Document:

Exhibit
10.16

 

EIGHTH
AMENDED AND RESTATED

OPERATING
AGREEMENT

OF

AY
DEE KAY, LLC

A
California Limited Liability Company

Dated
as of _________ __, 2021

  

 

 

THE
SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED
NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED,
PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. ANY TRANSFER OF THE SECURITIES
REPRESENTED BY THIS AGREEMENT IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH HEREIN.

 

THE
DELIVERY OF THIS AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
OFFER, SOLICITATION OR SALE OF LIMITED LIABILITY COMPANY INTERESTS IN AY DEE KAY, LLC IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE.

  

 

 

     

     

    

 

Table
of Contents

 

	 	Page
	 	 
	ARTICLE
    I IN GENERAL	2
	Section
    1.1 Name.	2
	Section
    1.2 Formation of Limited Liability Company.	2
	Section
    1.3 Agreement; Inconsistencies with Act.	2
	Section
    1.4 Principal Place of Business.	2
	Section
    1.5 Registered Office and Registered Agent.	3
	Section
    1.6 Term.	3
	Section
    1.7 Permitted Businesses.	3
	Section
    1.8 Defined Terms.	3
	Section
    1.9 Maintenance of Separate Existence	3
	Section
    1.10 No State-Law Partnership.	3
	 	 
	ARTICLE
    II MEMBERS; MEMBERSHIP INTERESTS; UNITS	4
	Section
    2.1 Members of the Company.	4
	Section
    2.2 Capital Contributions and Capital Accounts	4
	Section
    2.3 Classes of Units.	6
	Section
    2.4 Representations and Warranties.	8
	Section
    2.5 Voting; Meetings of Members.	9
	Section
    2.6 Members are Not Agents.	9
	Section
    2.7 Members as Creditors.	10
	Section
    2.8 No Right of Withdrawal or Resignation.	10
	Section
    2.9 Limited Liability.	10
	 	 
	ARTICLE
    III MANAGEMENT AND CONTROL OF BUSINESS	10
	Section
    3.1 Management Vested in the Manager	10
	Section
    3.2 Voting Rights.	11
	Section
    3.3 Certain Powers of the Manager.	11
	Section
    3.4 Limited Liability of the Manager.	11
	Section
    3.5 Fiduciary Duties of the Manager.	11
	Section
    3.6 Manager and Members Duties to Company.	12
	Section
    3.7 Transactions between the Company and the Manager.	12
	Section
    3.8 Bank Accounts.	12
	Section
    3.9 Officers.	12
	 	 
	ARTICLE
    IV TAXES, ALLOCATIONS AND DISTRIBUTIONS	16
	Section
    4.1 Allocations and Tax Provisions.	16
	Section
    4.2 Distributions.	16
	ARTICLE
    V ACCOUNTING AND RECORDS	19
	Section
    5.1 Accounting and Records.	19
	Section
    5.2 Access to Accounting and Other Records.	19
	Section
    5.3 Annual and Tax Information; Financial Information.	20
	 	 
	ARTICLE
    VI INDEMNIFICATION	21
	Section
    6.1 Indemnification.	21
	Section
    6.2 Procedures; Survival.	21

 

    i

     

    

 

Table of Contents

 

	 	Page
	 	 
	ARTICLE
    VII TRANSFERS OF UNITS; LIMITATIONS	22
	Section
    7.1 Transfer or Assignment of Units.	22
	Section
    7.2 Conditions to Transfer by Member.	22
	Section
    7.3 Permitted Transfers.	24
	Section
    7.4 Repurchase of Class B Units	24
	Section
    7.5 Unauthorized Transfers Void.	24
	Section
    7.6 Change of Control.	24
	 	 
	ARTICLE
    VIII ADMISSION OF ADDITIONAL MEMBERS	25
	Section
    8.1 Admission of Additional Members.	25
	Section
    8.2 Procedure for Admission.	25
	 	 
	ARTICLE
    IX TERMINATION, DISSOLUTION AND  LIQUIDATION OF THE COMPANY	25
	Section
    9.1 Events Causing Dissolution.	25
	Section
    9.2 Liquidation and Winding Up.	26
	Section
    9.3 Limitations on Payments Made in Dissolution.	26
	 	 
	ARTICLE
    X MISCELLANEOUS	26
	Section
    10.1 Complete Agreement.	26
	Section
    10.2 Governing Law.	27
	Section
    10.3 No Assignment; Binding Effect.	27
	Section
    10.4 Severability.	27
	Section
    10.5 No Partition.	27
	Section
    10.6 Multiple Counterparts.	27
	Section
    10.7 Additional Documents and Acts.	28
	Section
    10.8 No Employment Rights.	28
	Section
    10.9 Amendments.	28
	Section
    10.10 No Waiver.	28
	Section
    10.11 Representations and Warranties; Reliance.	28
	Section
    10.12 Notices.	29
	Section
    10.13 Dispute Resolution; Arbitration.	29
	Section
    10.14 Specific Performance.	30
	Section
    10.15 No Third Party Beneficiary.	30
	Section
    10.16 Cumulative Remedies.	30
	Section
    10.17 Exhibits.	30
	Section
    10.18 Interpretation.	31
	Section
    10.19 Survival.	31
	Section
    10.20 Confidentiality.	31
	Section
    10.21 No Recourse.	32

 

    ii

     

    

 

EIGHTH AMENDED AND RESTATED

OPERATING AGREEMENT

OF

AY DEE KAY, LLC

 

This EIGHTH Amended
and Restated Operating Agreement (together with all Exhibits attached hereto, this “Agreement”) is made and
entered into as of [___], 2021 (the “Effective Date”) by the Members specified in Section 2.1.

 

WHEREAS, the Company
was formed as a limited liability company pursuant to and in accordance with the Beverly-Killea Limited Liability Company Act,
by the filing of Articles of Organization filed with the California Secretary of State on February 9, 2007, entity number
200704010265, and the execution of that certain Operating Agreement of Limited Liability Company (the “Original Agreement”),
dated March 28, 2007;

 

WHEREAS, the then Members
and the Company made and entered into that certain Amended and Restated Limited Liability Company Agreement (the “First
Restated Agreement”), dated as of December 28, 2012, which amended and restated the Original Agreement in its entirety;

 

WHEREAS, the then Members
and the Company made and entered into that certain Second Amended and Restated Limited Liability Company Agreement (the “Second
Restated Agreement”), dated as of July 24, 2015, which amended and restated the First Restated Agreement in its
entirety;

 

WHEREAS, the then Members
and the Company made and entered into that certain Third Amended and Restated Limited Liability Company Agreement (the “Third
Restated Agreement”), dated as of August 28, 2015, which amended and restated the Second Restated Agreement in its
entirety;

 

WHEREAS, the then Members
and the Company made and entered into that certain Fourth Amended and Restated Limited Liability Company Agreement (the “Fourth
Restated Agreement”), dated as of July 12, 2017, which amended and restated the Third Restated Agreement in its
entirety;

 

WHEREAS, the then Members
and the Company made and entered into that certain Fifth Amended and Restated Limited Liability Company Agreement (the “Fifth
Restated Agreement”), dated as of June 22, 2018, which amended and restated the Fourth Restated Agreement in its entirety;

 

WHEREAS, the then Members
and the Company made and entered into that certain Sixth Amended and Restated Limited Liability Company Agreement (the “Sixth
Restated Agreement”), dated as of April 6, 2020, which amended and restated the Fifth Restated Agreement in its entirety;

 

WHEREAS, the then Members
and the Company made and entered into that certain Seventh Amended and Restated Limited Liability Company Agreement (the “Seventh
Restated Agreement”), dated as of April 20, 2020, which amended and restated the Sixth Restated Agreement in its entirety;

 

     

     

    

 

WHEREAS, the Company
is a party to that certain Master Transaction Agreement (the “Transaction Agreement”), by and among Thunder
Bridge II Surviving Pubco, Inc., a Delaware corporation (“Surviving Pubco”), Thunder Bridge Acquisition II,
Ltd., a Cayman Islands exempted company, the Merger Subs (as defined therein), each of the corporate entities listed on Schedule
1 to the Transaction Agreement, ADK Service Provider Holdco LLC, a Delaware limited liability company, and, solely in its capacity
as the Company Securityholder Representative, [•].

 

WHEREAS, pursuant to
the transactions contemplated in the Transaction Agreement (the “Reorganization”), effective at the Effective
Date, and in accordance with Section 10.10 of the Seventh Restated Agreement, the Members, as a result of the Reorganization,
desire to amend and restate in its entirety the Seventh Restated Agreement.

 

NOW, THEREFORE, in
consideration of their mutual promises, covenants and agreements, the Company and Members agree as follows:

 

ARTICLE I

IN GENERAL

 

Section 1.1 Name.

 

The name of the Company
is Ay Dee Kay, LLC (the “Company”).

 

Section 1.2 Formation of Limited Liability
Company.

 

The Company was duly
formed upon the filing of articles of organization of the Company (the “Articles of Organization”) with the
Secretary of State of the State of California on February 9, 2007, in accordance with the Beverly-Killea Limited Liability
Company Act.

 

Section 1.3 Agreement; Inconsistencies
with Act.

 

(a) This
Agreement constitutes the “operating agreement” of the Company within the meaning of California Revised Uniform Limited
Liability Company Act, as amended from time to time (the “Act”). This Agreement amends, restates and replaces
in its entirety the Seventh Restated Agreement.

 

(b) This
Agreement will govern the rights, powers, duties, obligations and liabilities of the Members, except to the extent a provision
of this Agreement is expressly prohibited or ineffective under the Act or under the Articles of Organization. If any provision
of this Agreement is prohibited or ineffective under the Act or the Articles of Organization, this Agreement will be considered
amended to the smallest degree possible in order to make such provision effective under the Act or Articles of Organization.

 

Section 1.4 Principal Place of Business.

 

The principal place
of business of the Company within the State of California shall be 32 JOURNEY, SUITE 100, ALISO VIEJO, CA 92656. The
Company may locate its place of business and registered office at any other place or places as the Manager of the Company may from
time to time deem advisable.

 

    2

     

    

 

Section 1.5 Registered Office and Registered
Agent.

 

The Company’s
registered office shall be at the office of its registered agent at 32 JOURNEY SUITE 100, ALISO VIEJO, CA 92656 and the
name of its registered agent at such address shall be DONALD MCCLYMONT. The registered office and registered agent may be changed
by the Manager from time to time by filing the address of the new registered office or the name of the new registered agent with
the California Secretary of State pursuant to the Act.

 

Section 1.6 Term.

 

The existence of the
Company (“Term”) shall continue until terminated, dissolved or liquidated in accordance with this Agreement
and the Act.

 

Section 1.7 Permitted Businesses.

 

The business of the
Company shall be to accomplish any lawful business or activity whatsoever, except the banking business, the business of issuing
policies of insurance and assuming insurance risks or the trust company business.

 

Section 1.8 Defined Terms.

 

Capitalized terms used
in this Agreement but not defined in this Agreement will have the meanings indicated on Exhibit A attached hereto and
made a part hereof.

 

Section 1.9 Maintenance of Separate
Existence

 

The Company shall do
all things necessary to maintain its limited liability company existence separate and apart from each Member and any Affiliate
of any Member, including holding regular meetings of the Members and maintaining its books and records on a current basis separate
from that of any Affiliate of the Company or any other Person, and shall not commingle the Company’s assets with those of
any Affiliate of the Company or any other Person.

 

Section 1.10 No State-Law Partnership.

 

The Members intend
that the Company not be a partnership (including a limited partnership) or joint venture, and that no Member be a partner or joint
venturer of any other Member by virtue of this Agreement, for any purposes other than as set forth in the last sentence of this
Section 1.10, and neither this Agreement nor any other document entered into by the Company or any Member relating
to the subject matter hereof shall be construed to suggest otherwise. The Members intend that the Company shall be treated as a
partnership for federal and, if applicable, state or local income tax purposes, and that each Member and the Company shall file
all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

 

    3

     

    

 

ARTICLE II

MEMBERS; MEMBERSHIP INTERESTS; UNITS

 

Section 2.1 Members of the Company.

 

Set forth on Exhibit B
is a current list of (i) the full names and business or residence address of each Member (as of the Effective Date) and each
holder of a transferable interest in the Company (set forth in alphabetical order) (as of the Effective Date), (ii) the class
and number of Units in the Company held by each Member and each such holder, (iii) any Capital Contribution or other contribution
made in respect of such Member’s or holder’s Units (which Capital Contribution or other contribution may consist of
tangible or intangible property or other benefit to the Company, including but not limited to money, services performed, promissory
notes, other agreements to contribute money or property and contracts for services to be performed), and (iv) the Percentage Interest
held by the Member. The current Percentage Interest held by each Member, as determined and recomputed by the Manager, shall be
computed by the Manager and set forth in the books and records of the Company. In all events, the sum of all Percentage Interests
shall total 100%. The Manager from time to time shall amend Exhibit B to show the current Percentage Interests held by the Members.

 

Section 2.2 Capital Contributions and
Capital Accounts

 

(a) Acquisition
of Units as of the Effective Date. The terms of the Agreement modify the rights, privileges and obligations of the existing
Units held by the Members. Except as set forth in Exhibit B as in effect on the Effective Date, no Member has as of
the Effective Date any Membership Interest in the Company.

 

(b) Class A
Members. As of the date specified in Exhibit B, each Class A Member has the Capital Account set forth opposite
such Members name on Exhibit B. As of the date specified in Exhibit B, each Class A Member has the
number of Class A Units set forth opposite such Member’s name on Exhibit B.

 

(c) Class B
Members. The parties hereto intend that Class B Units issued hereunder may be issued in exchange for services rendered
to or on behalf of the Company by certain persons in anticipation of becoming Members. Except to the extent of any cash and property
contributed, the Class B Units, when issued, are intended to qualify as “profits interests,” as that term
is used in Revenue Procedure 93-27 and Revenue Procedure 2001-43. All Class B Members as of the Effective Date are listed
on Exhibit B-2.

 

(d) Additional
Capital Contributions. No Member shall be required to make any additional Capital Contributions.

 

(e) No
Right to Return of Contribution; No Interest on Capital. Except as provided in this Agreement, no Member will have the right
to withdraw or receive any return of, or interest on, any Capital Contribution or on any balance in such Member’s Capital
Account. If the Company is required to return any Capital Contribution to a Member, the Member shall not have the right to receive
any property other than cash.

 

    4

     

    

 

(f) Profits
Interests.

 

(i) The
Company intends that each Class B Unit (such Class B Units, a “Profits Interest”), when issued, be
treated as a separate “profits interest” within the meaning of Revenue Procedure 93-27, 1993-2 C.B. 343, or any future
IRS guidance or other authority that supplements or supersedes the foregoing Revenue Procedure.

 

(ii) The
Class B Units are Profits Interests. In accordance with Revenue Procedure 2001-43, 2001-2 CB 191, for federal income tax purposes,
the Company shall treat a Member holding a Profits Interest as the owner of such Profits Interest from the date it is granted,
and shall file its IRS form 1065, and issue appropriate Schedule K-1s to such Member, allocating to such Member its distributive
share of all items of income, gain, loss, deduction and credit associated with any Profits Interest subject to vesting as if it
were fully vested. Each Member agrees to take into account such distributive share in computing its federal income tax liability
for the entire period during which it holds the Profits Interest. The Company and each Member agree not to claim a deduction (as
wages, compensation or otherwise) for the Fair Market Value of such Profits Interest issued to a Member, either at the time of
grant of the Profits Interest or at the time any unvested Profits Interest becomes substantially vested.

 

(iii) The
Company is hereby authorized to make an election to value any Profits Interests at liquidation value (the “Safe Harbor
Election”), as the same may be permitted pursuant to or in accordance with the finally promulgated successor rules to
Proposed Regulations Section 1.83-3(l) and IRS Notice 2005-43 (collectively, the “Proposed Rules”). Upon
making such an election, the Company shall make any allocations of items of income, gain, deduction, loss or credit (including
forfeiture allocations and elections as to allocation periods) necessary or appropriate to effectuate and maintain the Safe Harbor
Election.

 

(iv) Any
such Safe Harbor Election shall be binding on the Company and on all of its Members with respect to all Transfers of Profits Interests
made by the Company while a Safe Harbor Election is in effect. A Safe Harbor Election once made may be revoked by the Company as
permitted by the finally promulgated successor to the Proposed Rules or any other applicable rule.

 

(v) Each
Member (including any person to whom a Profits Interest is Transferred in connection with the performance of services), by signing
this Agreement or by accepting such Transfer, hereby agrees to comply with all requirements of the Safe Harbor Election with respect
to all Profits Interests Transferred while the Safe Harbor Election remains effective.

 

(vi) The
Company, acting under the control of the Manager, shall file all returns, reports and other documentation as may be required to
perfect and maintain any Safe Harbor Election with respect to Transfers of Profits Interests covered by such Safe Harbor Election.

 

    5

     

    

 

(vii) Each
Member agrees to cooperate with the Company to perfect and maintain any Safe Harbor Election that the Company elects to make, and
to timely execute and deliver any documentation with respect thereto reasonably requested by the Company.

 

(viii) Without
limitation of any other provision herein, no Transfer of any Profits Interest in the Company by a Member, to the extent permitted
by this Agreement, shall be effective unless prior to such Transfer, the transferee, assignee or intended recipient of such Profits
Interest shall have agreed in writing to be bound by the provisions of this Section 2.2(f).

 

(ix) On
the forfeiture of an unvested Class B Unit, the forfeited Class B Unit shall be cancelled. The Manager shall recompute the Percentage
Interests of the Members, so that the Percentage Interest associated with forfeited Class B Units is reallocated among the remaining
outstanding Class A Units and Class B Units. The Manager shall reallocate this forfeited Percentage Interest among the remaining
outstanding Class A Units and Class B Units pro rata in accordance with the ratio of the Percentage Interests held by each of these
Members to all outstanding Percentage Interests in such a manner that the sum of all outstanding Percentage Interests shall total
100%. The current Percentage Interest held by each Member, as determined and recomputed by the Manager, shall be computed by the
Manager and set forth in the books and records of the Company. The Manager from time to time shall amend Exhibit B to show the
current Percentage Interests held by the Members. Any portion of the Percentage Interest allocated to a Class B Unit that is not
currently vested at the time of reallocation shall become subject to the existing schedule and to potential forfeiture in the future
for failure to vest.

 

(x) Nothing
in this Section 2.2(f) shall be construed as imposing any liability on the Company for any Member’s taxes resulting
from the receipt, ownership or vesting of Membership Interests issued in connection with the performance of services, and the Company
shall under no circumstances be liable for any such taxes.

 

Section 2.3 Classes of Units.

 

The Company is authorized
to issue two (2) classes of units in the Company which shall represent the Membership Interests of the Members in the Company and
shall be designated “Class A Units” and “Class B Units.”

 

(a) Class A
Units. Class A Units are Membership Interests in the Company. The Percentage Interest of each holder of Class A Units
is set forth beside each Class A Member’s name in the column entitled “Percentage Interest” on Exhibit B.

 

(b) Class B
Units. Class B Units are Membership Interests in the Company. Class B Units may be issued, with or without monetary
consideration, only to those employees, consultants, advisors and independent contractors and in such amounts and subject to such
vesting and other restrictions as determined by the Manager, acting in good faith. The Percentage Interest of each holder of Class
B Units is set forth beside each Class B Member’s name in the column entitled “Percentage Interest” on Exhibit
B.

 

    6

     

    

 

(c) Book
Up, Allocations, and Unit Splits Upon Earn Out Event. Upon the occurrence of an Earn Out Event, the Company shall cause all
outstanding Units to be recapitalized in a manner, as determined by the Company in good faith, such that (i) the number of Units
held by the Surviving Pubco shall be divided to equal the number of Surviving Pubco shares issued and outstanding immediately after
the Earn Out Event, and (ii) the number of Units held by the Legacy Members shall be divided to equal the sum of (A) the number
of Units held by the Legacy Members immediately prior to the Earn Out Event plus (B) the number of share equivalents that would
have been issued to the Legacy Members in the Earn Out if the Legacy Members had held Surviving Pubco shares at the time of the
Earn Out Event. The Company will recalculate Percentage Interests on account of this recapitalization. The Company will amend this
Agreement to reflect the results of this recapitalization by substituting a revised Exhibit B to this Agreement. After such recapitalization,
the assets of the Company shall be revalued to fair market value and the Profits resulting from such revaluation shall be allocated
among all the Members such that the per Unit Capital Accounts of all Members are equal.

 

(d) Issuance
of Additional Pubco Shares. In the event that Surviving Pubco shall issue additional shares of Surviving Pubco stock other
than upon an Earn Out Event, (i) the Company shall issue additional Class A Units to Surviving Pubco in such a number as to preserve
the ratio existing between (A) the number of shares of issued and outstanding Suviving Pubco stock to (B) the number of Class A
Units held by Subviving Pubco, and (ii) Surviving Pubco shall contribute to the Company any consideration received by Pubco for
the issuance of these shares.

 

(e) Ratio
of Subviving Pubco Shares and Class A Units Held by Surviving Pubco. At all times, the ratio between (i) the number of shares
of issued and outstanding Suviving Pubco stock to (ii) the number of Class A Units held by Subviving Pubco, shall remain the same.
The Company shall issue to Surviving Pubco additional Units of Class A Units to the extent necessary to maintain this ratio.

 

(f) The
Company shall issue up to [_______] Class A Units, and up to [_______] Class B Units in connection with the Earn Out (as defined
in the Master Transaction Agreement), as required by and pursuant to the terms and conditions set forth in the Master Transaction
Agreement.1

 

(g) The
Units of each Initial Member of the Company are as set forth in Exhibits B and B-1.

 

(h) The
Units of each Member of the Company are as set forth in Exhibit B.

 

(i) The
number of Units issued to any Member shall not be adjusted for any increase or decrease in the Capital Account of such Member at
any time.

 

(j) Any
Transfer of Units by a Member shall be deemed to be the Transfer of the Membership Interest of the Member represented and evidenced
by such Units for all purposes; and no Transfer of the Membership Interest separate and apart from a Transfer of Units shall be
required or permitted for any purpose.

 

 

		1	NTD: subject to synchronization to the MTA with respect
to the Earn Out. The portion of the Earn Out due to the ADK Principal Owners and the Class B Unit holders who are remaining in
ADK will be issued in the form of additional Class A Units that will be convertible into Class A Shares of Pubco. TBD: Class B
Unit holders as third party beneficiaries to the clause guarantying the issuance of these Class A shares in connection with the
Earn Out.

 

    7

     

    

 

(k) The
Company may not reissue any Units that are not Class B Units that it acquires from any Member or other Person.

 

(l) The
Company may issue fractional Units.

 

Section 2.4 Representations and Warranties.

 

Each Member hereby
represents and warrants to the Company and each other Member that:

 

(a) If
such Member is a Person who is not an individual, such Member is duly organized, validly existing, and in good standing under the
law of its state of organization and has full organizational power to execute and deliver this Agreement and to perform its obligations
hereunder.

 

(b) If
such Member is a Person who is not an individual, such Member has full right, authority and power under its charter, by-laws or
governing partnership agreement, as applicable, to enter into this Agreement. The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action under such Member’s charter, by-laws or governing partnership agreement,
as applicable. The execution, delivery and performance by such Member of this Agreement does not (i) violate or result in
a violation of, conflict with or constitute or result in a default (whether after the giving of notice, lapse or time or both)
under, accelerate any obligation under, or give rise to a right of termination of, any material contract, permit, license or authorization
to which such Member is a party or by which such Member or its assets is bound, or any provision of such Member’s organizational
documents; (ii) violate or result in a violation of, or constitute a default (whether after the giving of notice, lapse of
time or both) under, any provision of any law, or any order of, or any restriction imposed by, any governmental entity applicable
to such Member; or (iii) require from such Member any notice to, declaration or filing with, or consent or approval of, any
governmental entity or other third party.

 

(c) Such
Member is (i) an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the Securities
Act of 1933, as amended (“Securities Act”) or (ii) qualifies for the exemption provided in Rule 701 of
the Securities Act.

 

(d) Such
Member, by reason of his or her or its business and financial experience has such knowledge, sophistication and experience in financial
and business matters and in making investment decisions of this type that the Member is capable of (i) evaluating the merits
and risks of an investment in the Company and the Units and making an informed investment decision, (ii) protecting his or
her or its own interest and (iii) bearing the economic risk of such investment.

 

(e) Such
Member has acquired or is acquiring its Units in the Company for such Member’s own account as an investment and without a
view to the distribution thereof.

 

    8

     

    

 

(f) Such
Member understands that the Units have not been registered under the Securities Act or any state securities laws and are being
issued by reason of a specific exemption from the registration provisions of the Securities Act and applicable state securities
laws that depend upon, among other matters, the bona fide nature of the investment intent and the accuracy of the Member’s
representations and warranties as expressed herein. Such Member further understands that except as otherwise provided herein, the
Company shall have no obligation to register the Units under the Securities Act or any state securities laws or to take any action
that would make available any exemption from the registration requirements of such laws. Such Member further understands and agrees
that such Member will observe and comply with this Agreement and with all applicable securities laws at all times in connection
with the Units, and that the Units may not be resold or transferred by such Member without appropriate registration or the availability
of an exemption from applicable registration and then only upon compliance with the terms and conditions set forth in this Agreement.

 

(g) Such
Member has had access to all information regarding the Company and its present and prospective business, assets, liabilities and
financial condition that the Member reasonably considers important in making the decision to purchase the Units.

 

(h) Such
Member has not been formed for the purpose of acquiring the Units.

 

(i) Each
Member represents and warrants that neither (i) such Member, nor (ii) any entity that controls such Member, or is under the control
of or under common control with, such Member, is subject to any of the “bad actor” disqualifications described in Rule
506(d)(1)(i) to (viii) under the Securities Act (each, a “Disqualification Event”), except for Disqualification Events
covered by Rule 506(d)(2)(ii) or (iii) under the Securities Act and disclosed in writing in reasonable detail to the Company.

 

Section 2.5 Voting; Meetings of Members.

 

(a) Vote
or Written Consent of the Members. Except as expressly provided in this Agreement or required by the Act, Members shall have
no voting, approval or consent rights. Except as otherwise provided, each matter requiring the vote or written consent of the Members
shall be authorized or approved by the vote or written consent of a Majority Vote (unless such greater percentage is explicitly
required in this Agreement to approve or disapprove such matter). Notwithstanding the foregoing, the Manager may from time to time
elect to submit a matter approved by the Manager to the vote or approval of the Members even though the Manager is not obligated
to submit such matter to the vote or approval of the Members.

 

(b) Meetings
of Members. No annual or regular meetings of Members are required.

 

Section 2.6 Members are Not Agents.

 

Pursuant to Section 3.1,
the management of the Company is vested in the Manager. No Member, acting solely in such capacity, is an agent of the Company,
nor can any Member in such capacity bind nor execute any instrument on behalf of the Company. Any Member who takes any action or
binds the Company in violation of this Section 2.6 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 harmless with respect to the loss or
expense.

 

    9

     

    

 

Section 2.7 Members as Creditors.

 

Subject to Section
3.7 and approval by the Manager, any Member may lend money to and transact other business with the Company as a creditor and, subject
to applicable law, any Member has the same rights and obligations with respect thereto as a person who is not a Member. Loans by
Members to the Company shall not be considered Capital Contributions. If any Member shall loan funds to the Company in excess of
the amounts required hereunder to be contributed by such Member to the capital of the Company, the making of such loans shall not
result in any increase in the amount of the Capital Account of such Member. The amount of any such loans shall be a debt of the
Company to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such loans are
made.

 

Section 2.8 No Right of Withdrawal or
Resignation.

 

No Member shall have
the right to disassociate, withdraw or resign from the Company except as otherwise provided for in this Agreement. Notwithstanding
any other provision of this Agreement, the disassociating, withdrawing or resigning Member shall not be entitled to any return
or repayment of its Capital Contribution or other distribution or transfer in the event of disassociation, withdrawal or resignation.
The foregoing provisions are exclusive and no Member shall be entitled to claim any distribution or transfer upon disassociation,
withdrawal or resignation pursuant to the Act or otherwise.

 

Section 2.9 Limited Liability.

 

Except as expressly
set forth in this Agreement or required by law, no Member will (a) be personally liable for any debt, obligation, or liability
of the Company or other Members, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason
of being a Member of the Company, or (b) have any obligation to restore any deficit or negative balance that may exist from
time to time in the Capital Account of such Member (including upon and after dissolution of the Company). Notwithstanding anything
contained herein to the contrary, the failure of the Company to observe any formalities or requirements relating to the exercise
of its powers or management of its business and affairs under this Agreement or the Act shall not be grounds for imposing personal
liability on any of the Members for liabilities of the Company.

 

ARTICLE III

MANAGEMENT AND CONTROL OF BUSINESS

 

Section 3.1 Management Vested in the
Manager

 

(a) Manager.
Subject to the terms hereof, management of the Company shall be vested in the Manager (the “Manager”). The
Manager of the Company shall have all the rights and powers that may be possessed by a manager under the Act. The Members intend
that the provisions of Section 17704.07(c)(4) of the Act shall not apply to the Company or this Agreement. The Manager shall
have full and complete authority, power and discretion to manage and control the business and affairs of the Company, to make all
decisions regarding those matters and to perform any and all other acts customary or incident to the powers granted by law or under
this Agreement.

 

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Section 3.2 Voting Rights.

 

(a) Except
as otherwise required by law or provided herein, each holder of Class A Units shall be entitled to one (1) vote per Class A
Unit at the record date for determination of the Members entitled to vote, or, if no such record date is established, at the date
such vote is taken or any written consent of the Members is solicited. The holders of the Class B Units shall have no right to
vote on any matter.

 

Section 3.3 Certain Powers of the Manager.

 

(a) Without
limiting the generality of Section 3.1, the Manager shall have power and authority, on behalf of the Company:

 

(i) to
appoint officers to run and manage the day-to-day operations of the Company and to remove such officers;

 

(ii) to
borrow money for the Company from banks, other lending institutions, Members, or Affiliates of the Members on such terms as the
Manager deems appropriate, and in connection therewith, to hypothecate, encumber and grant security interests in the assets of
the Company to secure repayment of the borrowed sums. No debt shall be contracted or liability incurred by or on behalf of the
Company except as approved by the Manager, or by agents or employees of the Company expressly authorized by the Manager to contract
such debt or incur such liability; and

 

(iii) to
employ accountants, legal counsel, managing agents or other experts to perform services for the Company and to compensate them
from Company funds.

 

(b) The
Manager shall have the power to recompute Percentage Interests in accordance with this Agreement and to amend this Agreement by
making changes to Exhibit B to reflect changes in the Members of the Company, changes in Member information, and changes in Percentage
Interests of the Members.

 

Section 3.4 Limited Liability of the
Manager.

 

Except as expressly
set forth in this Agreement or as required by law, no Manager will be personally liable for any debt, obligation or liability of
the Company whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being the Manager
of the Company.

 

Section 3.5 Fiduciary Duties of the
Manager.

 

The Manager shall perform
the duties as the Manager in good faith, consistent with the terms of this Agreement, in a manner the Manager reasonably believes
to be in the best interests of the Company, and with such care as an ordinarily prudent person in a like position would use under
similar circumstances. The Manager who so performs the duties as Manager shall not have any personal liability for any obligation
of the Company by reason of being or having been the Manager of the Company. The Manager does not, in any manner, guarantee the
return of the Members’ Capital Contributions or a profit for the Members from the operations of the Company. Subject to Section 17701.10(g)
of the Act, the Manager shall not be liable to the Company or to any Member for any loss or damage sustained by the Company or
any Member, unless the loss or damage shall have been the result of fraud, intentional misconduct, or a willful and knowing violation
of law by such Manager.

 

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Section 3.6 Manager and Members Duties
to Company.

 

The Manager shall not
be required to manage the Company as its sole and exclusive function and the Manager or Member may have other business interests
and may engage in other activities in addition to those relating to the Company.

 

Section 3.7 Transactions between the
Company and the Manager.

 

Notwithstanding that
it may constitute a conflict of interest, the Manager may directly or indirectly engage in any transaction (including the purchase,
sale, lease, or exchange of any property, or the lending of funds, or the rendering of any service, or the establishment of any
salary, other compensation, or other terms of employment) with the Company; provided, however, that in each case (a) such
transaction is not expressly prohibited by this Agreement, and (b) (i) the terms and conditions of such transaction on an
overall basis are fair and reasonable to the Company, and (ii) the transaction has been approved by an affirmative Majority
Vote.

 

Section 3.8 Bank Accounts.

 

The Manager shall maintain,
and may from time to time open, bank accounts in the name of the Company at such depository institution or institutions as determined
by the Manager, acting in good faith, and the Company shall maintain all of the funds of the Company in such bank account or accounts.
The Manager or officers as authorized by the Manager shall be the sole signatories thereon, unless the Manager determines otherwise.

 

Section 3.9 Officers.

 

(a) Certain
Powers of Officers. Without limiting the generality of the powers of the officers described below, the Manager hereby grant
the officers the power and authority, on behalf of the Company (with the exercise of such power and authority to be subject to
the management and direction of the Manager):

 

(i) To
acquire property from any Person as the Manager may determine and approve. The fact that the Manager or a Member is directly or
indirectly Affiliated or connected with any such Person shall not prohibit the Manager s from dealing with such Person;

 

(ii) To
purchase liability and other insurance to protect the Company’s property and business and to protect the assets of the Members
and the Manager;

 

(iii) To
acquire, hold and dispose of any Company real or personal properties;

 

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(iv) To
execute on behalf of the Company all instruments and documents, including checks; drafts; notes and other negotiable instruments;
mortgages or deeds of trust; security agreements; financing statements; documents providing for the acquisition, mortgage or disposition
of the Company’s property; assignments; bills of sale; leases; contracts; partnership agreements, operating agreements of
other limited liability companies; and any other instruments or documents necessary, in the opinion of the Manager, to conduct
the business of the Company;

 

(v) To
employ accountants, legal counsel, managing agents or other experts to perform services for the Company and to compensate them
from Company funds, in a manner and in an amount consistent with the Company’s annual budget;

 

(vi) To
enter into any and all other agreements on behalf of the Company, with any other Person for any purpose, in such forms as the Manager
may approve; and

 

(vii) To
do and perform all other acts as may be necessary or appropriate to the conduct of the Company’s business.

 

(b) The
officers of the Company shall be chosen by the Manager and may consist of the Chairman, the President, the Chief Executive Officer,
the Chief Operating Officer, the Secretary, and the Chief Financial Officer; and each of them shall be appointed by the Manager
(subject to the proviso below in this Section 3.9 (b)). The Company may also have one or more Vice Presidents, one or more
Assistant Secretaries and Assistant Chief Financial Officers, and such other officers as may be appointed by the Manager, or by
the President or the Chief Executive Officer with authorization from the Manager. Any two or more offices may be held by the same
person. All officers of the Company shall serve and may be removed at the pleasure of the Manager at any time, without waiver of
any claim under any contract to which such officer may be a party.

 

(c) Compensation.
The salary and other compensation of the officers shall be fixed from time to time by resolution of or in the manner determined
by the Manager, acting in good faith; provided, however, that any payments and compensation arising from a Side Agreement
shall be deemed authorized and not require approval by the Manager.

 

(d) Duties
and Powers of the Chairman. The Chairman shall be an officer of the Company and shall, if present, preside at meetings of the
Manager, if any, and at meetings of the Members, if any, and exercise and perform such other powers and duties as may be from time
to time assigned to the Chairman by the Manager or prescribed by this Agreement.

 

(e) Duties
of the Chief Executive Officer. Subject to the supervisory powers of the Manager, the Chief Executive Officer, if there
is one, shall be the chief executive officer of the Company, and the Chief Executive Officer shall supervise, coordinate and manage
the business and activities of the Company. The Chief Executive Officer shall perform such other duties and have such other powers
as the Manager shall designate from time to time and shall see that all orders and resolutions of the Manager are carried into
effect. Subject to the foregoing, the Chief Executive Officer shall have general authority general powers and duties of management
usually vested in the office of chief executive officer of a corporation. In the absence of a separate appointment of the Chief
Executive Officer, the President shall have the powers and authorities of the Chief Executive Officer.

 

    13

     

    

 

(f) Duties
and Powers of the President. Subject to the supervisory powers of the Manager, the President, if there is one, shall
be the chief executive officer of the Company, in the absence of a separate appointment of the Chief Executive Officer. The President
also shall preside at all meetings of the Members. The President shall perform such other duties and have such other powers as
the Manager shall designate from time to time and shall see that all orders and resolutions of the Manager are carried into effect.
Subject to the foregoing, the President shall have the general powers and duties of management usually vested in the office of
president of a corporation.

 

Without limiting the
foregoing, the President shall (i) execute bonds, mortgages and other contracts requiring a seal, under the seal of the Company,
except where required or permitted by law to be otherwise signed and executed, and except where the signing and execution thereof
shall be expressly delegated by the Manager to some other officer or agent of the Company and (ii) be entitled to vote securities
and other equity interests held by the Company.

 

(g) Duties
and Powers of the Chief Operating Officer. Subject to the supervisory powers of the Chief Executive Officer, the Chief
Operating Officer, if there is one, shall have supervision over the day-to-day operations and administration of the Company. The
Chief Operating Officer shall perform such other duties and have such other powers as the Manager shall designate from time to
time and shall see that all orders and resolutions of the Manager and all directions of the Chief Executive Officer are carried
into effect. Subject to the foregoing, the Chief Operating Officer shall have the general powers and duties of management usually
vested in the office of chief operating officer of a corporation.

 

(h) Duties
and Powers of the Vice President(s). The Vice President, if there is one, or if there shall be more than one, the Vice
Presidents in the order determined by a resolution of the Manager, shall perform such duties and have such powers as the Manager
by resolution may from time to time prescribe.

 

(i) Duties
and Powers of the Secretary. Subject to the supervisory powers of the Chief Executive Officer, and unless otherwise
determined by the Manager, the Secretary shall attend all meetings of the Manager, if any, and all meetings of the Members, if
any, and shall record all the proceedings of the meetings in a book to be kept for that purpose and shall perform like duties for
the standing committees when required. The Secretary shall give, or cause to be given, notice of all validly called meetings of
the Members and shall perform such other duties as may be prescribed by the Manager. The Secretary shall have custody of the seal,
if any, and the Secretary shall have authority to affix the same to any instrument requiring it, and when so affixed, it may be
attested by his or her signature. The Manager may give general authority to any other officer to affix the seal of the Company,
if any, and to attest the affixing by his or her signature.

 

The Secretary shall
keep, or cause to be kept, at the principal executive office of the Company, a register, or a duplicate register, showing the names
of all Members and their addresses, and the number and classes of Units held by each Member. The Secretary shall also keep all
documents as may be required under the Act. The Secretary shall perform such other duties and have such other authority as may
be prescribed elsewhere in this Agreement or from time to time by the Manager. Subject to the foregoing, the Secretary shall have
the general duties, powers and responsibilities of a secretary of a corporation.

 

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If the Manager chooses
to appoint an Assistant Secretary or Assistant Secretaries, the Assistant Secretaries, in the order of their seniority, in the
absence, disability or inability to act as the Secretary, shall perform the duties and exercise the powers of the Secretary, and
shall perform such other duties as the Manager may from time to time prescribe.

 

(j) Duties
and Powers of the Chief Financial Officer. Subject to the supervisory powers of the Chief Executive Officer, the Chief
Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts
of the properties and business transactions of the Company, including accounts of its assets, liabilities, receipts, disbursements,
gains, losses, and capital. The books of account shall at all reasonable times be open to inspection by the Manager.

 

The Chief Financial
Officer shall have the custody of the funds and securities of the Company, and shall keep or cause to be kept full and accurate
accounts of receipts and disbursements in books belonging to the Company, and shall deposit all moneys and other valuable effects
in the name and to the credit of the Company in such depositories as may be designated by the Manager.

 

The Chief Financial
Officer shall disburse the funds of the Company as may be ordered by the Manager or the Chief Executive Officer, taking proper
vouchers for such disbursements, and shall render to the Chief Executive Officer and the Manager, when so requested by the Manager
or the Chief Executive Officer, an account of all his or her transactions as Chief Financial Officer and of the financial condition
of the Company.

 

The Chief Financial
Officer shall perform such other duties and shall have such other responsibility and authority as may be prescribed elsewhere in
this Agreement or from time to time by the Manager. In lieu of a separate appointment by the Manager, the Chief Financial Officer
shall also be the Treasurer of the Company. Subject to the foregoing, the Chief Financial Officer shall have the general duties,
powers and responsibilities of a chief financial officer of a corporation and shall be the chief financial and accounting officer
of the Company.

 

If the Manager chooses
to appoint an Assistant Chief Financial Officer or Assistant Chief Financial Officers, the Assistant Chief Financial Officers in
the order of their seniority shall, in the absence, disability or inability to act of the Chief Financial Officer, perform the
duties and exercise the powers of the Chief Financial Officer, and shall perform such other duties as the Manager shall from time
to time prescribe.

 

(k) Signing
Authority of Officers. Subject to any restrictions imposed by the Manager and unless the Manager specifically provides
otherwise, the President, Chief Executive Officer or Chief Financial Officer, acting alone or any two officers acting together,
are authorized to (i) endorse checks, drafts and other evidences of indebtedness made payable to the order of the Company,
but only for the purpose of deposit into the Company’s accounts, and (ii) sign on behalf of the Company, all checks,
drafts, and other instruments obligating the Company to pay money and all contracts, obligations and other documents.

 

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ARTICLE IV

TAXES, ALLOCATIONS AND DISTRIBUTIONS

 

Section 4.1 Allocations and Tax Provisions.

 

The allocations of
income, gains, losses and deductions, certain tax matters and related items shall be as set forth in Exhibit C attached
hereto and made a part hereof.

 

Section 4.2 Distributions.

 

(a) Distributions.
Distributions of cash or other assets of the Company other than Tax Distributions, if any, shall be made to the Members in such
amounts and at such times as the Manager may determine from time to time in its sole judgment and discretion in the priorities
specified in this Section 4.2(a). All Distributions shall be made: (i) first, as Tax Distributions as provided under
Section 4.2(b), and (ii) second, in accordance with Percentage Interests.

 

(b) Tax
Distributions.

 

(i) To
the extent that the Company has funds legally available that are not otherwise required by the Company in the operations or business
of the Company or in reserves of the Company, as determined by the Manager acting in good faith, prior to making Distributions
under Section 4.2(a)(i), the Company will distribute to each Member, prior to March 15 of each year, a tax distribution
amount (“Tax Distributions”). All Tax Distributions will be made to the Members in accordance with their Percentage
Interests.

 

(ii) The
Tax Distribution to each Member equals the product of (A) the Member’s Percentage Interest and (B) an amount that, when added
to all other Distributions made in the aggregate to all Member (or their predecessors in interest) with respect to the previous
Fiscal Year, equals the estimated federal and state income tax liabilities applicable in the aggregate to such Members (or their
predecessors in interest) (“Tax Distributions”) for the immediately preceding Fiscal Year as the result of its,
his or her ownership of the Units. For this purpose, any increases in a Member’s share of income of the Partnership shall
be disregarded to the extent that the income is specially allocated to the Member pursuant to Code Section 704(c). This computation
of the Tax Distribution also will disregard any adjustments to tax basis resulting from adjustments under Code Section 743.

 

(iii) The
Tax Distribution for each Member shall be determined by the Manager, acting in good faith.

 

(iv) In
computing the Tax Distribution, the Manager will conclusively assume that each Member is a domestic C corporation domiciled in
the State of California and that all of the Member’s distributive share from the Company is California source. This computation
shall conclusively assume that all of the Member’s distributive share from the Company is taxable in the federal and state
tax brackets appropriate for the highest amounts of taxable income.

 

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(v) The
Manager shall consider any federal deduction for state taxes, to the extent available.

 

(vi) The
Manager shall consider as reductions to taxable income for such previous Fiscal Year the cumulative excess of items of expense,
deduction and loss over items of income and gain allocated to such Member (and predecessor owners of the Member’s Units)
by the Company from prior periods, to the extent the Manager determines that this reduction is reasonable.

 

(vii) The
Manager shall consider the various components of the Member’s distributive share from the Company as taxable at appropriate
tax rates depending on character of income.

 

(viii) The
Manager shall consider any effective tax rates that apply to capital gains, collectables, or other special rates of tax that depend
on character of income.

 

(ix) The
Manager additionally shall consider any minimum taxes, alternative minimum taxes, taxes on investment income, tax surcharges, special
income taxes on high income taxpayers, special taxes imposed on income of a special character, and other similar taxes.

 

(x) The
Manager shall apply tax rates and tax law applicable to the immediately previous Fiscal Year.

 

(xi) The
Manager shall not consider Code Section 1061.

 

(xii) The
Manager shall not consider any special tax characteristics personal to the Member such as net operating losses, carryover or capital
losses, etc.

 

(xiii) Notwithstanding
any of the foregoing, no Tax Distributions shall be made in violation of the Act.

 

(xiv) The
Company will make Tax Distributions only to the extent that the Company has funds available for the Tax Distributions after considering
the needs of the business of the Company for current operations and for reasonable reserves and any applicable restrictions on
Distributions under law or under contract.

 

(xv) No
Tax Distributions shall be made following the occurrence of an event resulting in a liquidation of the Company, or sale of all
or substantially all of the assets of or Membership Interests in, the Company or in connection with a Liquidity Event in connection
with the final liquidation of the Company.

 

(xvi) Each
Member waives any action against the Company, against the Manager, and any member of the Manager disputing the calculation of the
Tax Distribution or the decision to pay the Tax Distribution.

 

(xvii) The
Tax Distribution shall be considered an advance or draw against other Distributions to the Members from the Company.

 

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(c) The
Company shall withhold taxes from Distributions to, and allocations among, the Members to the extent required by law. All amounts
withheld hereunder shall be deemed to have been actually distributed to such Member for purposes hereof.

 

(i) The
Company will withhold from Distributions (or on account of allocations to a Member or Assignee) those amounts required to be withheld
under the Code, the laws of any state, or any other provision of law.

 

(ii) The
Company will treat any withhold amounts as having been distributed to that Member or Assignee (with respect to whom the withholding
was undertaken) under this Agreement.

 

(iii) The
Company will remit any sums withheld under this provision to (and file the required forms with) the appropriate governmental agency.

 

(iv) A
Member or Assignee will be limited to an action against the appropriate governmental agency for refund if the Member or Assignee
makes any claim of over-withholding. This action is the Member or Assignee’s exclusive remedy on account of any claimed over-withholding.

 

(v) Each
Member or Assignee waives any claim or right of action against the Company or anyone acting on behalf of the Company on account
of withholding.

 

(vi) The
Member or Assignee will contribute any excess to the Company (within ten (10) business days after notice from the Company) if the
amounts required to be withheld exceed the amounts that otherwise would have been distributed to a Member or Assignee. This Section 4.2(c)(vi)
applies regardless of whether the Member or Assignee disputes the withheld amounts.

 

(vii) The
Company will consider any excess amounts determined under Section 4.2(c)(vi) that the Member or Assignee has failed
to contribute to the Company, as a demand loan from the Company to that Member or Assignee.

 

(viii) This
demand loan will bear interest at a rate equal to the lesser of (i) ten percent (10%) or (ii) the highest rate permitted by law,
if lower.

 

(ix) The
Company will compute interest on the basis of a computational year of 360 days comprised of 30-day months, using the “30/360
US” day count convention.

 

(x) The
Company will compound interest annually on the anniversary of the loan.

 

(xi) The
Member or Assignee who is treated as the borrower of this demand loan will repay this demand loan in full within ten (10) business
days after demand by the Company.

 

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(d) Other
Rules.

 

(i) Provided
such Distributions are made in accordance with applicable law, neither the Company nor the Manager will incur any liability for
making Distributions in accordance with this Section 4.2.

 

(ii) In
the event Units of a Member are permissibly Transferred during any Fiscal Year in full compliance with Article VII,
(A) all Distributions on or before the date of such transfer shall be made to the transferring Member of record, and (B) all Distributions
thereafter shall be made to the assignee of record; provided, however, that neither the Company nor the Manager or Member
shall incur any liability for making Distributions in accordance with the foregoing, whether or not such Person has knowledge of
any transfer or purported transfer of ownership of any Units.

 

(iii) No
Distribution of assets shall be made to the Members if, after giving effect to the Distribution, the Company would not be able
to pay its debts as they become due in the usual course of business. Each Member acknowledges that if such Member receives any
Distribution from the Company in violation of the Act, the Member may be liable to the Company or its successors for the return
of such Distributions.

 

ARTICLE V

ACCOUNTING AND RECORDS

 

Section 5.1 Accounting and Records.

 

The books and records
of the Company shall be kept, and the financial position and the results of its operations recorded, in accordance with the accounting
methods elected to be followed by the Company for federal income tax purposes or GAAP, as appropriate. The books and records of
the Company shall reflect all Company transactions and shall be appropriate and adequate for the Company’s business in accordance
with the Act. All books and records of the Company shall be maintained at the Company’s principal executive offices.

 

Section 5.2 Access to Accounting and
Other Records.

 

(a) Subject
to such reasonable standards and conditions as imposed by the Manager, including but not limited to the entering into of a nondisclosure
or similar agreement as deemed appropriate by the Company, upon request of any Member for purposes reasonably related to the interest
of that Person as a Member, the Company shall promptly deliver or cause to be delivered to the requesting Member, at the expense
of the Company, a copy of (i) a current list of the full name and last known address of each Member and the Capital Contributions
and Units held of record by each Member; and (ii) the Company’s federal, state and local income tax returns and reports,
if any, for each of its Fiscal Years.

 

(b) Subject
to such reasonable standards and conditions as imposed by the Manager, including the entering into of a nondisclosure or similar
agreement as deemed appropriate by the Company, each Member also has the right, upon reasonable request for purposes reasonably
related to the interest of the Person as a Member, to inspect and copy during normal business hours (i) any of the Company
records described in the foregoing Section 5.2(a); (ii) the Articles of Organization of the Company, any amendments
thereto, and executed copies of any powers of attorney granted for the purpose of executing the such Articles or amendments; (iii) this
Agreement and any amendments to this Agreement; (iv) financial statements of the Company, if any, for the five (5) most recent
Fiscal Years; and (v) the written minutes of any meeting of the Members and any written consents of the Manager or the Members
for actions taken without a meeting.

 

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(c) The
Company also shall promptly furnish to a Member a copy of any amendment to the Articles of Organization or this Agreement executed
pursuant to a power of attorney from such Member.

 

(d) Any
request by a Member for documents or request to inspect or copy documents under this Section 5.2 (i) may be made
by that Member or that Member’s agent or attorney; and (ii) shall be made in writing and shall state the purpose of
such demand.

 

(e) Notwithstanding
any contrary provision of this Agreement, the Manager or officers of the Company designated by the Manager shall have the right
to keep confidential from the Members, for such period of time as the Manager deems reasonable, any information which the Manager
reasonably believes to be in the nature of trade secrets or other information the disclosure of which the Manager in good faith
believes is not in the best interest of the Company or could damage the Company or its business or which the Company is required
by law or by agreement with a third party to keep confidential.

 

(f) No
Person who is not the Manager or Member shall have any information or inspection rights.

 

Section 5.3 Annual and Tax Information;
Financial Information.

 

(a) The
Company shall deliver to each Member (i) within 90 days after the end of each Fiscal Year all information necessary for the
preparation of such Member’s federal and state income tax or information returns, (ii) within 90 days after the end
of each Fiscal Year an Annual Report containing a balance sheet as of the Fiscal Year end and an income statement and statement
of changes in financial position for such year and (iii) within 30 days after the end of each Fiscal Quarter all information necessary
for the preparation of such Member’s federal and state estimated income tax payments and (iv) for so long as the Company
has 35 or fewer Members, a copy of the Company’s federal, state and local income tax or information returns within 90 days
after the end of each Fiscal Year. Such Annual Report need not be audited by an independent public accounting firm at the discretion
of the Manager.

 

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ARTICLE VI

INDEMNIFICATION

 

Section 6.1 Indemnification.

 

(a) To
the fullest extent permitted by the Act and other applicable law, the Company will indemnify, hold harmless and defend the Manager
and officers of the Company, the Partnership Representative, the Tax Matters Partner, and each equityholder, officer, employee,
or agent of the Manager or officer of the Company (each, an “Indemnitee”) from and against any and all losses,
claims, damages, liabilities, whether joint or several, expenses (including legal fees and expenses), judgments, fines and other
amounts paid in settlement (collectively, “Indemnified Losses”), incurred or suffered by such Indemnitee, as
a party or otherwise, in connection with any threatened, pending or completed claim, demand, action, suit or proceeding, whether
civil, criminal, administrative or investigative, and whether formal or informal, arising out of or in connection with the business
or the operation of the Company, or by reason of the Indemnitee’s status as the Manager or officer of the Company or any
of its subsidiaries, regardless of whether the Indemnitee retains such status at the time any such Indemnified Loss is paid or
incurred, unless the Indemnified Losses were the result of fraud, intentional misconduct, or a willful and knowing violation of
law by such Indemnitee.

 

(b) Subject
to Section 17701.10(g) of the Act, (i) no Indemnitee shall be liable to the Company or to any Member for any loss or
damage sustained by the Company or any Member, unless the loss or damage shall have been the result of fraud, intentional misconduct,
or a willful and knowing violation of law by such Indemnitee and (ii) no Indemnitee shall be liable to the Company or to any
Member for any actions taken in good faith in a manner such Indemnitee reasonably believes to be in the best interests of the Company.
An Indemnitee shall be deemed to have acted in good faith and without negligence with regard to any action or inaction that is
taken in accordance with the advice or opinion of an attorney, accountant or other expert advisor so long as such advisor was selected
with reasonable care and the Indemnitee made a good faith effort to inform such advisor of all the facts pertinent to such advice
or opinion. An Indemnitee’s reliance upon the truth and accuracy of any written statement, representation or warranty of
a Member shall be deemed to have been reasonable and in good faith absent such Indemnitee’s actual knowledge that such statement,
representation or warranty was not, in fact, true and accurate.

 

(c) To
the fullest extent permitted by law, expenses incurred by an Indemnitee in defending any claim, demand, action, suit or proceeding
subject to this Section 6.1 will, from time to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay
such amount unless it is determined that such Indemnitee is entitled to be indemnified therefor pursuant to this Section 6.1.

 

(d) The
indemnification provided by this Section 6.1 will be in addition to any other rights to which any Indemnitee may be
entitled under this Agreement, any other agreement, as a matter of law or otherwise, and will inure to the benefit of the heirs,
legal representatives, successors, assigns and administrators of the Indemnitee.

 

Section 6.2 Procedures; Survival.

 

(a) If
an Indemnitee wishes to make a claim under Section 6.1, the Indemnitee should notify the Company in writing within
five (5) days after receiving notice of the commencement of any action that may result in a right to be indemnified under Section 6.1;
provided, however, that the failure to notify the Company will not relieve the Company of any liability for indemnification
pursuant to Section 6.1 (except to the extent that the failure to give notice has prejudiced the Company).

 

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(b) An
Indemnitee will have the right to employ separate legal counsel in any action pursuant to Section 6.1 and to participate
in the defense of the action. The fees and expenses of such legal counsel will be at the expense of the Indemnitee unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the Company has failed to assume the defense of the action
without reservation and employ counsel within a reasonable period of time after being given the notice required above, or (iii) the
named parties to any such action (including any impleaded parties) include both the Indemnitee and the Company and the Indemnitee
has been advised by its legal counsel that representation of the Indemnitee and the Company by the same counsel would be inappropriate
under applicable standards of professional conduct because of actual or potential differing interests between them. It is understood,
however, that the Company will, in connection with any one such action or separate but substantially similar or related actions
in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses
of only one separate firm of attorneys at any time for all such Indemnitees having actual or potential differing interests with
the Company.

 

(c) The
Company will not be liable for any settlement of any action agreed to without the Company’s written consent, such consent
not to be unreasonably withheld.

 

(d) The
indemnification obligations set forth in this Article VI will survive the termination of this Agreement.

 

ARTICLE VII

TRANSFERS OF UNITS; LIMITATIONS

 

Section 7.1 Transfer or Assignment of
Units.

 

No Member shall be
entitled to assign, convey, sell, encumber or in any manner alienate or otherwise Transfer all or part of such Member’s Units
in the Company or any other rights or obligations or interests of such Member as a Member except with the express written
consent of the Manager and in strict compliance with each and all of the other Sections of this Article VII.

 

Section 7.2 Conditions to Transfer by
Member.

 

Without limiting any
other provisions or restrictions or conditions of this Article VII and in addition thereto, a Transfer of Units or
any other rights or obligations or interests of a Member proposed to be effected in accordance with this Article VII may
not be effected unless each and all of the following requirements and conditions precedent are satisfied:

 

(a) Units
Only. Members may Transfer entire Units only. No rights or obligations or interests of a Member of any kind shall be severable
from the Units at any time or under any circumstances. Members therefore shall have no right to and shall not Transfer or purport
to Transfer any rights or obligations or interests as a Member separate from the Units.

 

(b) Required
Documents. The following are delivered to the Company:

 

(i) Notice
of Intent to Transfer. At a reasonable time prior to the consummation of the Transfer, written notice by the Member
of the intent to make a Transfer of Units, together with a detailed statement of the circumstances surrounding the proposed Transfer
which is sufficient to enable the Company and the Manager to determine whether such Transfer is permissible hereunder, and what
opinions of counsel, certificates or documents, if any, may be needed to complete such Transfer in compliance with Section 7.2(c);

 

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(ii) Agreement
to be Bound. An instrument pursuant to which the proposed assignee agrees to all of the terms and conditions of, and
to be bound by, this Agreement, and to assume all of the obligations with respect to the Units proposed to be transferred of the
transferring Member and to be subject to all the restrictions and obligations to which the transferring Member is subject under
the terms of this Agreement; and

 

(iii) Additional
Documents. Such additional instruments, documents and certificates as shall be requested by the Company (including opinions
of counsel to any transferor satisfactory to the Company with respect to any of the matters set forth in Section 7.2(c)).

 

(c) Restrictions.
Such Transfer would not:

 

(i) Securities
Laws. Result in the violation of the Securities Act of 1933, as amended, or any regulation issued pursuant thereto,
or any state securities laws or regulations, or any other applicable federal or state laws or order of any court having jurisdiction
over the Company;

 

(ii) Events
of Default. Be a violation of or an event of default under, or give rise to a right to accelerate any indebtedness described
in, any note, mortgage, loan agreement or similar instrument or document to which the Company is a party unless such violation
or event of default shall be waived by the parties thereto;

 

(iii) Not
Legally Competent. Be a Transfer to an individual who is not legally competent or who has not achieved his or her majority
under the laws of the State of California (excluding trusts for the benefit of minors as otherwise permitted in Section 7.3);

 

(iv) Tax
Status of Company. Cause a material risk, in the opinion of independent reputable tax counsel (whose fees and disbursements
shall be paid by the assignee), which counsel has been reasonably approved by the Manager of the Company, that the classification
of the Company as a partnership for purposes of the Code could be adversely affected;

 

(v) Restriction
on Number of Partners.. Notwithstanding anything in this Agreement to the contrary, no Disposition of a Member's Membership
Interest or any portion thereof shall cause the Company to have more than 95 partners at any time during the taxable year of the
Company. Any Disposition that would cause the Company to have more than 95 partners at any time will be void ab initial and of
no force or effect whatsoever, nor shall this Disposition cause the transferee to have any interest in the Company, whether legal
or equitable. This Section 7.2 (c)(v) is intended to permit the Company to qualify under the private placement safe harbor
of Treasury Regulations Section 1.7704-1 and shall be interpreted in accordance with this safe harbor.

 

(d) Costs.
If requested by the Manager, the transferring Member or assignee shall pay to the Company any and all costs incurred and to
be incurred by the Company in connection with or as a result of such Transfer, to the extent such costs would not have been incurred
by the Company if such Transfer had not been proposed or made.

 

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Section 7.3 Permitted Transfers.

 

Notwithstanding the
limitations in Section 7.1, subject to full compliance with and subject to the limitations contained in Section 7.2,
including to the requirement for an agreement to be bound, and, subject to the provisions of any other agreement between the Member
and the Company:

 

(a) A
Member shall be permitted to Transfer all or any part of its or his or her Units without further consent hereunder only to (i) to
any Affiliate of such Member; (ii) to the spouse of said Member; (iii) to any revocable trust established solely for
the benefit of such Member or his or her parents, spouse or issue; or (iv) upon the death of such Member, to his or her estate
or issue or devisees (each a “Permitted Assignee” and each Transfer permitted under this Section 7.3(a),
a “Permitted Transfer”).

 

(b) A
Member shall be permitted to Transfer Units in accordance with the Exchange Agreements.

 

(c) If
the consideration to be paid for the Units is in whole or in part in property, services or other non-cash consideration, the Fair
Market Value of such consideration shall be determined in good faith by the Manager. If the Company or any Member cannot for any
reason pay for the Units in the same form of non-cash consideration, the Company or such Member may instead pay the Fair Market
Value (as determined pursuant to the preceding sentence) therefor.

 

Section 7.4 Repurchase of Class B
Units

 

The terms governing
the repurchase of Class B Units (for example, in the event of termination of employment), shall be contained in each agreement
by which such Class B Member receives their Class B Units.

 

Section 7.5 Unauthorized Transfers Void.

 

Any Transfer or purported
Transfer in violation of the provisions of this Article VII shall be null and void ab initio and shall constitute
a material breach of this Agreement. In the event of any Transfer or purported Transfer of any Units in violation of this Agreement,
without limiting any other rights or remedies of the Company or the other Members, the assignee or purported assignee shall have
no right to participate in the management of the business and affairs of the Company or to become a Member, or to receive any Distributions
of any kind or to receive any part of the share of profits or other compensation by way of income and the return of contributions,
or any allocation of income, gain, loss, deduction, credit or other items to which the owner of such Units would otherwise be entitled.

 

Section 7.6 Change of Control.

 

In connection with
a Change of Control (as defined in the Transaction Agreement), the Class A Units held by the Class A Members (and any held by the
Class B Members in connection with the Earn Out (as defined in the Transaction Agreement) and Class B Units held by the Class B
Members shall be exchanged for the consideration set forth in the applicable Exchange Agreement.

 

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ARTICLE VIII

ADMISSION OF ADDITIONAL MEMBERS

 

Section 8.1 Admission of Additional
Members.

 

Upon approval by the
Manager, the Company may (a) admit, from time to time, Additional Members; (b) determine the Capital Contributions required
from Additional Members; and (c) issue such Units representing the Membership Interests of such Additional Members on such
terms and conditions as the Manager deems necessary or advisable.

 

Section 8.2 Procedure for Admission.

 

No Person will be admitted
as an Additional Member until such Person (i) executes and acknowledges such instruments, in form and substance satisfactory
to the Manager, as the Manager deems necessary or advisable to effect such admission and to confirm the agreement of the Person
being admitted to be bound by the terms and provisions of this Agreement; and (ii) makes such Capital Contribution as determined
by the Manager. The Company shall reflect the admission of such Additional Member in the records of the Company as soon as possible
after satisfaction of the conditions set forth in this Agreement. Exhibit B shall be deemed to be amended to reflect
the admission of the Additional Member upon such admission; and each of the Members then of record hereby consents to such amendment
to the extent required by law or this Agreement.

 

ARTICLE IX

TERMINATION, DISSOLUTION AND

LIQUIDATION OF THE COMPANY

 

Section 9.1 Events Causing Dissolution.

 

The Company will be
dissolved only upon the occurrence of any of the following events (each, a “Dissolution Event”):

 

(a) Permanent
cessation of the Company’s business;

 

(b) (i) The
consent of the Manager and (ii) the affirmative Majority Vote; or

 

(c) The
final decree of a court of competent jurisdiction that such dissolution is required under applicable law.

 

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Section 9.2 Liquidation and Winding
Up.

 

Upon the occurrence
of a Dissolution Event, the Company will be liquidated and the Manager who has not wrongfully dissolved the Company will wind up
the affairs of the Company provided, (i) if there is no such Manager, the Members will wind up the affairs of the Company,
and (ii) if there is a Person designated by a decree of court to wind up the affairs, then notwithstanding any other provision
of this Section 9.2, such Person will wind up the affairs of the Company. In such case, the Manager (or such Members
or such other Person designated by a decree of court) shall have the authority, in its sole and absolute discretion, to sell the
Company’s assets and properties or distribute them in kind. The Manager or other Person winding up the affairs of the Company
will promptly proceed to the liquidation of the Company. In a Dissolution Event, the assets and property of the Company will be
distributed in the following order of priority:

 

(a) To
the payment of all debts and liabilities of the Company in the order of priority as provided by law (other than outstanding loans
from a Member the Manager);

 

(b) To
the establishment of any reserves deemed necessary by the Manager, or the Person winding up the affairs of the Company, for any
contingent liabilities or obligations of the Company (including those of the Person serving as the liquidator), which reserves
when they become unnecessary shall be distributed in accordance with the provisions of Section 9.2(d);

 

(c) To
the repayment of any outstanding loans from a Member or the Manager to the Company; and

 

(d) The
balance, if any, to the Members in accordance with Sections 4.2(a)(ii).

 

Upon liquidation of
the Company, no Member shall be required to contribute any amount to the Company solely because of a deficit or negative balance
in the Capital Account of such Member. Any deficit or negative balance shall not be considered an asset of the Company for any
purpose.

 

Section 9.3 Limitations on Payments
Made in Dissolution.

 

Except as otherwise
provided in this Agreement, each Member shall be entitled to look solely to the assets and properties of the Company for return
of the Member’s Capital Contribution and returns thereon, and, if such assets and properties are insufficient to return such
Member’s Capital Contributions or returns thereon, the Member shall have no recourse against the Manager, other Members or
officers of the Company.

 

ARTICLE X

MISCELLANEOUS

 

Section 10.1 Complete Agreement.

 

This Agreement and
the subscription agreements of the Members including the Exhibits and ancillary documents hereto and thereto, the Articles of Organization
and the Exchange Agreements constitute the complete and exclusive statement of agreement among the Members with respect to the
subject matter hereof. This Agreement, including the Exhibits and ancillary documents hereto, and the Articles of Organization
replace and supersede all prior agreements by and among the Members or any of them in respect of the Company with respect to the
subject matter hereof. This Agreement, including the Exhibits and ancillary documents hereto, and the Articles of Organization
supersede all prior written and oral statements; and no representation, statement, condition or warranty not contained in this
Agreement, including the Exhibits and ancillary documents hereto, or the Articles of Organization will be binding on the Members
or the Company or have any force or effect whatsoever with respect to the subject matter hereof. Any conflict between the Exchange
Agreements and this Agreement shall be controlled by the applicable Exchange Agreement.

 

    26

     

    

 

Section 10.2 Governing Law.

 

This Agreement and
the rights of the parties hereunder will be governed by, interpreted, and enforced in accordance with the laws of the State of
California, without reference to conflicts of law principles.

 

Section 10.3 No Assignment; Binding
Effect.

 

This Agreement may
not be transferred or assigned by any party hereto other than (a) in the case of a Member, in full compliance with Article VII
as an integrated part of a permissible Transfer of any or all of the Units of such Member; and (b) in the case of the Company,
in connection with the transfer or assignment of all or substantially all of the assets of the Company. Any purported assignment,
sale, Transfer, delegation or other disposition, except as expressly permitted herein, will be null and void and shall constitute
a material breach of this Agreement. Subject to the foregoing restrictions and Article VII, this Agreement will be
binding upon and inure to the benefit of the Members and their respective spouses, heirs, devisees, representatives, successors
and assigns.

 

Section 10.4 Severability.

 

If any provision of
this Agreement is held to be illegal, invalid, or unenforceable under any present or future laws applicable to the Company effective
during the term of this Agreement, such provision will be fully severable; this Agreement will be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by the illegal, invalid, or unenforceable provision
or by its severance from this Agreement.

 

Section 10.5 No Partition.

 

The parties acknowledge
that the assets and properties of the Company are not and will not be suitable for partition. Thus, each Member (on behalf of such
Member and his, her or its successors and assigns) hereby irrevocably waives any and all rights that such Member may have to maintain
any action for partition of such assets and properties.

 

Section 10.6 Multiple Counterparts.

 

This Agreement may
be executed by written signature or electronically and delivered in multiple counterparts, including facsimile, PDF, or other electronic
counterparts, each of which shall be an original, but all of which together shall constitute one instrument. A party may deliver
this Agreement by transmitting a facsimile, PDF, or other electronic counterpart copy of the signed signature page to the other
parties.

 

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Section 10.7 Additional Documents and
Acts.

 

Each Member agrees
to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate
to effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreement and the transactions contemplated
hereby at any time.

 

Section 10.8 No Employment Rights.

 

Nothing in this Agreement
shall confer upon any Person any right to be employed or to continue employment by the Company or any affiliated entity, or interfere
in any manner with any right of the Company or affiliated entity to terminate such employment at any time.

 

Section 10.9 Amendments.

 

The Members intend
that the provisions of Section 17704.07(c)(4)(D) of the Act shall not apply to the amendment of this Agreement. All amendments
and modifications to this Agreement must be in writing and shall be approved (i) by the Manager, (ii) by the affirmative
Majority Vote of the Class A Members; provided, however, that no approval shall be needed for an amendment of Exhibit B
in connection with the admission of Additional Members in accordance with this Agreement or the issuance of additional Units to
certain Members in accordance with this Agreement and the Transaction Agreement. In addition to the foregoing, the Company may
not amend or modify this Agreement in any way that alters or changes the rights, preferences or privileges in a manner that would
be prejudicial and disproportionate with respect to any Member without the written approval of such Member.

 

Section 10.10 No Waiver.

 

No delay, failure or
waiver by any party to exercise any right or remedy under this Agreement, and no partial or single exercise of any such right or
remedy, will operate to limit, preclude, cancel, waive or otherwise affect such right or remedy, nor will any single or partial
exercise of such right or remedy limit, preclude, impair or waive any further exercise of such right or remedy or the exercise
of any other right or remedy.

 

Section 10.11 Representations and Warranties;
Reliance.

 

(a) Each
party represents and warrants that such party has the full right, power, legal capacity and authority to enter into and execute
this Agreement and to discharge all of his or her or its obligations hereunder, and that such party does not have any outstanding
obligation and is not a party to any outstanding agreement which obligation or agreement is inconsistent with this Agreement. This
Agreement has been duly executed and delivered by such party after all legally required approvals, and constitutes its or his or
her valid and legally binding agreement and obligation and is enforceable in accordance with its terms.

 

(b) Without
limiting the foregoing, in the event that a Member is not a natural person, neither the Company nor any Member will (i) be
required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of
such entity or to determine any fact or circumstance bearing upon the existence of the authority of such individual or (ii) be
required to see to the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf
of such entity.

 

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Section 10.12 Notices.

 

Except as otherwise
provided in this Agreement regarding notices by electronic mail or other electronic means to Members and the Manager and regarding
Member proxies, all notices, requests, demands and other communications required or permitted to be given hereunder shall be in
writing and shall be delivered (a) by personal delivery, (b) by a nationally recognized overnight courier service, (c) by
facsimile if the writing is legible and sent from a facsimile machine providing written confirmation of receipt, or (d) by
deposit in the United States Postal Service as registered or certified US Mail, postage and charges prepaid, return receipt requested,
to the Company at its principal executive office and to any Member at the address then shown as the current address of such Member
on the books and records of the Company. Any such notice shall be deemed to have been given on the date so delivered, if delivered
personally or by overnight air courier service; or if by facsimile, on the first day following the transmission of such facsimile;
or if mailed, five (5) calendar days after mailing. Any party may by written notice to the other parties specify a different address
or facsimile number for notice purposes by sending notice thereof in the foregoing manner.

 

Section 10.13 Dispute Resolution; Arbitration.

 

(a) Any
controversy, claim or dispute arising out of or related to this Agreement or the interpretation, performance, or breach hereof,
including alleged violations of state or federal statutory or common law rights or duties, all tort claims and all claims for punitive
damages (a “Dispute”), shall be resolved solely according to the procedures set forth in this Section 10.13
..

 

(b) The
parties shall attempt, whenever possible, to discuss and resolve any Disputes on an informal basis, in order to avoid the expense
and delay associated with arbitration. A party invoking these dispute resolution procedures shall deliver a notice to the other
parties (a “Dispute Notice”) of the claims it intends to bring and the relief sought, including sufficient details
regarding the factual, contractual or other legal bases for the party’s claim as reasonably required to enable the parties
receiving the Dispute Notice to evaluate the claim and respond thereto. No arbitrator shall have authority to consider or resolve
any Dispute that is not first the subject of a Dispute Notice and subject to informal dispute resolution pursuant to this Section
10.13 .

 

(c) If
the parties are unable to resolve one or more Disputes informally, any party to the Dispute may initiate a binding arbitration
proceeding for the final resolution of such remaining Dispute(s). A party shall initiate arbitration by delivering a notice to
the other parties to such Dispute(s) (an “Arbitration Notice”) describing the Dispute(s) to be arbitrated. Within
twenty (20) days of receiving an Arbitration Notice, the receiving party may deliver its own Arbitration Notice, specifying additional
Disputes to be submitted to arbitration. If more than one Dispute is to be arbitrated, the subject matters of the various Disputes
need not be related to each other.

 

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(d) The
arbitration, which shall take place in Los Angeles County, State of California, shall be administered by the Los Angeles, California
office of the American Arbitration Association (“AAA”), or any successor hereof, in accordance with the AAA
Rules, except as otherwise provided herein. The arbitration shall be held before and decided by a single neutral arbitrator (the
“Arbitrator”). The arbitrator shall be a member of the AAA Large and Complex Case Panel selected in accordance
with the AAA Rules. The arbitration decision shall be binding and final upon the parties thereto, and judgment on any award rendered
by the Arbitrator may be entered in any court having jurisdiction thereof.

 

(e) Notwithstanding
any contrary provision of this Section 10.13 , any party may seek emergency or temporary injunctive remedies exclusively
in any federal or state court located within Los Angeles County, State of California, in aid of its claims for relief in the arbitration
notwithstanding this agreement to arbitrate; provided, however, that such action shall not be deemed a waiver of the right
to arbitrate the merits of the dispute. Each party hereto irrevocably submits to the exclusive jurisdiction and venue of any such
court in any such action or proceeding.

 

(f) In
any judicial or arbitration proceeding hereunder, the prevailing party shall be entitled to receive its reasonable attorneys’
fees and costs incurred in connection with such proceeding in addition to its judgment. The arbitrator’s remedies shall be
limited to those which could be granted by a court of competent jurisdiction hearing the same dispute.

 

Section 10.14 Specific Performance.

 

Because of the unique
character of the Membership Interests and the Units, the Members and the Company will be irreparably damaged if this Agreement
is not specifically enforced. If any dispute arises concerning the Transfer of any Units, or any portion thereof, an injunction
may be issued restraining any purported Transfer pending the determination of such controversy. If any dispute arises concerning
the right or obligation to purchase or sell any such Units, or any portion thereof, such right or obligation will be enforceable
in a court of equity by a decree of specific performance. Such remedy may, however, be cumulative and not exclusive, and will be
in addition to any other remedy which the Members or the Company may have.

 

Section 10.15 No Third Party Beneficiary.

 

This Agreement is made
solely and specifically among and for the benefit of the parties hereto, and their respective successors and permitted assigns,
and no other Person will have any rights, interest, or claims hereunder or be entitled to any benefits under or on account of this
Agreement as a third party beneficiary or otherwise.

 

Section 10.16 Cumulative Remedies.

 

The rights and remedies
of any party as set forth in this Agreement are not exclusive and are in addition to any other rights and remedies now or hereafter
provided by law or at equity, subject to the Dispute Resolution and Arbitration provisions of Section 10.13 .

 

Section 10.17 Exhibits.

 

All Exhibits attached
hereto are hereby incorporated by reference into, and made a part of, this Agreement.

 

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Section 10.18 Interpretation.

 

The titles and section
headings set forth in this Agreement are for convenience only and shall not be considered as part of agreement of the parties.
No provision of this Agreement shall be interpreted or construed against any party because such party or its counsel was the drafter
thereof. Unless the context clearly requires otherwise:(i) any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms; (ii) the singular form of nouns, pronouns and verbs shall include the plural and vice
versa; (iii) the use of the word “includes” and “including” in this Agreement shall be by way of example
rather than by limitation; (iv) reference to any agreement, document or instrument means such agreement, document or instrument
as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof; (v) the
use of the words “or,” “either” and “any” shall not be exclusive; (vi) all references
in this Agreement to designated “Sections” and other subdivisions, or to designated “Exhibits” or “Schedules”,
are to the designated Sections and other subdivisions of, or the designated Exhibits or Schedules to, this Agreement; (vii) the
words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,”
and words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision hereof;.

 

Section 10.19 Survival.

 

It is the express intention
and agreement of the Company and the Members that all covenants, agreements, statement, representations, warranties and indemnities
made in this Agreement will survive the execution and delivery of this Agreement and the Units and, where appropriate to facilitate
the intent of this Agreement, the dissolution, liquidation and winding up of the Company.

 

Section 10.20 Confidentiality.

 

Each Member agrees
that it will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in
the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of
the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes
known to the public in general (other than as a result of a breach of this Section 10.20 by such Member), (b) is or
has been independently developed or conceived by the Member without use of the Company’s confidential information, or (c) is
or has been made known or disclosed to the Member by a third party without a breach of any obligation of confidentiality such third
party may have to the Company; provided, however, that a Member may disclose confidential information: (i) to its attorneys,
accountants, consultants, and other professionals and advisors to the extent necessary to obtain their services in connection with
monitoring its investment in the Company; (ii) to any prospective purchaser of any Units from such Member, if such prospective
purchaser agrees to be bound by confidentiality restrictions no less protective of the confidential information than those contained
in this Section 10.20 ; (iii) to any Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Member
in the ordinary course of business, provided, however, that such Person described in the foregoing clauses (i), (ii) or
(iii) (A) is not, in the reasonable judgment of the Manager, a competitor of the Company or an officer, employee, or Director
of, or holder of more than ten percent (10%) of the equity securities of, a competitor of the Company, unless such Person is a
bona fide prospective purchaser of Units from a Member, and (B) is informed by the Member that such information is confidential
and such Person agrees to be bound by the confidentiality provisions of this section or comparable restrictions to maintain the
confidentiality of such information; (iv) to any governmental agency pursuant to a subpoena or order and as reasonably necessary
or required during the course of any tax audit, dispute or controversy, or (v) as may otherwise be required by law, provided,
however, that the Member promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent
of any such required disclosure.

 

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Section 10.21 No Recourse.

 

Notwithstanding anything
that may be expressed or implied in this Agreement, each of the Company and the Members covenants, agrees and acknowledges that
no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against
any current or future Manager, officer, employee, general or limited partner or equity holder of any Member or of any Affiliate
or assignee thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any
statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Member or any current
or future member of any Member or any current or future Manager, officer, employee, partner or member of any Member or of any Affiliate
or assignee thereof, as such for any obligation of any Member under this Agreement or any documents or instruments delivered in
connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

 

* * *

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF,
the undersigned have executed this Agreement as of the date first hereinabove set forth.

 

COMPANY:

AY DEE KAY, LLC

a California limited liability company

 

	By:	 	 
	 	Donald McClymont	 
	 	Chief Executive Officer	 

 

MEMBERS:

 

     

     

    

 

EXHIBIT A

 

DEFINITIONS

 

As used in this Agreement,
the following terms will have the following meanings:

 

“Act”
has the meaning provided in Section 1.3.

 

“Additional
Member” means a Member who has acquired Units from the Company and who has been admitted as a Member pursuant to
Article VIII.

 

“Adjusted
Capital Account” means, with respect to any Member, such Member’s Capital Account as of the end of the relevant
Fiscal Year, after giving effect to the following adjustments:(i) credit to such Capital Account any amounts which such Member
is obligated or treated as obligated to restore with respect to any deficit balance in such Capital Account pursuant to Section
1.704-1(b)(2)(ii)(c) of the Treasury Regulations, or is deemed to be obligated to restore with respect to any deficit balance pursuant
to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations; and (ii) debit
to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and will be interpreted consistently therewith.

 

“ADK Principal
Owners” means the Class A Member listed on Exhibit B-1.

 

“Affiliate”
or “Affiliated” shall mean any corporation, firm or other entity that is directly or indirectly controlling,
controlled by, or under common control with a party hereto; provided, however, that the Company shall not be deemed to be
an Affiliate of any of the Members or any of their respective Affiliates, and no Member or any of its Affiliates shall be deemed
to be an Affiliate of the Company. For the purpose of this definition, “control” shall mean the power to direct or
cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

 

“Agreement”
means this Seventh Amended and Restated Operating Agreement and any amendments hereto.

 

“Articles
of Organization” has the meaning set forth in Section 1.2.

 

“Bankruptcy”
means with respect to any Person, (i) the inability of such Person generally to pay its debts as such debts become due, or
an admission in writing by such Person of its inability to pay its debts generally or a general assignment by such Person for the
benefit of creditors; the filing of any petition or answer by such Person seeking to adjudicate it a bankrupt or insolvent, or
seeking for itself any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of
such Person or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking, consenting
to, or acquiescing in the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official
for such Person or for any substantial part of its property; or corporate action taken by such Person to authorize any of the actions
set forth above; or (ii) without the consent or acquiescence of such Person, the entering of an order for relief or approving
a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency, or similar statute, law, or
regulation, or the filing of any such petition against such Person which petition shall not be dismissed or stayed within sixty(60)
days, or, without the consent or acquiescence of such Person, the entering of an order appointing a trustee, custodian, receiver
or liquidator of such Person or of all or any substantial part of the property of such Person which order shall not be dismissed
or stayed within sixty (60) days.

 

    A-1

     

    

 

“Capital
Account” means the capital account established on behalf of each Member on the books of the Company. The Capital
Account shall be computed and maintained strictly in accordance with the capital account maintenance rules of Treasury Regulations
Section 1.704-1(b)(2)(iv). The Manager shall have the absolute discretion to elect for the Company to revalue assets and to redetermine
Capital Accounts to the extent and as permitted under Treasury Regulations Section 1.704-1(b)(2)(iv)(f). In the case of a revaluation
of assets, the Manager will revalue assets in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and Treasury Regulations
Section 1.704-1(b)(2)(iv)(h). Upon the Transfer of a Membership Interest in accordance with this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent provided in the rules of Treasury Regulations Section 1.704-1(b)(2)(iv)(l).

 

“Capital
Contribution” means any contribution to the capital of the Company in cash or other assets or property by a Member.

 

“Class A
Members” mean those Members that hold Class A Units of the Company.

 

“Class B
Members” mean those Members that hold Class B Units of the Company.

 

“Code”
means the Internal Revenue Code of 1986 as amended, or corresponding provisions of subsequent superseding federal revenue laws.

 

“Company”
means Ay Dee Kay, LLC, a California limited liability company.

 

“Company
Minimum Gain” means “partnership minimum gain” set forth in Section 1.704-2(b)(2) of the Treasury
Regulations.

 

“Dissolution
Event” shall have the meaning set forth in Section 9.1.

 

“Distribution”
means each distribution made by the Company to a Member, whether in cash, property or securities of the Company and whether by
liquidating distribution, redemption, repurchase or otherwise; provided, however, that none of the following shall be a
Distribution: any recapitalization, exchange or conversion of Units, and any subdivision (by unit split or otherwise) or any combination
(by reverse unit split or otherwise) of any outstanding Units that does not involve (i) a distribution of cash, or (ii) a
direct or indirect change in the ownership of the fully diluted equity of the Company.

 

“Earn Out
Event” shall mean the achievement by the Surviving Pubco of the metrics resulting in an issuance of additional Surviving
Pubco shares under Section 205 of the Master Transaction Agreement.

 

    A-2

     

    

 

“Equity
Financing Transaction” has the meaning set forth in Section 3.4(d)(i).

 

“Exchange
Agreements” means the Principal Owners Exchange Agreement and the Service Provider Exchange Agreement.

 

“Fair Market
Value” means, except as otherwise specifically provided herein, with respect to any property, services or other non-cash
asset, the fair market value thereof determined in accordance with Treasury Regulations Section 1.704-1(b)(2)(h). This provision
will be applied by the Manager in accordance with these regulations.

 

“Fiscal
Year” means the Company’s fiscal year. The Company’s fiscal year and taxable year will be the Fiscal
Year, unless otherwise required by the Code or Treasury Regulations, as reasonably determined by the Manager.

 

“Fully
Diluted Units” means the sum of the number of outstanding Class A Units, plus the number of outstanding
Class B Units.

 

“Indemnified
Losses” has the meaning set forth in Section 6.1.

 

“Indemnitee”
has the meaning set forth in Section 6.1.

 

“Initial
Members” means the “Initial Members” as listed on Exhibit E.

 

“Legacy
Members” shall mean those members listed as Legacy Members on Exhibit ~~~~

 

“Majority
Vote” means the affirmative vote or consent of (1) the Class A Members of record owning more than Fifty Percent
(50%) of the Class A Units and (1) the ADK Preferred Class A Members of record owning more than Fifty Percent (50%) of the
voting power of the Class A Units held by the ADK Preferred Class A Members.

 

“Manager”
means Surviving Pubco.

 

“Master
Transactions Agreement” means that certain Master Transactions Agreement by and among Thunder Bridge II Surviving
Pubco. Inc., [the Thunder Bridge Surviving Pubco., Inc. Merger Subs described herein], Thunder Bridge Acquisition II, Ltd., Ay
Dee Kay LLC, d/b/a indie Semiconductor, [Ay Dee Kay Blocker Group], [ADK Service Provider HoldCo, LLC] and [•], as the Company
Securityholder Representative, Dated as of [•], 2020.

 

“Member”
or “Members” means the Members of the Company listed on Exhibit B, including any other Members
subsequently admitted as members in accordance with this Agreement and the Act.

 

“Member
Nonrecourse Debt” means “partner nonrecourse debt” in Treasury Regulations Section 1.704-2(b)(4).

 

“Member
Nonrecourse Deductions” means “partner nonrecourse deductions” in Treasury Regulations Section 1.704-2(i)(2).

 

    A-3

     

    

 

“Membership
Interest” means the entire ownership interest of a Member in the Company at any particular time, including all economic
rights and voting rights of the Member in the Company, the right of such Member to any and all benefits to which a Member may be
entitled as provided in this Agreement and under law, and the obligations of such Member to comply with all of the terms and provisions
set forth in this Agreement and under applicable law, all of which Membership Interest is represented and evidenced by Units.

 

“Minimum
Gain Attributable to Member Nonrecourse Debt” means “partner nonrecourse debt minimum gain” as determined
in accordance with Treasury Regulations Section 1.704-2(i)(2).

 

“Nonrecourse
Deductions” has the meaning set forth under Sections 1.704-2(b)(1) and (c) of the Treasury Regulations.

 

“Nonrecourse
Liabilities” has the meaning set forth under Section 1.704-2(b)(3) of the Treasury Regulations.

 

“Partnership
Representative” means the “partnership representative” of the Company as that term is used in Code Section 6223.

 

“Percentage
Interest” shall mean the percentage (rounded to the nearest 0.1%) determined for each Member equal to the number
of Units held by the Member divided by the number of Units held by all Members. The Percentage Interest of each Member as of the
date of this Agreement is set forth beside the Member’s name on Exhibit B in the column “Percentage Interest”.
The current Percentage Interest held by each Member, as determined and recomputed by the Manager, shall be computed by the Manager
and set forth in the books and records of the Company. In all events, the sum of all Percentage Interests shall total 100%. The
Manager from time to time shall amend Exhibit B to show the current Percentage Interests held by the Members.

 

“Permitted
Assignee” shall have the meaning provided in Section 7.3.

 

“Permitted
Transfer” shall have the meaning provided in Section 7.3.

 

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

 

“Principal
Owners Exchange Agreement” means that certain Principal Owners Exchange Agreement by and between [Surviving Pubco
and the ADK Principal Owners], dated as of the date hereof, pursuant to which the ADK Principal Owners shall have the right to
exchange their Class A Units for stock in Surviving Pubco, pursuant to the terms and conditions set forth therein.

 

“Profits”
and “Losses” shall mean, for each Fiscal Year or other period, the net “book” income or loss
of the Company (including revaluation surplus and revaluation loss on a permitted revaluation of partnership assets), computed
by excluding all items specially allocated under Paragraph C or Paragraph D of Exhibit “D”. In this regard, the term
“book” is used in the sense in which that term is used in Treasury Regulations Section 1.704-1(b)(2)(iv).

 

    A-4

     

    

 

“Service
Provider Exchange Agreement” means that certain Service Providers Exchange Agreement by and between [Surviving Pubco
and the Class B Members], dated as of the date hereof, pursuant to which the Class B Members shall have the right to exchange their
Class B Units for stock in Surviving Pubco, pursuant to the terms and conditions set forth therein.

 

“Tax Items”
has the meaning set forth in Section D(1) of Exhibit C.

 

“Tax Matters
Member” means the “tax matters partner” as defined in Section 6231(a)(7) of the Code.

 

“Term”
has the meaning provided in Section 1.6.

 

“Transfer”
means the sale, assignment, transfer, mortgage, pledge, hypothecation, encumbrance, exchange or other disposition of any Units
of the Company, directly or indirectly, whether or not for value, and whether voluntarily, by operation of law or otherwise, and
“Transferred” has the correlative meaning.

 

“Treasury
Regulations” means the temporary and final regulations issued by the U.S. Treasury Department under the Code, as
amended or superseded from time to time.

 

“Unit”
means a unit representing and evidencing a fractional part of the respective Membership Interest of each Member in the Company,
pursuant to Section 2.3.

 

    A-5

     

    

 

EXHIBIT B

 

MEMBERS, CONTRIBUTIONS, AND UNITS

NOT INCLUDING A UNITS AND B UNITS

  

	Member 

Name	Address	Number of 

Class A 

Units	Number of 

Class B Units	Redetermined 

Capital 

Account as of 

Date of this 

Agreement	Percentage 

Interest	Issue Date
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	TOTALS	 	 	 	 	 	 

  

    B-1

     

    

 

EXHIBIT B-1

  

CLASS A MEMBERS WITH RIGHTS PURSUANT
TO THE ADK PRINCIPAL OWNERS EXCHANGE AGREEMENT

  

	Member Name	Address	Number of 

Class A 

Units	Number 

of Class B 

Units
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

    B-2

     

    

 

EXHIBIT B-2

 

CLASS B MEMBERS

 

(As of [Effective Date])

 

    B-3

     

    

 

EXHIBIT C

TAXES; ALLOCATIONS; RELATED MATTERS

 

A. Profits
and Losses Generally.

 

All Profits and Losses
of the Company shall be allocated in accordance with “partners’ interests in the partnership” as defined in Treasury
Regulations Section 1.704-1(b)(3) and as required by Treasury Regulations Section 1.704-1. The Profits and Losses of
the Company (and, if necessary, individual items of Profit and Loss) shall be allocated annually (and at such other times as the
tax law may require). Subject to the first sentence of this paragraph, allocations of Profits and Losses will be made to the Members
in such manner that the Adjusted Capital Account balance of each Member, to the greatest extent possible, after this allocation
(and recognition of any partner minimum gain or partnership minimum gain) shall be equal to the amount, positive or negative, that
would be distributed to such Member (in the case of a positive amount) or for which such Member would be liable to the Company
under this Agreement (in the case of a negative amount), if (a) the Company were to sell the assets of the Company for their
Adjusted Asset Values, (b) all Company liabilities were satisfied (limited with respect to each nonrecourse liability to the
Adjusted Asset Values of the assets securing such liability), (c) the Company were to distribute the proceeds of sale pursuant
to Section 4.2(a)(ii) and (d) the Company were to dissolve pursuant to Article IX.

 

B. [Intentionally
Omitted.]

 

C. Regulatory
Allocations and Other Allocation Rules.

 

Notwithstanding the
foregoing, the following special allocations will be made as follows, and, as appropriate, in the following order:

 

(1) Company
Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain for any Fiscal Year (except as a result of conversion
or refinancing of Company indebtedness, certain capital contributions or revaluation of the Company’s property as further
outlined in Treasury Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), the minimum gain chargeback set forth in Treasury
Regulations Section 1.704-2(f) shall apply as if those requirements were expressly set forth in this Agreement.

 

(2) Chargeback
of Minimum Gain Attributable to Member Nonrecourse Debt. If there is a net decrease in Minimum Gain Attributable to Member
Nonrecourse Debt during any Fiscal Year (other than due to the conversion, refinancing or other change in the debt instrument causing
it to become partially or wholly nonrecourse, certain capital contributions, or certain reevaluations of the Company’s property
as further outlined in Treasury Regulations Section 1.704-2(i)(4)), the partner nonrecourse debt minimum gain chargeback set
forth in Treasury Regulations Section 1.704-2(i) shall apply as if those requirements were expressly set forth in this agreement.

 

(3) Qualified
Income Offset. In the event a Member unexpectedly receives any adjustments, allocations or distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Member has an Adjusted Capital Account Deficit, the qualified
income offset set forth in Treasury Regulations Section 1.704-2(d) shall apply as if those requirements were expressly set
forth in this Agreement.

 

    C-1

     

    

 

(4) Nonrecourse
Deductions. Nonrecourse Deductions for any Fiscal Year or other applicable period shall be allocated to the Members in accordance
with Percentage Interests.

 

(5) Member
Nonrecourse Deductions. Member Nonrecourse Deductions for any Fiscal Year or other applicable period shall be specially allocated
in accordance with Treasury Regulations Section 1.704-2(i) as if its requirements were set forth explicitly in this Agreement.

 

(6) Varying
Interests Rule. Allocations to Members whose interests vary during a year by reason of transfer, redemption, admission, capital
contributions, or otherwise, shall be made as determined by the Manager, acting in good faith, in accordance with permissible methods
under Code Section 706.

 

(7) Forfeiture
Allocations. The Company shall make Forfeiture Allocations with respect to any unvested Class B Units that have been forfeited.
“Forfeiture Allocations” refer to allocations of loss and deduction as described in REG-105346-03, 70 Fed. Reg.
29675-29683, as it may be amended or supplemented.

 

D. Tax
Allocations.

 

(1) Except
as otherwise provided in this Agreement, all tax items of income, deduction, gain, or loss of the Company shall be allocated in
accordance with “partners’ interests in the partnership” as defined in Treasury Regulations Section 1.704-1(b)(3)
and as required by Treasury Regulations Section 1.704-1 and Treasury Regulations Section 1.704-3. Subject to the foregoing
and except as specifically provided under Paragraph C and Paragraph D, all tax items of income, deduction, gain, or loss of the
Company shall be allocated in accordance with Percentage Interests.

 

(2) If
any Company property is subject to Code Section 704(c) or is reflected in the Capital Accounts of the Members and on the books
of the Company at a value that differs from the adjusted tax basis of such property, then the Tax Items with respect to such property
will be allocated in accordance with Treasury Regulations Section 1.704-1(b)(4)(i) and Treasury Regulations Section 1.704-3
in accordance with the principles of Section 704(c), using the “traditional” method.

 

(3) Pursuant
to Treasury Regulations Section 1.752-3, each Member’s interest in Company profits, for purposes of determining such
Member’s shares of excess “nonrecourse liabilities” for such purpose will be the percentage of that Member’s
Units of the total issued and outstanding Units in the Company.

 

(4) Any
payment of foreign tax that may be creditable against any Member’s United States federal income tax liability and any tax
credits shall be allocated to the Members in a manner reasonably determined by the Manager, but strictly in accordance with Treasury
Regulations Section 1.704-1(b)(2) and any other applicable Treasury Regulations.

 

(5) The
Members are aware of the income tax consequences of the allocations made by this Agreement and will report their shares of Profits
and Losses and other items of Company, gross income, gain, loss and deduction for income tax purposes consistently with this Agreement
and the Form 1065 and Schedules K-1 issued by the Company.

 

    C-2

     

    

 

E. Tax
Classification.

 

The Members intend
that the Company shall always be operated in a manner consistent with its treatment as a “partnership” for federal,
state and local income and franchise tax purposes. In accordance therewith, (a) no Member shall file any election with any
taxing authority to have the Company treated otherwise, and (b) each Member hereby represents, covenants, and warrants that
it shall not maintain a position inconsistent with such treatment. The Manager shall not at any time, except as otherwise required
by applicable law, (i) cause or permit the Company to elect (A) to be excluded from the provisions of Subchapter K
of the Code, or (B) to be treated as a corporation or an association taxable as a corporation for any tax purposes; (ii) cause
the Company to make any election reasonably determined to be necessary or appropriate in order to ensure the treatment of the Company
as a partnership for all tax purposes; (iii) cause the Company to file any required tax returns in a manner consistent with
its treatment as a partnership for tax purposes; and (iv) take any action or cause any officer or agent or representative
of the Company to take any action that would be inconsistent with the treatment of the Company as a partnership for such purposes.

 

F. Annual
and Tax Information.

 

The Manager will cause
the Company to deliver to each Member, within 90 days after the end of each Fiscal Year, all information with respect to the Company
necessary for the preparation of such Member’s federal and state income tax returns.

 

G. Tax
Audit.

 

(1) For
fiscal years of the Company beginning before December 31, 2017, these terms shall apply to any audit of the Company:

 

(a) Donald
McClymont shall serve as the Tax Matters Member.

 

(b) If
Donald McClymont is no longer a Member of the Company, then a replacement Tax Matters Member shall be designated by the Manager.

 

(c) Except
to the extent specifically provided in the Code or Treasury Regulations (or the laws of other relevant taxing jurisdiction) or
otherwise provided herein, the Tax Matters Member in his sole and absolute discretion shall have exclusive authority to act for
or on behalf of the Company with regard to tax matters to the extent such matters are reserved to a tax matters partner under the
Code and related Treasury Regulations and corresponding provisions of state or local law if any.

 

(d) Any
Member entering into a settlement agreement with the Internal Revenue Service that concerns a Company item shall notify the Tax
Matters Member of such settlement agreement and its terms within ten (10) days after the date thereof. During any Company income
tax audit or other income tax controversy with any governmental agency over which the Tax Matters Member has control, the Tax Matters
Member shall keep the other Members informed of all material facts and developments on a reasonably prompt basis.

 

    C-3

     

    

 

(e) All
expenses incurred by the Tax Matters Member on behalf of the Company with respect to any tax matter that does or may affect the
Company, or any Member by reason thereof, shall be paid for out of Company assets, These expenses shall be treated as Company expenses;
provided however that the Company shall not be obligated to pay any such expenses incurred as a result of the Tax Matters Member’s
breach of fiduciary duty, breach of duty of loyalty, bad faith, gross negligence, reckless or intentional misconduct or knowing
violation of the law.

 

(f) The
Tax Matters Partner shall give prompt notice to the Members upon receipt of advice that the Internal Revenue Service or other taxing
authority intends to examine any income tax return, or records or books of the Company and upon the occurrence of any significant
developments with respect thereto.

 

(g) If
a Member is permitted by the Tax Matters Member or permitted under the Code to participate in Company-level administrative or judicial
tax proceedings, such Member shall be responsible for all expenses incurred by it in connection with such participation.

 

(h) The
cost of any adjustments to all Members and the cost of any resulting audits or adjustments of Members will be borne solely by the
Members without reimbursement by the Company.

 

(2) Tax
Audit of the Partnership under Consolidated Tax Audit Rules. The provisions of Paragraph G(2) will apply to an Audit of the
Partnership pursuant to the audit provisions enacted as part of the Centralized Company Audit Regime.

 

(a) Definitions.
These definitions apply for purposes of this Paragraph G(2):

 

(i) Audit.
“Audit” means a federal tax audit of the Company and subsequent administrative proceedings and judicial proceedings
under the Centralized Company Audit Regime.

 

(ii) Audit
Expenses. “Audit Expenses” mean all expenses of the conduct of an Audit. Audit Expenses include the Imputed Underpayment.

 

(iii) Centralized
Company Audit Regime. “Centralized Company Audit Regime” means the provisions of the Internal Revenue Code enacted
by the Bipartisan Budget Act of 2015, Section 1101, Pub. L. No. 114-74, contained in Subchapter C, Chapter 63, of Subtitle
F of Title 26, as these rules may be amended.

 

(iv) Imputed
Underpayment. “Imputed Underpayment” means the “Imputed Underpayment” of the Partnership as that term
is used in Section 6225. For purposes of this Agreement, the “Imputed Underpayment” will include any penalties,
interest, and additions to tax with respect to the Imputed Underpayment.

 

    C-4

     

    

 

(v) In
Good Faith. “In Good Faith” means, to act for a purpose reasonably believed by the Partnership Representative to
be in, or not opposed to, the best interests of the Partnership and not any improper personal benefit, without fraud or gross negligence.

 

(vi) Indemnified
Audit Claim. “Indemnified Audit Claim” means any civil investigation or civil action undertaken, filed or threatened
to be filed against the Partnership Representative before any governmental agency or in a federal or state court or in an arbitration
or mediation or similar forum for nonjudicial adjudication in connection with the Partnership Representative’s activities,
actions, or status in connection with an Audit.

 

(vii) Indemnified
Audit Claim Expenses. “Indemnified Audit Claim Expenses” mean liabilities, costs and expenses related to defense
against an Indemnified Audit Claim.

 

(viii) Indemnified
Expenses. “Indemnified Expenses” mean liabilities, costs and expenses (other than Indemnified Audit Claim Expenses)
related to an Audit incurred In Good Faith.

 

(ix) Partnership
Representative.. “Partnership Representative” means the “partnership representative” of the Company
as the term “partnership representative” is used in Code Section 6223.

 

(b) Selection
of Partnership Representative.

 

(i) The
Manager will appoint the Partnership Representative. The initial Partnership Representative will be Donald McClymont.

 

(ii) The
Manager can remove the Partnership Representative with or without cause, subject to the rules of the Centralized Company Audit
Regime.

 

(iii) The
Partnership Representative will serve until replaced by the Manager.

 

(iv) The
Partnership Representative and any replacement Partnership Representative must meet the qualification requirements under the Centralized
Company Audit Regime.

 

(c) General
Duties of Partnership Representative.

 

(i) The
Partnership Representative will undertake the duties of the “Partnership Representative” for the Partnership under
the Code and Regulations.

 

(ii) The
Partnership Representative shall defend any audit of the Company and any related administrative or court proceedings using the
accountants of the Company and counsel of the Company, as determined by the Manager.

 

(iii) The
Partnership Representative shall supervise the Company’s accountants and counsel in connection with an audit of the Company
and any related administrative or court proceedings, subject to the overall supervision by the Manager. In any event, the Manager
shall have final authority to engage or to discharge accountants and counsel.

 

    C-5

     

    

 

(iv) The
Partnership Representative will have the sole authority to bind the Partnership under Section 6223(b).

 

(v) Subject
to the terms of this Agreement, the Partnership Representative shall undertake all duties, have all responsibilities, and shall
have all powers of the “partnership representative” of the Company under the Centralized Company Audit Regime.

 

(d) Partnership
Representative Will Keep Manager Informed. The Partnership Representative will keep the Manager reasonably apprised on a current
basis of all material developments in connection with any Company Audit, administrative proceedings, and judicial proceedings.

 

(e) Partnership
Representative Will Follow All Instructions of Manager. The Partnership Representative will follow all instructions of the
Manager in connection with the Company Audit, administrative proceedings, and judicial proceedings.

 

(f) Actions
Requiring Prior Approval of Manager. The Partnership Representative will undertake these acts only with the prior approval
of the Manager:

 

(i) Scheduling
Meetings. To schedule or to attend any meeting with representatives of the Internal Revenue Service, the United States Department
of Justice, or state tax authorities.

 

(ii) Written
Communications. To make any written filings or to send to the Internal Revenue Service, United States Department of Justice,
or state tax authorities any letters, memoranda, responses to information document requests, responses to any requests for admissions,
or any other written arguments, responses or communications.

 

(iii) Depositions.
To schedule any depositions.

 

(iv) Election
Out. To make the “election out” under Section 6221.

 

(v) Push-Out
Election. To make the “push-out” election under Section 6226 to apply to the Partnership.

 

(vi) Pull-in
Election. To cause the Company to make the “pull-in” election under Section 6225(c)(2)(B).

 

(vii) Administrative
Adjustment. To cause the Company to request an administrative adjustment for any Partnership taxable year under Section 6227.

 

(viii) Waive
Section 6232(b) Restrictions. To waive the restrictions in Section 6232(b) on the making of any Partnership adjustment.

 

    C-6

     

    

 

(ix) File
Petition for Readjustment in Court. To file a petition for readjustment with the Tax Court, the district court of the United
States for the district in which the Partnership’s principal place of business is located, or the Court of Federal Claims.

 

(x) Filings.
To make any filings with any court or the appellate division of the Internal Revenue Service.

 

(xi) To
Seek Member Information in Connection with Company Audit, Administrative Proceedings, and Judicial Proceedings. To seek information
from Members and former Members necessary or reasonably desirable in connection with the Company audit, administrative proceedings,
and judicial proceedings.

 

(xii) Extend
Period of Limitations on Adjustments. To extend the period of the period of limitations on making adjustments.

 

(xiii) Settlement
Agreement. To enter into a settlement agreement or closing agreement with the Internal Revenue Service.

 

(xiv) Amended
Tax Returns. To file any amended tax returns for the Company.

 

(xv) Tax
Appeal. To file any appeal to an audit determination.

 

(xvi) Court
Action. To file any court action for the determination of the taxes of the Company.

 

(xvii) To
File Amended Returns. To cause the Company to file any amended tax returns.

 

(g) Partnership
Representative Will Keep Manager Informed. The Partnership Representative will inform the Manager on a current basis of all
material developments in connection with any Company Audit, administrative proceedings, and judicial proceedings.

 

(h) Manager
May Remove and Replace Partnership Representative. The Manager may remove the Partnership Representative and appoint a successor
Partnership Representative, without or without cause and with or without prior notice. Notwithstanding the foregoing, the removal
and selection of the successor Partnership Representative will be effective only as provided in controlling Treasury Regulations.

 

(i) Partnership
Representative May Resign. The Partnership Representative may resign as Partnership Representative’s on 30-days’
advance written notice to the Manager. Notwithstanding the foregoing, the resignation and selection of the successor Partnership
Representative will be effective only as provided in controlling Treasury Regulations.

 

(j) Delivery
of Files on Removal or Resignation. The Partnership Representative may resign or be removed. In that event, the former Partnership
Representative promptly will deliver to the Manager all of the Partnership Representative’s written and electronic files
and writings with respect to the Partnership Representative’s position.

 

    C-7

     

    

 

(k) Manager
May Elect Successor Partnership Representative. The Manager may elect a successor Partnership Representative at any time at
which the office of Partnership Representative is vacant.

 

(l) Member
Cooperation in Connection With Company Audits. Each Member and former Member will fully cooperate with the Partnership Representative
in connection with Company Audits.

 

(m) Allocation
of Audit Expenses. The Partnership Representative may allocate, In Good Faith, Audit Expenses and reasonably expected Audit
Expenses equitably among current and former Members.

 

(n) Contribution
of Imputed Underpayment.

 

(i) Election
Out. The Manager, in their discretion, may reasonably determine any imputed underpayment imposed on the Company pursuant to
Code Section 6232 (and any related interest, penalties or other additions to tax) that is attributable to one or more Members
or former Members.

 

(ii) Contribution
by Members. At the discretion of the Manager, the Manager shall require that such Members promptly pay to the Company (pro
rata in proportion to their respective shares of such underpayment, as reasonably determined by the Manager) within fifteen
days following the Partnership Representative’s request for payment.

 

(iii) Failure
to Pay. Any failure of a Member or former Member to pay such amount shall result in a subsequent reduction in Distributions
otherwise payable to such Members or former Members plus interest on such amount calculated at the Prime Rate plus two percent
(2%)).

 

(iv) Allocation
of Imputed Underpayment. In making the determination of which Members (including former Members) should contribute a share
of the imputed underpayment, the Manager will allocate any imputed underpayment imposed on the Company (and any related interest,
penalties, additions to tax and audit costs) among the Members and former Members in good faith taking into account each Member’s
particular status, including, for the avoidance of doubt, a Member’s tax-exempt status.

 

(v) Imputed
Underpayment of Lower-Tier Entity. Any amounts that the Company is required to contribute to any passthrough entity in which
it owns an interest (a “Lower-Tier Entity”) with respect to taxes of the Lower-Tier Entity (“Lower-Tier Taxes”)
that the Manager reasonably determines is reasonably allocable to one or more Members or former Members shall be treated as an
imputed underpayment of the Company.

 

(A) In
the discretion of the Manager, this amount shall be promptly paid by such Members or former Members to the Company (pro rata
in proportion to their respective shares of “Lower-Tier Taxes” as determined by the Manager) within fifteen days
following the Manager’ request for payment. Any failure to pay such amount shall result in a subsequent reduction in Distributions
otherwise payable to such Members or former Members plus interest on such amount calculated at the Prime Rate plus two percent
(2%)).

 

    C-8

     

    

 

(B) In
making the determination of which Members or former Members (including former Members or former Members) are liable for any “Lower-Tier
Taxes”, the Manager will allocate any “Lower-Tier Taxes” among the Members or former Members in good faith taking
into account each Member’s particular status, including, for the avoidance of doubt, a Member’s tax-exempt status.

 

(C) All
of the indemnification provisions of Article VI shall apply to the Manager and the Manager shall have no liability to the Company
or any Member for any loss suffered by the Company or any Member that arises out of any action or inaction of the Manager, unless
such action or inaction is adjudicated by a court of competent jurisdiction to constitute bad faith, actual fraud, gross negligence
or willful misconduct by the Manager.

 

(o) Audit
Notification. The Partnership Representative will provide prompt written notification to each Member in the event of any audit
of the Company by the United States Internal Revenue Service.

 

(p) Member
Contribution for Audit Expenses. At the Manager’ option, the Partnership may require each current and former Member to
contribute to the Partnership the current or former Member’s share of the Audit Expenses and reasonably expected Audit Expenses
as so allocated.

 

(q) Member
Covenant Not to Sue. No current or former Member will sue (and neither the Partnership nor any current and former Member or
other Member will have any claim against) the Tax Matters Partner, the Partnership Representative, the Manager, or the Company
on account of any act or failure to act by the Tax Matters Partner, the Partnership Representative, the Manager, or the Company
in connection with an Audit.

 

(r) Partnership
Indemnification against Expenses. The Partnership will indemnify and will hold harmless the Partnership Representative from
and against any and all Indemnified Audit Claim Expenses and Indemnified Expenses.

 

(s) Survival
of Audit Provisions. Each Member agrees that the provisions of this Paragraph G will survive the termination of the Partnership
and the termination of any Member’s interest in the Partnership.

  

    C-9

     

    

 

EXHIBIT D

LEGACY MEMBERS

 

The Legacy Members are:

 

    D-1

     

    

 

EXHIBIT E

LEGACY MEMBERS

 

The Initial Members are:

 

 

 

E-1aljj-ex101_6.htm

 

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “Agreement”), dated January 23, 2021 is made by and among ALJ Regional Holdings, Inc., a Delaware corporation (the “Seller”), Superior Interior Finishes, LLC, a Nevada limited liability company (the “Purchaser”), and solely with respect to Section 4.2, Floors-N-More, LLC, a Nevada limited liability company (the “Company”). 

W I T N E S S E T H

WHEREAS, as set forth in this Agreement, the Seller desires to sell, assign and transfer to the Purchaser, and the Purchaser desires to purchase and accept, all of Seller’s right, title and interest in and to 100% of the membership interests (the “Units”) in the Company (the “Sale Transaction”).

NOW, THEREFORE, subject to the conditions herein, in consideration of the premises and the mutual representations, warranties, covenants, agreements and obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

Article I
PURCHASE AND SALE

Section 1.1Purchase and Sale.  

(a)On the terms and subject to the conditions set forth herein, on the Closing Date (as defined below) Seller hereby agrees to sell, assign and transfer to Purchaser the Units, and the Purchaser hereby agrees to purchase and accept from the Seller, the Units for total consideration in an amount equal to $500,000.00 (the “Purchase Price”).  The Purchase Price shall be paid on the Closing Date as follows:

(i)Immediately following the execution of that certain term sheet summarizing the principal terms of the Sale Transaction by the Seller and the Purchaser and as a condition precedent to the formation of this Agreement, Purchaser shall have deposited in an account mutually acceptable to the parties the sum of $500,000.00 (the “Earnest Money Deposit”). Except as otherwise set forth in Section 4.5 herein, the Earnest Money Deposit shall be deemed non-refundable. On the Closing Date, the Earnest Money Deposit shall be applied against the Purchase Price and constitute payment in full. 

(ii)  In the event that Purchaser fails to close the Sale Transaction within the Outside Date (as defined below), Seller shall be entitled to retain the Earnest Money Deposit as liquidated damages as more fully provided in Section 4.5 herein.

(b)Seller shall be entitled to all cash on hand of the Company as of the Closing Date (net of issued but uncleared checks and drafts) and shall have the right at any time on or prior to the Closing Date to transfer all such cash by wire transfer to the account or accounts designated by Seller (any such transfers, a “Cash Transfer”). 

			
	
 
	
 
	
 

 

Section 1.2Covenants of the Parties.  During the period from the date of this Agreement to the Closing Date, the Seller shall (i) continue to operate the Company in the ordinary course of business consistent with historical operations and (ii) use commercially reasonable efforts to maintain the employees, customers and vendors of the Company; provided, that nothing set forth herein shall prevent any Cash Transfers by Seller as contemplated in Section 1.1(b). Further, Seller agrees to consider all inter-company obligations between the Seller and the Company as paid as of the Closing Date as a result of the consummation of the Sale Transaction.

Section 1.3Closing.  The closing (the “Closing”) of the Sale Transaction shall be held remotely via the exchange of signatures or in such other manner as the parties may mutually agree as practicable after the Closing Conditions (as defined below) are satisfied (the “Closing Date”) but in no event later than thirty (30) calendar days after the full and final execution of this Agreement by the parties (or if such date is not a business day, the immediately following business day, in each case, the “Outside Date”). The Sale Transaction shall be effective as of 12:01 AM (Pacific Time) on the Closing Date. In the event the Sale Transaction is not consummated prior to 11:59 PM (Pacific Time) on the Outside Date, then Seller and Purchaser shall each have the right as set forth in Section 4.5 herein.

Section 1.4Closing Conditions.  The parties’ obligations to consummate the Sale Transaction shall be subject to and conditioned upon (the “Closing Conditions”) on the following:

(a)The Seller shall deliver or cause to be delivered to the Purchaser:

(i)An assignment and assumption (the “Assignment and Assumption Agreement”) of the Units sufficient to transfer to Purchaser good and valid title in the Seller’s Units free and clear of any lien, pledge, charge, claim, encumbrance, security interest, option, mortgage, easement, or other restriction or third-party right of any kind, including any right of first refusal or restriction on voting (each a “Lien”), substantially in the form of Exhibit A attached hereto, duly executed by the Seller;

(ii)executed copies of the consent of Cerberus Business Finance, LLC with respect to the Sale Transaction; 

(iii)a certificate of the Secretary or Assistant Secretary (or equivalent officer) of Seller certifying as to (A) the resolutions of the board of directors (or duly authorized committee thereof) of Seller, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the Sale Transaction, and (B) the names and signatures of the officers of Seller authorized to sign this Agreement and the documents to be delivered hereunder; and

(iv)a certificate of an authorized officer of Seller certifying that the representations and warranties of the Seller contained in Article II herein shall be true and correct on and as of the Closing Date.

(b)The Purchaser shall deliver or cause to be delivered to the Seller:

(i)the Purchase Price in cash in immediately available funds (provided, that the Earnest Money Deposit shall be applied against the Purchase Price on the Closing Date);

			
	
 
	
 
	
 

 

(ii)executed counterparts of the Assignment and Assumption Agreement;

(iii)copies of such notices to or consents from, as applicable, the Nevada State Contractors Board with respect to the Sale Transaction reasonably acceptable to Seller in its sole discretion; 

(iv)an executed copy of a loan commitment letter issued to the Purchaser for a line of credit with respect to the operations of the Company following the Sale Transaction;

(v)a certificate of the Secretary or Assistant Secretary (or equivalent officer) of Purchaser certifying as to (A) the resolutions of the sole member of Purchaser, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the Sale Transaction, and (B) the names and signatures of the officers of Purchaser authorized to sign this Agreement and the documents to be delivered hereunder; and

(vi)a certificate of an authorized officer of Purchaser certifying that the representations and warranties of the Purchaser contained in Article III herein shall be true and correct on and as of the Closing Date. 

Article II
REPRESENTATIONS AND WARRANTIES OF THE SELLER

Seller represents and warrants to the Purchaser that the following statements in this Article II are true and correct as of the date hereof and on the Closing Date:

Section 2.1Organization and Qualification.  The Seller is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.

Section 2.2Authorization and Enforceability.  The Seller has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance by the Seller of this Agreement has been duly and validly authorized and no additional corporate consent by the Seller is required in connection with the execution, delivery and performance by the Seller of this Agreement. This Agreement (assuming due authorization, execution and delivery by the Purchaser) constitutes the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms.

Section 2.3Ownership.  The Seller owns beneficially and of record the Units.  The Purchaser will acquire good and marketable title to the Units, free and clear of all Liens.

Article III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Seller that the following statements in this Article III are true and correct as of the date hereof and on the Closing Date:

Section 3.1Organization and Qualification.  The Purchaser is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.

			
	
 
	
 
	
 

 

Section 3.2Authorization.  The Purchaser has full limited liability company power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance by the Purchaser of this Agreement has been duly and validly authorized and no additional limited liability company or member consent by the Purchaser is required in connection with the execution, delivery and performance by the Purchaser of this Agreement. This Agreement (assuming due authorization, execution and delivery by the Seller) constitutes the legal, valid and binding obligation of the Purchaser, enforceable against Purchaser in accordance with its terms.

Section 3.3  Accredited Investor.  Purchaser (a) is an “accredited investor” as such term is defined in Rule 501 under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder and is able to bear the economic risk associated with the purchase of the Units, (b) is a sophisticated entity with respect to the sale of the Units, (c) has adequate information concerning the business and financial condition of the Company and the value of the Units to make an informed decision regarding the sale of the Units, (d) has independently and without reliance upon Seller, and based on such information as Purchaser has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that Purchaser has relied upon Seller’s express representations, warranties, covenants and agreements in this Agreement, (e) acknowledges that Seller has not given Purchaser any investment advice, credit information or opinion on whether the sale of the Units is prudent, (f) acknowledges, represents and warrants that (i) Seller currently may have, and later may come into possession of, information with respect to the Units and/or the Company that is not known to Purchaser and that may be material to a decision to purchase the Units (“Purchaser Excluded Information”), (ii) Purchaser has determined to purchase the Units notwithstanding its lack of knowledge of the Purchaser Excluded Information and (iii) Seller shall have no liability to Purchaser or any other person or entity, and Purchaser waives and releases any claims that it might have against Seller or any affiliate of Seller, whether under applicable securities laws or otherwise, with respect to the nondisclosure of the Purchaser Excluded Information in connection with the transaction described herein; provided, however, that the Purchaser Excluded Information shall not and does not affect the truth or accuracy of Seller’s representations or warranties in this Agreement.

Section 3.4Adequate Funds.  The Purchaser has or will have sufficient funds or other sources of working capital available as of the Closing Date to operate the Company in its ordinary course of business following the consummation of the Sale Transaction. Notwithstanding anything to the contrary set forth herein, the Purchaser acknowledges that availability of funding and financing is not a condition to Purchaser’s obligation to consummate the Sale Transaction.

Article IV
ADDITIONAL MATTERS

Section 4.1Disclaimer of Warranties. Notwithstanding anything contained in this Agreement, it is the explicit intent of the parties that Seller is not making any representations or warranties whatsoever, express or implied, beyond those expressly given in Article II of this Agreement, and Seller hereby disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to Purchaser or its Representatives (as defined below) (including any opinion, information, projection, or advice that may have been provided to Purchaser by any Representative of Seller). Except for the representations and warranties contained in Article II, 

			
	
 
	
 
	
 

 

Purchaser takes the Units and the business, assets and liabilities of the Company “as is” and “where is” with all faults as of the Closing Date. Without limiting the generality of the immediately foregoing sentence, except for the representations and warranties contained in Article II, the Seller hereby expressly disclaims and negates and representation or warranty, expressed or implied, at common law, by statute, or otherwise, relating to the condition of the business, assets or liabilities of the Company.

Section 4.2Releases.

(a)Release by Purchaser Releasing Parties of Seller Released Parties.  Effective upon the Closing Date, the Purchaser, its affiliates, successors and assigns (collectively, the “Purchaser Releasing Parties”) hereby fully, finally, absolutely, unconditionally and irrevocably exculpate, exonerate, release and forever discharge the Seller and its affiliates, successors, assigns, respective current or former, direct or indirect, parent entities, divisions, subsidiaries, related business entities, members, managers, managing members, partners, general partners, limited partners, directors, managing directors, officers, control persons, stockholders, equityholders, employees, agents, attorneys, administrators, heirs, executors, trustees, beneficiaries, representatives, insurers, lenders, attorneys, legal representatives, consultants, contractors, successors and assigns (each a “Representative” and collectively, “Representatives”) and any Representative of any such Representative (collectively, the “Seller Released Parties”) from any and all claims (including derivative claims), counterclaims, actions, causes of action, suits, arbitrations, proceedings, losses, debts, liabilities, obligations, sums of money, compensation, accounts, covenants, contracts, controversies, agreements, promises, damages, costs, fees, attorneys' fees, expenses, judgments, executions, demands and liabilities of any kind or nature whatsoever (each a “Claim” and collectively, “Claims”) arising out of, relating to, against, or in any way connected with the Company, including, without limitation, any matters related to any debt or equity investment in, or loan to, the Company (including without limitation, as memorialized herein) by any Seller Released Parties and any matters related to any service to the Company by any Seller Released Parties as a manager, director, or in any other capacity, in each case with respect to any such Claim, whether known or unknown, suspected or unsuspected, asserted or unasserted, disclosed or undisclosed, concealed or hidden, absolute or contingent, direct or indirect, derivative or otherwise, or nominally or beneficially possessed or claimed by any Purchaser Releasing Party, whether the same be in administrative proceedings, in arbitration or admiralty, at law, in equity or mixed, and whether based on contract, tort, statutory or other legal or equitable theory of recovery, which the Purchaser Releasing Parties ever had, now have or hereafter can, shall or may have against any or all of the Seller Released Parties, in respect of any and all agreements, liabilities or obligations entered into or incurred on or prior to the date hereof, or in respect of any actions taken or event occurring or circumstances existing on or prior to the date hereof, whether or not relating to Claims pending on, or asserted after, the date hereof (collectively, the “Seller Released Claims”); provided, however, that notwithstanding the foregoing, the Seller Released Claims shall not include (i) the express obligations of the Seller Released Parties under the documents entered into on the date hereof or (ii) any liability of a Seller Released Party if and to the extent arising from the actual fraud of such Seller Released Party. Further, the Purchaser Releasing Parties shall indemnify the Seller Released Parties against, and shall protect, defend and hold harmless the Seller Released Parties from and against all liabilities arising out of or relating to the operation of the Company following the Closing Date.

(b)Release by the Company Releasing Party of the Seller Released Parties.  Effective upon the Closing Date, the Company, and its respective affiliates, successors and assigns 

			
	
 
	
 
	
 

 

(collectively, the "Company Releasing Parties"), hereby fully, finally, absolutely, unconditionally and irrevocably exculpate, exonerate, release and forever discharge the Seller Released Parties from any and all Seller Released Claims; provided, however, that notwithstanding the foregoing, the Seller Released Claims shall not include (i) the express obligations of the Seller Released Parties under the documents entered into on the date hereof or (ii) any liability of any Seller Released Party if and to the extent arising from the actual fraud of such Seller Released Party.

(c)Release by the Seller Releasing Parties of the Company Released Parties.  Effective upon the Closing Date, the Seller, its affiliates, successors and assigns (collectively, the “Seller Releasing Parties,” and together with the Company Releasing Parties, the “Releasing Parties”) hereby fully, finally, absolutely, unconditionally and irrevocably exculpate, exonerate, release and forever discharge the Company, and its respective affiliates, successors, assigns and Representatives and any Representative of any such Representative (collectively, the “Company Released Parties”) from any and all Claims arising out of, relating to, against, or in any way connected with the Company, including, without limitation, any matters related to any debt or equity investment in, or loan to, the Company by any person and any matters related to any service to the Company by any person as a manager, director, or in any other capacity, in each case with respect to any such Claim, whether known or unknown, suspected or unsuspected, asserted or unasserted, absolute or contingent, direct or indirect, derivative or otherwise, or nominally or beneficially possessed or claimed by any Seller Releasing Party, whether the same be in administrative proceedings, in arbitration or admiralty, at law, in equity or mixed, and whether based on contract, tort, statutory or other legal or equitable theory of recovery, which any Seller Releasing Party ever had, now has or hereafter can, shall or may have against any or all of the Company Released Parties, in respect of any and all agreements, liabilities or obligations entered into or incurred on or prior to the date hereof, or in respect of any actions taken or event occurring or circumstances existing on or prior to the date hereof, whether or not relating to Claims pending on, or asserted after, the date hereof (collectively, the “Company Released Claims” and together with the Seller Released Claims, the “Released Claims”); provided, however, that notwithstanding the foregoing, the Company Released Claims shall not include (i) the express obligations of the Company Released Parties under the documents entered into on the date hereof or (ii) any liability of any Company Released Party if and to the extent arising from the actual fraud of such Company Released Party.

(d)Effective upon the Closing Date, each of the Releasing Parties hereby expressly waives any rights a Releasing Party may have under applicable law to preserve Released Claims which the Releasing Party does not know or suspect to exist in the Releasing Party’s favor at the time of executing this Agreement.  The Releasing Party understands and acknowledges that the Releasing Party may discover facts different from, or in addition to, those which the Releasing Party knows or believes to be true with respect to the Released Claims, and agrees that the release provided herein shall be and remain effective in all respects notwithstanding any subsequent discovery of different or additional facts.  If the Releasing Party discovers that any fact relied upon in entering into this Agreement was untrue, or that any fact was concealed, or that an understanding of the facts or law was incorrect, the Releasing Party shall not be entitled to any relief as a result thereof, and the Releasing Party surrenders any rights the Releasing Party might have to rescind this Agreement on any ground.  This Agreement is intended to be final and binding regardless of any claim of misrepresentation, promise made with intention of performing, concealment of fact, mistake of law, or any other circumstances whatsoever.

			
	
 
	
 
	
 

 

(e)Effective upon the Closing Date, the Releasing Parties shall not, and shall cause each of their respective Representatives not to, (a) commence, prosecute, continue or issue any litigation, claim, action or demand, (b) join in any litigation, claim, action or demand or (c) suggest, encourage, induce, incite or assist any other person to commence, prosecute, continue or issue any litigation, claim, action or demand, in each case against any Released Party arising out of, based upon or relating to any Released Claim as set forth in this Section 4.2.  If any Releasing Party or any of its respective Representatives does any of the things mentioned in the immediately preceding sentence, then the Releasing Parties shall indemnify any involved Released Party in the amount of the value of any final judgment or settlement (monetary or other) entered against, paid or incurred by those Released Parties, shall promptly reimburse those Released Parties for their attorneys’ fees and disbursements as incurred and hereby waives and forfeits any right it may have to recover with respect to any such litigation, claim, action or demand.  Each Releasing Party represents and warrants that it has not sold, assigned, transferred, conveyed or hypothecated (each a “Transfer”) any claim or cause of action or right to payment that would be released hereunder but for such Transfer.

(f)Effective upon the Closing Date, the parties each understand and agree that the releases set forth herein are intended to be full and final releases covering all known and unknown and unanticipated injuries, debts, investment opportunities, Claims or damages that have arisen or may have arisen from any matters, acts, omissions or dealings referred to above.  Therefore, as to these matters released above, the Releasing Parties hereby expressly waive and relinquish any and all rights or benefits that they may now have, or in the future may have under the terms of Section 1542 of the California Civil Code and any similar law of any state or territory of the United States.  Said section provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release which if known by him or her must have materially affected his or her settlement with the debtor. The Releasing Parties acknowledge that they are aware that they may hereafter discover facts in addition to, or different from, those which they now know or believe to be true, but it is their intention here, fully and finally and forever, to settle and to release any and all matters, disputes and differences, known or unknown, suspected or unsuspected, that do now exist, may exist or heretofore have existed with respect to those matters described above.

Section 4.3Mutual Non-Disparagement.  As of the execution of this Agreement, each party hereto shall, and shall cause its Representatives to, refrain from directly or indirectly disparaging, impugning or taking any action reasonably likely to damage the reputation of the other party or its affiliates.  The foregoing shall not apply to any compelled testimony or production of information, either by legal process or subpoena or in connection with a response to a request for information from any governmental authority with jurisdiction over the party from whom information is sought.

Section 4.4Liability Cap.  The liability of Seller for any breach of any representation or warranty set forth herein shall not exceed the Purchase Price. In no event shall Seller (or any of Seller’s affiliates) be liable to Purchaser (or any other person or entity) for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple of damages. 

Section 4.5Default; Liquidated Damages. 

			
	
 
	
 
	
 

 

(a)In the event the Sale Transaction is not consummated within the Outside Date, Seller may, as its sole and exclusive remedy for such default, terminate this Agreement by written notice to Purchaser, in which event Seller shall be entitled to immediately retain the Earnest Money Deposit; provided, however, that if the Sale Transaction is not consummated within the Outside Date because of the failure by the Seller to deliver the deliverables set forth in Section 1.4(a) herein, Purchaser may, as its sole and exclusive remedy for such default, terminate this Agreement by written notice to Seller, in which event the Earnest Money Deposit shall be immediately returned to Purchaser. 

(b)SELLER AND PURCHASER ACKNOWLEDGE THAT SELLER IS VERY DESIROUS OF CLOSING THE SALE TRANSACTION CONTEMPLATED HEREBY WITHIN THE TIME FRAME ESTABLISHED BY THIS AGREEMENT, AND THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IN THE EVENT THAT THE SALE TRANSACTION DOES NOT CLOSE WITHIN SUCH TIME FRAME DUE TO PURCHASER’S DEFAULT UNDER THIS AGREEMENT. SELLER AND PURCHASER FURTHER ACKNOWLEDGE THAT SELLER WILL BE ENTITLED TO COMPENSATION IF THE SALE TRANSACTION DOES NOT CLOSE DUE TO PURCHASER’S DEFAULT. THE PARTIES AGREE THAT IT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE, AS OF THE SIGNING OF THIS AGREEMENT, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY THE EXTENT OF DAMAGES TO SELLER IN THE EVENT OF PURCHASER’S DEFAULT OR THE AMOUNT OF COMPENSATION SELLER SHOULD RECEIVE IN THE EVENT THAT THE SALE TRANSACTION DOES NOT CLOSE DUE TO PURCHASER’S DEFAULT. ACCORDINGLY, THE PARTIES HEREBY AGREE THAT A REASONABLE ESTIMATE OF SUCH DAMAGES OR SUCH COMPENSATION, AS THE CASE MAY BE, IS THE AMOUNT OF THE EARNEST MONEY DEPOSIT. 

Article V
MISCELLANEOUS

Section 5.1Notices.  All notices and communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended or delivered by registered or certified mail, return receipt requested, or if sent by electronic transmission, provided that the electronic transmission is promptly confirmed by telephone or email confirmation thereof.  All notices and other communications will be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a business day.  Otherwise, any notice or communication will be deemed not to have been received until the next succeeding business day.  All such notices, demands and other communications shall be sent, in the case of each party, to such party at the address set forth below the name of such party on such party’s counterpart signature page to this Agreement, or to such other address or telecopy number as shall be specified by such party by notice given in accordance with this Section 5.1.

Section 5.2Severability.  The terms and provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other terms and provisions hereof.  If any provision of this Agreement, or the application thereof to any person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefore in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the 

			
	
 
	
 
	
 

 

remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 5.3Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of law.

Section 5.4Selection of Forum; Waiver of Jury Trial.  The parties hereto agree that any litigation or other action, seeking to enforce any term or provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought solely in the United States federal courts or state courts located in the State of Delaware, as applicable, and each of the parties hereto hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such litigation or other action and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such litigation or other action in any such court or that any such litigation or other action brought in any such court has been brought in an inconvenient forum.  Process in any such litigation or other action may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in ‎‎Section 5.1 shall be deemed effective service of process on such party.  Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or other proceeding arising out of this Agreement or the transactions contemplated hereby.  Each party hereto (a) represents that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement, by, among other things, the mutual waiver and certifications in this Section 5.4.

Section 5.5Amendment; Waiver.  This Agreement may be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party hereto, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any party hereto to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

Section 5.6Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Nothing in this Agreement shall create or be deemed to create any third-party beneficiary rights in any person or entity not a party to this Agreement.  No assignment of this Agreement or of any rights or obligations hereunder may be made by either the Seller or the Purchaser (by operation of 

			
	
 
	
 
	
 

 

law or otherwise) without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void.

Section 5.7Mutual Drafting.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

Section 5.8Entire Agreement.  This Agreement (including all schedules hereto and the other documents and instruments referred to herein) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters.

Section 5.9Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement.

. 

[Signature Pages Follow]

 

			
	
 
	
 
	
 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed as of the date first written above.

 

“SELLER”

 

	
	
ALJ Regional Holdings, Inc.

	
 

	
 

	
 

	
By:  .       /s/ Jess Ravich           .

	
Name: Jess Ravich 

	
Title:   Chairman & CEO 

	
 

	
 

	
Address for Notices:

	
 

	
244 Madison Avenue, PMB #358 

New York, NY 10016

Attention: Jess Ravich 

Email: Jessravich@gmail.com

	
 

	
 

	
with copies (which shall not constitute notice) to:

	
 

	
244 Madison Avenue, PMB #358 

New York, NY 10016

Attention: Brian Hartman 

Email: brian.hartman@aljregionalholdings.com 

	
 

	
And

	
 

	
Shearman & Sterling LLP

	
1460 El Camino Real, 2nd Floor

Menlo Park, CA 94025
Attention: Christopher M. Forrester

Email: chris.forrester@shearman.com

 

			
	
 
	
 
	
 

Signature Page to Purchase Agreement

 

 

	
	
Superior Interior Finishes, LLC

	
 

	
 

	
 

	
By:  .     /s/ Steve Chesin           .

	
Name: Steve Chesin 

	
Title:   President & Owner 

	
 

	
 

	
 

	
 

	
Address for Notices:

	
 

	
4580 W. Teco Avenue

Las Vegas, NV  89118 

 

	
Facsimile: 702-458-6294

	
Attn: Steve Chesin

 

with a copy to:

 

MacDonald & Associates

1731 Village Center Circle

Las Vegas, NV  89134

 

Facsimile: (702) 869-0683 Attn: Scott MacDonald

	
 

	
 

	
 

	
 

	
 

	
 

	
	
“PURCHASER”

	
 

 

			
	
 
	
 
	
 

Signature Page to Purchase Agreement

 

 

	
	
SOLELY WITH RESPECT TO SECTION 4.2:

Floors-N-More, LLC

	
 

	
 

	
By:  .     /s/ Steve Chesin           .

	
        Name:  Steve Chesin

	
        Title:    CEO

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

Signature Page to Purchase Agreement

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