Document:

ex10-14.htm

    
      

    

    EXHIBIT
10.14

     

     

    Consulting
Agreement

    

    

    This
Consulting Agreement (the "Agreement") is entered into as of this 2nd day of
April, 2008, by and between Visual Management Systems, Inc., a Nevada
corporation, with its principal place of business at 1000 Industrial Way North
Suite C, Toms River, NJ 08755 (the “Company”) and Jay Edmond Russ, an individual
("Consultant").

    

    Recitals

    

    WHEREAS,
the Company is in need of guidance and consultation with respect to its digital
video surveillance and digital video recorder (“DVR”) businesses;

    

    WHEREAS,
the Company requires access to the expertise of the Consultant as to certain
strategic elements of the digital video surveillance industry; and

    

    WHEREAS,
Consultant has agreed to make himself reasonably available to provide consulting
services to the Company in connection with its digital video surveillance and
DVR businesses as requested by the Company;

    

    NOW,
THEREFORE, the parties hereby agree as follows:

    

    
      	 
      	
              Consultant's
      Services. Consultant shall make himself reasonably available by telephone
      to the Company during regular business hours during the Term (as defined
      below) of this Agreement, subject in all respects to his other business
      obligations, to provide to the Company professional consulting services in
      connection with its digital video surveillance and DVR businesses and
      other related activities as reasonably requested from time to time (the
      “Consulting Services”).  In providing the Consulting Services as
      described in this Agreement, Consultant shall give the Company full access
      to his range of knowledge and professional contacts in the digital video
      surveillance industry, with a view  towards the Company
      leveraging his industry relationships to expand its DVR and digital video
      surveillance product distribution, and increase its fully integrated
      system install revenue.

            
	 	 
	
              1.

            	
              Compensation.

            
	 	 
	 
      	
              1.1.

            	
              Base
      Compensation.  In consideration for the Consulting Services to
      be performed by Consultant under this Agreement, the Company will pay
      Consultant the annualized sum of $75,000.00.  During the first
      nine (9) months of this Agreement, payment shall be made to Consultant in
      equal monthly installments on the last day of each calendar month during
      which this Agreement is effective, and thereafter, payment shall be made
      to Consultant in equal quarterly installments on the first day of each
      quarter during which this Agreement is effective.

            
	 	 	 
	 
      	
              1.2.

            	
              Expenses.  Consultant
      shall be responsible for all his own normal business
      expenses.  Extraordinary expenses must be submitted to the
      Company for approval or no reimbursement shall occur for any reason
      whatsoever.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              2.

            	
              Independent
      Contractor.  Nothing herein shall be construed to create an
      employer-employee relationship between the Company and Consultant.
      Consultant is an independent contractor and not an employee of the Company
      or any of its subsidiaries or affiliates. The consideration set forth in
      Section 2 shall be the sole consideration due Consultant for the services
      rendered hereunder. It is understood that the Company will not withhold
      any amounts for payment of taxes from the compensation of Consultant
      hereunder. Consultant will not represent to be or hold himself out as an
      employee of the Company.  The parties hereto acknowledge that
      Consultant is a licensed and practicing attorney-at-law, currently
      practicing with the law firm Russ & Russ P.C. Notwithstanding anything
      to the contrary contained in this Agreement, Consultant shall in no way be
      prohibited, restricted or otherwise limited from practicing law or
      otherwise providing legal services of any kind or nature to any person or
      entity, whether directly or indirectly through any firm or
      organization.

            
	 	 
	
              3.

            	
              Confidentiality.  In
      the course of performing the Consulting Services, the parties recognize
      that Consultant may come in contact with or become familiar with
      information which the Company or its subsidiaries or affiliates may
      consider confidential. This information may include, but is not limited
      to, information pertaining to the Company’s business and technology
      systems, which information may be of value to a competitor. Consultant
      agrees to keep all such information confidential and not to discuss or
      divulge it to anyone other than appropriate Company personnel or their
      designees.

            
	 	 
	
              4.

            	
              Term.
      This Agreement shall commence on April 2, 2008 and shall terminate on
      April 1, 2012 (the “Term”).

            
	 	 
	
              5.

            	
              Company
      Contract Default.  In the event that the Company fails to
      perform any obligations or otherwise breaches any agreement under the
      terms of that certain Unsecured Convertible Promissory Note, issued by the
      Company and dated as of the date hereof (the “Note”), and such failure or
      breach constitutes an “event of default” (as such term is defined in the
      Note) under such Note, then in any such case, Consultant shall have the
      right, exercisable by delivery of written notice thereof to the Company in
      accordance with Section 7 of this Agreement, to immediately terminate this
      Agreement and all of his obligations hereunder without liability of any
      kind.  In addition, in the event this Agreement is terminated by
      Consultant prior to the end of the Term pursuant to this Section 6, then
      notwithstanding such termination, the Company shall immediately pay to
      Consultant an amount equal to the full amount of compensation that
      Consultant would have received under this Agreement for the remaining Term
      hereof had this Agreement not been so terminated.

            
	 	 
	
              6.

            	
              Notice.  Any
      notice or communication permitted or required by this Agreement shall be
      deemed effective when personally delivered or deposited, postage prepaid,
      in the first class mail of the United States properly addressed to the
      appropriate party at the address set forth below or delivered via
      facsimile to the appropriate party at the facsimile number set forth below
      (so long as delivery of such facsimile to the correct facsimile number is
      evidenced by electronic
confirmation).

            

    

     

    Notices
to Consultant:

     

    Jay
Edmond Russ

    Facsimile:
(516) 541-1077

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Notices
to the Company:

     

    Visual
Management Systems, Inc.

    1000
Industrial Way North Suite C

    Toms
River, NJ 08755

     

    
      	
              7.

            	
              Miscellaneous.

            
	 	 
	 
      	
              7.1.

            	
              Entire
      Agreement and Amendments.  This Agreement constitutes the entire
      agreement of the parties with regard to the subject matter hereof, and
      replaces and supersedes all other agreements or understandings, whether
      written or oral. No amendment or extension of the Agreement shall be
      binding unless in writing and signed by both parties.

            
	 	 	 
	 
      	
              7.2.

            	
              Binding
      Effect, Assignment.  This Agreement shall be binding upon and
      shall inure to the benefit of Consultant and the Company and to their
      respective successors and assigns.  Nothing in this Agreement
      shall be construed to permit the assignment by either party hereto of
      either of the respective parties rights or obligations hereunder, and any
      such assignment is expressly prohibited without the prior written consent
      of the other party hereto.  Any attempted or purported
      assignment in violation of this Section 8.2 shall be void and of no force
      or effect.

            
	 	 	 
	 
      	
              7.3.

            	
              Governing
      Law, Severability.  This Agreement shall be governed by the laws
      of the State of New York, without regard to the conflicts of laws
      principles thereof. The invalidity or unenforceability of any provision of
      the Agreement shall not affect the validity or enforceability of any other
      provision.

            

    

     

     

    [Signature
page follows]

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

     

    IN
WITNESS WHEREOF, the parties hereto have set their hands this 2nd day of
April, 2008.

    

    Visual
Management Systems, Inc.

    

    

    

    

    By:

    _____________________________________________

    Jason
Gonzalez, Chief Executive Officer

    

    

    

    

    

    

    _____________________________________________

    Jay
Edmond Russ, Consultant

     

     

     

     

    4ex10-15.htm

    
      

    

    EXHIBIT 10.15

     

    OPERATING
AGREEMENT

    OF

    IDS
PATENT HOLDING, LLC

     

    This
Operating Agreement (“Agreement”), effective this
2nd
day of April, 2008, is among IDS Patent Holding, LLC, a New York limited
liability company (the “Company”), and the Members of
the Company set forth on Schedule 2.3.

     

    
      	
              SECTION
      1

            	
              DEFINITIONS

            

    

     

    
      	 
      	
              Unless
      defined elsewhere in this Agreement, capitalized terms used in this
      Agreement will have the meanings ascribed to them in the attached Appendix
      A.

            

    

     

    
      	
              SECTION
      2

            	
              COMPANY

            

    

     

    
      	 
      	
              2.1

            	
              Organization.  The
      Company was organized as a New York limited liability company pursuant to
      the Act on March 6, 2008.

            
	 	 	 
	 
      	
              2.2

            	
              Name of the
      Company.  The name of the  Company heretofore formed
      is IDS Patent Holding, LLC.  The Company may do business under
      that name and under any other name or names which the Managing Member
      selects.  If the Company does business under a name other than
      that set forth in its Articles of Organization, then the Company shall
      file a certificate with the Department of State of the State of New York
      as required by the Act.

            
	 	 	 
	 
      	
              2.3

            	
              Company
      Information.  Schedule 2.3
      sets forth the following Company information:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              the
      name of each Member;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              the
      number of Units owned by each Member;

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              each
      Member’s contribution to the Company, together with the date and value of
      the contribution;

            
	 	 	 	 
	 
      	 
      	
              (d)

            	
              the
      value of each Member’s capital account;

            
	 	 	 	 
	 
      	 
      	
              (e)

            	
              the
      address or other contact information of the Company and each
      Member;

            
	 	 	 	 
	 
      	 
      	
              (f)

            	
              the
      Tax Matters Member of the Company; and

            
	 	 	 	 
	 
      	 
      	
              (g)

            	
              the
      name of each officer of the Company, if
any.

            

    

     

    
      
        
        

      

      
        1 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              2.4

            	
              Amendment.  The
      Company will promptly amend and restate Schedule 2.3 to
      account for any changes in the information set forth on Schedule 2.3
      resulting from matters that occur in accordance with the Act, the Articles
      of Organization, and this Agreement.  Upon an amendment, the
      Company will promptly deliver to each Member a copy of the amended and
      restated Schedule
      2.3.

            

    

     

    
      	
              SECTION
      3

            	
              PURPOSES
      AND POWERS

            

    

     

    
      	 
      	
              3.1

            	
              Purposes.  The
      Company has been organized to own all rights in and to certain United
      States patent applications (the “Patent Applications”) filed by Member,
      Intelligent Digital Systems, LLC (“IDS”), to process appeals therefore, to
      pursue such patent rights, and to hold and commercially exploit any
      patents granted thereon, by threatening, commencing, prosecuting and
      settling litigation to enforce those patents, if granted, to recover
      damages for infringement, if granted, and to pursue, negotiate and settle
      claims for license fees for use of patented technologies, if granted, to
      maintain such patents, and other acts related to the ownership, use and
      sale of such patent rights, if granted, all to the extent deemed advisable
      by the Managing Member. The Patent Applications are identified on attached
      Exhibit
      A.

            
	 	 	 
	 
      	
              3.2

            	
              Duties.  The
      Company shall utilize the knowledge, experience, expertise, and know how
      of the Members, their advice and consultation, and their managerial,
      operational and financial resources, so that the Company performs its
      obligations and discharges its duties as stated herein.

            
	 	 	 
	 
      	
              3.3

            	
              Good
      Faith.  The Members acknowledge that the terms and
      conditions of each and every specific role of the Members within the
      Company may not have been fully set forth herein. The Members agree to act
      cooperatively and in good faith to supplement their understanding as to
      their specific roles within the Company so that the objectives and purpose
      set forth herein are accomplished.

            
	 	 	 
	 
      	
              3.4

            	
              Costs.  The
      Managing Member shall have the right to cause the Company to incur such
      costs as it determines are appropriate to pursue the purposes set forth in
      Section 3.1 and the Members shall contribute to such costs as
      provided in Section 6 below.

            
	 	 	 
	 
      	
              3.5

            	
              Limitation.  The
      Company will not conduct or promote any other business.

            
	 	 	 
	 
      	
              3.6

            	
              Powers.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              Unless
      the Articles of Organization provide otherwise, the duration of the
      Company will be perpetual, subject to termination as set forth in Section
      17;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              Unless
      the Articles of Organization provide otherwise, and subject to the Act,
      the Company may have and exercise all powers and do every other act not
      inconsistent with law, which is necessary, convenient or incidental to
      promote and effect any and all of the purposes for which the Company is
      organized.

            

    

     

    
      
        
        

      

      
        2 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    SECTION
4                           OFFICE
AND AGENT

     

    
      	 
      	
              4.1

            	
              Registered
      Office.  The Company must continuously maintain in the
      State of New York a registered office, which shall be such place as the
      Managing Member shall designate and which may be, but need not be, the
      same as any of its places of business.

            
	 	 	 
	 
      	
              4.2

            	
              Registered
      Agent.  The Company must continuously maintain in the
      State of New York a registered agent, which registered agent shall be such
      agent as the Managing Member shall designate and which must
      be:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              an
      individual who resides in the State of New York and whose business office
      is identical to the registered office, or

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              a
      domestic limited liability company, a domestic corporation or a domestic
      professional corporation whose business office is identical to the
      registered office.

            

    

     

    
      	
              SECTION
      5

            	
              MANAGEMENT
      AND MANAGEMENT RIGHTS OF MEMBERS

            

    

     

    
      
        
          	 
      	
                  5.1

                	
                  Management.

                

        

      

    

     

    (a)                 Managing
Member.  The Company is a Member-managed limited liability
company. The Company shall be managed by Member IDS, which is and shall be its
Managing Member.  The Managing Member shall have full, exclusive, and
complete discretion, power and authority, subject in all cases to the other
provisions of this Agreement  and the requirements of applicable law,
to manage, control, administer, and operate the business and affairs of the
Company for the purposes herein stated, and to make all decisions affecting such
business and affairs, including, without limitation, for Company purposes, the
power to:

     

    (i)           
enter into agreements and contracts and give receipts, releases, and
discharges;

     

    (ii)           purchase
liability and other insurance to protect the Company’s properties and
business;

     

    (iii)          execute
any and all other instruments and documents which may be necessary or in the
opinion of the Managing Member desirable to carry out the intent and purpose of
this Agreement;

     

    
      
        
        

      

      
        3 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    (iv)         
make any and all expenditures which the Managing Member, in its sole discretion,
deems necessary or appropriate in connection with the management of the affairs
of the Company and the carrying out of its obligations and responsibilities
under this Agreement, including, without limitation, all legal, accounting and
other related expenses incurred in connection with the organization and
operation of the Company, except that if the expenditures for any given calendar
year exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate, Member
VMS shall have the right to exert veto authority over all additional
expenditures for the remainder of said given calendar year.  Upon the
expenditure in the aggregate of $100,000 by the Company in a given year, the
Managing Member must submit in writing all additional planned expenditures to
Member VMS at least 10 days prior to payment of the expense; and

     

    (v)           enter
into any kind of activity necessary to, in connection with, or incidental to,
the accomplishment of the purposes of the Company.

     

    (b)               
Limitation on
Authority of Members.  No Member is an agent of the Company
solely by virtue of being a Member, and no Member has authority to act for the
Company solely by virtue of being a Member.  This Section 5.1(b)
supersedes any authority granted to the Members pursuant to Section 401 of the
Act.  Any Member who takes any action or binds the Company in
violation of this Section 5.1(b) shall be solely responsible for any loss and
expense incurred by the Company as a result of the unauthorized action and shall
indemnify and hold the Company and the other Member harmless with respect to the
loss or expense.  Notwithstanding the foregoing, Member, Visual
Management Systems Inc. (“VMS”) shall not have a management right, but shall
have the right to approve any transaction between the Company and the Managing
Member or an affiliate thereof, including the payment of salary or distributions
of income, or compensation of any kind to the Managing Member or an affiliate
thereof, except for (i) distributions to the Members made pursuant to and in
accordance with Section 10 hereof and (ii) loans to the Company on commercially
reasonable terms, of less than $50,000.00 in the aggregate when summed with all
other loans from the Managing Member to the Company, in any given calendar
year.

     

    
      	 
      	
              5.2

            	
              Member
      Proxy.  A Member may appoint a proxy to vote or otherwise
      act for the Member by signing an appointment instrument, either personally
      or by the Member’s attorney-in-fact.

            
	 	 	 
	 
      	
              5.3

            	
              Member Duties and Standards of
      Conduct.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              Each
      Member’s duty of loyalty to the Company and the other Member includes the
      following:

            
	 	 	 	 
	 
      	 
      	 
      	
              (1)

            	
              to
      account to the Company and hold for it any property, profit, or benefit
      derived by the Member in the conduct and winding up of the Company’s
      business or derived from a use by the Member of Company property,
      including the appropriation of a Company opportunity;
  and

            

    

     

    
      
        
        

      

      
        4 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	 
      	
              (2)

            	
              except
      as provided in Section 5.3(d)
      and Section
      5.3(e), to refrain from dealing with the Company in a manner
      adverse to the Company and to refrain from representing a person with an
      interest adverse to the Company, in the conduct or winding up of the
      Company’s business; and

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (3)

            	
              to
      refrain from competing with the Company in the conduct of the business of
      the Company before the dissolution of the Company.

            
	 	 	 	 	 
	 
      	 
      	
              (b)

            	
              Each
      Member’s duty of care to the Company and the other Members in the conduct
      and winding up of the business of the Company also includes refraining
      from grossly negligent or reckless conduct, intentional misconduct, or a
      violation of applicable regulation or law.

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              Each
      Member will discharge the duties to the Company and the other Members
      under the Act or under this Agreement and exercise any rights consistent
      with the obligation of good faith and fair dealing.

            
	 	 	 	 
	 
      	 
      	
              (d)

            	
              A
      Member does not violate a duty or obligation under the Act or under this
      Agreement merely because the Member’s conduct furthers the Member’s own
      interest.

            
	 	 	 	 
	 
      	 
      	
              (e)

            	
              A
      Member may lend money to or transact other business with the Company,
      provided that any loan or transaction between the Member and the Company
      must be:

            
	 	 	 	 
	 
      	 
      	 
      	
              (1)

            	
              fair
      to the Company;

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (2)

            	
              authorized
      by this Agreement; or

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (3)

            	
              authorized
      or ratified by the Managing Member after full disclosure of all material
      facts.

            
	 	 	 	 	 
	 
      	 
      	
              (f)

            	
              Loans
      and other transactions between the Company and a Member are binding on the
      parties in the same manner as transactions between the Company and persons
      who are not Members, subject to other applicable law.

            
	 	 	 	 
	 
      	 
      	
              (g)

            	
              Member
      IDS is owned by Jay Edmond Russ, Esq. (“Russ”).  Russ is, or may
      in the future become, a member of the Board of Directors of Member
      VMS.  Russ is, or may in the future become, a compensated
      consultant to Member VMS.  The parties hereto acknowledge and
      agree that Member IDS may act as Managing Member of the Company, without
      limitation, notwithstanding these positions and any others, which Russ may
      now, or hereafter, hold with Member VMS, or otherwise.  In the
      event Russ is or becomes a member of the Board of Directors of Member VMS,
      Russ may vote as a member of such Board of Directors of Member VMS on any
      and all matters affecting VMS, the Company, or both, without limitation
      and Member VMS hereby waives any conflict of interest, actual or
      perceived, in relation thereto, and in relation to the purpose of the
      Company.

            

    

    
    

     

    
      
        
        

      

      
        5 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
              5.4

            	
              Limitation of Liability and
      Indemnification.

            
	 	 
	 
      	 
      	
              (a)

            	
              The
      Managing Member shall not be liable, responsible, or accountable, in
      damages or otherwise, to any Member or to the Company for any act or
      omission performed by it within the scope of the authority conferred by
      this Agreement, except for acts or omissions not in good faith or which
      involve intentional misconduct or a knowing violation of applicable
      regulation or law or any transaction from which the Member derives an
      improper personal benefit.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              The
      Company will indemnify the Managing Member for any act or omission
      performed by it within the scope of the authority conferred by this
      Agreement, except for acts or omissions not in good faith or which involve
      gross recklessness, intentional misconduct or a knowing violation of
      applicable regulation or law or any transaction from which the Member
      derives an improper personal benefit.

            
	 	 	 	 
	
              5.5

            	
              Liability of
      Members.  The debts, obligations, and liabilities of the
      Company, whether arising in contract, tort, or otherwise, are solely the
      debts, obligations, and liabilities of the Company.  A Member is
      not and shall not be personally liable for a debt, obligation, or
      liability of the Company solely by reason of being or acting as a
      Member.

            

    

     

    
      	
              SECTION
      6

            	
              CONTRIBUTIONS

            

    

     

    
      	 
      	
              6.1

            	
              Contributions.  The
      Members each acknowledge and agree that the funding for the business
      activities of the Company as set forth in Section 6.3(b) below shall be
      borne by the Members, based upon each member’s pro rata ownership of
      Units.  The contributions of a Member to the Company may consist
      of cash, property, services rendered, or a promissory note or other
      obligation to contribute cash or to perform services, each as acceptable
      to the Managing Member.

            
	 	 	 
	 
      	
              6.2

            	
              Liability for
      Contributions.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              A
      promise by a Member to contribute to the Company is not enforceable unless
      it is set out in writing and signed by the Member.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              The
      obligation of a Member to make a contribution may be compromised only by
      consent of both Members.

            

    

     

    
      
        
        

      

      
        6 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              6.3

            	
              Contributions.  Contemporaneously
      with the execution and delivery of this Agreement, each Member will
      contribute to the Company the contribution of the Member set forth on
      Schedule
      2.3 (the “Initial Contribution”) as of the date of this
      Agreement.  From time to time after the date hereof, the
      Managing Member may make requests for additional contributions by the
      Members hereunder (each such request, a “Capital Call”), and each Member
      hereby agrees that it shall within thirty (30) days contribute its share
      of any Capital Call to the Company, based upon each Member’s pro rata
      ownership of Units; provided, that under no
      circumstances shall a Member be required to make any contribution in
      response to a Capital Call hereunder unless:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              The
      amount of such contribution in respect of such Capital Call, together with
      the amounts of all prior contributions made by such Member hereunder,
      including the Initial Contribution and any additional contributions made
      pursuant to prior Capital Calls hereunder, does not exceed $250,000 in the
      aggregate; and

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              The
      contributions in respect of any such Capital Call are to be used only for
      the purposes of either (i) prosecution of the Patent Applications,
      including (without limitation) the preparation and filing of any
      applications, amendments, supplemental materials, appeals or similar
      activities in connection with the pursuit of any and all patent rights
      thereunder, (ii) commercially exploiting any patents granted on the Patent
      Applications, if any, or (iii) preserving, maintaining or protecting any
      patents granted on the Patent Applications, if any, including (without
      limitation) by threatening, commencing, prosecuting and settling
      litigation to enforce or prevent or seek damages in respect of the
      infringement of those patents, if granted, or to pursue, negotiate and
      settle claims for license fees for use of patented technologies, if
      granted.

            
	 	 	 	 
	 
      	
              6.4

            	
              No Interest on
      Contributions.  A Member shall not be paid any interest
      on any contribution.

            
	 	 	 
	 
      	
              6.5

            	
              Return of
      Contributions.  Except as otherwise provided in this
      Agreement, a Member shall not have the right to receive any return of any
      contribution.  If a Member is entitled to receive a return of a
      contribution, the Company may distribute cash, property or a combination
      thereof to the Member in return of the contribution at the discretion of
      the Managing Member, and pursuant to any relevant terms of this
      Agreement.

            
	 	 	 
	 
      	
              6.6

            	
              Failure to Make
      Contributions.  If any Member shall fail to make timely
      payment in full of any required additional capital contribution pursuant
      to Section 6.3 (a “Funding Default”), the defaulting Member
      shall have five (5) days in which to cure such Funding
      Default.  If, after such five (5) days, the defaulting Member
      has not cured such Funding Default, the non-defaulting Member shall have
      the following rights, as applicable, in each case exercisable by giving
      written notice to the defaulting Member in accordance with Section
      19.4:

            

    

     

    
      
        
        

      

      
        7 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	
              (a)

            	
              in
      the case of a Funding Default by a Member other than the Managing Member,
      the Managing Member shall have the right to cause such defaulting Member
      to sell all of the Units that such defaulting Member then owns to the
      Managing Member for an amount equal to the Buy-out Amount (as defined
      below).  Within five (5) days following receipt by the
      defaulting Member of a notice from the Managing Member pursuant to this
      Section 6.6, the defaulting Member shall sell, transfer, assign, convey
      and deliver to the Managing Member all of its right, title and interests
      in the Units of such defaulting Member (the “Forced Sale Units”), free and
      clear of all liens.  Simultaneously with the sale, transfer,
      assignment, conveyance and delivery by the defaulting Member of the Forced
      Sale Units to the Managing Member, the Managing Member shall deliver or
      cause to be delivered to the defaulting Member the Buy-out Amount.
      Thereafter, the defaulting Member shall cease to be a Member for any and
      all purposes under this Agreement.  For purposes of this
      Agreement, the term “Buy-out Amount” shall mean, the amount that
      represents, at the election of such defaulting Member, either (i) the
      defaulting Member’s then-current Capital Account balance, which amount
      will be payable by the Managing Member in the form of a non-interest
      bearing, subordinated promissory note, which note shall be due and payable
      on the five (5) year anniversary of the date of its issuance, or (ii)
      fifty percent (50%) of the defaulting Member’s then-current Capital
      Account balance, which amount will be paid in cash.  If such
      defaulting Member fails to make an election by written notice to the
      Managing Member with respect to its Buy-out Amount hereunder within five
      (5) days following receipt by such defaulting Member of the notice from
      the Managing Member pursuant to this Section 6.6(a), then such defaulting
      Member shall be deemed to have elected payment in accordance with Section
      6.6(a)(i) above.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              in
      the case of a Funding Default by the Managing Member, the non-defaulting
      Member shall have the right to cause the Managing Member to purchase all
      of the Units that such non-defaulting Member then owns for an amount equal
      to such non-defaulting Member’s then-current Capital Account balance,
      which amount will be payable by the Managing Member in
      cash.  Within five (5) days following receipt by the Managing
      Member of a notice from the non-defaulting Member pursuant to this Section
      6.6, the non-defaulting Member shall sell, transfer, assign, convey and
      deliver to the Managing Member all of its right, title and interests in
      the Units of such non-defaulting Member (the “Forced Purchase Units”),
      free and clear of all liens.  Simultaneously with the sale,
      transfer, assignment, conveyance and delivery by the non-defaulting Member
      of the Forced Purchase Units to the Managing Member, the Managing Member
      shall deliver or cause to be delivered to the non-defaulting Member the
      cash in an amount equal to such non-defaulting Member’s then-current
      Capital Account balance.  Thereafter, the non-defaulting Member
      shall cease to be a Member for any and all purposes under this
      Agreement.

            

    

     

    
      
        
        

      

      
        8 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

    
    

     

    
      	
              SECTION
      7

            	
              CAPITAL
      ACCOUNTS

            

    

     

    
      	 
      	
              7.1

            	
              Capital
      Accounts.  The Company will maintain a separate Capital
      Account for each Member.

            
	 	 	 
	 
      	
              7.2

            	
              Section 704(c)
      Considerations.  In cases where IRC § 704(c) and
      Treas Reg § 1.704-3 apply to Company property, the Members’
      Capital Accounts will be adjusted in accordance with
      Treas Reg § 1.704-1(b)(2)(iv)(g) for allocations to them of
      income, gain, loss, and deduction, including depreciation, depletion,
      amortization, or other cost recovery as computed for book purposes, with
      respect to the property.

            
	 	 	 
	 
      	
              7.3

            	
              Revaluations of
      Property

            
	 	 	 
	 
      	 
      	
              (a)

            	
              Subject to Section
      7.3(c),
      the Managing Member may increase or decrease the Capital Accounts
      of the Members to reflect a revaluation of Company property, including
      intangible assets such as goodwill on the Company’s books upon the
      occurrence of any of the following events:

            
	 	 	 	 
	 
      	 
      	 
      	
              (1)

            	
              a
      contribution of money or other property to the Company by a Member as
      consideration for Units; or

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (2)

            	
              a
      distribution of Company property by the Company to a Member as
      consideration for Units.

            
	 	 	 	 	 
	 
      	 
      	
              (b)

            	
              Subject
      to Section
      7.3(c), the Managing Member will increase
      or decrease the Capital Accounts of the Members to reflect a revaluation
      of Company property including intangible assets such as goodwill on the
      Company’s books upon the liquidation of the Company.

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              Adjustments
      to Capital Accounts under this Section 7.3
      may be made only if:

            
	 	 	 	 
	 
      	 
      	 
      	
              (1)

            	
              the
      adjustments are based on the fair market value of Company property taking
      IRC § 7701(g) into account on the date of adjustment;

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (2)

            	
              the
      adjustments reflect the manner in which the unrealized income, gain, loss,
      or deduction inherent in such property that has not been reflected in the
      Capital Accounts previously would be allocated among the Members if there
      were a taxable disposition of such property for such fair market value on
      that date;

            

    

     

    
      
        
        

      

      
        9 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	 
      	
              (3)

            	
              the
      Members’ Capital Accounts are adjusted in accordance with
      Treas Reg § 1.704-1(b)(2)(iv)(g) for allocations to them of
      depreciation, depletion, amortization, and gain or loss, as computed for
      book purposes, with respect to such property; and

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (4)

            	
              the
      Members’ distributive shares of depreciation, depletion, amortization, and
      gain or loss, as computed for tax purposes, with respect to such property
      will be determined so as to take account of the variation between the
      adjusted tax basis and book value of such property in the same manner as
      under IRC § 704(c) and
      Treas Reg § 1.704-1(b)(4)(i).

            
	 	 	 	 	 
	 
      	
              7.4

            	
              Section 754
      Elections.  Upon adjustment to the adjusted tax basis of
      Company property under IRC § 732, IRC § 734, or IRC § 743, the Capital
      Accounts of the Members will be adjusted as provided in
      Treas Reg § 1.704-1(b)(2)(iv)(m).

            
	 	 	 
	 
      	
              7.5

            	
              Negative Capital Account
      Balances  No Member will have the obligation to
      contribute to the Company any amount in respect of such Member’s negative
      Capital Account balance.

            

    

     

    
      	
              SECTION
      8

            	
              ALLOCATION
      OF PROFITS AND LOSSES

            

    

     

    
      	 
      	
              8.1

            	
              Allocation of Profits and
      Losses  After giving effect to the allocation provisions
      set forth on Schedule 8.1,
      Profits and Losses will be allocated to the Members based upon each
      Members Unit ownership percentage, which shall be determined by dividing
      the number of Units owned by such Member by the total number of Units
      owned by all Members.

            
	 	 	 
	 
      	
              8.2

            	
              Distributions In
      Kind  The Profits or Losses attributable to any asset in
      kind that is distributed to one or more Members:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              will
      be determined as if the asset had been sold at its fair market value
      before the dissolution and winding up of the Company;
  and

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              will
      be allocated as provided in Section 8.1.

            

    

     

    
      	
              SECTION
      9

            	
              ACCOUNTING,
      TAXES, AND BANKING

            

    

     

    
      	 
      	
              9.1

            	
              Books of
      Account   The Company will keep complete and
      accurate books of account and records in a manner sufficient to effect and
      carry out this Agreement.  The books of account and records will
      be kept in accordance with sound accounting practices consistently
      applied.

            
	 	 	 
	 
      	
              9.2

            	
              Taxable
      Year.  The Company will have a taxable year ending on
      December 31.

            

    

     

    
      
        
        

      

      
        10 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              9.3

            	
              Bank
      Accounts.  All Company funds will be deposited in one or
      more bank accounts in the Company’s name.  The Managing Member
      will determine the banks, the types of accounts, and the individuals who
      have authority with respect to the accounts and the funds
      therein.  Company funds will not be commingled with the funds of
      any Member.

            
	 	 	 
	 
      	
              9.4

            	
              Tax
      Returns.  The Company will cause to be prepared all
      federal, state, and local income tax returns for the
      Company.  Within ninety (90) days after the end of a taxable
      year, the Company will deliver to each Member:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              any
      financial statements of the Company for the taxable year, which may be
      unaudited;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              a
      statement showing the share of Company income, gain, loss, credit, and
      deduction for income tax purposes allocated to each Member for the taxable
      year; and

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              any
      other information concerning the Company that the Member may require to
      complete the Member’s federal, state, and local income tax
      returns.

            
	 	 	 	 
	 
      	
              9.5

            	
              Reporting.  Each
      Member will report the Member’s share of Company income, gain, loss,
      credit, and deduction for income tax purposes in a manner consistent with
      this Agreement.

            
	 	 	 
	 
      	
              9.6

            	
              Tax Matters
      Member.  The Company will have a Tax Matters Member who
      will have all of the powers and obligations of a “tax matters member”
      under IRC § 6231(a)(7).  The Tax Matters Member shall be the
      Managing Member.

            
	 	 	 
	 
      	
              9.7

            	
              Tax
      Elections.  The Tax Matters Members will make all of the
      Company’s tax elections permitted under the Internal Revenue Code,
      including but not limited to elections under IRC §
  754.

            

    

     

    
      	
              SECTION
      10

            	
              DISTRIBUTIONS

            

    

     

    
      	 
      	
              10.1

            	
              Allocation of Interim
      Distributions.  Any distributions of cash or other assets
      of the Company before the dissolution and winding up of the Company will
      be allocated to the Members based on each Member’s pro rata ownership of
      Units, except as set forth in Section
      8.1.

            
	 	 	 
	 
      	
              10.2

            	
              Right to
      Distributions.  A Member is entitled to receive
      distributions from the Company before the dissolution and winding up of
      the Company to the extent and at the times the Managing Member determines,
      based upon each Member’s pro rata ownership of
  Units.

            

    

     

    
      
        
        

      

      
        11 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	
              SECTION
      11

            	
              WITHDRAWAL

            

    

     

    
      	 
      	
              11.1

            	
              Withdrawal.  A
      Member may voluntarily withdraw from the Company upon not less than twenty
      (20) days prior written notice to the Company and the other
      Member.  If such a notice is provided, the Member receiving the
      notice may waive any portion or all of the twenty (20) days, thereby
      causing the Member providing the notice to withdraw on an earlier
      date.  A notice of withdrawal may not be amended or
      revoked.  Upon the effectiveness of the withdrawal of a Member
      pursuant to this Section 11.1, all Units owned by such withdrawn Member
      shall be immediately cancelled and will no longer be outstanding, and the
      withdrawn Member shall no longer have any rights hereunder, including
      (without limitation) any right to return of any of its contributions
      hereunder.

            
	 	 	 
	 
      	
              11.2

            	
              No
      Expulsion.  A Member may not be expelled from the Company
      but the following acts or omissions by a Member, including the Managing
      Member, shall entitle the other Member to treat such act or omission as a
      Funding Default hereunder subject in all respects to the terms of Section
      6.6 hereof and/or to hold the Member responsible and liable for damages
      and other remedies in an arbitration proceeding in accordance with Section 11.3,
      for such acts or omissions:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              the
      Member has willfully or persistently committed a material breach of the
      Articles of Organization or this Agreement or otherwise breached a duty
      owed to the Company or another Member (including but not limited to
      violation of the Transfer, Non-competition, or Non-disclosure Provisions
      hereof).

            
	 	 	 	 
	 
      	
              11.3

            	
              Arbitration.  Except
      as set forth in Section 6.6 or 19.18, any disagreement, claim or dispute
      between the Members, shall be resolved by binding
      arbitration.  The arbitration hereunder shall be before one
      arbitrator in New York County, New York, selected in accordance with
      procedures established by JAMS Endispute.  Judgment on the award
      may be entered in any court having jurisdiction.  Each Member
      shall be responsible for its own fees related to any
      arbitration.  The Members intend that the arbitration be an
      expedited forum and, therefore, waive pre-arbitration discovery,
      depositions, document production and the like, except if, in the opinion
      of the arbitrator, same may be completed within ten (10)
      days.  Each Member may be present at all proceedings and may be
      represented by counsel, who shall have the right to participate, make
      argument and cross-examine witnesses.  There shall be a full
      record of the proceedings.  The arbitrator shall render a
      decision in writing with findings of fact and conclusions of
      law.

            

    

     

    
      	
              SECTION
      12

            	
              DISSOLUTION

            

    

     

    
      	 
      	
              12.1

            	
              Dissolution.  The
      Company will be dissolved and its affairs will be wound up upon the
      earliest to occur of any of the following Dissolution
    Events:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              upon
      reaching the time for dissolution, if any, specified in the Articles of
      Organization;

            

    

     

    
      
        
        

      

      
        12 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	
              (b)

            	
              by
      the consent of the Members;

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              at
      such time as the Company has no Members; or

            
	 	 	 	 
	 
      	 
      	
              (d)

            	
              upon
      entry of a decree of judicial dissolution under the
Act.

            
	 	 	 	 
	 
      	
              12.2

            	
              Distribution.  Upon
      the winding up of the Company, the assets of the Company will be
      distributed, and applied by the Company in the following
      priority:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              to
      the extent permitted by law, to creditors, including Members and former
      Members who are creditors, in satisfaction of liabilities of the
      Company;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              with
      respect to non-cash assets of the Company, to the Managing Member;
      and

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              after
      giving effect to the allocation and other provisions under Section 8.1,
      all other assets of the Company to the Members based upon their respective
      pro rata ownership of Units.

            
	 	 	 	 
	 
      	
              12.3

            	
              Winding
      Up.  Upon dissolution, the Company will continue its
      existence, but may not carry on any business, except that which is
      appropriate to wind up and liquidate its business and affairs. The Member
      who has not wrongfully dissolved the Company may wind up the Company’s
      affairs, including:

            
	 	 	 
	 
      	 
      	 
      	
              (1)

            	
              collecting
      its assets;

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (2)

            	
              disposing
      of its properties that will not be distributed in kind to the
      Members;

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (3)

            	
              discharging
      or making provision for discharging its liabilities;

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (4)

            	
              distributing
      its remaining property among the Members in accordance with Section 12.2;
      and

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (5)

            	
              doing
      every other act necessary to wind up and liquidate its business and
      affairs.

            

    

     

    
      	
              SECTION
      13

            	
              RECORDS
      AND REPORTS

            

    

     

    
      	 
      	
              13.1

            	
              Company
      Records.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              The
      Company will keep at its principal office or registered office the
      following:

            
	 	 	 	 
	 
      	 
      	 
      	
              (1)

            	
              a
      current list of the full name and last-known business, residence, or
      mailing address of each Member;

            

    

     

    
      
        
        

      

      
        13 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	 
      	
              (2)

            	
              a
      copy of the Articles of Organization and all amendments to the Articles of
      Organization, together with executed copies of any powers of attorney
      pursuant to which any amendment has been executed;

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (3)

            	
              copies
      of the Company's federal, state, and local income tax returns and reports,
      if any, for the three most recent years; and

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (4)

            	
              a
      copy of this Agreement and all restated operating agreements, copies of
      any writings permitted or required under the Act, and copies of any
      financial statements of the Company for the three most recent
      years.

            
	 	 	 	 	 
	 
      	 
      	
              (b)

            	
              Any
      of the foregoing Company records are subject to inspection and copying by
      any Member at such Member’s reasonable request and at such Member’s
      expense during ordinary business hours.

            
	 	 	 	 
	 
      	
              13.2

            	
              Scope of Inspection
      Right.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              A
      Member’s agent or attorney has the same inspection and copying rights as
      the Member.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              The
      right to copy records includes, if reasonable, the right to receive copies
      made by photographic, xerographic, or other
  means.

            

    

     

    
      	
              SECTION
      14

            	
              OFFICERS

            

    

     

    
      	 
      	
              14.1

            	
              Officers.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              The
      Company may have any officers or assistant officers designated by the
      Managing Member.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              The
      same individual may simultaneously hold more than one office in the
      Company.

            
	 	 	 	 
	 
      	
              14.2

            	
              Duties.  Each
      officer has the authority and will perform the duties set forth in this
      Agreement or, to the extent consistent with this Agreement, the duties
      prescribed by the Managing Member or by direction of an officer authorized
      by the Managing Member to prescribe the duties of other
      officers.

            
	 	 	 
	 
      	
              14.3

            	
              Designation and
      Removal.  An officer:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              must
      be designated, appointed, elected, removed, or replaced by vote, approval,
      or consent of the Managing Member; and

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              holds
      office until a successor has been appointed and qualified, unless the
      officer sooner resigns or is
removed.

            

    

     

    
      
        
        

      

      
        14 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              14.4

            	
              President. The Managing
      Member may designate a President.  If designated, the President
      will supervise, direct, manage and administer the business and affairs of
      the Company as directed by the Managing Member.

            
	 	 	 
	 
      	
              14.5

            	
              Treasurer.  The
      Managing Member may designate a Treasurer.  If designated, the
      Treasurer will:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              have
      general charge of and be responsible for all funds of the
      Company;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              receive
      and give receipts for monies due and payable to the Company from any
      source and deposit the monies in the name of the Company in banks, trust
      companies, or other depositories selected by the Managing Member or an
      authorized officer; and

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              perform
      all duties commonly incident to the office of Treasurer and other duties
      prescribed by the Managing Member or an authorized
  officer.

            
	 	 	 	 
	 
      	
              14.6

            	
              Secretary.  The
      Managing Member may designate a Secretary.  If designated, the
      Secretary will.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              prepare
      minutes of the Members’ and Managing Member’s meetings and authenticate
      records of the Company;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              ensure
      that all notices by the Company under the Act, the Articles of
      Organization, or this Agreement are given;

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              keep
      and maintain the records of the Company specified in Section 13.1(a); and

            
	 	 	 	 
	 
      	 
      	
              (d)

            	
              perform
      all duties commonly incident to the office of Secretary and other duties
      prescribed by the Managing Member or an authorized
  officer.

            

    

     

    
      	
              SECTION
      15

            	
              REPRESENTATIONS,
      WARRANTIES, AND COVENANTS OF
MEMBERS

            

    

     

    
      	 
      	
              Each
      Member represents, warrants, and covenants to the other Member as
      follows:

            
	 	 
	 
      	
              15.1

            	
              Status. Member is duly
      organized and validly existing under the laws of the state specified under
      the Member’s name on Schedule 2.1.

            
	 	 	 
	 
      	
              15.2

            	
              Authority.  Member
      has full power and authority to sign and deliver this Agreement and to
      perform all of Member’s obligations under this
  Agreement.

            
	 	 	 
	 
      	
              15.3

            	
              Binding
      Obligation.  This Agreement is the legal, valid, and
      binding obligation of Member, enforceable against Member in accordance
      with its terms, except as enforceability may be limited by bankruptcy,
      insolvency, or other similar laws of general application or by general
      principles of equity.

            

    

     

    
      
        
        

      

      
        15 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              15.4

            	
              No
      Conflicts.  The signing and delivery of this Agreement by
      Member and the performance by Member of all of Member’s obligations under
      this Agreement will not:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              conflict
      with Member’s articles of incorporation, bylaws, articles of organization,
      operating agreement, certificate of limited partnership, partnership
      agreement, trust agreement, or other similar organizational documents, if
      any;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              breach
      any agreement to which Member is a party, or give any person the right to
      accelerate any obligation of Member;

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              violate
      any law, judgment, or order to which Member is subject;
  or

            
	 	 	 	 
	 
      	 
      	
              (d)

            	
              require
      the consent, authorization, or approval of any person, including but not
      limited to any governmental body.

            
	 	 	 	 
	 
      	
              15.5

            	
              Speculative
      Investment.  Member understands that:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              Acquiring
      or purchasing the Units is a speculative investment and involves a high
      degree of risk of loss of Member’s investment; and.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              Member
      may be unable to liquidate Member’s investment in the Units because the
      Units are subject to substantial transfer restrictions in that Units may
      only be sold or transferred to the other Member, and because no public
      market exists for the Units.

            
	 	 	 	 
	 
      	
              15.6

            	
              Sophistication.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              Member
      has the knowledge and experience in technological, financial and business
      matters necessary to make Member capable of evaluating the merits and
      risks of an investment in the Units.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              Member
      has had the opportunity to ask questions and receive answers concerning
      the Company and the terms and conditions of the purchase of the Units, and
      to obtain any additional information deemed necessary by Member to
      evaluate the merits and risks of an investment in the
      Units.  Member has obtained all of the information desired in
      connection with the purchase of the
Units.

            

    

     

    
      
        
        

      

      
        16 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              15.7

            	
              Investment
      Intent.

            
	 	 	 
	 
      	 
      	
              (a)

            	
              Member
      is acquiring the Units solely for Member’s own account, for investment,
      and not with a view to or for resale in connection with any distribution
      of the Units.

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              Member
      has no oral or written agreement or plan to sell or transfer or otherwise
      dispose of the Units.

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              Member
      understands that Member must bear the economic risk of owning the Units
      for an indefinite period of time.

            
	 	 	 	 
	 
      	
              15.8

            	
              No
      Registration.  Member understands that the Units have not
      been registered under the Securities Act of 1933, as amended (the
      “Securities Act”), or any state securities laws and that the Company is
      not obligated to register the Units.

            
	 
      	 
      	 
      	 
      
	 
      	
              15.9

            	
              Release and
      Indemnification.  Member understands that the Company is
      relying on Member’s representations, warranties, and covenants in this
      Agreement to issue the Units pursuant to one or more exemptions from the
      registration and qualification requirements of the Securities Act and
      applicable state securities laws.  Member releases and will
      defend and indemnify the Company and the other Member and authorized
      representative of the Company and other Member, from and against any and
      all claims, actions, proceedings, damages, liabilities, and expenses of
      every kind, whether known or unknown, including but not limited to
      reasonable attorney’s fees, resulting from or arising out of a breach by
      Member of any representation, warranty, or covenant in this Section
      15.

            

    

     

    SECTION
16                         ADDITIONAL
PROVISIONS

     

    
      	 
      	
              The
      following provisions are incorporated by reference into this
      Agreement:

            
	 	 	 	 
	 
      	 
      	
              (a)

            	
              Definitions;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              the
      Transfer Provisions attached as Appendix
      B;

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              the
      Non-competition Provisions attached as Appendix C;
      and

            
	 	 	 	 
	 
      	 
      	
              (d)

            	
              the
      Non-disclosure Provisions attached as Appendix
      D.

            

    

     

    
      	
              SECTION
      17

            	
              TERMINATION

            

    

     

    
      	 
      	
              17.1

            	
              Agreement.  This
      Agreement will terminate (which will not relieve the Members from,
      thereafter, complying with the Non-competition Provisions, Non-disclosure
      Provisions, Dissolution matters and remedies of the Members) upon the
      earliest to occur of the following:

            

    

     

    
      
        
        

      

      
        17 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	
              (a)

            	
              upon
      the written agreement of the Members; or

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              upon
      the merger of the Company with another business entity, if the Company is
      not the surviving business entity; or

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              upon
      the conversion of the Company into another business entity;
    or

            
	 	 	 	 
	 
      	 
      	
              (d)

            	
              as
      set forth in Section 11.2;
      or

            
	 	 	 	 
	 
      	 
      	
              (e)

            	
              the
      Bankruptcy of the Company.

            

    

     

    
      	
              SECTION
      18

            	
              EQUITABLE
      RELIEF

            

    

     

    
      	 	

              The
      parties acknowledge that the remedies available at law for any breach of
      this Agreement will, by their nature, be
      inadequate.  Accordingly, each party may obtain injunctive
      relief or other equitable relief to restrain a breach or threatened breach
      of this Agreement or to specifically enforce this Agreement, without
      proving that any monetary damages have been
  sustained.

            

    

     

    
      	
              SECTION
      19

            	
              GENERAL

            

    

     

    
      	 
      	
              19.1

            	
              No
      Assignment.  Except as specifically set forth herein, a
      Member may neither assign nor delegate any of the Member’s rights or
      obligations under this Agreement to any person or entity, and any
      attempted or purported assignment in violation of this provision shall be
      void and of no effect.  An assignment includes but is not
      limited to a transfer or encumbrance or series of transfers or
      encumbrances of fifty (50%) percent or more of the Units or other
      ownership interests of a Member, regardless of whether the transfer or
      encumbrance occurs voluntarily or involuntarily, by operation of law, or
      because of any act or occurrence.

            
	 	 	 
	 
      	
              19.2

            	
              Binding
      Effect.  This Agreement will be binding on the Members
      and their respective representatives and successors.

            
	 	 	 
	 
      	
              19.3

            	
              Amendment.  This
      Agreement may be amended only by a written agreement signed by the
      Members, except that the Company may amend Schedule 2.3 in
      accordance with Section 2.4
      without the consent of the other parties.

            
	 	 	 
	 
      	
              19.4

            	
              Notices.  All
      notices or other communications required or permitted by this
      Agreement:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              must
      be in writing;

            

    

     

    
      
        
        

      

      
        18 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	
              (b)

            	
              must
      be delivered to the Members at the addresses or facsimile numbers set
      forth on Schedule 2.3,
      or any other address or contact information that a Member may designate by
      notice to the other Members; and

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              are
      considered delivered:

            
	 	 	 	 
	 
      	 
      	 
      	
              (1)

            	
              upon
      actual receipt if delivered personally or by facsimile, e-mail, or an
      overnight delivery service; and

            
	 	 	 	 	 
	 
      	 
      	 
      	
              (2)

            	
              at
      the end of the third business day after the date of deposit in the United
      States mail, postage pre-paid, certified, return receipt
      requested.

            
	 	 	 	 	 
	 
      	
              19.5

            	
              Waiver.  No
      waiver will be binding on a Member unless it is in writing and signed by
      the Member making the waiver.  A Member’s waiver of a breach of
      a provision of this Agreement will not be a waiver of any other provision
      or a waiver of a subsequent breach of the same
  provision.

            
	 	 	 
	 
      	
              19.6

            	
              Severability.  If
      a provision of this Agreement is determined to be unenforceable in any
      respect, the enforceability of the provision in any other respect and of
      the remaining provisions of this Agreement will not be
      impaired.

            
	 	 	 
	 
      	
              19.7

            	
              Further
      Assurances.  The Members will sign other documents and
      take other actions reasonably necessary to further effect and evidence
      this Agreement.

            
	 	 	 
	 
      	
              19.8

            	
              No Third-Party
      Beneficiaries.  The Members do not intend to, and do not,
      confer any right or remedy on any third party.

            
	 	 	 
	 
      	
              19.9

            	
              Termination.  The
      termination of this Agreement, regardless of how it occurs, will not
      relieve a party of obligations that have accrued before the
      termination.

            
	 	 	 
	 
      	
              19.10

            	
              Survival.  All
      provisions of this Agreement that would reasonably be expected to survive
      the termination of this Agreement will do so.

            
	 	 	 
	 
      	
              19.11

            	
              Attachments.  Any
      exhibits, schedules, and other attachments referenced in this Agreement
      are part of this Agreement.

            
	 	 	 
	 
      	
              19.12

            	
              Remedies.  The
      Members will have all remedies available to them at law or in
      equity.  All available remedies are cumulative and may be
      exercised singularly or concurrently.

            
	 	 	 
	 
      	
              19.13

            	
              Governing
      Law.  This Agreement and all rights, benefits and
      privileges hereunder are governed by the laws of the State of New York
      without giving effect to any conflict-of-law principle of any
      jurisdiction.

            

    

     

    
      
        
        

      

      
        19 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              19.14

            	
              Venue.  Any
      action or proceeding arising out of this Agreement will be litigated in
      courts located in New York or Nassau County, New York.  Each
      party consents and submits to the jurisdiction of any local, state, or
      federal court located in New York or Nassau County, New
    York.

            
	 	 	 
	 
      	
              19.15

            	
              Attorney’s
      Fees.  Each Member shall be responsible for its own
      attorney’s and other fees related to any arbitration or
      litigation.

            
	 	 	 
	 
      	
              19.16

            	
              Entire
      Agreement.  This Agreement contains the entire
      understanding of the Members regarding the subject matter of this
      Agreement and supersedes all prior and contemporaneous negotiations and
      agreements, whether written or oral, between the parties with respect to
      the subject matter of this Agreement.

            
	 	 	 
	 
      	
              19.17

            	
              Signatures.  This
      Agreement may be signed in counterparts.  A fax transmission of
      a signature page will be considered an original signature
      page.  At the request of a Member, the other Member will confirm
      a fax-transmitted signature page by delivering an original signature page
      to the requesting Member.

            
	 	 	 
	 
      	
              19.18

            	
              Member VMS Contract
      Default.  In the event that Member VMS fails to perform
      any obligation or otherwise breaches any agreement under the terms of
      either (a) that certain Unsecured Convertible Promissory Note issued by
      Member VMS to Member IDS, dated as of the date hereof (the “Note”), (b)
      that certain Consulting Agreement between Member VMS and Jay Russ, dated
      as of the date hereof (the “Consulting Agreement), or (c) that certain
      Exclusive Patent and Trade Secret License Agreement, by and between Member
      VMS and the Company, dated as of the date hereof (the “License Agreement,”
      and together with the Note and the Consulting Agreement, the “IDS
      Agreements”), and in the case of (a) above, such failure constitutes an
      “event of default” (as such term is defined in the Note) under such Note,
      then in any such case, Member VMS shall be deemed to have committed a
      Funding Default under Section 6.6 of this Agreement and, thereafter,
      Member IDS shall be entitled to all remedies available to it under this
      Agreement for such Funding Default.

            

    

     

     

     

    [Signature
pages to follow]

    
      
        
        

      

      
        20 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              Company:

               

              IDS
      Patent Holding, LLC, by

               

              Intelligent
      Digital Systems, LLC, its Managing Member, by

               

               

              ___________________________________

              Jay
      Edmond Russ, Esq., Managing Member

               

            

    

    

    
      	 
      	
              Members:

            

    

    

    
      	 
      	
              Intelligent
      Digital Systems, LLC, by

               

              ___________________________________

              Jay
      Edmond Russ, Esq., Managing Member

            

    

    

    

    

    
      	 
      	
              Visual
      Management Systems, Inc., by

               

              ______________________________

              Jason
      Gonzalez, President

            

    

    

     

    
      
        
        

      

      
        21 -
OPERATING AGREEMENT

        
          

        

      

      
        
        

      

    

     

    APPENDIX
A

     

    Definitions

     

    “Act” means the New York
Limited Liability Company Act, as amended from time to time.

     

    “Articles of Organization”
means the document described in the Act for the purpose of forming the Company,
including articles of organization as they may be amended or restated, articles
of conversion, and articles of merger.

     

    “Bankruptcy” means, with
respect to a person:

     

    
      	 
      	
              (a)

            	
              assignment
      by the person for the benefit of creditors;

            
	 	 	 
	 
      	
              (b)

            	
              commencement
      of a voluntary bankruptcy case by the person;

            
	 	 	 
	 
      	
              (c)

            	
              adjudication
      of the person as bankrupt or insolvent;

            
	 	 	 
	 
      	
              (d)

            	
              filing
      by the person of a petition or answer seeking for the person any
      reorganization, arrangement, composition, readjustment, liquidation,
      dissolution, or similar relief under any statute, law, or
      rule;

            
	 	 	 
	 
      	
              (e)

            	
              filing
      by the person of an answer or other pleading admitting or failing to
      contest the material allegations of a petition filed against the person in
      any proceeding of this nature;

            
	 	 	 
	 
      	
              (f)

            	
              seeking,
      consenting to, or acquiescing in the appointment of a trustee, receiver,
      or liquidator of the person or of all or any substantial part of the
      person’s properties;

            
	 	 	 
	 
      	
              (g)

            	
              commencement
      of an involuntary bankruptcy case against the person that has not been
      dismissed on or before the 120th
      day after the commencement of the case; or

            
	 	 	 
	 
      	
              (h)

            	
              appointment,
      without the person’s consent, of a trustee, receiver, or liquidator either
      of the person or of all or any substantial part of the person’s properties
      that is not:

            
	 	 	 
	 
      	 
      	
              (1)

            	
              vacated
      or stayed on or before the 90th
      day after appointment; or

            
	 	 	 	 
	 
      	 
      	
              (2)

            	
              vacated
      on or before the 90th
      day after expiration of a stay.

            

    

     

    “Capital Account” means a
capital account to be maintained in accordance with
Treas Reg § 1.704-1(b)(2)(iv).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Member” means a person with an
ownership interest in the Company and all of the rights and obligations of a
Member specified in the Act, the Articles of Organization, and this Agreement,
including the Member’s share of Profits and Losses, the right to receive
distributions of the Company’s assets, and any right to vote or participate in
management.

     

    “Profit” and “Loss” means for each taxable
year of the Company or other period for which profits and losses must be
computed the Company’s taxable income or loss determined in accordance with IRC
§ 703(a), with the following adjustments:

     

    
      	 
      	
              (i)

            	
              all
      items of income, gain, loss, deduction, or credit required to be stated
      separately under IRC § 703(a)(1) will be included;

            
	 	 	 
	 
      	
              (j)

            	
              any
      tax-exempt income of the Company not otherwise taken into account in this
      definition will be included;

            
	 	 	 
	 
      	
              (k)

            	
              any
      expenditures of the Company under IRC § 705(a)(2)(B) or treated as such
      under Treas Reg § 1.704-1(b)(2)(iv)(i) not otherwise taken
      into account in this definition will be excluded;

            
	 	 	 
	 
      	
              (l)

            	
              gain
      or loss resulting from any taxable disposition of property will be
      computed by reference to the adjusted book value of the property disposed
      of, notwithstanding the fact that the adjusted book value of the property
      differs from the adjusted basis of the property for federal income tax
      purposes;

            
	 	 	 
	 
      	
              (m)

            	
              in
      lieu of the depreciation, amortization, or cost recovery deductions
      allowable in computing taxable income or loss, there will be taken into
      account the depreciation or amortization computed for book purposes;
      and

            
	 	 	 
	 
      	
              (n)

            	
              any
      items which are allocated under Schedule
      8.1
      will not be taken into account.

            

    

     

    “Transfer” means any transfer,
including but not limited to any sale, exchange, gift, encumbrance, foreclosure
of an encumbrance, or attachment.

     

    “Units” means units that
evidence an ownership interest in the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
B

     

    Transfer
Provisions

     

    SECTION
20                         DEFINITIONS

     

    Unless
defined elsewhere in this Agreement, capitalized terms used in these Transfer
Provisions will have the meanings ascribed to them in Appendix
A.

     

    SECTION
21                         RESTRICTION
ON TRANSFER

     

    
      	 
      	
              21.1

            	
              Restriction.  No
      Transfer of Units may be made unless the Transfer is expressly permitted
      by this Agreement.

            
	 	 	 
	 
      	
              21.2

            	
              Securities
      Laws.  No offer or Transfer of Units may be made unless
      pursuant to an effective registration statement filed under the Securities
      Act and applicable state securities laws, or unless the Company receives
      an opinion of counsel, in form and from counsel satisfactory to the
      Company, that the offer or Transfer is exempt from the registration
      requirements of the Securities Act and applicable state securities
      laws.

            
	 	 	 
	 
      	
              21.3

            	
              Prohibited
      Transfers.  Any Transfer of Units that is not expressly
      permitted by this Agreement will be null and void and have no force or
      effect.

            
	 	 	 
	 
      	
              21.4

            	
              Indemnification.  Each
      Member will defend and indemnify the Company and the other Member from any
      and all claims, actions, proceedings, damages, liabilities, and expenses
      of every kind, whether known or unknown, including but not limited to
      reasonable attorney’s fees, resulting from or arising out of any attempted
      or purported Transfer of Units by the Member that is not expressly
      permitted by this Agreement.

            

    

     

    SECTION
22                         PERMITTED
TRANSFERS

     

    A Member
may Transfer Units only with the prior written consent of all other Members.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
C

     

    Non-competition
Provisions

     

    SECTION
23                         DEFINITIONS

     

    
      	 
      	
              For
      purposes of these Non-competition Provisions, the following terms have the
      following meanings:

            
	 	 
	 
      	
              “Restricted Period” means
      with respect to a Member the period beginning on the date of this
      Agreement and ending after the earlier to occur of the
      following:

            
	 	 
	 
      	 
      	
              (a)

            	
              the
      Member ceases being a party to this Agreement; and

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              this
      Agreement terminates.

            
	 	 	 	 
	 
      	
              “Restrictions” means the
      restrictions set forth in Section
      20, Section
      21, and Section
      22 of these
      Non-competition Provisions.

            

    

     

    SECTION
24                         NON-COMPETITION

     

    
      	 
      	
              During
      a Member’s Restricted Period, the Member will not advise, invest in, own,
      manage, operate, control, be employed by, provide services to, lend the
      Member’s name to, or otherwise assist any person or entity that competes
      with the Company.

            

    

    

    SECTION
25                         NON-SOLICITATION

     

    
      	 
      	
              25.1

            	
              Employees.  During
      a Member’s Restricted Period, except as expressly contemplated in this
      Agreement or as expressly authorized by all Members, the Member will
      not:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              solicit
      any employee of the Company or the other Member to become an employee or
      independent contractor of the Member or any other person;
    or

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              suggest
      to an employee of the Company or the other Member that the employee should
      reduce or terminate the employee’s relationship with the Company or other
      Member.

            
	 	 	 	 
	 
      	
              25.2

            	
              Business
      Relations.  During a Member’s Restricted Period, the
      Member will not suggest to a business relation of the Company or the other
      Member that the business relation should reduce or terminate the business
      relation’s business or relationship with the Company or other
      Member.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
26                         NO
HIRE

     

    
      	 
      	
              During
      a Member’s Restricted Period, except as expressly contemplated by this
      Agreement or as expressly authorized by all Members, the Member will not,
      for the Member, or on behalf of any person or entity, hire as an employee
      or engage as an independent contractor any person who was an employee of
      the Company or the other Member at any time during the Member’s Restricted
      Period.

            

    

     

    SECTION
27                         RESTRICTIONS

     

    
      	 
      	
              27.1

            	
              Reasonableness.  Each
      Member acknowledges and agrees that each Restriction is reasonable in
      scope and that the Restrictions afford a fair protection to the interests
      of the Company and the other Member.

            
	 	 	 
	 
      	
              27.2

            	
              Enforceability.  The
      parties intend that each Restriction be enforceable to the fullest extent
      permitted by law.  If a Restriction is determined to be
      unenforceable to any extent, the Restriction will automatically be amended
      to the extent necessary to make it enforceable.

            
	 	 	 
	 
      	
              27.3

            	
              Breach.  If a
      Member breaches a Restriction, the Member’s Restricted Period for all
      Restrictions will be extended by the duration of the
    breach.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     APPENDIX
D

     

    Non-disclosure
Provisions

     

    SECTION
28                         DEFINITIONS

     

    
      	 
      	
              For
      purposes of these Non-disclosure Provisions, the following terms have the
      following meanings:

            
	 
      	 
      	 
      	 
      
	 
      	
              “Confidential
      Information” means all information related to the Company or its
      business that is disclosed to a Member, including but not limited to
      business models, financial and technical information, trade secrets,
      know-how, ideas, designs, drawings, specifications, techniques, programs,
      systems, processes, and computer software.

            
	 	 
	 
      	
              “Representatives” means
      directors, officers, managers, employees, subcontractors, agents,
      consultants, advisors, and other authorized
    representatives.

            
	 	 
	 
      	
              “Restricted Period” means
      with respect to a Member the period beginning on the date of this
      Agreement and ending after the earlier to occur of the
      following:

            
	 	 
	 
      	 
      	
              (a)

            	
              the
      Member ceases being a party to this Agreement; and

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              this
      Agreement terminates.

            

    

     

    SECTION
29                         OBLIGATIONS
OF MEMBERS

     

    
      	 
      	
              29.1

            	
              Use Restrictions and
      Nondisclosure Obligations.  During a Member’s Restricted
      Period:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              the
      Member will not use Confidential Information for any purpose without the
      Company’s specific prior written authorization, except the Member may use
      Confidential Information to promote and effect the purposes of the
      Company;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              the
      Member will not disclose Confidential Information to any person without
      the Company’s specific prior written authorization, except the Member may
      disclose Confidential Information on a need-to-know basis, to
      Representatives of the Member who are informed by the Member of the
      confidential nature of the Confidential Information and the obligations of
      the Member under these Non-disclosure Provisions and each Member will
      cause the Member’s Representatives to comply with the provisions of this
      Section
      24.

            
	 	 	 	 
	 
      	
              29.2

            	
              Notification and Assistance
      Obligations.  During a Member’s Restricted Period, the
      Member will: 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	
              (a)

            	
              promptly
      notify the Company of any unauthorized use or disclosure of Confidential
      Information, or any other breach of these Non-disclosure Provisions;
      and

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              assist
      the Company in every reasonable way to retrieve any Confidential
      Information that was used or disclosed by the Member or the Member’s
      Representatives without the Company’s specific prior written authorization
      and to mitigate the harm caused by the unauthorized use or
      disclosure.

            
	 	 	 	 
	 
      	
              29.3

            	
              Exceptions.  A
      Member will not breach Section 24.1
      or Section 24.2
      of these Non-disclosure Provisions by using or disclosing Confidential
      Information if the Member demonstrates that the information used or
      disclosed:

            
	 	 	 
	 
      	 
      	
              (a)

            	
              is
      generally available to the public other than as a result of a disclosure
      by the Member or a Representative of the Member;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              was
      received by the Member from another person without any limitations on use
      or disclosure, but only if the Member had no reason to believe that the
      other person was prohibited from using or disclosing the information by a
      contractual or fiduciary obligation; or

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              was
      independently developed by the Member without using Confidential
      Information.

            
	 	 	 	 
	 
      	
              29.4

            	
              Return of Confidential
      Information.  Upon the Company’s request, each Member
      will promptly return to the Company all materials furnished by the Company
      containing Confidential Information, together with all copies and
      summaries of Confidential Information in the possession or under the
      control of the Member.

            

    

     

    SECTION
30                                NO
TRANSFER

     

    
      	 
      	
              These
      Non-disclosure Provisions do not transfer any ownership rights to any
      Confidential Information.

            

    

     

    SECTION
31                                NO
REPRESENTATIONS OR WARRANTIES

     

    
      	 
      	
              No
      party makes any representations or warranties, either express or implied,
      with respect to the accuracy or completeness of Confidential
      Information.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
2.3

     

    Company
Information as of April 2, 2008.

     

    
      	
               
      

            	
              (a)

            	
              Name
      of each Member:

            

    

     

    Intelligent
Digital Systems, LLC

     

    Visual
Management Systems, Inc.

     

    

     

    
      	
               
      

            	
              (b)

            	
              Number
      of Units owned by each Member:

            

    

     

    
      	
              Member

            	
              Units

            
	 	 
	
              Intelligent
      Digital Systems, LLC

            	
              50
      Units

            
	 	 
	
              Visual
      Management Systems, Inc.

            	
              50
      Units

            

    

    

     

    
      	
               
      

            	
              (c)

            	
              Each
      Member’s contribution to the Company, together with the date and value of
      the contribution:

            

    

     

    
      	
              Member

            	
              Contributions

            	
              Date of

              Contribution

            	
              Value

            
	 	 	 	 
	
              Intelligent
      Digital Systems, LLC

            	
              U.S.
      Patent Applications,

              Serial
      Numbers 10/145,058

              and
      10/279,279

            	
              4/2/08

            	
              $5,000*

            
	 	 	 	 
	
              Visual
      Management Systems, Inc.

            	
              Cash

            	
              4/2/08

            	
              $5,000

            

    

     

     

    
      
        

        
          *
Represents the agreed value of certain assets contributed pursuant to that
certain Asset Purchase Agreement, dated as of April 2, 2008, by and among
Intelligent Digital Systems, LLC, Visual Management Systems, Inc. and the IDS
Patent Holding, LLC.

        

      

    

    
      
      

      
        
          

        

      

      
      

    

    
      	
               
      

            	
              (d)

            	
              Value
      of each Member’s capital account:

            

    

     

    
      	
              Member

            	
              Value
      of Capital Account

            
	 	 
	
              Intelligent
      Digital Systems, LLC

            	
              $5,000

            
	 	 
	
              Visual
      Management Systems, Inc.

            	
              $5,000

            

    

     

     

    
      	
               
      

            	
              (e)

            	
              Address
      or other notice information of the Company and each Member (for purposes
      of all notices hereunder):

            

    

     

    IDS
Patent Holding, LLC

    Facsimile:
(516) 541-1077

     

    Intelligent
Digital Systems, LLC

    Facsimile:
(516) 541-1077

     

    Visual
Management Systems, Inc.

    1000
Industrial Way North Suite C

    Toms
River, New Jersey  08755

     

    
      	
               
      

            	
              (f)

            	
              Tax
      Matters Member of the Company:

            

    

     

    Intelligent
Digital Systems, LLC

     

    
      	
               
      

            	
              (g)

            	
              Name
      of each officer of the Company:

            

    

     

    Jay Russ
- President

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
8.1

     

    Allocation
of Profits and Losses

     

    SECTION
1                                CONTRIBUTED
PROPERTY

     

    
      	 
      	
              To
      the extent permitted or required by IRC § 704(c) and the
      regulations thereunder, income, gain, loss, and deduction with respect to
      property contributed to the Company will be allocated among the Members so
      as to take account of the variation between the basis of the property to
      the Company and its fair market value at the time of
      contribution.  Allocations made under this Section
      1 are solely for tax purposes and will not affect any Member’s
      Capital Account, share of Profits and Losses, or the right to receive
      distributions of the Company’s
assets.

            

    

     

    
      	
              SECTION
      2

            	
              SECTION
      754 ELECTIONS

            

    

     

    
      	 
      	
              If
      the Capital Accounts of the Members are adjusted under Treas
      Reg § 1.704-1(b)(2)(iv)(m) because of an adjustment to the
      adjusted tax basis of Company property under IRC § 732, IRC § 734, or IRC
      § 743:

            
	 	 
	 
      	 
      	
              (a)

            	
              the
      amount of the adjustment to the Capital Accounts will be treated as an
      item of gain if the basis of the property increases;

            
	 	 	 	 
	 
      	 
      	
              (b)

            	
              the
      amount of the adjustment to the Capital Accounts will be treated as an
      item of loss if the basis of the property decreases;
and

            
	 	 	 	 
	 
      	 
      	
              (c)

            	
              the
      gain or loss will be allocated to the Members in a manner consistent with
      the manner in which their Capital Accounts are adjusted under Treas
      Reg § 1.704-1(b)(2)(iv)(m).

            

    

     

    
      	
              SECTION
      3

            	
              GUARANTEED
      PAYMENTS

            

    

     

    
      	 
      	
              To
      the extent that any compensation paid to a Member by the Company is
      determined by the Internal Revenue Service not to be a guaranteed payment
      under IRC § 707(c) or not to be a transaction between the Member and
      the Company under IRC § 707(a), the Member will be allocated income
      in an amount equal to the compensation payment and the Member’s Capital
      Account will be adjusted to treat the compensation payment as a
      distribution.

            

    

     

    
      	
              SECTION
      4

            	
              RECAPTURE

            

    

     

    
      	 
      	
              In
      making any allocation among the Members of income or gain from a sale or
      other disposition of a Company asset, the ordinary income portion, if any,
      of the income or gain resulting from the recapture of cost recovery or
      other deductions will be allocated among those Members who were previously
      allocated, or whose predecessors-in-interest were previously allocated,
      the cost recovery deductions or other deductions resulting in the
      recapture items, in proportion to the amount of the cost recovery
      deductions previously allocated to
them.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              SECTION
      5

            	
              WITHHOLDING

            

    

     

    
      	 
      	
              All
      amounts required to be withheld under IRC § 1446 or any other
      provision of applicable federal, state, or local tax law will be treated
      as amounts actually distributed to the affected
  Members.

            

    

     

    
      	
              SECTION
      6

            	
              OTHER
      ALLOCATIONS

            

    

     

    
      	 
      	
              If
      this Agreement does not provide for the allocation of any items of Company
      income, gain, loss, credit, or deduction among the Members the items will
      be allocated among the Members in the same proportions as they share
      profits.

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