board of Directors may specify that a written
ballot, if any, submitted to Members for the purpose of taking any action
without a meeting shall be returned to the Company within the time period, which
shall be not less than 20 days, specified by the Board of Directors in its sole
discretion. If a ballot returned to the Company does not vote all of the Units
held by a Member, the Units held by such Member and not voted on such ballot
shall be deemed to have been voted in the same manner and in the same
proportions as the voted Units. If approval of the taking of any action by the
Members is solicited by any Person other than by or on behalf of the Board of
Directors, the written approvals shall have no force and effect unless and until
(a) they are deposited with the Company in the care of the Secretary or another
Officer designated by the Board of Directors, (b) approvals sufficient to take
the action proposed are dated as of a date not more than 90 days prior to the
date sufficient approvals are deposited with the Company and (c) in the
Company’s opinion the exercise of such right and the action proposed to be taken
with respect to any particular matter is permissible under the state statutes
then governing the rights, duties and liabilities of the Company and the
Members. Nothing contained in this Section 12.8 shall be deemed to require the
Board of Directors to solicit all Members in connection with a matter approved
by Members holding the requisite percentage of the voting power of the
Outstanding Voting Units acting by written consent without a meeting.

 

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Section 12.9 Voting and Other Rights.

 

(a) Only those Record Holders of Units on the Record Date set pursuant to
Section 12.3 shall be entitled to notice of, and to vote at, a meeting of
Members or to act with respect to matters as to which the holders of the
Outstanding Voting Units have the right to vote or to act (including the giving
of approval in writing). All references in this Agreement to votes of, or other
acts that may be taken by, the holders of Outstanding Voting Units shall be
deemed to be references to the votes or acts of the Record Holders of such
Outstanding Voting Units on such Record Date. For the avoidance of doubt, the
provisions of this Section 12.9 (as well as the other provisions of this
Agreement) are subject to the provisions of Section 3.4.

 

(b) With respect to Outstanding Voting Units that are held for a Person’s
account by another Person (such as a broker, dealer, bank, trust company or
clearing corporation, or an agent of any of the foregoing), in whose name such
Outstanding Voting Units are registered, such other Person shall, in exercising
the voting rights in respect of such Outstanding Voting Units on any matter, and
unless the arrangement between such Persons provides otherwise, vote such
Outstanding Voting Units in favor of, and at the direction of, the Person who is
the Beneficial Owner, and the Company shall be entitled to assume it is so
acting without further inquiry.

 

Section 12.10 Proxies and Voting.

 

(a) On any matter that is to be voted on by Members, the Members may vote 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. Any such
proxy shall be filed in accordance with the procedure established for the
meeting. For purposes of this Agreement, the term “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. Any copy, facsimile or other reliable
reproduction of the writing or transmission created pursuant to this paragraph
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used; provided, that such copy, facsimile or other reproduction shall be a
complete reproduction of the entire original writing or transmission.

 

(b) The Company may, and to the extent required by applicable Law, shall, in
advance of any meeting of Members, appoint one or more inspectors to act at the
meeting and make a written report thereof. The Company may designate one or more
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate is able to act at a meeting of Members, the Person presiding at the
meeting may, and to the extent required by applicable Law, shall, appoint one or
more inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. Every vote taken by ballot shall be counted by a
duly appointed inspector or inspectors.

 

(c) With respect to the use of proxies at any meeting of Members, the Company
shall be governed by the applicable provisions of the CCC.

 

33

 

 

ARTICLE XIII

 

GENERAL PROVISIONS

 

Section 13.1 Addresses and Notices.

 

(a) Unless otherwise specified herein, any notice, demand, request, report or
proxy materials required or permitted to be given or made to a Member under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person or when sent by first class United States mail or other means of
written communication to the Member at the address described below. Any notice,
payment in the form of a check, demand, request, report or proxy materials to be
given or made to a Member in respect of any Units hereunder shall be deemed
conclusively to have been given or made, and the obligation to give such notice,
demand, request, report or proxy materials or to make such payment shall be
deemed conclusively to have been fully satisfied, upon the sending of such
notice, payment, demand, request, report or proxy materials to the Record Holder
of such Units at its address as shown on the records of the Transfer Agent or as
otherwise shown on the records of the Company, regardless of any claim of any
Person who may have an interest in such Units by reason of any assignment or
otherwise.

 

(b) An affidavit or certificate of making of any notice, demand, request, report
or proxy materials in accordance with the provisions of this Section 13.1
executed by the Company, the Transfer Agent or the mailing organization shall be
prima facie evidence of the giving or making of such notice, demand, request,
report or proxy materials. If any notice, demand, request, report or proxy
materials given or made in accordance with this Section 13.1 is returned marked
to indicate that such notice, demand, request, report or proxy materials was
unable to be delivered, then such notice, demand, request, report or proxy
materials, and in the case of notice, demand, request, report or proxy materials
returned by the United States Postal Service or overnight courier of national
reputation (or other physical mail delivery service outside of the United States
of America), any subsequent notice, demand, request, report or proxy materials,
shall be deemed to have been duly given or made without further mailing (until a
reasonable period after such time as such Member or another Person notifies the
Transfer Agent or the Company in writing of a change in such Member’s address)
or other delivery if it is available for the Member at the principal office of
the Company for a period of one year from the date of the giving or making of
such notice, demand, request, report or proxy materials to the other Members.
Any notice to the Company shall be deemed given if received by the Secretary at
the principal office of the Company designated pursuant to Section 2.3. The
Board of Directors and any Officer may rely and shall be protected in relying on
any notice or other document from a Member or other Person if believed by the
Board of Directors or such Officer to be genuine.

 

Section 13.2 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.

 

Section 13.3 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns. The Indemnified Persons
and their heirs, executors, administrators and successors shall be entitled to
receive the benefits of this Agreement.

 

Section 13.4 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.

 

Section 13.5 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Company.

 

Section 13.6 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach of any other covenant, duty, agreement or
condition.

 

Section 13.7 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
Person acquiring a Unit pursuant to Section 3.1(a), without execution hereof.

 

34

 

 

Section 13.8 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of California applicable to
agreements made and to be performed entirely therein.

 

Section 13.9 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.

 

Section 13.10 Consent of Members. Each Member hereby expressly consents and
agrees that, whenever in this Agreement it is specified that an action may be
taken upon the affirmative vote or consent of less than all of the Members, such
action may be so taken upon the concurrence of less than all of the Members and
each Member shall be bound by the results of such action.

 

Section 13.11 Facsimile Signatures. The use of facsimile signatures affixed in
the name and on behalf of an Officer or Transfer Agent on Certificates is
expressly permitted by this Agreement.

 

[remainder of this page intentionally left blank]

 

35

 

 

 

IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.

 

  Members:       AMINO NUTRITIONALS, LLC, as attorney-
in-fact for the Members of the Company         By:     Name: Targeted Medical
Pharma, Inc.   By: Kim Giffoni   Its: Chief Executive Officer

 

  By:     Name:  Shlomo Rechnitz

 

  Manager:         By:     Name: Kim Giffoni   Title: Principal and President

 

[Amino Nutritionals, LLC Operating Agreement]

 

36

 

 

EXHIBIT A

 

FORM OF CLASS A UNIT CERTIFICATE

 

 

CLASS A UNITS     CLASS A UNITS         NUMBER     UNITS        

  

    Amino Nutritionals, LLC   CUSIP     Formed under the laws of the State of
California   SEE REVERSE FOR DEFINITIONS THIS CERTIFIES THAT        

 

SPECIMEN

 

is the owner of

 

Class A Units of Amino Nutritionals, LLC

 

(hereinafter called the “Company”) transferable on the books of the Company by
the holder hereof in person or by duly authorized attorney, upon surrender of
this certificate properly endorsed. This certificate is not valid until
countersigned by the Transfer Agent and registered by the registrar.

 

Witness, the facsimile signatures of the duly authorized officers of the
Company.

 

Dated                

 

 

 

 

THE CLASS A UNITS EVIDENCED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF
THE OPERATING AGREEMENT (AS AMENDED, SUPPLEMENTED OR RESTATED, THE “OPERATING
AGREEMENT”) OF AMINO NUTRITIONALS, LLC (“THE COMPANY”), WHICH CONTAINS
SUBSTANTIAL RESTRICTIONS ON THEIR TRANSFER. THE CLASS A UNITS MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
OPERATING AGREEMENT AND APPLICABLE SECURITIES LAWS. ANY PURPORTED TRANSFER NOT
MADE IN COMPLIANCE WITH THE OPERATING AGREEMENT SHALL BE NULL AND VOID.

 

THE OPERATING AGREEMENT PROHIBITS ANY TRANSFER IF SUCH TRANSFER WOULD, AMONG
OTHER THINGS (A) VIOLATE APPLICABLE U.S. FEDERAL OR STATE SECURITIES LAWS, RULES
OR REGULATIONS, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF THE COMPANY
UNDER THE LAWS OF ANY JURISDICTION, (C) CAUSE THE COMPANY TO BE TREATED AS AN
ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR
U.S. FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED)
OR (D) REQUIRE THE COMPANY TO BE SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE
SECURITIES EXHANGE ACT OF 1934. IN ADDITION, THE CLASS A UNITS ARE SUBJECT TO
MANDATORY REDEMPTION UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE OPERATING
AGREEMENT.

 

A COPY OF THE OPERATING AGREEMENT IS AVAILABLE WITHOUT CHARGE UPON REQUEST FROM
THE COMPANY.

 

THE HOLDER OF A CLASS A UNIT, BY ACCEPTANCE OF THIS CERTIFICATE, SHALL BE DEEMED
TO HAVE (A) REQUESTED ADMISSION AS, AND AGREED TO BECOME, A MEMBER OF THE
COMPANY, (B) AGREED TO COMPLY WITH, AND BE BOUND BY, THE TERMS OF THE OPERATING
AGREEMENT, (C) GRANTED THE POWERS OF ATTORNEY PROVIDED FOR IN THE OPERATING
AGREEMENT AND (D) MADE THE WAIVERS AND GIVEN THE CONSENTS AND APPROVALS
CONTAINED IN THE OPERATING AGREEMENT.

 

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

 

TEN COM –   as tenants in common   UNIF GIFT MIN ACT –    ________Custodian
________ TEN ENT –   as tenants by the entireties    
(Cust)                           (Minor) JT TEN –   as joint tenants with right
of survivorship and not as tenants in common    

under Uniform Transfers/Gifts to

Minors Act_______________

            (State)

 

Additional abbreviations may also be used though not in the above list.

 

FOR VALUE RECEIVED, _________ hereby sell, assign and transfer unto

 

Please insert Social Security or other

identifying number of Assignee

 

 

(Please print or typewrite name and address, including zip code, of Assignee)

 

_________ units represented by the Certificate, and do hereby irrevocably
constitute and appoint

 

______________Attorney to transfer the said units on the books of the Company
with full power of substitution in the premises.

 

Dated _________

 

    Signature(s) Guaranteed: NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

 

        THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT
UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.