Exhibit 10.1

 

 

MT MELROSE, LLC

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

This Amended and Restated Limited Liability Company Agreement of MT MELROSE,
LLC, a Delaware limited liability company (the “Company”), is made as of June
27, 2019 (the “Effective Date”) by and among Woodmont Lexington LLC, a Delaware
limited liability company (“Woodmont”) as Manager, and Enterprise Diversified,
Inc., a Nevada corporation (“ENDI”), to serve as the limited liability company
agreement under the Act (hereinafter defined) for the Company. Woodmont and ENDI
shall be referred to herein together as the “Members” and, each, a “Member.”

 

WHEREAS, the Company was formed on December 14, 2017, as a limited liability
company pursuant to the Act by (i) filing a Certificate of Formation of the
Company (as it may be amended or modified from time to time, the “Certificate”)
with the office of the Secretary of State of the State of Delaware and (ii) an
Operating Agreement of the Company, dated as of December 14, 2017 (the “Initial
Agreement”), entered into by ENDI as the sole member of the Company;

 

WHEREAS, certain of the Members have, concurrently with the execution of this
Agreement, made certain Capital Contributions to the Company and acquired the
Percentage Interest set forth opposite such Member’s name on the attached
Schedule A; and

 

WHEREAS, the Members desire to continue the Company as a limited liability
company under the Act and to amend and restate the Initial Agreement in its
entirety.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and intending to be legally bound hereby, the parties to
this Agreement hereby agree as follows:

 

1.     Definitions. Unless the context otherwise requires, the terms defined in
this Section 1 shall, for the purposes of this Agreement, have the meanings
herein specified.

 

“Act” has the meaning set forth in the recitals hereof.

 

“Affiliate” means, as 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 such Person or, if such Person is an individual, the
Immediate Family of such Person. As used in this definition, the term “control”
means the possession, directly or indirectly, or as trustee or executor, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, as trustee or executor,
by contract or credit arrangement or otherwise.

 

“Agreement” means this Limited Liability Company Agreement, as amended,
modified, supplemented or restated from time to time.

 

“Applicable Portion” means a portion of the Interest owned by each electing
Tag-Along Member equal to the product of (i) the total Interest owned by such
Tag-Along Member times (ii) a fraction, the numerator of which is the portion of
the Interest owned by the Manager that the Manager has proposed or agreed to
transfer in a Tag-Along Transaction and the denominator of which is the total
Interest owned by the Manager. For the purpose of this definition, any Interest
owned by an Affiliate of either the Tag-Along Member or the Manager shall be
deemed owned by such Tag-Along Member and the Manager, respectively.

 

“Capital Account” means, with respect to any Member, the account maintained for
such Member in accordance with the provisions of Section 8 hereof.

 

“Capital Contribution” means, with respect to each Member, the aggregate amount
of cash and the agreed value of any property or services contributed to the
Company pursuant to Section 7 hereof. In the case of a Member that acquires an
Interest in the Company by virtue of an assignment or transfer in accordance
with the terms of this Agreement, “Capital Contribution” means the pro rata
Capital Contribution of such Member’s predecessor to an extent proportionate to
the acquired Interest.

 

“Certificate” means the Certificate of Formation of the Company and any and all
amendments thereto and restatements thereof filed on behalf of the Company with
the office of the Secretary of State of the State of Delaware pursuant to the
Act.

 

“Claim” has the meaning set forth in Section 18(b) hereof.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any corresponding federal tax statute enacted after the date of this Agreement.
A reference to a specific section of the Code refers not only to such specific
section but also to any corresponding provision of any federal tax statute
enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.

 

“Covered Person” means a Member, a Manager, any Affiliate of a Member or a
Manager, any officer, director, shareholder, partner, employee, representative
or agent of a Member or a Manager, or their respective Affiliates, or any
officer, employee or agent of the Company or its Affiliates.

 

“Damages” has the meaning set forth in Section 18(a) hereof.

 

“Dispute” means any dispute, claim or controversy arising out of or relating to
this Agreement or the breach, termination, enforcement, interpretation or
validity thereof.

 

“Fair Market Value” means, with respect to any property (including any
securities), the fair market value of such property as determined in good faith
by the Manager in its sole discretion.

 

“Fiscal Year” means (a) the period commencing upon the formation of the Company
and ending on such date as the Manager shall determine, (b) any subsequent
twelve (12) month or 52/53 week period ending on such date as the Manager shall
determine, or (c) any portion of the period described in clause (b) of this
sentence for which the Company is required to allocate Net Income and Net Loss
and other items pursuant to Section 9 hereof.

 

“Gross Asset Value” with respect to any asset shall mean the asset’s adjusted
basis for federal income tax purposes, except as follows:

 

 

(i)

The initial Gross Asset Value of any asset contributed by a Member to the
Company shall be the gross Fair Market Value of such asset, as determined by the
Manager;

 

 

(ii)

The Gross Asset Values of all Company assets shall be adjusted to equal their
respective gross Fair Market Values, as determined by the Manager, as of the
following times:

 

 

(a)

the acquisition of an additional interest in the Company by any new or existing
Member

 

 

(b)

the distribution by the Company to a Member of more than a de minimis amount of
property other than money, as consideration for an interest in the Company;

 

 

(c)

the liquidation of the Company for federal income tax purposes within the
meaning of Regulation Section 1.704-1(b)(2)(ii)(g) (other than pursuant to Code
Section 708(b)(1)(B)); and

 

 

(d)

in connection with the grant of an interest in the Company (other than a de
minimis interest) as consideration for the provision of services to or for the
benefit of the Company by an existing Member acting in a member capacity, or by
a new Member acting in a member capacity in anticipation of being a Member;
provided, however, that the adjustments pursuant to clauses (a), (b), and (d)
above shall be made only if the Manager reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members in the Company;

 

 

(iii)

The Gross Asset Value of any Company asset distributed to any Member shall be
the gross fair market value of such asset on the date of distribution as
determined by the Manager;

 

 

(iv)

The Gross Asset Values of Company assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
(A) Regulation Section 1.704-1(b)(2)(iv)(m) and (B) subparagraph (vi) of the
definition of Profits and Losses and Section 4.02(g) hereof; provided, however,
that Gross Asset Values shall not be adjusted pursuant to this clause (iv) to
the extent the General Partner determines that an adjustment pursuant to clause
(ii) hereof is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this clause (iv).

 

If the Gross Asset Value of an asset has been determined pursuant to
subparagraphs (i), (ii), or (iv) hereof, such Gross Asset Value shall thereafter
be adjusted by the depreciation and amortization taken into account with respect
to such asset for purposes of computing Net Income and Net Loss.

 

“Immediate Family” means, with respect to any individual, such individual’s
parents, spouse, issue and adopted children, or any of them, or any trust,
corporation, partnership, limited liability company, or other entity
substantially all of the economic interests in which are held by or for the
benefit of such parents, spouse, issue, adopted children, or any of them.

 

“Indemnified Party” has the meaning set forth in Section 18(b) hereof.

 

“Interest” means the interest in capital and profits of the Company held by a
particular Member.

 

“Laws” means:

 

(a)     all constitutions, treaties, laws, statutes, codes, ordinances, orders,
decrees, rules, regulations and municipal by-laws, whether domestic, foreign or
international;

 

(b)     all judgments, orders, writs, injunctions, decisions, rulings, decrees
and awards of any governmental body;

 

(c)     all policies, practices and guidelines of any governmental body; and

 

(d)     any amendment, modification, re-enactment, restatement or extension of
the foregoing, in each case binding on or affecting the party or Person referred
to in the context in which such word is used; and “Law” shall mean any one of
them.

 

“Majority in Interest” means, Members holding greater than 67% of the Percentage
Interest of the Company.

 

“Manager” has the meaning set forth in the preamble, and shall also include each
other Person designated as a manager of the Company that may become a party to
this Agreement after the Effective Date.

 

“Member” means each Member set forth on Schedule A hereto and any Person
admitted as an additional Member or a substitute Member pursuant to the
provisions of this Agreement, in such Person’s capacity as, and so long as such
Person is, a member of the Company, and “Members” means two or more of such
Persons when acting in their capacities as members of the Company. For purposes
of the Act, the Members shall constitute one class or group of members.

 

“Net Income” or “Net Loss” means, for each Fiscal Year or other period, an
amount equal to the Company’s taxable income or loss for such year or period,
other than items of income or loss specially allocated pursuant to this
Agreement, as determined by the Company’s accountants in accordance with Section
703(a) of the Code (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in Net Income or Net Loss), with the adjustments required
to comply with the Capital Account maintenance rules of Treasury Regulation
Section 1.704 1(b), including the rules relating to (i) revaluations of the
Gross Asset Value in the case of distributions of Company property in kind and
the optional revaluation of the Gross Asset Value of Company property and (ii)
utilizing “book” depreciation, cost recovery or amortization as determined under
Treasury Regulation Section 1.704-1(b)(2)(iv)(g)(3) if there is a difference
between the fair market value of contributed or revalued property and the
adjusted tax basis of such property. The Manager shall cause the Company to
revalue property as required or permitted under the applicable Treasury
Regulations.

 

“Notice” has the meaning set forth in Section 18(b) hereof.

 

“Parties” or “Party” means the parties to any Dispute, or any one of them.

 

“Percentage Interest” means the Interest of a Member, expressed as a portion of
one hundred percent, as shown on Schedule A hereto, which reflects the Member’s
ownership interest in profits of the Company.

 

“Person” means any natural person, corporation, association, partnership
(general or limited), limited liability company, joint venture, trust, estate,
unincorporated association, or other legal entity or organization.

 

“Reorganization” means any of the following: (a) a merger, consolidation,
Transfer of Interests, or reorganization, in any single transaction or series of
related transactions in which the Members of the Company immediately preceding
such transaction or the first of such series of transactions, directly or
indirectly, possess a majority of the voting power of the Company’s or any
successor entity’s issued and outstanding capital securities immediately after
such transaction or series of transactions or (b) a single transaction or series
of transactions pursuant to which a Person or Persons who are direct or indirect
wholly-owned subsidiaries of the Company acquire all or substantially all of the
Company’s assets determined on a consolidated basis.

 

“Regulatory Allocations” means allocations of Net Income and Net Loss (or items
thereof) and Company indebtedness in accordance with the following:

 

(a)     The non-recourse deductions of the Company (within the meaning of
Treasury Regulation Section 1.704 2(b)(1) and (c)) shall be allocated among the
Members in accordance with their respective Percentage Interests.

 

(b)     Allocations of Net Income or Net Loss (or items thereof) shall be made
consistent with the requirements of Treasury Regulation Section 1.704 2(e),
including those provisions relating to allocations of income and deductions
attributable to non-recourse debt and partner non-recourse debt. Allocations
that would conform to those required by a “minimum gain chargeback” (as defined
in Treasury Regulation Section 1.704 2(f)) in addition to the requirements of
Treasury Regulation Section 1.704 1(b)(2)(ii)(d), relating to a “qualified
income offset,” and Treasury Regulation Section 1.704 2(i)(4), relating to the
chargeback on account of a decrease in minimum gain attributable to partner
non-recourse debt, shall be made in a manner, at a time, and in the amounts
consistent with those provisions.

 

(c)     The “excess non-recourse indebtedness” of the Company (within the
meaning of Treasury Regulation Section 1.752 3(a)(3)) shall be allocated among
the Members in accordance with their respective Percentage Interests.

 

(d)     Solely for federal income tax purposes, items of income, gain, loss and
deduction shall be allocated among the Members in a manner so as to take into
account the difference between the income tax basis of any Company property
contributed by a Member to the Company immediately after its contribution to the
Company and its value for purposes of this Agreement, as required by Section
704(c) of the Code. The Manager, in its absolute discretion, may elect to
account for the book-tax variation using any method permitted under the
applicable Treasury Regulations.

 

“Representative” means, with respect to any Person, such Person’s partners,
members, directors, officers, employees, agents, counsel, investment advisers or
representatives.

 

“Sale Notice” has the meaning set forth in Section 13(d)(i) hereof.

 

“Sale of the Company” means any of the following: (a) a merger or consolidation
of the Company into or with any other Person or Persons, or a Transfer of
Interests in a single transaction or a series of transactions, in which in any
case the Members of the Company immediately prior to such merger, consolidation,
sale, exchange, conveyance or other disposition or first of such series of
transactions possess less than a majority of the voting power of the Company’s
or any successor entity’s issued and outstanding capital securities immediately
after such transaction or series of such transactions; or (b) a single
transaction or series of transactions, pursuant to which a Person or Persons who
are not direct or indirect wholly-owned subsidiaries of the Company acquire all
or substantially all of the Company’s assets determined on a consolidated basis.

 

“Tag-Along Member” has the meaning set forth in Section 13(d)(i) hereof.

 

“Tax Payment Loan” has the meaning set forth in Section 10(d) hereof.

 

“Treasury Regulations” means the income tax regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).

 

“Unreturned Capital” means, with respect to any Member on any date of
determination, an amount equal to the excess, if any, of (x) the aggregate
amount of Capital Contributions made by such Member over (y) the aggregate
amount of distributions made by the Company to such Member pursuant to Section
10(a).

 

“Withholding Tax Act” has the meaning set forth in Section 10(d) hereof.

 

2.     Organization. The Company has been organized as a limited liability
company under and pursuant to the provisions of the Act and, for the purpose,
caused a Certificate of Formation to be prepared, executed and filed with the
Delaware Secretary of State on December 14, 2017. The Members hereby agree that
all actions taken in connection with the formation of the Company are hereby
authorized and ratified in all respects. This Agreement shall constitute the
“limited liability company agreement” (as that term is defined in the Act) of
the Company and shall be deemed effective as of the date hereof. The Members
agree that the rights, duties and liabilities of the Members shall be as
provided in the Act, except as otherwise provided herein. To the extent that the
rights, powers, duties, obligations and liabilities of any Member are different
by reason of any provision of this Agreement than they would be in the absence
of such provision, this Agreement shall, to the extent permitted by the Act,
control.

 

3.     Name. The name of the Company is Mt Melrose, LLC. The business of the
Company may be conducted upon compliance with all applicable Laws under any
other name designated by the Manager.

 

4.     Purpose. The Company is formed for the object and purpose of engaging in
any business of any kind necessary to, in connection with, related to or
incidental to such purpose or purposes as the Manager shall from time to time
deem desirable.

 

5.     Term. The term of existence of the Company commenced on the date the
Certificate was filed in the office of the Secretary of State of the State of
Delaware and shall continue perpetually unless the Company is sooner dissolved
in accordance with the provisions of this Agreement. The existence of the
Company as a separate legal entity shall continue until cancellation of the
Certificate in the manner required by the Act.

 

6.     Registered Office, Registered Agent, and Principal Office. The registered
office of the Company in the State of Delaware shall be located at 251 Little
Falls Drive, Wilmington, Delaware 19808, the registered agent for service of
process on the Company in Delaware is Corporation Service Company, whose
business office is identical to the Company’s registered office, and the
principal office of the Company shall be located at, 194 E. 2nd St., #4D, New
York, NY 10009, Attn: Tice Brown, or at such other locations as, from time to
time, may be determined by the Manager. The Company may also have such other
offices at such other locations as, from time to time, may be deemed advisable
by the Manager.

 

7.     Company Capital and Initial Percentage Interests.

 

a.     The Initial Capital Contribution that each Member has made to the Company
is set forth opposite each Member’s name on Schedule A hereto.

 

b.     Except as otherwise provided herein, no Member shall be required to lend
any funds to the Company or to contribute any capital to the Company in excess
of the amount that is initially credited to such Member’s Capital Account. No
Member shall have any obligation to eliminate a deficit balance in such Member’s
Capital Account at any time or to bring such Member’s Capital Account into any
particular parity with any other Member’s Capital Account at any time.

 

c.     No interest shall be paid on or with respect to the Capital Contribution
or Capital Account of any Member.

 

d.     Although the Company may make distributions to the Members from time to
time as a return of their Capital Contributions, no Member shall have the right
to withdraw or otherwise dissociate from the Company (whether voluntary or
involuntary) or demand a return of any of such Member’s Capital Contribution or
Capital Account or the fair value of such Member’s interest in the Company,
except upon dissolution and winding up of the Company. Any attempted
dissociation in violation of this Agreement shall be null and void ab initio.

 

e.     The Percentage Interest of each Member shall be as set forth in Schedule
A hereto.

 

8.     Capital Accounts. A separate Capital Account shall be established and
maintained for each Member under this Agreement. Schedule B hereto sets forth a
balance sheet of the Company as of the effective date of this agreement showing
the Gross Asset Values and tax basis of all Company assets as of such date, the
value of all Company liabilities taken into account as of such date, and the
Capital Accounts of each of the Members as of such date. The amount of the
Capital Account of a Member shall be determined in accordance with the rules set
forth in Treasury Regulation 1.704-1(b). Any references in any Section or
subsection of this Agreement to the Capital Account of a Member shall be deemed
to refer to such Capital Account as the same may be credited or debited from
time to time as set forth above. It is the intention of the Members to satisfy
the capital account maintenance requirements of Treasury Regulation Section
1.704-1(b)(2)(iv), and the foregoing provisions defining Capital Accounts are
intended to comply with such provisions.

 

9.     Allocation of Net Income or Net Loss.

 

a.     Allocation of Net Income or Net Loss Generally. After giving effect to
the special allocations set forth in subsections b-d hereof, Net Income or Net
Loss for any taxable period shall be allocated among the Members in a manner
such that the Capital Account balance of each Member is, as nearly as possible,
equal to the excess (which may be negative) of: (i) the distributions that would
be made to such Member if the Company were dissolved, its affairs wound up and
each of its assets sold for cash equal to its respective Gross Asset Value, all
Company liabilities were satisfied (limited with respect to each nonrecourse
liability to the Gross Asset Value of the assets securing such liability) in
accordance with their terms, and the net assets of the Company were distributed
pursuant to Section 10 of this Agreement to the Members immediately after making
such allocations, minus (ii) the sum of (A) the amount (if any) that such Member
would be obligated to contribute to the capital of the Company, and (B) such
Member’s share of partnership minimum gain (as determined in accordance with
Regulation Section 1.704-2(b)(2) and (d)) and partner nonrecourse debt minimum
gain (as determined in accordance with Regulation Section 1.704-2(i)), computed
immediately prior to the hypothetical sale of assets.

 

b.     Regulatory Allocations. Net Income and Net Loss (and items thereof) and
Company indebtedness shall be specially allocated in accordance with the
Regulatory Allocations, to the extent applicable, and Regulatory Allocations of
Net Income and Net Loss (and items thereof) shall be made prior to other
allocations of Net Income or Net Loss under this Agreement.

 

c.     Curative Allocations. Notwithstanding any other provisions of this
Section 9 (other than the Regulatory Allocations), the Regulatory Allocations
shall be taken into account in allocating Net Income or Net Loss, and items of
income, gain, loss, and deduction among the Partners so that, to the extent
possible, the net amount of such allocations of Net Income or Net Loss and other
items and the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the Regulatory
Allocations had not occurred. Notwithstanding the preceding sentence, (i)
Regulatory Allocations relating to nonrecourse deductions shall not be taken
into account except to the extent that there has been a reduction in partnership
minimum gain, and (b) partner nonrecourse deductions shall not be taken into
account except to the extent that there would have been a reduction in partner
minimum gain if the loan to which such deductions are attributable were not made
or guaranteed by a Member within the meaning of Regulation Sections
1.704-2(b)(4) and 1.704-2(i) or a person related to a Member within the meaning
of such Sections of the Regulations. In exercising the discretion under this
subsection (c), future Regulatory Allocations that are likely to offset other
Regulatory Allocations previously made under Section 4.02(e) and 4.02(f) shall
be taken into account.

 

d.     Allocations and Distributions with Respect to Interests Transferred. If
any Interest is transferred, there shall be allocated to each Member who held
the transferred Interest during the Fiscal Year of transfer the product of (a)
the Net Income or Net Loss allocable to such transferred Interest for such
fiscal year and (b) a fraction, the numerator of which is the number of days
such Member held the transferred Interest during such Fiscal Year and the
denominator of which is the total number of days in such Fiscal Year; provided,
however, that the Company shall allocate the Net Income or Net Loss by closing
the Company’s books immediately after the Transfer of any Interest if the
Manager so determines or as requested by the transferor or transferee of the
Interest within forty-five (45) days after the close of the taxable year in
which the transfer occurred.

 

10.     Distributions.

 

a.     Subject to Sections 10(b)-(f), distributions of cash and/or other assets
or property of the Company, from whatever source (including net proceeds of
Company operations and sale, financing or refinancing of Company assets) may be
made to the Members in the following priorities:

 

i.     First, up to a cumulative total of Two Million Dollars ($2,000,000),
shall be distributed among the Members in accordance with their respective
Percentage Interests;

 

ii.     Second, cumulative distributions in excess of Two Million Dollars
($2,000,00) and up to Three Million Dollars ($3,000,000), shall be distributed
sixty-seven percent (67%) to ENDI, and thirty-three percent (33%) to Woodmont;
and

 

iii.     Any further distributions in excess of Three Million Dollars
($3,000,000) cumulatively, shall be distributed among the Members in accordance
with their respective Percentage Interests.

 

b.     Distributions shall be made at such times, and in such amounts, as the
Manager shall determine.

 

c.     Whenever a distribution provided for in this Section 10 is made in
property other than cash, the value of such distribution shall be deemed to be
the Fair Market Value of such property as determined in the sole discretion of
the Manager. If the Company makes such a non-cash distribution to any Member and
such distribution is subject to withholding or other taxes payable by the
Company on behalf of such Member, the Manager shall notify such Member as to the
amount of such withholding or other taxes and such Member shall make a prompt
payment to the Company of such amount by wire transfer in immediately available
funds.

 

d.     To the extent there is available cash, as determined by the Manager in
its sole discretion, the Company shall make distributions to each Member in an
amount expected to equal the excess of such Member’s aggregate federal, state
and local tax liability attributable to items of income, gain, loss and
deduction allocated to such Member for the taxable year over the distributions
made to the Member during such taxable year. Distributions under this Section
10(d) shall be made before April 15th of the year following the relevant taxable
year. Distributions under this Section 10(d) shall be considered an advance of
amounts a Member would otherwise receive under Section 10(a).

 

e.     Unless treated as a Tax Payment Loan (as hereinafter defined), any amount
paid by the Company for or with respect to any Member on account of any
withholding tax or other tax payable with respect to the income, profits or
distributions of the Company pursuant to the Code, the Treasury Regulations, or
any foreign, state or local statute, regulation or ordinance requiring such
payment (each a “Withholding Tax Act”) shall be treated as a distribution to
such Member for all purposes of this Agreement. To the extent that the amount
required to be remitted by the Company under a Withholding Tax Act exceeds the
amount then otherwise distributable to such Member, the excess shall constitute
a loan from the Company to such Member (a “Tax Payment Loan”) which shall be
payable upon demand and shall bear interest, from the date that the Company
makes the payment to the relevant taxing authority, at the applicable federal
short-term rate under Section 1274(d) of the Code, compounded semiannually. So
long as any Tax Payment Loan or the interest thereon remains unpaid, the Company
shall make future distributions due to such Member under this Agreement by
applying the amount of any such distribution first to the payment of any unpaid
interest on all Tax Payment Loans of such Member and then to the repayment of
the principal of all Tax Payment Loans of such Member. The Manager shall have
the authority to take all actions necessary to enable the Company to comply with
the provisions of any Withholding Tax Act applicable to the Company and to carry
out the provisions of this subsection.

 

f.     The Manager may, in its discretion, reallocate distributions otherwise
payable to one Member to another Member to the extent necessary to satisfy unmet
indemnification obligations under the Membership Interest Purchase Agreement
dated June 13, 2019, between the Members. For purposes of Capital Account
maintenance, any such distribution will be treated as having been made to the
Member responsible for indemnification, and shall satisfy the obligation of such
Member to the extend paid to the Member to whom indemnification is owed.

 

g.     No distribution under this Section 10 shall be made if and to the extent
that such distribution would (i) render the Company insolvent or impair its
ability to discharge its obligations (whether or not accrued, absolute, fixed or
contingent), or (ii) conflict with or cause a default under any legal or
contractual obligation of the Company.

 

11.     Dealings with the Company. The officers of the Company may perform any
services for the Company and to earn and be paid a fee by the Company for such
performance and to procure and deliver, goods or materials to the Company, and
be paid therefor by the Company, provided in all instances that such dealings
are approved by the Manager and benefit the Company and are on good-faith,
arms-length terms that are no more favorable than would be if an independent
third party were providing such services, goods or materials.

 

12.     Control and Management.

 

a.     Power and Authority of the Manager. Management of the business and
affairs of the Company shall be vested in one or more Managers. Woodmont is
hereby appointed as the Manager. So long as there is only one Manager, all
references herein to “Managers” shall refer solely to such single Manager.
Woodmont may designate a substitute Manager at any time and may appoint one or
more additional Managers at any time. Except as otherwise specifically provided
in this Agreement, the Managers shall have all rights and powers and shall make
all decisions affecting the Company in furtherance of the Company’s purposes,
and shall have the exclusive responsibility for the management, operation and
control of the business and affairs of the Company. Subject to the foregoing,
the Manager shall have full power granted to managers under the Act to carry out
any and all objects and purposes of the Company and to perform all acts and
execute and deliver all agreements, instruments and other documents which it, in
its sole discretion, may deem necessary or advisable. In addition to the powers
and authority expressly conferred upon the Manager by this Agreement, the
Manager may exercise all such powers of the Company and do all such lawful acts
and things as are not by law, the Certificate of Formation of the Company or
this Agreement directed or required to be exercised or done by the Members.

 

b.     Binding Effect of Actions of Managers. Each Member shall be bound by, and
hereby consents to, any and all actions taken and decisions made by the Managers
in accordance with the terms of this Agreement. All third parties shall be
entitled to rely upon the action or decision of any of the Managers that
purports to be on behalf of the Company as being binding upon, and duly
authorized by, the Company. A majority of the Managers acting in concert, and
any other person designated by all of the Managers, shall have the authority to
bind the Company. The Members, other than any Member who is a Manager or the
designee of a Manager and who is acting on behalf of the Managers, shall not
have the authority to bind the Company or to make any expenditures on behalf of
the Company, and the Members hereby consent to the exercise by the Managers of
the powers and rights conferred on the Managers by law and by this Agreement.

 

c.     Voting Rights. Except as otherwise provided by this Agreement or as
otherwise required by the Act, each Member shall be entitled to one vote per
Interest on all matters upon which the Members have the right to vote under this
Agreement. However, ENDI agrees to vote with Manager on all matters for a three
(3) year period commencing on the effective date of this Amended and Restated
Limited Liability Company Agreement. This “standstill” voting arrangement may be
extended on an annual basis at ENDI’s option by written notice to Manager thirty
(30) days prior to expiration.

 

d.     Action by Written Consent. Any action required or permitted to be taken
by the Members at any annual or special meeting may be taken without a meeting,
without prior notice and without a vote, if the Members consent in writing,
setting forth the action so taken and bearing the dates of signature of each
Member. Any action taken pursuant to such written consent or consents of the
Members shall have the same force and effect as if taken by the Members at a
meeting of the Members.

 

e.     Removal of the Manager.

 

i.     The Manager may voluntarily resign from serving in such capacity at any
time by (A) giving no less than sixty (60) days’ written notice of the Members
and (2) recommending to the Members a successor Manager, and obtaining the
written approval of a Majority in Interest of such successor Manager; provided,
however, that such successor Manager must meet the conditions specified in
Section 12(g) hereto.

 

ii.     The Manager shall be deemed to have resigned involuntarily as such in
the event of the bankruptcy or adjudication of incompetency of the Manager. In
the event of such an involuntary resignation, the Manager shall automatically
cease to be a Manager.

 

f.     Successor Manager. A Person may be appointed as a successor Manager only
if the following conditions are satisfied:

 

i.     Such Person has been designated and consented to by a Majority in
Interest and in accordance with the definition of “Manager”;

 

ii.     The Person shall have accepted and agreed to be bound by all the terms
and provisions of this Agreement, by executing such documents or instruments as
may be required or appropriate in order to effect the appointment of such Person
as Manager; and

 

iii.     If the Person is an entity, it shall have provided the Company evidence
satisfactory to establish its authority to become the Manager and to be bound by
this Agreement.

 

g.     Appointment of Officers. The Manager may, by written instrument executed
by the Manager, appoint officers and agents of the Company to which the Manager
may delegate such duties, responsibilities and authority as shall be provided in
such instrument. Any officer may be removed at any time by written instrument
executed by the Manager. Only the Manager and officers and agents of the Company
authorized by the Manager to bind the Company by written instrument executed by
the Manager shall have the authority to bind the Company. The officers of the
Company shall be entitled to receive compensation, if any, as determined by the
Manager in its sole discretion.

 

h.     Compensation and Reimbursement of Manager.

 

i.     The Manager shall diligently and faithfully devote the time to the
management of the Company reasonably necessary to serve the purposes of the
Company and shall perform all of the duties of managers that are provided for in
this Agreement and the Act.

 

ii.     The Manager (and the officers of the Company, if any) shall be
reimbursed for all out-of-pocket expenses reasonably incurred on behalf of the
Company in connection with managing the Company.

 

i.     Reliance by Third Parties. Any Person, other than a Member, dealing with
the Company may rely on the authority of the Manager in taking any action in the
name of the Company without inquiry into the provisions of this Agreement. Any
document executed by a Manager or an officer of the Company expressly authorized
to execute such document or instrument by the terms of this Agreement or by
written resolutions of the Manager shall be deemed to be the action of the
Company as to any third party.

 

j.     Business Activities of Woodmont. The parties hereto acknowledge that
Woodmont and its Affiliates are engaged in the business of making investments.
Except as Woodmont may otherwise agree in writing after the date hereof: (i)
Woodmont shall have the right to, and shall have no duty (contractual or
otherwise) not to, directly or indirectly: (A) engage in the same or similar
business activities or lines of business as the Company or any of its
Affiliates, including those competing with the Company or its Affiliates and (B)
do business with any client or customer of the Company or its Affiliates; (ii)
neither Woodmont nor any officer, director, employee, partner, affiliate nor
associated entity thereof shall be liable to the Company or any of its
Affiliates for breach of any duty (contractual or otherwise) solely by reason of
having engaged in any such activities or of such person’s participation therein;
and (iii) in the event that Woodmont acquires knowledge of a potential
transaction or matter that may be a corporate opportunity for the Company or its
Affiliates, on the one hand, and Woodmont, on the other hand, or any other
person, Woodmont shall have no duty (contractual or otherwise) to communicate or
present such corporate opportunity to the Company and, notwithstanding any
provision of this Agreement to the contrary, shall not be liable to the Company,
the Members, their Permitted Transferees or any of their Affiliates for breach
of any duty (contractual or otherwise) by reason of the fact that Woodmont
directly or indirectly pursues or acquires such opportunity for itself, directs
such opportunity to another person, or does not present such opportunity to the
Company.

 

13.     Transfers of Units; Tag-Along Rights; Participation Rights; Admission of
Additional Members.

 

a.     Restrictions on Transfer.

 

i.     Except as otherwise provided in this Agreement, no Interest of a Member
may be sold, assigned, transferred, given, bequeathed, donated, mortgaged,
pledged, attached, levied upon, seized by or for creditors, or otherwise
encumbered or disposed of, whether by act of the Member or by operation of Law
(any of the foregoing being a “Transfer”), without the prior written consent of
all Managers, which consent may be withheld for any reason or for no reason. Any
attempted Transfer by a Person of a Member’s Interest, or any part thereof,
other than in accordance with this Agreement shall be, and is hereby declared,
null and void ab initio.

 

ii.     No Member shall effect a Transfer of any Units other than (A) pursuant
to Section 13(c) in connection with the Company Right of First Refusal or the
Member Refusal Right, (B) pursuant to Section 13(d) in connection with the
exercise of “Tag-Along Rights,” or (C) to a Permitted Transferee of the Member
in question, (each of (A), (B), and (C), a “Permitted Transfer”). In exercising
the Manager’s consent and approval provided for in Section 13(a), the Manager
may employ its sole discretion in evaluating the nature of the proposed
transferee and the Manager may impose such conditions on Transfer as it deems
appropriate in its sole discretion, including, but not limited to, requirements
that the transferee be an employee of the Company or a Member.

 

iii.     Prior to any proposed Transfer of any Units, the holder thereof shall
give written notice to the Company describing the manner and circumstances of
the proposed Transfer.

 

b.     Permitted Transfers. Notwithstanding the restriction in Section 13(a),
the economic interest associated with a Member’s Interest (i.e., the right to
distributions and rights to assets upon liquidation) may be transferred without
the consent of the Managers if the transferee is an Affiliate of such Member or
the transfer is made for such Member’s estate or tax planning purposes;
provided, however that the permitted transferee shall execute a joinder to this
Agreement in form and substance reasonably acceptable to the Company's counsel.

 

c.     Right of First Refusal.

 

i.     Except with respect to Transfers to Permitted Transferees, each Member
hereby unconditionally and irrevocably grants to the Company a right of first
refusal (the “Company Right of First Refusal”) to purchase all, but not less
than all, of the Interests that such transferring Member may propose to Transfer
(the “Transfer Units”) to another Person, at the same price and on the same
terms and conditions as those offered to the prospective transferee. Each Member
proposing to make a Transfer that is subject to this Section 13(c) must deliver
a notice to the Company not later than thirty (30) days prior to the proposed
closing date of such Transfer. Such notice shall contain the material terms and
conditions (including price and form of consideration) of the proposed Transfer
and the identity of the prospective transferee (an “Offering Notice”). To
exercise the Company Right of First Refusal under this Section13(c), the Company
must deliver a notice to the transferring Member within fifteen (15) days of
receipt of the Offering Notice, stating that it elects to exercise the Company
Right of First Refusal and, if applicable, providing the identity of any Person
that the Company designates as the purchaser.

 

ii.     In the event that the Company does not acquire all of the Transfer Units
pursuant to Section 13(c)(i) above, each Member hereby unconditionally and
irrevocably grants to all of the other Members (other than the Manager) a right
of first refusal (the “Member Refusal Right”) to purchase all or any portion of
the Transfer Units not purchased by the Company pursuant to the Company Right of
First Refusal pursuant to Section 13(c)(i). If the Company does not intend to
exercise the Company Right of First Refusal with respect to all Transfer Units,
the Company must deliver a notice to that effect (the “Company Refusal Notice”)
to the transferring Member and the non-transferring Members within fifteen (15)
days of receipt of the Offering Notice. To exercise its Member Refusal Right, a
Member must deliver a notice to the transferring Member, the other
non-transferring Members and the Company within fifteen (15) days after the
deadline for delivery of the Company Refusal Notice, stating that it elects to
exercise the Member Refusal Right, and indicating the amount of Units such
Member would be willing to elect to purchase.

 

iii.     Unless the Members agree unanimously upon a different allocation, each
Member electing to purchase Transfer Units shall have a pro rata right to
purchase Transfer Units in accordance with the number of Interests it elected to
purchase in its notice delivered pursuant to Section 13(c)(ii). Each
participating Member shall have a further pro rata right (a “right of
over-allotment”) to purchase the Transfer Units refused by any Member who
declines to fully exercise its Member Refusal Right.

 

iv.     The closing of the sale of Interests pursuant to the Company Right of
First Refusal or the Member Refusal Right shall be within thirty (30) days of
the exercise notice with respect thereto.

 

v.     Subject to Section 13(c)(ii) and Section 13(c)(iii), the transferring
Member shall be free for a period of sixty (60) days after the above notice
periods have expired to sell any Transfer Units that the Company and the Members
do not elect to purchase to the same prospective transferee, at the same price
and on the same terms as set forth in the Offering Notice.

 

d.     Tag-Along Rights. If at any time the Managers propose to transfer their
Interests to an independent third party in a Reorganization or Sale of the
Company (a “Tag-Along Transaction”):

 

i.     The Managers shall provide written notice thereof (the “Sale Notice”) to
the other Members (each, a “Tag-Along Member”). Such notice shall describe the
amount and type of consideration to be paid to the Managers or any of its
Affiliates, the form of the transaction the Managers proposes to enter into in
connection with such Tag-Along Transaction and all other material terms and
conditions thereof.

 

ii.     Thereafter, each Tag-Along Member may exercise his/her/its rights
pursuant to this Section 13(d) by delivering to the Managers a written notice
thereof (a “Tag-Along Sale Notice”) within five business days following the date
of the Sale Notice. The Tag-Along Sale Notice shall require that the Person(s)
to which the Managers would transfer their Interest (the “Tag-Along Buyer”) in
the Tag-Along Transaction acquire the Applicable Portion of such Tag-Along
Member’s Interest for the same consideration per unit of Interest as is to be
received by the Managers or any Affiliate, and otherwise upon the same terms and
conditions as the Managers has proposed or agreed to transfer its Interest to
the Tag-Along Buyer (including, without limitation, any escrows, holdbacks,
resale restrictions, or contingent consideration).

 

iii.     Following the delivery of any such Tag-Along Sale Notice, each
Tag-Along Member shall agree to become a party to or otherwise become bound by
the applicable terms and conditions of the contract, agreement or instrument
pursuant to which the Managers have agreed to sell its Interest, the terms and
conditions of which shall be no less favorable to such Tag-Along Member than the
terms and conditions applicable to the Managers, subject to appropriate changes
necessary to reflect any differences in the securities or assets being
transferred or sold by the Managers in such Tag-Along Transaction. In connection
therewith, the Tag-Along Member must agree to severally make to the Tag-Along
Buyer the same representations, warranties, covenants, indemnities and
agreements as the Managers agrees to make in connection with such Tag-Along
Transaction (except in the case of representations and warranties pertaining
specifically to the Tag-Along Member or the Managers).

 

e.     Preemptive Rights. Except as provided in this Section 13(e), the Company
shall not issue any Interest or consummate any Capital Contribution transaction
unless, prior to such issuance, the Company offers such Interest or the
opportunity to consummate such a Capital Contribution to each Member at the same
price per Percentage Interest and upon the same terms and conditions (including,
in the event such Interest of the Company are issued as a package together with
other financial instruments, the purchase of such other instruments). Not less
than 10 business days prior to the closing of such offering or capital
contribution (the “Preemptive Rights Period”), the Company shall send a written
notice to each Member stating (A) in the case of an equity offering, the
Interest to be offered (the “Preemptive Rights Interests”), the closing date and
the price and terms on which it proposes to offer such Interest, or (B) in the
case of a Capital Contribution, the closing date and material terms and
conditions of the capital contribution transaction. Within 5 business days after
the receipt of such, each Member may elect, by written notice to the Company, to
participate in such offering whether, (A) in the case of an equity offering, by
purchasing an Interest of the Company, at the price and on the terms specified
in such notice, up to an amount equal to the amount to be issued, or (B) in the
case of a Capital Contribution, by making the requested Capital Contribution, on
the same terms and conditions as specified in such notice. In either case, a
participating Member shall be able to participate in the offering to the extent
of such participating Member’s Percentage Interest at the time of the offering.
The closing of any such purchase of an Interest or Capital Contribution by such
Member pursuant to this Section 13(e) shall occur concurrently with the closing
of the proposed issuance or contribution, as applicable. Notwithstanding the
foregoing, the Participation Right shall not apply to the issuance of any
Interest in payment of the purchase price of assets acquired by the Company,
including any issuance in connection with a merger, joint venture, licensing
transaction or exchange of shares.

 

f.     No Right to Resign or Withdraw and Receive Payment. Except as provided in
this Section 13, no Member shall have any right to resign or withdraw as a
Member or to receive the fair value of such Member’s Interest or any other
payment with respect to such Member’s Interest.

 

g.     Operating Agreement. No Person shall be admitted as a Member unless such
Person executes, acknowledges and delivers to the Company such instruments as
the Managers may deem necessary or advisable to effect the admission of such
Person as a Member, including, but not limited to, the written acceptance and
adoption by such Person of the provisions of this Agreement. Schedule A shall be
revised from time to time to reflect the admission of additional Members. Any
Transfer to a Person who does not agree, in writing, to be bound by the
provisions of this Agreement, shall be void and ineffectual and shall not
operate to transfer any Interests in the Company to such Person.

 

14.     Dissolution.

 

a.     Events of Dissolution. The Company shall be dissolved and its affairs
wound up upon the first to occur of the following:

 

i.     the unanimous decision of the Members;

 

ii.     the termination of the membership of the last remaining Member; provided
that the Company shall not be dissolved and its affairs shall not be wound up if
within 30 days after the occurrence of the event that terminated the continued
membership of the last remaining Member, the personal representative of the last
remaining Member agrees in writing to continue the Company and to the admission
of the personal representative of such Member or its nominee or designee to the
Company as a Member, effective as of the occurrence of the event that terminated
the continued membership of the last remaining Member;

 

iii.     a Member becoming bankrupt or executing an assignment for the benefit
of creditors or the death, retirement, resignation, expulsion or dissolution of
a Member or the occurrence of any other event that terminates the continued
membership of a Member in the Company under the Act, unless within 90 days after
such event a majority of the Members elect to continue the Company; or

 

iv.     the entry of a decree of judicial dissolution of the Company under
Section 8972 of the Act.

 

b.     Distributions upon Dissolution. In the event of a dissolution of the
Company, the assets of the Company shall be liquidated in such manner as the
Managers shall determine and, after Company obligations to third parties and
Members have been discharged or provided for in accordance with applicable Law,
and appropriate reserves set aside for contingent or unliquidated liabilities,
debts, and expenses, the net proceeds of such liquidation shall be distributed
as set forth in Section 10, giving effect to all prior distributions under such
section. A reasonable time shall be allowed for such liquidation in order to
minimize the losses normally attendant upon a liquidation. In connection with
the Company’s liquidation, the Manager shall cause the Company’s accountants to
compile and furnish to each Member a statement setting forth the assets and
liabilities of the Company as of the date of complete liquidation.

 

c.     Certificate of Cancellation. Upon the dissolution and the completion of
winding up of the Company, the Managers shall file in the office of the
Secretary of State a certificate of cancellation containing the information
required by the Act.

 

d.     No Action for Dissolution. The Members acknowledge that irreparable
damage would be done to the goodwill and reputation of the Company if any Member
should bring an action in court to dissolve the Company. This Agreement has been
drawn carefully to provide fair treatment of all parties and equitable payment
in liquidation of the Interests of all Members. Accordingly, except where the
Managers have failed to liquidate the Company as required by Section 14(a) and
Section 14(b), each Member hereby waives and renounces its right to initiate
legal action to seek dissolution or to seek the appointment of a receiver or
trustee to liquidate the Company.

 

e.     No Further Claim. Upon dissolution, each Member shall have recourse
solely to the assets of the Company for the return of such Member’s capital, and
if the Company’s property remaining after payment or discharge of the debts and
liabilities of the Company, including debts and liabilities owed to one or more
of the Members, is insufficient to return the Unreturned Capital Contributions
of each Member (if any), such Member shall have no recourse against the Company,
the Manager or any other Member (it being understood that the foregoing is not
intended to limit any other claims or rights a Member may have).

 

15.     Books and Records.

 

a.     The Managers shall cause to be kept full and accurate books and records
of the Company. The Managers shall establish a separate Capital Account for each
Member on the books of the Company. All books and records of the Company shall
be (i) kept at the Company’s principal office and shall be available at such
location at reasonable times for inspection and copying by the Members or their
duly authorized representatives, (ii) maintained in accordance with U.S.
generally accepted accounting principles (“GAAP”), and (iii) retained by the
Company throughout the term of this Agreement. The Manager shall cause the
Company’s accountants to prepare all information needed by the Members and other
Persons who were Members during the applicable calendar year for income tax
purposes and to furnish such information to each such Person after the end of
each calendar year of the Company.

 

b.     The books will be closed and balanced at the end of each Fiscal Year. The
Manager shall cause the Company’s accountants, at the Company’s cost, to (i)
prepare all tax returns of the Company, and (ii) prepare annual audited
financial reports of the Company. In addition, the Company will make available
to each Member, upon written request, within 60 days after the close of each
Fiscal Year, copies of the Company’s annual financial statements, including a
written balance sheet and statement of income or loss. Such financial statements
will also indicate the Members’ share of the Net Income and Net Loss and other
relevant fiscal items of the Company for such year. The Managers shall arrange
for the preparation of all tax returns required to be filed for the Company.
Each Member shall be entitled to receive, upon written request, copies of all
federal, state and local income tax returns and information returns, if any,
which the Company is required to file.

 

16.     Tax Elections.

 

a.     The Manager shall make the election under Section 754 of the Code to
adjust the basis of the Company’s property in the case of a Transfer of a
Percentage Interest by sale or exchange or upon the death of a Member, if the
transferee becomes a substitute Member, and the transferee requests that the
Managers make the election, in writing, not later than thirty (30) days after
the close of the Fiscal Year in which the event giving rise to the adjustment
for which an election is needed occurs. The Manager may also, in its discretion,
make an election at any time without a request to do so.

 

b.     The Company shall take any action necessary to be taxed as a
“partnership” for federal and state income tax purposes and neither the Company
nor any Member shall take any action that would result in the Company being
taxed as other than a “partnership” for federal income tax purposes, including
(but not limited to) electing to be taxed as other than a “partnership” by
filing Form 8832, “Entity Classification Election.”

 

c.     All other tax elections on behalf of the Company may be made or rescinded
in the discretion of the Managers.

 

d.     The Manager shall be the “partnership representative” for purposes of
Subchapter C of Code Subtitle F, Chapter 63.

 

17.     Liability of Members. The Members shall have no liability for the
obligations or liabilities of the Company except to the extent required by the
Act.

 

18.     Indemnification.

 

a.     Indemnification of Covered Persons. To the fullest extent permitted by
Law, the Company shall indemnify, defend and hold harmless each Covered Person
from and against any and all debts, losses, claims, damages, costs, demands,
fines, judgments, contracts (implied and expressed, written and unwritten),
penalties, obligations, payments, liabilities of every type and nature (whether
known or unknown, fixed or contingent), including, without limitation, those
arising out of any lawsuit, action or proceeding (whether brought by a party to
this Agreement or by any third party), together with any reasonable costs and
expenses (including, without limitation, reasonable attorneys’ fees,
out-of-pocket expenses and other reasonable costs and expenses incurred in
investigating, preparing or defending any pending or threatened lawsuit, action
or proceeding) incurred in connection with the foregoing (collectively
“Damages”) suffered or sustained by such Covered Person by reason of any act,
omission or alleged act or omission by such Covered Person arising out of such
Covered Person’s activities taken primarily on behalf of the Company, or at the
request or with the approval of the Company, or primarily in furtherance of the
interests of the Company; provided, however, that the acts, omissions or alleged
acts or omissions upon which such actual or threatened actions, proceedings or
claims are based did not constitute willful misconduct, fraud, gross negligence
or willful violation of the law.

 

b.     Indemnification Procedure.

 

i.     A party seeking indemnification from the Company pursuant to Section
18(a) hereof (an “Indemnified Party”) shall give prompt notice to the Company of
the assertion of any claim, including any claim brought by a third party, in
respect of which indemnity may be sought hereunder (a “Claim”) and shall give
the Company such information with respect thereto as the Company may reasonably
request, but no failure to give such notice shall relieve the Company of any
liability hereunder except to the extent the Company has suffered actual
prejudice thereby. The Company shall have the right, exercisable by written
notice (the “Notice”) to the Indemnified Party (which Notice shall state that
the Company expressly agrees that as between the Company and the Indemnified
Party, the Company shall be solely obligated to satisfy and discharge the Claim)
within thirty (30) days of receipt of notice from the Indemnified Party of the
commencement of or assertion of any Claim, to assume the defense of such Claim,
using counsel selected by the Company and reasonably acceptable to the
Indemnified Party; provided that the Company shall not have the right to assume
the defense of a Claim (A) seeking an injunction, restraining order, declaratory
relief or other nonmonetary relief against the Indemnified Party (whether or not
the Company is also named as a party) or (B) if the named parties to any such
action (including any impleaded parties) includes both the Indemnified Party and
the Company and the Indemnified Party shall have been advised by counsel that
there are one or more legal or equitable defenses available to the Indemnified
Party which are different from those available to the Company; in which case
such Indemnified Party shall have the right to participate in the defense of a
Claim of the type set forth in clause (A) and/or (B) above and all Damages in
connection therewith shall be reimbursed by the Company to the extent provided
in Section 18(a). In addition, if the Company fails to give the Indemnified
Party the Notice complying with the provisions stated above within the stated
time period, the Indemnified Party shall have the right to assume control of the
defense of the Claim and all Damages in connection therewith shall be reimbursed
by the Company to the extent provided in Section 18(a) upon demand of the
Indemnified Party. In any event, no party assuming the defense of any Claim
shall have the right to compromise or settle any claim for non-monetary relief
against the other party or any claim for monetary relief against another party
without such party’s consent (which consent shall not be unreasonably withheld
or denied) unless such monetary relief is paid in full by the settling party.

 

ii.     If at any time after the Company assumes the defense of a Claim any of
the conditions set forth above are no longer satisfied, the Indemnified Party
shall have the same rights as if clause (A) or (B) in the preceding paragraph
had been satisfied and the Company never assumed the defense of such Claim.

 

iii.     The Company or the Indemnified Party, as the case may be, shall in any
event have the right to participate, at its own expense, in the defense of any
Claim which the other is defending.

 

iv.     The Company, if it has assumed the defense of any Claim in accordance
with the terms hereof, shall have the right, upon five (5) business days prior
written notice to the Indemnified Party, to consent to the entry of judgment
with respect to, or otherwise settle, such Claim unless (i) the Claim involves
equitable or other non-monetary damages or (ii) in the reasonable judgment of
the Indemnified Party such settlement would have a continuing material adverse
effect on the Indemnified Party’s business (including any material impairment of
its relationships with customers and suppliers). In the case of (i) and (ii)
above, such settlement may be made only with the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
If the Indemnified Party otherwise assumes the defense of a Claim, it shall have
the right to settle such Claim only with the consent of the Company.

 

v.     Whether or not the Company chooses to defend or prosecute any Claim
involving a third party, all the parties hereto shall cooperate in the defense
or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals as may be reasonably requested in connection therewith.

 

c.     Limitation on Liability. In addition to limitations on liability imposed
elsewhere in this Agreement, and to the fullest extent permitted by law
(including Section 18-1101(b), (c), (d) and (e) of the Act):

 

i.     Notwithstanding any duty otherwise existing at law or in equity and
notwithstanding any other provision of this Agreement, neither the Manager nor
any other Indemnified Party shall owe any duty (including fiduciary duties) to
the Company, any of the Members or any other Person that is a party to or is
otherwise bound by this Agreement, in connection with any act or failure to act;
and

 

ii.     Neither the Manager nor any other Indemnified Party shall have any
personal liability to the Company, any of the Members, or any other Person that
is a party to or is otherwise bound by this Agreement for monetary damages in
connection with any act or failure to act, or breach, whether hereunder,
thereunder or otherwise.

 

iii.     The Members expressly acknowledge that the Manager is acting on behalf
of the Company. Neither the Manager nor any other Indemnified Party shall be
obligated to consider or not consider the separate interest of any Member or
other Person (including the tax consequences to any Member or other Person) in
deciding, pursuant to its authority granted under this Agreement, whether to
cause the Company to take (or decline to take) any actions that are in the
interest of the Company. Neither the Manager nor any other Indemnified Party
shall be liable for monetary damages or losses sustained, liabilities incurred,
or benefits not derived by Members in connection with such decisions.

 

iv.     Except as otherwise required by mandatory provisions of applicable law
or as expressly set forth herein, no Member shall have any personal liability
whatsoever in such Member’s capacity as a Member, whether to the Company, to any
of the other Members, to the creditors of the Company or to any other third
party, for the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise (including those arising as member, owner
or shareholder of another company, partnership or entity). Under the Act, a
member of a limited liability company may, under certain circumstances, be
required to return amounts previously distributed to such member. It is the
intent of the Members that no distribution to any Member pursuant to this
Agreement shall be deemed to constitute money or other property paid or
distributed in violation of the Act, and the Members agree that each such
distribution shall constitute a compromise of the Members within the meaning of
Section 18-502(b) of the Act, and that the Member receiving such distribution
shall not be required to return to any Person any such money or property, unless
such distribution was made in error or in contravention of non-waivable
provisions of applicable law or this Agreement. If, however, any court of
competent jurisdiction holds that, notwithstanding the provisions of this
Agreement, any Member is obligated to make any such payment, such obligation
shall be the obligation of such Member and not of the other Members.

 

v.     The provisions of this Section 18(c) are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators, all of whom
are third party beneficiaries of this Section 18(c), and shall not be deemed to
create any rights for the benefit of any other Persons.

 

d.     Right to Advancement of Expenses. To the fullest extent permitted by
applicable Law, expenses (including legal fees) incurred by a Covered Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Company prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Company of an undertaking
by or on behalf of the Covered Person to repay such amount if it shall be
determined that the Covered Person is not entitled to be indemnified as
authorized in Section 18(a) hereof.

 

e.     Insurance. The Company may purchase and maintain insurance, to the extent
and in such amounts as the Manager shall deem reasonable, on behalf of Covered
Persons and such other Persons as the Managers shall determine, against any
liability that may be asserted against or expenses that may be incurred by any
such Person in connection with the activities of the Company or such
indemnitees, regardless of whether the Company would have the power to indemnify
such Person against such liability under the provisions of this Agreement. The
Company may enter into indemnity contracts with Covered Persons and such other
Persons as the Manager shall determine and adopt written procedures pursuant to
which arrangements are made for the advancement of expenses and the funding of
obligations under this Section 18 and containing such other procedures regarding
indemnification as are appropriate.

 

f.     Non-Exclusivity of Rights. The rights conferred on any Person by this
Section 18 shall not be exclusive of any other rights which such Person may have
or hereafter acquire under any statute, provision of the Certificate, agreement,
vote of Members or otherwise.

 

g.     Amendment or Repeal. Any repeal or modification of this Section 18 shall
not adversely affect any right or protection hereunder of any Person in respect
of any act or omission occurring prior to the time of such repeal or
modification.

 

h.     Changes in Law. References in this Section 18 to Law shall be to such Law
as it existed on the date this Agreement was executed or as such Law thereafter
may be changed; provided that (i) in the case of any change which limits the
indemnification rights or the rights to advancement of expenses which the
Company may provide, the rights to indemnification and to the advancement of
expenses provided in this Section 18 shall continue as theretofore agreed upon
to the extent permitted by Law; and (ii) if such change permits the Company
without the requirement of any further action by the Members or the Manager to
provide broader indemnification rights or rights to the advancement of expenses
than the Company was permitted to provide prior to such change, then the rights
to indemnification and the advancement of expenses shall be so broadened to the
extent permitted by Law.

 

i.     Applicability. The provisions of this Section 18 shall be applicable to
all actions, suits or proceedings commenced after its adoption, whether such
arise out of acts or omissions which occurred prior or subsequent to such
adoption and shall continue as to a Person who has ceased to be a Covered
Person, and shall inure to the benefit of the heirs, personal representatives,
successors and assigns of such Person.

 

19.     Representations, Warranties and Covenants of the Members. Each Member
hereby represents and warrants to the Company and each other Member that each of
the following statements shall be true and correct:

 

a.     Advice. The Member has either consulted with the Member’s own investment
adviser, attorney and/or accountant about this Agreement, its ownership of any
Interest and the suitability and advisability of this Agreement with respect to
the Member.

 

b.     Investment Representation and Warranty. The Member is acquiring the
Interest for its/his own account as principal, not with a view to or for sale in
connection with any distribution of all or any part of the Interest. The Member
hereby agrees that the Member will not, directly or indirectly, assign,
transfer, offer, sell, pledge, hypothecate or otherwise dispose of all or any
part of the Interest (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of all or any part of the Interest) except in
accordance with the registration provisions of the Securities Act or an
exemption from such registration provisions, any applicable state or other
securities laws, and the terms of this Agreement.

 

c.     Accredited Investor. The Member is an “accredited investor” within the
meaning of rule 501(a) of Regulation D promulgated under the Securities Act of
1933, as amended.

 

d.     Representation of Investment Experience and Ability to Bear Risk. The
Member (i) is knowledgeable and experienced with respect to the financial, tax
and business aspects of the ownership of investments such as the Interest and of
the business contemplated by the Company and is capable of evaluating the risks
and merits of purchasing the Interest and, in making a decision to proceed with
this investment, (ii) can bear the economic risk of an investment in the Company
for an indefinite period of time and can afford to suffer the complete loss
thereof, and (iii) has had an adequate opportunity to review all information
with respect to the Company necessary to enter into this Agreement.

 

e.     Power, Authority; Valid Agreement. The Member has (i) all requisite power
and authority to execute, deliver and perform the obligations of the Member
under this Agreement and to subscribe for and purchase or otherwise acquire the
Interest for which the Member is acquiring, (ii) the Member’s execution of this
Agreement has been authorized by all necessary action on the Member’s behalf and
(iii) this Agreement is valid, binding and enforceable against the Member in
accordance with its terms.

 

f.     No Conflict; No Violation. The execution and delivery of this Agreement
by the Member and the performance of the Member’s duties and obligations
hereunder (i) do not and will not result in a breach of any of the terms,
conditions or provisions of, or constitute a default under (A) any contract,
agreement, indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness or any lease or other agreement or understanding, or
(B) any license, permit, franchise or certificate, in either case to which the
Member or any of the Member’s Affiliates is a party or by which the Member or
any of them is bound or to which the Member’s or any of their properties is
subject, (ii) do not require any authorization or approval under or pursuant to
any of the foregoing, and (iii) do not violate any statute, regulation, law,
order, writ, injunction or decree to which the Member or any of the Member’s
Affiliates is subject.

 

g.     No Default. The Member is not (i) in default (nor has any event occurred
which with notice, lapse of time or both would constitute a default) in the
performance of any obligation, agreement or condition contained in (A) this
Agreement, or (B) (1) any contract, agreement, indenture, mortgage, deed of
trust, credit agreement, note or other evidence of indebtedness or any lease or
other agreement or understanding, or (2) any license, permit, franchise or
certificate, in either case to which the Member or any of the Member’s
Affiliates is a party or by which the Member or any of them is bound or to which
the Member’s or any of their properties is subject, or (ii) in violation of any
statute, regulation, law, order, writ, injunction, judgment or decree applicable
to the Member or any of the Member’s Affiliates.

 

h.     No Litigation. There is no litigation, investigation or other proceeding
pending or, to the Member’s knowledge, threatened against the Member or any of
the Member’s Affiliates which, if adversely determined, would adversely affect
the Member’s business or financial condition or the Member’s ability to perform
the Member’s obligations under this Agreement.

 

i.     Consents. No consent, approval or authorization of, or filing,
registration or qualification with, any court or governmental authority on the
Member’s part is required for the execution and delivery of this Agreement by
the Member or the performance of the Member’s obligations and duties hereunder
or thereunder.

 

20.     Covenants and Agreements.

 

a.     Confidentiality.

 

i.     Each Member agrees that Confidential Information (as defined below) may
be made available in connection with the provisions of this Agreement. Such
Member agrees that it will use, and that it will cause any of its
Representatives to use, the Confidential Information only in connection with its
investment in the Company and not for any other purpose. Each Member further
acknowledges and agrees that such Member will not disclose any Confidential
Information to any person, provided that Confidential Information may be
disclosed (i) to such Member’s Representatives, (ii) to the extent required by
applicable law, rule or regulation (including complying with any oral or written
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process to which such Member is subject,
provided that such Member gives the Company prompt notice of such request(s), to
the extent practicable (and not prohibited by law), so that the Company may
seek, at its expense, an appropriate protective order or similar relief (and
such Member shall reasonably cooperate with such efforts by the Company) or
(iii) if the prior written consent of the Manager shall have been obtained.

 

ii.     For purposes of this Agreement, “Confidential Information” means any
information concerning the Company and its current or future Subsidiaries or the
financial condition, business, operations or prospects of the Company and its
current or future Subsidiaries in the possession of or furnished to the Company,
provided that the term “Confidential Information” does not include information
that (i) is or becomes generally available to the public other than as a result
of a disclosure by such Member or its Representatives in violation of this
Agreement, (ii) is or was made available to such Member on a non-confidential
basis or (iii) was or becomes available to such Member on a non-confidential
basis from a source other than the Company, provided that such source is or was
(at the time of receipt of the relevant information) not, to the best of such
Member’s knowledge, bound by a confidentiality agreement with (or other
confidentiality obligation to) the Company or another person, with respect to
such information.

 

21.     Miscellaneous.

 

a.     Indulgences, Etc. Neither the failure nor any delay on the part of any
party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.

 

b.     Controlling Law; Jurisdiction. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the Laws of the State of Delaware. Each of the
Members agrees that all suits relating to this agreement shall be filed and
maintained in any state or federal court in New York, New York, and agrees to
submit to the jurisdiction of any such court and to waive any objection he has
or may have to such jurisdiction, including lack of personal jurisdiction or
forum non conveniens.

 

c.     Notices. All notices, requests, demands and other communications required
or permitted under this Agreement shall be in writing and shall be deemed to
have been duly given, made and received only when delivered (personally against
receipt, by reputable courier service such as Federal Express, or by other
messenger, or by telecopier or e-mail with proof of successful transmission) or
when deposited in the United States mails, registered or certified mail, postage
prepaid, return receipt requested, addressed as set forth below:

 

If to the Company:

 

Woodmont Lexington, LLC

C/o Woodmont Property

194 E. 2nd St., #4D

New York, NY 10009

Attn: Tice Brown
Email: tice@snyderbrown.com

 

If to a Member:

 

To the address appearing for such Member on Schedule A hereto.

 

Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address to the other parties in conformity
with the provisions of this paragraph for the giving of notice.

 

d.     Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns except that no party may assign or transfer any of its
rights or obligations under this Agreement except as provided herein.

 

e.     Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. If executed in multiple counterparts,
this Agreement shall become binding when any counterpart or counterparts hereof,
individually or taken together, bear the signatures of all of the parties
reflected hereon as the signatories.

 

f.     Provisions Separable. The provisions of this Agreement are independent of
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other
provision may be invalid or unenforceable in whole or in part.

 

g.     Entire Agreement. This Agreement contains the entire understanding among
the parties hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.

 

h.     Headings. The headings in this Agreement are for convenience only; they
form no part of this Agreement and shall not affect its interpretation.

 

i.     Gender, Etc. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.”

 

j.     Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or holiday on which federal banks are or may elect to be closed, then the
final day shall be deemed to be the next day which is not a Saturday, Sunday or
such holiday.

 

k.     Assurances. Each Member shall execute all certificates and other
documents and shall do all such filing, recording, publishing and other acts as
the Manager deems appropriate to comply with any Laws relating to the
acquisition, operation or holding of the property of the Company.

 

l.     Specific Performance. The parties recognize that irreparable injury will
result from a breach of any provision of this Agreement and that money damages
will be inadequate to fully remedy the injury. Accordingly, in the event of a
breach or threatened breach of one or more of the provisions of this Agreement,
any party who may be injured (in addition to any other remedies that may be
available to that party) shall be entitled to one or more preliminary or
permanent orders (i) restraining and enjoining any act which would constitute a
breach, or (ii) compelling the performance of any obligation which, if not
performed, would constitute a breach.

 

m.     Estoppel Certificate. Each Member shall, within ten (10) days after
written request by the Manager, deliver to the requesting Person a certificate
stating, to the Member’s knowledge, that: (a) this Agreement is in full force
and effect, (b) this Agreement has not been modified except by any instrument or
instruments identified in the certificate, and (c) there is no default hereunder
by the requesting Person, or if there is a default, the nature and extent
thereof.

 

n.     Amendments; Disproportionate Effect. Any amendment of this Agreement
approved pursuant to Section 12(a) and (b) shall be binding on all Members
notwithstanding that such amendment was not executed by all Members; provided
that any amendment that would have a disproportionate and adverse effect on any
Member as compared to the effect on the other Members shall require the approval
of such disproportionately affected Member in order for such amendment to be
effective.

 

[Signatures appear on next pages]

 

 

 

--------------------------------------------------------------------------------

 

 

 

IN WITNESS WHEREOF, the Members have executed and delivered this Agreement as of
the date first above written.

 

MANAGER:

 

Woodmont Lexington, LLC

 

By:    /s/ Tice Brown                                              
Name: Tice Brown

Title: Authorized Signatory

 

MEMBERS:

 

Woodmont Lexington, LLC

 

By:    /s/ Tice Brown                                                 
Name: Tice Brown

Title: Authorized Signatory

 

 

Enterprise Diversified, Inc.

 

By:    /s/ Steven Kiel                                                   
Name: Steven Kiel

Title: Executive Chairman

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

MT MELROSE, LLC

SCHEDULE A

 

 

MEMBER

ADDRESS FOR NOTICES

PERCENTAGE

INTEREST

UNITS

Woodmont Lexington, LLC

c/o Woodmont Property

194 E. 2nd St., #4D

New York, NY 10009

Attn: Tice Brown

Email: tice@snyderbrown.com

65.00%

650

Enterprise Diversified, Inc.

1518 Willow Lawn Drive, Richmond, Virginia 23230

Attn: Steven Kiel

Email: steven@endi-inc.com

35.00%

350

       

TOTAL:

 

100%

1,000

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

SCHEDULE B

 

GROSS ASSET VALUE

 

[See attached.]