HomeMy WebLinkAbout3-A_Master_Application_VEK_on_Aberdeen_191106_v1DEPARTMENT OF COMMUNITY
AND ECONOMIC DEVELOPMENT
Planning Division
1055 South Grady Way, 6th Floor | Renton, WA 98057 | 425-430-7200
www.rentonwa.gov
*By completing the email address field the owner/applicant/contact person is opting to receive all formal notifications
and project documents in digital format via email unless otherwise requested.
LAND USE PERMIT MASTER APPLICATION
PROPERTY OWNER(S) PROJECT INFORMATION
NAME: PROJECT OR DEVELOPMENT NAME:
ADDRESS: PROJECT/ADDRESS(S)/LOCATION AND ZIP CODE:
CITY: STATE: ZIP:
PHONE NUMBER: KING COUNTY ASSESSOR’S ACCOUNT NUMBER(S):
EMAIL ADDRESS*:
I prefer to receive all correspondence via US Mail.
APPLICANT (if other than owner)EXISTING LAND USE(S):
NAME: PROPOSED LAND USE(S):
COMPANY (if applicable): EXISTING COMPREHENSIVE PLAN MAP DESIGNATION:
ADDRESS: PROPOSED COMPREHENSIVE PLAN MAP
DESIGNATION (if applicable)
CITY: STATE: ZIP: EXISTING ZONING:
PHONE NUMBER: PROPOSED ZONING (if applicable):
EMAIL ADDRESS*:
I prefer to receive all correspondence via US Mail.
SITE AREA (in square feet):
CONTACT PERSON SQUARE FOOTAGE OF PRIVATE ACCESS EASEMENTS:
NAME: SQUARE FOOTAGE OF PUBLIC ROADWAYS TO BE
DEDICATED:
COMPANY (if applicable): PROPOSED RESIDENTIAL DENSITY IN UNITS PER NET
ACRE (if applicable)
ADDRESS: NUMBER OF PROPOSED LOTS (if applicable)
CITY: STATE: ZIP: NUMBER OF NEW DWELLING UNITS (if applicable):
PHONE NUMBER NUMBER OF EXISTING DWELLING UNITS (if applicable):
EMAIL ADDRESS*:
I prefer to receive all correspondence via US Mail.
PROJECT VALUE:
LIMITED LIABILITY COMPANY AGREEMENT
OF
Nord West Properties LLC
i
TABLE OF CONTENTS
Page
ARTICLE 1 – DEFINITIONS ...................................................................................................... 1
ARTICLE 2 – ORGANIZATION ................................................................................................. 4
Formation ............................................................................................................................ 4
Name ................................................................................................................................. 4
Purpose ................................................................................................................................ 4
Purpose ................................................................................................................................ 4
Principal Place of Business ................................................................................................. 4
Registered Office and Registered Agent............................................................................. 4
Term ................................................................................................................................. 4
Members ............................................................................................................................. 4
ARTICLE 3 – MANAGERS; RIGHTS AND DUTIES ............................................................... 4
Management ........................................................................................................................ 4
Number of Managers; Qualification ................................................................................... 5
Compensation ..................................................................................................................... 6
Limitation on Liability; Indemnification ............................................................................ 6
Removal .............................................................................................................................. 6
Vacancies ............................................................................................................................ 6
Right to Rely on the Manager ............................................................................................. 6
ARTICLE 4 – RIGHTS AND OBLIGATIONS OF MEMBERS AND ECONOMIC
INTEREST OWNERS ........................................................................................................ 7
Limitation of Liability......................................................................................................... 7
Liability for Company Obligations ..................................................................................... 7
Inspection of Records ......................................................................................................... 7
No Priority on Return of Capital ......................................................................................... 7
Withdrawal of Member ....................................................................................................... 7
ARTICLE 5 – MEETINGS OF MEMBERS ................................................................................ 7
Member Meetings ............................................................................................................... 7
Place of Meetings ................................................................................................................ 7
Notice of Meetings .............................................................................................................. 7
Record Date ........................................................................................................................ 8
Quorum ............................................................................................................................... 8
Manner of Acting ................................................................................................................ 8
Proxies................................................................................................................................. 8
Action by Members Without a Meeting ............................................................................. 8
Waiver of Notice ................................................................................................................. 8
ARTICLE 6 – CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS ......... 9
Members’ Capital Contributions......................................................................................... 9
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Additional Contributions .................................................................................................... 9
Capital Accounts ................................................................................................................. 9
6.1.1 Establishment and Maintenance ................................................................. 9
6.1.2 Compliance with Regulations ..................................................................... 9
6.1.3 Withdrawal or Reduction of Unit Holders’ Contributions to Capital ....... 10
ARTICLE 7 – ALLOCATIONS OF NET PROFITS AND LOSSES ........................................ 10
Allocation of Net Profit and Loss – In General ................................................................ 10
7.1.1 Allocation of Net Profit or Loss................................................................ 10
7.1.2 Limitation .................................................................................................. 10
Special Allocations ........................................................................................................... 10
7.1.3 Minimum Gain Chargeback ...................................................................... 10
7.1.4 Member Minimum Gain Chargeback ....................................................... 10
7.1.5 Qualified Income Offset ........................................................................... 11
7.1.6 Nonrecourse Deductions ........................................................................... 11
7.1.7 Member Nonrecourse Deductions ............................................................ 11
Corrective Allocations ...................................................................................................... 11
7.1.8 Allocations to Achieve Economic Agreement .......................................... 11
7.1.9 Waiver of Application of Minimum Gain Chargeback ............................ 11
Other Allocation Rules ..................................................................................................... 11
7.1.10 General ...................................................................................................... 11
7.1.11 Allocation of Recapture Items .................................................................. 11
7.1.12 Allocations in Connection with Varying Interests .................................... 12
7.1.13 Election Under Section 754 of the Code................................................... 12
Determination of Net Profit or Loss ................................................................................. 12
7.1.14 Computation of Net Profit or Loss............................................................ 12
7.1.15 Adjustments to Net Profit or Loss ............................................................ 12
7.1.16 Items Specially Allocated ......................................................................... 13
Mandatory Tax Allocations Under Code Section 704(c) ................................................. 13
ARTICLE 8 – DISTRIBUTIONS ............................................................................................... 13
Cash Distributions ............................................................................................................. 13
8.1.1 Nonliquidating Distributions .................................................................... 13
8.1.2 Distributions in Liquidation ...................................................................... 14
Distributions in Kind......................................................................................................... 14
Distribution for Taxes ....................................................................................................... 14
Limitation Upon Distributions .......................................................................................... 14
ARTICLE 9 – ACCOUNTING, BOOKS, AND RECORDS ..................................................... 14
Accounting Principles ....................................................................................................... 14
Interest on and Return of Capital Contributions ............................................................... 14
Loans to Company ............................................................................................................ 14
Accounting Period ............................................................................................................ 14
Records, Audits and Reports............................................................................................. 14
Tax Matters Partner........................................................................................................... 15
9.1.1 Designation ............................................................................................... 15
9.1.2 Expenses of Tax Matters Partner; Indemnification .................................. 15
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Returns and Other Elections ............................................................................................. 15
ARTICLE 10 – TRANSFERABILITY ....................................................................................... 15
General .............................................................................................................................. 15
10.1.1 Gift ............................................................................................................ 15
10.1.2 Transfer ..................................................................................................... 15
First Refusal Rights........................................................................................................... 16
10.1.3 Bona Fide Offer ........................................................................................ 16
10.1.4 Purchase Rights ......................................................................................... 16
10.1.5 Instruments ................................................................................................ 17
10.1.6 Effective Date ........................................................................................... 17
Transferee Not Member in Absence of Consent ............................................................... 17
Conditions Precedent to Any Transfer or Encumbrance .................................................. 18
Effect of Transfer .............................................................................................................. 18
ARTICLE 11 – DISSOLUTION AND TERMINATION .......................................................... 18
Dissolution ........................................................................................................................ 18
Allocation of Net Profit and Loss in Liquidation ............................................................. 18
Winding Up, Liquidation and Distribution of Assets ....................................................... 19
No Obligation to Restore Negative Capital Account Balance on Liquidation ................. 19
Termination ....................................................................................................................... 19
Certificate of Cancellation ................................................................................................ 19
Return of Contribution Nonrecourse to Other Unit Holders ............................................ 20
ARTICLE 12 – MISCELLANEOUS PROVISIONS ................................................................. 20
Notices .............................................................................................................................. 20
Governing Law ................................................................................................................. 20
Amendments ..................................................................................................................... 20
Construction ...................................................................................................................... 20
Headings ........................................................................................................................... 20
Waivers ............................................................................................................................. 20
Rights and Remedies Cumulative ..................................................................................... 20
Severability ....................................................................................................................... 20
Heirs, Successors and Assigns .......................................................................................... 21
Jurisdiction and Venue ...................................................................................................... 21
Creditors ............................................................................................................................ 21
Counterparts ...................................................................................................................... 21
Investment Representations .............................................................................................. 21
Schedule 1
1
LIMITED LIABILITY COMPANY AGREEMENT
OF
THIS LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) is made
and entered into effective as of by and among the Persons whose signatures
appear on the signature page hereof.
DEFINITIONS
The following terms used in this Agreement shall have the following meanings (unless
otherwise expressly provided herein):
“Act” means the Washington Limited Liability Company Act (RCW Ch. 25.15).
“Affiliate” means, with respect to any Person, (i) any other Person directly or indirectly
controlling, controlled by, or under common control with such Person, (ii) any Person owning or
controlling 50% or more of the outstanding voting interests of such Person, (iii) any officer,
director, or general partner of such Person, or (iv) any Person who is an officer, director, general
partner, trustee, or holder of 50% or more of the voting interests of any Person described in
clauses (i) through (iii). For purposes of this definition, the term “controls,” “is controlled by,”
or “is under common control with” shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Capital Account” means the capital account determined and maintained for each Unit
Holder pursuant to Section 6.3.
“Capital Contribution” means any contribution to the capital of the Company in cash or
property by a Unit Holder whenever made.
“Certificate of Formation” means the certificate of formation pursuant to which the
Company was formed, as originally filed with the office of the Secretary of State on <Date> and
as amended from time to time.
“Corporate Transaction” shall mean (i) the acquisition of this Company by another
entity by means of merger, consolidation or other transaction or series of related transactions
resulting in the exchange of the outstanding units of this Company for securities of or
consideration issued, or caused to be issued, by the acquiring entity or any of its affiliates or (ii)
the Company’s sale, lease or other distribution of all or substantially all of its assets; provided,
however, that after the Corporate Transaction the Unit Holders of the Company immediately
prior to the Corporate Transaction own less than a majority of the outstanding voting equity
securities of the surviving entity immediately following the Corporate Transaction; provided,
further, that neither (x) a merger effected exclusively for the purpose of changing the domicile of
the Company nor (y) an equity financing in which the Company is the surviving company shall
be considered a “Corporate Transaction.”
Nord West Properties LLC
07/30/2018
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“Code” means the Internal Revenue Code of 1986, as amended, or corresponding
provisions of subsequent superseding federal revenue laws.
“Company” means
“Company Minimum Gain” has the same meaning as the term “partnership minimum
gain” in Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
“Deficit Capital Account” means with respect to any Unit Holder, the deficit balance if
any, in such Unit Holder’s Capital Account as of the end of the taxable year, after giving effect
to the following adjustments:
(i)credit for any amount that such Unit Holder is obligated to restore to the
Company under Regulation Section 1.704-1(b)(2)(ii)(c), as well as any addition thereto under the
next to last sentences of Regulation Sections 1.704-2(g)(1) and (i)(5); and
(ii)debit for the items described in Regulation Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6).
This definition is intended to comply with the provisions of the Regulation Sections
1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted consistently with those provisions.
“Distributable Cash” means all cash received by the Company, less the sum of the
following to the extent paid or set aside by the Company: (i) all principal and interest payments
on indebtedness of the Company and other sums paid or payable to lenders; (ii) all cash
expenditures incurred incident to the normal operation of the Company’s business (including
guaranteed payments under Section 707(c) of the Code; and (iii) Reserves.
“Economic Interest” means an Economic Interest Owner’s share of Net Profits, Net
Losses, and other tax items of the Company and distributions of the Company’s assets under this
Agreement and the Act, but does not include any right to participate in the management or affairs
of the Company, including, the right to vote on, consent to or otherwise participate in any
decision of the Members.
“Economic Interest Owner” means the owner of an Economic Interest who is not a
Member.
“Entity” means any general partnership, limited partnership, limited liability company,
corporation, joint venture, trust, business trust, cooperative or association or any other
organization that is not a natural person.
“Majority Interest” means, at any time, more than 50% of the then outstanding Units
held by Members.
“Manager” means and any other Person who may become
D VXEVWLWXWH RU additional Manager as provided in Section 3.
Nord West Properties LLC
Valery Kalashnikov
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“Member” means each Person who executes a counterpart of this Agreement as a
Member and each Person who may hereafter become a Member. To the extent a Manager has
purchased a Membership Interest in the Company, it will have all the rights of a Member with
respect to such Membership Interest, and the term “Member” as used herein shall include a
Manager to the extent it has purchased a Membership Interest in the Company. If a Person is a
Member immediately prior to the acquisition by such Person of an Economic Interest, such
Person shall have all the rights of a Member with respect to such Economic Interest.
“Membership Interest” means all of a Member’s share in the Net Profits, Net Losses,
and other tax items of the Company and distributions of the Company’s assets pursuant to this
Agreement and the Act and all of a Member’s rights to participate in the management or affairs
of the Company, including the right to vote on, consent to or otherwise participate in any
decision of the Members.
“Member Minimum Gain” has the same meaning as the term “partner nonrecourse debt
minimum gain” in Regulation Section 1.704-2(i).
“Member Nonrecourse Deductions” has the same meaning as the term “partner
nonrecourse deductions” in Regulation Sections 1.704-2(i)(1) and (2). The amount of Member
Nonrecourse Deductions for a Company fiscal year shall be determined in accordance with
Regulation Section 1.704-2(i)(2).
“Net Profits” and “Net Losses” have the meaning ascribed to those terms in Section 7.5.
“Nonrecourse Deductions” has the meaning set forth in Regulation Section 1.704-
2(b)(1). The amount of Nonrecourse Deductions for a Company fiscal year shall be determined
pursuant to Regulation Section 1.704-2(c).
“Percentage Interest” means with respect to any Unit Holder the percentage determined
based upon the ratio that the number of Units held by such Unit Holder bears to the total number
of outstanding Units.
“Person” means any individual or Entity, and the heirs, executors, administrators, legal
representatives, successors, and assigns of such “Person” where the context so permits.
“Regulations” includes proposed, temporary and final Treasury regulations promulgated
under the code and the corresponding sections of any regulations subsequently issued that amend
or supersede such regulations.
“Reserves” means, with respect to any fiscal period, funds set aside or amounts allocated
during such period to reserves which shall be maintained in amounts deemed sufficient by the
Manager for working capital and to pay taxes, insurance, debt service or other costs or expenses
incident to the ownership or operation of the Company’s property.
“Termination Date” means the date of the voluntary or involuntary termination of a
Member’s employment or consulting relationship with the Company for any reason (including
death or disability), with or without cause.
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“Unit Holder” means a Person who is a Member or an Economic Interest Holder.
“Units” means the membership units representing a Membership Interest issued to any
Member or Economic Interest Holder under this Agreement as reflected in attached Schedule 1,
as amended from time to time.
ARTICLE 1 – ORGANIZATION
1.1 Formation. The Company was formed on A when the Certificate of Formation was
executed and filed with the office of the Secretary of State.
1.2 Name. The name of the Company is
1.3 Purpose. The Company is organized to engage in any business permitted under the
Act.
Principal Place of Business. The principal place of business of the Company shall be:
1.4 . The Company may locate its place of business at any other place or places as the
Manager may from time to time deem advisable.
Registered Office and Registered Agent. The Company’s initial registered agent and the address
of its registered office in the State of Washington are as follows:
1.5 . The registered office and registered agent may be changed by the Manager from time
to time by filing an amendment to the Certificate of Formation.
1.6 Term. The Company shall have perpetual existence, unless the Company is dissolved
in accordance with the provisions of this Agreement or the Act.
1.7 Members. The name, present mailing address and taxpayer identification number of,
the Units currently issued to, and the Percentage Interest held by, each Unit Holder are set forth
on Schedule 1 hereto as may be amended from time to time.
ARTICLE 2 – MANAGERS; RIGHTS AND DUTIES
2.1 Management. The business and affairs of the Company shall be managed by the
Manager. Except as otherwise expressly provided in this Agreement, the Manager shall have full
and complete authority, power and discretion to manage and control the business, affairs and
properties 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.
At any time when there is more than one Manager, any one Manager may take any action
permitted to be taken by the Manager, unless the approval of more than one of the Managers is
expressly required by this Agreement or the Act. Without limiting the generality of the
foregoing, the Manager shall have power and authority, on behalf of the Company to:
Nord West Properties LLC
14435 NE 40th st apt B101, Bellevue, WA 98007
14435 NE 40th st apt B101, Bellevue, WA 98007
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2.1.1 acquire property from any Person as the Manager may determine, and the
fact that a Manager or a Member is an Affiliate of such Person shall not prohibit the Manager
from dealing with that Person;
2.1.2 borrow money from financial institutions, Persons, the Manager,
Members, or Affiliates of the Manager or Members on such terms as the Manager deems
appropriate, and in connection therewith, to hypothecate, encumber and grant security interests
in the assets of the Company to secure repayment of the borrowed sums;
2.1.3 purchase liability and other insurance to protect the Company’s property
and business;
2.1.4 acquire, improve, manage, charter, operate, sell, transfer, exchange,
encumber, pledge or dispose of any real or personal property of the Company;
2.1.5 invest Company funds, including investments in time deposits, short-term
governmental obligations, commercial paper or other short-term investments, and/or money
markets, stocks, bonds or mutual funds;
2.1.6 execute instruments and documents, including without limitation, checks,
drafts, notes and other negotiable instruments, mortgages or deeds of trust, security agreements,
financing statements, documents providing for the acquisition, mortgage or disposition of the
Company’s property, assignments, bills of sale, leases, partnership agreements, operating
agreements of other limited liability companies, and any other instruments or documents
necessary, in the opinion of the Manager, to the business of the Company;
2.1.7 employ accountants, legal counsel, managing agents or other experts to
perform services for the Company and to compensate them from Company funds:
2.1.8 enter into any and all other agreements with any other Person for any
purpose, in such form as the Manager may approve;
2.1.9 from time to time open bank accounts in the name of the Company, and
the Manager shall be the sole signatory thereon, unless the Manager determines otherwise; and
2.1.10 do and perform all other acts as may be necessary or appropriate to the
conduct of the Company’s business.
Unless authorized to do so by this Agreement or by the Manager, no Member, Economic
Interest Owner, employee or other agent of the Company shall have any power or authority to
bind the Company in any way, to pledge its credit or to render it liable for any purpose.
2.2 Number of Managers; Qualification. The number of Managers of the Company shall
be one (1) until amended in accordance with this Agreement. No reduction of the authorized
number of Managers shall have the effect of removing any Manager before that Manager’s term
of office expires. If a greater or lesser number of Managers than is specified in this section is
elected by the Members, then election of that number shall automatically be deemed to constitute
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an amendment to this Agreement. No Manager need be a Member of the Company or a resident
of Washington State. Each Manager must be at least eighteen (18) years of age.
2.3 Compensation. The Manager may receive such compensation for services rendered
under this agreement as determined from time to time by a Majority Interest. The Manager shall
be reimbursed by the Company for reasonable out-of-pocket expenses incurred by the Manager
in connection with the Company’s business, including without limitation expenses incurred in
the organization of the Company and the placement of the Units.
2.4 Limitation on Liability; Indemnification. Neither the Manager nor any director,
officer, partner, agent or employee of the Manager is liable, responsible or accountable in
damages or otherwise to the Company, any Member or any Economic Interest Owner for any act
or omission by such Person performed in good faith pursuant to the authority granted to such
Person by this Agreement or in accordance with its provisions, and in a manner reasonably
believed by such Person to be within the scope of the authority granted to such Person and in the
best interest of the Company; provided that such act or omission did not constitute fraud,
misconduct, bad faith or gross negligence. The Company must indemnify and hold harmless the
Manager, and each director, officer, partner, employee or agent thereof, against any liability,
loss, damage, cost or expense incurred by them on behalf of the Company or in furtherance of
the Company’s interests without relieving any such Person of liability for fraud, misconduct, bad
faith or negligence. No Member or Economic Interest Owner has any personal liability with
respect to the satisfaction of any required indemnification of the above-mentioned Persons.
Any indemnification required to be made by the Company must be made promptly
following the fixing of the liability, loss, damage, cost or expense incurred or suffered by a final
judgment of any court, settlement, contract or otherwise. In addition, the Company may advance
funds to a Person claiming indemnification under this Section 3.4, for legal expenses and other
costs incurred as a result of a legal action brought against such Person only if (i) the legal action
relates to the performance of duties or services by such Person on behalf of the Company, (ii) the
legal action is initiated by a party other than a Member, and (iii) such Person undertakes to repay
the advanced funds to the Company if it is determined that such Person is not entitled to
indemnification under this Agreement.
2.5 Removal. At a meeting called expressly for that purpose, a Manager may be removed
at any time, with or without cause, by the affirmative vote of a Majority Interest. The removal 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.
2.6 Vacancies. Any vacancy occurring for any reason in the number of Managers may be
filled by the affirmative vote of a majority of the remaining Managers. If there are no remaining
Managers, the vacancy shall be filled by the affirmative vote of the holders of a Majority
Interest.
2.7 Right to Rely on the Manager. Any Person dealing with the Company may rely
(without duty of further inquiry) upon a certificate signed by any Manager as to the identity and
authority of any Manager or other Person to act on behalf of the Company or any Member.
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ARTICLE 3 – RIGHTS AND OBLIGATIONS OF MEMBERS AND ECONOMIC
INTEREST OWNERS
3.1 Limitation of Liability. The liability of each Member and Economic Interest Owner
is limited as set forth in this Agreement and Section 25.15.125 of the Act (or any successor
provision thereto). For purposes of this Section 4.1, references in Section 25.15.125 of the Act
to a “member” shall also be considered a reference to an “economic interest owner”.
3.2 Liability for Company Obligations. Members are not personally liable for any debts,
obligations or liabilities of the Company beyond their respective Capital Contributions except as
otherwise provided by this Agreement or law.
3.3 Inspection of Records. Upon reasonable request, each Member has the right to
inspect and copy at his expense, during ordinary business hours, the records required to be
maintained by the Company under Section 9.5.
3.4 No Priority on Return of Capital. Except as expressly provided in Articles 7, 8 or 11,
no Unit Holder shall have priority over any other Unit Holder, either as to the return of Capital
Contributions or as to Net Profits, Net Losses or distributions, provided, that this Section 4.5
shall not apply to loans made by a Unit Holder to the Company.
3.5 Withdrawal of Member. Except as expressly permitted in this Agreement, no
Member shall voluntarily resign or otherwise withdraw as a Member. Unless otherwise
approved by Members holding a Majority Interest, a Member who resigns or withdraws shall be
entitled to receive only those distributions to which such Person would have been entitled had
such Person remained a Member (and only at such times as such distribution would have been
made had such Person remained a Member). Except as otherwise expressly provided herein, a
resigning or withdrawing Member shall become an Economic Interest Owner. The remedy for
breach of this Section 4.6, shall be monetary damages (and not specific performance), which
may be offset against distributions by the Company to which such Person would otherwise be
entitled.
ARTICLE 4 – MEETINGS OF MEMBERS
4.1 Member Meetings. Members meetings, for any purpose or purposes, may be called
by the Manager or Members holding a Majority Interest.
4.2 Place of Meetings. The Manager or the Members may designate any place, either
within or outside the State of Washington, as the place of meeting for any meeting of the
Members. If no designation is made, or if a special meeting is called, the place of meeting shall
be the principal place of business of the Company specified in Section 2.4.
4.3 Notice of Meetings. Written notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the meeting is called,
shall be delivered not less than 10 nor more than 50 days before the date of the meeting, either
personally or by mail, by or at the direction of the Manager or the Members calling the meeting,
to each Member entitled to vote at such meeting. If mailed, such notice shall be deemed to be
8
delivered two calendar days after being deposited in the United States Mail, addressed to the
Member as specified on Schedule 1, with postage thereon prepaid.
4.4 Record Date. For the purpose of determining Members entitled to notice of or to vote
at any meeting of Members or any adjournment thereof, or Members entitled to receive payment
of any distribution, the date on which notice of the meeting is mailed or the date on which the
resolution declaring such distribution is adopted, as the case may be, is the record date for such
determination of Members. A determination of Members entitled to vote at any meeting of
Members, made as provided in this Section 5.4, applies to any adjournment thereof.
4.5 Quorum. A Majority Interest represented in person or by proxy constitutes a quorum
at any meeting of Members. In the absence of a quorum a majority of Units held by Members so
represented may adjourn the meeting from time to time for a period not to exceed 60 days
without further notice. However, if the adjournment is for more than 60 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. At such
adjourned meeting at which a quorum is present or represented, any business may be transacted
which might have been transacted at the meeting as originally noticed. The Members present at
a duly organized meeting may continue to transact business until adjournment, notwithstanding
the withdrawal during such meeting of that number of Units whose absence would cause less
than a quorum.
4.6 Manner of Acting. If a quorum is present, the affirmative vote of Members holding a
Majority Interest shall be required to approve any matter coming before the Members, unless the
vote of a greater or lesser percentage is required by this Agreement or the Act.
4.7 Proxies. At all meetings of Members a Member may vote in person or by proxy
executed in writing by the Member. Such proxy must be filed with the Manager before or at the
time of the meeting. No proxy is valid after 11 months from the date of its execution, unless
otherwise provided in the proxy.
4.8 Action by Members Without a Meeting. Action required or permitted to be taken at a
meeting of Members may be taken without a meeting if the action is evidenced by one or more
written consents describing the action taken, executed by Members entitled to vote thereon and
delivered to the Manager for inclusion in the Company’s minutes. Action taken pursuant to this
Section 5.8 is effective if (a) consents approving the action and representing at least the
minimum number of Units that would have been required to approve the action at a meeting have
been delivered to the Company; and (b) the period of advance notice specified in Section 5.3 to
be given to any nonconsenting Member has been satisfied. The record date for determining
Members entitled to take action without a meeting is the date the first Member signs a consent.
4.9 Waiver of Notice. When any notice is required to be given to a Member, a waiver
thereof in writing signed by the Member entitled to such notice, whether before, at, or after the
time stated therein, is equivalent to the giving of such notice.
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ARTICLE 5 – CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
5.1 Members’ Initial Capital Contributions. Each Unit Holder must contribute such
amount as is set forth in attached Schedule 1 as such Unit Holder’s share of the Unit Holder’s
Capital Contribution. In exchange for their respective initial Capital Contribution, each Unit
Holder shall hold the number of Units, and the Percentage Interest, set forth on Schedule 1 to this
Agreement. Schedule 1 will also identify which Unit Holders are Members and which Unit
Holders are Economic Interest Owners.
5.2 Additional Contributions. No Unit Holder is required to make additional Capital
Contributions. The Manager must retain such cash as in his discretion is needed to meet the
operational needs of the company and additional cash for anticipated capital expenditures,
including reserves for repairs, and improvements to the Company’s property.
5.3 Capital Accounts.
5.3.1 Establishment and Maintenance. A separate Capital Account will be
maintained for each Unit Holder throughout the term of the Company in accordance with the
rules of Regulation Section 1.704-1(b)(2)(iv). Each Unit Holder’s Capital Account will be
increased by (1) the amount of money contributed by such Unit Holder to the Company; (2) the
fair market value of property contributed by such Unit Holder to the Company (net of liabilities
secured by such contributed property that the Company is considered to assume or take the
property subject to under Code Section 752); (3) allocations to such Unit Holder of Net Profits;
(4)any items in the nature of income and gain that are specially allocated to the Unit Holder
pursuant to Sections 7.2 and 7.3; and (5) allocations to such Unit Holder of income and gain
exempt from federal income tax. Each Unit Holder’s Capital Account will be decreased by
(1)the amount of money distributed to such Unit Holder by the Company; (2) the fair market
value of property distributed to such Unit Holder by the Company (net of liabilities secured by
such distributed property that such Unit Holder is considered to assume or take the property
subject to Code Section 752); (3) allocations to such Unit Holder of expenditures described in
Code Section 705(a)(2)(B); (4) any items in the nature of deduction and loss that are specially
allocated to the Unit Holder pursuant to Sections 7.2 and 7.3; and (5) allocations to such Unit
Holder of Net Losses. In the event of a permitted sale or exchange of a Membership Interest or
an Economic Interest in the Company, the Capital Account of the transferor shall become the
Capital Account of the transferee to the extent it relates to the transferred Membership Interest or
Economic Interest.
5.3.2 Compliance with Regulations. The manner in which Capital Accounts are
to be maintained pursuant to this Section 6.3 is intended to comply with the requirements of
Code Section 704(b) and the Regulations promulgated thereunder. If in the opinion of the
Company’s legal counsel or accountants the manner in which Capital Accounts are to be
maintained pursuant to the preceding provisions of this Section 6.3 should be modified in order
to comply with Code Section 704(b) and the Regulations thereunder, then notwithstanding
anything to the contrary contained in the preceding provisions of this Section 6.3, the method in
which Capital Accounts are maintained shall be so modified; provided, however, that any change
in the manner of maintaining Capital Accounts shall not materially alter the economic agreement
between or among the Members.
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5.3.3 Withdrawal or Reduction of Unit Holders’ Contributions to Capital. A
Unit Holder shall not receive out of the Company’s property any part of its Capital Contribution
until all liabilities of the Company, except liabilities to Unit Holders on account of their Capital
Contributions, have been paid or there remains property of the Company sufficient to pay them.
A Unit Holder, irrespective of the nature of its Capital Contribution, has only the right to demand
and receive cash in return for its Capital Contribution.
ARTICLE 6 – ALLOCATIONS OF NET PROFITS AND LOSSES
6.1 Allocation of Net Profit and Loss – In General.
6.1.1 Allocation of Net Profit or Loss. After giving effect to the special
allocations set forth in Sections 7.2 and 7.3, the Net Profit or Net Loss for any fiscal year of the
Company shall be allocated among the Unit Holders in accordance with their respective
Percentage Interests.
6.1.2 Limitation. The Net Loss allocated to each Unit Holder for any Company
fiscal year pursuant to Section 7.1.1 shall not exceed the maximum amount of Net Loss that can
be so allocated without causing such Unit Holder to have a Deficit Capital Account at the end of
the fiscal year. All Net Losses in excess of the limitation set forth in this Section 7.1.2 shall be
allocated to the other Unit Holders who do not have Deficit Capital Accounts in proportion to
their respective Percentage Interests.
6.2 Special Allocations. The following special allocations shall be made for any fiscal
year of the Company in the following order:
6.2.1 Minimum Gain Chargeback. If there is a net decrease in Company
Minimum Gain during any Company fiscal year, each Unit Holder shall be specially allocated
items of Company income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Unit Holder’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulation Sections 1.704-2(f) and 1.704-2(g)(2). The items to
be so allocated, and the manner in which those items are to be allocated among the Unit Holders,
shall be determined in accordance with Regulation Sections 1.704-2(f) and 1.704-2(j)(2). This
Section 7.2.1 is intended to satisfy the minimum gain chargeback requirement in Regulation
Section 1.704-2(f) and shall be interpreted and applied accordingly.
6.2.2 Member Minimum Gain Chargeback. If there is a net decrease in Member
Minimum Gain during any Company fiscal year, each Unit Holder who has a share of that
Member Minimum Gain, determined in accordance with Regulation Section 1.704-2(i)(5), shall
be specially allocated items of Company income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Unit Holder’s share of the net decrease in Member
Minimum Gain, determined in accordance with Regulation Sections 1.704-2(i)(4) and 1.704-
2(i)(5). The items to be so allocated, and the manner in which those items are to be allocated
among the Unit Holders, shall be determined in accordance with Regulation Sections 1.704-
2(h)(4) and 1.704-2(j)(2). This Section 7.2.2 is intended to satisfy the minimum gain chargeback
requirement in Regulation Section 1.704-2(i)(4) and shall be interpreted and applied accordingly.
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6.2.3 Qualified Income Offset. If any Unit Holder unexpectedly receives any
adjustments, allocations, or distributions described in Regulation Sections 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be specially allocated to
such Unit Holder in an amount and in a manner sufficient to eliminate as quickly as possible, to
the extent required by Regulation Section 1.704-(1)(b)(2)(ii)(d), the Deficit Capital Account of
the Unit Holder (which Deficit Capital Account shall be determined as if all other allocations
provided for in this Article 7 have been tentatively made as if this Section 7.2.3 were not in this
Agreement).
6.2.4 Nonrecourse Deductions. Nonrecourse Deductions shall be allocated
among the Unit Holders in accordance with their respective Percentage Interests.
6.2.5 Member Nonrecourse Deductions. Member Nonrecourse Deductions
must be specially allocated among Unit Holders in accordance with Regulation Section 1.704-
2(i).
6.3 Corrective Allocations.
6.3.1 Allocations to Achieve Economic Agreement. The allocations set forth in
the last sentence of Section 7.1.2 and in Section 7.2 are intended to comply with certain
regulatory requirements under Code Section 704(b). The Members intend that, to the extent
possible, all allocations made pursuant to such Sections will, over the term of the Company, be
offset either with other allocations pursuant to Section 7.2 or with special allocations of other
items of Company income, gain, loss, or deduction pursuant to this Section 7.3.1. Accordingly,
the Manager is hereby authorized and directed to make offsetting allocations of Company
income, gain, loss or deduction under this Section 7.3.1 in whatever manner the Manager
determines is appropriate so that, after such offsetting special allocations are made, the Capital
Accounts of the Unit Holders are, to the extent possible, equal to the Capital Accounts each
would have if the provisions of Section 7.2 were not contained in this Agreement and all income,
gain, loss and deduction of the Company were instead allocated pursuant to Section 7.1.1.
6.3.2 Waiver of Application of Minimum Gain Chargeback. The Manager with
the prior consent of a Majority Interest shall request from the Commissioner of the Internal
Revenue Service a waiver, pursuant to Regulation Section 1.704-2(f)(4), of the minimum gain
chargeback requirements of Regulation Section 1.704-2(f) if the application of such minimum
gain chargeback requirement would cause a permanent distortion of the economic arrangement
of the Unit Holders, as reflected in Section 7.1.1.
6.4 Other Allocation Rules.
6.4.1 General. Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction, and any other allocations not otherwise provided for
shall be divided among the Unit Holders in the same proportions as they share Net Profits or Net
Loses, as the case may be, for the year.
6.4.2 Allocation of Recapture Items. In making any allocation among the Unit
Holders of income or gain from the sale or other disposition of a Company asset, the ordinary
income portion, if any, of such income and gain resulting from the recapture of cost recovery or
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other deductions shall be allocated among those Unit Holders who were previously allocated (or
whose predecessors-in-interest were previously allocated) the cost recovery deductions or other
deductions resulting in the recapture items, in proportion to the amount of such cost recovery
deductions or other deductions previously allocated to them.
6.4.3 Allocations in Connection with Varying Interests. If, during a Company
fiscal year, there is (i) a permitted transfer of a Membership Interest or Economic Interest under
this Agreement during a Company fiscal year or (ii) the admission of a Member or Economic
Interest Owner or additional Members or Economic Interest Owners, then Net Profit, Net Loss,
each item thereof, and all other tax items of the Company for such period shall be divided and
allocated among the Unit Holders by taking into account their varying interests during such fiscal
year in accordance with Code Section 706(d) and using any conventions permitted by law and
selected by the Manager.
6.4.4 Election Under Section 754 of the Code. In determining Capital Accounts
to the extent an adjustment to the tax basis of any Company asset pursuant to Section 734(b) or
Section 743(b) of the Code is required, pursuant to Regulation Section 1.704-1(b)(2)(iv)(m), 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 basis), and the
gain or loss shall be specially allocated to the Unit Holders in a manner consistent with the
manner in which their respective Capital Accounts are required to be adjusted pursuant to that
Regulation Section.
6.5 Determination of Net Profit or Loss.
6.5.1 Computation of Net Profit or Loss. The Net Profit or Net Loss of the
Company, for each fiscal year or other period, shall be an amount equal to the Company’s
taxable income or loss for such period, determined in accordance with Code Section 703(a) (and,
for this purpose, all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1), including income and gain exempt from federal income tax,
shall be included in taxable income or loss).
6.5.2 Adjustments to Net Profit or Loss. For purposes of computing taxable
income or loss on the disposition of an item of Company property or for purposes of determining
the cost recovery, depreciation, or amortization deduction with respect to any property, the
Company shall use such property’s book value determined in accordance with Regulation
Section 1.704-1(b). Consequently, each property’s book value shall be equal to its adjusted basis
for federal income tax purposes, except as follows:
(a)The initial book value of any property contributed by a Unit Holder to
the Company shall be the gross fair market value of such property at the time of contribution;
(b)In the discretion of the Members holding a Majority Interest, the book
value of all Company properties may be adjusted to equal their respective gross fair market
values, as determined by the Members as of the following times: (1) in connection with the
acquisition of an interest in the Company by a new or existing Unit Holder for more than a de
minimis capital contribution, (2) in connection with the liquidation of the Company as defined in
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Regulation Section 1.704-(1)(b)(2)(ii)(g), or (3) in connection with a more than de minimis
distribution to a retiring or a continuing Unit Holder as consideration for all or a portion of his or
its interest in the Company. In the event of a revaluation of any Company assets hereunder, the
Capital Accounts of the Unit Holders shall be adjusted, including continuing adjustments for
depreciation, to the extent provided in Regulation Section 1.704-(1)(b)(2)(iv)(f);
(c)If the book value of an item of Company property has been determined
pursuant to this Section 7.5.2, such book value shall thereafter be used, and shall thereafter be
adjusted by depreciation or amortization, if any, taken into account with respect to such property,
for purposes of computing taxable income or loss.
6.5.3 Items Specially Allocated. Notwithstanding any other provision of this
Section 7.5, any items that are specially allocated under Sections 7.2 or 7.3 shall not be taken
into account in computing Net Profit or Net Loss.
6.6 Mandatory Tax Allocations Under Code Section 704(c). In accordance with Code
Section 704(c) and Regulation Section 1.704-3, 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 Unit Holders 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 initial book value
computed in accordance with Paragraph (a) of Section 7.5.2. Prior to the contribution of any
property to the Company that has a fair market value that differs from its adjusted tax basis in the
hands of the contributing Unit Holder on the date of contribution, the contributing Unit Holder
and the Manager (or, if the contributing Unit Holder is also a Member and the Manager, a
Majority Interest of the non-contributing Members) shall agree upon the allocation method to be
applied with respect to that property under Regulation Section 1.704-3, which allocation method
shall be set forth on attached Schedule 2, as amended form time to time.
If the book value of any Company property is adjusted pursuant to Paragraph (b) of
Section 7.5.2, subsequent allocations of income, gain, loss and deduction with respect to such
property shall take account of any variation between the adjusted basis of such property for
federal income tax purposes and its book value in the same manner as under Code Section
704(c). The choice of allocation methods under Regulation Section 1.704-3 with respect to such
revalued property shall be made by the Manager.
Allocations under this Section 7.6 are solely for purposes of federal, state, and local taxes
and do not affect, or in any way be taken into account in computing, any Unit Holder’s Capital
Account or share of Net Profit, Net Loss, or other items as computed for book purposes, or
distributions pursuant to any provision of this Agreement.
ARTICLE 7 – DISTRIBUTIONS
7.1 Cash Distributions.
7.1.1 Nonliquidating Distributions. Distributions of Distributable Cash, other
than liquidating distributions under Section 8.1.2, shall be made to the Unit Holders in discretion
of the Manager.
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7.1.2 Distributions in Liquidation. Upon the winding up of the Company,
liquidating distributions shall be made to each Unit Holder as set forth in Section 11.3.
7.2 Distributions in Kind. Non-cash assets, if any, shall be distributed in a manner that
reflects how cash proceeds from the sale of such assets for fair market value would have been
distributed (after any unrealized gain or loss attributable to such non-cash assets has been
allocated among the Unit Holders in accordance with Article 7).
7.3 Distribution for Taxes. Any Person who is allocated Net Profits or Net Losses under
Section 7.1.1 herein and as a result of such allocation has taxable income under the Code shall be
entitled to a distribution by the Company in an amount equal to the Person’s tax liability
resulting from such allocation.
7.4 Limitation Upon Distributions. No distribution may be declared and paid unless,
after the distribution is made, the assets of the Company are in excess of all liabilities of the
Company, except liabilities to Unit Holders on account of their contributions.
ARTICLE 8 – ACCOUNTING, BOOKS, AND RECORDS
8.1 Accounting Principles. The Company’s books and records shall be kept, and its
income tax returns prepared, under such permissible method of accounting, consistently applied,
as the Manager determines is in the best interest of the Company and its Unit Holders.
8.2 Interest on and Return of Capital Contributions. No Unit Holder is entitled to interest
on, or return of, its Capital Contribution except as otherwise specifically provided for herein.
8.3 Loans to Company. Nothing in this Agreement shall prevent any Unit Holder from
making secured or unsecured loans to the Company.
8.4 Accounting Period. The Company’s accounting period is the calendar year.
8.5 Records, Audits and Reports. At the Company’s expense, the Manager shall maintain
records and accounts of all operations and expenditures of the Company. At a minimum the
Company must keep at its principal place of business copies of the following records:
8.5.1 A current list and past list, setting forth the full name and last known
mailing address of each Member, Economic Interest Owner and Manager;
8.5.2 the Certificate of Formation and all amendments;
8.5.3 this Agreement and all amendments;
8.5.4 the Company’s federal, state, and local tax returns and reports, if any, for
the last three years;
8.5.5 Minutes of every meeting of the Members and any written consents
obtained from Members for actions taken by Members without a meeting; and
15
8.5.6 the Company’s financial statements for the last three years.
8.6 Tax Matters Partner.
8.6.1 Designation. Rare Beef Productions LLC shall be the “tax matters partner”
of the Company for purposes of Code Section 6221 et seq. and corresponding provisions of any
state or local tax law.
8.6.2 Expenses of Tax Matters Partner; Indemnification. The Company shall
indemnify and reimburse the tax matters partner for all reasonable expenses, including legal and
accounting fees, claims, liabilities, losses and damages incurred in connection with any
administrative or judicial proceeding with respect to the tax liability of the Unit Holders
attributable to the Company. The payment of all such expenses shall be made before any
distributions are made to Unit Holders (and such expenses shall be taken into consideration for
purposes of determining Distributable Cash) or any discretionary Reserves are set aside by the
Manager. Neither the tax matters partner nor any Unit Holder shall have any obligation to
provide funds for such purpose. The provisions for exculpation and indemnification of the
Manager set forth in Section 3.4 of this Agreement shall be fully applicable to the Member
acting as tax matters person for the Company.
8.7 Returns and Other Elections. The Manager shall cause the preparation and timely
filing of all tax and information returns required to be filed by the Company pursuant to the Code
and all other tax and information returns deemed necessary and required in each jurisdiction in
which the Company does business. Copies of such returns, or pertinent information therefrom
shall be furnished to the Unit Holders within a reasonable time after the end of the Company’s
fiscal year.
Except as otherwise expressly provided to the contrary in this Agreement, all elections
permitted to be made by the Company under federal or state laws shall be made by the Manager
in his or its sole discretion.
ARTICLE 9 – TRANSFERABILITY
9.1 General.
9.1.1 Gift. Subject to Section 10.3, a Unit Holder may gift all or any portion of
its Membership Interest or Economic Interest (without regard to Section 10.2.1 and 10.2.2),
provided, that the donee complies with Section 10.2.3 and further provided that the donee is
either such Unit Holder’s spouse or lineal descendant (including adopted children) or a trust or
other entity in which the Unit Holder, spouse or lineal descendants hold the entire beneficial
interest. In the event of the gift of all or any portion of a Unit Holder’s Membership Interest or
Economic Interest to one or more donees who are under 21 years of age, one or more trusts shall
be established to hold the gifted interest(s) for the benefit of such donee(s) until all of the
donee(s) reach the age of at least 21 years.
9.1.2 Transfer. Except as otherwise expressly provided in this Agreement,
neither a Member nor an Economic Interest Owner shall have the right to:
16
(a)sell, assign, transfer, exchange or otherwise transfer for consideration,
(collectively, “sell” or “sale”),
(b)gift, bequeath or otherwise transfer for no consideration whether or not
by operation of law, except in the case of bankruptcy (collectively “gift”), or
(c)pledge, all or any part of its Membership Interest or Economic Interest.
Each Member and Economic Interest Owner hereby acknowledges the reasonableness of the
restrictions on sale and gift of Membership Interests and Economic Interests imposed by this
Agreement in view of the Company’s purposes and the relationship of the Members and
Economic Interest Owners. Accordingly, the restrictions on sale and gift contained herein shall
be specifically enforceable.
9.2 First Refusal Rights.
9.2.1 Bona Fide Offer. A Unit Holder desiring to sell all or any portion of its
Membership Interest or Economic Interest to a third party purchaser shall obtain from such third
party purchaser a bona fide written offer to purchase such Interest, stating the terms and
conditions upon which the purchase is to be made and the consideration offered therefore. Such
Unit Holder shall give written notice to the other Unit Holders and the Manager of its intention
to so transfer such Interest. Such notice shall set forth the complete terms of the written offer to
purchase and the name and address of the proposed third party purchaser.
9.2.2 Purchase Rights. The other Unit Holders, shall, on a basis pro rata to the
Units of those remaining Unit Holders exercising their first refusal rights, have the first right to
purchase all (but not less than all) of the Interests proposed to be sold by the selling Unit Holder
upon the same terms and conditions stated in the notice given pursuant to Section 10.2.2 by
giving written notice to the other Unit Holders and the Manager within 10 days after such notice
from the selling Unit Holder. The failure of a Unit Holder to so notify the other Unit Holders
and the Manager of its desire to exercise its first refusal rights within said ten (10) day period as
required by this Section 10.2.2 shall result in the termination of such Unit Holder’s first refusal
rights.
Within 10 days after expiration of the 10 day period specified in the preceding paragraph,
the Manager shall notify those Unit Holders electing to exercise their first refusal rights of any
Units that the other Unit Holders did not elect to purchase. Those Unit Holders exercising first
refusal rights in accordance with the preceding paragraph shall then notify the Manager and the
other purchasing Unit Holders whether they elect to purchase such remaining Units, which shall
be pro rata or allocated in such other manner as the purchasing Unit Holders shall agree. If no
such notification is received by the Manager from any such Unit Holders in accordance with this
paragraph, no Unit Holder shall have any further first refusal rights with respect to such Units.
If Unit Holders have elected to purchase all of the Units offered by the selling Unit
Holder, the selling Unit Holder shall sell such Units upon the same terms and conditions
specified in the notice required by Section 10.2.1, and the purchasing Unit Holders shall have the
right to close the purchase within 30 days after receipt of notification from the Manager that such
Unit Holders have elected to purchase the selling Unit Holder’s Units.
17
If Unit Holders do not elect to purchase all of the Units offered by the selling Unit Holder
in accordance with this Section 10.2.1, then the selling Unit Holder shall be entitled to sell such
Units to the third party purchaser substantially in accordance with the terms and conditions upon
which the purchase is to be made as specified in the notice under Section 10.2.1. However, if
such sale is not completed within 90 days following expiration of the other Unit Holders’ first
refusal rights under this Section 10.2.2, then the selling Unit Holder shall not be entitled to
complete the sale to such third party purchaser and the selling Unit Holder’s Units shall continue
to be subject to the rights of first refusal set forth in this Section 10.2.2, with respect to any
proposed subsequent transfer.
9.2.3 Instruments. Upon the purchase or the gift of a Membership Interest or an
Economic Interest, and as a condition to recognizing the effectiveness and binding nature of any
sale or gift and (subject to Section 10.3, below) substitution of a Person as a new Unit Holder,
the Manager may require the transferring Unit Holder and the proposed purchaser, done or
successor-in-interest, as the case may be to execute, acknowledge and deliver to the Manager
such instruments of transfer, assignment and assumption and such other agreements and to
perform all such other acts that the Manager may deem necessary or desirable to:
(a)constitute such Person as a Unit Holder;
(b)confirm that the Person desiring to become a Unit Holder, has
accepted, assumed and agreed to be subject and bound by all of the terms, obligations and
conditions of this Agreement (whether such Person is to be admitted as a new Member or will
merely be an Economic Interest Owner);
(c) maintain the status of the Company as a partnership for federal tax
purposes; and
(d)assure compliance with any applicable state and federal laws,
including securities laws and regulations.
9.2.4 Effective Date. Any sale or gift of a Membership Interest or Economic
Interest or admission of a Member in compliance with this Article 10, shall be deemed effective
as of the last day of the calendar month in which the remaining Members’ consent thereto was
given, or if no such consent was required pursuant to Sections 10.1.1 and 10.3, then on such date
that the transferor and the transferee both comply with Section 10.2.3. The transferring Unit
Holder hereby indemnifies the Company and the Manager against any and all loss, damage, or
expense (including, without limitation, tax liabilities or loss of tax benefits) arising directly or
indirectly as a result of any transfer or purported transfer in violation of this Article 10.2.4.
9.3 Transferee Not Member in Absence of Consent. Notwithstanding anything to the
contrary in this Article 10, if the sale or gift of a Member’s Membership Interest or Economic
Interest to a transferee or donee which is not a Member immediately prior to the sale or gift is
not approved in writing by at least 75% of the then outstanding units held by Members, in their
sole discretion, then the proposed transferee or donee shall have no right to participate in the
management of the business and affairs of the Company or to become a Member. Such
transferee or donee shall be merely an Economic Interest Owner.
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9.4 Conditions Precedent to Any Transfer or Encumbrance. Notwithstanding any
contrary provision contained in this Agreement, no Unit Holder may transfer any of its Units:
9.4.1 Without first notifying each other Unit Holder, in writing, 30 days in
advance of any proposed transfer;
9.4.2 Unless and until the Company has received an opinion of counsel for the
Company, prepared at the transferring Unit Holder’s expense, stating that the proposed transfer
will not cause the termination of the Company under this Agreement or the Act or for federal
income tax purposes;
9.4.3 Unless and until the Company has received an opinion of counsel
satisfactory to the Company, prepared at the expense of the Unit Holder proposing the transfer,
stating that the proposed transfer (A) may be effected without registration of the Units under the
Securities Act of 1933, as amended, and (B) will not violate any applicable state securities law
(including investor suitability standards); and
9.4.4 Unless and until the transferor has made all required contributions to the
capital of the Company.
9.5 Effect of Transfer. If any purported transfer of a Unit Holder’s Units does not
comply with the various requirements and restrictions contained in this Article, it will be void
and of no force or effect. If any such purported transfer complies with the various requirements
and restrictions contained in this Article, then effective on the date of the transfer, the transferor
will cease to be a Unit Holder with respect to the transferred Units and, whether or not the
transferee is admitted to the Company as a substitute Member pursuant to the provisions of this
Agreement, the transferee will be entitled to receive all future distributions to which the
transferor would otherwise be entitled. In the case of a transfer of an interest, the transferee shall
succeed to the Capital Account of the transferor, or, in the case of a partial transfer, a
proportionate share thereof. The Company will be entitled to treat the transferor as the record
owner of the transferred Units until the effective date, and no Unit Holder will incur liability for
distributions made in good faith to the transferor prior to the effective date. No such transfer will
relieve the transferor of its existing obligations under this Agreement.
ARTICLE 10 – DISSOLUTION AND TERMINATION
10.1 Dissolution. The Company shall be dissolved upon the occurrence of any of the
following events:
10.1.1 by the written agreement of a Majority Interest; or
10.1.2 a Manager ceases to be a Member upon the occurrence of any of the
events specified in Chapter 25.15.130(a)-(i) RCW unless the business of the Company is
continued with the consent of a majority, by interest, of the remaining Members within 90 days
following the occurrence of such event.
10.2 Allocation of Net Profit and Loss in Liquidation. The allocation of Net Profit,
Net Loss and other items of the Company following the date of dissolution, including but not
19
limited to gain or loss upon the sale of all or substantially all of the Company’s assets, shall be
determined in accordance with the provisions of Articles 7 and 8 and shall be credited or charged
to the Capital Accounts of the Unit Holders in the same manner as Net Profit, Net Loss, and
other items of the Company would have been credited or charged if there were no dissolution
and liquidation.
10.3 Winding Up, Liquidation and Distribution of Assets. Upon dissolution, the
Manager shall immediately proceed to wind up the affairs of the Company, unless the business
of the Company is continued as provided in Section 11.1.2. The Manager shall sell or otherwise
liquidate all of the Company’s assets as promptly as practicable (except to the extent the
Manager may determine to distribute any assets to the Unit Holders in kind) and shall apply the
proceeds of such sale and the remaining Company assets in the following order of priority:
10.3.1 Payment of creditors, including Unit Holders and Managers who are
creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Company,
other than liabilities for distributions to Unit Holders;
10.3.2 To establish any reserves that the Manager deems reasonably necessary
for contingent or unforeseen obligations of the Company and, at the expiration of such period as
the Manager shall deem advisable, the balance then remaining in the manner provided in
Paragraphs 11.3.3 below;
10.3.3 To the Unit Holders in proportion to the positive balances of their
respective Capital Accounts, as determined after taking into account all Capital Account
adjustments for the taxable year during which the liquidation occurs (other than those made
pursuant to this paragraph 11.3.3).
10.4 No Obligation to Restore Negative Capital Account Balance on Liquidation.
Notwithstanding anything to the contrary in this Agreement, upon a liquidation within the
meaning of Regulation Section 1.704-1(b)(2)(ii)(g), if any Unit Holder has a negative Capital
Account balance (after giving effect to all contributions, distributions, allocations and other
Capital Account adjustments for all taxable years, including the year during which such
liquidation occurs), such Unit Holder shall have no obligation to make any Capital Contribution
to the Company, and the negative balance of such Unit Holder’s Capital Account shall not be
considered a debt owed by such Unit Holder to the Company or to any other Person for any
purpose whatsoever.
10.5 Termination. The Manager shall comply with any applicable requirements of
applicable law pertaining to the winding up of the affairs of the Company and the final
distribution of its assets. Upon completion of the winding up, liquidation and distribution of the
assets, the Company shall be deemed terminated.
10.6 Certificate of Dissolution. When all debts, liabilities and obligations have been
paid and discharged or adequate provisions have been made therefor and all of the remaining
property and assets have been distributed to the Unit Holders, the Manager may file a certificate
of dissolution as authorized by RCW 25.15.273 of the Act. Upon filing the certificates of
dissolution, the existence of the Company shall cease, except as otherwise provided in the Act.
20
10.7 Return of Contribution Nonrecourse to Other Unit Holders. Except as provided
by law or as expressly provided in this Agreement, upon dissolution each Unit Holder shall look
solely to the assets of the Company for the return of its Capital Contribution. If the property
remaining after the payment or discharge of liabilities of the Company is insufficient to return
the contributions of Unit Holders, no Unit Holder shall have recourse against any other Unit
Holder.
ARTICLE 11 – MISCELLANEOUS PROVISIONS
11.1 Notices. Any notice, demand, or communication required or permitted under this
Agreement shall be deemed to have been duly given if delivered personally to the party to whom
directed or, if mailed by registered or certified mail, postage and charges prepaid, addressed (a) if
to a Unit Holder, to the Unit Holder’s address specified on attached Schedule 1, (b) if to the
Company, to the address specified in Section 2.4, and (c) if to the Manager, to the address
specified on Schedule 1. Except as otherwise provided herein, any such notice shall be deemed
to be given when personally delivered or, if mailed, 3 business days after the date of mailing. A
Unit Holder, the Company or the Manager may change its address for the purposes of notices
hereunder by giving notice to the others specifying such changed address in the manner specified
in this Section 12.1.
11.2 Governing Law. This Agreement shall be construed and enforced in accordance
with the internal laws of the State of Washington, without giving effect to principles of conflicts
of laws.
11.3 Amendments. This Agreement may not be amended except by the written
agreement of each Unit Holder.
11.4 Construction. Whenever the singular number is used in this Agreement and when
required by the context, the same shall include the plural and vice versa, and the masculine
gender shall include the feminine and neuter genders and vice versa.
11.5 Headings. The headings in this Agreement are inserted for convenience only and
shall not affect the interpretations of this Agreement.
11.6 Waivers. The failure of any Person to seek redress for violation of or to insist
upon the strict performance of any covenant or condition of this Agreement shall not prevent a
subsequent act, which would have originally constituted a violation, from having the effect of an
original violation.
11.7 Rights and Remedies Cumulative. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy shall not preclude or waive the
right to use any or all other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
11.8 Severability. If any provision of this Agreement or the application thereof to any
Person or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of
this Agreement and the application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
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11.9 Heirs, Successors and Assigns. Each of the covenants, terms, provisions and
agreements herein contained shall be binding upon and inure to the benefit of the parties hereto
and, to the extent permitted by this Agreement, their respective heirs, legal representatives,
successors and assigns.
11.10 Jurisdiction and Venue. Any suit involving any dispute or matter arising under
this Agreement may only be brought in the United States District Court for the Western District
of Washington or any Washington State Court having jurisdiction over the subject matter of the
dispute or matter. All Members hereby consent to the exercise of personal jurisdiction by any
such court with respect to any such proceeding.
11.11 Creditors. None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditors of the Company.
11.12 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which shall constitute one and the same instrument.
11.13 Investment Representations. The Units have not been registered under the
Securities Act of 1933, the Securities Act of Washington or any other state securities laws
(collectively, the “Securities Acts”) because the Company is issuing the Units in reliance upon
the exemptions from the registration requirements of the Securities Acts, and the Company is
relying upon the fact that the Units are to be held by each Unit Holder for investment and not for
resale or distribution.
Accordingly, each Unit Holder hereby confirms the Units have been acquired for such
Unit Holder’s own account, for investment and not with a view to the resale or distribution
thereof and may not be offered or sold to anyone unless there is an effective registration or other
qualification relating thereto under all applicable Securities Acts or unless such Unit Holder
delivers to the Company an opinion of counsel, satisfactory to the Company, that such
registration or other qualification is not required. The Unit Holders understand that the
Company is under no obligation to register the Units or to assist any Unit Holder in complying
with any exemption from registration under the Securities Act.
[Signature page follows]
SIGNATURE PAGE TO AGREEMENT
Executed by the undersigned Unit Holder effective as of the date first above written.
MANAGER
__________________________________
By:
Its: Manager
Nord West Properties LLC
Valery Kalashnikov
SCHEDULE 1
MEMBER OR
UNIT HOLDER
ADDRESS
MEMBER OR
ECONOMIC
INTEREST OWNER
TYPE AND NUMBER
OF UNITS HELD
PERCENTAGE
INTEREST
14435 NE 40th St apt B101Century Investment A voting member 100