Document:

Ex. 10.2

 

LIMITED LIABILITY COMPANY AGREEMENT

 

FOR

 

RBT – YOUJI, LLC

 

a Delaware limited liability company

 

Table of Contents

 

Page

 

	
ARTICLE I  BACKGROUND AND PURPOSE.

	
1

	 	 
	
1.1

	
Certificate

	
1

	
1.2

	
Adoption of Agreement

	
1

	
1.3

	
Supply Agreement

	
1

	
1.4

	
Manager Managed

	
1

	
1.5

	
Currency

	
1

	 	 
	
ARTICLE II  CERTAIN DEFINITIONS.

	
1

	 	 
	
ARTICLE III  ORGANIZATION OF THE COMPANY.

	
7

	 	 
	
3.1

	
Formation

	
7

	
3.2

	
Name

	
7

	
3.3

	
Term

	
7

	
3.4

	
Office and Agent

	
7

	
3.5

	
Purpose of the Company

	
7

	 	 
	
ARTICLE IV  CAPITAL CONTRIBUTIONS; PERCENTAGE INTEREST AND UNITS.

	
8

	 	 
	
4.1

	
Initial Capital Contributions

	
8

	
4.2

	
Percentage Interests

	
8

	
4.3

	
Capital Accounts

	
8

	
4.4

	
Additional Capital Contributions

	
8

	
4.5

	
Return of Capital Contribution

	
8

	
4.6

	
Adjustment upon Grant of Profits Interest

	
8

	 	 
	
ARTICLE V  MEMBERS.

	
9

	 	 
	
5.1

	
Members and Units

	
9

	
5.2

	
Admission of Additional Members

	
9

	
5.3

	
Withdrawals or Resignations

	
9

	
5.4

	
Payments to Members

	
9

	
5.5

	
Termination of Membership Interest

	
10

	
5.6

	
Loans and Other Transactions with the Company

	
10

	
5.7

	
Meetings of Members

	
10

	
5.8

	
Business Activities of Members; Confidentiality

	
11

	
5.9

	
Members Are Not Agents

	
12

 

	
ARTICLE VI  MANAGEMENT AND CONTROL OF THE COMPANY.

	
12

	 	 
	
6.1

	
Management of the Company

	
12

	
6.2

	
Management Committee

	
13

	
6.3

	
Consent of Members

	
15

	
6.4

	
Liability of Manager and Management Committee Members; Performance of Duties

	
16

	
6.5

	
Devotion of Time

	
16

	
6.6

	
Competing Activities by Management Committee Members

	
16

	
6.7

	
Transactions between the Company and the Managers

	
16

	
6.8

	
Payments to Managers

	
17

	
6.9

	
Acts of Manager as Conclusive Evidence of Authority

	
17

	
6.10

	
Limited Liability

	
17

	
6.11

	
Membership Interests of and Voting by Manager

	
17

	
6.12

	
Officers of the Company

	
17

	
6.13

	
RBT Reimbursement for Shared Employees

	
18

	 	 
	
ARTICLE VII  DISTRIBUTIONS OF DISTRIBUTABLE CASH.

	
18

	 	 
	
7.1

	
Tax Liabilities

	
18

	
7.2

	
Discretionary Distribution of Distributable Cash

	
18

	
7.3

	
No Restoration of Deficit Capital Account Balance

	
19

	
7.4

	
Maintenance of Working Capital Reserve

	
19

	
7.5

	
Limitations on Distributions

	
19

	 	 
	
ARTICLE VIII  ALLOCATIONS OF TAXABLE NET INCOME AND TAXABLE NET LOSS.

	
19

	 	 
	
8.1

	
Taxable Net Income

	
19

	
8.2

	
Taxable Net Loss

	
19

	
8.3

	
Special Allocations

	
19

	
8.4

	
Code Section 704(c) Allocations

	
21

	
8.5

	
Allocation of Taxable Net Income and Loss and Distributions On Transferred Interest

	
21

	
8.6

	
Recapture Chargeback

	
21

	
8.7

	
Section 754 Adjustment

	
21

	
8.8

	
Curative Allocations

	
21

	
8.9

	
Obligations of Members to Report Allocations

	
22

 

	
ARTICLE IX  TRANSFER AND ASSIGNMENT OF INTERESTS.

	
22

	 	 
	
9.1

	
Transfer and Assignment of Interests

	
22

	
9.2

	
Substitution of Members

	
22

	
9.3

	
Permitted Transfers

	
22

	
9.4

	
Right of First Refusal.

	
22

	
9.5

	
Right of Co-Sale

	
24

	
9.6

	
Transfers in Violation of this Agreement and Transfers of Partial Membership Interests

	
25

	 	 
	
ARTICLE X  CONSEQUENCES OF A DISPOSITION EVENT.

	
25

	 	 
	
10.1

	
Disposition Event

	
25

	
10.2

	
Purchase Price

	
25

	
10.3

	
Notice of Intent to Purchase

	
26

	
10.4

	
Election to Purchase Less than All of the Former Member’s Interest

	
26

	
10.5

	
Payment of Purchase Price

	
26

	
10.6

	
Closing of Purchase of Former Member’s Interest

	
26

	 	 
	
ARTICLE XI  ACCOUNTING, RECORDS, REPORTING BY MEMBERS.

	
27

	 	 
	
11.1

	
Books and Records

	
27

	
11.2

	
Inspection by Members

	
27

	
11.3

	
Reports

	
27

	
11.4

	
Bank Accounts

	
27

	
11.5

	
Tax Matters Member

	
28

	 	 
	
ARTICLE XII  DISSOLUTION AND WINDING UP.

	
28

	 	 
	
12.1

	
Conditions of Dissolution

	
28

	
12.2

	
Winding Up

	
28

	
12.3

	
Order of Payment of Liabilities, Distribution of Assets, Upon Dissolution

	
28

	
12.4

	
Limitations on Payments Made in Dissolution

	
28

	 	 
	
ARTICLE XIII  INDEMNIFICATION OF AGENTS.

	
28

	 	 
	
13.1

	
Indemnification of Manager and Management Committee

	
28

	
13.2

	
Limitation on Indemnification

	
29

	
13.3

	
Indemnification on Successful Defense

	
29

 

	
ARTICLE XIV  INVESTMENT REPRESENTATIONS.

	
29

	 	 
	
14.1

	
Preexisting Relationship or Experience

	
29

	
14.2

	
No Advertising

	
29

	
14.3

	
Investment Intent

	
29

	 	 
	
ARTICLE XV  BUSINESS DEALINGS.

	
29

	 	 
	
15.1

	
General Business Practices

	
29

	
15.2

	
Supply Agreement

	
30

	
15.3

	
Cooperation Regarding Future Products

	
30

	 	 
	
ARTICLE XVI  MISCELLANEOUS.

	
30

	 	 
	
16.1

	
Entire Agreement

	
30

	
16.2

	
Interpretation

	
30

	
16.3

	
Severability

	
30

	
16.4

	
Notice

	
31

	
16.5

	
Amendment

	
31

	
16.6

	
Counterparts

	
31

	
16.7

	
Attorneys’ Fees; Prejudgment Interest

	
31

	
16.8

	
Remedies Cumulative

	
31

	
16.9

	
Successors and Assigns

	
31

	
16.10

	
Specific Performance

	
32

	
16.11

	
Captions

	
32

	
16.12

	
Time

	
32

	
16.13

	
Parties in Interest

	
32

	
16.14

	
Further Assurances

	
32

	
16.15

	
Governing Law; Venue

	
32

 

LIMITED LIABILITY COMPANY AGREEMENT

FOR

RBT – YOUJI, LLC

 

RiceBran Technologies, a California corporation (“RBT”), and Youji Company  Limited, a Hong Kong corporation (“Youji”), agree, effective as of February 8, 2016 (the “Effective Date”), as follows:

 

ARTICLE I

Background and Purpose

 

1.1            Certificate.     On or about February 8, 2016, a Certificate of Formation (“Certificate”) for RBT - Youji, LLC, a limited liability company formed under the laws of the State of Delaware (“Company”), was filed with the office of the Delaware Secretary of State.

 

1.2            Adoption of Agreement.  The Members hereby adopt and approve this Limited Liability Company Agreement for the Company under the Act upon the terms set forth herein.

 

1.3            Supply Agreement.  The Company and Youji have agreed to use their good faith, best efforts to enter into an Exclusive Supply Agreement (“Exclusive Supply Agreement”) promptly following the Effective Date, pursuant to which Youji will agree to sell to the Company and the Company will agree to purchase from Youji certain products listed on Exhibit B-1 hereto. The general form of the Exclusive Supply Agreement is attached hereto as Exhibit B-2, provided that the parties acknowledge that various terms thereof remain in discussion.

 

1.4            Manager Managed.  The Members intend that the Company be manager managed.

 

1.5            Currency.       Unless specifically provided otherwise herein, all references to monetary units shall refer to the currency of the United States of America.

ARTICLE II

Certain Definitions.

 

The following terms shall have the meanings set forth below unless the context requires otherwise:

 

“Act” means the Delaware Limited Liability Company Act, Delaware Code Annotated Title 6, Sections 18-101 through 18-1109, as amended from time to time and any corresponding provisions of succeeding law.

 

“Affiliate” means (i) any individual, partnership, corporation, trust or other entity or association, that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Person, or that holds a substantial beneficial interest in a Person, or (ii) any relative or spouse of any person who holds a substantial beneficial interest in a Person.  The term “control,” as used above, means, with respect to a corporation or limited liability company, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company and, with respect to any individual, partnership, trust, other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

 

1

“Agreement” means this Limited Liability Company Agreement of RBT - Youji, LLC, as amended.

 

“Assignee” means a person who has acquired a beneficial interest in the Company who has not, as of the relevant time, been admitted as a substitute Member in accordance with the requirements of this Agreement.

 

“Bankruptcy”  means, with respect to any Person, any of the following events occurring after the Effective Date:  (a) the filing by such Person for, or its consent to, the appointment of a trustee, receiver, or custodian of such Person’s assets: (b) the entry of an order for relief with respect to such Person in proceedings under the United States Bankruptcy Code, as amended or superseded from time to time; (c) the making by such Person of a general assignment for the benefit of creditors; (d) the entry of an order, judgment, or decree by any court of competent jurisdiction appointing a trustee, receiver, or custodian of the assets of such Person unless the proceedings and the person appointed are dismissed within ninety (90) days; or (e) the failure by such Person generally to pay his or her debts as the debts become due within the meaning of Section 303(h)(1) of the United States Bankruptcy Code, as determined by the Bankruptcy Court, or the admission in writing of such Person of its inability to pay its debts as they become due.

 

“Business” has the meaning set forth in Section 3.5.

 

“Business Day” means any day other than a Saturday, Sunday or a day upon which banking institutions are authorized or required by law or executive order to be closed in the City of San Francisco, California.

 

“Capital Account” means an account initially reflecting the Capital Contribution of a Member which the Company establishes and maintains for such Member pursuant to Section 4.3.

 

“Capital Contribution” means the total value of cash and fair market value of property, as determined by the Manager and the Management Committee contributed to the Company by a Member or the Member’s predecessor in interest.

 

"Capital Transaction" means (i) the sale, lease, exchange, condemnation, casualty or other disposition of the Company’s or Subsidiaries business or capital assets, whether voluntary or involuntary, and (ii) any financing or refinancing of the Company’s or Subsidiaries assets or other Company borrowing; except for credit purchases of goods and services on a current basis and in the ordinary course of business.

 

“Certificate” and “Certificate of Formation” means the Certificate of Formation for the Company, as originally filed with the Delaware Secretary of the State pursuant to Section 18-201 of the Act.

 

2

“Code” means the Internal Revenue Code of 1986, as amended from time to time, the provisions of succeeding law, and to the extent applicable, the Treasury Regulations.  A reference to a specific section of the Code refers not only to that specific section but any corresponding provisions of any federal tax statute enacted after the date of this Agreement, as such specific section or corresponding provisions are in effect on the date of application of this Agreement containing such reference.

 

“Company” has the meaning set forth in Section 1.1.

 

“Competing Business” means any of the activities constituting the Business in which any Person or division of any Person may engage within all or any part of the Territory.

 

“Co-Sale Closing” has the meaning set forth in Section 9.5.3.

“Co-Sale Confirmation Notice” has the meaning set forth in Section 9.5.2.

“Co-Sale Eligible Member” has the meaning set forth in Section 9.5.

“Co-Sale Eligible Residual Membership Interest” has the meaning set forth in Section 9.5.

“Co-Sale Notice” has the meaning set forth in Section 9.5.1.

“Co-Sale Residual Interest Deficit” has the meaning set forth in Section 9.5.1.

 “Confidential Information” has the meaning set forth in Section 5.8.3.

 

“Designees” has the meaning set forth in Section 6.2.1(a).

 

“Disposition Closing” has the meaning set forth in Section 10.6.

 

“Disposition Event” means one or more of the following with respect to a Member: the death, Bankruptcy or dissolution (other than dissolution following or in connection with a transfer or assignment by the Member permitted pursuant to ARTICLE IX) of the Member, the occurrence of any other event which terminates the continued Membership of a Member other than pursuant to a transfer or assignment by the Member pursuant to ARTICLE IX.

 

“Distributable Cash” means cash that the Manager and the Management Committee deems available for Distribution to the Members from any source including the net revenues from operations, net proceeds from any sales or other dispositions or refinancing of Company assets, and all principal and interest payments with respect to any note or other obligation received by the Company in connection with sales and other dispositions of Company assets, less any portion used to pay into or establish Working Capital Reserves.

 

“Distribution”, “Distribute” and “Distributed” means the transfer of money or property by the Company to the Members without consideration.

 

 “Economic Interest” means a Member’s share, or Economic Interest Owner’s share, of the Company’s Taxable Net Income, Taxable Net Loss, and/or Distributions of the Company’s assets pursuant to this Agreement and the Act, but shall not include any other rights of a Member, including, without limitation, the right to vote or participate in the management, or any right to information concerning the business and affairs of the Company.

 

3

“Economic Interest Owner” means the owner of an Economic Interest (i) who has not been admitted as a Member in accordance with the requirements of this Agreement, or (ii) whose Membership Interest (but not that Member’s Economic Interest) has terminated.

 

“Effective Date” has the meaning set forth in the Preamble hereto.

 

“Exercise Period” has the meaning set forth in Section 9.4.2.

 

“Fiscal Year” means each year ended on December 31, or other fiscal year of the Company.

 

“Former Member” has the meaning set forth in Section 10.1.

 

“Former Member’s Interest” has the meaning set forth in Section 10.1.

 

“GAAP” shall mean those generally accepted accounting principles and practices which are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor), consistently applied, as such principles exist from time to time.

 

“Majority in Interest of the Members” means one or more Percentage Interests of the Members which exceed fifty percent (50%) of the aggregate of all Percentage Interests held by all Members.

 

“Management Committee” initially means a five (5) person committee, unless a different number is authorized in accordance with Section 6.2, and shall comprise such successors and replacements as may be selected from time to time pursuant to Section 6.2.1 of this Agreement.

 

“Manager” means W. John Short and any other Person added as a Manager pursuant hereto and any other Persons who succeed a Manager in that capacity.

 

“Member” means any Person holding Units that has been admitted to the Company as a Member with the approval of the Manager and the Management Committee or is an Assignee who has become a Member in accordance with Article IX, and has not resigned, withdrawn, dissolved, or had its Membership Interest terminated for any other reason.

 

“Membership Interest” means a Member’s entire interest in the Company including the Member’s Economic Interest, the right to vote on or participate in the management, and the right to receive information concerning the business and affairs of the Company.

 

“Non-Competing Business” means any business that is not a Competing Business.

 

“Non-Transferring Member” has the meaning set forth in Section 9.4.

 

“Percentage Interest” means, with respect to each Unit Holder, the product of (a) 100% and (b) the quotient obtained by dividing (i) the number of Units held by a Member by (ii) the total number of Units then outstanding.

 

4

“Permitted Transfers” has the meaning set forth in Section 9.3.

 

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

 

“Presenting Member” has the meaning set forth in Section 5.8.2.

 

“Product” means those products described on Exhibit B hereto, including those products that are added to Exhibit B hereto pursuant to the terms of this Agreement.

 

“Purchasing Member” has the meaning set forth in Section 9.4.4.

 

“RBT” has the meaning set forth in the Preamble hereto.

 

“RBT Designees” has the meaning set forth in Section 6.2.1(a).

 

“Regulatory Allocations” has the meaning set forth in Section 8.8.

 

“Remaining Member” has the meaning set forth in Section 10.1.

 

“Remaining Membership Interest” has the meaning set forth in Section 9.5.5.

 

“Residual Membership Interest” has the meaning set forth in Section 9.5.

 

“Right of Co-Sale” has the meaning set forth in Section 9.5.

 

“Rights of First Refusal” has the meaning set forth in Section 9.4.6.

 

“Selling Member” has the meaning set forth in Section 9.5.

 

“Subsidiary” means any Person of which more than Fifty Percent (50%) of the Voting Power is owned or controlled by the Company at any date of determination, either directly or through other Subsidiaries.

 

“Super-Majority in Interest” means one or more Members which hold, in the aggregate, in excess of sixty percent (60%) of the aggregate of all Percentage Interests held by all Members.

 

“Super-Majority of the Management Committee” means four (4) of the five (5) members of the Management Committee.

 

“Taxable Net Income and Taxable Net Loss” means the income, gain, loss, deductions and credits of the Company in the aggregate or separately, as appropriate, determined by certified public accountants for the Company and in accordance with United States generally accepted accounting principles, consistently applied, at the close of each Fiscal Year, reflected on the Company’s information tax return filed for federal income tax purposes.

 

“Territory” means the United States of America, Canada, the United Mexican States and each of their territories.

 

5

“Transfer” or “Transferred” means any direct or indirect sale, assignment, transfer, conveyance, pledge, hypothecation, or other disposition voluntarily or involuntarily, by operation of law, with or without consideration, or otherwise (including, without limitation, by way of intestacy, will, gift, bankruptcy, receivership, levy, execution, charging order or other similar sale or seizure by legal process) of all or any portion of any Membership Interest. Without limiting the generality of the foregoing, the sale or exchange of at least fifty percent (50%) of the voting stock of a Member, if a Member is a corporation, or the Transfer of an interest or interests of at least fifty percent (50%) in the capital profits of a Member (whether accomplished by the sale or exchange of interests or by the admission of new partners or members), if a Member is a partnership or limited liability company, or the cumulative Transfer of such interests in a Member in a series of related transactions that effectively equal the foregoing (including Transfer of interests followed by the incorporation of a Member and subsequent stock Transfer, or Transfer of stock followed by the liquidation of a Member and subsequent Transfers of interests) will be deemed to constitute a Transfer of the Member’s entire Membership Interest.  Notwithstanding the foregoing, “Transfer” shall not include any grant by RBT of a lien on its interest to the existing RBT lienholders/shareholders or to commercial lenders.

 

“Transferring Member” has the meaning set forth in Section 9.4.

 

“Transferred Membership Interest” has the meaning set forth in Section 9.4.

 

“Transfer Notice” has the meaning set forth in Section 9.4.1.

 

“Units” means a portion of a Membership Interest of a Member.  Each Unit shall represent an equal portion of the total Percentage Interests held by all Members, and the number of Units held by each Member shall be set forth on Exhibit A, as amended from time to time.  Units repurchased or redeemed by the Company shall terminate and no longer exist.

 

“Unit Holder” means a Member owning a Unit.

 

“Unreturned RBT Capital Contributions” means, as of any date of determination, the total (but not less than zero) of (i) the Capital Contributions of RBT, less (ii) the aggregate amount of Distributions to RBT in respect of RBT’s Units pursuant to Section 7.2 excluding all minimum tax Distributions to RBT pursuant to Section 7.1.

 

“Unreturned Youji Capital Contributions” means, as of any date of determination, the total (but not less than zero) of (i) the Capital Contributions of Youji, less (ii) the aggregate amount of Distributions to Youji in respect of Youji’s Units pursuant to Section 7.2 excluding all minimum tax Distributions to Youji pursuant to Section 7.1.

 

“Unreturned Capital Contributions” means, as applicable, the Unreturned Youji Capital Contributions and the Unreturned RBT Capital Contributions.

 

“Voting Power” means with respect to any Person, the power to vote for or designate members of the board of directors, management committee, the manager or a similar Person or group, whether exercised by virtue of the record ownership of securities, under a close corporation, a limited liability company agreement, partnership agreement or similar agreement or under an irrevocable proxy.

 

6

“Working Capital Reserve” means any cash reserve for normal expenses and contingencies maintained by the Manager pursuant to Section 7.4.

 

“Youji” has the meaning set forth in the Preamble hereto.

 

“Youji Designees” has the meaning set forth in Section 6.2.1(a).

 

ARTICLE III

Organization of the Company

 

3.1           Formation.The Members have formed a limited liability company under the Act.  This Agreement controls all rights and obligations of the Members, Economic Interest Owners and Managers, as such, to the fullest extent permitted by law.

 

3.2           Name.  The name of the Company shall be “RBT - Youji, LLC.”  The Company may conduct business under that name or upon compliance with applicable laws, any other name that the Manager, with the approval of the Management Committee, deems appropriate or advisable.  The Company’s name shall be the exclusive property of the Company and no Member shall have any rights in the name or any derivations thereof.

 

3.3           Term.  The term of the Company will commence on the date of the filing of the Certificate and shall terminate as provided under Article XII.

 

3.4           Office and Agent.

 

3.4.1                 Registered Office.  The Company shall continuously maintain a registered agent in the State of Delaware as required by Section 18-104(a)(2) of the Act. The initial registered office of the Company shall be 2711 Centerville Road, Suite 400, Wilmington, DE.  The initial registered agent shall be Corporation Service Company.  The Manager, with consent of the Management Committee, may change the registered office and/or the registered agent at any time and from time to time, as permitted under the Act, upon prior written notice to the Members.

 

3.4.2                 Other Offices.  The principal office of the Company shall be located at RBT’s corporate offices in Scottsdale, Arizona, or such location as the Manager, with the approval of the Management Committee, may determine.  The Company also may have such other offices anywhere within and without the State of Arizona, as the Manager, with approval of the Management Committee, from time to time may determine.

 

3.5           Purpose of the Company.  The purpose of the Company is to (i) purchase for sale, develop, market, sell and otherwise commercialize the Products in the Territory and (ii) take such other activities incidental to the foregoing and not prohibited under the terms of this Agreement or applicable law or regulation (the “Business”).

 

7

ARTICLE IV

Capital Contributions; Percentage Interest and Units.

 

4.1           Initial Capital Contributions.  Contemporaneously with the execution of this Agreement, each Member shall make Capital Contributions as set forth after each Member’s name on Exhibit A attached hereto and receive therefor a number of Units set forth on Exhibit A, which Exhibit A shall be revised to reflect any additional contributions in accordance with Section 4.4.

 

4.2           Percentage Interests.  In exchange for the Capital Contributions set forth in Section 4.1, the Members shall be deemed to have contributed capital and shall receive the Percentage Interests set forth in Exhibit A.

 

4.3           Capital Accounts.  The Company shall establish an individual Capital Account for each Member.  The Company shall determine and maintain each Capital Account in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv). Each Member’s Capital Account shall initially be credited with the Capital Contribution made by such Member pursuant to Section 4.1.  If a Member transfers the Member’s Membership Interest in accordance with this Agreement, such Member’s Capital Account shall carry over to the new owner of such Membership Interest pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(1).

 

4.4           Additional Capital Contributions. Except as required by Section 7.5 below, no Member shall have any obligation to make additional Capital Contributions other than the initial Capital Contributions designated on Exhibit A. From time to time, if the Management Committee determines that additional Capital Contributions are necessary or appropriate for the conduct of the Company’s operations, the Manager shall provide written notice (“Contribution Notice”) to each of the Members specifying the required additional Capital Contribution and the number of Units, if any, that the contributing Members will receive in exchange for additional Capital Contributions.  Each of the Members shall have the right, but no obligation, to contribute their portion of such additional Capital Contributions on a pro rata basis in accordance with their Percentage Interests within thirty (30) days following receipt (as determined pursuant to Section 16.4) of the Contribution Notice.  Notwithstanding the foregoing, if RBT expends any amounts to perform any ordinary administrative functions for the Company, Youji shall promptly reimburse RBT for 45% of such amounts.

 

4.5           Return of Capital Contribution.  No time is agreed upon as to when the Capital Contributions of the Members are to be returned or whether the Capital Contributions of the Members will be returned.  The Members shall not have the right to withdraw or demand return of their Capital Contributions nor shall the Members have the right to demand and receive property other than cash in return for their Capital Contributions.

 

4.6           Adjustment upon Grant of Profits Interest.  In connection with the grant of a “profits interest” in the Company as determined pursuant to the applicable provisions of the Code, whether as consideration for the provision of services or the grant of other rights to or for the benefit of the Company by an existing Member acting in a Member capacity, or by a new Member acting in a Member capacity or in anticipation of being a Member, the Company shall increase or decrease the Capital Accounts of the existing Members to reflect a revaluation of Company property (including intangible assets such as goodwill) on the Company's books effective as of the date immediately before the date the grant of the profits interest in the Company occurs.  This provision is intended to comply with Treasury Regulation Section 1.704-1(b)(2)(iv)(f)(5)(iii).  Each of the Members hereby elects to apply this provision whenever there is a grant of a profits interest in the Company.

 

8

ARTICLE V

Members.

 

5.1           Members and Units.  Any Membership Interests in the Company shall be represented by Units. The Members shall have the rights of Members as provided herein.

 

5.2           Admission of Additional Members.  Other than substitute Members admitted pursuant to Article IX, additional Members may be admitted to the Company, only with the consent of the Manager and the Management Committee as set forth below.  Any additional Members shall obtain Units and Membership Interests and will participate in the management, Taxable Net Income, Taxable Net Losses, and Distributions of the Company on such terms as are set forth herein.  Substitute Members and assignees of Members may be admitted only in accordance with Article IX.  Upon admission of a new or substitute Member, this Agreement shall be amended to set forth the name, Capital Contribution, number of Units and Percentage Interest of the new Member and the new Member shall enter into this Agreement as amended, subject to the following:

 

5.2.1                 Capital Contribution.  Each additional Member shall make a Capital Contribution in such amount and on such terms as the Management Committee determines to be appropriate based upon the needs of the Company, the net value of the Company’s assets, the Company’s financial condition and the benefits anticipated to be realized by the additional Member;

 

5.2.2                 No Deemed Termination.  No Member shall be admitted if the effect of admission would be termination of the Company under Code Section 708(b);

 

5.2.3                 Compliance with Law.  The admission must comply with all applicable state and federal securities and all other applicable laws; and

 

5.2.4                 Agreement.  Each additional Member shall agree to be bound by the terms of this Agreement.

 

5.3           Withdrawals or Resignations.  No Member may withdraw or resign from the Company without the prior written consent of the Management Committee, which consent shall not be unreasonably withheld or delayed.  If a Member withdraws from the Company, the withdrawing Member’s Membership Interest shall immediately terminate and the Member shall retain solely an Economic Interest.  Such withdrawal shall not entitle the withdrawing Member to the return of any of the withdrawing Member’s Capital Contribution.

 

5.4           Payments to Members.  Except (i) as approved in writing by Management Committee, (ii) as specified in this Agreement, (iii) as specified in the Exclusive Supply Agreement or (iv) as otherwise provided in an agreement between the Company and the Member that has been approved by the Management Committee, no Member or Affiliate of a Member is entitled to remuneration for services rendered or goods provided to the Company.  However, the Company shall reimburse RBT for the actual cost of goods and materials used by the Company and for organizational expenses (including, without limitation, legal and accounting fees and costs) incurred to form the Company and prepare the Certificate, this Agreement and the Exclusive Supply Agreement.  If the Company does not have the funds available to so reimburse RBT, then Youji shall promptly pay to RBT 45% of such reimbursable amounts.

 

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5.5           Termination of Membership Interest.  Upon (i) any Transfer or attempted Transfer of all or a portion of a Member’s Membership Interest in violation of this Agreement, (ii) the occurrence of a Disposition Event as to such Member that does not result in the dissolution of the Company or (iii) the withdrawal or resignation of a Member in accordance with Section 5.3, the Membership Interest of that Member shall be terminated and thereafter that Member shall be an Economic Interest Owner only unless such Membership Interest is purchased by the Company and/or one or more of the Remaining Members as provided in ARTICLES IX and X.  Each Member acknowledges and agrees that such termination or purchase of a Membership Interest upon the occurrence of any of the foregoing events is not unreasonable under the circumstances existing as of the date hereof.

 

5.6           Loans and Other Transactions with the Company.  With the express prior approval of the Management Committee, a Member may loan money to the Company.  Interest shall be payable on any such loans at competitive rates for loans of similar character and amount, but not to exceed the maximum usury rate permitted for loans as to which no exemption from usury applies.  No such loan shall constitute a Capital Contribution or increase the Percentage Interest of the lending Member unless otherwise expressly provided herein or otherwise agreed by the Management Committee.

 

5.7           Meetings of Members.  Except as required by applicable law, no annual or regular meetings of the Members are required.  However, if meetings are held, then such meetings shall be held in accordance with this Section 5.7 and applicable law.

 

5.7.1                 Place of Meetings.  Meetings of Members shall be held telephonically unless otherwise determined by the Management Committee.

 

5.7.2                 Power to Call Meetings.  Meetings of the Members may be called by the Manager or by any Member holding twenty five percent (25%) or more of the total Units then outstanding, for the purpose of addressing any matters on which the Members may vote.

 

5.7.3                 Notice of Meetings.

 

(a)            Whenever Members are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than ten (10) days nor more than sixty (60) days before the date of the meeting to each Member entitled to vote at the meeting; provided that each Member shall be able to waive the notice requirements hereof in whole or part.  The notice shall state the place, date and hour of meeting and the general nature of the business to be transacted at such meeting.  No other business may be transacted at such meeting, unless at least a Majority in Interest of the Members is present at the meeting and approves such other business.

 

(b)            Notice of a Members’ meeting shall be given either personally or by mail or other means of written communication (including by electronic transmission), addressed to the Member at the address of Member appearing on the books of the Company or given by the Member to the Company for the purpose of notice.  The notice or report shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication.

 

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(c)            Upon written request to the Manager by any Person(s) entitled to call a meeting of the Members, the Manager shall immediately cause notice to be given to the Members entitled to vote that a meeting will be held at a time requested by the Person(s) calling the meeting, not less than ten (10) days nor more than sixty (60) days after the receipt of the request.  If the notice is not given within five (5) days after the receipt of the request, the Person(s) entitled to call the meeting may give the notice.

 

(d)            When a Members’ meeting is adjourned to another time or place, except as provided in the last sentence of this paragraph, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.  At the adjourned meeting, the Company may transact any business that may have been transacted at the original meeting.  If the adjournment is for more than forty-five (45) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Member of record entitled to vote at the meeting.

 

5.7.4                 Action without a Meeting.  Any action that may be taken at any meeting of the Members may be taken without a meeting if a written consent setting forth the action so taken is executed and delivered to the Company by Members having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all Members entitled to vote thereon were present and voting.

 

Any Member giving a written consent, or the Member’s proxy holder, may revoke the consent by a writing received by the Company prior to the time that the written consents of Members having the minimum number of votes that would be required to authorize the proposed action have been filed with the Company, but may not do so thereafter.  Such revocation is effective upon its receipt at the office of the Company.

 

5.7.5                 Proxies.  The use of proxies in connection with this Section 5.7 will be governed in the same manner as in the case of corporations formed under the Delaware General Corporation Law.

 

5.8           Business Activities of Members; Confidentiality.

 

5.8.1                 Non-Competing Business.  The Members and their Affiliates may engage or invest in, independently or with others, any business activity relating to a Non-Competing Business. Neither the Company nor any other Member shall have any right in or to such other ventures or activities or to the income or proceeds derived therefrom.  The Members, as such, shall not be obligated to present any investment opportunity or prospective economic advantage to the Company, even if the opportunity is of the character that, if presented to the Company, could be taken by the Company relating to a Non-Competing Business.  Each Member hereby waives any and all rights and claims which it may otherwise have against the other Members and their officers, directors, shareholders, partners, members, managers, agents, employees, and Affiliates as a result of any of such activities.

 

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5.8.2                 Competing Business.  No Member, nor any Affiliate of a Member, shall directly or indirectly own, manage, operate, control or participate in the operation of any Competing Business (including without limitation, the sale of Products in the Territory), whether independently or with others, unless expressly approved in writing in advance by the Member(s) other than the Presenting Member (as defined below).  Each Member shall be obligated to present any investment opportunity or prospective economic advantage to the Company relating to a Competing Business (such Member presenting the opportunity on behalf of itself or, as applicable, it Affiliates, the “Presenting Member”).  However, if the Member(s) other than the Presenting Member approves any of such activities in writing, then the Member(s) other than the Presenting Member hereby waives any and all rights and claims which it may otherwise have against the Presenting Member and the Presenting Member’s officers, directors, shareholders, partners, members, managers, agents, employees, and Affiliates as a result of any of such activities.

 

5.8.3                 Confidentiality.  During the term of the Company, Youji, the Youji Designees and all other Youji representatives will receive or gain access to certain non-public information regarding the Company, its Business, or its Subsidiaries, including without limitation, technical information, market and marketing information, tactics, strategies and costs, manufacturing techniques,  processes, costs and technologies, accounting, financial, personnel and planning information, details of banking and other borrowing relationships, customer lists and customer contact information, product formulations, product and component costs and pricing tactics and strategies, supplier names and contact information, employee and consultant or advisor  names, compensation and contact information, raw material purchase costs and contracts, legal information and other intellectual property rights and confidential information proprietary to the Company, its Subsidiaries or RBT (“Confidential Information”). Youji agrees, and any representative of Youji will agree, to hold in confidence and trust and to act in a fiduciary manner with respect to all such Confidential information, except to the extent otherwise required by law and any other applicable regulatory process.  Youji understands and agrees that material nonpublic information regarding the Company or its Subsidiaries may constitute material nonpublic information of RBT, and agrees to comply with all applicable securities laws with regard to its use of such information.

 

5.9           Members Are Not Agents.  The management of the Company is vested in the Manager, the Management Committee and duly appointed officers of the Company. No Member, acting solely in the capacity of a Member, is an agent of the Company nor can any member in such capacity bind or execute any Agreement or instrument on behalf of the Company.

 

ARTICLE VI

Management and Control of the Company.

 

6.1           Management of the Company.  Except as otherwise provided in the Certificate or in this Agreement, the business, property and affairs of the Company shall be managed by the Manager, subject to  such assistance, direction, approvals and consents as are required hereunder from the Management Committee and the authority granted to the Company’s officers by the Management Committee.  The Manager, with approval of the Management Committee when required pursuant hereto, but subject to the powers delegated to the Company’s officers, shall have full and complete authority, power, and discretion to manage and control the Business, property and affairs of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company’s Business, property and affairs, but in all cases subject to the limitations set forth herein.  The Manager and the Manager’s designees are authorized to 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.  Without limiting the generality of the foregoing and subject to the limitations imposed under Section 6.2.4, and Section 6.3 or in other express provisions of this Agreement, any employment agreement between the Manager and the Company that has been approved by the Management Committee or any other required approvals of the Management Committee set forth herein, the Manager shall have all necessary powers to manage and carry out the purposes, Business, property, and affairs of the Company, including, without limitation, the power to exercise on behalf and in the name of the Company all of the powers of a “manager” described in the Act.

 

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6.1.1                 Election of Manager(s), Number, Term, and Qualifications; Vote of Managers.  The Company shall initially have one (1) Manager.  The initial Manager shall be W. John Short.  The number of Managers of the Company shall be fixed from time to time by the affirmative vote or written consent of a Majority in Interest of the Members; provided, that in no instance shall there be less than one (1) Manager and provided further, that if the number of Managers is increased to more than one (1), the Certificate shall be amended to delete the statement that the Company has only one Manager.  Unless a Manager resigns or is removed, the Manager shall hold office until a successor is elected and qualified.  Managers shall be elected by the affirmative vote or written consent of a Majority in Interest of the Members.  A Manager need not be a Member, an individual, a resident of any specific State, or a citizen of the United States.  If there is more than one (1) Manager, the vote of a majority of the Managers shall govern all decisions to be made by the Managers.

 

6.1.2                 Resignation.  Any Manager may resign at any time by giving written notice to the Members and remaining Managers without prejudice to the rights, if any, of the Company under any contract to which the Manager is a party.  The resignation of any Manager shall take effect upon receipt of that notice or at such later time as shall be specified in the notice; and, unless otherwise specified in the notice, the acceptance of the resignation shall not be necessary to make it effective. The resignation of a Manager who is also a Member shall not affect the Manager’s rights as a Member and shall not constitute a withdrawal of a Member.

 

6.1.3                 Removal.  All or any lesser number of Managers may be removed at any time, with or without cause, by the affirmative vote of a Majority in Interest of the Members at a meeting called expressly for that purpose, or by the written consent of a Super-Majority in Interest of the Members.  Any removal shall be without prejudice to the rights, if any, of the Manager under any employment contract and, if the Manager is also a Member, shall not affect the Manager’s rights as a Member or constitute a withdrawal of a Member.

 

6.2           Management Committee.  The Company shall be managed by the Manager, subject to the approval of the Management Committee to certain decisions specifically required herein.  The Management Committee shall be composed of at least five (5) individuals, or such other greater odd number of individuals as is approved by a Super Majority in Interest of the Members, who may each be Members, Managers or any other Person selected to serve on the Management Committee as provided herein.

 

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6.2.1                 Election, Resignation and Removal of Management Committee Members.

 

(a)            Election.  Three (3) members of the Management Committee  shall consist of individuals appointed by RBT (“RBT Designees”).  The initial RBT Designees shall be W. John Short, Dale Belt and Robert Smith.  The remaining two (2) members of the Management Committee shall consist of individuals appointed by Youji (“Youji Designees”, and together with the RBT Designees, the “Designees”).  The initial Youji Designees shall be [____________] and [______________].

 

(b)            Resignation. Any member of the Management Committee may resign at any time by giving written notice to the Manager and the remaining Members of the Management Committee.  The resignation of any member of the Management Committee shall take effect upon receipt of that notice or at such later time as shall be specified in the notice; and, unless otherwise specified in the notice, the acceptance of the resignation shall not be necessary to make it effective. The resignation of a member of the Management Committee who is also a Member shall not affect the resigning member’s rights as a Member and shall not constitute a withdrawal of a Member.

 

(c)            Removal.  The RBT Designees may be removed or replaced only by RBT.  The Youji Designees may be removed or replaced only by Youji.  RBT and Youji may remove their respective designees at any time, with or without cause.  Any removal of a member of the Management Committee that is a Member shall not affect such removed member’s rights as a Member or constitute a withdrawal of a Member.

 

6.2.2                 Meetings of the Management Committee.  The Management Committee shall hold regularly scheduled telephonic meetings at least once each calendar quarter, and participation by telephone shall be arranged for Management Committee members. The Management Committee shall designate the times of these regular meetings.  No notice need be given of regular meetings for which the Management Committee has designated a time.  Special meetings of the Management Committee may be held at any time upon the call of any two (2) members of the Management Committee.  Notice of any special meeting shall be sent to the last known address of each Management Committee member at least five (5) Business Days before the meeting, which notice may be sent electronically.  Notice of the time, place and purpose of such meeting may be waived in writing before or after such meeting, and shall be equivalent to the giving of notice.  Attendance at such meeting, whether by telephone or in person, shall also constitute a waiver of notice thereof, except where a Person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting need be specified in the notice or waiver of notice of such meeting.

 

(a)            A quorum for the transaction of business at a meeting shall require the presence of a majority of the members of the Management Committee and at least one Youji Designee and one RBT Designee.  Except as otherwise provided in this Agreement, the vote or consent of three (3) Management Committee members shall be the act of the Management Committee.

 

(b)            Meetings of the Management Committee shall be held at such location to be determined by the Management Committee, or such meetings may be held telephonically without a physical location.  The Management Committee may appoint from its members (i) a Chairman who shall preside at meetings, and (ii) a Secretary of the meeting.  At least one (1) Management Committee meeting each year shall be held in person.

 

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(c)            Anything in this Section 6.2 to the contrary notwithstanding, any action that may be taken at a meeting of the Management Committee may be taken without a meeting if a consent in writing, setting forth the action to be taken, shall be signed by those Persons with the requisite authority to take such action under this Agreement, with at least five (5) Business Days prior notice thereof provided to the members of the Management Committee (or with waiver thereof by the Members) and such consent shall have the same force and effect as a vote duly called and held.  No notice shall be required in connection with the use of a written consent pursuant to this Section 6.2.1 if a Super-Majority of the Management Committee consents to the action.

 

(d)            Meetings may be held by means of conference telephone or similar communications equipment so long as all persons participating in the meeting can hear each other.  Participation in a meeting by means of conference telephone shall constitute presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business thereat on the ground that the meeting is not lawfully called or convened.

 

6.2.3                 Powers of the Management Committee.  Except as specifically provided herein, the Management Committee shall have no power to cause the Company to do any act, but shall have such approval and other authority as expressly provided hereunder.

 

6.2.4                 Super-Majority Vote of the Management Committee.  Notwithstanding anything to the contrary contained herein, neither the Manager nor any Company officer shall have authority to cause the Company to take, and the Company shall not take, the following actions without first obtaining the affirmative vote or written consent of a Super-Majority of the Management Committee:

 

(a)            Any amendment to this Agreement or the Certificate, unless specifically provided otherwise herein;

 

(b)            The redemption or repurchase of any securities of the Company or its Subsidiaries, except as specifically provided otherwise herein;

 

(c)            Dissolve, liquidate or approve the dissolution or liquidation of the Company or its Subsidiaries; and

 

(d)            Filing any petition in bankruptcy or reorganization or instituting any other type of bankruptcy, reorganization or insolvency proceeding with respect to the Company or any of its Subsidiaries, consenting to the institution of involuntary bankruptcy, reorganization or insolvency proceedings with respect to the Company or any of its Subsidiaries, or the making by the Company or any of its Subsidiaries of a general assignment for the benefit of its creditors.

 

6.3           Consent of Members.  In addition to any other limitations expressly set forth in this Agreement, no Manager or officer shall have the authority to cause the Company to engage in (and the Company shall not engage in) the following transactions without first obtaining the affirmative vote or written consent of at least a Super-Majority in Interest of the Members.

 

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6.3.1                 The sale, exchange or other disposition of all, or substantially all, of the Company’s assets other than in the ordinary course of business, except in the orderly liquidation and winding up of the Business of the Company upon its duly authorized dissolution, of the merger of the Company with another entity other than as part of a transaction primarily related to a change of the Company’s jurisdiction;

 

6.3.2                  An alteration of the primary purpose of the Company (see Section 3.5); and

 

6.3.3                  The amendment of this Agreement or the Certificate, except as specifically provided otherwise herein.

 

6.4           Liability of Manager and Management Committee Members; Performance of Duties.  No Manager, member of the Management Committee or officer shall be liable, responsible or accountable to the Company or to any Member for any mistake of fact or judgment, or doing or failing to do any act, or any loss or damage sustained by the Company or any Member, unless the loss or damage shall have been the result of gross negligence, reckless or intentional misconduct committed fraudulently or in bad faith or a knowing violation of law by the Manager, Management Committee member or officer.  In performing their respective duties, the Manager, the Management Committee members and any officers may rely on information obtained from agents or consultants retained by the Company, if the Manager, Management Committee member or officer reasonably and in good faith believes such persons to be reliable and competent as to such matter. Each of the Members acknowledges and agrees that except as provided above or elsewhere in this Agreement, the Manager, and any officers or Members of the Management Committee shall have no fiduciary duties to the Company or the Members.

 

6.5           Devotion of Time.  Except as otherwise provided herein or in any employment agreements, neither the Manager, the Management Committee members, the Members nor the officers of the Company are obligated to devote all or any specified portion of their time or business efforts to the affairs of the Company, but each shall devote appropriate time, effort and skill for the successful operation of the Company.

 

6.6           Competing Activities by Management Committee Members.  Subject to Section 5.8 hereof, the Designees and their agents and Affiliates may not engage or invest in, independently or with others, any Competing Business, and the Designees shall be obligated to present any investment opportunity or prospective economic advantage, each with respect to a Competing Business, to the Company.

 

6.7           Transactions between the Company and the Managers.  Notwithstanding that it may constitute a conflict of interest, a Manager may, and may cause his, her or its Affiliates to, engage in any transaction (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any service, or the establishment of any salary, other compensation, or other terms of employment) with the Company so long as such transaction is not expressly prohibited by this Agreement, the Management Committee approved the transaction and the terms and conditions of such transaction, on an overall basis, are fair and reasonable to the Company and are at least as favorable to the Company as those that are generally available from Persons capable of similarly performing them and in similar transactions between parties operating at arm’s length.  Each of the Members hereby approves the Exclusive Supply Agreement.

 

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6.8           Payments to Managers.  Except as specified in this Agreement, no Manager, Management Committee member or Affiliate thereof is entitled to remuneration for services rendered or goods provided to the Company other than pursuant to the Exclusive Supply Agreement.

 

6.9           Acts of Manager as Conclusive Evidence of Authority.  Any note, mortgage, evidence of indebtedness, contract, certificate, statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between the Company and any other Person, when signed by a Manager and any officer designated with signatory authority by the Management Committee is not invalidated as to the Company by any lack of authority of the signing party in the absence of actual knowledge on the part of the other Person that the signing party had no authority to execute the same.

 

6.10        Limited Liability.  No person who is a Manager or officer or both a Manager and officer of the Company or a member of the Management Committee shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the Company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being a Manager, officer or Management Committee member.

 

6.11         Membership Interests of and Voting by Manager.  Except as otherwise provided in this Agreement, Membership Interests held by the Manager as a Member shall entitle the Manager to all the rights of a Member, including without limitation the voting rights of a Member and the rights of an Economic Interest Owner.

 

6.12        Officers of the Company.  The Manager, with approval of the Management Committee, may designate one or more individuals as officers of the Company, who shall have such titles and exercise and perform such powers and duties as shall be assigned to them from time to time by the Manager. Officers need not be Members, Managers or residents of any specific State.

 

6.12.1               Term.   Any officer may be removed by the Manager or Management Committee  at any time, with or without cause.  Each officer shall hold office until his or her successor shall be duly designated and shall qualify or until the earlier of the officer’s death, resignation or removal.  Any number of offices may be held by the same Person.  The salaries or other compensation, if any, of the officers and agents of the Company shall be fixed by the Manager, with approval of the Management Committee.

 

6.12.2              Initial Officers.  The Manager hereby appoints, and the Management Committee approves, the following officers of the Company, who shall be subject to removal as provided in this Section 6.12:  (i) W. John Short, President, (ii) Dale Belt, Secretary and Treasurer, and (iii) Robert Smith, Vice President-Technical Services.

 

6.12.3  Powers and Duties of Officers. The Chief Executive Officer, President, if any, and Vice Presidents shall have such powers and shall perform such duties as shall have been assigned to them from time to time by the Manager. The Secretary shall give, or cause to be given, notice of all meetings, and all other notices required by law or by this Agreement. The Secretary shall record all the proceedings of the meetings in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him or her from time to time by the Manager. The Treasurer shall have the custody of all funds, securities, evidences of indebtedness and other valuable documents of the Company. The Treasurer shall receive and give or cause to be given receipts and acquaintances for moneys paid in on account of the Company and shall pay out of the funds on hand all just debts of the Company of whatever nature upon maturity of the same. The Treasurer shall enter or cause to be entered in books of the Company to be kept for that purpose full and accurate accounts of all moneys received and paid out on account of the Company, and whenever required by Manager or the Management Committee, the Treasurer shall render a statement of the Company’s cash accounts. The Treasurer shall keep or cause to be kept such other books as will show a true record of the expenses, losses, gains, assets and liabilities of the Company. Without limitation upon the foregoing, the Treasurer shall perform such other duties as may be assigned to him from time to time by the Manager. If the Company has a Chief Financial Officer, the Chief Financial Officer shall be the Treasurer.

 

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6.13        RBT Reimbursement for Shared Employees.  If any RBT employee is required to perform services for the Company pursuant to the terms of this Agreement, then the Company shall promptly reimburse RBT for each such employee for an amount equal to the product of (i) the percent of time that a RBT is required to provide services to the Company and (ii) the amount of base salary and related payroll taxes and benefits paid by RBT to such RBT employee.  The provisions of this Section 6.13 shall in no event require the approval of the Manager or the Management Committee.

 

ARTICLE VII

Distributions of Distributable Cash

 

7.1           Tax Liabilities.  Subject to any limitations contained elsewhere in this Agreement, the Company shall make minimum quarterly cash Distributions of Distributable Cash pursuant to Section 7.2 to each Member in an amount of cash equal to forty percent (40%) of the Taxable Net Income allocated to that Member with respect to each tax year of the Company; provided that unless otherwise approved by the Management Committee, no such Distributions shall be made to the extent that the Company will maintain less than $250,000 of cash after such Distributions.

 

7.2           Discretionary Distribution of Distributable Cash.  Subject to applicable law and any limitations contained elsewhere in this Agreement, the Manager shall Distribute all or a portion of Distributable Cash to the Members at such time or times as the Management Committee may designate; provided that Distributions upon dissolution of the Company shall be made in accordance with Section 12.3.  Except as otherwise provided in Section 12.3 with respect to Distributions upon dissolution and liquidation, Distributions of Distributable Cash shall be made in the following priority:

 

7.2.1                 Capital Transaction.  Any amounts Distributed with regard to a Capital Transaction shall be made as follows::

 

(a)            Preference.  First, to the Members to the extent of, and in proportion to, their Unreturned Capital Contributions; and

 

(b)            Percentage Interests.  Next, to the Members in proportion to their Percentage Interests.

 

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7.2.2                 Not a Capital Transaction.  Any amounts Distributed other than with regard to a Capital Transaction shall be made to the Members in proportion to their Percentage Interests.

 

7.3           No Restoration of Deficit Capital Account Balance.  No Member or Manager shall be obligated to contribute to the Company to restore a deficit in that Member’s Capital Account balance.  No Member shall be obligated to contribute to the Company to allow a return of capital to any other Member.

 

7.4           Maintenance of Working Capital Reserve.  The Management Committee, may set aside out of net cash from operations and cash from capital transactions a Working Capital Reserve for repayment of any Company indebtedness, for operating expenses and for the replacement or preservation of any Company asset.  Any portion of such Working Capital Reserve that the Management Committee deems unnecessary for the prudent conduct of Company business may be Distributed to the Members in accordance with this ARTICLE VII.

 

7.5           Limitations on Distributions.  No cash or property shall be distributed to a Member to the extent that the Distribution is prohibited by Section 18-607 of the Act.  Any Member who receives a distribution from the Company, all or a portion of which is determined to have been prohibited by Section 18-607 of the Act, shall, within thirty (30) days following notice, return such prohibited portion of the distribution to the Company.

 

ARTICLE VIII

Allocations of Taxable Net Income and Taxable Net Loss.

 

8.1           Taxable Net Income.  Except as otherwise provided in Section 8.2 or Section 8.3, Taxable Net Income shall be allocated to the Members in accordance with each Member’s Percentage Interest.

 

8.2           Taxable Net Loss.  Except as provided in this Section 8.2 or Section 8.3, Taxable Net Loss shall be allocated to the Members in accordance with each Member’s Percentage Interest.  Notwithstanding the previous sentence, loss allocations to a Member shall be made only to the extent that such loss allocations will not create a deficit Capital Account balance for that Member in excess of an amount, if any, equal to such Member’s share of Company minimum gain, as such term is used in Treasury Regulations Section 1.704-2(g)(2), that would be realized on a foreclosure of the Company’s property.  Any loss not allocated to a Member because of the foregoing provision shall be allocated to the other Members (to the extent the other Members are not limited in respect of the allocation of losses under this Section 8.2).  Any Taxable Net Loss reallocated under this Section 8.2 shall be taken into account in computing subsequent allocations of Taxable Net Income and Losses pursuant to this Article VIII, so that the net amount of any item so allocated and the Taxable Net Income and Losses allocated to each Member pursuant to this Article VIII, to the extent possible, shall be equal to the net amount that would have been allocated to each such Member pursuant to this Article VIII if no reallocation of Taxable Net Losses had occurred under this Article VIII.

 

8.3           Special Allocations.

 

8.3.1  Minimum Gain Chargeback. Notwithstanding Section 8.1 and Sections 8.2, if there is a net decrease in Company minimum gain, as such term is used in Treasury Regulations Section 1.704-2(g)(2), during any Fiscal Year, each Member shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, in subsequent Fiscal Years) in an amount equal to the portion of such Member’s share of the net decrease in Company minimum gain that is allocable to the disposition of Company property subject to a nonrecourse liability, which share of such net decrease shall be determined in accordance with Treasury Regulations Section 1.704-2(g)(2). Allocations pursuant to this Section 8.3.1 shall be made in proportion to the amounts required to be allocated to each Member under this Section 8.3.1. The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f). This Section 8.3.1 is intended to comply with the minimum gain chargeback requirement contained in Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

 

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8.3.2                 Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt.  Notwithstanding Section 8.1 and Section 8.2 of this Agreement, if there is a net decrease in Company minimum gain attributable to a Member nonrecourse debt, during any fiscal year, each Member who has a share of the Company minimum gain attributable to such Member nonrecourse debt (which share shall be determined in accordance with Treasury Regulations Section 1.704-2(i)(5)) shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, in subsequent fiscal years) in an amount equal to that portion of such Member’s share of the net decrease in Company minimum gain attributable to such Member nonrecourse debt that is allocable to the disposition of Company property subject to such Member nonrecourse debt (which share of such net decrease shall be determined in accordance with Treasury Regulations Section 1.704-2(i)(5)).  Allocations pursuant to this Section 8.3.2 shall be made in proportion to the amounts required to be allocated to each Member under this Article VIII.  The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(i)(4).  This Section 8.3.2 is intended to comply with the minimum gain chargeback requirement contained in Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

 

8.3.3                 Nonrecourse Deductions.  Notwithstanding Section 8.3.2, any nonrecourse deductions (as defined in Treasury Regulations Section 1.704-2(b)(1)) for any fiscal year or other period shall be specially allocated to the Members in proportion to their Percentage Interests.

 

8.3.4                 Member Nonrecourse Deductions.  Notwithstanding Section 8.3.2, those items of Company loss, deduction, or Code Section 705(a)(2)(B) expenditures which are attributable to Member nonrecourse debt for any fiscal year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member nonrecourse debt to which such items are attributable in accordance with Treasury Regulations Section 1.704-2(i).

 

8.3.5                Qualified Income Offset.  Notwithstanding Section 8.2 if 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), or any other event creates a deficit balance in such Member’s Capital Account in excess of such Member’s share of Company minimum gain, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate such excess deficit balance as quickly as possible.  Any special allocations of items of income and gain pursuant to this Section 8.3.5 shall be taken into account in computing subsequent allocations of income and gain pursuant to this Article VIII, so that the net amount of any item so allocated and the income, gain, and losses allocated to each Member pursuant to this Section 8.3.5 to the extent possible, shall be equal to the net amount that would have been allocated to each such Member pursuant to the provisions of this Article VIII if such unexpected adjustments, allocations, or distributions had not occurred.

 

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8.4           Code Section 704(c) Allocations.  Notwithstanding any other provision in this Article XIII, in accordance with Code Section 704(c) and the Regulations promulgated thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its fair market value on the date of the contribution.  Allocations pursuant to Section 8.4 are solely for purposes of federal, state and local taxes.  As such, they shall not affect or in any way be taken into account in computing a Member’s Capital Account or share of profits, losses, or other items of distributions pursuant to any provision of this Agreement.

8.5           Allocation of Taxable Net Income and Loss and Distributions On Transferred Interest.  If any Economic Interest is transferred, or is increased or decreased by reason of the admission of a new Member or otherwise, during any Fiscal Year, each item of income, gain, loss, deduction, or credit of the Company for such Fiscal Year shall be assigned pro rata to each day in the particular period of such Fiscal Year to which such item is attributable (i.e., the day on or during which it is accrued or otherwise incurred) and the amount of each such item so assigned to any such day shall be allocated to the Member based upon his or her respective Economic Interest at the close of such day.

8.6           Recapture Chargeback.  In the event the Company has taxable income chargeable as ordinary income under the recapture provisions of the Code, each Member’s share of taxable gain or loss as a result of gain from sales shall be allocated, to the extent possible, pro rata among the Members who received depreciation or cost recovery allocations which gave rise to the recapture income until the amount of such prior allocations has been charged back to such Members.

8.7           Section 754 Adjustment.  To the extent an adjustment to the adjusted tax basis of and Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such section of the Treasury Regulations.

8.8           Curative Allocations.  The allocations set forth in Section 8.3.1 through Section 8.3.5, and in Section 8.7, hereof (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations.  It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss, or deduction pursuant to this Section 8.8.  Therefore, notwithstanding any other provision of this Article VIII (other than the Regulatory Allocations), the Manager shall make such offsetting special allocations of income, gain, loss, or deduction in whatever manner the Manager determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and the Company items were allocated pursuant to Section 8.1 and Section 8.2.  In exercising the Manager’s discretion under this Section 8.8, the Manager shall take into account future Regulatory Allocations under Section 8.3.5 that, although not yet made, are likely to offset other Regulatory Allocations previously made under Section 8.3.5.

 

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8.9           Obligations of Members to Report Allocations.  The Members acknowledge and agree to the allocations made by this Article VIII and agree to be bound by the provisions of this Article VIII in reporting their shares of Company income and loss for income tax purposes.

ARTICLE IX

Transfer and Assignment of Interests.

9.1           Transfer and Assignment of Interests.  Except as provided in Section 9.3, no Member shall be entitled to Transfer all or any portion of such Member’s Membership Interest except with the prior consent of the Management Committee, which consent may be given or withheld as the Management Committee may determine in its sole discretion.  Transfers in violation of this ARTICLE IX shall only be effective to the extent set forth in Section 9.4.  After the consummation of any transfer of any part of a Membership Interest, the Membership Interest so transferred shall continue to be subject to the terms and provisions of this Agreement and any further transfers shall be required to comply with all the terms and provisions of this Agreement.

9.2           Substitution of Members.  An Assignee shall have the right to become a substitute Member only if (i) consent of the Management Committee is given in accordance with, and as required by, Section 9.1, (ii) such person executes an instrument satisfactory to the Management Committee accepting and adopting the terms and provisions of this Agreement, and (iii) such person pays any reasonable expenses in connection with his or her admission as a new Member.  The admission of a substitute Member shall not release the Member who assigned the Membership Interest from any liability that such Member may have to the Company.

9.3           Permitted Transfers.  The Members may transfer their Membership Interests, subject to compliance with parts (ii) and (iii) of Section 9.2, to (a) any Affiliate of the Member, (b) any other Member and (c) as specifically allowed under this Agreement (“Permitted Transfers”).

9.4           Right of First Refusal.  Except pursuant to a Disposition Event (which shall be governed by ARTICLE X) or a Transfer described in Section 9.3, each time a Member or Economic Interest Owner (a “Transferring Member”) proposes to Transfer in accordance with Section 9.1, all or any part of his, her or its Membership or Economic Interest (or as required by operation of law or other involuntary transfer to do so) (such Membership Interest or Economic Interest proposed to be Transferred, the ‘Transferred Membership Interest”), and without in any manner limiting the right of the Management Committee to withhold consent to the Transfer as permitted in Section 9.1, such Member shall first offer such Transferred Membership Interest to the non-transferring Members  (“Non-Transferring Members”) and then to the Company in accordance with the following provisions: Notice of Intent to Transfer.  Such Transferring Member shall deliver a written notice (“Transfer Notice”) to the Manager and the Non-Transferring Members stating (i) such Transferring Member's bona fide intention to Transfer such Transferred Membership Interest, (ii) the number of Units constituting the Transferred Membership Interest to be Transferred, (iii) the purchase price and terms of payment for which the Transferring Member proposes to Transfer such Transferred Membership Interest, and (iv) all other material terms of the proposed Transfer.

 

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9.4.2                 Notice of Intent to Purchase.  Within thirty (30) days after receipt of the Transfer Notice (“Exercise Period”), the Non-Transferring Members shall notify the other Non-Transferring Members and the Transferring Member in writing of his, her or its desire to purchase a portion of the Transferred Membership Interest.  The failure of any Non-Transferring Member to submit a notice within the applicable period shall constitute an election on the part of that Non-Transferring Member not to purchase any of the Transferred Membership Interest.  If there is more than one Non-Transferring Member electing to purchase the Transferred Membership Interest, each Non-Transferring Member so electing to purchase shall be entitled to purchase a portion of the Transferred Membership Interest in the same proportion that the number of Units held by such Non-Transferring Members bears to the aggregate of Units held by all of the Non-Transferring Members electing to so purchase the Transferred Membership Interest.

9.4.3                 Election to Purchase Less than all of the Transferring Member’s Membership Interest.  In the event any Non-Transferring Members elects to purchase none or less than all of his, her or its pro rata share of the Transferred Membership Interest, then the other Non-Transferring Members can elect to purchase more than their pro rata share.  If such Non-Transferring Members fail to elect to purchase the entire Transferred Membership Interest, the Company may elect to purchase any remaining share of such Transferred Membership Interest.

9.4.4                 Purchase Terms.  Within one hundred eighty (180) days after receipt of the Transfer Notice the Company and the Non-Transferring Members electing to purchase the Transferred Membership Interest (“Purchasing Members”) shall have the first right to purchase or obtain the Transferred Membership Interest upon the price and terms of payment designated in the Transfer Notice.  If the Transfer Notice provides for the payment of non-cash consideration, the Company and such Purchasing Members each may elect to pay the consideration in cash equal to the good faith estimate of the present fair market value of the non-cash consideration offered as determined by the Management Committee.

9.4.5                 Expiration of Right of First Refusal.  Subject to Section 9.5, if the Company or the Non-Transferring Members elect not to purchase or obtain all of the Transferred Membership Interest designated in the Transfer Notice, then the Transferring Member may transfer the Transferred Membership Interest described in the Transfer Notice, to the extent the Non-Transferring Members and the Company have not elected to purchase Transferred Membership Interest, providing (i) the definitive agreements providing for such Transfer are executed and in full force within two hundred ten (210) days after the expiration of the Exercise Period, (ii) such Transfer  is completed within two hundred forty (240) days after the expiration of the Exercise Period, (iii) such Transfer is made on terms substantially similar to, and on no more favorable to the transferee than as designated in, the Transfer Notice, and (iv) the requirements of Sections 9.1 and 9.2 relating to consent of the Management Committee and other matters are satisfied.

9.4.6                 Exclusion from Right of First Refusal.  The rights of first refusal of the Company and the Non-Transferring Members under Section 9.4 (“Rights of First Refusal”) shall not apply with respect to any portion of the Residual Membership Interest sold and to be sold by Non-Transferring Members pursuant to Section 9.5.

 

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9.5           Right of Co-Sale.  Subject to prior compliance with Section 9.1, to the extent that the Company and the Non-Transferring Members do not exercise their respective Rights of First Refusal with respect to any portion of the Transferred Membership Interest pursuant to Section 9.4, then, each Non-Transferring Member that is not a Purchasing Member (“Co-Sale Eligible Member”) shall have the right to participate in the sale (the “Right of Co-Sale”) of a portion of the Transferred Membership Interest which is not being purchased by the Company or the Purchasing Members pursuant to their respective Rights of First Refusal (“Residual Membership Interest”).  The portion of the Residual Membership Interest that may be sold collectively by the Co-Sale Eligible Members (“Co-Sale Eligible Residual Membership Interest”) shall equal a fraction determined by dividing (i) the total number of Units consisting of the Residual Membership Interest held by the Co-Sale Eligible Members by (B) the total number of Units consisting of the Residual Membership Interest held by the Co-Sale Eligible Members and the Transferring Member.  The sale by Co-Sale Eligible Members of their Membership Interests under this Section 9.5 shall be on the same terms and conditions as specified in the Transfer Notice.  Such terms and conditions shall not include the making of any representations and warranties, indemnities or other similar agreements other than representations and warranties with respect to title of the Membership Interest being sold and authority to sell such Membership Interest and indemnities directly related thereto.

9.5.1                 Exercise of Right of Co-Sale.  To exercise its rights hereunder, each Co-Sale Eligible Member (a “Selling Member”) must have provided a written notice to the Transferring Member (a “Co-Sale Notice”) within the Exercise Period indicating the portion of the Membership Interest that it holds of the same class as the Co-Sale Eligible Residual Membership Interest that it wishes to sell pursuant to this Section 9.5.  If the portion of the Membership Interests that the Selling Members desire to sell (as evidenced by the Co-Sale Notices) exceeds the Co-Sale Eligible Residual Membership Interest, each Selling Member will be entitled to sell up to its pro rata share of the Eligible Co-Sale Residual Membership Interest, based upon the ratio of (i) the number of Units held by the Selling Member on the date of the Transfer Notice to (ii) the number of Units held by the Transferring Member and the Selling Members on the date of the Transfer Notice (“Pro Rata Co-Sale Share”).  Notwithstanding the foregoing, if any Selling Member indicates that it desires to sell less than its Pro Rata Co-Sale Share of the Co-Sale Eligible Residual Membership Interest (such deficit, the “Co-Sale Residual Interest Deficit”), each other Selling Member shall be entitled to sell, in addition to their respective Pro Rata Co-Sale Shares, a portion of the Co-Sale Residual Interest Deficit equal to the ratio of the number of Units held by that other Selling Member to the number of Units being sold held by all other Selling Members that indicate that they desire to sell more than their entire Pro Rata Co-Sale Share.

9.5.2                 Confirmation Notice. Within ten (10) days after the expiration of the Exercise Period, the Transferring Member shall give written notice to the Company and each Selling Member specifying the portion of the Residual Membership Interest to be sold by each Selling Member exercising its Right of Co-Sale (the “Co-Sale Confirmation Notice”).

9.5.3                 Closing. Subject to compliance with applicable state and federal securities laws, the sale of the Membership Interests by the Selling Members under Section 9.5 shall occur within two hundred forty (240) days after the expiration of the Exercise Period (the “Co‐Sale Closing”).  At the Co‐Sale Closing, the Transferring Member shall remit, or will cause to be remitted, to each Selling Member, at the Co‐Sale Closing, that portion of the proceeds of the Transfer to which each Selling Member is entitled by reason of each Selling Member’s participation in such Transfer pursuant to the Right of Co‐Sale.  In addition, the Transferring Member, the Selling Member and the proposed Transferee shall execute all instruments of transfer and all amendments to this Agreement required to effect the Transfer(s).

 

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9.5.4                 Exclusions from Co-Sale. This Right of Co‐Sale shall not apply with respect to that portion of the Transferred Membership Interest sold or to be sold to Purchasing Members or the Company pursuant to the Right of First Refusal, nor shall it apply to Permitted Transfers in compliance with Section 9.3.

9.5.5                  Transferring Member’s Right to Transfer. If any portion of the Transferred Membership Interest remains available after the exercise of all Rights of First Refusal and all Rights of Co-Sale, then the Transferring Member shall, subject to compliance with Section 9.1, be free to Transfer any such remaining portion of the Transferred Membership Interest (“Remaining Membership Interest”) to the proposed Transferee on the terms provided in the Transfer Notice; provided, however, that if all of the Remaining Membership Interest is not so Transferred during the one hundred eighty day period following the end of the Exercise Period, then the Transferring Member may not, without the written consent of all the other Members, Transfer any portion of its Membership Interest other than pursuant to Section 9.3 hereof until the one year anniversary of the date one hundred and eighty (180) days after the Expiration of the Exercise Period.

9.6           Transfers in Violation of this Agreement and Transfers of Partial Membership Interests.  Upon a Transfer in violation of this ARTICLE IX, the transferee shall have no right to vote or participate in the management of the Company or to exercise any rights of a Member.  Such transferee shall only be entitled to receive the share of the Company's Taxable Net Income, Taxable Net Losses and distributions of the Company's assets to which the transferor would otherwise be entitled.  Notwithstanding the immediately preceding sentences, if, in the determination of the Management Committee, a transfer in violation of this ARTICLE IX would cause the termination of the Company under the Code, the transfer shall be null and void.

ARTICLE X

Consequences of a Disposition Event.

10.1        Disposition Event.  Upon the occurrence of a Disposition Event, the Company and/or the remaining Members (“Remaining Members”) shall have the option to purchase, and the Member (or his or her legal representative) whose actions or conduct resulted in the Disposition Event (“Former Member”) shall sell, the Former Member’s Membership Interest (“Former Member’s Interest”) as provided in this Article X.  The Former Member shall promptly notify the Company and all Members in writing after the occurrence of a Disposition Event.

10.2        Purchase Price.  The purchase price for the Former Member’s Interest shall  be an amount equal to the fair market value of the Former Member’s Interest as of the Disposition Event, as determined by an independent appraiser jointly selected by the Former Member and by the Manager.  If the Former Member and Manager are unable to select an appraiser within thirty (30) days after the Former Member is given notice as provided herein, the Former Member and the Manager shall each select an appraiser within thirty (30) days after notice from the Manager or Former Member and the two appraisers so selected shall select a third appraiser who alone shall determine the value of the Former Member’s Interest.  The Company and the Former Member shall each pay one‐half of the cost of the appraisal.  Notwithstanding the foregoing, if the Disposition Event results from a breach of this Agreement by the Former Member, the purchase price shall be reduced by an amount equal to the damages suffered by the Company and/or the Remaining Members as a result of such breach.

 

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10.3        Notice of Intent to Purchase.  Within thirty (30) days after the purchase price of the Former Member’s Interest has been determined in accordance with Section 10.2, each Remaining Member shall notify the other Members in writing of such Remaining Member’s desire to purchase a portion of the Former Member’s Interest.  The failure of any Remaining Member to submit a notice within the applicable period shall constitute an election on the part of the Remaining Member not to purchase any of the Former Member’s Interest.  Each Remaining Member so electing to purchase shall be entitled to purchase a portion of the Former Member’s Interest in the same proportion as the number of Units held by the Remaining Member bears to the aggregate of the Units held by all of the Remaining Members electing to purchase the Former Member’s Interest.

10.4        Election to Purchase Less than All of the Former Member’s Interest.  If any Remaining Member elects to purchase none or less than all of his or her pro rata share of the Former Member’s Interest, then the Remaining Members can elect to purchase more than their pro rata share.  If the Remaining Members fail to purchase the entire interest of the Former Member, the Company may purchase any remaining share of the Former Member’s Interest.

10.5       Payment of Purchase Price.  The Company or the Remaining Members, as the case may be, shall pay the purchase price within ninety (90) days following the determination of the purchase price. The purchase price shall be payable as follows: (i) at least twenty percent (20%) of the purchase price shall be paid at the Disposition Closing (defined below) and the balance of the purchase price shall be payable in three (3) equal annual principal installments, plus simple accrued interest at the annual rate of five percent (5.0%), commencing on the one (1) year anniversary date of the Disposition Closing and continuing on such date for each succeeding year for the three (3) years. The Company and/or the Remaining Members, as applicable, shall have the right to prepay in full or in part at any time without penalty.  The obligation to pay the balance due shall be evidenced by a promissory note, which promissory note shall be subordinate to all indebtedness of the Company.

10.6        Closing of Purchase of Former Member’s Interest.  The closing (“Disposition Closing”) for the sale of a Former Member’s Interest pursuant to this Article X shall be held no later than ninety (90) days after the determination of the purchase price.  At the Disposition Closing, the Former Member shall deliver to the Company and/or the Remaining Members an instrument of transfer (containing warranties of title and no encumbrances) conveying the Former Member’s Interest.  The Former Member, the Company and the Remaining Members shall do all things and execute and deliver all papers as may be necessary fully to consummate such sale and purchase in accordance with the terms and provisions of this Agreement.

 

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ARTICLE XI

Accounting, Records, Reporting by Members

11.1        Books 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 GAAP.  The books and records of the Company shall reflect all the Company transactions and shall be appropriate and adequate for the Company’s business.  The Company shall maintain at its principal office, 6720 North Scottsdale Road, Suite 390, Scottsdale, AZ 85253, all of the following and any other information required by Section 18-305 of the Act: (i) a current list of the full name and last known business, residence or mailing address of each Member, Management Committee member and Manager, both past and present; (ii) a copy of the Certificate and all amendments thereto, together with any power of attorney pursuant to which any amendment thereto has been executed; (iii) copies of the Company’s federal, state and local income tax or information returns and reports, if any, for the three most recent Fiscal Years; (iv) copies of this Agreement and any amendments hereto, and copies of any writings permitted or required under the Act; (v) copies of any financial statements of the Company for the three most recent Fiscal Years; (vi) minutes of any meetings of Members and any written consents obtained from Members; (vii) true and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each Member and which each Member has agreed to contribute in the future, and the date on which each became a Member; and (viii) the books and records of the Company as they relate to the internal affairs of the Company for at least the current and past four Fiscal Years.

11.2        Inspection by Members.

11.2.1              Inspection.  Except as provided in Section 11.2.2, any Company records are subject to inspection and copying at the reasonable request, and at the expense, of any Member during ordinary business hours by such Member or Member’s agent.  The Company may impose a reasonable charge, not to exceed the estimated cost of labor and material for production or reproduction, for copies of any documentation provided to a Member.

            

11.2.2               Confidentiality.  The Manager shall have the right to keep confidential from the Members (but not from the members of the Management Committee), for such period 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, of its business, or which the Company is required by law or by agreement with a third party to keep confidential.  The provisions of this Section 11.2.2 shall in no way limit the ability of the Designees from inspecting such information.

11.3        Reports.  The Company shall cause to be prepared at least annually information necessary for the preparation of the Members' federal and state income tax returns.  The Company shall send or cause to be sent to each Member within ninety (90) days after the end of each taxable year such information as is necessary to complete federal and state income tax or information returns.

11.4        Bank Accounts.  The Company shall maintain the funds of the Company in one or more separate bank accounts in the name of the Company, and shall not permit the funds of the Company to be commingled in any fashion with the funds of any other person.  The Manager, acting alone, is authorized to 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.  All checks, drafts, and other instruments obligating the Company to pay money shall be signed in accordance with the requirements of this Agreement.

 

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11.5         Tax Matters Member.  The Members shall from time to time cause the Company to make such tax elections as they deem to be in the best interests of the Company and the Members. The Manager, or any other individual appointed by the Management Committee, shall be the “Tax Matters Partner,” as defined in Code Section 6231.

ARTICLE XII

Dissolution and Winding Up

12.1         Conditions of Dissolution.  The Company shall dissolve upon the occurrence of any of the following events:

12.1.1      Election.  The election by a Super-Majority in Interest of the Members to dissolve the Company; or

12.1.2      Sale.  The sale or other disposition of all or substantially all of the assets of the Company and the distribution of the proceeds of the sale or other disposition to the Members.

12.2        Winding Up.  Upon the dissolution of the Company under the Act or this Agreement, the Company’s assets shall be disposed of and its affairs wound up and the conduct of the Company’s business shall be limited to those matters consistent with the disposition of assets and winding up of affairs.

12.3        Order of Payment of Liabilities, Distribution of Assets, Upon Dissolution. After determining that all known debts and liabilities of the Company in the process of winding-up, including, without limitation, debts and liabilities to Members who are creditors of the Company, have been paid or adequately provided for, the remaining assets shall be liquidated and the proceeds distributed, after taking into account Taxable Net Income and Loss allocations for the Company’s taxable year during which the liquidation occurs, to the Members in proportion to and to the extent of their positive Capital Account balances.  Such liquidating distributions shall be made by the earlier of (i) the end of the Company’s taxable year in which the Company is liquidated, or (ii) ninety (90) days after the date of such liquidation.

12.4        Limitations on Payments Made in Dissolution.  Except as otherwise specifically provided in this Agreement, each Member shall be entitled to look solely to the assets of the Company for the return of the Member’s positive Capital Account balance and shall have no recourse for his or her Capital Contribution and/or share of Company profits against any other Member except as provided in Article XIII.

 

ARTICLE XIII

Indemnification of Agents.

 

13.1        Indemnification of Manager and Management Committee. The Company, its receiver, or its trustee shall indemnify and hold harmless the Manager, the Members, the Management Committee members and the officers, and each of them, and each of their employees, agents, representatives and successors, to the fullest extent permitted by law, from and against any loss, expense, damage, claim, liability, expense or injury suffered or sustained by them because of any act or omission arising out of their activities on behalf of the Company or in furtherance of the interests of the Company or their status as a Manager, officer, Management Committee member, Member or agent of the Company, including without limitation any judgment, award, settlement, attorneys’ fees, and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding, or claim, regardless of whether the indemnified party ceases to act in the capacity at the time the liability or expense is paid or incurred and regardless of the identity of the party bringing the claim or action. Reasonable expenses incurred by an indemnified party in connection with the foregoing matters, to the fullest extent permitted by law, shall be paid or reimbursed by the Company in advance of the final disposition of such proceedings. A Person shall not be denied indemnification hereunder because such person had an interest in the action to which the indemnification applies, if the Person is otherwise entitled to indemnity hereunder.

 

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13.2        Limitation on Indemnification.  Notwithstanding Section 13.1 above, no Person shall be entitled to or shall receive indemnification in respect to any matters that proximately result from the person’s fraud, bad faith, gross negligence or willful misconduct or the person’s material breach of this Agreement.

13.3        Indemnification on Successful Defense.  To the extent that the Person entitled to indemnification is successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Section 13.1, or in the defense of any claim, issue or matter therein, the Company shall indemnify the Person against the expenses, including attorney’s fees, actually and reasonably incurred in connection therewith.

ARTICLE XIV

Investment Representations.

Each Member hereby represents and warrants to, and agrees with, the other Members and the Company as set forth below.

14.1        Preexisting Relationship or Experience.  Such Member has a preexisting personal or business relationship with the Company or the Manager, or by reason of such Member’s business or financial experience, such Member is capable of evaluating the risks and merits of an investment in the Company and of protecting such Member’s own interests in connection with this investment.

14.2        No Advertising.  Such Member has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, article or any other form of advertising or general solicitation with respect to the sale of the Membership Interest.

14.3        Investment Intent.  Such Member is acquiring the Membership Interest for investment purposes for such Member’s own account only and not with a view to or for sale in connection with any distribution of all or any part of the Membership Interest.  No other Person will have any direct or indirect beneficial interest in or right to the Membership Interest.

 

ARTICLE XV

Business Dealings.

 

15.1        General Business Practices. Each Member and the Company shall, and each Member shall cause each of its Affiliates to, (i) conduct its business in a professional manner that reflects favorably on their products and the parties hereto, (ii) take all action necessary to prevent and avoid deceptive, misleading or unethical practices in operating its business, (iii) make no false or misleading representations with regard to its products (iv) not publish or participate in the publishing of any false, misleading or deceptive advertising material, (v) make no representation, warranty or guaranty to anyone with respect to the specifications, features or capabilities of its products that is false or contrary to law, and (vi) comply with the Foreign Corrupt Practices Act.

 

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15.2        Supply Agreement.  Youji hereby agrees as a Member of the Company to supply Products to the Company on the terms set forth in the Exclusive Supply Agreement. The parties further agree that if the Exclusive Supply Agreement addresses the supply to the Company of any products other than those Products then listed on Exhibit B hereto, then Exhibit B shall be deemed to include such products.

15.3        Cooperation Regarding Future Products.  From time to time, the Members agree to discuss and evaluate in good faith whether additional products not then listed on Exhibit B to this Agreement should be sold by the Company, which additional products may include existing products of Youji or its Affiliates or new products to be developed by the Company.  If the Members and the Management Committee add additional Products to Exhibit B, Youji and the Company shall amend the Exclusive Supply Agreement to provide for the purchase and sale of such additional Products on the terms set forth in the Exclusive Supply Agreement.

ARTICLE XVI

Miscellaneous.

16.1        Entire Agreement.  Other than as provided in the Exclusive Supply Agreement regarding the rights of the Members, this document constitutes the entire agreement between the parties with respect to the subject matter herein, all oral agreements being merged herein, and supersedes all prior representations with respect thereto.  Other than as provided in the Exclusive Supply Agreement, there are no representations, agreements, arrangements, or understandings, oral or written, between or among the parties relating to the subject matter of this Agreement that are not fully expressed herein.

16.2        Interpretation.  All pronouns shall be deemed to refer to the masculine, feminine, or neuter, singular or plural, as the context in which they are used may require.  All headings herein are inserted only for convenience and ease of reference and are not considered in the interpretation of any provision of this Agreement.  Numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of this Agreement unless otherwise expressly stated.  In the event any claim is made by any Member relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular Member or his or her counsel.

16.3        Severability.  If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated in any way.

 

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16.4        Notice.  Any notice under this Agreement shall be in writing, and any written notice or other document shall be deemed to have been duly given (i) on the date of personal service on the parties, (ii) on the third Business Day after mailing, if the document is mailed by registered or certified mail, (iii) one day after being sent by professional or overnight courier or messenger service guaranteeing one-day delivery, with receipt confirmed by the courier, or (iv) on the date of transmission if sent by telegram, telex, telecopy or other means of electronic transmission resulting in written copies, with receipt confirmed.  Any such notice shall be delivered or addressed to the parties at the addresses set forth below the party’s signature to this Agreement or at the most recent address specified by the addressee through written notice under this provision.  Failure to conform to the requirement that mailings be done by registered or certified mail shall not defeat the effectiveness of notice actually received by the addressee.

16.5        Amendment.  Except as specifically provided otherwise herein, the provisions of this Agreement may be modified, in whole or in part, at any time by written consent of all the Members.

16.6        Counterparts.  This Agreement may be executed in any number of counterparts with the same effect as if the parties had all signed the same document.  All counterparts shall be construed together and shall constitute one agreement. This Agreement, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similar reproduction of such signed writing using a facsimile machine or electronic mail shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re execute original forms thereof and deliver them to all other parties.  No party hereto shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

16.7         Attorneys’ Fees; Prejudgment Interest.  If the services of an attorney are required by any party to secure the performance of this Agreement or otherwise upon the breach or default of another party to this Agreement, or if any judicial remedy or arbitration is necessary to enforce or interpret any provision of this Agreement or the rights and duties of any Person in relation thereto, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and other expenses, in addition to any other relief to which such party may be entitled.  Any award of damages following judicial remedy or arbitration as a result of the breach of this Agreement or any of its provisions shall include an award of prejudgment interest from the date of the breach at the maximum amount of interest allowed by law.

16.8        Remedies Cumulative.  No remedy or election hereunder shall be deemed exclusive but shall whenever possible be cumulative with all other remedies at law or in equity.

16.9        Successors and Assigns.  Subject to the provisions otherwise contained in this Agreement, this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Members or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

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16.10     Specific Performance.  Each party’s obligations under this Agreement are unique.  The parties each acknowledge that, if any party should default in performance of the duties and obligations imposed by this Agreement, it would be extremely impracticable to measure the resulting damages.  Accordingly, the nondefaulting party, in addition to any other available rights or remedies, may sue in equity for specific performance, and the parties each expressly waive the defense that a remedy in damages will be adequate.

16.11     Captions.  All paragraph captions are for reference only and shall not be considered in construing this Agreement.

16.12      Time.  Time is of the essence of this Agreement.

16.13     Parties in Interest.  Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action against any party to this Agreement.

16.14     Further Assurances.  The Members shall execute and deliver all such further documents and instruments, and take all further actions as may be necessary to consummate the transactions contemplated hereby.

16.15     Governing Law; Venue.  The laws of the State of Delaware, including, with limitation, the Act, shall govern the organization and internal affairs of the Company and the liability of the Members.  Nevertheless, to the extent that reference need be made to the law of any state to enforce the decision made in any legal proceeding brought pursuant hereto, the internal laws of the State of California (without reference to the rules regarding conflict or choice of laws of such State) shall be utilized for such purpose.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in Sacramento County, California. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Sacramento County, California for the adjudication of any dispute hereunder or in connection herewith, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.

[remainder of page intentionally left blank]

 

32

The Parties have executed this Agreement as of the date first above written.

	
MEMBERS

	 
	 	 	 
	
RICEBRAN TECHNOLOGIES,

	 
	
a California corporation

	 
	 	 	 
	
By:

	
/s/ W. John Short

	 
	 	
W. John Short, Chief Executive Officer

	 

	
Address:

	
6720 North Scottsdale Rd., Suite 390

	 
	 	Scottsdale, AZ  85253	 
	
Facsimile:

	
(480) 315-8275

	 

YOUJI COMPANY LIMITED,

a Hong Kong corporation

	
By:

	
/s/ Arvind Narula

	 
	 	
Arvind Narula

	 
	
Title:

	
Director

	 

	
Address:

	
Youji Company Limited

	 
	 	
Unit 21, 5/F, Kowloon Bay Industrial Centre,

	 
	 	
15 Wang Hoi Road, Kowloon, HONG KONG

	 
	 	
Tel: +852 2759 1213

	 
	 	
Fax: +852 2759 1215

	 

MANAGER

	
/s/ W. John Short

	 
	
W. John Short

	 

	
Address:

	
6720 North Scottsdale Rd., Suite 390

	 
	 	
Scottsdale, AZ  85253

	 

 

[SIGNATURE PAGE TO THE LIMITED LIABILITY COMPANY AGREEMENT: RBT – Youji, LLC]

 

EXHIBIT A

 

Capital Contributions

	 	
Member

	
Total Initial Capital 

Contributions

	 	
RBT

	 
	 	
Youji

	 

 

Percentage Interests

	 	
Member

	
Units

	
Percentage Interest

	 	
RBT

	
5,500

	
55%

	 	
Youji

	
4,500

	
45%

	 	
Total

	
10,000

	
100%

Initial Capital Accounts

	 	
Member

	
Initial Capital Accounts 

(as of Effective Date)

	 	
RBT

	 
	 	
Youji

	 

 

EXHIBIT B

PRODUCTSEx. 10.3

VOTING AGREEMENT AND IRREVOCABLE PROXY

This Voting Agreement and Irrevocable Proxy (this “Agreement”) is dated as of February 8, 2016 (the “Effective Date”), and is entered into by and among RiceBran Technologies, a California corporation (“Company”), Arvind Narula, an individual with mailing address at 1000/30 P.B. Tower, 9th Floor, Sukhumvit 71 Road, Klongton – Nua, Wattana, Bangkok (“Narula”), Youji Company Limited, a Hong Kong limited company, with principal offices located at Unit 21, 5/F, Kowloon Bay Industrial Centre, 15 Wang Hoi Road, Kowloon, Hong Kong (together with Narula, “Shareholders”) and John Short (“CEO”), the Chief Executive Officer of the Company. The Shareholders and CEO are referred to herein collectively as the “Voting Parties” and individually as a “Voting Party”.

BACKGROUND

A.                 Company and Shareholders have entered into an Exclusive Supply and Cooperation Agreement (the “Supply Agreement”), dated as of February 8, 2016, pursuant to which Company will acquire organic rice bran from Youji and pay Youji a portion of the purchase price for the organic rice bran in the form of common stock of Company at a value as set forth in the Supply Agreement. In furtherance thereof, Company will issue and deposit 950,000 of the partially paid common stock into an escrow pursuant to an Escrow Agent (“Escrow Agreement”) dated on or about February 8, 2016 by and among Company, Shareholder and American Stock Transfer & Trust Company, LLC (the “Escrow”).

B.                  The Voting Parties intend that the shares that are Escrowed Shares (as defined in the Escrow Agreement, “Escrowed Shares”) will not impact the voting or decision making of the Company’s shareholders, and in furtherance thereof, that the Escrowed Shares be voted in such percentages such that the votes, abstentions, and presence match that of the Company’s outstanding common stock other than Escrowed Shares, in any corporate vote or action.

AGREEMENT

THE PARTIES AGREE AS FOLLOWS:

1.                    Escrowed Shares. During the term of this Agreement, the Voting Parties each agree to vote all Escrowed Shares in accordance with the provisions of this Agreement. This Agreement shall not apply to any Escrowed Shares once they become Released Shares (as defined in the Escrow Agreement) or any common stock of Company acquired by Shareholders outside of the Escrow.

2.                    Voting of Escrowed Shares.

2.1.                Voting Agreement. For purposes of this Agreement, “Expiration Date” shall mean the date upon which this Agreement is validly terminated pursuant to the provisions hereof. Shareholders agree that, during the period from the date of this Agreement through the Expiration Date:

 

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(a)            At any meeting of shareholders of the Company, however called, and at every adjournment thereof, all outstanding shares of the Escrowed Shares that are owned by Shareholders as of the record date fixed for such meeting shall be present and/or voted as determined by CEO, as set forth below in Section 2.2.

(b)            In the event written consents are solicited or otherwise sought from shareholders of the Company, then, with respect to Escrowed Shares that are owned by Shareholders as of the record date fixed for the consent to the proposed action, Shareholders agree to execute and deliver such written consents to such proposed action as set forth below in Section 2.2.

(c)            Shareholders shall vote all of the Escrowed Shares and shall take all other necessary or desirable actions within Shareholders’ control (in any capacity) to comply with the requirements hereof, including, without limitation, executing a proxy to vote, calling meetings, and executing written consents to vote the Escrowed Shares as set forth below in Section 2.2.

2.2.                Vote Allocations. When voting shares or taking a corporate action, the Voting Parties shall (a) attend and be present for quorum and (b) vote the Escrowed Shares in favor or against, or abstain, in both cases, in such percentage as the outstanding common stock of Company other than Escrowed Shares. It is the parties’ intent that the Escrowed Shares shall not alter the approval or disapproval of any matter brought before the Company’s shareholders for vote from that which would have occurred if the Escrowed Shares were not outstanding.

3.                   Additional Escrowed Shares. In the event that after the Effective Date any shares or other securities are issued on, or in exchange for, any of the Escrowed Shares by reason of any stock dividend, stock split, consolidation of shares, reclassification or consolidation involving the Company, such shares or securities shall be deemed to be Escrowed Shares for purposes of this Agreement.

4.                    No Ownership Interest. Notwithstanding the irrevocable proxy granted to CEO under Section 8, nothing contained in this Agreement shall be deemed to vest in CEO any direct or indirect ownership or incidence of ownership of or with respect to any of the Escrowed Shares held by Shareholders. All rights, ownership and economic benefits of and relating to the Escrowed Shares shall remain vested in and belong to the Shareholders, excluding Escrowed Shares held by CEO and except as otherwise provided herein.

5.                    Transfer of Voting Rights. Shareholder agrees that, during the period from the Effective Date through the Expiration Date, Shareholders shall ensure that, except as expressly provided in this Agreement: (i) none of the Escrowed Shares is deposited into a voting trust; (i) no proxy is granted; and (iii) no voting agreement or similar agreement is entered into, with respect to any of the Escrowed Shares. Shareholders shall not sell, transfer or assign any Escrowed Shares or any interest thereon, unless the transferee agrees in writing, in form and substance satisfactory to CEO, to be bound as Shareholders by the provisions of this Agreement.

 

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6.                    Representations and Warranties of Shareholders. Each Shareholder represents and warrants to the Company and CEO as follows:

6.1.               Authorization, etc. Shareholder has the absolute and unrestricted right, power, authority and capacity to execute and deliver this Agreement and the attached Proxy and to perform its obligations hereunder and thereunder. This Agreement and the Proxy have been duly executed and delivered by Shareholder and constitute legal, valid and binding obligations of Shareholder, enforceable against Shareholder in accordance with their terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

6.2.               Termination. This Agreement shall continue in full force and effect from the Effective Date until the termination of the Escrow Agreement.

7.                    Legend(s). The Company may place on certificates representing the Escrowed Shares such restrictive legends as it deems reasonably appropriate in order to reflect the provisions of this Agreement, including without limitation the following (the “Legend”):

THE SHARES REPRESENTED HEREBY ARE SUBJECT TO A VOTING AGREEMENT (A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER) AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON HOLDING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT. A COPY OF SUCH VOTING AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.

At any time after the termination of this Agreement, any holder of a stock certificate legended pursuant to this Section may surrender such certificate to the Company for removal of the Legend and the Company will duly reissue a new certificate without the Legend.

8.                    Irrevocable Proxy. Concurrently with the execution of this Agreement, Shareholders agree to deliver to CEO a proxy in the form attached hereto as Exhibit A (the “Proxy”), which shall be irrevocable to the maximum extent permitted by applicable law, covering the total number of Escrowed Shares beneficially owned or as to which beneficial ownership is acquired by Shareholders set forth herein, to vote the Escrowed Shares held by Shareholders in accordance with the terms of this Agreement.

If applicable, Shareholders shall cause to be delivered to CEO an additional proxy (in substantially the form attached hereto as Exhibit A) executed on behalf of the record owner of any outstanding shares of the Escrowed Shares that are owned beneficially (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), but not of record, by Shareholders. From time to time and without additional consideration, Shareholders shall (at Shareholders’ sole expense) execute and deliver, or cause to be executed and delivered, such additional transfers, assignments, endorsements, proxies, consents and other instruments, and shall (at Shareholders’ sole expense) take such further actions, as the CEO may request for the purpose of carrying out and furthering the intent of this Agreement.

 

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9.                    Special Power of Attorney.

9.1.               Appointment. Shareholders, by executing this Agreement, hereby appoint the CEO as Shareholders’ true and lawful attorney-in-fact for Shareholders and in Shareholders’ name, place, and stead to: (i) undertake all acts and do all things necessary to approve, consent or otherwise act in any lawful manner in connection with any amendments, additions, revisions or restatements of, or any other modifications to, any agreements between the shareholders of the Company regarding voting of any shares in the Company to which Shareholders are a party along with the Company and other shareholders of the Company, including the authority to approve or consent to any action permitted to be taken by Shareholders as a party to any such agreements, and (ii) generally to do, execute, and perform any other act, deed, matter, or thing, that in the opinion of the CEO ought to be done, executed or performed in conjunction with this special power of attorney, of every kind and nature, as fully and effectively as Shareholders could do if personally present.

9.2.               Additional Matters. The CEO’s signature under the authority granted in this special power of attorney may be accepted by any third party or organization with the same force and effect as if Shareholders were personally present and acting on Shareholders’ own behalf. No person or organization, specifically including but not limited to the Company, who relies on the CEO’s authority under this Agreement shall incur any liability to Shareholders, or Shareholders’ beneficiaries, successors, or assigns, because of reliance on this Agreement. Shareholders and Shareholders’ beneficiaries, successors, and assigns shall be bound by the CEO’s acts under this special power of attorney. Shareholders hereby ratify and confirm all that the CEO shall do, or cause to be done, by virtue of this special power of attorney.

9.3.                Successor Proxy Holder. Should the CEO at any time be unable or unwilling to continue as proxy holder pursuant to the Proxy, the CEO may in writing designate a successor proxy holder. Unless modified by the CEO in a writing delivered to the Company prior to such incapacity, the CEO hereby designates Dale Belt, as chief financial officer of Company, to, without further action by the CEO, serve as successor in the event CEO becomes unable to continue as proxy holder or ceases to be the Company’s chief executive officer. Such successor proxy holder may accept such designation by signing and dating an acknowledgment thereof, which acknowledgment shall be appended to this Agreement and become a part hereof. From the date of such acknowledgment, such successor shall be the proxy holder for all purposes under this Agreement and under the Proxy, without the need to sign and deliver a substitute proxy, and the previous proxy holder shall have no further authority or obligation as proxy holder under this Agreement or under the Proxy.

10.                 Miscellaneous.

10.1.            Additional Parties. Without the consent of any current Voting Party, additional persons who become shareholders (or holders of options or other rights to acquire common stock of the Company) may, with the Company’s approval, execute counterpart signature pages to this Agreement and become additional Shareholders and Voting Parties.

10.2.             Certain Definitions. Escrowed Shares “held” or “owned” by a Voting Party shall mean any Escrowed Shares directly or indirectly owned (of record or beneficially) by such Voting Party or as to which such Voting Party has voting power. “Vote” shall include any exercise of voting rights whether at an annual or special meeting or by written consent or in any other manner permitted by applicable law.

 

4

10.3.             Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed, or delivered to each party as follows: (i) if to a Voting Party, at such Voting Party’s address or facsimile number set forth in the Company’s records, or at such other address or facsimile number as a Voting Party shall have furnished the Company in writing; or (ii) if to the Company or CEO, at 6720 N. Scottsdale Road, Suite #390, Scottsdale, Arizona 85253, Attention: Chief Executive Officer, or at such other address as the Company shall have furnished to the Voting Parties in writing. All such notices and communications will be deemed effectively given the earlier of: (I) when received; (II) when delivered personally; (III) one business day after being delivered by facsimile (with written confirmation of successful transmission); (IV) one business day after being deposited with an overnight courier service of recognized standing; or (V) four days after being deposited in the U.S. mail, first class with postage prepaid. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.

10.4.             Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. The Company shall not permit the transfer of any Escrowed Shares on its books or issue a new certificate representing any Escrowed Shares, unless and until the person to whom such security is to be transferred shall have executed a written agreement pursuant to which such person becomes a party to this Agreement and agrees to be bound by all the provisions hereof as if such person was a Voting Party hereunder.

10.5.             Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of Arizona, without regard to principles of conflicts of law.

10.6.            Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.

10.7.             Entire Agreement. This Agreement and the exhibit(s) hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof. No party hereto shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants, except as specifically set forth herein.

10.8.             Specific Performance. It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

 

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10.9.            Amendment. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, discharged or terminated other than by a written instrument referencing this Agreement and signed by CEO and holders of a majority of the Escrowed Shares subject to this Agreement. Any such amendment, discharge or termination effected in accordance with this paragraph shall be binding upon each Voting Party that has entered into this Agreement. Each Voting Party acknowledges that by the operation of this paragraph, the CEO will have the right and power to diminish or eliminate all rights of such Voting Party under this Agreement.

10.10.          No Waiver. The failure or delay by a party to enforce any provision of this Agreement will not in any way be construed as a waiver of any such provision or prevent that party from thereafter enforcing any other provision of this Agreement. The rights granted both parties hereunder are cumulative and will not constitute a waiver of either party’s right to assert any other legal remedy available to it.

10.11.          Severability. If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement. The balance of this Agreement shall be enforceable in accordance with its terms.

10.12.          Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. Facsimile copies of signed signature pages will be deemed binding originals. When properly signed, this Agreement may be delivered electronically or by facsimile.

[SIGNATURE PAGE FOLLOWS]

 

6

The parties have executed this Voting Agreement and Irrevocable Proxy as of the Effective Date.

	 	
COMPANY:

	 
	 	  	 
	 	
RICEBRAN TECHNOLOGIES

	 
	 	  	 
	 	
By: 

	/s/ W. John Short	 
	 	
Name: 

	W. John Short	 
	 	
Title: 

	CEO & President	 
	 	  	 
	 	
CEO:

	 
	 	  	 
	 	
/s/ W. John Short

	 
	 	
W. John Short

	 
	 	  	 
	 	
SHAREHOLDERS:

	 
	 	  	 
	 	
/s/ Arvind Narula

	 
	 	
Arvind Narula, an individual

	 
	 	  	 
	 	
YOUJI COMPANY LIMITED

	 
	 	 	 	 
	 	
By: 

	/s/ Arvind Narula	 
	 	
Name: 

	Arvind Narula	 
	 	
Title: 

	Director	 

[SIGNATURE PAGE TO VOTING AGREEMENT AND IRREVOCABLE PROXY]

 

EXHIBIT A

IRREVOCABLE PROXY

The undersigned (“Shareholders”) of RiceBran Technologies, a California corporation (the “Company”), hereby irrevocably (to the fullest extent permitted by law) appoint and constitute W. John Short (“Proxy Holder”), and any successor proxy holder as provided in the Voting Agreement (as defined below), the sole attorney and proxy of the undersigned, with full power of substitution and resubstitution, to vote and exercise all voting and related rights, with respect to the matters specified in the Voting Agreement and Irrevocable Proxy, dated as of February 8, 2016, entered into by and among, among other parties, Proxy Holder and the Shareholders (the “Voting Agreement”) with respect to all of the shares of capital stock of the Company that now are or hereafter may be beneficially owned by the undersigned that are required to be delivered into escrow pursuant to the Supply Agreement (as defined in the Voting Agreement), and any and all other shares or securities of the Company issued or issuable in respect thereof on or after the date hereof pursuant to the Supply Agreement (collectively, the “Escrowed Shares”), in accordance with the terms of this Proxy. The Escrowed Shares beneficially owned by the undersigned Shareholders of the Company as of the date of this Proxy are listed on the final page of this Proxy. Upon the undersigned’s execution of this Proxy, any and all prior proxies given by the undersigned with respect to any Escrowed Shares are hereby revoked and the undersigned agrees not to grant any subsequent proxies with respect to the Escrowed Shares until after the Expiration Date (as defined below).

This Proxy is irrevocable (to the extent permitted by applicable law) and is granted pursuant to the Voting Agreement, and is granted in consideration, in part, of the issuance by the Company to the Shareholders of the Escrowed Shares. As used herein, the term “Expiration Date” shall mean the date of termination of the Voting Agreement.

The attorneys and proxies named above, and each of them, are hereby authorized and empowered by the undersigned, at any time prior to the Expiration Date, to act as the undersigned’s attorney and proxy to vote the Escrowed Shares, and to exercise all voting rights of the undersigned with respect to the Escrowed Shares (including, without limitation, the power to execute and deliver written consents pursuant to the California Corporations Code), at every annual, special or adjourned meeting of the shareholders of the Company and in every written consent in lieu of such meeting, with respect to all matters specified in the Voting Agreement, as determined by the CEO as set forth in Section 2.2 of the Voting Agreement, including without limitation: (i) election and removal of directors of the Company and the size of the board of directors of the Company; (ii) amendments to the Company’s restated articles of incorporation or bylaws or votes to increase the number of authorized shares of common stock; (iii) any merger, sale of assets or similar transaction to which the Company is a party or by which any assets of the Company are bound; and (iv) any other corporate matter with respect to which the Shareholders of the Company vote or act by means of written consent.

This Proxy shall be binding upon the beneficiaries, successors and assigns of the undersigned (including any transferee of any of the Escrowed Shares).

 

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If any provision of this Proxy or any part of any such provision is held under any circumstances to be invalid or unenforceable in any jurisdiction, then: (i) such provision or part thereof shall, with respect to such circumstances and in such jurisdiction, be deemed amended to conform to applicable laws so as to be valid and enforceable to the fullest possible extent; (ii) the invalidity or unenforceability of such provision or part thereof under such circumstances and in such jurisdiction shall not affect the validity or enforceability of such provision or part thereof under any other circumstances or in any other jurisdiction; and (iii) the invalidity or unenforceability of such provision or part thereof shall not affect the validity or enforceability of the remainder of such provision or the validity or enforceability of any other provision of this Proxy. Each provision of this Proxy is separable from every other provision of this Proxy, and each part of each provision of this Proxy is separable from every other part of such provision.

This Proxy shall terminate automatically upon the expiration or other valid termination of the Voting Agreement.

Dated: February 8, 2016

	 	
SHAREHOLDERS:

	 
	 	  	 
	 	
/s/ Arvind Narula

	 
	 	
Arvind Narula, an individual

	 
	 	  	 
	 	
YOUJI COMPANY LIMITED

	 
	 	  	 
	 	
By:

	/s/ Arvind Narula	 
	 	
Name: 

	Arvind Narula	 
	 	
Title: 

	Director	 
	 	 	 	 
	 	
Number of shares of common and/or stock of the Company owned of record as of the date of this proxy:

	 
	 	  	 
	 		
950,000 shares of Company’s common stock

	 

 

 

-2-

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