**Exhibit 10.13**

 

**LIMITEDLIABILITY COMPANY AGREEMENTOFRICH DAD EDUCATION, LLC**

 

This LIMITED LIABILITYCOMPANY AGREEMENT (this “Agreement”) is entered into as July 18,2006 (the “Effective Date”), between Rich Global, LLC., a(n) Wyominglimited liability company (“Rich Dad”), and Whitney Information Network, Inc..a Colorado corporation (“WIN”), as Members, and WIN as the initial Manager ofRich Dad Education, LLC, a Wyoming limited liability company (the “Company”).

 

**RECITALS**

 

WHEREAS, WIN is in thebusiness of developing, producing and marketing educational curricula on realestate, business development, and asset protection;

 

WHEREAS, Rich Dad is inthe business of developing, producing and marketing educational curricula onsecurities and financial investment and asset protection;

 

WHEREAS, WIN and Rich Daddesire to form the joint venture described in this Agreement for the purpose ofconducting the Business (defined below);

 

NOW, THEREFORE, for goodand valuable consideration, the receipt of sufficiency of which his herebyacknowledged, the parties agree as follows:

 

**SECTION **1.**DEFINITIONS; THE COMPANY**

 

1.1           Definitions.Capitalized words and phrases used in this Agreement shall have the meaningsset forth in Section 11.14 hereof

 

1.2           Formation. TheMembers hereby form the Company as a limited liability company pursuant to theprovisions of the Act and upon the terms and conditions set forth in thisAgreement and in the Certificate.

 

1.3           Name. The nameof the Company is Rich Dad Education, LLC. The name of the Company may bechanged by the Manager upon the prior written consent of all Members.

 

1.4           Purposes. Thepurposes of the Company and the general character of its business are to marketand fulfill to current and prospective customers of Rich Dad and WIN and to thegeneral public through new acquisition channels developed by the Company, realestate, business and stock based trainings throughout the United States andCanada using the Rich Dad logo, trademark(s), branding and goodwill associatedwith such logo and trademarks and to engage in any and all other activitiesreasonably related or incidental to the foregoing not prohibited by thisAgreement, and any other purposes agreed to by the Members in a writingexecuted by all the Members (collectively, the “Business”). The Membersintend that the Business shall be based on a modified version of WIN’smarketing model described in Appendix 1.4, which shall be subject to aLicensing Agreement to be entered into between the Company and WIN, andutilizing WIN’s operations and fulfillment centers with the exception ofcoaching services which shall be provided by Rich Dad’s 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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coaching provider or suchother entity as may be agreed upon by the Members. The Members agree that thescope of the Company’s business purpose shall be to provide education tocurrent and prospective customers of Rich Dad and WIN and to the general publicthrough new acquisition channels developed by the Company and that the Companyshall have no authority to offer investments or opportunities to invest(investment opportunities) to its existing or prospective students during thecourse of its training or otherwise.

 

The Company shall be alimited liability company only for the purposes specified in this Section 1.4(the “Core Activities”). The Company shall not engage in any activity orbusiness other than the Core Activities, and no Member or Manager shall have anyauthority to hold itself out as a general agent of any other Member in anyother business or activity.

 

1.5           Intent. It isthe intent of the Members that the Company shall always be operated in a mannerconsistent with its treatment as a “partnership” for federal and state incometax purposes. The Company is not a “partnership” for purposes of the WyomingUniform Partnership Act or a “limited partnership” for purposes of the WyomingUniform Limited Partnership Act, and the Members are not partners. It also isthe intent of the Members that the Company not be operated or treated as a “partnership”for purposes of Section 303 of the federal Bankruptcy Code. No Membershall take any action inconsistent with the express intent of the partieshereto.

 

1.6           Office. Theprincipal office of the Company shall be maintained at Whitney InformationNetwork, Inc., 1612 E. Cape Coral Parkway, Cape Coral, Florida 33904,Attn: Thomas McElroy, or at such other location or locations in Lee County,Florida as the Manager may from time to time designate by written notice to allMembers.

 

1.7           Registered Officeand Agent for Service of Process. The registered office of the Company inthe State of Wyoming is c/o Corporate Direct, 60 East Simpson Ave., Jackson,Wyoming 83001 or such other location as Manager shall select from time to timein compliance with the Act. The name and business address of the Company’sagent for service of process are Corporate Direct, 60 East Simpson Ave.,Jackson, Wyoming 83001 (mailing Address P.O. Box 2869, Jackson, Wyoming83001), or such other qualified person or entity and such other businessaddress as Manager shall select from time to time in compliance with the Act.The Manager shall comply, and the Members hereby agree to timely execute alldocuments and take all actions as determined by Manager as may be necessary tocomply with the requirements of the laws of the States of Wyoming, Arizona,Colorado, and any other applicable jurisdiction, for the formation,registration, continuation, qualification and operation of a limited liabilitycompany.

 

1.8           Term. The termof the Company shall commence on the date the Certificate of Formation (the “Certificate”)is filed with the Wyoming Secretary of State and shall continue until theCompany is dissolved in accordance with this Agreement.

 

1.9          IndependentActivities.

 

1.9.1 General Scope ofIndependent Activities. Except as otherwise provided below, the Membershereby expressly acknowledge that each Member (either directly or through itsAffiliates) is involved in transactions, investments and business ventures andundertakings of every nature, which include, without limitation, activitiesassociated with real 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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estate and stock basedtraining (all such investments and activities being referred to individually asan “Independent Activity” and collectively as “Independent Activities”).

 

1.9.2 Waiver of Rightswith Respect to Independent Activities. Except as provided below, nothingin this Agreement shall be construed to: (i) prohibit any Member or itsAffiliates from continuing, acquiring, owning or otherwise participating in anyIndependent Activity that is not owned or operated by the Company, even if suchIndependent Activity is or may be in competition with the Company or (ii) requireany Member to allow the Company or the other Members to participate in theownership or profits of any such Independent Activity. To the extent any Memberwould have any rights or claims against the other Member as a result of theIndependent Activities of such Member or its Affiliates, whether arising bystatute, common law or in equity, the same are hereby waived with respect tothe operation of the Company except as provided below.

 

1.9.3 ConfidentialInformation. During the course of this Agreement, each Member may comeinto possession of confidential information and materials of the Company, theother Member and their respective members and Affiliates, which comprisesconfidential and proprietary information or data which is not readilyascertainable by proper means and which derives economic value, actual orpotential, from not being generally known. All information regarding theproducts or the business of the Company or other Members or their respectivemembers to which a Member may obtain access to under this Agreement shall bedeemed to be confidential and proprietary information or data of the Company orother Member as applicable, unless such Member can show such information hasbecome generally known to the public other than as a result of a breach ordefault of this Agreement. Any such information or materials are “Confidential,”and each Member agrees not to use or disclose such information except inaccordance with the terms of this Agreement. Each Member further agrees tomaintain Confidential information of the Company and of other Members inconfidence and limit disclosure on a need to know basis, to take all reasonableprecautions to prevent unauthorized disclosure, and to treat such informationat least as much care as it treats its own information of a similar nature,until the information becomes publicly available through no fault of thenondisclosing party. All Members shall keep confidential and not disclose to,discuss with or otherwise make available to any Person any Confidentialinformation of the Company and of other Members, except to any affiliates,shareholders, principals, officers, employees, agents, attorneys, potentialinvestors, advisors, lenders, consultants, suppliers or other persons actingfor or on behalf of any Member or the Company (“Representatives”) on a “need-to-know”basis to the extent the assistance of Representatives is required in connectionwith the purposes of the Company. If disclosure is required by applicable law,rule, or regulation, or is compelled by a court or governmental agency,authority, or body: (i) the parties shall use all legitimate and legalmeans available to minimize the disclosure to third parties, including withoutlimitation seeking a confidential treatment request or protective order; (ii) theMember compelled to make the disclosure shall inform the Company and the otherMember at least ten (10) business days (i.e., not a Saturday, Sunday, or aday on which banks are not open for business in the geographic area in whichthe non-disclosing party’s principal office is located) in advance of thedisclosure; and (iii) the Member compelled to make disclosure shall givethe Company or the other Member, as the case may be, a reasonable opportunityto review and comment upon the disclosure, and any request for confidentialtreatment or a protective order pertaining thereto, prior to making suchdisclosure. Moreover, no press release or other information release shall bemade by the Company or any Member without the prior approval 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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and consent of theMembers.

 

1.9.4 Enforcement.The Company and each Member recognizes that irreparable harm and damage willresult to the affected party in the event of any breach by any Member or theCompany of any of the covenants contained in this Agreement relating toconfidentiality. The Company and each Member agrees to use commerciallyreasonable efforts to obtain an executed confidentiality agreement from anyRepresentatives in accordance with Section 1.9.3 prior to the disclosureof any Confidential information to such Representatives. The Company and eachMember agrees that, in the event of such a breach and in addition to any otherlegal or equitable remedies to which the affected party may be entitled orwhich may be available, the affected party will be entitled to an injunctionfrom a court of law to restrain the violation of those covenants by the Companyor Member and all other Persons acting for or with such party, to damages or toboth an injunction and damages. The Company and each Member further agree that,in the event an affected party brings an action for the enforcement of thosecovenants, and if the court finds any part of the covenants unreasonable as totime, area, or activity covered, the disclosing party agrees to abide by anyfinding, judgment or decree of the court as to what is reasonable and thedisclosing party agrees that the affect party may enforce this Agreement to theextent of such finding, judgment or decree. The Company and each Member furtheracknowledges that the provisions of this Section 1.9 shall survive thetermination of this Agreement, and shall continue thereafter in full force andeffect in accordance with the terms of this Section 1.9.

 

1.9.5 Acknowledgmentof Reasonableness. The Members hereby expressly acknowledge, represent andwarrant that they are sophisticated investors, they understand the terms,conditions and waivers set forth in this Section 1.9, and that theprovisions of this Section 1.9 are reasonable, taking into account therelative sophistication and bargaining position of the Members.

 

**SECTION 2.MEMBERS; MANAGER; PROFITS INTERESTS; CAPITAL CONTRIBUTIONS; LOANS**

 

2.1           Members and Manager.The name and address of the Manager and each Member are set forth on Exhibit A.In addition to being a Member of the Company, WIN is also the initial Managerof the Company.

 

2.2           Profits Interests.The Members’ Profits Interests in the Company shall be as set forth on Exhibit A,and are subject to adjustment as provided in this Agreement.

 

2.3           Initial CapitalContributions. The Members shall make the contributions to the Company setforth opposite their names on Exhibit A within 15 calendar days of theEffective Date.

 

2.4           Additional CapitalContributions. If, during the term of the Company, funds available to theCompany (including any borrowings) are insufficient for the Company to carryout its purposes hereunder, the Manager may send a written request to eachMember and each Member shall contribute within 15 days following such writtenrequest their pro rata share (based on their then existing profits interest) ofthe funds needed for the Company to carry out its purposes hereunder Rich Dad’scapital contribution shall be based on the following percentage split: Rich Dad45%, WIN 55%.

 

[***] Confidential treatment requested. Omitted portionshave been filed separately with the Securities and Exchange Commission.

 

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2.5           LimitationsPertaining to Capital Contributions.

 

2.5.1 Return ofCapital. Except as otherwise provided in this Agreement, no Member shallwithdraw any Capital Contributions or any money or other property from theCompany without the written consent of each other Member. Except as otherwisemay be provided for in this Agreement, under circumstances requiring a returnof any Capital Contributions, no Member shall have the right to receiveproperty other than cash, unless otherwise specifically agreed to in writing bythe Members at the time of such distribution.

 

2.5.2 No Interest orSalary. No Member shall receive any interest, salary or drawing withrespect to its Capital Contributions or its Capital Account or for servicesrendered on behalf of the Company or otherwise in its capacity as the Manageror as a Member, except as otherwise expressly provided in this Agreement.

 

2.5.3 Liability ofMembers. Except as agreed upon in writings signed by the Members, no Membershall be liable for the debts, liabilities, contracts or any other obligationsof the Company. Except as agreed upon in writings signed by the Members, andexcept as otherwise provided by the Act or by any other applicable state law,the Members shall be liable only to make their Capital Contributions asprovided in Sections 2.3 and 2.4 hereof and no Member shall be required to makeany other Capital Contributions or to loan any amounts to the Company. NoMember shall have any personal liability for the repayment of the CapitalContributions or loans of any other Member, unless agreed upon in writing.

 

2.5.4 No Third PartyRights. Nothing contained in this Agreement is intended or will be deemedto benefit any creditor of the Company, and no creditor of the Company will beentitled to require the Manager or any Member to solicit or demand AdditionalCapital Contributions.

 

2.5.5 Withdrawal.Except as provided in Section 8 hereof, no Member may withdraw from theCompany or terminate its interest therein without the prior written consent ofeach other Member, except a member may withdraw if a License Agreement fromsuch Member to the Company is terminated for any reason. Any Member whowithdraws from the Company in breach of this Section 2.5.5:

 

2.5.5.1               shall be treated asan assignee of a Member’s interest, as provided in the Act;

 

2.5.5.2               shall have no rightto participate in the business and affairs of the Company or to exercise anyrights of a Member under this Agreement or the Act; and

 

2.5.5.3 shall, subject toSection 8.5 hereof, continue to share in distributions from the Company,on the same basis as if such Member had not withdrawn, provided that anydamages to the Company as a result of such withdrawal shall be offset againstamounts that would otherwise be distributed to such Member. The right to sharein distributions granted under this Section 2.5.5 shall be in lieu of anyright the withdrawn Member may have under the Act to receive a distribution orpayment of the fair value of the Member’s interest in the Company.

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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2.6           Failure toContribute.

 

2.6.1 Remedy forFailure to Contribute Capital Contributions. If any Member fails to fundits Initial Capital Contributions or Additional Capital Contributions when due,then the contributing Member shall have the right to either (a) cause anadjustment in the Members’ Profits Interests to the equal of the overallpercentage of contributions made by each party over the course of the previoustwelve months; or (b) initiate the buy-out provisions set forth in Section 8.8below.

 

2.6.2 Treatment ofDistributions. Upon a change in the Members’ Profits Interests as describedin Section 2.6.1, all future distributions of the Company occurring aftersuch date shall be in accordance with the Members’ adjusted Profits Interests.

 

2.7           Member Loans.With the consent of the Manager, any Member may make loans (“Member Loans”)to the Company to pay Approved Expenses. Unless otherwise approved in writingby the Manager at the time of a Member Loan, (a) each Member Loan shallbear simple noncompounded) interest at the Prime Rate per annum (provided thatany Wyoming laws limiting the rate of interest that may be legally charged withrespect to a Member Loan shall be taken into account and, if applicable, therate of interest charged on the Member Loan shall be reduced to the maximumrate of interest permitted by such laws), and shall be repaid solely from theCompany’s Net Cash Flow, prior to any distributions to the Members pursuant toSections 3.1 or 9 hereof, and (b) all payments on Member Loans shall beapplied first to repay interest on all Member Loans, in proportion to theunpaid interest outstanding on all such Member Loans, and then to repayprincipal on all Member Loans, in proportion to the unpaid principaloutstanding on all such Member Loans. No Member shall be required to make aMember Loan, unless that Member has agreed in writing to make such Member Loanand no Member shall have any obligation to repay the Member Loans of any otherMember or to make Additional Capital Contributions to the Company to provide itwith funds with which to repay Member Loans. Each Member shall have the rightto fund its pro rata share, based on the Member’s Profits Interest, of anyMember Loan pursuant to this Section 2.7.

 

2.8           ***

 

2.8.1 ***

 

2.8.2 ***

 

2.8.3 ***

 

2.8.4 ***

 

2.9           Product andMaterials.

 

2.9.1 Promptly followingthe Effective Date, the Members shall review the WIN Materials for the purposeof determining which Materials shall be used by the Company in the Business. Inconsideration for the license rights granted by Rich Dad to the Companypursuant to the Rich Dad License Agreement, Rich Dad shall have editorial andeducational approval rights pursuant to the terms and conditions set forth inthe Rich Dad License 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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Agreement with respect tothe selection of WIN Materials and any other related materials for use by theCompany.

 

2.9.2  Within 15 days of the Effective Date, RichDad and the Company shall enter into the Rich Dad License Agreement.

 

2.9.3  Within 15 days of the Effective Date, WIN andthe Company shall enter into the WIN License Agreement.

 

**SECTION 3.DISTRIBUTIONS**

 

3.1           Distributions.Except as provided in Section 9 hereof or as otherwise provided below, andsubject to the provisions of Section 2.7 hereof, distributions of Net CashFlow, if available, shall be made to the Members on a quarterly basis in thefollowing order of priority:

 

3.1.1        First, to the extent ofNet Cash Flow, the Manager shall make periodic cash distributions from Net CashFlow to each Member. Notwithstanding the above, no distribution shall be madeuntil the Company has accumulated 90 days of working capital, and providedthat, unless agreed to in writing by the Members, mandatory distributions shallbe from funds accumulated in excess of the 90 days of working capital.

 

3.1.2        Second, to the Members inproportion to their respective Unreturned Capital Contributions, until eachMember’s Unreturned Capital Contribution has been reduced to zero; and

 

3.1.3       The balance, to the Membersin proportion to their Profits Interests.

 

SECTION 4. TAXALLOCATIONS

 

4.1          Allocation of Profitsand Loss. (not used)

 

4.2          Limitation onAllocation of Losses. (not used)

 

4.3           Qualified IncomeOffset. If any Member unexpectedly receives any adjustments, allocation ordistributions described in clauses (4), (5) or (6) of Regulations Section 1.704-1(b)(2)(ii)(d),items of Company income shall be specially allocated to such Member in anamount and manner sufficient to eliminate the Adjusted Capital Account Deficitcreated by such adjustments, allocations or distributions as quickly aspossible. This Section 4.3 is intended to constitute a “qualified incomeoffset” within the meaning of Regulations Section 1.7041(b)(2)(ii)(d)(3).

 

4.4           Minimum GainChargeback. If there is a net decrease in Company Minimum Gain during aFiscal Year, each Member will be allocated, before any other allocation underthis Section 4, items of income and gain for such fiscal year (and ifnecessary, subsequent years) in proportion to and to the extent of an amountequal to such Member’s share of the net decrease in Company Minimum Gaindetermined in accordance with Regulations Section 1.7042(g)(2). This Section 4.4is intended to comply with, and shall be interpreted 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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consistently with, the “minimumgain chargeback” provisions of Regulations Section 1.704-2(f).

 

4.5           Member NonrecourseDebt Minimum Gain Chargeback. Notwithstanding any other provision of this Section 4,except Section 4.4 hereof, if there is a net decrease in MemberNonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt duringany Fiscal Year of the Company, each Member who has a share of the MemberNonrecourse 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 such Member’s share ofthe net decrease in Member Nonrecourse Debt Minimum Gain attributable to suchMember Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4).Allocations pursuant to the previous sentence shall be made in proportion tothe respective amounts required to be allocated to each Member pursuantthereto. The items to be so allocated shall be determined in accordance withRegulations Section 1.704-2(i)(4). This Section 4.5 is intended tocomply with a minimum gain chargeback requirement of that Section of theRegulations and shall be interpreted consistently therewith.

 

4.6           NonrecourseDeductions. (not used)

 

4.7           Member NonrecourseDeductions. (not used)

 

4.8           Special Allocations.Any special allocations of items of gain, income, loss, or deduction pursuantto this Section 4 shall be taken into account in computing subsequentallocations of Profits or Losses or items thereof pursuant to this Section 4so that the net amount of any items so allocated and the gain, loss and anyother item allocated to each Member pursuant to this Agreement shall, to theextent possible, be equal to the net amount that would have been allocated toeach such Member pursuant to the provisions of this Section 4 if suchspecial allocations had not occurred.

 

4.9           Fees To Members OrAffiliates. Notwithstanding the provisions of this Section 4, in theevent that any fees, interest, or other amounts paid to any Member or anyAffiliate thereof pursuant to this Agreement or any other agreement between theCompany and any Member or Affiliate thereof providing for the payment of suchamount, and deducted by the Company in reliance on Section 707(a) and/or707(c) of the Code, are disallowed as deductions to the Company on itsfederal income tax return and are treated as Company distributions, then:

 

4.9.1 the Profits orLosses, as the case may be, for the fiscal year in which such fees, interest,or other amounts were paid shall be increased or decreased, as the case may be,by the amount of such fees, interest, or other amounts that are treated asCompany distributions; and

 

4.9.2 there shall beallocated to the Member to which (or to whose Affiliate) such fees, interest,or other amounts were paid, prior to the allocations pursuant to Section 4.1hereof, an amount of items of gross income or expense for the fiscal year equalto the amount of such fees, interest, or other amounts that are treated asCompany distributions.

 

4.10         Code Section 704(c).In accordance with Code Section 704(c) and the 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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Regulations thereunder,income, gain, loss and deduction with respect to any property contributed tothe capital of the Company shall, solely for tax purposes, be allocated amongthe Members by the Manager so as to take account of any variation between theadjusted basis of such property to the Company for federal income tax purposesand its fair market value as agreed to by the Manager and the contributingMember using any method approved of under the Code, Regulations, or any otherIRS issuance.

 

**SECTION 5.MANAGEMENT**

 

5.1                     Managementof Company.

 

5.1.1 General.Except as specifically provided in Sections 5.4, 5.5 and 5.11 hereof, the rightto manage, control and conduct the business and affairs of the Company shall bevested solely in the Manager. Subject to the provisions of Sections 2.9, 5.4,5.5 and 5.11, the Manager shall be responsible for conducting the daily businessaffairs of the Company, for making the day-to-day operating decisions incarrying out the purposes, objectives and policies established by thisAgreement and the Members, and for implementing all Approved Business Plans andApproved Budgets adopted pursuant to the terms of this Agreement. The Managershall devote such time to the Company and its business as is appropriate tocarry out the Manager’s responsibilities hereunder, but shall not be obligatedto devote its full time efforts to the Company. Subject to the terms of theApproved Business Plans and Approved Budgets, the Manager (exercising suchskill and care as a prudent person with experience in the Business wouldexercise in dealing with its own property), shall have the rights and theduties to exert commercially reasonable efforts in a prompt, courteous andbusinesslike manner to do, accomplish and complete, in accordance with thisAgreement, all of the following:

 

5.1.1.1 Borrow money inthe name of the Company on terms and conditions set forth in the ApprovedBusiness Plan then in effect or otherwise as approved by all the Members;

 

5.1.1.2 Implement, usingthe Manager’s commercially reasonable efforts and subject to 5.5, the ApprovedBusiness Plan, and in connection therewith, undertake each and every act onbehalf of the Company as deemed necessary by the Manager to implement thepurposes of the Company, pursuant to authority delegated to the Managerpursuant to this Section 5.1;

 

5.1.1.3 Engage andsupervise, at the Manager’s expenses, such officers, assistants, employees,sales personnel, contractors, accountants, attorneys, operations staff, andother persons necessary or appropriate to carry out the business of the Companyand to maintain the books of account and other records and to produce thereports required by the terms of this Agreement;

 

5.1.1.4 Monitor theCompany’s activities and use commercially reasonable efforts to ensure that theCompany maintains adequate insurance with respect to its operations and assetsand not (i) commit or permit others to commit any waste on or of suchassets, or (ii) make any change in the use of the assets that will in anyway increase the risk of fire or other hazard arising out of the use oroperation of such assets;

 

5.1.1.5 Pay, at theexpense of the Company and to the extent funds of

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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the Company areavailable, all bills and expenses of the Company in accordance with theApproved Budgets;

 

5.1.1.6  Cause all books of account and other recordsof the Company to be kept in accordance with the terms of this Agreement;

 

5.1.1.7  Prepare and deliver to each Member allreports required by the terms of this Agreement and as requested from time totime by the Company or any Member;

 

5.1.1.8 Maintain allfunds of the Company in a Company account in a bank or banks located in LeeCounty, Florida or any other location as agreed upon by the Members, and be thesignatory to such accounts;

 

5.1.1.9  Make distributions periodically to theMembers in accordance with the provisions of this Agreement;

 

5.1.1.10 Undertake suchactions as are necessary or desirable in order that the Company promptlycomplies with all material present and future laws, ordinances, orders, rules,regulations and requirements of all governmental authorities havingjurisdiction which may be applicable to the Company, its assets, and theoperations and management of the Company; and

 

5.1.1.11 Provide suchother administrative and operational assistance as required from time to timeby the Company with respect to the following departmental activities of theCompany: legal, accounting and finance, booking, confirmations, education.facilities maintenance, human resources, information technologies, marketing,operations, sales and shipping;

 

5.1.1.12 Supervision anddirection of the general operations of the departments listed in Section 5.1.1.11and operate such departments efficiently and with proper economy;

 

5.1.1.13  Develop internal policies necessary formaximizing the Company’s net income;

 

5.1.1.15  Take such activities as are reasonablynecessary to stimulate and facilitate the general business of the Company; and

 

5.1.1.16 Perform allother duties otherwise described in this Agreement to he carried out by theManager and take all actions reasonably deemed necessary to carry out any ofthe above rights and duties.

 

5.1.2 Designation ofManager. WIN is the initial Manager of the Company. Any Person then servingas Manager (whether WIN or a successor Manager) may be removed for “cause,”which shall mean and be limited to a default by the Manager under thisAgreement or engaging in acts constituting fraud, gross negligence or willfulmisconduct, unless in the case of a default, the Manager cures such defaultwithin 30 days after receipt of notice of default (a “Notice of Default”)from any Member specifying in reasonable detail the facts and circumstances ofsuch default, or (ii) in the case of a default, the Manager in good faithcommences to cure the default within 30 days following the Manager’s receipt ofthe 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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Notice of Default andthereafter prosecutes to completion with diligence and continuity the curingthereof and cures such default within a reasonable period of time. With respectto matters involving fraud, gross negligence or willful misconduct, the Managershall have no cure period. If the Manager disputes that “cause” exists underthe preceding sentences, it shall promptly so advise the Members in writing andthe determination of whether “cause” exists shall be made through the proceduredescribed in Section 5.7. During the pendency of the dispute resolutionprocess, the 30-day cure period shall be shall be tolled pending the outcomethereof, and if “cause” is determined to exist, such cure period shall commenceupon the date of such determination. Upon the removal of a Manager, areplacement Manager may be designated only upon the unanimous written approvalof the Members. At any time during the term of the Company when there is noManager, management of the Company shall revert to the Members. Nothing in thisSection 5.1.2 shall be construed to affect the rights and remedies of theother Members under Section 2.6 if the Manager fails to make AdditionalCapital Contributions as and when required under this Agreement.

 

5.1.3 Signature Powerof Manager. The Manager, acting alone and without the joinder of any otherMember, shall have the power to execute and deliver documents and instrumentsof every type and nature on behalf of the Company, which shall be binding onthe Company. Any Person dealing with the Company may rely, without furtherinquiry, upon the identity of the Manager set forth in the Company’sCertificate at the time action is taken by or on behalf of the Company by theManager, and may rely on a certificate signed by the Manager as to theexistence or nonexistence of any fact or facts which constitute a conditionprecedent to acts by the Manager or which are in any other manner germane tothe affairs of the Company.

 

5.1.4 Delegation ofAuthority to Officers. Subject to the approval of the Members, the Managermay designate one or more Persons, including its Affiliates, as officers of theCompany. The officers shall have the authority to act for and bind the Company,to the extent of the authority granted to them by the Members. The officers ofthe Company may include a chairman, chief executive officer, president, vicepresidents, a secretary and such other officers as the Manager deemsappropriate in the exercise of its discretion. The officers of the Company willnot be entitled to compensation for their services except in accordance with anApproved Budget.

 

5.1.5 Insurance.The Manager shall purchase and maintain or cause to be purchased and maintainedfor and at the expense of the Company policies of insurance for the Company’soperations, for protection of the Company’s assets, as may be reasonablyrequired to comply with third party requirements, and as the Members’ agree inthe Approved Business Plan. The liability of the Manager shall be limited, andthe Manager shall be indemnified for its acts, to the extent provided in Section 5.8hereof. At the request of the Manager, the Company shall procure at the Company’ssole expense (as an Approved Expense) errors and omissions insurance coveragefor the Manager and insurance to fund the indemnification described in Section 5.8hereof, with policy limits and for risks reasonably acceptable to the Manager.

 

5.2 Submission andApproval of Business Plan. Within 15 days following the Effective Date, theManager shall prepare and submit to the Members for review and approval inaccordance with Section 5.4 hereof an overall proposed plan (the “BusinessPlan”) for the development and operation of the Business. The Manager mayfrom time to 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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time submit revisions ormodifications to the Business Plan to the Members for approval in the samemanner; provided that the Manager shall submit annually an updated BusinessPlan containing such revisions and modifications as may be needed for approvalby the Members not later than November 1 of the year preceding the yearcovered by the proposed Business Plan, and the Members shall approve theupdated Business Plan by December 1 of each year in accordance with theprovisions of Section 5.4. The Business Plan, including modificationsthereto, approved by the Members shall be termed the “Approved Business Plan.”

 

5.3 Budgets. Infurtherance of the Business Plan, the Manager shall have prepared and attachedhereto as Exhibit B (the “Initial Operating Budget”) anoperating budget for the remainder of 2006, which shall have been approved bythe Members. From time to time during the development and operation of theBusiness, the Manager shall prepare and present for the approval of the Membersin accordance with Section 5.4 a separate annual budget for the Business(each, a “Budget”). The Manager shall update all outstanding Budgets,including the annual operating budget, and present such Budgets for approval bythe Members not later than November 1 of the year preceding the yearcovered by the proposed Budget, and the Members shall approve the updatedBudgets, including the annual operating budget by December 1 of each yearin accordance with the provisions of Section 5.4. Budgets shall include areasonable contingency reserve for unanticipated costs associated with thematters covered thereby. The Manager may from time to time submit revisions ormodifications to Budgets to the Members for approval; provided that norevisions or modifications shall be implemented unless approved in accordancewith Section 5.4 hereof. The Initial Operating Budget and each otherBudget, including any revisions thereto, which is approved separately or aspart of a Business Plan in accordance with Section 5.4 hereof, shall betermed an “Approved Budget.” Specific expenditures to develop and operate theBusiness may be made only pursuant to an Approved Budget; provided that theManager shall have discretion to use contingency reserves included in anyApproved Budget in any reasonable manner and shall be permitted to makereasonable adjustments between line items reflected on an Approved Budget ifthe expenses intended to be paid pursuant to the line item from which funds aretransferred are in fact incurred and paid (at a total cost less than budgeted)and the items on which the transferred funds are expended were included amongthe items set forth in the Approved Budget (and were incurred at a cost greaterthan budgeted). Notwithstanding the foregoing, any increase in excess of tenpercent (10%) in any individual line item in an Approved Budget that alsoexceeds $100,000 shall require the approval of the Members. All expense itemsidentified in the Company’s Approved Budget from time to time shall constitute “ApprovedExpenses” of the Company. Until a Budget is otherwise modified as provided inthis Agreement, each Budget shall remain in effect subject to modificationsrequired by an increases in Non-Discretionary Expenditures in order to avoid amaterial adverse change to the financial condition or assets of the Company.Non-Discretionary Expenditures shall be deemed Approved Expenses until oneMember or the other disapproves of such expenditures. The Manager shall informthe Members within a reasonable time of any incurrence of a Non-discretionaryExpenditure.

 

5.4 Mechanism forObtaining Consents. The Manager may propose approval of a Business Plan,Budgets and amendments thereto and other matters required to be approved by theMembers pursuant to this Agreement (except for those matters indicated in Section 5.5)by giving notice thereof to each Member. Where the Manager is required toobtain Member consent pursuant to Section 5.5, the procedure set forth in5.5.29 shall apply and not 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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this Section 5.4.The Members shall cooperate in good faith to reach mutual agreement on allmatters submitted for the approval of the Members within 30 days of theirsubmission to the Members. All matters submitted for approval by the Membersshall require the affirmative approval of all the Members.

 

5.5  MajorDecisions. Notwithstanding any provision of this Agreement to the contrary,the following matters shall require the consent of all Members, which may bewithheld in the sole and absolute discretion of each Member.

 

5.5.1                        Any amendment to thisAgreement;

 

5.5.2                        Requesting for approval all orany part of a Business Plan in a manner that is inconsistent with thisAgreement;

 

5.5.3                        An act which is outside thescope of the Company’s Core Activities;

 

5.5.4                        The dissolution of the Companypursuant to Section 9.1.3 hereof,

 

5.5.5                        Admission of any new Member tothe Company;

 

5.5.6                        Filing a voluntary petition onbehalf of the Company seeking protection under the United States BankruptcyCode or debtor relief or insolvency laws of any jurisdiction;

 

5.5.7                        Acquiring by lease, purchaseassets exceeding $5,000 other than those described in the Business Plan or inthis or other Agreements as may be entered into by the Members from time totime;

 

5.5.8                        Any call for Additional CapitalContributions in excess of an Approved Budget unless they are: (i) anyNon-Discretionary Expenditures, (ii) any expense paid in an EmergencySituation, (iii) any other Approved Expenses, and (iv) the permittedvariances to an Approved Budget as described in Section 5.3 hereof or asotherwise permitted herein;

 

5.5.9                        Except as set forth in Section 5.9,entering into any contracts between the Company and any Member, Manager orAffiliate.

 

5.5.10                      Selling, conveying, exchanging,leasing, pledging, hypothecating, encumbering or otherwise transferring all orany portion of the assets of the Company;

 

5.5.11                      Except for Member Loans permittedby Section 2.7 and 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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5.1.1, borrowingor incurring any indebtedness on behalf of the Company, making or delivering onbehalf of the Company any indemnity bond or surety bond, lending fundsbelonging to the Company to any Member or its Affiliate or to any third party,or extending credit on behalf of the Company to any person, or obligating theCompany or another Member as a surety, guarantor, or accommodation party to anyobligation, or granting any lien or encumbrance on the assets of the Company,including, without limitation, any modification of any of the foregoing, unlessin accordance with the Member Loans permitted by Section 2.7 hereof;

 

5.5.12                      The Manager delegating any of itsduties set forth herein other than to its directors, officers, employees andany contractors, agents or consultants engaged by the Company in accordancewith the Approved Business Plan;

 

5.5.13                      Possessing, assigning, or usingfunds or other property of the Company for other than a Company purpose;

 

5.5.14                      Making, executing or deliveringon behalf of the Company an assignment for the benefit of creditors; causingthe Company, a Member’s Company interest or any part thereof or interesttherein to be subject to the authority of any trustee, custodian or receiver orto be subject to any proceedings for bankruptcy, insolvency. reorganization,arrangement, readjustment of debt, relief of debtors, dissolution orliquidation or similar proceedings;

 

5.5.15                      Partitioning all or any portionof the assets of the Company, or filing any complaint or institute anyproceeding at law or in equity seeking such partition;

 

5.5.16                      Confessing a judgment against theCompany; settling or adjusting any claims against the Company; or commencing,negotiating and settling any legal actions or proceedings brought by the Companyagainst unaffiliated third parties in excess of $100,000;

 

5.5.17                      The recapitalization, equitysplitting or any similar transaction of or with respect to the Company, or theissuance of any equity interest, debentures or other securities of or in the Companyor the issuance of any options, warrants or rights to purchase or acquire oreffectuate any of the foregoing;

 

5.5.18                      Doing any act that would make itimpossible to carry on the Business;

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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5.5.19                      Entering into any contractsbetween the Company and any Member, Manager or Affiliate, except as provided inthe Approved Business Plan or Section 5.9 hereof;

 

5.5.20                      Executing any bond in the Company’sname, except in the ordinary course of business;

 

5.5.21                      Making loans on behalf of theCompany or causing the Company to guarantee the obligations of others;

 

5.5.22                      Pledging or encumbering anyCompany asset as security for an obligation of a Member or any Affiliate of aMember;

 

5.5.23                      Commingling any Company funds orcapital with the funds of any other person;

 

5.5.24                      Accepting voluntary CapitalContributions from any Member without first offering each Member theopportunity to make a pro-rata share of any such voluntary CapitalContributions, based on that Member’s Profits Interest in the Company;

 

5.5.25                      Entering into one or morepartnerships, joint ventures, limited liability companies or other businessassociations between the Company and other Persons, except as described in anApproved Business Plan;

 

5.5.26                      Except as provided in thisAgreement, dissolving, terminating or liquidating the Company prior to theoccurrence of an event described in Section 9.1,

 

5.5.27                      Taking any action inconsistentwith the Approved Business Plan;

 

5.5.28                      Engaging or changing the Company’sindependent accountants; or

 

5.5.29                      Taking any other action with thisAgreement specifically requires to be agreed upon by all members under the Act(unless this Agreement supersedes such rights)

 

The Manager shall seekthe consent required by this Section 5.5 by delivering reasonably detailedwritten notice of the matter(s) requiring such consent to each Member inany manner reasonably designed to reach the Member, including via electronicmail, or in the matter set forth in Section 11. 1. Each Member shall have15 days from the receipt of such notice to advise the Manager of its decision(s) regardingsuch matter(s). A Member’s failure to respond to such consent request withinsuch 15 day period shall be deemed to be an affirmative vote 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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with respect to thematter(s) subject to such consent request.

 

5.6                         Inproviding the services hereunder, the Manager shall not at any time do or causeto be done any act or thing or make or cause to be any omission that would:

 

(a) tendto impair or damage the goodwill associated with any trademarks or servicemarks used by the Company, whether such marks are owned by the Company or usedunder license from a third party;

 

(b) contestor in any way impair or tend to impair any part of the licensor’s right, titleand interest in trademarks or service marks used by the Company under licensefrom a third party; or

 

(c) violateor infringe any right of privacy or publicity, copyright, or trademark orconstitute defamatory, obscene, or unlawful matter, or otherwise violate orinfringe any personal or propriety rights of any person, firm or corporation;or

 

(d)            violate or breach anylicense agreement to the Company from a Member.

 

5.7                         DisputeResolution.

 

5.7.1 Initial DisputeResolution. It is the Parties’ desire that any disputes that might arisebetween them be amicably settled, without resort to litigation, and the Partieswill attempt to settle any such disputes through consultation and negotiationin good faith and in a spirit of mutual cooperation. All disputes ordisagreements arising between the Parties, out of or relating to thisAgreement, that cannot be resolved by the involved employees of the Parties,shall be brought before a conciliation committee, consisting of one managementexecutive from each Party. The executives shall be of at least vice presidentiallevel, and with the authority to bind the Parties. The conciliation committeeshall, within fifteen (15) days after a written request from either Party, meetin person (or telephonically, if agreeable to both Parties) and attempt to workout a settlement. Such meeting shall be held at the facility of thenonrequesting Party, or such other location as mutually agreed upon by theParties

 

5.7.2 Litigation.If, after complying with the requirements of 5.7.1, no resolution is reached;either Party may initiate litigation proceedings. The parties agree that anyclaims arising from or in connection with the subject matter of this Agreementmust be brought in (i) the state or federal courts in and for Lee, PalmBeach or Broward Counties, Florida, if an action is commenced by Rich Dad or (ii) thestate of federal courts in Arizona if an action is commenced by WIN. Theparties further waive the right and hereby agree not to assert by way ofmotion, as a defense or otherwise in any action, suit or other legal proceedingbrought in any such court, any claim that it, he or she is not subject to thejurisdiction of such court, that such action, suit or proceeding is brought inan inconvenient forum or that the venue of such action, suit or proceeding isimproper. Each party irrevocably and unconditionally consents to the service ofany process, pleadings, notices or other papers in a manner permitted by the rules ofthe state and federal courts serving the respective lawsuit. The prevailingparty shall be entitled to reasonable attorneys’ fees and costs.

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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5.8           Limitations onLiability; Indemnity. No Member (including the Manager) or its Affiliatesor their members, officers, directors, partners, stockholders, employees,contractors, advisors or consultant (each an “Indemnitee”) shall beliable to the Company or the other Members for actions taken in good faith bythe Indemnitee in connection with the Company or its business. The Company, itsreceiver or trustee shall indemnify, defend and hold harmless each Indemnitee,to the extent of the Company’s assets (without any obligation of any Member tomake contributions to the Company to fulfill such indemnity), from and againstany liability, damage, cost, expense, loss, claim or judgment incurred by theIndemnitee arising out of any claim based upon acts performed or omitted to beperformed by the Indemnitee in connection with the business of the Company,including without limitation attorneys’ fees and costs incurred by theIndemnitee in the settlement or defense of such claim; provided that noIndemnitee shall be indemnified for claims based upon acts performed or omittedin an intentional breach of this Agreement or which constitute fraud, willfulmisconduct or gross negligence. Notwithstanding anything in this Section 5.8to the contrary, the Manager shall not be entitled to indemnification withrespect to the matters set forth in Section 5.6.

 

5.9                      Compensation.

 

5.9.1 ***

 

5.9.2 Reimbursement ofExpenses of the Manager. The Manager shall be entitled to reimbursementfrom the Company for all reasonable out of pocket costs and expenses paid tothird parties in connection with the performance of its duties hereunder,including all actual and necessary direct expenses incurred by the Manager forlegal, accounting, auditing and similar services (whether rendered byAffiliates of the Manager or otherwise). For purposes of clarification, such expensesshall not include any payments made to affiliates of WIN, the salaries of anyemployee of WIN or Affiliates of WIN (other than reasonable direct compensationto seminar leaders) or any overhead expenses of WIN or Affiliates of WIN, whichamounts shall be paid by the Manager outside of the fees pursuant to Section 5.9.1.The total amount reimbursable to the Manager for any period shall be set forthin the Company’s Approved Budget for such period, and shall be identified as aseparate line item in such Approved Budget (i.e., the Approved Budget shallinclude a line item stating “amounts reimbursable to Manager”). No specificallocation of reimbursements to the Manager will be included in the ApprovedBudget (i.e., the line item will be an aggregate number for allreimbursements), but amounts actually paid or reimbursed to the Manager or itsAffiliates pursuant to this Section 5.9.1 will be reported to the Membersin accordance with Section 6.3 The Members shall have the right to objectto the amount of reimbursements paid or payable to the Manager or itsAffiliates (in connection with the adoption of the Approved Budget or revisionsor modifications thereto and following delivery of the reports required under Section 6.3,regardless of whether a Budget may be an Approved Budget), on the basis thatthe amounts paid or payable to the Manager failed to satisfy the requirementsof this Section 5.92, but the Members shall have no right to object to theManager’s right to receive reimbursements which actually satisfy therequirements of this Section 5.9.2.

 

5.9.3 Limitation.Except as set forth in this Section 5.9, the Manager and the Members shallnot receive any reimbursements, fees or other compensation unless unanimouslyagreed from time to time by the Members. Approval of the budget, however, 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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constitutes defaultapproval of any of the aforementioned, if applicable.

 

5.10                       EmergencySituations. Notwithstanding anything herein to the contrary, if theManager, in its commercially reasonable business judgment, concludes thatemergency repairs, replacements or other actions (including by way of exampleand limitation, the signing of documents) are immediately necessary for thepreservation or safety of persons or any portion of the Business (individuallyor collectively, an “Emergency Situation”) and the Manager after usingreasonably diligent efforts is unable to consult with the Members prior totaking any action, then the Manager may take said action without the priorapproval of the Members. If the Manager takes such action by reason of anEmergency Situation, the Manager shall notify the Members in writing as quicklyas possible after taking the action, the reasons therefor and the cost thereof.

 

**SECTION 6.BOOKS, RECORDS, REPORTS AND ACCOUNTING**

 

6.1 Records. TheManager shall keep or cause to be kept at the specified office of the Companythe following: (a) a current list of the full name and last knownbusiness, residence or mailing address of each Member, (b) a copy of theinitial Certificate and all amendments thereto, (c) copies of all writtenoperating agreements, including this Agreement, and all amendments to theoperating agreements, including any prior written operating agreements, nolonger in effect, (d) copies of any written and signed promises by Membersto make Additional Capital Contributions or Member Loans to the Company, (e) copiesof the Company’s federal, state and local income tax returns and reports, (f) copiesof all prepared financial statements of the Company, and (g) minutes ofevery meeting of the Members as well as any written consents of Members oractions taken by Members without a meeting. Any such records maintained by theCompany may be kept on or be in the form of any information storage device, orkept off site pursuant to arrangements with a suitable outside vendorspecializing in data and document storage, provided that the records so keptcan be obtained or are convertible into legible written form within areasonable period of time. Any Member or its designated representative shallhave the right, at any reasonable time, to have access to and inspect and copythe contents of such books or records, which, upon request, shall be madeavailable to such Member at the Company’s specified office in Lee County,Florida.

 

6.2 Fiscal Year andAccounting. The fiscal year of the Company shall be the calendar year. Allamounts computed for the purposes of this Agreement and all applicablequestions concerning the rights of Members shall be determined using the cashmethod of accounting. All decisions as to other accounting matters, except asspecifically provided to the contrary herein, shall be made by the Manager.

 

6.3 Annual Reports.As soon as practicable, but in no event later than four months after the closeof each fiscal year, the Manager shall make available to the Members as of thelast day of that fiscal year reports containing unaudited financial statementson an accrual basis (as determined by the Manager) of the Company for thefiscal year, presented in accordance with generally accepted accountingprinciples, including a balance sheet, a statement of income, a statement ofMembers’ investment and a statement of cash flows.

 

6.4 Interim Reports.The Manager shall provide the Members with interim written reports on a cashbasis in such detail as the Members may reasonably require setting out the 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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progress and status ofthe business of the Company. In addition, as soon as practicable, but in noevent later than 45 days after the close of each calendar quarter, the Manager shalluse its best efforts to furnish to the Members as of the last day of thatcalendar quarter reports containing unaudited financial statements of theCompany for that calendar quarter, including a balance sheet and statements ofincome and cash flows. The Manager also shall provide monthly statements to theMembers comparing actual Company expenses with those projected on the thencurrent Approved Budget.

 

6.5 Preparation of TaxReturns. The Manager shall arrange for the preparation and timely filing ofall returns of Company income, gains, deductions, losses and other itemsnecessary for federal and state income tax purposes and shall cause to befurnished to the Members the tax information reasonably required for federaland state income tax reporting purposes. The classification, realization andrecognition of income, gain, losses and deductions and other items, for federalincome tax purposes, shall be on that method of accounting as the Manager shalldetermine in its reasonable discretion with the advice of the Members and theCompany’s independent accountants.

 

6.6 Tax Elections.The Manager may in its reasonable discretion determine, with the advice of theCompany’s independent accountants and in the best interests of all Members,whether to make any available elections pursuant to the Code.

 

6.7 Tax Controversies.Subject to the provisions hereof, the Manager is designated the “Tax MattersPartner” pursuant to the Code and is authorized and required to represent theCompany in connection with all examinations of the Company’s affairs by taxauthorities, including resulting administrative and judicial proceedings, andto expend Company funds for professional services and costs associatedtherewith. The Members agree to cooperate with the Manager and to do or refrainfrom doing any or all things reasonably required by the Manager to conductthose proceedings. The Manager agrees to promptly notify the Members upon thereceipt of any correspondence from any federal, state or local tax authoritiesrelating to any examination of the Company’s affairs. The Manager shall beprohibited from entering into any settlement or arrangement in excess of $5,000on behalf of the Company with respect to any federal, state or local taxauthorities without the express written approval of the Members.

 

**SECTION **7.**AMENDMENTS**

 

7.1   Amendments. This Agreement may not beamended, except by a written instrument signed by the Manager and all Members.

 

**SECTION 8.TRANSFER OF COMPANY INTERESTS; NEW MEMBERS**

 

8.1 General.Except as otherwise set forth herein, no Member shall sell, assign, pledge,hypothecate, encumber or otherwise voluntarily transfer by any means whatever (“Transfer”)all or any portion of its interest in the Company (or permit any Persondirectly or indirectly holding any interest in such Member directly orindirectly to Transfer any part of such interest), except for Transfers (a) approvedin writing by all Members, or (b) permitted as described in Sections 8.2,8.7 and 8.8 hereof. A transferee of a Member’s interest in the Company will beadmitted as a Substituted Member only pursuant to Section 8.4 hereof, Anypurported Transfer which does not comply with the provisions of this Section 8shall be void 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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and of no force oreffect.

 

8.2 PermittedTransfers. A Member may transfer or assign its Company interest to aControlled Affiliate upon the consent of the other Member, which consent shallnot be unreasonably be withheld, conditioned or delayed. Notwithstanding anylanguage to the contrary herein, any changes in ownership of Member shall notaffect such Member’s status as “Member” for all purposes of this Agreement.Further, a transferee of a Company interest permitted under this Section 8.2shall automatically be a Substituted Member after such transfer or transfers ifsuch transferee assumes all the obligations of the transferor under thisAgreement and the transferor acknowledges that it is not relieved of itsfinancial obligations hereunder until 6 months after the date of the transfer.

 

8.3 Assignee of Member’sInterest. If, pursuant to a Transfer of an interest in the Company byoperation of law and without violation of Section 8.1 hereof (or pursuantto a Transfer that the Company is required to recognize notwithstanding anycontrary provisions of this Agreement), a Person acquires an interest in theCompany, but is not admitted as a Substituted Member pursuant to Sections 8.4or 8.5.9 hereof, then, subject to Section 8.5 hereof, such Person:

 

8.3.1        shall be treated as anassignee of a Member’s interest, as provided in the Act;

 

8.3.2        shall have no right toparticipate in the business and affairs of the Company or to exercise any rightsof a Member under this Agreement or the Act; and

 

8.3.3        shall share indistributions from the Company with respect to the transferred interest, on thesame basis as the transferring Member.

 

8.4           Substituted Members.Except as specifically provided in Sections 8.2 and 8.5.9 or elsewhere in thisAgreement, no Person taking or acquiring, by whatever means, the interest ofany Member in the Company shall be admitted as a substituted Member in theCompany (a “Substituted Member”) without the written consent of allMembers, which consent may be withheld or granted in the sole and absolutediscretion of each Member.

 

8.5           Option to Purchase.

 

8.5.1 General.Upon any Transfer of an interest in the Company in violation of this Section 8or upon a Transfer of any interest in a Member that is prohibited by thisAgreement (a “Triggering Event”), the Members to whom a Triggering Eventhas not occurred (the “Option Members”) shall have the right, but not theobligation, to purchase the entire interest in the Company (the “OptionInterest’) of the Member to whom the Triggering Event occurred (the “SellingMember”), on the terms and conditions set forth in this Section 8.5.

 

8.5.2 Election.Any Option Member may invoke the valuation procedure of Section 8.5.3 bygiving written notice (the “Valuation Notice”) to the Selling Member(or, if applicable, its representatives, successors, or assigns) and to eachother Option Member at any time within six months following the Option Member’sactual knowledge of the Triggering Event.

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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8.5.3 ValuationProcedure. For a period of 60 days following the Valuation Notice, theOption Members and the Selling Member (or, if applicable, the representatives,successors or assigns of the Selling Member) shall negotiate in good faith todetermine the fair market value of all of the Company’s assets, taken as awhole, exclusive of any goodwill or other intangible asset that does not have abook value for accounting purposes (the “Assets”). If the parties areunable to agree on the fair market value of the Assets within the prescribed60-day period, the parties shall, within 15 days following the end of such60-day period, unanimously select an appraiser or appraisers to determine thefair market value of the Assets. If the parties are unable to agree on anappraiser or appraisers within the foregoing 15day period, then at the electionof any party, the selection of an appraiser or appraisers shall be made asfollows: (a) each party shall select an appraiser, and (b) theappraisers selected by the parties shall in turn appoint another appraiser toperform the appraisal. Following his or their selection, the appraiser(s) shalldetermine as soon as practicable the fair market value of the Assets assuming,for purposes of determining such value, that the Assets are liquidated in anorderly manner over a period of six months. The parties’ agreement as to value,or if applicable, the appraiser’s (appraisers’) determination of value shall bebinding on all parties for purposes of this Agreement. The date of the parties’agreement on the value of the Assets, or, if applicable, the date of the finalappraisal report(s), is referred to hereinafter as the “Valuation Date.”All appraisal costs shall be borne by the Selling Member.

 

8.5.4 Purchase Price.The purchase price of the Option Interest shall equal 75% of the amount theSelling Member would receive pursuant to Section 9.2.3 if the Assets weresold for cash at their fair market value (determined in accordance with Section 8.5.3),the Company immediately dissolved, and its assets were applied and distributedin liquidation pursuant to Section 9.2 hereof. For the avoidance of alldoubt, no discount for marketability, minority interest or any other discountshall apply to the Selling Member’s interest.

 

8.5.5 Exercise ofRight. Within 60 days following the Valuation Date, each Option Membershall give written notice to the other Members stating whether such OptionMember desires to purchase the Option Interest. Each Option Member who gives atimely notice stating its intent to purchase the Option Interest is referred tohereinafter as a “Purchasing Member.” If there is more than onePurchasing Member, the Purchasing Members shall be entitled to purchase theOption Interest in proportion to their Profits Interests, or in such otherproportions as they may agree (with such proportions being referred tohereinafter as the “Purchase Percentages”). Each Purchasing Member shallthereafter be entitled to purchase its proportionate share of the OptionInterest (determined as provided in the immediately preceding sentence) bydelivering to the Selling Member (or, if applicable, to the representatives,successors or assigns of the Selling Member) the Purchasing Member’s negotiablepromissory note (the “Note”) in a principal amount equal to the purchaseprice determined under Section 8.5.4 multiplied by the Purchasing Member’sPurchase Percentage, payable in equal annual installments of principal togetherwith annual payments of interest at the Prime Rate, over a period not to exceedfive years, with the first installment due and payable one year from the dateof sale. The Note shall be secured by a collateral assignment of the portion ofthe Option Interest acquired by the Purchasing Member, in a commerciallyreasonable form determined by the Purchasing Member.

 

8.5.6 Deliveries bySelling Member. Upon receipt of a Purchasing Member’s 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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Note, the Selling Member(or, if applicable, its representatives, successors or assigns) shall deliverto the Purchasing Member an executed assignment of the portion of the OptionInterest to be acquired by the Purchasing Member, sufficient to convey suchinterest to the Purchasing Member free and clear of any liens, claims orencumbrances, except those taken subject to by the Purchasing Member, asprovided in Section 8.5.8 below.

 

8.5.7 Assumption andRelease. In connection with the purchase of any portion of the OptionInterest hereunder, the Purchasing Member shall release the Selling Member fromand assume, as appropriate, such Company-related obligations and guarantees asshall relate to the transferred portion of the Option Interest and agree toindemnify and hold harmless the Selling Member with respect to all suchobligations and guarantees.

 

8.5.8 ClosingAdjustments. If the Option Interest is subject to any lien, claim orencumbrance, a Purchasing Member may elect (a) to cause the purchase price(or a portion thereof) to be applied to discharge such lien, claim orencumbrance, or (b) to take the relevant portion of the Option Interestsubject to such lien, claim or encumbrance and to reduce the purchase priceotherwise payable by the Purchasing Member to the Selling Member by the amountof such lien, claim or encumbrance.

 

8.5.9 Use of Nominee.At the election of a Purchasing Member, the purchase of all or part of theOption Interest pursuant to this Section 8.5 may be completed by a nomineeof the Purchasing Member, in which case, the obligations of the PurchasingMember under this Section 8.5 shall be performed by the nominee ratherthan the Purchasing Member. If a nominee completes the purchase of the OptionInterest, the nominee shall be admitted as a Substituted Member in the Companyupon the execution and delivery by such nominee to the remaining Members of aninstrument in a form approved by the remaining Members in their reasonablediscretion, whereby such nominee agrees to be bound by the terms and conditionsof this Agreement from and after the date the nominee acquires the OptionInterest.

 

8.6           Distributions inRespect of Transferred Interests. If any interest in the Company istransferred during any accounting period in compliance with the provisions ofthis Section 8, all distributions on or before the date of such Transfershall be made to the transferor, and all distributions thereafter shall be madeto the transferee.

 

8.7           Right of FirstRefusal. In the event any Member proposes to sell all or any portion of itsinterest in the Company (at “Transferring Member”) to a third party,such Transferring Member shall deliver a written notice (the “TransferNotice”) to the Company and to the other Member (the “ROFO Offeree”).The Transfer Notice shall specify the interest in the Company the TransferringMember proposes to sell (the “Transfer Securities”) and shall describethe material terms of the third party offer (the “Third Party Offer”).If, following delivery of the Transfer Notice, the ROFO Offeree is interestedin purchasing all of the Transfer Securities, the ROFO Offeree shall, withintwenty (20) days thereafter, deliver a written notice to the TransferringMember expressing the ROFO Offeree’s interest in acquiring the TransferSecurities on the same terms as set forth in the Third Party Offer (the “Expressionof Interest”). If, following delivery of the Transfer Notice, the ROFOOfferree determines it is not interested in purchasing all of the TransferSecurities, the ROFO Offeree shall, within twenty (20) days thereafter, delivera written notice of its decision not to purchase the Transfer Securities (the “RejectionNotice”). If the ROFO Offeree elects to 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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proceed with the purchaseof the Transfer Securities, such sale transaction shall be consummated withinninety (90) days following delivery of the Expression of Interest. In the eventthe ROFO Offeree elects not to purchase the Transfer Securities pursuant to theRejection Notice, the Transferring Holder shall have the right to sell theTransfer Securities to the third party pursuant to the terms of the Third PartyOffer. If such sale transaction is not completed with ninety (90) days of thereceipt of the Rejection Notice, the Transferring Member shall be obligated toreinitiate the right of first offer procedures set forth in this Section 8.8.

 

8.8 Buy-Sell Rights.If either the Company or either Member shall request the written consent of theother Member to any of the actions set forth in Sections [1.9.3, 5.3, 5.5,5.9.1] or any License Agreement from Rich Dad to the Company or from WIN to theCompany is terminated for any reason, and one Member (the “Consenting Member”)gives such consent but the other Member (the “Non-Consenting Member”)does not so consent (such situation is hereinafter referred to as a “DeadlockEvent”), then the Consenting Member and the NonConsenting Member shall eachhave the right to initiate the following buy/sell option:

 

8.8.1 Company Notice;Buy/Sell Notice. Within ten (10) days of the occurrence of a DeadlockEvent, the Company shall give written notice (the “Company Notice”) tothe Consenting Member and the Non-Consenting Member of the occurrence of suchDeadlock Event. Each of the Consenting Member and the Non-Consenting Membershall have an option, continuing for a period of ninety (90) days, beginningwith the day following receipt of the Company Notice by both the Consenting andNon-Consenting Members to exercise its buy/sell rights pursuant to this Section 8.8.If the Consenting or Non-Consenting Member desires to exercise its buy/sellrights under this Section 8.8, such Consenting or Non-Consenting Member(the “Notifying Member”) shall send written notice (“Buy/Sell Notice”)to the other Member as the case may be (the “Notified Member”), whichshall set forth the interest in the Company held by such Notifying Member (the “SpecifiedInterests”) and the price (the “Selling Price”) at which theSpecified Shares may be transferred, which shall be determined pursuant to thesame valuation procedures set forth in Section 8.5.3 hereof. The SpecifiedInterests shall include all Interests held by the Notifying Member. In theevent both the Consenting Member and the NonConsenting Member attempt toexercise their buy/sell rights under this Section 8.8, the operativeBuy/Sell Notice shall be the first notice received by a Notified Member.Notwithstanding anything in this Section 8.8 to the contrary, in the eventany license agreement from (i) Rich Dad to the Company is terminated forany reason, then only Rich Dad shall have the right to deliver a Buy/SellNotice, and (ii) WIN to the Company is terminated for any reason, thenonly WIN shall have the right to deliver a Buy/Sell Notice.

 

8.8.2 Notified Member’sOption. The Notified Member shall have an option, continuing for a periodof ninety (90) days beginning with the day following receipt of the Buy/SellNotice to elect: (i) to acquire all, but not less than all, of theSpecified Shares at the Selling Price and on the terms set forth in theBuy/Sell Notice, or (ii) to sell all, but not less than all, of the Sharesthen held by such Notified Member to the Notifying Member at the Selling Priceand on the terms set forth in the Buy/Sell Notice. The Notified Member mustselect one of the two foregoing options within such ninety day period and shallnotify the Notifying Member of the option it has selected prior to theexpiration of such ninety day period. If the Notified Member fails to notifythe Notifying Member of its selection prior to the expiration of such ninetyday period, the Notified Member shall be deemed to have 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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elected to sell itsShares to the Notifying Member at the Selling Price.

 

8.8.3 Transfer ofInterest. Upon the determination of which Member is to sell its Interestunder this Section 8.8, both Members shall thereupon take all action asmay be required or necessary to effectuate the transfer of such Interest to thepurchasing Member pursuant to the terms set forth in this Section 8.8 aspromptly as practicable, but in no event later than sixty (60) days thereafter.

 

**SECTION 9.DISSOLUTION AND TERMINATION**

 

9.1                         TheCompany shall dissolve upon the first to occur of any of the following events:

 

9.1.1             The sale of all orsubstantially all of the assets of the Company and the collection of theproceeds of such sale;

 

9.1.2             The unanimouselection by the Members to dissolve the Company;

 

9.1.3             Upon the entry of adecree of dissolution under the Act; or

 

9.1.4 Upon any otherWithdrawal Event, unless the business of the Company is continued by thespecific written consent of the remaining Member(s) given within 90 daysafter such event.

 

9.2                         WindingUp.

 

9.2.1 Notice ofWinding Up. Following the dissolution of the Company, as provided in Section 9.1hereof, the Manager, or if there is no Manager, any remaining Member, mayexecute and file a notice of winding up with the Wyoming Secretary of State.

 

9.2.2 Effect ofFiling. After the dissolution of the Company, the Company shall cease tocarry on its business, except insofar as may be necessary for the winding up ofits business, but the Company’s separate existence shall continue untilarticles of termination have been filed with the Wyoming Secretary of State oruntil a decree dissolving the Company has been entered by a court of competentjurisdiction.

 

9.2.3 Liquidation andDistribution of Assets. Upon the dissolution of the Company, the Manager,or, if there is no Manager, the remaining Member(s), or a court appointedtrustee if there is no remaining Member, shall take full account of the Company’sliabilities and assets, and such assets shall be liquidated as promptly as isconsistent with obtaining the fair value thereof During the period ofliquidation, the business and affairs of the Company shall continue to begoverned by the provisions of this Agreement, with the management of theCompany continuing as provided in Section 5 hereof. The proceeds fromliquidation of the Company’s property, to the extent sufficient therefore,shall be applied and distributed in the following order:

 

9.2.3.1 To the paymentand discharge of all of the Company’s debts and liabilities, including those toMembers who are creditors (to the extent permitted by law), and to theestablishment of any necessary reserves; and

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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9.2.3.2               To the Members andin accordance with Sections 3.1.2 and 3.1.3 hereof.

 

9.2.4 Winding UpPeriod. The Company shall have up to one year from the occurrence of thedissolution event to wind up its affairs, during which the Company shallfulfill all outstanding trainings as of the date of the dissolution event.

 

9.3 Deficit CapitalAccounts. In no event shall a Member’s negative or deficit Capital Accountbalance be considered a debt or obligation owed to the Company, nor shall anyMember with a negative or deficit Capital Account balance have any obligationto restore such Capital Account by means of an Additional Capital Contributionto the Company.

 

9.4 Articles ofTermination. When all debts, liabilities and obligations of the Companyhave been paid and discharged or adequate provisions have been made thereforeand all of the remaining property and assets of the Company have beendistributed to the Members. articles of termination shall be executed and filedby the Manager, or if there is no Manager, by the remaining Members, with theWyoming Secretary of State.

 

9.5 Rights of theMembers Following Dissolution. Upon dissolution of the Company as describedin this Section 9, the Members shall have the following rights withrespect to the assets of the Company:

 

9.5.1.1 WIN shall havethe exclusive right to use all proprietary information owned by the Company atthe time of dissolution, including, without limitation, all handouts,workbooks, presentation manuals, software programs, or any other literature ormaterial and other collateral (the “Company Materials”) to the extent,and only to the extent, that WIN was the owner of any original works which gaverise to the derivative works comprising the Company Materials, provided,however, that WIN shall remove any and all Rich Dad logos, trademark(s) andbranding, as well as any materials comprising Rich Dad materials, or which arederived from Rich Dad materials or which would tend to create a likelihood ofconfusion with respect to affiliation or sponsorship (the “Rich DadProprietary Materials”), between the Company and Rich Dad, from suchmaterials prior to any use and shall provide evidence of the same to Rich Dad.WIN shall have the exclusive right to use any WIN Proprietary Materialcontributed to the Company.

 

9.5.1.2 Rich Dad shallhave the exclusive right to use all proprietary information owned by theCompany at the time of dissolution, including, without limitation, the CompanyMaterials to the extent, and only to the extent, that Rich Dad was the owner ofany original works which gave rise to the derivative works comprising theCompany Materials, provided,however, that Rich Dad shall removeany and all WIN trademark(s) and branding, as well as any materialscomprising WIN materials, or which are derived from WIN materials or whichwould tend to create a likelihood of confusion with respect to affiliation orsponsorship (the “WIN Proprietary Materials”), between the Company andWIN, from such materials prior to any use and shall provide evidence of thesame to WIN. Rich Dad shall have the exclusive right to use any Rich DadProprietary Material contributed to the Company.

 

9.5.1.3 Neither Membershall have any right whatsoever to use any 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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Company logo or tradename, unless agreed to in writing by the Members, provided, however, that RichDad shall have the exclusive right to use the Rich Dad Education name upon thedissolution of the Company, however, not in connection with any products orservices as offered by the Company under 9.5.1.1 herein.

 

9.5.1.4 Any and alllicenses of intellectual property entered into between the Company and a Memberthat provide for the right by the Company to use the Member’s intellectualproperty described in such license agreement shall automatically terminate uponthe occurrence of a dissolution event and shall be of no further force oreffect.

 

9.5.1.5 In the event thatthe Company develops any new Company Materials (the “Company DevelopedProprietary Materials”) that are not derived from Rich Dad ProprietaryMaterials or from any WIN Materials, each party shall have the non-exclusiveright to use the Company Development Materials upon the dissolution of theCompany.

 

**SECTION 10.CONVERSION TO CORPORATE FORM  **Notwithstandinganything to the contrary set forth in this Agreement, upon the consent of theMembers, the Members may, at any time upon not fewer than [twenty (20) days]prior written notice given to each Member (unless such notice period is waivedby the Members), cause the Company to convert into a corporation (the “SuccessorCorporation”), by such means (including, without limitation, filing ofappropriate certificates of conversion and incorporation; merger orconsolidation or other business combination; transfer of all or a part of theCompany’s assets; and/or exchange of interest in the Company for securities ofthe Successor Corporation) as the Manager may reasonably select. Upon suchconversion:

 

(a)  eachMember’s interest in the Company shall be exchanged for, or otherwise convertedinto, the number of shares of common stock of the Successor Corporationrepresenting, as nearly as reasonably practicable, an equity interest thereinequivalent to the “economic interest” in the Company represented by such Member’sinterest immediately prior to the conversion (without regard to whether suchcorporation is subject to federal or state income taxation at the entitylevel); and

 

(b)  thecertificate of incorporation, bylaws and other organizational documents of suchcorporation (and/or, to the extent determined by the Members to be customarywith respect to the particular provisions of this Agreement in documentationtypically used in joint venture transactions, agreements among security holdersof such corporation) shall, to the extent reasonably practicable and unlesssuch conversion is being effected in connection with an initial public offering(“IPO) (in which case the Members shall be expressly authorized herebyto make such modifications with respect thereto as the deemed necessary oradvisable in connection with the IPO), reflect voting, management, exculpation,indemnification and other arrangements among the stockholders and directorswhich are comparable to the voting, management, exculpation, indemnificationand other arrangements among the Members contained in this Agreement.

 

**SECTION 11.****                       MISCELLANEOUS**

 

11.1 Notices. Exceptfor communication and/or consents under Section 5.5 and its 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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subsections, any notice,payment, demand or communication required or permitted to be given by anyprovision of this Agreement shall be in writing and shall be deliveredpersonally to the Person to whom the same is directed, sent by registered orcertified mail, return receipt requested, addressed to the Manager or anyMember at the address appearing below such Person’s name on Exhibit A,or by facsimile transmission to the “FAX” number set below such Person’s nameon Exhibit A, or if to the Company, by notice to the Manager andeach Member as herein provided, or to such other address as the parties mayfrom time to time specify by notice in accordance with this Section 11.1.Any such notice shall be deemed to be delivered, given and received for allpurposes as of the date so delivered, if delivered personally or if sent byfacsimile transmission, or, if sent by certified or registered mail, three daysfollowing the date on which the same was deposited in a regularly maintainedreceptacle for the deposit of United States mail, postage and charges prepaid.

 

11.2 Binding Effect.Except as otherwise provided in this Agreement, every covenant, term andprovision of this Agreement shall be binding upon and inure to the benefit ofthe Members and their respective heirs, legatees, legal representatives,successors, transferees and assigns.

 

11.3   Construction. Every covenant, termand provision of this Agreement shall be construed simply according to its fairmeaning and not strictly for or against any Member.

 

11.4   Time. Time is of the essence withrespect to this Agreement.

 

11.5 Headings. Section andother headings contained in this Agreement are for reference purposes only andare not intended to describe, interpret, define or limit the scope, extent orintent of this Agreement or any provision hereof.

 

11.6 Severability.Every provision of this Agreement is intended to be severable. If any term orprovision hereof is illegal or invalid for any reason whatsoever, suchillegality or invalidity shall not affect the validity or legality of theremainder of this Agreement.

 

11.7 Incorporation byReference. Every exhibit, schedule and other appendix attached to thisAgreement and referred to herein is hereby incorporated in this Agreement byreference.

 

11.8 AdditionalDocuments. Each Member, upon the request of any other Member, agrees toperform all further acts and execute, acknowledge and deliver any documentswhich may be reasonably necessary, appropriate or desirable to carry out theprovisions of this Agreement.

 

11.9 Variation ofPronouns. All pronouns and any variations thereof shall be deemed to referto masculine, feminine or neuter, singular or plural, as the identity of thePerson or Persons may require.

 

11.10 Wyoming Law.The laws of the State of Wyoming shall govern the validity of this Agreement,the construction of its terms, and the interpretation of the rights and dutiesof the Members.

 

11.11 Waiver of Actionfor Partition. Each Member irrevocably waives any right that such Membermay have to maintain any action for partition with respect to any of the 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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Company’s property.

 

11.12 CounterpartExecution; Facsimile Signatures. This Agreement may be executed in anynumber of counterparts pursuant to original or facsimile copies of signatureswith the same effect as if the Manager and all of the Members had signed thesame document pursuant to original signatures. All counterparts shall beconstrued together and shall constitute one agreement.

 

11.13 Representationsand Warranties. Effective upon the execution of this Agreement, and as ofthe Effective Date, each Member represents and warrants to the Company, to theManager and to each other Member that:

 

11.13.1 It has acquired itsinterest in the Company for its own account, for investment, and not with aview to or for the resale, distribution, subdivision or fractionalizationthereof;

 

11.13.2 Except asotherwise permitted herein, it has no contract, undertaking, understanding,agreement or arrangement, formal or informal, with any person to sell, transferor pledge all or any portion of its interest in the Company and has no currentplans to enter into any such contract, undertaking, understanding, agreement orarrangement;

 

11.13.3 It has suchbusiness and financial experience alone, or together with its professionaladvisers, that it has the capacity to protect its own interests in connectionwith its acquisition of an interest in the Company;

 

11.13.4 It has sufficientfinancial strength to hold the interest in the Company as an investment andbear the economic risks of that investment (including possible complete loss ofsuch investment) for an indefinite period of time;

 

11.13.5 It has beenafforded an opportunity to ask such questions as it has deemed necessary ordesirable in order to evaluate the merits and risks of the investmentcontemplated herein;

 

11.13.6 It acknowledgesthat it has performed its own due diligence with respect to its interest in theCompany and is relying on that due diligence in making this investment and thatit is not relying on the Manager or any other Member or their respectiveAffiliates with respect to tax, suitability or other economic considerations;

 

11.13.7   This Agreement constitutes a legal, validand binding obligation of the Member enforceable against the Member inaccordance with its terms;

 

11.13.8 To the Member’sknowledge, the execution, delivery and performance of this Agreement by theMember does not and will not violate, conflict with or contravene any judgment,order, decree, writ or injunction, or any law, rule, regulation, contract oragreement to which the Member is subject; and

 

11.13.9 Rich Dad herebyrepresents and warrants to WIN that, to the knowledge of Rich Dad, neither theformation of this joint venture nor the participation therein by Rich Dad(after giving due consideration to WIN’s 51% Profits Interest in the Companyand status as a publicly traded company) shall give rise to any legal orfinancial 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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reporting or regulatoryrequirements on the part of Rich Dad, including, without limitation, filingswith the Federal Trade Commission under the Hart-Scott Rodino AntitrustImprovements Act of 1976, as amended, except for such obligations to reportRich Dad’s allocable share of profits and losses under applicable state andfederal tax laws.

 

11.14    Glossary. For purposes of thisAgreement, the following terms shall have the meanings specified in this Section 11.14:

 

“Act” means the WyomingLimited Liability Company Act, as amended from time to time (or anycorresponding provisions of succeeding law).

 

“Additional CapitalContributions” means the additional Capital Contributionsmade under Section 2.4 hereof.

 

“Adjusted Capital AccountDeficit” means an amount with respect to any Member equal tothe deficit balance in such Member’s Capital Account at the end of the relevantfiscal year, after increasing the balance in such Member’s Capital Account byany amount which such Member is obligated to or deemed to be obligated torestore pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5).The foregoing definition of Adjusted Capital Account Deficit generally isintended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) andshall be interpreted consistently therewith.

 

“Affiliate”means, with respect to any Person: (a) any Person directly or indirectlycontrolling, controlled by or under common control with such Person; (b) anyPerson owning or controlling 10% or more of the outstanding voting interests ofsuch Person; (c) any officer, director, or general partner of such Person;or (d) any Person who is an officer, director, general partner, trustee orholder of 10% or more of the voting interests of any Person described inclauses (a) through (c) of this definition.

 

“Agreement”means this Limited Liability Company Agreement, as amended from time to time.Words such as “herein,” “hereinafter,” “hereinafter,” “hereto” and “hereunder,”refer to this Agreement as a whole, unless the context otherwise requires.

 

“Approved Budget”has the meaning given that term in Section 5.3 hereof.

 

“Approved Expenses”has the meaning given that term in Section 5.3 hereof.

 

“Approved Business Plan”has the meaning given that term in Section 5.2 hereof.

 

“Assets”has the meaning given that term in Section 8.5.3 hereof

 

“Asset Acquisition Fee”has the meaning given such term in Section 5.9.2 hereof.

 

“Asset Management Fee”has the meaning given such term in Section 5.9.2 hereof

 

“Book Value”has the meaning given that term in Section 4.1.2 hereof. 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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“Budget”has the meaning given that term in Section 5.3 hereof.  

 

“Business Plan”has the meaning given that term in Section 5.2 hereof.

 

“Capital Account”means, with respect to any Member or assignee, the Capital Account maintainedfor such Person in accordance with the following provisions:

 

(a) To eachPerson’s Capital Account there shall be credited such Person’s CapitalContributions, such Person’s distributive share of Profits and any items in thenature of income or gain which are specialty allocated pursuant to Section 4,and the amount of any Company liabilities assumed by such Person or which aresecured by any Property distributed to such Person.

 

(b) To eachPerson’s Capital Account there shall be debited the amount of cash and theGross Asset Value of any Property distributed to such Person pursuant to anyprovision of this Agreement, such Person’s distributive share of Losses and anyitems in the nature of expenses or losses which are specially allocatedpursuant to Section 4, and the amount of any liabilities of such Personassumed by the Company or which are secured by any property contributed by suchPerson to the Company.

 

(c) In theevent all or a portion of an interest in the Company is transferred inaccordance with the terms of this Agreement, the transferee shall succeed tothe Capital Account of the transferor to the extent it relates to thetransferred interest.

 

(d) Indetermining the amount of any liability for purposes of (a) and (b) ofthis definition, there shall be taken into account Code Section 752(c) andany other applicable provisions of the Code and Regulations.

 

The foregoing provisionsand the other provisions of this Agreement relating to the maintenance ofCapital Accounts are intended to comply with Regulations Section 1.704-1(b),and shall be interpreted and applied in a manner consistent with suchRegulations. In the event the Manager shall determine that it is prudent tomodify the manner in which the Capital Accounts, or any debits or creditsthereto (including, without limitation, debits or credits relating toliabilities which are secured by contributions or distributed property or whichare assumed by the Company, a Member, or assignee), are computed in order tocomply with such Regulations, the Manager may make such modification, providedthat it is not likely to have a material effect on the amounts distributed toany Person pursuant to Section 9 of this Agreement upon the dissolution ofthe Company. The Manager also shall (i) make any adjustments that arenecessary or appropriate to maintain equality between the Capital Accounts ofthe Members and assignees and the amount of Company capital reflected on theCompany’s balance sheet, as computed for book purposes, in accordance withRegulations Section 1.704- 1 (b)(2)(iv)(g), and (ii) make anyappropriate modifications in the event unanticipated events might otherwisecause this Agreement not to comply with Regulations Section 1.704-1(b).

 

“Capital AccountDepreciation” shall mean for each calendar year or otherperiod, an amount equal to the depreciation, amortization or other costrecovery deduction allowable with respect to an asset for such fiscal year orother period, except that if the Gross Asset 

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and ExchangeCommission.

 

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Value of an asset differsfrom its adjusted basis for federal income tax purposes at the beginning ofsuch fiscal year or other period, Capital Account Depreciation shall be anamount which bears the same ratio to such beginning Gross Asset Value as thefederal income tax depreciation, amortization or other cost recovery deductionfor such fiscal year or other period bears to such beginning adjusted taxbasis.

 

“Capital Contribution”means, with respect to any Member, the amount of money and the net fair marketvalue of any property (other than money) contributed to the Company by suchMember pursuant to any provision of this Agreement.

 

“Certificate”has the meaning given that term in Section 1.8 hereof.

 

“Code”means the Internal Revenue Code of 1986, as amended from time to time (or anycorresponding provisions of succeeding law).

 

“Company”has the meaning given that term in the introductory paragraph to thisAgreement, but shall also include any limited liability company continuing thebusiness of this Company in the event of dissolution as herein provided.

 

“Company Materials”means all handouts, workbooks, presentations, manuals, software programs, DVDs,CDs, tapes and such other literature, material and collateral used by theCompany in the Business.

 

“Company Minimum Gain”has the meaning set forth in Regulations Section 1.7042(b)(2) and isdetermined by computing with respect to each nonrecourse liability of theCompany, the amount of gain (of whatever character), if any, that would berealized by the Company if it disposed (in a taxable transaction) of theProperty subject to such liability in full satisfaction thereof, and by thenaggregating the amounts so computed as set forth in Regulations Section 1.704-2(d).

 

“Confidential”has the meaning given such term in Section 1.9.5 hereof.

 

“Controlled Affiliate”means as to any Person, any other Person controlled by or under common controlwith such Person. For the purposes of this definition, the terms “controlled”and “control” means the possession, directly or indirectly, of the power todirect or cause the direction of management and policies of a Person, whetherthrough ownership of voting securities or a partnership or membership interest,by contract or otherwise.

 

“Core Activities”has the meaning given that term in Section 1.4 hereof.

 

“Effective Date”has the meaning given that term in the introductory paragraph to thisAgreement.

 

“Emergency Situations”has the meaning given such term in Section 5.10 hereof.

 

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

 

(a) Theinitial Gross Asset Value of any asset contributed by a Member to the Companyshall be the fair market value of such asset at the time of contribution to the

 

[***] Confidential treatment requested. Omittedportions have been filed separately with the Securities and Exchange Commission.

 

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Company, as determined bythe contributing Member and the Company as reflected in this Agreement oranother writing agreed to by all the Members;

 

(b) The GrossAsset Value of all Company assets shall be adjusted to equal their respectivegross fair market values, as determined by the Members, as of the followingtimes: (A) the acquisition of an additional interest in the Company by anynew or existing Members in exchange for more than a de minimis CapitalContribution if the Members determine that such adjustment is necessary orappropriate to reflect the relative economic interests of the Members in theCompany; (B) the distribution by the Company to a Member of more than a deminimis amount of Company property as consideration for an interest inthe Company if the Members determine that such adjustment i s necessary orappropriate to reflect the relative economic interests of the Members in theCompany; (C) the liquidation of the Company within the meaning ofRegulations Section 1.704-1(b)(2)(ii)(g); and (D) upon the grant ofan interest in the Company (other than a de minimis interest) in considerationfor the provision of services to or for the benefit of the Company by anexisting Member acting in a Member capacity, or by a New Member acting in aMember capacity, or in anticipation of being a Member;

 

(c) If theGross Asset Value has been determined or adjusted pursuant to Subsections (a) and(b) above, such Gross Asset Value shall be thereafter adjusted by theCapital Account Depreciation taken into account for purposes of computingProfits or Losses; and

 

(d) if anelection under Code Section 754 has been made, the Gross Asset Value ofCompany assets shall be increased (or decreased) to reflect any adjustments tothe adjusted basis of the assets pursuant to Code Section 734(b) orCode Section 743(b), but only to the extent that those adjustments aretaken into account in determining Capital Accounts pursuant to TreasuryRegulation Section 1.704-1(b)(2)(iv)(m) and Section 4.1 hereof;provided, however, that Gross Asset Value shall not be adjusted pursuant tothis subsection (d) to the extent that the Manager determines that anadjustment pursuant to subsection (b) hereof is necessary or appropriatein connection with a transaction that would otherwise result in an adjustmentpursuant to this subsection (d).

 

“Indemnitee”has the meaning given that term in Section 5.8 hereof.

 

“Independent Activity”and “Independent Activities” has the meaning given such terms in Section 1.9hereof.

 

“Initial Capital Contribution”has the meaning given that term in Section 2.3 hereof.

 

“Initial Operating Budpet”has the meaning given that term in Section 5.3 hereof.

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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“Liquidated Damages”has the meaning given such term in Section 2.3 hereof.

 

“Loan”has the meaning given such term in Section 1.4. 10 hereof.

 

“Manager”means the Person identified as the Manager in the introductory paragraph to thisAgreement, and any new Manager selected by the Manager pursuant to Section 5.1.2hereof.

 

“Member”means any Person identified as a Member in the introductory paragraph to thisAgreement. If any Person is admitted as Substituted Member pursuant to the termsof this Agreement, “Member” shall be deemed to refer also to such Person. “Members”refers collectively to all Persons who are designated as a “Member” pursuant tothis definition.

 

“Member Loans”has the meaning given that term in Section 2.7 hereof.

 

“MemberNonrecourse Debt” has the meaning set forth in Section L704-2(b)(4) ofthe Regulations.

 

“MemberNonrecourse Debt Minimum Gain” means an amount, with respectto each Member Nonrecourse Debt, equal to the Company Minimum Gain that wouldresult if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,determined in accordance with Section 1.704-2(i)(3) of theRegulations.

 

“Net Cash Flow”means the gross cash proceeds from Company operations (including from sales,dispositions or refinancing of Company property), less the portion thereof usedto (a) pay any royalties due pursuant to the Rich Dad License Agreementand WIN License Agreement, and (b) pay or establish reserves for Companyexpenses, debt payments (other than payments to Members in relation to MemberLoans under Section 2.7 of this Agreement), capital improvements,replacements and contingencies, all as reasonably determined by the Manager,consistent with any Approved Budget then in effect.

 

“Non-DiscretionaryExpenditure” means expenditures which the Company is requiredto pay by law or pursuant to existing contracts between the Company and anythird party in accordance with an Approved Business Plan. For example, suchexpenditures may include increases in taxes, loan payments, etc.

 

“NonrecourseLiability” has the meaning set forth in Section 1.704-2(b)(3) ofthe Regulations.

 

“Note”has the meaning given that term in Section 8.5.5 hereof.

 

“Notice of Default”has the meaning given that term in Section 5.1.2 hereof.

 

“OptionInterest” has the meaning given that term in Section 8.5.1hereof.

 

“OptionMember” has the meaning given that term in Section 8.5.1hereof.

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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“Person”means any individual, partnership, limited liability company, corporation,trust or other entity.

 

“Prime Rate”means the prime rate of interest announced publicly from time to time by Bankof America NT & SA, or its successor.

 

“Profits Interest”means, with respect to each Member, the percentage identified on Exhibit Aas that Member’s “Profits Interest” in the Company, subject to adjustment asprovided in Section 2.6 of this Agreement.

 

“Profits”and “Losses” means, for each fiscal year or other period, an amountequal to the Company’s taxable income or loss for such year or perioddetermined in accordance with Code Section 703(a) (including in suchtaxable income or loss all items of income, gain, loss or deduction required byCode Section 703(a) to be stated separately) with the followingadjustments:

 

(a) Anyincome of the Company that is exempt from federal income tax, and not otherwisetaken into account in this definition in computing Profits or Losses, shall beadded to such taxable income or loss;

 

(b) AnyCompany expenditures described in Code Section 705(a)(2)(B), or treated assuch pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and nototherwise taken into account in this definition in computing Profits or Lossesshall be subtracted from such taxable income or loss;

 

(c) Gainor loss resulting from any disposition of Company property shall be computed byreference to the Gross Asset Value of the Company property disposed of,notwithstanding that the adjusted tax basis of such property differs from itsGross Asset Value;

 

(d) Inlieu of the depreciation, amortization and other cost recovery deductions takeninto account in computing such taxable income or loss, there shall be takeninto account the “Capital Account Depreciation” computed in accordance withsuch definition contained above;

 

(e) Inthe event the Gross Asset Value of any Company asset is adjusted as required bysubsections (b) or (c) of the definition of Gross Asset Value, theamount of that adjustment shall be taken into account as gain or loss from thedisposition of that asset (assuming the asset was disposed of just prior to theadjustment) for purposes of computing Profits or Losses in the Fiscal Year ofadjustment; and

 

 (f) Notwithstanding any other provisionof this subsection, any items of income, gain; loss or deduction which arespecifically allocated shall not be taken into account in computing Profits orLosses.

 

“Purchase Percentage”has the meaning given that term in Section 8.5.5 hereof.

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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“Purchasing Member”has the meaning given that term in Section 8.5.5 hereof.

 

“Regulations”means the Income Tax Regulations promulgated under the Code, as suchregulations may be amended from time to time (including correspondingprovisions of succeeding regulations).

 

“Rich Dad LicenseAgreement” means that certain License Agreement dated as ofthe Effective Date between the Company and Rich Dad relating to the Company’suse of the Rich Dad logo on the Company Materials, a copy of which is attachedas Exhibit C to this Agreement.

 

“Rich Dad ProprietaryMaterials” has the meaning given that term in Section 9.5.1.2.

 

“Selling Member”has the meaning given that term in Section 8.5.1 hereof. 

 

“Substituted Member”has the meaning given that term in Section 8.4 hereof.

 

“Target Account”means, with respect to any Member for any period, a balance (which may bepositive or negative) equal to (i) the hypothetical amount that Memberwould receive upon the liquidation of the Company, assuming that (x) allassets of the Company were sold for an amount equal to their respective GrossAsset Values, (y) all liabilities of the Company allocable to thoseproperties became due and were satisfied in accordance with their terms(limited with respect to each non-recourse liability, to the Gross Asset Valueof the asset securing such liability), and (z) all net assets of theCompany were distributed pursuant to Section 9.2.3.2 hereof as of the lastday of the fiscal year or the applicable period, reduced by (ii) theMember’s share of Company Minimum Gain and Member Nonrecourse Debt MinimumGain, as determined pursuant to Regulations Section 1.704-2.

 

“Transfer”has the meaning given that term in Section 8.1 hereof.

 

“Triggering Event”has the meaning given that term in Section 8.5.1 hereof.

 

“Unreturned CapitalContribution” means, with respect to each Member, such Member’stotal Capital Contributions less distributions previously received by suchMember pursuant to Section 3.1.2 of this Agreement.

 

“Valuation Date”has the meaning given that term in Section 8.5.3 hereof.

 

“Valuation Notice”has the meaning given that term in Section 8.5.2 hereof.

 

“WIN License Agreement”means that certain License Agreement dated as of the Effective Date by andamong the Company and the WIN Subsidiaries relating to the Company’s use of theWIN Materials, a copy of which is attached hereto as Exhibit D tothis Agreement.

 

“WIN Materials”means the following propriety information of WIN: handouts, workbooks,presentations, manuals, software programs, and other literature and materialdescribed on Exhibit E attached hereto.

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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“WIN Subsidiaries”means the following entities: Whitney Education Group, Inc. Whitney Canada, Inc.,EduTrades, Inc., Wealth Intelligence Academy, Inc.

 

“Withdrawal Event”means those events and circumstances listed in Section                            ofthe Act.

 

[REMAINDER OF PAGEINTENTIONALLY LEFT BLANK.]

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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IN WITNESS WHEREOF, theparties have entered into this Agreement as of the date first above written.

 
|   | **MANAGER/MEMBER:**                                                         |
|--------|-----------------------------------------------------------------------------|
|   | ** **                                                                  |
|   | ** **                                                                  |
|   | **WHITNEY INFORMATION NETWORK,  INC.,**a Colorado  corporation, its Manager |
|   |                                                                        |
|   |                                                                        |
|   | By:                                                                         |  /s/ Ronald Simon |
|   | Name:                                                                       |  Ronald Simon |
|   | Title:                                                                      |   EUP |
|   |                                                                        |
|   |                                                                        |
|   | 1612 E. Cape Coral Parkway                                                  |
|   | Cape Coral,Florida 33904                                                    |
|   |                                                                        |
|   | Attn: Thomas McElroy                                                        |   |
|   | Fax No.: (239) 540-6501                                                     |
|   |                                                                        |
|   |                                                                        |
|   | **OTHER MEMBER:**                                                           |
|   |                                                                        |
|   | **RICH GLOBAL, LLC,** a(n) Wyoming limited   liability company              |
|   |                                                                        |
|   |                                                                        |
|   | By:                                                                         |   /s/ Sharon L Lechter |
|   | Name:                                                                       |   Sharon L Lechter |
|   | Its:                                                                        |       Member |
|   |                                                                        |
|   |                                                                        |
|   | 4330 North Civic Center Plaza                                               |
|   | Scottsdale, Arizona 85251                                                   |
|   | Attn:                                                                       | Sharon Lechter |
|   | Fax No: (   )    -        |
|        |                                                                             |  |  |  |  |  |  |

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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**EXHIBIT**A

 
| **Manager and Members**                                                                                                                                                                                                                                     | ** ** | **Profits**   | ** ** | **Initial Capital** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------|------------|---------------------|------------|
| **Names and Addresses**                                                                                                                                                                                                                                     | ** ** | **Interests** | ** ** | **Contribution**    | ** ** |
|                                                                                                                                                                                                                                                        |       |          |       |                |       |
| **Manager/Member:**                                                                                                                                                                                                                                         | ** ** | ** **    | ** ** | ** **          | ** ** |
|                                                                                                                                                                                                                                                        |       |          |       |                |       |
| Whitney  Information Network, Inc.                                                                                                                                                                                                                     |       | 51            | %          | $                   |       |   |
|                                                                                                                                                                                                                                                        |       |          |       |                |       |
| Attn:                                                                                                                                                                                                                                                       |       |          |       |                |       |
| Fax No.: (     )                                                                                                                                                                                     |       |          |       |                |       |
|                                                                                                                                                                                                                                                        |       |          |       |                |       |
| **Member:**                                                                                                                                                                                                                                                 | ** ** | ** **    | ** ** | ** **          | ** ** |
|                                                                                                                                                                                                                                                        |       |          |       |                |       |
| Rich Global, LLC                                                                                                                                                                                                                                            |       | 49            | %          | $                   |       |   |
|                                                                                                                                                                                                                                                        |       |          |       |                |       |
| Attn:                                          |       |          |       |                |       |
| Fax No.: (~                                                                                                                                                                                                                                                 |       |          |       |                |       |

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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EXHIBIT B

Initial OperatingBudget

 

(See Attachment)

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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EXHIBIT C

Rich Dad LicenseAgreement

 

(See Attachment)

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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EXHIBIT D

WIN LicenseAgreement

 

(See Attachment)

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

 

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**EXHIBIT E**

**WINMaterials**

 

(See Attachment)

 

[***] Confidentialtreatment requested. Omitted portions have been filed separately with theSecurities and Exchange Commission.

 

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