Document:

REGISTRATION RIGHTS AGREEMENT (SERIES B)

REGISTRATION RIGHTS AGREEMENT (SERIES B)

 

REGISTRATION RIGHTS AGREEMENT

SERIES B

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of March 31, 2016, between REVOLUTIONARY CONCEPTS INC (REVO),  a Nevada corporation (the “Company”), and each of the Persons who are signatories hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers”).

 

This Agreement is made pursuant to the Securities Purchase Agreement (as defined herein).

 

The Company and each Purchaser hereby agrees as follows:

 

1. Definitions.  Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement.  As used in this Agreement, the following terms shall have the following meanings:

 

“Advice” shall have the meaning set forth in Section 6(c).

 

“Additional Dividends” shall have the meaning set forth in Section 6(a).

 

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

 

“Effectiveness Period” shall have the meaning set forth in Section 2(b).

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

“Purchase Agreement” means the Securities Purchase Agreement, dated as of the date hereof, among the Company and the initial Holders party hereto, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration Default” shall have the meaning set forth in Section 6(a).

 

“Registrable Securities” means, as of any date of determination:

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(a) the Underlying Shares with respect to the Preferred Stock;

 

(b) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however , that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as:

 

(i) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement,

 

(ii) such Registrable Securities have been previously sold in accordance with Rule 144, or 

 

(iii) such securities become eligible for resale without volume or manner-of-sale restrictions (provided the Company is current with the public information requirements as determined by the counsel to the Company as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company), as reasonably determined by the Company, upon the advice of counsel to the Company.

 

“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2 (Registration) or Section 6(d) (Piggyback Registrations), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

 

“Significant Holder” shall have the meaning set forth in Section 3(a).

 

“10-K Filing Date” shall have the meaning set forth in Section 2(a).

 

1. Registration. 

 

(a)  The Company shall, at its own cost, prepare and, not later than 45 days after (or if the 45th day is not a business day, the first business day thereafter) the date upon which the Company’s annual report on Form 10-K for the fiscal year ending April 10, 2017 is filed with the Commission (the “10-K Filing Date”), file with the Commission a Registration Statement covering the resale of the Registrable Securities by each Holder.

 

(b) The Registration Statement filed hereunder shall be on an appropriate form as determined by the Board of Directors.  Subject to the terms of this Agreement, the Company shall cause a Registration Statement filed hereunder to be declared effective under the Securities Act as promptly as possible after the filing thereof but in 

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no event later than the one (1) year anniversary of the Closing Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until the earlier of:

 

(i) the date on which all Registrable Securities covered by such Registration Statement may be resold without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 or any other rule of similar effect; 

 

(ii) the date on which all Registrable Securities covered by such Registration Statement have been sold pursuant to a Prospectus or Rule 144 or any other rule of similar effect; or 

 

(iii) as otherwise mutually agreed to between the parties hereto (the “Effectiveness Period”).  The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. New York City time on a Trading Day.  The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of such Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement.  The Company shall, by 9:30 a.m. New York City time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424.

 

2. Registration Procedures.  In connection with the Company’s registration obligations hereunder, the Company shall: 

 

(a) Not less than ten (10) Trading Days prior to the filing of such Registration Statement and not less than three (3) Trading Days prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall: 

 

(i) furnish to each Holder that has Registrable Securities constituting at least 35% of the aggregate Registrable Securities included in such Registration Statement (each, “ Significant Holder ”) copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Significant Holders, and 

 

(ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Significant Holder, to conduct a reasonable investigation within the meaning of the Securities Act.  The Company shall not file a Registration Statement or any amendments or supplements thereto to which the Significant Holders shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Significant Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Significant Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto.  Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex A (a “Selling Stockholder Questionnaire”) promptly after it has been requested by the Company, but in no event less than five (5) Trading Days prior to the filing date of the Registration Statement.

 

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities,  

 

(ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, 

 

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(iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Significant Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement ( provided that, the Company may excise any information contained therein which would constitute material non-public information as to any Significant Holder which has not executed a confidentiality agreement with respect thereto with the Company), and 

 

(iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

 

(c) Provide notice to the Holders whose Registrable Securities are to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of clause (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day: 

 

(i) (A) with respect to the Significant Holders and all other Holders whose Registrable Securities are to be sold in such registration, notice of when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; 

 

(B) with respect only to the Significant Holders, notice when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement; and

 

(C) with respect to the Significant Holders and all other Holders whose Registrable Securities are to be sold in such registration, notice of when the Registration Statement or any post-effective amendment thereto has become effective;

 

(ii) with respect only to the Significant Holders, notice of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; 

 

(iii) with respect to the Significant Holders and all other Holders whose Registrable Securities are to be sold in such registration, notice of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; 

 

(iv) with respect to the Significant Holders and all other Holders whose Registrable Securities are to be sold in such registration, notice of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; 

 

(v) with respect to the Significant Holders and all other Holders whose Registrable Securities are to be sold in such registration, notice of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein  

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or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

 

(vi) with respect to the Significant Holders and all other Holders whose Registrable Securities are to be sold in such registration, notice of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided that, any and all of such information shall remain confidential to each Holder until such information otherwise becomes public, unless disclosure by a Holder is required by law; provided, further , that notwithstanding each Holder’s agreement to keep such information confidential, each such Holder makes no acknowledgement that any such information is material, non-public information. 

 

(d) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of  

 

(i)   any order stopping or suspending the effectiveness of a Registration Statement, or 

 

(ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(e) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided , that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form. 

 

(f) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d). 

 

(g) The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company shall pay the filing fee required by such filing within two (2) Business Days of request therefore. 

 

(h) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided , that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction. 

 

(i) If requested by a Holder, the issuer must cooperate with such Holder to facilitate and coordinate with the Company’s transfer agent the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement (unless it falls under the Rules of Exemption under state and federal regulatory statues and SEC guidelines), which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable  

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Securities to be in such denominations and registered in such names as any such Holder may request and should be deemed an irrevocable transaction.

 

(j) Upon the occurrence of any event contemplated by Section 3(c) , as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(c) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus.  The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is reasonably practicable.  The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period. 

 

(k) Comply with all applicable rules and regulations of the Commission. 

 

(l) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. 

 

3. Registration Expenses.  All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement.  The fees and expenses referred to in the foregoing sentence shall include, without limitation,  

 

(i) all registration and filing fees (including, without limitation, reasonable fees and expenses of the Company’s counsel and independent registered public accountants)  

 

(A) with respect to filings made with the Commission, 

 

(B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, 

 

(C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and 

 

(D) with respect to any sales of Registrable Securities in an underwritten offering any filing fees payable to FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale, 

 

(ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities),  

 

(iii) fees and disbursements of counsel for the Company,  

 

(iv) Securities Act liability insurance, if the Company so desires such insurance, and  

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(v) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.  In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. 

 

5. Indemnification.

 

(a)  Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to: 

 

(1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, 

 

(2) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or 

 

(3) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that:

 

(i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or 

 

(ii) in the case of an occurrence of an event of the type specified in Section 3(c)(iii)-(vi) , the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(c) .  The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.

 

(b) Indemnification by Holders.  Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the  

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meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or relating to: (x) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act, (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or (z) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading:

 

(i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus or 

 

(ii) in the case of an occurrence of an event of the type specified in Section 3(c)(iii) - (vi) , the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(c) .  A Holder shall notify the Company promptly of the institution, thread or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Holder is aware.  In no event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

(c) Conduct of Indemnification Proceedings.  If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided , that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party. 

 

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless:  

 

(1)  the Indemnifying Party has agreed in writing to pay such fees and expenses, 

 

(2)  the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or 

 

(3)  the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any 

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Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

 

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is judicially determined not to be entitled to indemnification hereunder.

 

(d) Contribution.  If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 5 was available to such party in accordance with its terms. 

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

The indemnity and contribution agreements contained in this Section 5 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

 

6. Miscellaneous.

 

(a) Remedies.  

 

(i) Additional Dividends Under Certain Circumstances.  Additional dividends (the “Additional Dividends”) with respect to the Preferred Stock shall be assessed if the Registration Statement is not declared effective by the Commission on or prior to the one (1) year anniversary of the Closing Date as provided in Section 2(b) hereof (such event, a “Registration Default”). Additional Dividends shall accrue on the Preferred Stock over and above the dividend rate set forth in the title of the Securities from and including the date on which such Registration Default shall occur to but excluding the date on which such Registration Default has been cured. The rate of the Additional Dividends will be 1.00% per annum for the first 30-day period (or pro rata portion thereof) immediately following the occurrence of a Registration Default, and such rate will increase by an additional 1.00% per annum with respect to each subsequent 30-day period (or pro rata portion thereof) until such Registration  

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Default has been cured. Additional Dividends shall be paid on Dividend Payment Dates. Such Additional Dividends will be in addition to any other dividends payable from time to time with respect to the Preferred Stock.

 

(ii) In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement.  Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate. 

(a) Compliance.  Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement. 

 

(b) Discontinued Disposition.  .  By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c) (iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed.  The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.  The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 3(b). 

 

(c) Piggy-Back Registrations.  If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however , that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(d) that are eligible for resale pursuant to Rule 144 promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement. 

(d) Amendments and Waivers.  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of at least 85% of the then outstanding Registrable Securities (including, for this purpose any Registrable Securities issuable upon exercise or conversion of any Security issued and issuable under the Purchase Agreement).  If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement.  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however , that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(e) 

 

REVOPage 10 

 

 

(e) Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement. 

 

(f) Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder.  The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities.  Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.6 of the Purchase Agreement. 

 

(g) No Inconsistent Agreements.  Neither the Company nor any of its Subsidiary has entered, as of the date hereof, nor shall the Company or any of its Subsidiary, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.  Neither the Company nor any of its Subsidiary has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full. 

 

(h) Execution and Counterparts.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. 

 

(i) Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement. 

 

(j) Cumulative Remedies.  The remedies provided herein are cumulative and not exclusive of any other remedies provided by law. 

 

(k) Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 

 

(l) Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof. 

 

(m) Independent Nature of Holders’ Obligations and Rights.  The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder.  Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement.  Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. 

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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement effective as of the day, month and year first above written. 

 

COMPANY

REVOLUTIONARY CONCEPTS INC.

 

By: _________________________________

Ronald Carter

Its: President & CEO

 

PURCHASER

By: _________________________________

 

PURCHASER

By: _________________________________

 

PURCHASER

By: _________________________________

 

 

REVOPage 12OPERATING AGREEMENT

OPERATING AGREEMENT

 

Operating Agreement

of

R.I. TECHNOLOGY, LLC

 

This Operating Agreement of R.I. TECHNOLOGY, LLC (the "Company"), a limited liability company organized pursuant to the Georgia Limited Liability Company Act, is entered into by and among the Company and the persons executing this Agreement as Members.

 

Article I

 

FORMATION

 

1.1 Organization - The Members hereby organize the Company as a limited liability company pursuant to the provisions of the Act.

 

1.2 Agreement - For and in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members executing this Agreement hereby agree to the terms and conditions of this Agreement, as it may from time to time be amended. It is the express intention of the Members that the Articles and this Agreement shall be the sole source of agreement of the parties, and, except to the extent a provision of this Agreement expressly incorporates federal income tax rules by reference to sections of the Code or Regulations or is expressly prohibited or ineffective under the Act, this Agreement shall govern, even when inconsistent with, or different than, the provisions of the Act or any other law or rule. If any conflict appears between this Agreement and the Act, the provisions of the Act shall govern this Agreement. The Manager shall promptly resolve any such conflict adopting an amendment either to the appropriate provisions of the Articles, or to the appropriate provisions of this Agreement.

 

1.3 Name - The name of the Company is R.I. TECHNOLOGY, LLC and all business of the Company shall be conducted under that name or under any other name chosen by the Manager of the Company as trade names.

 

1.4 Term - The Company shall be dissolved and its affairs wound up in accordance with the Act and this Agreement on the twenty fifth (25th) anniversary of its organization, unless the term shall be extended by amendment to this Agreement and the Articles, or unless the Company shall be sooner dissolved and its affairs wound up in accordance with the Act or this Agreement.

 

1.5 Effective Date - This Agreement shall become effective upon its execution by the members.

 

1.6 Registered Agent and Office - The registered agent for service of process and the registered office shall be that Person and location reflected in the Articles or as otherwise filed in the office 

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of the Secretary of State. The Manager may, from time to time, change the registered agent or office through appropriate filings with the Secretary of State. In the event the registered agent ceases to act as such for any reason or the registered office shall change, the Manager shall promptly designate a replacement registered agent or file a notice of change of address, as the case may be. If the Manager shall fail to designate a replacement registered agent or change of address of the registered office, any Member may designate a replacement agent or file a notice of change of address.

 

1.7 Principal Office - The initial Principal Office of the Company shall be located at 101 Marietta Street, Suite 3100, Atlanta, Georgia 30303. The Manager shall have the right to change the Principal Office in their sole discretion to another location within or outside the State of Georgia.

 

ARTICLE II

 

NATURE OF BUSINESS

 

The Company may engage in any lawful business permitted by the Act and in all businesses incident or related thereto. The Company shall have the authority to do all things necessary or appropriate to accomplish its purpose and operate its business as described in this Article.

 

ARTICLE III

 

ACCOUNTING AND RECORDS

 

3.1 Records to be Maintained - The Company shall at all times maintain the following records at the Principal Office:

 

3.1.1. A current list of the full name and last known business address of each Member;

 

3.1.2. A copy of the Articles and all amendments thereto, together with executed copies of any powers of attorney pursuant to which the Articles or any amendment has been executed; and any other records that would enable a Member to determine the relative voting rights of the Members;

 

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

 

3.1.4. Copies of this Agreement, including all amendments thereto;

 

3.1.5. Any financial statements of the Company;

 

3.1.6. A writing or other data compilation from which information can be obtained through retrieval devises into reasonably usable form setting forth the following:

 

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3.1.6.1. the amount of cash and a description and statement of the agreed value of any other Property or services contributed by each Member and which each Member has agreed to contribute;

 

3.1.6.2. the times are which or events on the happening of which any additional Commitments are to be made;

 

3.1.6.3. any right of a Member to receive, or of the Company to make, Distributions to a Member which include a return of all or any part of the Member's Capital Contribution; and

 

3.1.6.4. any events upon the happening of which the Company is to be dissolved and its affairs wound up.

 

3.2 Reports to Members

 

3.2.1.The Manager shall provide reports at least annually to the Members other than Assignees at such time and in such manner as the Manager may determine reasonable.

 

3.2.2. The Manager shall provide all Members with any and all information required by the Code and the Act.

 

3.3 Accounts - The Manager shall maintain a record of Capital Account for each Member in accordance with Article IX.

 

ARTICLE IV

 

NAMES AND ADDRESSES OF MEMBERS

 

The sole Member is SOLOMON R.C. ALI.

 

ARTICLE V

 

RIGHTS AND DUTIES OF MEMBERS

 

5.1 Management Rights - All Members shall be entitled to vote on any matter submitted to a vote of the Members. The Interests of the Members shall be calculated in units ("Units") with each Unit being equivalent to a 1% Interest. Each Member shall be entitled to one vote per Unit on all matters, and the approval and consent of a Majority of the Members shall be required on all matters for which Members shall be entitled to vote.

 

5.2 No Personal Liability of Members and Manager - No Member or Manager shall be personally liable for the liabilities of the Company. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the Members or Manager for liabilities of the Company.

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5.3 Representations and Warranties - Each Member, and in the case of an Organization, the person(s) executing this Agreement on behalf of the Organization, hereby represents and warrants to the Company and each other Member that: (a) if that Member is an Organization, that it is duly organized, validly existing, and in good standing under the law of its state of organization and that it has full organizational power to execute and agree to the Company Agreement to perform its obligations hereunder; (b) that the Member is acquiring its Interest in the Company for the Member's own account as an investment and without an intent to distribute the Interest; (c) the Member acknowledges that the Interests have not been registered under the Securities Act of 1933 or any state securities laws, and may not be resold or transferred without appropriate registration or the availability of an exemption from such registration requirements.

 

5.4 Conflicts of Interest

 

5.4.1. A Member, including a Manager, shall be entitled to enter into a transaction that may be considered to be competitive with, or a business opportunity that may be beneficial to, the Company, it being expressly understood that some of the Members or Manager may enter into transactions that are similar to the transactions into which the Company may enter. Notwithstanding the foregoing, Members and Manager shall account to the Company and hold as trustee for it any property, profit, or benefit derived by the Member or Manager, as the case may be, without the consent of the other Members, in the conduct and winding up of the Company business or from a use or appropriation by the Member or Manager of Company property, including information developed exclusively for the Company and opportunities expressly offered to the Company.

 

5.4.2. A Member, including a Manager, does not violate a duty or obligation to the Company merely because the Member's conduct furthers the Member's own interest. A Member may lend money to and transact other business with the Company. The rights and obligations of a Member who lends money to or transacts business with the Company are the same as those of a Person who is not a Member, subject to applicable law. No transaction with the Company shall be voidable solely because a Member, including a Manager, has a direct or indirect interest in the transaction if either the transaction is fair to the Company, or the disinterested Manager or disinterested Members, in either case knowing the material facts of the transaction and the Member's interest, authorize, approve, or ratify the transaction.

 

5.4.3. A Member's or Manager's actions respecting any transaction that might involve a conflict of interest due to the interest of a Member or Manager therein shall be effective if the transaction receives the approval of a Majority of those Members or Manager who expressed approval or disapproval after disclosure to them of: (a) the existence and nature of the conflicting interest; and (b) all facts known to the disclosing Member or Manager respecting the subject matter of the transaction that an ordinarily prudent person would reasonably believe to be material to a judgment as to whether or not to proceed with the transaction.

 

REVOPage 4 

 

 

5.4.4. Except as expressly modified by the provisions of this Section 6.4, the provisions of the Act regarding conflicting interest transactions (O.C.G.A. §14-11-307) shall apply to the Company.

 

ARTICLE VI

 

MANAGEMENT

 

6.1 Designation of Management - The business and affairs of the Company shall be managed and directed by Solomon R.C. Ali.

 

6.2 Tenure - The Manager shall hold office until he or she resigns or is removed pursuant to Section 6.5 herein. The Manager shall be appointed by the affirmative vote of Members holding a Majority or Interests. If a vacancy exists either because the Members or the Manager have not filled a designated position or because of the resignation, removal, incompetency, disability or death of a Manager, then unless an election is held pursuant to Section 6.3.1 below, such vacancy may be filled by the Manager acting by majority vote.

 

6.4 Tenure - Except as provided above, the Manager shall hold office until his or her successor is elected and qualified as herein provided, or until such Manager's earlier resignation, removal or death, or until dissolution of the Company.

 

6.5 Removal and Resignation

 

6.5.1. Manager may be removed from office, with or without cause, by the affirmative vote of holders of a Majority of the Interests at a meeting called for such purposes and with respect to which the Notice states that the meeting has been called for such purpose. Any Manager may also be removed from office, with or without cause, by the affirmative vote of a Majority of the other Manager. In the event of a deadlock among the Manager (excluding the Manager or Manager whose removal is sought), the Manager shall call a special meeting of the Members for the purpose of deciding the issue of removal. Such meeting shall be called in accordance with the terms of this Section 7.5.

 

6.5.2 Manager may resign at any time by giving written notice to the other Manager of the Company. The resignation of a Manager shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of a Manager who is also a Member shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of a Member.

 

6.6 Authority of Manager to Bind the Company - The Members hereby agree that only the Manager shall have the authority to bind the Company. No Member who is not also a Manager shall take any action to bind the Company and hereby indemnifies the Company for any costs, losses, damages, claims or expenses (including attorneys' fees) incurred by the Company as a result of any unauthorized action of such Member.

REVOPage 5 

 

 

 

6.6.1. Manager shall have the power, on behalf of the Company, to do all things necessary or appropriate to carry on the business and affairs of the Company, including, without limitation, the following:

 

(a) the purchase, receipt, lease or other acquisition, use or otherwise dealing with any Property;

 

(b) the sale, conveyance, mortgage, pledge, encumbrance, lease, exchange or other disposition of any Property;

 

(c) the borrowing of money for any business purpose;

 

(d) the entering into of contracts, agreements and other documents relating to any of the powers, duties, rights or obligations set forth herein or otherwise authorized by law, including, without limitation, promissory notes, guarantees, security agreements, loan agreements, deeds to secure debt or mortgages, bonds, debentures, or other evidences of indebtedness;

 

(e) the lending of money for business purposes and the investment or reinvestment of Company funds in such businesses, financial institutions and otherwise as such Manager deem prudent or appropriate;

 

(f) the appointment of employees and agents of the Company, including accountants, investment bankers and attorneys, on such terms as the Manager deem in the best interest of the Company;

 

(g) the payment of compensation to any Members, employees and agents;

 

(h) the purchase of insurance on the life of any Member or employees for the benefit of the Company;

 

(i) the taking of such other action and the execution of such other documents related thereto as the Manager determine to be in the normal and ordinary course of the business of the Company or as may otherwise be deemed in the best interest of the Company.

 

6.6.2. Any document, contract, agreement, instrument, certificate, check, deposit or other writing may be executed in the name and on behalf of the Company by the Manager and shall be conclusively presumed to be duly authorized, validly executed and binding on behalf of the Company when so executed.

 

6.7 No Personal Liability - So long as the Manager, acting in accordance with his or her authority hereunder, believes in good faith that his or her actions on behalf of the Company are in the best interests of the Company, and has acted with the care an ordinarily prudent person in a like position would exercise under similar circumstances, no Manager shall be liable to the Company, its Members or its Manager for any action taken in managing the business or affairs of the Company. Any Manager shall be entitled to rely on information, opinions, reports or statements (including financial data) in accordance with Section 14-11-305 of the Act. 

REVOPage 6 

 

 

Furthermore, no Member or Manager shall have any personal liability to any third party for any obligation or liability of or any claim against the Company or for any acts or omissions of any other Member, Manager, agent or employee of the Company.

 

6.7.1. Manager of the Corporation may, however, be personally liable to the Company or its Members for monetary damages for breach of a duty of care or other duty as a Manager of the Company, if he: (i) appropriates, in violation of his or her duties, any business opportunity of the Company; (ii) acts or fails to act in knowing violation of the law; (iii) is liable for misconduct as set forth in Section §14-2-831 of the Georgia Business Corporation Code; or (iv) derived an improper personal benefit from any transaction. Neither the amendment or repeal of this provision, not the adoption of any provision of the Articles inconsistent with this provision, shall apply to or have any effect on the liability or alleged liability of any Manager of the Company for or with respect to any act or omission of such Manager occurring prior to such amendment, repeal or adoption of an inconsistent provision. If the Act is amended to authorize the further elimination or limitation of the liability of the Manager, then the liability of the Manager, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Act.

 

6.8 Limitations on the Authority of Manager - Notwithstanding the powers and authority of the Manager set forth herein, the Manager shall not have the authority, without the express approval of a Majority of the Members to:

 

6.8.1. amend this Agreement in any manner that would impair, decrease or adversely affect the interests of the Members (other than due to the admission of new or substitute Members);

 

6.8.2. take any action to dissolve the Company;

 

6.8.3. effect a merger, acquisition or consolidation of the Company with or into any other business entity;

 

6.8.4. sell, exchange, lease or otherwise transfer all or substantially all of the assets of the Company;

 

6.8.5. reduce or eliminate an obligation to make a Capital Contribution to the Company, or require any new or additional Capital Contributions from existing Members.

 

6.9 Compensation of Manager - Manager shall be entitled to compensation for his or her services as a Manager and to be reimbursed for all reasonable expenses incurred by such Manager in that capacity, in such amounts and on such terms as the Manager shall from time to time agree upon.

 

ARTICLE VII

 

MEETINGS

 

7.1 Meetings of Members

REVOPage 7 

 

 

 

7.1.1. There are no requirements for any meetings of Members.

 

7.1.2. A special meeting of Members may be called at any time by the Manager, or by a majority of the Members.

 

7.1.3. Notice of any special meeting of Members shall be given, except as otherwise provided herein, at least two (2) days prior to any such meeting. The Notice of special meeting shall set forth the purposes of the meeting. If the meeting is called for the purpose of taking action with respect to one or more of those matters set forth in Section 7.8, the Notice shall state the purposes of the meeting and shall be set at lease ten (10) days prior to the date of the proposed meeting. In addition, if the action to be taken at any annual or special meeting gives rise to the possible exercise of dissenters' rights pursuant to Section 14-11-1002 of the Act, the Notice shall so state and be accompanied by a copy of those provisions of the Act which deal with dissenters' rights.

 

7.1.4. A Member may waive Notice of any meeting, in writing, either before or after the date and time of the Meeting.

 

7.1.5. At any meeting of Members, the presence, in person or by proxy, of a Majority of Members shall constitute a quorum and, unless a higher vote is required by this Agreement, the affirmative vote of a Majority of the Members present at a meeting, in person or by proxy, shall be required to adopt, approve or confirm those matters voted upon at such meeting.

 

7.1.7. At a meeting, the Manager shall conduct the business of the meeting and record the actions taken in minutes that shall be kept and maintained with the books and records of the Company.

 

ARTICLE VIII

 

INDEMNIFICATION

 

8.1 Indemnification -- Action Other Than by Or in the Right of the Company - Under the circumstances prescribed in Sections 8.2 and 8.3 of this Agreement, the Company shall indemnify and hold harmless any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suite or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a Manager, Member, officer, employee or agent of the Company, or is or was serving at the request of the Company as a manager, director, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonable incurred by him in connection with such action, suit or proceeding if he acted in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nob contendere or its 

REVOPage 8 

 

 

equivalent, shall not, of itself, create a presumption that the Person did not act in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

 

8.2 Indemnification -- Action by or in the Right of the Company - Under the circumstances prescribed in Sections 8.3 and 8.4 of this Agreement, the Company shall indemnify and hold harmless any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact he is or was a Manager, Member, officer, employee or agent of the company, or was serving at the request of the Company as a director, manager, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Company, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

 

8.3 Defense Expenses -- To the extent that a Manager, Member, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 9.1 and 9.2 of this Agreement, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding as authorized by the Manager in the specific case upon receipt of an undertaking by or on behalf of the Manager, Member, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Company as authorized in this Agreement.

 

8.4 Determination -- Except as provided in Section 9.3 of this Agreement and except as may be ordered by a court, any indemnification under Sections 9.1 and 9.2 of this Agreement shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the Manager, Member, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 9.1 and 9.2. Such determination shall be made (a) by the Manager of the Company by a majority vote of Manager who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Manager so directs, by the independent legal counsel then employed by the Company, in a written opinion, or (c) by a Majority of the Members.

 

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8.5. Not Exclusive of Other Rights -- The indemnification provided by this Agreement shall not be deemed exclusive of any other rights, in respect of indemnification or otherwise, to which those seeking indemnification may be entitled apart from the provisions of this Agreement and shall apply both as to action by a Manager, Member, officer, employee or agent in his official capacity and as to action in another capacity while holding such office or position, and shall continue as to a person who has ceased to be a Manager, Member, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

8.6. Designation of Counsel -- The Manager acting by a quorum consisting of Manager not parties to or involved in such action shall designate legal counsel in any lawsuit involving any person by reason of the fact that he is or was an officer, Manager, Member, employee or agent of the Company, or is or was serving at the request of the Company as a director, manager, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, to represent all such persons for the purposes of this Agreement; provided that, if such quorum is not obtainable with due diligence, the then Chief Executive Officer shall designate

such independent legal counsel, and such designation shall be final and conclusive. The fees and expenses of such legal counsel shall be paid by the Company.

 

8.7. Insurance -- The Company may purchase and maintain insurance on behalf of any person who is or was a Manager, Member, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, manager, officer, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of this Agreement.

 

ARTICLE IX

 

TRANSFER OF INTERESTS

 

9.1 In General -- A Member may not sell, assign, transfer or otherwise dispose of, or pledge, hypothecate or otherwise encumber his or her Interest in the Company, in whole or in part without the prior approval of a Majority of the Members and except in accordance with this Agreement. The Members acknowledge that any act taken by any Member in violation of this Agreement is null and void ab initio. No Member shall have the power to confer upon a non-Member, including an Assignee, all the attributes of a Member's interest except as expressly provided herein.

 

9.2 Documentation -- Any Member who desires to assign or transfer an Interest shall deliver to the Company such written documentation as the Company may require.

 

9.3 Effect of Assignment -- A permitted assignment entitles the Assignee to share in the profits, losses and Distributions of the Company to the extent his assignor was so entitled; provided, however, until and unless the assignee becomes a Member: (a) the assignor continues as a 

REVOPage 10 

 

 

Member with respect to the assigned Interest; and (b) the Assignee shall have no liability as a Member solely as a result of such assignment.

 

9.4 Standards for Transfers of Interests -- The following standards govern any transfers of Interests by any Member:

 

9.4.1.Interest Held for Investment - Each Member affirms that the Interest in the Company has been purchased by that Member and is held by that Member only for investment, and that the Member does not have any intention to distribute, divide, or resell the Interest except as expressly provided for herein.

 

9.4.2. Any person to whom a disposition or transfer is validly made, including any person who purchases an Interest in the Company through foreclosure of a pledge or of a security interest, will not be considered to be a Substitute Member within the meaning of the Act, with respect to that Interest in the Company, except as provided in Section 13.6 below. Any person who receives, or is assigned a disposition of an Interest will only be entitled to receive that portion of any Distribution to which that Interest is entitled, and all or other rights and duties associated with that Interest will remain with the person or entity making the disposition of assigning such Interest.

 

9.5 Substitution of a Member -- The following provisions govern the admission of a Substitute Member:

 

9.5.1. Consent for Substitution - An Assignee of an Interest of a Member may become a Substitute Member with respect to that Interest only with the approval or consent of a Majority of the Manager and provided:

 

(a) The person seeking to be admitted as a Substitute Member will execute and deliver to the Manager all instruments necessary in connection with the admission of a person as a Substitute Member as are satisfactory to the Manager. 

 

(b) The person seeking to be admitted as a Substitute Member assumes all obligations of his predecessor in interest as a Member that may exist.

 

(c) The person seeking to be recognized as a Substitute Member pays for all expenses incurred by the Company in connection with that person's admission as a Substitute Member.

 

9.5.2. Amendment of Agreement - This Agreement may be amended in accordance with the Act once the provisions of the preceding subparagraph of this Agreement are met. Further, the Manager and Members will take all other steps that are reasonably necessary to admit such person within the meaning of the Act as a Substitute Member.

 

9.5.3. Status of Substitute Member - Upon the admission of a Substitute Member, the Substitute Member will enjoy all of the rights and duties incident to the Interest with respect to which the substitution has occurred. Neither the assignment of an Interest of a Member, not the admission 

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of an assignee as a Substitute Member relieves the assignor of any duties or obligations that arose prior to the assignation except to the extent provided in writing in a document signed by the assignor, the Substitute Member and the Manager of the Company.

 

9.5.4. Certain Involuntary Transfers - The Company will not take any action to authorize or recognize any transfer of Interests by a court concerning bankruptcy, insolvency, satisfaction of judgment, divorce or dissolution of marriage proceeding to a souse or creditor of a Member, except with the approval of the Manager.

 

ARTICLE X

 

DISSOCIATION OF A MEMBER

 

10.1 Dissociation -- A Member shall cease to be a Member upon the occurrence of any of the following events:

 

10.1.1. the resignation, expulsion or withdrawal of a Member prior to dissolution of the Company;

 

10.1.2. the Member (A) makes an assignment for the benefit of creditors; (B) files a voluntary petition in bankruptcy; (C) is adjudicated a bankrupt or insolvent; (D) files a petition or answer seeking for the Member any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation; (E) files an answer or other pleading admitting or failure to contest the material allegations of a petition filed against the Member in any proceeding of this nature; or (F) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the Member or of all or any substantial part of the Member's properties.

 

10.2 Rights of Dissociating Member -- In the event of the Dissociation of any Member prior to the expiration of the Term:

 

10.2.1. If the dissociation causes a dissolution and winding up of the Company under -11- Article XI, the Member shall be entitled to participate in the winding up of the Company to the same extent as any other Member except that any Distributions to which the Member would have been entitled shall be reduced by the damages sustained by the Company as a result of the dissolution and winding up.

 

10.2.2. If the Dissociation does not cause a dissolution and winding up of the Company under Article XI, the Member shall be entitled to an amount equal to the value of the Member's Interest in the Company, to be paid within six months of the date of Dissociation. Notwithstanding the foregoing, the Manager may pay the value of the Member's Interest in the Company over a period not to exceed five (5) years, provided that the dissociating Member shall be entitled to participate as an Assignee in the Company until the value of such interest (plus interest at the Default Interest Rate) is paid in full. The value of the Member's Interest shall include the amount of any Distributions to which the Member is entitled under this Agreement and the fair value of 

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the Member's Interest as if the date of Dissociation based upon the Member's right to share in Distributions from the Company reduced by any damages sustained by the Company as a result of the Member's Dissociation. As used herein, the value of an Interest shall be determined solely by the Manager whose decision shall be final, binding and conclusive.

 

ARTICLE XI

 

DISSOLUTION AND WINDING UP

 

11.1 Dissolution -- The Company shall be dissolved and its affairs wound up, upon the first to occur of the following events (which, unless the Members agree to continue the business, shall constitute Dissolution Events)

 

11.1.1. the expiration of the Term, unless the business of the Company is continued thereafter with the consent of a Majority of the Members;

 

11.1.2. the unanimous written consent of all of the Members;

 

11.1.3. the Dissociation of any Manager who is a Member, unless the business of the Company is continued with the consent of all of the remaining Members within ninety (90) days after such Dissociation;

 

11.1.4. the Dissociation of a Member (other than a Manager) shall not constitute a Dissolution Event.

 

11.2 Effect of Dissolution -- Upon dissolution, the Company shall cease carrying on, as distinguished from the winding up of, the Company's business; however, the Company is not terminated, but continues until the winding up of the affairs of the Company is completed and the Certificate of Termination has been issued by the Secretary of State.

 

11.3 Winding Up -- Upon the occurrence of a Dissolution Event, the Manager shall take all such action as may reasonably be necessary and appropriate, in their discretion, to liquidate and wind up the Company's business in as orderly a manner as possible.

 

11.3.1. The Manager shall seek to liquidate the assets of the Company as promptly as practicable and discharge all liabilities of the Company or make provision therefore.

 

11.3.2. The Manager shall file or cause to be filed with the Secretary of State a Statement of Commencement of Winding Up and provide for the disposition of liabilities and claims, both known and unknown.

 

11.3.3. The proceeds from the liquidation of the assets of the Company shall be applied in the following order of priorities:

 

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(a) Repayment of all creditors of the Company, including creditors who are Members, to the extent permitted by law, in satisfaction of all liabilities of the Company other than the liabilities for Distributions to Members under this Agreement;

 

(b) Establishment of a reasonable reserve for contingencies;

 

(c) Payment to all Members in satisfaction of liabilities for Distributions to Members under this Agreement;

 

(d) Payments to all Members pro rata to the extent of positive balances in each Member's respective capital accounts;

 

(e) Payment to all Members pro rata in the manner set forth in this Agreement.

 

ARTICLE XII

 

POWER OF ATTORNEY

 

12.1 Appointment

 

12.1.1. Each Member hereby appoints the Manager, with full power of substitution, as the Member's true and lawful attorney-in-fact with full power and authority in that Member's name, place and stead from time to time to:

 

(a) Make any agreements provided for in this Agreement in connection with the dissolution or reconstitution of the Company;

 

(b) Execute any document, including deeds and security deeds, appropriate to effect or perfect any transaction as to which the Manager are authorized to act on behalf of the Company in connection with decisions already made by the Members, or in connection with the dissolution or reconstruction of the Company, so long as no personal liability is imposed by such document on any Member;

 

(c) Make any certificates, instruments and documents as may be required by, or may be appropriate under the laws of the State of Georgia as to the use of the name of the Company;

 

(d) Make any certificates, instruments and documents which may be required appropriate to reflect any changes in or amendments to this Agreement or pertaining to the Company to reflect decisions already made by the Members;

 

(e) Make any certificates, instruments and documents which may be required or appropriate to effectuate the dissolution and termination of the Company, or the cancellation of the Articles, as amended from time to time.

 

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12.1.2. Powers Conferred - The power conferred in Section 12.1.1 of this Agreement to make agreements, certificates, instruments and documents includes the powers to sign, execute, acknowledge, swear to, verify, deliver, file, record and publish the agreements, certificates, instruments and documents.

 

12.2 Exercise and Survival -- Each power of attorney granted under this Agreement is subject to the following:

 

12.2.1. Special Power - The power of attorney is designated as a special power of attorney coupled with an interest and is irrevocable.

 

12.2.2. Survival - The power of attorney survives the dissolution of the Company through winding up to termination or through reconstitution and thereafter, as the case may be.

 

12.2.3. Assignment of a Member's Partial Interest - The power of attorney survives the delivery of an assignment by a Member of a portion of that Member's Interest in the Company.

 

12.2.4. Assignment of a Member's Entire Interest - Where the assignment covers the entire Interest of a Member and the purchaser, transferee, or assignee is admitted as a Substitute Member, the power of attorney survives the delivery of the assignment for the sole purpose of enabling such attorney-in-fact to execute, swear to, acknowledge, and file any such agreement, certificate, instrument or document necessary to effect such substitution.

 

ARTICLE XIII

 

AMENDMENTS

 

13.1 Authority to Amend -- under certain circumstances specified below, this Agreement may be amended, altered, restated, or repealed with the consent of the Manager and without the consent or approval of the Members. Amendments made under this section, if necessary to accomplish the objective of the amendments, have an effective date prior to the date of filing.

 

These circumstances include:

 

13.1.1. Substitute Members Change in Members - To admit into the Company;

 

13.1.2. Clarification of Agreement - To clarify language in this Agreement provided that the substance of such provision is not materially changed; and

 

13.1.3. Compliance with Tax or Securities Laws - To make any necessary or -14- appropriate changes in this Agreement in order to comply with the requirements of the Code, with respect to entities taxed as partnerships, to implement any future tax provisions governing the taxation of limited liability companies, as such, or the requirements of any federal or state securities laws or regulations, provided that any amendment does not adversely affect the Interests of any Member.

 

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13.2 Other Amendments -- Any other amendment shall require the approval of the requisite Majority in interest of all of the Members set forth in section 6.1 herein.

 

13.3 Notice of Amendment -- Notice and a copy of any proposed amendment to this Agreement requiring approval by Members shall be provided to each Member in advance, with an opportunity for discussion by the Members prior to any action to adopt the proposed amendment.

 

ARTICLE XIV

 

MISCELLANEOUS

 

14.1 Entire Agreement -- This Agreement represents the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any prior understandings, agreements or commitments, whether written or oral.

 

14.2 Waiver -- Any party having the benefit of any provision or remedy hereunder may waive such benefit or remedy in writing. Any such waiver shall apply only to the matter specifically waived and shall not constitute a waiver of any such benefit or remedy on any other occasion or a waiver of any other benefit or remedy to which such Person may be entitled.

 

14.3 Reimbursement of Organization Expenses -- All expenses of the organization of the Company shall be borne by the Company, and the Company shall reimburse any organizer, Member or Manager who incurred any expenses on behalf of the Company in connection with its organization.

 

14.4 Acceptance of Prior Acts -- Each person upon becoming a Member of the Company, by becoming a Member, shall be deemed to have ratified and confirmed any and all actions taken by the Company prior to the admission of such Person as a Member.

 

14.5 Further Assurances -- Each person who becomes a party to this Agreement hereby agrees to execute and deliver to or on behalf of the Company such additional documents, certificates, instruments or other writings which the Manager may from time to time determine to be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

 

14.6 Governing Law -- This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Georgia (without regard to its conflicts of laws)

 

14.7 Benefit -- Each of the terms and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, permitted assigns and successors.

 

14.8 Counterparts -- This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same Agreement.

 

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IN WITNESS WHEREOF, the Member has duly executed and delivered this Operating Agreement.

 

MEMBER:

 

__________________________________________

SOLOMON R.C. ALI

 

 

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