LIMITED LIABILITY COMPANY AGREEMENT
 
OF
 
JAVO DISPENSER, LLC
 
a Delaware limited liability company
 
 
 
July 8, 2005
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Section
Page
 
1 . ORGANIZATION
1
1.1 Formation.
 
1.2 Name.
 
1.3 Principal Office or Offices; Other Offices.
 
1.4 Purpose and Business.
1
1.5 Term.
1
1.6 Registered Office and Registered Agent.
1
1.7 Other Required Filings.
1
1.8 Fiscal Year and Accounting Methods.
2
1.9 Organizational Expenses of the Company.
2
1.10 Partnership Status.
2
1.11 Limit on Borrowing.
2
2.  MANAGEMENT
2
2.1 Management by the Managers.
2
2.2 Limitations on Power of the Manager
3
2.3 Election and Removal of Manager
4
2.4 Performance of Duties and Liabilities of Manager
5
2.5 Limited Liability of Manager.
6
2.6 Reimbursement of Expenses of Manager.
6
2.7 Waiver of Conflict of Interests.
6
3.  MEMBERS
6
3.1 Limited Liability of Members.
6
3.2 Limitations on Rights of Members.
6
3.3 Members are not Agents.
6
3.4 Action by Members
7
3.5 Tax Matters Member.
7
3.6 Admission and Withdrawal of Members
7
3.7 No Transfer of Interest Separate from Units.
8
3.8 Consistent Tax Reporting.
8
3.9 Representations and Warranties of Members.
8
       

 
 
 
 
 
 

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Section
Page

   
3.10 Acknowledgment of Counsel; Members' Consent.
9
3.11 Power of Attorney
10
4.  UNITS
10
4.1 Authorized Units.
10
4.2 Common Units.
11
4.3 Issuance of Units
11
4.4 Recapitalizations.
12
4.5 Transfer of Units
12
4.6 Permitted Transfers.
13
4.7 Rights of First Refusal
13
5.  CAPITAL
15
5.1 Initial Capital Contributions.
15
5.2 Additional Capital Contributions.
15
5.3 Capital Accounts.
15
5.4 Gross Asset Value of Company Assets.
16
5.5 Authority to Enforce Capital Contributions.
17
5.6 No Interest; No Return.
17
5.7 No Obligation to Restore Capital Account Deficit.
17
6.  DISTRIBUTIONS
18
6.1 Distributions in General.
18
6.2 Priority of Distributions
18
6.3 Distributions In Kind.
18
6.4 Distributions to Pay Taxes.
18
6.5 Taxes of Members Paid or Withheld.
18
7.  ALLOCATIONS
19
7.1 General Allocations.
19
7.2 Regulatory Allocations.
19
7.3 Tax Allocations
21
7.4 Other Allocation Rules
21
7.5 Consent to Allocations.
22

 
 
 
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Section
Page
   

7.6 Computation of Net Income and Net Loss.
22
8.  DISSOLUTION AND TERMINATION
23
8.1 Events Causing Dissolution.
23
8.2 Liquidator.
23
8.3 Certificate of Dissolution.
23
8.4 Winding Up of the Company.
23
8.5 Termination.
24
9.  INDEMNIFICATION
24
9.1 General.
24
9.2 Advancement of Expenses.
24
9.3 Non-Exclusivity.
24
9.4 Interested Transactions.
24
9.5 Curative Payments.
25
10.  BOOKS AND RECORDS
25
10.1 Maintenance of Books and Records.
25
10.2 Inspections and Reports
26
11.  MISCELLANEOUS
26
11.1 Amendment.
26
11.2 Notices
26
11.3 Counterparts.
27
11.4 Severability.
27
11.5 Binding on Successors.
27
11.6 Captions.
27
11.7 Terms and Usage.
27
11.8 Application of the Act.
27
11.9 Choice of Law.
27
11.10 Entire Agreement.
27
11.11 Waiver.
28
11.12 Further Assurances.
28
11.13 Attorney's Fees.
28

 
 
 
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Section
Page

 
11.14 Probate Confirmation.
28
11.15 Remedies and Jurisdiction.
28
12.  DEFINITIONS.
28
12.1 Act.
28
12.2 Adjusted Capital Account Deficit.
28
12.3 Adjustment Date.
29
12.4 Affiliate.
29
12.5 Agreement.
29
12.6 Capital Account.
29
12.7 Capital Contribution.
29
12.8 Certificate.
29
12.9 Code.
29
12.10 Common Unit.
30
12.11 Company.
30
12.12 Company Minimum Gain.
30
12.13 Control.
30
12.14 Depreciation.
30
12.15 Economic Risk of Loss.
30
12.16 Fiscal Period.
30
12.17 Fiscal Year.
30
12.18 Gross Asset Value.
30
12.19 GAAP.
30
12.20 Indemnitee.
31
12.21 IRS.
31
12.22 Liquidator.
31
12.23 Majority Vote.
31
12.24 Manager or Manager.
31
12.25 Member.
31
12.26 Member Minimum Gain.
31
12.27 Member Nonrecourse Debt.
31

 
 
 
 
 
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Section
Page

 
12.28 Member Nonrecourse Deductions.
31
12.29 New Units.
31
12.30 Net Income or Net Loss.
31
12.31 Nonrecourse Deductions.
31
12.32 Nonrecourse Liability.
31
12.33 Permitted Transfer.
31
12.34 Person.
31
12.35 Proportionate or Proportionately.
32
12.36 Purchaser.
32
12.37 Recapitalization.
32
12.38 Regulations.
32
12.39 Regulatory Allocations.
32
12.40 SEC.
32
12.41 Securities Act.
32
12.42 Supermajority Vote.
32
12.43 Transfer.
32
12.44 Unit.
32
12.45 Unitholders.
32
EXHIBIT A SCHEDULE OF UNITS
34
CONSENT OF SPOUSE
35

 

 
 
 
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LIMITED LIABILITY COMPANY AGREEMENT
 
OF
 
JAVO DISPENSER, LLC
 
a Delaware limited liability company
 
This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of JAVO DISPENSER,
LLC, a Delaware limited liability company (the "Company") is made and entered
into as of July 8, 2005 ("Effective Date") by and among each of the persons
listed on the attached Exhibit A, as may be amended or supplemented from time to
time in accordance with this Agreement (each, a "Member," and collectively, the
"Members"). Capitalized words used herein have the meanings provided in Section
12 hereof.
 
1.    ORGANIZATION
 
1.1       Formation. The Company has been formed as a Delaware limited liability
company by the execution and filing of the Certificate with the Delaware
Secretary of State in accordance with the Act.
 
1.2       Name. The name of the Company on the date of execution of this
Agreement is JAVO DISPENSER, LLC. The Company's business may be conducted under
its name or under one or more fictitious names deemed advisable by the Manager.
 
1.3       Principal Office or Offices; Other Offices. The principal office of
the Company is located at 131 I Specialty Drive, Vista, California 92081, or
such other place as the Manager may from time to time designate by notice to the
Members. The Company may maintain another principal executive office and
additional offices or places of business at such other place or places within or
outside the State of Delaware from time to time as the Manager may deem
advisable.
 
1.4       Purpose and Business. The purpose of the Company is to engage, as
determined from time to time by the Manager, in any lawful business activity in
which a Delaware limited liability company may engage, except that the Company
shall not engage in the banking business, the business of issuing policies of
insurance and assuming insurance risks, or the trust company business.
 
1.5       Term. The term and existence of the Company commenced upon the filing
of the Certificate with the Delaware Secretary of State and shall continue in
perpetuity until terminated pursuant to this Agreement.
 
1.6       Registered Office and Registered Agent. The address of the initial
registered office of the Company in the State of Delaware and the initial
registered agent for service of process on the Company in the State of Delaware
at such registered office is as provided in the Certificate. The registered
office and registered agent may be changed from time to time by the Manager by
causing the filing with the Delaware Secretary of State of the address of the
new registered office and/or the name of the new registered agent in accordance
with the Act.
 
1.7       Other Required Filings. The Manager shall cause to be filed an annual
tax statement, provided by the Company's registered agent in Delaware, pursuant
to Section 18-1 107(d) of the Act with the Delaware Secretary of State on or
before the first day of June of each year, and as soon as practicable after any
change in the information that shall have been required to be contained in such
tax statement. The Manager shall also cause to be filed, recorded or published
such certificates and documents as may be required by the Act or other
applicable law in connection with the use of fictitious business names by the
Company, the qualification of the Company to do business in one or more States,
the continuance of the business and affairs of the Company in the ordinary
course of business of the Company, and for the due performance by the Company of
the terms and conditions of this Agreement.
 
 
 

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1.8       Fiscal Year and Accounting Methods. The Fiscal Year of the Company
shall be the calendar year, unless the Manager determines that some other Fiscal
Year would be more appropriate and obtains the consent, if necessary, of the IRS
to use that other Fiscal Year as its taxable year. The financial books and
records of the Company shall be kept in accordance with GAAP, and the tax books
and records of the Company shall be kept on the basis of United States federal
income tax accounting principles using the accrual method of accounting.
 
1.9       Organizational Expenses of the Company. The Company shall pay the
expenses and costs of formation and organization of the Company (including
legal, accounting and filing fees and costs), and promptly reimburse the Manager
and Members of the Company the expenses incurred, or caused to be incurred, by
each such Manager or Member on behalf of the Company or in its name with respect
to the formation and organization of the Company (including legal, accounting
and filing fees and costs).
 
1.10      Partnership Status. The Members intend, unless there is only one
Member, that the Company be treated for federal, state and local income tax
purposes as a partnership. No election shall be executed or filed on behalf of
the Company by any Manager or Member of the Company or any other Person to treat
the Company as other than a partnership without prior unanimous written approval
by the Members. Whenever possible, this Agreement shall be construed in a manner
consistent with the classification of the Company for federal, state and local
income tax purposes as a partnership, unless there is only one Member.
 
1.11      Limit on Borrowing. The outstanding borrowing associated with
guaranties made by Members shall not exceed in the aggregate original principal
amount of $2,000,000, which shall initially be the maximum amount of borrowing.
A different limit may be established from time to time by a Supermajority Vote
of the Members.
 
2.            MANAGEMENT
 
2.1       Management by the Managers. Management of the Company shall be vested
in the Manager. Subject to the requirements of approval of Members to the extent
that such approval is expressly required by the Act or any provision of this
Agreement, the Manager shall have full and complete authority, power and
discretion to manage and control the business, affairs and properties of the
Company, to make all decisions regarding those matters and to exercise any and
all of the powers of the Company, on behalf of the Company, at Company expense
and without Member approval, including without limitation the authority, power
and discretion to cause the Company to exercise, or to exercise on behalf of the
Company or in its name, any and all of the powers of a limited liability company
set forth in Section 18-402 of the Act from time to time, whether independently
or successively in any combination, including but not limited to the following:
 
(a)           Make contracts and guarantees, incur liabilities, act as surety,
and borrow money;
 
(b)           Sell, lease, exchange, transfer, convey, mortgage, pledge, and
otherwise dispose of all or any part of the property and assets of the Company;
 
 
 
 
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(c)           Purchase, take, receive, lease, or otherwise acquire, own, hold,
improve, renovate, alter, rebuild, demolish, replace, and use or otherwise deal
in and with any interest in real or personal property, wherever located, or
acquire options to do so;
 
(d)           Issue notes, bonds, and other obligations and secure any of them
by mortgage or deed of trust or security interest of any or all of the assets of
the Company;
 
(e)           Sue on, defend,' or compromise any and all claims or liabilities
in favor of or against the Company; submit any or all such claims or liabilities
to arbitration; confess a judgment against the Company in connection with any
litigation in which the Company is involved; and complain or defend any action,
arbitration, or proceeding, whether judicial, administrative, or otherwise, in
the name of the Company ;
 
(f)            Appoint and remove all agents, and employees of the Company,
prescribe the powers and duties for them consistent with this Agreement and
applicable law, and fix their compensation;
 
(g)           Retain legal counsel, auditors, and other professionals in
connection with the Company business and to pay therefor such remuneration as
the Manager may determine;
 
(h)           Take all actions, make all filings, registrations, applications,
give such consents, and do all other things as the Manager may deem necessary or
appropriate to constitute the Company a limited liability company in good
standing in each jurisdiction wherever the Company may do business and any other
jurisdiction as the Manager deems appropriate;
 
(i)            Issue Units in exchange for Capital Contributions; and
 
(j)            Admit one or more Persons as Members, and supplement or amend
such Addendum to reflect the issuance of Units by the Company and admission of
Members to the Company.
 
2.2       Limitations on Power of the Manager
 
(a)    Actions Requiring Approval of Members. Notwithstanding any other
provisions of this Agreement to the contrary, the Manager shall not have
authority hereunder to take, or to cause the Company to take, any of the
following actions or to engage, or to cause the Company to engage, in any of the
transactions specified below without the prior written approval by Majority Vote
of the Members with respect to which such action or transaction is undertaken:
 
(i)              The sale, exchange or other disposition of all, or
substantially all, of the assets of the Company occurring as part of a single
transaction or plan, or in multiple transactions over a twelve month period,
except in the orderly liquidation and winding up of the business of the Company
upon its duly authorized dissolution;
 
(ii)            The merger of the Company with another limited liability
company, corporation, partnership or other business entity; provided in no event
shall a Member be required to become a general partner in a merger with a
partnership without his express written consent, unless the agreement of merger
provides each Member with the dissenter's rights described in the Act;
 
(iii)           Transactions between the Company and the Manager or one or more
of the Manager's Affiliates, or transactions in which the Manager or one or more
of the Manager's Affiliates, has a material financial interest, with the
exception of transactions contemplated under the Master Equipment Lease
Agreement between Javo Beverage Company, Inc., an Delaware corporation ("Javo")
and the Company entered into on the Effective Date and any other transactions
contemplated in this Agreement;
 
 
 
 
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(iv)            The filing of a voluntary bankruptcy petition on behalf of the
Company;
 
(v)             The dissolution of the Company;
 
(vi)            The amendment of the Certificate; or
 
(vii)           The amendment of this Agreement, other than an amendment merely
to reflect the issuance of Units or the admission of the transferees thereof as
Members and withdrawal of the transferors thereof as Members.
 
(b)       Prohibited Actions. Except as expressly set forth in this Agreement,
the Manager shall not have any authority hereunder to:
 
(i)               Employ, or permit any Person to employ, the funds or assets of
the Company (other than pursuant to an act taken in good faith and required by
this Agreement) in any manner except as intended in good faith for the exclusive
benefit of the Company;
 
(ii)             Perform any action (other than an act required by this
Agreement or any act taken in good faith) which would, at the time such act
occurred, subject the Members, as such, to liability in any jurisdiction;
 
(iii)            Possess Company property in a capacity other than on behalf, or
in the name, of the Company;
 
(iv)            Assign the rights of the Company in any property for other than
a Company purpose or commingle Company funds with those of any other Person;
 
(v)            Take any action (other than an act required by this Agreement)
that would make it reasonably impracticable to carry on the ordinary business of
the Company;
 
(vi)           Take any action (other than any act taken in the good faith based
belief that it is required by this Agreement) in contravention of the express
provisions of this Agreement.
 
2.3       Election and Removal of Manager
 
(a)       Number. There shall be one (1) Manager.
 
(b)       Tenure. The Manager shall hold office until the Manager resigns or is
removed and a successor has been elected and qualified.
 
(c)       Election and Qualification of Manager. The Manager shall be elected by
the Members. The person who receives a plurality of the votes shall be elected
as Manager. The Manager need not be a Member, a resident of the State of
Delaware, or a citizen of the United States. Initially, the Manager shall be
Richard Gartrell.
 
(d)       Resignation. The Manager may resign at any time by giving written
notice to the Members. The resignation of the Manager who is also a Member or
has any other relationship with the Company shall not affect the Manager's
rights as a Member, shall not constitute a withdrawal of that Member and shall
not constitute the termination of any such relationship.
 
 
 
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(e)         Removal. The Manager may be removed at any time with or without
cause by a Majority Vote of the Members. The removal of a Manager who is also a
Member, or associated with a Member, shall not affect the Manager's or such
associate's rights as a Member and shall not constitute a withdrawal of that
Member.
 
2.4       Performance of Duties and Liabilities of Manager
 
(a)       Standard of Care; Reliance on Information. The Manager shall not be
liable to the Company or to any Member for any loss or damage sustained by the
Company or any Member, unless the loss or damage shall have been the result of
fraud, gross negligence, reckless or intentional misconduct, or a knowing
violation of law by the Manager. In performing the duties of the Manager, the
Manager shall be entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, of the
following persons or groups: (a) employees or other agents of the Company; or
(b) any attorney, independent accountant, or other person as to matters which
the Manager reasonably believes to be within such person's professional or
expert competence, as to matters within its designated authority.
 
(b)       Payment of Manager.The Manager shall be paid such reasonable
compensation as determined from time to time by the Members and approved by
Majority Vote of the Members.
 
(c)       Devotion of Time. The Manager is not obligated to devote all of its
time or business efforts to the affairs of the Company. The Manager shall devote
whatever time, effort, and skill as the Manager deems appropriate for the
operation of the Company.
 
(d)       Signing Authority of Manager. The Manager is authorized to endorse
checks, drafts, and other evidences of indebtedness made payable to the order of
the Company, to sign all checks, drafts, promissory notes, deeds of trust or
other instruments obligating the Company to pay money, and to sign all other
contracts, agreements, deeds, obligations and other instruments on behalf of the
Company. The signature of the Manager alone is sufficient for such instrument to
be binding on the Company. The Manager shall have the power to execute bonds,
mortgages and other contracts except where required or permitted by law to be
otherwise signed and executed, and the signing and execution thereof may be
expressly delegated by the Manager to some other agent of the Company.
 
(e)        Duties and Powers of the Manager. The Manager shall record, or cause
to be recorded, all the resolutions of the Manager or Members in a book to be
kept for that purpose, and shall perform like duties for the standing committees
when required. The Manager shall give, or cause to be given, notice of any
meetings of the Members or Manager and shall have custody of the seal, if any,
and have authority to affix the same to any instrument requiring it, and when so
affixed it may be attested by his signature. The Manager may give general
authority to any other officer to affix the seal of the Company, if any, and to
attest the affixing by his signature. The Manager shall keep, or cause to be
kept, at the principal executive office or at the office of the Company's
transfer agent or registrar, as determined by resolution of the Manager, a
register, or a duplicate register, showing the names of all Members and their
addresses, and the number of Units held by each. The Manager shall also keep, or
cause to be kept, all documents described in Section 11.1 and such other
documents as may be required under the Act and deliver documents to the Members
to the extent required by Section 1 1.2 or the Act. The Manager shall be
responsible for financial management and control, financial reporting to the
lenders, investors and regulatory agencies, and tax planning, tax compliance and
tax reporting. The Manager shall also be responsible for personnel policies and
administration. The Manager shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the properties
and business transactions of the Company, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, and interests. The
books of account shall at all reasonable times be open to inspection by the
Manager. The Manager or agent expressly authorized shall have, Chief Financial
Officer shall have the custody of the funds and securities of the Company, and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Company, and shall deposit all moneys and other valuable
effects in the name and to the credit of the Company with such depositories as
may be designated by the Manager. The Chief Financial Officer shall disburse the
funds of the Company as may be ordered by the Manager, taking proper vouchers
for such disbursements, and shall render to the president and the Manager, or
when Members so require, at a meeting of the Members, an account of all of his
transactions as Chief Financial Officer and of the financial condition of the
Company. The Chief Financial Officer shall perform such other duties and shall
have such other responsibility and authority as may be prescribed elsewhere in
this Agreement or from time to time by the Manager. The Chief Financial Officer
shall have the general duties, powers and responsibility of a chief financial
officer of a corporation, and shall be the chief financial and accounting
officer of the Company.
 
 
 
5

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2.5       Limited Liability of Manager. No person who is the Manager of the
Company shall be personally liable under any judgment of a court, or in any
other manner, for any debt, obligation, or liability of the Company, whether
that liability or obligation arises in contract, tort, or otherwise, by reason
of being the Manager of the Company.
 
2.6       Reimbursement of Expenses of Manager. The Manager of the Company shall
be reimbursed for the reasonable expenses incurred by the Manager on behalf of
the Company or in its name with respect to the business and affairs of the
Company to the extent such expenses are approved in writing by the Manager or
incurred pursuant to the express terms and provisions of the Act or this
Agreement.
 
2.7       Waiver of Conflict of Interests. Each of the Members acknowledges and
consents to and waives the conflict of interests of the Manager in that the
Manager is an employee and an executive officer of Javo. The Members hereby
consent, as a condition to becoming a Member, that the Members' sole remedy
shall be removal of the Manager with or without cause and replacement by a vote
of the Members.
 
3.            MEMBERS
 
3.1        Limited Liability of Members. No Member shall be liable under any
judgment of a court, or in any other manner, for any debt, obligation or
liability of the Company, whether that liability or obligation arises in
contract, tort, or otherwise, by reason of being a Member of the Company;
provided, however, that Members may be required under Section I 7253(e) of the
Act to return certain distributions if they shall have had actual knowledge of
facts indicating the impropriety of the distribution.
 
3.2       Limitations on Rights of Members. No Member shall have the right or
power to (a) withdraw or reduce its Capital Contribution, except as a result of
the dissolution of the Company or as otherwise expressly provided in this
Agreement or required by law, (b) bring an action for partition against or
affecting the Company, (c) demand or receive in any distribution property of any
kind other than money, or (d) withdraw, resign or retire as a Member or member
of the Company except pursuant to Section 4.6.
 
 
 
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3.3       Members are not Agents. Pursuant to the Certificate and Section 3.1,
the management of the Company is vested in the Manager. No Member, acting solely
in the capacity of a Member or holder of Units, is an agent of the Company nor
can any Member in such capacity bind, or execute any instrument on behalf of,
the Company.
 
3.4       Action by Members
 
(a)       Voting Rights. Any action or approval of the Members shall require a
Majority Vote of the Members, other than the election of Manager or replacement
Manager which shall require the vote set forth in Section 3.3, and other than
any action or approval which this Agreement expressly provides requires a
Supermajority Vote of the Members.
 
(b)       Meetings. If and when the Manager shall determine, meetings of Members
may be called and when called shall be governed by Section 17104 of the Act;
provided, however, that this reference to Section 17104 or any other provision
of this Agreement shall not be interpreted to require that meetings of the
Members be held, it being the intent of the Members that meetings of the Members
are not required.
 
(c)       Action Without Meeting. Any action with respect to which the Members
are entitled to vote may be taken without a meeting of the Members and without
prior notice, if a consent in writing, setting forth the action so taken, is
signed by Members holding not less than a Majority Vote or such other requisite
vote that would be necessary to authorize or take such action at a meeting at
which all Members entitled to vote thereon were present and voted and such
written consent is delivered to the Secretary of the Company for retention with
the books and records of the Company. Each Member shall be notified of any
action so taken within thirty (30) days of its approval.
 
3.5       Tax Matters Member. If required by Section 623I(a)(7) of the Code, the
Manager shall appoint a Member to serve as the tax matters partner in accordance
with such Section (the "Tax Matters Member"), and in connection therewith and in
addition to all the powers given thereunder, the Tax Matters Member shall have
all other powers needed to fully perform hereunder including, without
limitation, the power to retain all attorneys and accountants of his choice. The
designation made pursuant to this paragraph is hereby expressly consented to by
each Member as an express condition to becoming a Member.
 
3.6       Admission and Withdrawal of Members
 
(a)       Admission of a Member. Upon the Transfer or issuance of Units in
compliance with the conditions set forth in Section 5, a transferee or recipient
of Units shall be deemed admitted to the Company as a substitute or additional
Member without need for further action of any Person. A transferee admitted as a
Member shall enjoy the same rights, and be subject to the same obligations, as
the transferor of the Units that were Transferred to the transferee; provided,
however, that such transferor shall not be relieved of any obligation or
liability hereunder arising prior to the consummation of such Transfer but shall
be relieved of all future obligations with respect to the Units so Transferred,
and such transferee shall not be entitled to the receipt of any distribution
with a record date preceding the date such Units were Transferred to the
transferee. As promptly as practicable after the admission of any Person as a
Member, the books and records of the Company shall be changed to reflect such
admission of such substitute or additional Member. Anything herein to the
contrary notwithstanding, the Company shall be entitled to treat the transferor
of Units as the absolute owner thereof in all respects, and shall incur no
liability for allocations of Net Income or Net Loss, or distributions of money
or property or transmittal of reports and notices which are made in good faith
to such transferor, until such time as the conditions set forth in Section 4 or
5, as applicable, have been satisfied and the effective date of the Transfer has
passed.
 
 
 
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 (b)       Withdrawal of a Member. If a Member shall Transfer all (but not less
than all) of its remaining Units in compliance with the provisions of this
Agreement, such Member shall thereupon automatically be withdrawn from the
Company and cease to be a Member of the Company, the entire membership interest
of such Member in the Company shall automatically terminate, and the withdrawn
Member shall not be entitled to any payment from the Company for its Units or to
any distributions from the Company other than distributions with a record date
preceding the effective date of such Transfer.
 
3.7       No Transfer of Interest` Separate from Units. No Member shall assign
an economic or membership interest in the Company, or otherwise Transfer all or
any portion of such Member's economic, membership, voting, information or other
rights as a Member, separately from a Transfer of the Units representing such
rights and the admission of the transferee of such Units as a Member pursuant to
Section 4.6, nor shall any Member obligate itself to act on behalf of or upon
the direction of any Person with regard to the Member's right to require any
information from the Company or obtain accountings of the Company's activities,
to inspect the Company's books and records, or to vote on any matter upon which
a Member is entitled to vote pursuant to either this Agreement or any applicable
law. No Person who is assigned an economic or membership interest in the
Company, or is otherwise Transferred all or any portion of a Member's economic,
membership, voting, information or other rights as a Member, shall have any
right to receive distributions, to vote, to receive information, to review the
books and records of the Company or have any other rights with respect to the
Company other than the rights to which such Person is entitled pursuant to their
ownership of Units that are Transferred or issued to such Person in compliance
with the provisions of this Agreement. Any Transfer or attempted Transfer of any
interest or rights in the Company in violation of this Agreement, or any
obligation to act on behalf of or upon the direction of another Person with
respect to any of a Member's rights as a Member in violation of this Agreement,
shall be null and void and of no effect.

3.8       Consistent Tax Reporting. Each of the Members acknowledge and are
aware of the income tax consequences of the manner in which allocations are to
be made under this Agreement and hereby agree to be bound by the provisions of
this Agreement and the allocations made by the Manager from time to time
pursuant thereto in reporting their Units of Net Income, Net Loss and other
items of income, gain, loss, deduction and credit for federal, state and local
income tax purposes consistently therewith.

3.9       Representations and Warranties of Members. Each Member hereby
represents, warrants and covenants to the Company that, as of the date hereof:

(a)            Investment. Representation. The Member has acquired or is
acquiring his, Units in good faith for his own account, for investment purposes
only and not with a view to or for the distribution, resale, subdivision,
fractionalization or disposition thereof, and the Member has no present interest
of selling or otherwise distributing such Units. The Member is or will be the
sole party in interest in his Units and as such is or will be vested with all
legal and equitable rights in such Units.
 
(b)            Sophistication of the Member. The Member either has a preexisting
personal or business relationship with the Company or any of its Manager or, by
reason of his business or financial experience or the business or financial
experience of his professional advisors, who are unaffiliated with and not
compensated by the Company, directly or indirectly, has the capacity to protect
his or her own interests in connection with this investment. The Member is able
to bear the economic risk of an investment in his Units and can afford to
sustain a total loss on such investment. The nature and amount of the Member's
investment in such Units is consistent with his investment objectives, abilities
and resources.
 
 
 
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(c)            No Public Market. The Member understands that there is no public
market for his Units and there is no assurance that there will be such a market
in the future. The Member has been advised that his Units have not been
registered under the Securities Act, and that said Units must be held
indefinitely unless it is subsequently registered under the Securities Act, or
an exemption from such registration is available, and understands that the
Company is under no obligation to register said Units or to comply with any
exemption from such registration requirement. In addition, the Member
understands that the transferability of his Units is and will be further
restricted by this Agreement which, among other things, requires that any sale
or assignment or other Transfer of his Units will be subject to certain terms
and conditions. Thus, the Member realizes that he cannot expect to be able to
liquidate his investment in the Company readily, or at all, in the case of an
emergency.
 
(d)            Member's Receipt of Information. The Member has been given the
opportunity to ask questions of, and receive answers from the Manager of the
Company concerning the terms and conditions of its investment in the Company and
to obtain additional information necessary to verify the accuracy of the
information provided by the Company and all other information as the Member
desired in order to evaluate his investment  in the Company.
 
3.10   Acknowledgment of Counsel; Members' Consent. Each of the Members
acknowledge that The Yocca Law Firm, LLP (the "Firm") drafted this Agreement on
behalf of, and has acted as legal counsel to, both Javo and the Company, not as
legal counsel to any of the Members individually and not as to Javo
individually. Each Member is also aware that the Firm's representation of Javo
with respect to this Agreement or the Master Lease between Javo and the Company
may create a certain conflict between the interests of Javo and the interests of
the Company or its Members. The Company, Javo and each Member has been informed
that they may consult and should only rely on their own separate counsel in
fully reviewing and evaluating this Agreement, including Members' obtaining tax
advice on any subject relevant to the Members. Each Member acknowledges that:
 
(a)            The Member's interests in the Agreement may conflict with those
of the Company and the other Members, including with respect to how the Members
will share profits and losses between themselves;
 
(b)            The Member is aware that the Firm represents the Company, and
that the Firm has represented Javo with respect to the Master Lease between Javo
and the Company and with respect to other previous matters;
 
(c)            The Member hereby acknowledges receiving a full disclosure of the
facts causing those actual or potential conflicts of interest;
 
(d)            The Member has been advised by the Company to seek independent
counsel of the Member's choosing, and has had an adequate opportunity to do so,
regarding the issue of actual and potential conflict of interests that may exist
or may arise in the future among itself, the Company, the other Members, and
Javo;
 
(e)            The Member has retained independent counsel, or has had adequate
opportunity to do so and has knowingly and voluntarily waived its right to do
so, and has in either case waived any conflict of interest arising out of the
Firm's representation of the Company and the Firm's prior, concurrent, and
future representation of Javo;
 
(f)            The Member has been advised by the Company that, and is aware
that, this Agreement will have material tax consequences;
 
 
 
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(g)            The Member has been advised by the Company to seek independent
counsel of its choosing regarding this Agreement and its tax consequences, has
had an adequate opportunity to do so, and has done so or has voluntarily waived
such right;
 
(h)            The Member is aware that it remains able to engage independent
counsel of its own choosing to vigorously assert any right on the Member's
behalf at any time; and
 
(i)            The Member consents to the representation of the Company by the
Firm under these circumstances.
 
3.11     Power of Attorney
 
(a)            Each Member hereby irrevocably constitutes and appoints the
Manager, and any Liquidator, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
 
(i)       execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate and all
amendments or restatements thereof) that the Manager or any Liquidator deems
appropriate or necessary to form, qualify or continue the existence or
qualification of the Company as a limited liability company in the State of
Delaware and in all other jurisdictions in which the Company may conduct
business or own property; (b) all instruments that the Manager or any Liquidator
deems appropriate or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (c) all conveyances
and other instruments or documents that the Manager or any Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of the
Company pursuant to the terms of this Agreement, including, without limitation,
a certificate of cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Member or the Capital Contribution of
any Member; and (e) all certificates, documents and other instruments relating
to the determination of the rights, preferences and privileges of Units; and
 
(ii)       execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or necessary,
in the sole and absolute discretion of the Manager or any Liquidator, to make,
evidence, give, confirm or ratify any vote, consent, approval, agreement or
other action which is expressly made or given by the Members hereunder.
 
(b)            Nothing contained in this Section 3.11 shall be construed as
authorizing the Manager or any Liquidator to amend this Agreement except in
accordance with Section 12.1 or as may be otherwise expressly provided for in
this Agreement.
 
(c)            The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Members will be relying upon the power of the Manager to
act as contemplated by this Agreement, and it shall survive and not be affected
by the subsequent incapacity 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 Manager or any Liquidator, acting
in good faith pursuant to such power of attorney; and each such Member hereby
waives any and all defenses which may be available to contest, negate or
disaffirm the action of the Manager or any Liquidator, taken in good faith under
such power of attorney. Each Member shall execute and deliver to the Manager or
any Liquidator, within 15 days after receipt of the Manager's or Liquidator's
request therefor, such further designation, powers of attorney and other
instruments as the Manager or the Liquidator, as the case may be, deems
necessary to effectuate this Agreement and the purposes of the Company.
 
 
 
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4.            UNITS
 
4.1       Authorized Units. The ownership and membership interests of the
Company shall be represented by and divided into Units. The total number of
Units authorized to be issued by the Company is three thousand (3,000) and the
maximum amount issuable at this time is three thousand (3,000) Units. The total
number of Units authorized to be issued may only be changed by a Supermajority
Vote. Any Units that are purchased, redeemed or otherwise acquired by the
Company or that otherwise cease to be outstanding shall be canceled and restored
to the status of authorized but unissued Units unless otherwise provided.
 
4.2       Common Units. All Units of the Company shall be designated as Common
Units. For so long as it remains outstanding, each outstanding Common Unit shall
entitle and obligate the holder thereof to the rights, powers, duties and
obligations set forth below:
 
(a)            Allocations and Distributions. Each Common Unit shall entitle the
holder thereof to a Proportionate share of the Net Income and Net Loss allocated
to the Unitholders, and a Proportionate share of the distributions made to the
Unitholders.
 
(b)            Voting Rights. Members holding Common Units shall have the right
to one (1) vote for each outstanding Common Unit held by such Member and shall
be entitled to notice of any Member's meeting and shall be entitled to vote upon
such matters and in such manner as provided in this Agreement.
 
(c)            Other Rights and Obligations. Each outstanding Common Unit shall
entitle and obligate the holder thereof to such other rights and obligations of
Members as set forth in this Agreement.
 
4.3       Issuance of Units
 
(a)            Authority to Issue Units. Subject to the conditions set forth in
Section 5.3(b) and the Preemptive Rights set forth in Section 4.3(c), the
Manager may issue Units from time to time to such Persons in exchange for such
Capital Contributions and upon such terms and conditions as the Manager may
determine in its discretion.
 
(b)            Conditions to the Issuance of Units. The Company shall not issue
Units to any Person, and no issuance of Units shall be effective, unless:
 
(i)            The Capital Contribution per Unit to be made by such Person is
not less than the greater of (A) the fair market value per Unit as of the date
of such issuance, or (B) the sum of the Capital Accounts of all existing
Unitholders (determined after adjustment of the Capital Accounts of the Members
pursuant to Section 6.4(b)), divided by the number of outstanding Units prior to
such issuance;
 
(ii)           Such Person, if not a Member prior to such issuance, shall
execute and deliver to the Company a counterpart to this Agreement, or a written
agreement to be bound by the terms and conditions of this Agreement;
 
(iii)         Such issuance, and the admission of such Person as a Member, shall
not require registration under the Securities Act, shall not otherwise violate
any federal or state securities laws or regulations applicable to the Company,
and shall not cause the Company to be treated as a "publicly traded partnership"
under Section 7704 of the Code, in each case in the determination of the
Manager.
 
 
 
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(c)       Preemptive Rights. In the event that the Company proposes to undertake
an issuance of New Units, it shall give to each of the Unitholders written
notice of the proposed issuance, describing the New Units and setting forth the
number of New Units that the Company proposes to issue and the price and other
terms and conditions upon which the Company proposes to issue the New Units
("Issuance Notice"). Upon receipt of such Issuance Notice, each of the
Unitholders shall have the right, but not the obligation, to purchase New Units
at the price and on the other terms and conditions specified in the Issuance
Notice, exercisable by delivery of notice to the Company ("Preemption Notice")
within twenty (20) calendar days from the date of receipt of the Issuance Notice
setting forth the number of New Units that the Unitholder, individually from the
other Unitholders, elects to purchase. Such Unitholder's right to purchase New
Units shall terminate if the Unitholder does not exercise such right (by
delivery of the Preemption Notice) within the required time period. If any
Unitholder elects to purchase New Units, then each such Unitholder shall
purchase a number of the New Units equal to the lesser of (i) the number of New
Units that the Unitholder elected to purchase, or (ii) the Unitholder's
Proportionate share of the New Units. However, if there are New Units left
unpurchased by Unitholders after the application of the previous sentence, then
each Unitholder that elected to purchase more New Units than were allocated to
the Unitholder under the previous sentence (an "excess election amount") shall
additionally be obligated to purchase a number of New Units equal to (i) the
number of New Units not allocated to any Unitholder under the previous sentence,
multiplied by (ii) the ratio of the Unitholder's excess election amount to the
aggregate excess election amount of all Unitholders. If existing Unitholders do
not elect to purchase all of the New Units that the Company proposes to issue,
the Company may issue any excess New Units to any other Person or Persons upon
the terms and conditions specified in the Issuance Notice and subject to the
conditions and limitations of this Agreement.
 
4.4     Recapitalizations. The Company may make a distribution of Units with
respect to outstanding Units, effect a subdivision or combination of Units, or
take a like action (each, a "Recapitalization"); provided, however, that the
Company shall not effect any Recapitalization unless the respective voting
rights and interests in Net Income and Net Loss and distributions of the Members
immediately after the Recapitalization are the same as their respective voting
rights and interests in Net Income and Net Loss and distributions immediately
before the Recapitalization.
 
 
4.5       Transfer of Units
 
(a)       Conditions to the Transfer of Units. No Member shall Transfer all or
any portion of its Units to any Person, and no such Transfer shall be effective,
unless:
 
(i)            The Transfer is either a Permitted Transfer pursuant to Section
4.6, a Transfer pursuant to Section 4.7, or a Transfer pursuant to Section 4.8;
 
(ii)            Such Person, if not a Member prior to such Transfer, shall
execute and deliver to the Company a counterpart to this Agreement, or a written
agreement to be bound by the terms and conditions of this Agreement and to make
all of the representations, warranties, approvals and acknowledgements of a
Member hereunder, or (in the case of a Transfer by operation of law) such Person
shall by operation of law be bound by the obligations of the transferor Member
under this Agreement and be deemed to make the representations, warranties,
approvals and acknowledgements made by the transferor Member under this
Agreement;
 
(iii)         Such Transfer, and the admission of such Person as a Member, shall
not require registration under the Securities Act, shall not otherwise violate
any federal or state securities laws  or regulations applicable to the Company,
and shall not cause the Company to be treated as a "publicly traded partnership"
under Section 7704 of the Code, in each case in the determination of the
Manager.
 
 
 
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(b)            No Transfer of Units shall be effective, and no transferee of
Units shall be admitted as a Member hereunder or acquire any rights hereunder,
including any voting rights or rights to receive distributions or allocations in
respect of the transferred or issued Units, as applicable, unless the conditions
set forth above are satisfied prior to or concurrent with such Transfer. Any
Transfer or attempted Transfer of Units in violation of this Agreement shall be
null and void and of no effect.
 
(c)            Each Member acknowledges the reasonableness of the restrictions
on Transfer imposed by this Agreement in view of the purposes of the Company,
its status as a limited liability company and the relationship of its Members.
The Transfer restrictions contained herein are expressly consented to by each
Member as an express condition of becoming a Member.
 
4.6       Permitted Transfers. Subject to the conditions of Section 4.5, a
Member shall be permitted to make a Transfer (a "Permitted Transfer") of Units
without the application of Sections 4.7 if the Transfer is to:
 
(a)            his spouse or issue,
 
(b)            a trust for the sole benefit of such Member and/or his spouse or
issue, but only if the Member retains sole voting control over any Transferred
Units,
 
(c)            any individual or entity directly or indirectly holding one
hundred percent (100%) of the value and voting power of the securities or other
interests of the Member, or
 
(d)            any entity of which the Member holds, directly or indirectly, one
hundred percent (100%) of the value and voting power of the securities or other
interests of such entity.
 
Such Transferred Units shall remain subject to all of the terms and conditions
contained in this Agreement and no further Transfer of such Units shall be
permitted unless such Transfer complies with all of the terms and conditions
contained in this Agreement. In the event of a Permitted Transfer of Units to a
trust, at such time that the Transferring Member dies, loses sole voting control
over such Units or such Units become no longer subject to such trust, the
Company and non-Transferring Members shall have the rights provided in Sections
4.7 with respect to all such Units, unless concurrent with such event such Units
are returned to the transferring Member. In the event of a Transfer to a trust,
all notices required by this Agreement shall be given to both the Transferring
Member and to the trustee or the successor trustee of such trust.
 
4.7       Rights of First Refusal
 
(a)            Company's Right of First Refusal. If a Unitholder ("Offering
Unitholder") shall decide to sell or otherwise Transfer all or any portion of
such Unitholder's Units ("Offered Units") pursuant to a bona fide offer, the
Offering Unitholder shall give written notice to the Company (the "Offer
Notice") setting forth such Offering Unitholder's desire to make such Transfer,
the number of Units proposed to be Transferred by the Offering Unitholder, and
the price and other terms and conditions upon which the Offering Unitholder
proposes to Transfer the Offered Units. Upon receipt of the Offer Notice, the
Company shall have the right, but not the obligation, to elect to purchase any
or all of the Offered Units on the same terms and conditions as set forth in the
Offer Notice, exercisable by delivery of notice to the Offering Unitholder (the
"Exercise Notice") within twenty (20) calendar days from the date of receipt of
the Offer Notice setting forth the number of Offered Units that the Company
elects to purchase.
 
 
 
 
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The Company's right to purchase Offered Units shall terminate if the Company
does not exercise such right by delivery of the Exercise Notice within the
required time period. If the Company elects to purchase all of the Offered
Units, then the Offering Unitholder shall sell the Offered Units to the Company
pursuant to Section 4.7(c).
 
(b)            Unitholders' Right of First Refusal. If the Company elects to
purchase some but not all of the Offered Units, determines not to exercise its
right to purchase Offered Units or does not exercise its right to purchase any
of the Offered Units within the required time period, the Company shall notify
the Unitholders other than the Offering Unitholder (the "Remaining Unitholders")
in writing of such fact within five (5) calendar days of the Company's election
to purchase some but not all of the Offered Units, the Company's determination
not to exercise its right to purchase Offered Units, or the expiration of the
Company's right to purchase Offered Units, as applicable (the "Unitholder Offer
Notice"). The Unitholder Offer Notice shall also include a copy of, or set forth
all of the information contained in, the Offer Notice. Upon delivery of the
Unitholder Offer Notice, each Remaining Unitholder shall have the right, but not
the obligation, to elect to purchase Offered Units that the Company did not
elect to purchase (the "Remaining Offered Units") on the same terms and
conditions as set forth in the Offer Notice, exercisable by delivery of notice
to the Offering Unitholder and to the Company (the "Unitholder Exercise Notice")
within twenty (20) calendar days from the date of delivery of the Unitholder
Offer Notice setting forth the number of Remaining Offered Units that the
Remaining Unitholder elects to purchase. On the date that is twenty (20)
calendar days after delivery of the Unitholder Offer Notice, the right of each
Remaining Unitholder to purchase Remaining Offered Units shall terminate if such
Remaining Unitholder has not exercised such right by delivery of a Unitholder
Exercise Notice, and the Company shall determine if the Remaining Unitholders
together have elected to purchase all of the Remaining Offered Units. If not,
then the right of the Company and of the Remaining Unitholders to purchase any
of the Offered Units shall terminate, and the Offering Unitholder shall be
permitted to Transfer all of the Offered Units pursuant to Section 4.7(d). If
so, then the Offering Unitholder shall sell all of the Offered Units to the
Company and the Remaining Unitholders pursuant to Section 4.7(c), and each
Remaining Unitholder shall purchase a number of the Remaining Offered Units
equal to the lesser of (i) the number of Remaining Offered Units that the
Unitholder elected to purchase, or (ii) the number of Remaining Offered Units
allocated to such Unitholder Proportionately among the Remaining Unitholders
(determined as if all of the Units held by either the Offering Unitholder or the
Remaining Unitholders not electing to purchase were not outstanding). However,
if there are Remaining Offered Units left unpurchased after the application of
the previous sentence, then each Remaining Unitholder that elected to purchase
more Remaining Offered Units than were allocated to the Unitholder under the
previous sentence (an "excess election amount") shall additionally be obligated
to purchase a number of Remaining Offered Units equal to (i) the number of
Remaining Offered Units not allocated to any Remaining Unitholder under the
previous sentence, multiplied by (ii) the ratio of the Unitholder's excess
election amount to the aggregate excess election amount of all Remaining
Unitholders.
 
(c)            Purchase by the Company and/or Remaining Unitholders. If the
Company and/or one or more Unitholders (collectively the "Purchasers") have
elected to purchase all of the Offered Units, the closing of the purchase and
sale shall occur at the offices of the Company at 10:00 a.m. on the fourteenth
(14th) calendar day following the delivery by the Company of the Exercise Notice
electing to purchase all of the Offered Units, or the determination by the
Company that the Remaining Unitholders had elected to purchase all of the
Remaining Offered Units, as the case may be, or at such other time and place as
may be mutually agreed to in writing by the Purchasers and the Offering
Unitholder (the "Closing"). At the Closing, the Offering Unitholder shall
deliver to the Purchasers a certificate or certificates (if applicable)
representing its Units duly endorsed for transfer, and the Purchasers shall each
deliver to the Offering Unitholder cash (or a certified or cashier's check) for
the amount of the cash consideration and any other consideration to be paid by
such Purchaser for the Units it has elected to purchase. The Offering Unitholder
and the Purchasers shall each execute and deliver such other documents as may
reasonably be requested by any of the parties mentioned above in connection with
the transactions contemplated in this Agreement. The Purchasers shall have the
right, but not the obligation, to purchase the Offered Units for cash
consideration whether or not part or all of the consideration specified in the
Offer Notice is other than cash. If part or all of the consideration to be paid
for the Offered Units as stated in the Company Offer Notice is other than cash,
the price stated in the Offer Notice shall be deemed to be the sum of the cash
consideration, if any, specified in the Offer Notice plus the fair market value
of the non-cash, consideration specified in the Offer Notice. If the Offering
Unitholder and the Purchasers are unable to agree upon the fair market value of
the non-cash consideration, the fair market value shall be determined in good
faith by the Manager, which determination shall be conclusive and binding upon
all of the parties.
 
 
 
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(d)            Failure to Exercise Right of First Refusal. In the event the
Company and/or the Remaining Unitholders shall fail to tender the required
consideration at the Closing, or in the event that the Company and/or the
Remaining Unitholders do not elect to purchase all of the Offered Units within
the time periods specified above, then all of the Offered Units may be
Transferred by the Offering Unitholder at any time within eighty (80) calendar
days from the date of the Closing, or the date of expiration of the Remaining
Unitholders' rights to purchase, as applicable, to the person and for the
consideration and upon the terms and conditions specified in the Offer Notice.
Any Transfer of the Offered Units after the end of the eighty (80) day period or
any change in the terms of the Transfer from the terms set forth in the original
Offer Notice shall require a new notice of intent to transfer delivered to the
Company and shall give rise anew to the rights provided in the preceding
paragraphs.
 
5.           CAPITAL
 
5.1       Initial Capital Contributions. At the time of their respective
execution of this Agreement, each Member or Unitholder has severally and not
jointly agreed to guaranty a Proportionate amount of the obligation for money to
be borrowed by the Company from First Regional Bank, or any future lender to the
Company (each a "Lender"), up the amount as set forth in the Capital
Contribution column opposite its name on Exhibit A to this Agreement, which is
based on 150% of the maximum amount to be borrowed. The guaranty of the
obligation shall be considered an immediate Capital Contribution to the Company
and shall be evidenced by such further instruments and documents as may be
requested by the Company or its Lender. In exchange for the Capital
Contribution, each Unitholder has been issued the number of Units set forth
opposite its name on Exhibit A to this Agreement equal to the amount of such
Capital Contribution divided by $1,000.00. Each of the Members and the Company
hereby agree that the amount of the Capital Contribution set forth opposite the
name of each Unitholder is the fair market value of the total Capital
Contribution made by such Unitholder as of the date of the execution by such
Unitholder of this Agreement. The Company and each Member and Unitholder shall
be deemed a third-party beneficiary of the guaranties of all the other Members
or Unitholders. Accordingly, to the extent a Member or Unitholder shall make a
payment on account of its guaranty that exceeds the lesser of (a) the
Proportionate amount due under all such guaranties or (b) the amount of the
Capital Contribution of the Member or Unitholder in Exhibit A, the paying Member
or Unitholder shall have a right to claim and recover contribution from all
other Members or Unitholders who have paid less than the lesser of (a) their
Proportionate share of the obligation and (b) their Capital Contribution.
Furthermore, the Company shall treat as a creditor any Member or Unitholder to
the extent its payments under the guarantees exceed the lesser of (a) its
Proportionate amount of the obligations or (b) the amount of the Capital
Contribution of the Member or Unitholder in Exhibit A.
 
5.2       Additional Capital Contributions.Except as required by law or
expressly contemplated or permitted by this Agreement pursuant to the issuance
of Units, no Member shall be required or permitted to make any Capital
Contributions or loans to the Company.
 
 
 
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5.3       Capital Accounts. A separate Capita] Account shall be established and
maintained for each Member on the Company's books and records in accordance with
the following:
 
(a)            To each Member's Capital Account, there shall be added such
Member's Capital Contributions, such Member's allocable share of Net Income and
any items of income or gain specially allocated to such Member, and the amount
of any Company liabilities assumed by such Member or that are secured by any
property distributed to such Member.
 
(b)            From each Member's Capital Account, there shall be subtracted the
amount of cash and the Gross Asset Value of any property distributed to such
Member pursuant to any provision of this Agreement, such Member's allocable
share of Net Loss and any items of loss or deductions specially allocated to
such Member, and the amount of any liabilities of such Member assumed by the
Company or that are secured by any property contributed by such Member to the
Company.
 
(c)            In the event any Units are Transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent that it relates to the transferred Units.
 
(d)            In determining the principal amount of any liability for purposes
of subsections (a) and (b) above there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
 
(e)            The provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and
1.704-2, and shall be interpreted and applied in a manner consistent with such
Regulations. If the Manager shall determine that it is prudent to modify the
manner in which the Capital Accounts are maintained in order to comply with such
Regulations, the Manager may make such modification; provided that such
modification will not have a material effect on the amounts distributable to any
Member pursuant to Section 8.4 upon the dissolution of the Company. The Manager
shall also make (i) any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Members and the amount of
Company capital reflected on the Company's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii)
any appropriate modifications upon the occurrence of unanticipated events that
might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b) or Section 1.704-2. The foregoing provisions are not intended to
prevent the Company from maintaining such books and records as may be necessary
to prepare financial statements on the basis of GAAP.
 
5.4       Gross Asset Value of Company Assets. The Gross Asset value of any
asset of the Company shall be the asset's adjusted basis for federal income tax
purposes, except as follows:
 
(a)            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 at the
time of contribution, as reasonably determined by the Manager, provided that the
initial Gross Asset Values of assets contributed to the Company pursuant to
Section 5.1 shall be as agreed to by such Member and the Company as set forth on
Exhibit A with respect to that Member;
 
(b)            The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values (taking Code Section 7701(g)
into account), as reasonably determined by the Manager immediately prior to the
following times:
 
 
 
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 (i)            the acquisition of an additional interest in the Company by a
new or existing Member in exchange for more than a de minimis Capital
Contribution, if the Manager reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic interests of the
Members in the Company;
 
(ii)            the distribution by the Company to a Member of more than a de
minimis amount of Company property as consideration for an interest in the
Company, if the Manager reasonably determines that such adjustment is necessary
or appropriate to reflect the relative economic interests of the Members in the
Company;
 
(iii)            the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b) (2)(ii)(g); and
 
(iv)            such other times as the Manager shall reasonably determine
necessary or advisable in order to comply with Regulations Sections 1.704-1(b)
and 1.704-2.
 
(c)            The Gross Asset Value of any Company asset distributed to a
Member shall be adjusted to equal the gross fair market value (taking Code
Section 7701(g) into account) of such asset on the date of distribution as
reasonably determined by the Manager.
 
(d)            At the election of the Manager, the Gross Asset Values of Company
assets shall be increased (or decreased) to reflect any adjustments to the
adjusted tax 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 Regulations Section
1.704-1(b)(2)(iv)(m) as provided in Section 5.4(e); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the
extent that the Manager reasonably determines that an adjustment pursuant to
subsection (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subsection (d).
 
(e)           If the Gross Asset Value of a Company asset has been determined or
adjusted pursuant to subsection (a), subsection (b) or subsection (d) above,
such Gross Asset Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Net Income and
Net Loss.
 
5.5       Authority to Enforce Capital Contributions. Only the Company (and no
third party creditor, either in its own right or as a successor-in-interest of
the Company, and including a trustee, receiver or other representative of the
Company or Member) shall be entitled to enforce any obligation to make Capital
Contributions. The Members intend and agree that any obligation of the Members
to make Capital Contributions constitutes an agreement to make financial
accommodations to and for the benefit of the other Members and the Company. If
any Person fails to make in full a Capital Contribution that such Person agreed
to make in exchange for the issuance of Units prior to or concurrent with the
issuance of such Units or at such other time as agreed to by such Person and the
Company, then such Person shall have no membership interest or economic interest
in the Company relating to or represented by such Units, and such Units shall
not be considered to be outstanding, until such Capital Contribution is made in
full.
 
5.6       No Interest; No Return. Except as provided herein or required by law,
no Member shall be entitled to interest on its Capital Contributions or on its
Capital Account, and no Member may withdraw any portion of the capital of the
Company and no Member shall have any right to demand or receive the return of
its Capital Contributions from the Company.
 
 
 
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5.7       No Obligation to Restore Capital Account Deficit. No Member shall be
obligated to restore the amount of any deficit Capital Account balance, and no
Member shall have any liability to the Company, to any other Member, to the
creditors of the Company or to any other Person on account of any deficit
Capital Account balance.
 
6.            DISTRIBUTIONS
 
6.1       Distributions in General. Money or other property of the Company may
be distributed to the Members in such amounts and at such times as determined by
the Manager in its discretion, and when distributed shall be distributed among
the Members as provided in Section 6.2, except as otherwise provided in this
Agreement. The Manager shall establish a record date with respect to each
distribution that is on or before the date the distribution is made, and each
distribution shall be distributed according to the ownership of Units as of the
record date of such distribution. If the Manager does not specify a record date
for a distribution, the record date shall be the date of the action or
resolution of the Manager authorizing the distribution.
 
6.2       Priority of Distributions
 
(a)            Distributions in General. Any distribution other than a
distribution upon dissolution of the Company shall be made Proportionately to
the Unitholders.
 
(b)            Distribution upon Dissolution. Any distribution made on or after
the dissolution of the Company shall be distributed in accordance with Section
8.4 hereof.
 
6.3       Distributions In Kind. The Manager may distribute assets in kind to
the Members, provided that if such distribution in kind is made together with a
distribution of money, such assets shall, to the extent possible and except as
hereinafter provided, be distributed among the Members Proportionately, and
provided further that no Member may be compelled to accept a distribution of
assets in kind except (a) upon a dissolution of the Company or (b) when no
Member is receiving a distribution of money. Such distribution in kind shall be
treated as if it were a sale of such assets, and any gain or loss on such deemed
sale shall be included in the Net Income or Net Loss of the Company for the
Fiscal Period in which such distribution occurs. To the extent assets are
distributed to the Members, the Manager shall make a determination of the fair
market value of such property at the time of such distribution. No right is
given to any Member to demand or receive property other than money.
 
6.4       Distributions to Pay Taxes. The Company may, but shall not be
obligated to, distribute Proportionately to the Unitholders within thirty (30)
calendar days after the end of each quarter of each Fiscal Year an amount of
cash equal to the product of (a) the sum of the highest federal income tax rate
and the highest state income tax rate applicable to any Unitholder for such
Fiscal Year, multiplied by (b) the taxable income of the Company for such
quarter of such Fiscal Year for federal income tax purposes. The sum of the
highest federal income tax rate and the highest state income tax rate shall be
initially presumed to be fifty percent (50%).
 
6.5       Taxes of Members Paid or Withheld. Each Member hereby authorizes the
Company to withhold from or pay on behalf of or with respect to such Member any
amount of federal, state, local or foreign taxes that the Manager reasonably
determines that the Company is required to withhold or pay with respect to any
amount distributable or allocable to such Member pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Company pursuant to Code Section 1441, Code Section 1442, Code Section 1445 or
Code Section 1446, or Section 18805 or Section 26131 of the California Revenue
and Taxation Code or Title 30 of the Delaware Code. Any amounts withheld from a
distribution to a Member pursuant to this paragraph shall be treated as having
been distributed to such Member for all purposes under this Agreement. Any
subsequent distribution of an amount previously withheld from a distribution to
such Member and not paid to a taxing authority on behalf of or with respect to
such Member shall not be treated as an additional amount distributed. Any amount
paid on behalf of or with respect to a Member and not withheld from a
distribution to such Member shall constitute an amount that is due and payable
by the Member to the Company within 15 days after notice from the Manager that
such payment must be made.
 
 
 
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7.            ALLOCATIONS
 
7.1       General Allocations. Net Income and Net Loss shall be determined with
respect to each Fiscal Period as of the end of the last day of each such Fiscal
Period and shall be allocated at such time to the Members for purposes of
adjusting the Capital Accounts of the Members as provided in this Section 7.1
after giving effect to the allocations under Section 7.2.
 
(a)            Net Income. Net Income of the Company for a Fiscal Period shall
be allocated Proportionately to the Unitholders.
 
(b)            Net Loss. Net Loss of the Company for any Fiscal Period shall be
allocated Proportionately to the Unitholders.
 
7.2       Regulatory Allocations. Notwithstanding the allocations made pursuant
to Section 7.1, items of income, gain, loss, deduction. or credit of the Company
shall be allocated for purposes of adjusting the Capital Accounts of the Members
as and to the extent required by this Section 7.2.
 
(a)            Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), if there is a net decrease in Company Minimum
Gain during any Fiscal Period, then each Member shall be specially allocated
items of Company income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Member's share of the net decrease in Company
Minimum Gain during such Fiscal Period as determined under Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto, and the items to be allocated shall be determined in
accordance with Regulations Section 1.704-2(0(6) and 1.704-2(j)(2). This
paragraph is intended to qualify as a "minimum gain chargeback" within the
meaning of Regulations Section I.704- 2(f) and shall be interpreted consistent
therewith.
 
(b)            Member Minimum Cain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(0(4) or in paragraph (a) above, if there is a net
decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during
any Fiscal Period, then each Member that has a share of the Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company
income and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Member's share of the net decrease in Member Minimum Gain
attributable to the Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). This paragraph is intended to qualify as a
"chargeback of partner nonrecourse debt minimum gain" within the meaning of
Regulations Section 1.704-2(i) and shall be interpreted consistent therewith.
 
(c)            Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any Fiscal Period shall be specially allocated to the Member or Members who
bear the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member Nonrecourse Deductions are attributable, as determined in
accordance with Regulations Section 1.704-2(0. If more than one Member bears the
economic risk of loss with respect to a Member Nonrecourse Debt, any Member
Nonrecourse Deductions with respect to such Member Nonrecourse Debt shall be
specially allocated among such Members in accordance with the ratios in which
the Members share the economic risk of loss for such Member Nonrecourse Debt.
 
 
 
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(d)            Qualified Income Offset. If any Member unexpectedly receives an
adjustment, allocation, or distribution described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), then items of Company income and gain
(consisting of a pro rata portion of each item of income and gain of the
Company) shall be specially allocated, in accordance with Regulations Section
1.704-1(b)(2)(ii)(d), to such Member in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of such Member as quickly as possible, provided that an
allocation pursuant to this paragraph shall be made only if and only to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided in this Agreement have been tentatively made as if
this paragraph were not in the Agreement. This paragraph is intended to qualify
as a "qualified income offset" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
 
(e)            Code Section 754 Adjustment. To the extent an adjustment to the
adjusted tax asis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(2) or Treasury Regulations Section 1.704-
1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a
result of a distribution to a Member in complete liquidation of his interest,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specifically
allocated to the Members in accordance with their interests in the Company in
the event Treasury Regulations Section 1.704- 1(b)(2)(iv)(m)(2) applies, or the
Members to whom such distribution was made in the event that Treasury
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
 
(f)            Limitation on Allocation of Net Loss. If the allocation of Net
Loss to a Member would create or increase an Adjusted Capital Account Deficit,
there shall be allocated to such Member only that amount of Net Loss as will not
create or increase an Adjusted Capital Account Deficit. The Net Loss that would,
absent the application of the preceding sentence, otherwise be allocated to such
Member shall be specially allocated to the other Members in the manner that such
Net Loss would generally allocated if the Units of such Member were not
outstanding, subject to the limitation of this paragraph.
 
(g)            Curative Allocations. The allocations set forth in paragraphs (a)
through (f) above (the "Regulatory Allocations") are intended to comply with
certain regulatory requirements, including the requirements of Regulations
Sections 1.704-1(b) and 1.704-2. To the maximum extent possible without
violating the requirements giving rise to the Regulatory Allocations, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Company income, gain, loss, or
deduction pursuant to this paragraph, so that the net amount of Company income,
gain, loss, deduction and credit allocated to each Member shall be equal to the
net amount of Company income, gain, loss, deduction and credit that would have
been allocated to each such Member if the Regulatory Allocations had not
occurred. Therefore, notwithstanding any other provision of this Section 7
(other than the Regulatory Allocations), the Manager shall be authorized to make
such offsetting special allocations of Company income, gain, loss, deduction or
credit in whatever manner they determine appropriate so that, after such
offsetting allocations are made, each Member's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Member would have
had if the Regulatory Allocations were not part of the Agreement and all Company
items were allocated pursuant to Section 7.1. In exercising their discretion
under this paragraph, the Manager shall take into account future Regulatory
Allocations under paragraphs (a) and (b) above that, although not yet made, are
likely to offset Regulatory Allocations made under paragraphs (c) and (d) above.
 
 
 
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7.3       Tax Allocations
 
(a)            General. For purposes of determining the distributive Units of
the Members of ompany income, gain, loss, deduction or credit for federal,
state, or local income tax purposes, (i) an allocation to a Member of a share of
Net Income or Net Loss for purposes of adjusting its Capital Account shall be
treated as an allocation of the same share of each item of income, gain, loss,
deduction or credit that is taken into account in computing Net Income or Net
Loss, except as otherwise provided in this Section 7.3, and (ii) any items of
income, gain, loss, deduction or credit of the Company not taken into account in
computing Net Income or Net Loss shall be allocated among the Members in the
same manner as the correlative items of "book" income, gain, loss, deduction or
credit are allocated for purposes of adjusting Capital Accounts. Allocations
pursuant to this Section 7.3 are solely for purposes of federal, state, and
local income taxes and shall not affect, or in any way be taken into account in
computing or adjusting, any Member's Capital Account.
 
(b)            Code Section 704(c) Allocations. Items of income, gain, loss,
deduction and credit with respect to any property contributed to the capital of
the Company with a Gross Asset Value that varies from its adjusted tax basis in
the hands of the contributing Member immediately preceding the date of
contribution shall be allocated among the Members for federal, state and local
income tax purposes so as to take into account the variation between the
adjusted tax basis of the property and its initial Gross Asset Value using any
method permitted under Regulations Section 1.704-3 as selected by the Manager.
In the event the Gross Asset Value of any Company asset is adjusted pursuant to
Section 5.4(b), subsequent allocations of income, gain, loss deduction and
credit with respect to such asset shall take into account any variation between
the adjusted basis of such asset for federal income tax purposes and its Gross
Asset Value in the same manner as under Code Section 704(c) using any method
permitted under Regulations Section 1.704-3 as selected by the Manager.
 
(c)            Recapture. In the event that the Company has taxable gain that is
characterized as ordinary income under the recapture provisions of the Code,
each Member's distributive share of taxable gain from the sale of Company assets
(to the extent possible) shall include a proportionate share of this recapture
income equal to that Member's proportionate share of the prior cumulative
depreciation deductions with respect to the assets that gave rise to the
recapture income.
 
7.4       Other Allocation Rules
 
(a)            Varying Interests. In the event that Units are issued,
Transferred, converted or redeemed during a Fiscal Period, Net Income, Net Loss,
each item thereof and all other items of income, gain, loss, deduction and
credit shall be allocated among the Members taking into account their varying
ownership of Units during the Fiscal Period in accordance with Code Section
706(d), using the "interim closing of the books" method, the "daily proration"
method, a monthly proration method or any other method permissible under Code
Section 706(d), as selected and applied in the discretion of the Manager.
 
(b)            Excess Nonrecourse Liabilities. The "excess nonrecourse
liabilities" of the Company within the meaning of Regulations Section
1.752-3(a)(3) shall be allocated Proportionately among the Unitholders, which is
the manner in which it is reasonably expected that the deductions attributable
to those nonrecourse liabilities will be allocated.
 
(c)            Treatment of Distributions. Distributions to a Member shall be
treated as having been made from the proceeds of a Nonrecourse Liability or a
Member Nonrecourse Debt only if and to the extent that the distribution (a)
causes or increases an Adjusted Capital Account Deficit for the Member and (b)
is directly attributable to the proceeds of a Nonrecourse Liability or a Member
Nonrecourse Debt under the methods prescribed under Regulations Section 1.163-8T
for allocating debt proceeds among expenditures (applying those rules to the
Company as if it were an individual).
 
 
 
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(d)            Tax Elections. The Manager shall, without further consent of the
Members being required (except as specifically required by Section 1 or any
other provision hereof), have the authority to determine the method of
depreciation to be utilized by the Company for federal, state and local income
tax purposes and to make any and all elections for federal, state, and local tax
purposes including, without limitation, any election, if permitted by applicable
law, to adjust the basis of Company property pursuant to Code Sections 754,
734(b) and 743(b), or comparable provisions of state or local law, in connection
with transfers of interests in the Company and Company distributions.
 
(e)            Changes in Tax Law. In the event that (a) any modifications are
made to the Code or any Regulations, (b) any changes occur in any case law
applying or interpreting the Code or any Regulations, (c) the IRS changes or
clarifies the manner in which it applies or interprets the Code or any
Regulations or any case law applying or interpreting the Code or any Regulations
or (d) the IRS adjusts the reporting of any of the transactions or allocations
contemplated by this Agreement which, in each case, in the opinion of an
independent tax counsel, requires allocations of items of income, gain, loss,
deduction or credit or reporting of any of the transactions contemplated by this
Agreement in a manner different from the allocations or reporting set forth in
this Agreement, the Manager is hereby authorized to make new allocations or
report any such transactions (as the case may be) in reliance on the opinion of
such independent tax counsel, and such new allocations and reporting shall be
deemed to be made pursuant to the fiduciary duty of the Manager to the Company
and the other Members, and no such new allocation or reporting shall give rise
to any claim or cause of action by any Member.
 
7.5       Consent to Allocations. The Members acknowledge and are aware of the
federal, state and local income tax consequences of the provisions, hereinabove
set forth, by which Net Income, Net Loss and each item of income, gain, loss,
deduction and credit of the Company are allocated and treated and hereby agree
to be bound by those provisions, and the allocations made pursuant thereto, in
reporting each item of income, gain, loss, deduction and credit for federal,
state and local income tax purposes. The Members hereby expressly consent to
such provisions as an express condition of becoming a Member.
 
7.6       Computation of Net Income and Net Loss. The Net Income and Net Loss of
the Company for each Fiscal Period shall be equal to the Company's taxable
income or loss for such Fiscal Period, determined in accordance with Code
Section 703(a) (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss), with the following adjustments:
 
(a)            Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Net Income (or Net Loss)
pursuant to this Section 7.6 shall be added to (or subtracted from, as the case
may be) such taxable income (or loss);
 
(b)            Any expenditure of the Company described in Code Section
705(a)(2)(b) or treated as a Code Section 705(a)(2)(b) expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income (or Net Loss) pursuant to this Section 7.6 shall be
subtracted from (or added to, as the case may be) such taxable income (or loss);
 
(c)            In the event that the Gross Asset Value of any Company asset is
adjusted pursuant to Section 5.4(b) or (c), the amount of such adjustment shall
be taken into account as gain (if the adjustment increases the Gross Asset Value
of the asset) or loss (if the adjustment decreases the Gross Asset Value of the
asset) from the disposition of such asset for purposes of computing Net Income
or Net Loss;
 
 
 
 
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(d)            Gain or loss resulting from any disposition of any Company asset
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such asset differs from its
Gross Asset Value;
 
(e)            In lieu of the depreciation, amortization and other cost recovery
deductions that would otherwise be taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such Fiscal
Period;
 
(f)            To the extent that an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account
in determining Capital Accounts as a result of a distribution other than in
liquidation of a Member's interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Net Income or Net Loss; and
 
(g)            Notwithstanding any other provision of this Section 7.6, any item
allocated pursuant to Section 7.2 hereof shall not be taken into account in
computing Net Income or Net Loss. The amounts of the items of Company income,
gain, loss or deduction available to be allocated pursuant to Section 7.2 hereof
shall be determined by applying rules analogous to those set forth in this
Section 7.6.
 
 
8.            DISSOLUTION AND TERMINATION
 
8.1       Events Causing Dissolution. The Company shall he dissolved and its
affairs shall be wound up upon the earliest to occur of the following events (a
"Dissolution Event"):
 
(a)            A Majority Vote of the Members in favor of dissolution of the
Company; or
 
(b)            Entry of a decree of judicial dissolution of the Company. The
foregoing events shall be the only events that shall cause the dissolution of
the Company.
 
8.2       Liquidator. The winding up of the Company shall be conducted by the
Manager, excluding any Manager who has wrongfully dissolved the Company, or if
there are no the Manager remaining then by a Person designated by a Majority
Vote of the Members (in each case, the "Liquidator").
 
8.3       Certificate of Dissolution. As soon as practicable following the
occurrence of a Dissolution Event, the Liquidator shall execute a Certificate of
Dissolution in such form as shall be prescribed by the Delaware Secretary of
State and file such certificate as required by the Act.
 
8.4       Winding Up of the Company. Upon a Dissolution Event, the Liquidator
shall take full account of the Company's assets and liabilities, liquidate the
assets as promptly as is consistent with obtaining their fair value, or to the
extent the assets cannot be sold or the Members otherwise unanimously agree in
writing, value and distribute the asset in kind, and apply and distribute the
proceeds or assets in the following order:
 
 
 
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 (a)            To the payment, or adequate provision for payment, of the
creditors of the Company (including Members who are creditors of the Company);
 
(b)            To the creation of any reserves which the Liquidator deems
reasonably necessary for any contingent or unforeseen liabilities or obligations
of the Company; and
 
(c)            To the Members with positive Capital Account balances in
proportion to their positive Capital Account balances.
 
8.5       Termination. After dissolution pursuant to Section 8.1, the Company
shall continue to exist for the purpose of winding up its affairs, prosecuting
and defending actions by or against it in order to collect and discharge
obligations, disposing of and conveying its property, and collecting and
dividing assets. At any time after dissolution of the Company, any Member with
approval by a Majority Vote of the Members may file a certificate of revival
with the Delaware Secretary of State in accordance with Section 18-1109 of the
Delaware Limited Liability Companies Act, in which case the Company shall be
treated as if it had never dissolved. Absent the filing of a certificate of
revival, upon the completion of the winding up of the affairs of the Company,
the Liquidator shall cause to be filed in the office of the Delaware Secretary
of State a certificate of cancellation of Certificate of Formation in accordance
with the Act, and the existence of the Company shall cease as of the date of
filing of such certificate subject to the conditions specified in Section 18-203
of the Act.
 
9.            INDEMNIFICATION
 
9.1       General. The Company, its receiver or its trustee, shall indemnify,
defend and save harmless each of the Managers of the Company, and former
Managers and the Members and the former Members (each, an "Indemnitee") from any
and all liability, loss or damage incurred by such Indemnitee by reason of any
act performed or omitted to be performed by such Indemnitee in connection with
the business of the Company, including any and all costs, claims, damages,
demands, expenses, fines, judgments and amounts expended in the settlements of
any claims of liability, loss or damage; provided that if the liability, loss or
damage arises out of any action or inaction of an Indemnitee the action or
inaction must not have constituted fraud, gross negligence or willful
malfeasance by such Indemnitee; and, provided further, that the indemnification
shall be recoverable only from the assets of the Company and not any assets of
the Members. The Company may, however, purchase and pay for that insurance,
including extended coverage liability and casualty and worker's compensation, as
would be customary for any person engaging in a similar business, and name the
Indemnitees as additional or primary insured parties. To the extent that the law
hereafter changes to allow for broader indemnification, this Agreement shall be
deemed modified to provide such indemnification.
 
9.2       Advancement of Expenses. The Company shall pay or advance all expenses
incurred by an Indemnitee in connection with the investigation, defense,
settlement or appeal of any civil or criminal action or proceeding referenced in
Section 9.1 hereof. The Indemnitee shall repay such amounts paid or advanced
only if, and to the extent that, it shall ultimately be determined that such
Indemnitee is prohibited by law from being indemnified by the Company as
authorized hereby. The payments and advances to be made hereunder shall be paid
by the Company to the Indemnitee within ten (10) days following delivery of a
written request therefor by the Indemnitee to the Company.
 
9.3       Non-Exclusivity. The indemnification provided by this Section 9 shall
be in addition to any other rights to which an Indemnitee may be entitled under
any agreement, as a matter of law or equity or otherwise, and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.
 
 
 
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9.4       Interested Transactions. No Indemnitee shall be denied
indemnification, in whole or in part, under this Section 9 by reason of the fact
that the Indemnitee had an interest in the transaction that was previously
disclosed to all Members or the Manager with respect to which the
indemnification applies to the extent that the transaction was otherwise
permitted by law or the terms of this Agreement.
 
9.5       Curative Payments. The Company agrees that it shall pay Lender all
amounts for which it becomes liable to Lender in the manner provided for payment
thereof in the credit agreements between Company and Lender, as amended from
time to time ("Loan Agreement"). If any Unitholder (a "Defaulting Unitholder")
fails to pay his Proportionate amount of any obligation or liability for which
the Unitholders become jointly liable pursuant to the Loan Agreement or any
guaranties thereof, and, as a result, the Company or any or all of the other
Unitholders (the "non-defaulting Unitholders") make the payment that should have
been made by the Defaulting Unitholder (a "Curative Payment"), then the
Defaulting Unitholder shall reimburse the Company or the Unitholders that made
the Curative Payment on his or her behalf not later than five (5) business days
after written demand is made therefor by the Company or any of the
non-defaulting Unitholders on the Defaulting Unitholder, together with interest
thereon, accruing at the maximum rate permitted by law from the date such
payment should have been made by the Defaulting Unitholder. If such
reimbursement does not occur within such time period, and the Curative Payment
was made by the Company and/or any non-defaulting Unitholders, then the Company
and/or any of the Unitholders shall be entitled to exercise all rights and
remedies that are available at law to recover from the Defaulting Unitholder the
Curative Payment and any interest that has accrued thereon and, in addition and
without limiting any of such rights or remedies, the Company is hereby
authorized to withhold from cash distributions that would otherwise be payable
to the Defaulting Unitholder by the Company the amount of the Curative Payment,
plus the interest accrued thereon, and to reimburse the non-defaulting
Unitholders for (i) the amount of any Curative Payment they made on behalf of
the Defaulting Unitholder, and (ii) if the Company made the Curative Payment, or
any portion thereof on behalf of the Defaulting Unitholder, the amount of any
cash distributions that the non-defaulting Unitholders would have received from
the Company had the Company not had to make the Curative Payment. Any such
distributions that are so withheld shall be deemed to have been paid to and
received by the Defaulting Unitholder and then paid by the Defaulting Unitholder
to the Company or such non- defaulting Unitholders (as the case may be) and
shall not be deemed to constitute, for any purpose, a re­allocation of cash
distributions among the Unitholders.
 
10.           BOOKS AND RECORDS
 
10.1      Maintenance of Books and Records. The Secretary shall maintain at the
Company's principal office, or such other place as shall be designated by the
Manager, the following documents:
 
(a)            A current list, and all past lists, setting forth the full name
and last known business or residence address of each Member, in alphabetical
order, together with the Capital Contribution made by each Member and the number
of Units held by each Member;
 
(b)            A current list, and all past lists, setting forth the full name
and last known business or residence address of the Manager;
 
(c)            A copy of the Certificate and all amendments thereto, together
with executed copies of any power of attorney pursuant to which the Certificate,
or any amendments thereto, shall have been executed;
 
(d)            Copies of the Company's federal, state and local income tax or
information returns and reports for the six (6) most recent taxable years or, if
those returns and statements were not prepared, copies of the information and
statements provided to, or which should have been provided to, the Members, if
any. in order to enable them to prepare their federal, state, and local tax
returns for those years;
 
 
 
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(e)             Copies of the Company's financial statements, if any, for the
six (6) most recent Fiscal Years and the interim period thereafter;
 
(f)             Copies of this Agreement and all amendments or supplements
thereto, and copies of any written such operating agreement's, amendments or
supplements no longer in effect, together with executed copies of any
power-of-attorney pursuant to which this Agreement, or any amendments or
supplements thereto, shall have been executed;
 
(g)            The books and records of the Company as they relate to the
internal affairs of the Company for at least the current and past four (4)
Fiscal Years, including a book of the minutes of all meetings of the Members or
the Manager, all resolutions and actions by written consent of the Members or
the Manager and any other writings prepared pursuant to a requirement of this
Agreement; and
 
(h)            Upon request of any tax assessor to make such documents
available, a true copy of business records relevant to the amount, cost, and
value of all property that the Company owns, claims, possesses or controls
within the county of such tax assessor.
 
10.2       Inspections and Reports
 
(a)             Upon the request of a Member in writing with a stated purpose
reasonably related to the interest of the Member as a Member, the Company shall
promptly deliver to the requesting Member, at the expense of the Company, a copy
of the information required to be maintained by the Company pursuant to Sections
10.1(a), (b), (c), (d) and (f) to the extent requested by the requesting Member;
provided, however, the Manager shall have the discretion to keep confidential
any such information to the extent to which the Manager believes in good faith
that disclosure could compromise the protection of confidential information of
the Company, its customers, vendors or any Persons to whom the Company believes
in good faith that it owes an obligation to maintain such confidentiality.
 
(b)            Each Member and Manager has the right, upon reasonable request
and for purposes reasonably related to the interest of that person as a Member
or Manager, to inspect and copy during normal business hours any of the records
required to be maintained by Section 10.1, and to obtain from the Company,
promptly after its becoming available, a copy of the Company's federal, state,
and local income tax or information returns for each Fiscal Year.
 
(c)            The Company shall deliver to each Member within 90 days after the
end of each Fiscal Year the information required by law for the Member to
complete his or her federal, state and local income tax or information returns.
 
 
11.           MISCELLANEOUS
 
11.1          Amendment. Subject to any further approval expressly required by
this Agreement, this Agreement may be amended by the Manager in the Manager's
discretion; provided, however, that this Agreement may not be amended without
the unanimous consent of each and every Member for any amendment that would
affect (i) the limited liability of a Member, affect the status of the Company
as a partnership (except as expressly provided in this Agreement) or disregarded
entity (except as expressly provided in this Agreement) for federal or State
income tax purposes, (ii) the amount of Net Income or Net Loss allocable to the
Members, or (iii) the amount or relative priority of distributions to and among
the Members.
 
 
 
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11.2       Notices. Unless otherwise specifically provided in this Agreement,
all notices and demands required to be given hereunder shall be deemed to be
duly given at the time of delivery if such notice or demand is personally
delivered, or forty-eight (48) hours after mailing if such notice or demand is
deposited with the United States Postal Service, postage prepaid, for mailing
via certified or registered mail, return receipt requested, to the Secretary of
the Company at the principal office of the Company or to a Member at the address
set forth below the name of the Member on Exhibit A attached hereto. Such
addresses may only be changed by such addressee giving written notice of such
change of address to all of the other parties hereto.
 
11.3       Counterparts. This Agreement may be executed in one or more
counterparts and all, so executed, shall constitute one Agreement, binding on
all of the Members or Unitholders who so execute, notwithstanding that all of
the Members are not signatories to the same original or the same counterpart. A
signed original in counterpart can be delivered or stored electronically, and
such copies shall be considered enforceable to the full extent of the originals
and as if they were an originally signed Agreement.
 
11.4       Severability. If any provision of this Agreement is declared by a
court of competent jurisdiction to be void or unenforceable, such provision
shall be deemed severed from the remainder of this Agreement and the balance of
this Agreement shall remain in effect.
 
113       Binding on Successors. This Agreement shall be binding upon and shall
inure to the benefit of the Members and their successors and permitted assigns.
 
11.6       Captions. Paragraph titles or captions contained in this Agreement
are inserted only as a matter of convenient reference. The titles and captions
in no way define, limit, extend, or describe the scope or intent of this
Agreement nor any provision hereof.
 
11.7       Terms and Usage. Whenever required by the context, any pronoun shall
include the corresponding masculine, feminine and neuter forms, and the singular
shall include the plural, and vice versa. All references herein to Sections or
Exhibits shall be deemed to refer to Sections of or Exhibits to this Agreement
unless the context shall otherwise require. All Exhibits attached hereto shall
be deemed incorporated herein by reference as if set forth in full herein. The
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation." All accounting terms not defined herein shall
have the meanings determined by GAAP. The words "hereof," "herein" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. References to a Person
are also to its permitted successors and permitted assigns. Unless otherwise
expressly provided herein, any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes. As used in this Agreement, the vote, approval, or consent
of, and the exercise of discretion by, the Members shall be obtained, received
or conducted in the manner specified in Section 3.4, and the vote, approval, or
consent of, and the exercise of discretion by, the Manager shall be obtained,
received or conducted in the manner specified in Section 2.1.
 
11.8       Application of the Act. Except as provided in this Agreement or the
Certificate, the rights and obligations of the Members and Manager shall be as
provided in the Act and the business and affairs of the Company shall be
governed by the Act. In the event of a conflict between the provisions of this
Agreement or the Certificate and the provisions of the Act, the provisions of
this Agreement or the Certificate shall prevail over the provisions of the Act
unless the Act provides that a written operating agreement or Certificate of
organization may not vary the provision or provisions of the Act that are in
conflict with this Agreement or the Certificate.
 
 
 
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11.9       Choice of Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware as if this Agreement were executed in
and to be performed entirely within the State of Delaware and as if all the
Members and Manager reside in Delaware.
 
11.10    Entire Agreement. There are no representations, agreements,
arrangements or understandings, oral or written, between and among the Members
relating to the subject matter of this Agreement that are not fully expressed
herein, and this Agreement constitutes the entire understanding among the
Members relating to the subject matter of this Agreement and supersedes any
prior written or oral agreements between them respecting the subject matter
contained herein.
 
11.11    Waiver. No waiver of any breach or default of this Agreement by any
party hereto shall be considered to be a waiver of any other breach of default
of this Agreement.
 
11.12    Further Assurances. Each party hereto agrees to perform any further
acts and to execute and deliver any further documents which may be reasonably
necessary to carry out the provisions of this Agreement.
 
11.13    Attorney's Fees. In the event a dispute arises with respect to this
Agreement, the party prevailing in such dispute shall be entitled to recover all
expenses, including, without limitation, reasonable attorneys' fees and
expenses, incurred in ascertaining such party's rights, in preparing to enforce,
or in enforcing such party's rights under this Agreement, whether or not it was
necessary for such party to institute suit.
 
11.14   Probate Confirmation. If the Units of a Deceased Member or spouse are a
part of his or her probate estate, the personal representative of the Deceased
Member or Deceased Spouse shall apply for and obtain any necessary court
approval or confirmation of the purchase and sale of the Units, and any fees or
expenses incurred in connection therewith shall be borne by the estate.
 
11.15    Remedies and Jurisdiction. Any and all disputes, complaints,
controversies, claims and grievances arising under, out of or in connection
with, or in any manner related to this Agreement, shall be submitted for
resolution to a state Superior Court sitting in San Diego County, California.
Each Member hereby consents to the personal jurisdiction of the courts of the
State of California, and agrees that all actions brought under this Agreement
shall be brought in Superior Court sitting in San Diego County, California. The
parties acknowledge that this Agreement is to be performed in material part in
the location of the Company's principal office, currently in Vista, California.
 
12.            DEFINITIONS. The following definitions shall for all purposes be
applied to the terms used in this Agreement, unless clearly indicated to the
contrary. The following definitions shall apply equally to both the singular and
plural forms of the terms defined.
 
12.1       "Act" means the Delaware Limited Liability Act, Delaware Code Section
18-101 or any successor statute, as amended from time to time.
 
12.2       "Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit alance in such Member's Capital Account, if any, as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
 
 
 
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 (a)            Increase such balance by any amounts that such Member is
obligated to contribute pursuant to this Agreement, the outstanding principal
balance of any promissory note (of which such Member is the maker) contributed
to the Company by such Member (other than a promissory note that is readily
tradable on an established securities market), and the amount of any
unconditional obligation of such Member (whether imposed by this Agreement or by
state or local law) to make subsequent contributions to the Company (other than
pursuant to a promissory note of which such Member is the maker), to the extent
such Member is treated under Regulations Section 1.704-1(b)(ii)(c) as obligated
to restore such amounts;
 
(b)             Increase such balance by such Member's share of Company Minimum
Gain at the end of such Fiscal Year, as determined pursuant to Regulations
Section 1.704-2(g)( I ), and such Member's share of the Member Minimum Gain for
all Member Nonrecourse Debts, as determined pursuant to Regulations Section
1.704-2(i);
 
(c)             Decrease such balance by the adjustments described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4) relating to depletion allowances
with respect to oil and gas properties of the Company;
 
(d)             Decrease such balance by the allocations of loss and deduction
that, as of the end of such Fiscal Year, reasonably are expected to be made to
such Member pursuant to Code Section 704(e)(2) relating to interests created by
gift, Code Section 706(d) relating to changes in interest during a Fiscal Year,
and Regulations Section 1.751-1(b)(2)(ii) relating to distributions of
unrealized receivables or substantially appreciated inventory items; and
 
(e)              Decrease such balance by the distributions that, as of the end
of such Fiscal Year, reasonably are expected to be made to such Member to the
extent they exceed offsetting increases to such Member's Capital Account balance
that reasonably are expected to occur during (or prior to) the Fiscal Years in
which such distributions reasonably are expected to be made, as determined
pursuant to Regulations Section 1.704-1(b)(2)(ii)(d)(6).
 
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
 
12.3     "Adjustment Date" means (a) the last day of each Fiscal Year, (b) the
day before the date of admission of any Member, (c) the day before the date a
Member ceases to be a Member except as a result of a Transfer of such Member's
remaining Units, or (d) any other date determined by the Manager as appropriate
for the closing of the Company's books.
 
12.4     "Affiliate" means, with respect to any Person, any Person directly or
indirectly Controlling or Controlled by or under common Control with such
Person.
 
12.5      "Agreement" means this Limited Liability Company Operating Agreement
of JAVO DISPENSER, LLC, as it may be amended, supplemented or restated from time
to time.
 
12.6     "Capital Account" means, with respect to any Member, the capital
account established and maintained for such Member on the Company's books and
records in accordance with the provisions of Section 3.
 
12.7     "Capital Contribution" means, with respect to any Member, the amount
guarantied by such Member to or for the Company.
 
 
 
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12.8      "Certificate" means the Certificate of Formation of JAVO DISPENSER,
LLC, filed with the Delaware Secretary of State under Section 18-201 of the Act.
 
12.9     "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
 
12.10   "Common Unit" means a Share specified as a Common Unit by the Manager at
the time it is issued.
 
12.11   "Company" means the limited liability company formed upon the filing of
the Certificate pursuant to the Act and this Agreement and, if the context
permits, any successor to such company.
 
12.12   "Company Minimum Gain" has the meaning set forth in Regulations Section
1.704­2(b)(2) for the phrase "partnership minimum gain," and the amount of
Company Minimum Gain, as well as any net increase or decrease in Company Minimum
Gain, for a Fiscal Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
 
12.13   "Control" means, when used with respect to any Person, the possession
directly or indirectly of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have correlative meanings.
 
12.14   "Depreciation" means, for each Fiscal Year or other applicable period,
an amount equal to the federal income tax depreciation, amortization or other
cost recovery deduction allowable with respect to an asset for such Fiscal Year
or other period, except that, if the Gross Asset Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such year
or period, Depreciation shall be in an amount that hears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that, if the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Manager.
 
12.15   "Economic Risk of Loss" means the "economic risk of loss" within the
meaning of Section 1.752-2 of the Treasury Regulations.
 
12.16 "Fiscal Period" means the period beginning on the day following any
Adjustment Date (or for the purposes of the first Fiscal Period, beginning on
the date of formation of the Company) and ending on the next succeeding
Adjustment Date.
 
12.17   "Fiscal Year" means the fiscal year and taxable year of the Company for
financial reporting and tax purposes determined pursuant to Section 1.
 
12.18   "Gross Asset Value" means, with respect to any asset, the value
determined in accordance with Section 5.4.
 
12.19   "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Manager and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Manager (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the United States accounting profession, which are
applicable to the facts and circumstances on the date of determination.
 
 
 
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12.20   "Indemnitee" has the meaning set forth in Section 9.1
 
12.21   "IRS" means the Internal Revenue Service of the United States.
 
12.22   "Liquidator" means the Manager, or any Person elected by a Majority Vote
of the Members to be responsible for overseeing the winding up and dissolution
of the Company pursuant to Section 8.
 
12.23   "Majority Vote" of the Members means approval by the affirmative vote or
written consent of one or more Members holding in the aggregate more than fifty
percent (50%) of the votes afforded with respect to all outstanding Units
eligible to vote on the matter.
 
12.24   "Manager" or "Manager" means the Manager of the Company formed pursuant
to Section 2 and empowered to manage the business and affairs of the Company
pursuant to the Certificate and Section 2.
 
12.25   "Member" means a member of the Company holding one or more Units.
 
12.26   "Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704­2(i) with respect to "partner
nonrecourse debt minimum gain."
 
12.27   "Member Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704­2(b)(4) for the phrase "partner nonrecourse debt."
 
12.28   "Member Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2) for the phrase "partner nonrecourse deductions," and the
amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse
Debt for a Fiscal Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(i)(2).
 
12.29   "New Units" means any Units proposed to be issued by the Company after
the date of this Agreement, other than (a) Units issued in connection with a
bona fide business acquisition by the Company, whether by merger, consolidation,
purchase of assets, purchase or exchange of stock or other equity interests in
another business entity or otherwise approved by the Manager, to the extent that
such Units or the proceeds from the issuance of such Units are used to finance
such business acquisition, or (b) Units issued in a Recapitalization.
 
12.30   "Net Income" or "Net Loss" means, with respect to each Fiscal Year of
the Company, the amount calculated in accordance with Section 5.10 for such
Fiscal Year.
 
12.31   "Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b) (1), and the amount of Nonrecourse Deductions for a Fiscal
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(c).
 
 
 
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12.32   "Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2). 12.33 "Permitted Transfer" has the meaning set forth in Section
4.6.
 
12.34   "Person" means an individual, partnership, limited partnership, trust,
estate, association, corporation. limited liability company, or other entity,
whether domestic or foreign.
 
12.35   "Proportionate" or "Proportionately" means in proportion to the number
of Units held by Unitholders (i.e. according to the ratio of the number of Units
held by each Member to the total number of Units that are outstanding). For
instance, a distribution to be made Proportionately to the Unitholders would be
made to each Member holding Units in an amount equal to (i) the number of Units
held by such Member, divided by (ii) the total number of Units outstanding on
the record date of such distribution, multiplied by (iii) the total amount of
the allocation made to the Unitholders.
 
12.36   "Purchasers" has the meaning set forth in Section 4.7(c). 12.37
"Recapitalization" has the meaning set forth in Section 4.4.
 
12.38   "Regulations" means the income tax regulations promulgated under the
Code, whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
 
12.39   "Regulatory Allocations" means the allocations set forth in Section
7.2(a) through (g). 12.40 "SEC" means the Securities and Exchange Commission of
the United States.
 
12.41   "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
 
12.42   "Supermajority Vote" of the Members means approval by the affirmative
vote or written consent of one or more Members holding in the aggregate more
than seventy-five percent (75%) of the votes afforded with respect to all
outstanding Units eligible to vote on the matter.
 
12.43   "Transfer" means, with respect to any property or right, any sale,
assignment, bequest, conveyance, devise, encumbrance, exchange, gift (outright
or in trust), hypothecation, mortgage, pledge, transfer or other disposition or
act of alienation, whether directly or indirectly or through one or more steps
in a series of interrelated or interdependent transactions, whether voluntary or
involuntary or by operation of law, of (a) such property or right, (b) an option
to acquire such property or right, or (c) stock, partnership interests,
membership interests or other interests (whether equity or otherwise) in the
holder of such property or right that together comprise fifty percent (50%) or
more of the value or voting power of all securities of such holder (other than
stock, partnership, membership or other interests listed for trading on a
national stock exchange or listed on the NASDAQ National Market). The terms
"Transferred" and "Transferring" have correlative meanings.
 
12.44   "Unit" means a unit of ownership of the Company, a membership interest
in the Company issued pursuant to Section 4 and conferring upon the holder
thereof all the rights and benefits as provided in this Agreement, and any and
all rights and benefits to which a member of the Company is entitled under the
Act to the extent not in conflict with this Agreement, together with all
obligations of Members to comply with the terms and provisions of this Agreement
and the Act.
 
 
 
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12.45   "Unitholders" means, individually and collectively, a Member holding one
or more Units.
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT A
 
SCHEDULE OF UNITS
 
Member
 
Capital
Contribution*
   
Number of
Common Units
   
Proportionate Interest
 
William C. Baker
  $ 525,000.00       525       17.50 %
Thomas Rielly
  $ 525,000.00       525       17.50 %
Terry C. Hatch
  $ 300,000.00       300       10.00 %
James R. Knapp
  $ 300,000.00       300       10.00 %
Walter Eeds
  $ 300,000.00       300       10.00 %
Kerry Mangano
  $ 300,000.00       300       10.00 %
Wade Cable
  $ 300,000.00       300       10.00 %
Ron Maggard
  $ 300,000.00       300       10.00 %
Stanley A. Solomon
  $ 150,000.00       150       5.00 %
TOTALS:
  $ 3,000,000.00       3,000       100.00 %

 
* Capital Contribution for this schedule is the total amount of the Member's
loan guarantee which is 150% of the several portion of the $2,000,000 which the
Member has agreed to guarantee.
 
 
 
 

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CONSENT OF SPOUSE
 
 
 
I am the spouse of . I acknowledge that I have read the foregoing Agreement and
that I know its contents. I am aware that by its provisions, my spouse agrees,
among other things, to the imposition of certain restrictions on the transfer of
Units in JAVO DISPENSER, LLC, a Delaware limited liability company, including my
community interest therein (if any), which rights and restrictions may survive
my spouse's death. I hereby consent to such rights and restrictions, approve of
the provisions of the Agreement, and agree that I will bequeath any interest
which I may have in such Units or any portion thereof, including my community
interest, if any, or permit any such interest to be purchased, only in a manner
consistent with the provisions of the foregoing Agreement. I direct that any
residuary clause in my Will shall not be deemed to apply to my community
interest (if any) in such Interest except to the extent consistent with the
provisions of the foregoing Agreement.
 
I also acknowledge that I have been advised to obtain independent counsel to
represent my interests with respect to the foregoing Agreement but that I have
declined to do so and I hereby expressly waive my right to such independent
counsel.
 
Date: July , 2005
 
 

 
 
 

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[Signature Above]
 

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[Print Name Above]

 
 
 
 
 
 
 
 
 

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IN WITNESS WHEREOF, the parties have signed this Agreement in one or more
counterparts on the date first above written.
 

 

 
MEMBERS
 
/s/ William C. Baker

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William C. Baker, an individual
 
/s/ Thomas Rielly

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

Thomas Rielly, an individual
 
/s/ Terry C. Hackett

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

Terry C. Hackett, an individual
 
/s/ James R. Knapp

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

James R. Knapp, an individual
 
/s/ Walter Eeds

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

Walter Eeds, an individual
 
/s/ Kerry Mangano

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

Kerry Mangano, an individual
 
/s/ Wade Cable

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

Wade Cable, an individual
 
/s/ Ron Maggard

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

Ron Maggard, an individual
 
/s/ Stanley A. Solomon

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

Stanley A. Solomon, an individual
 
 
 JAVO DISPENSER, LLC
 
By:  /s/ Richard Gartrell                                                    

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Name: Richard Gartrell
Title: Manager

 
 
 
 
 
 

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