LIMITED LIABILITY COMPANY OPERATING AGREEMENT
Tidalloft Avionics Research LLC
A Member-Managed Limited Liability Company
This Agreement is entered into on August 26th, 2021, by and between TIDALLOFT AVIONICS, LLC, (the “Company”) and XU LI of 7 Margaret Dr. Wilbraham MA 01095, Matthew Stoneback of 4210 Balboa St. Apt 505, San Francisco CA 94121 hereinafter known as the “Members”
The Members desire to create a limited liability company and set forth the terms herein of the Company’s operation and the relationship between Members.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Members and the Company agree as follows:
- PRELIMINARY PROVISIONS
The Company is formed was formed by filing Articles of Organization, a Certificate of Formation or a similar organizational document with the state of Massachusetts filing office on February 19, 2020. A copy of this organizational document has been placed in the LLC’s records book.
- Name and Principal Place of Business
The name of the Company shall be Tidalloft Avionics Research LLC with a principal place of business at 7 Margaret Dr. Wilbraham MA 01095. However, this LLC may do business under a different name by complying with the state’s fictitious or assumed business name statutes and procedures.
The Company may conduct all lawful business, activities, or functions appropriate in carrying out aircraft electronics and its derivative products’ research, development, and production. (the “Purpose”). It is understood that the foregoing statement of powers shall not serve as a limitation on the powers or abilities of this LLC, which shall be permitted to engage in any and all lawful business activities. If this LLC intends to engage in business activities outside the state of its formation that require the qualification of the LLC in other states, it shall obtain such qualification before engaging in such out-of-state activities
- Registered Office and Resident Agent
The location and name of the registered agent will be as stated in the Company’s formation documents or any amendment thereof. Accordingly, the registered agent and/or office of this LLC may be changed from time to time as the members may see fit, by filing a change of registered agent or office statement with the state LLC filing office. It will not be necessary to amend this provision of the Operating Agreement if and when such changes are made.
The term of the Company shall be perpetual, commencing on the filing of the Articles of Organization of the Company, and continuing until terminated under the provisions set forth herein.
- FINANCIAL, CAPITAL, & TAX PROVISIONS
- Member Capital Contributions
The Members may make such capital contributions (each a “Capital Contribution”) in such amounts, form, and at such times as the Member shall determine. The Members are obligated to make equal amount of Capital Contributions. Accordingly, the members may agree, from time to time by unanimous vote, to require the payment of additional capital contributions by the members, on or by a mutually agreeable date.
Failure to make contributions. If a member fails to make a required capital contribution within the time agreed for a member’s contribution, the remaining member(s) may, by unanimous vote, agree to reschedule the time for payment of the capital contribution by the late-paying member, setting any additional repayment terms, such as a late payment penalty, rate of interest to be applied to the unpaid balance, or other monetary amount to be paid by the delinquent member, as the remaining member(s) decide. Alternatively, the remaining member(s )may, by unanimous vote, agree to cancel the membership of the delinquent member, provided any prior partial payments of capital made by the delinquent member are refunded promptly by the LLC to the member after the decision is made to terminate the membership of the delinquent member.
For purposes of this Agreement “net profits” and “net losses” mean the profits or losses of the Company resulting from the conduct of the Company’s business, after all expenses, including depreciation allowance, incurred in connection with the conduct of its business for which such expenses have been accounted.
The term “cash receipts” shall mean all cash receipts of the Company from whatever source derived, including without limitation capital contributions made by the Member(s); the proceeds of any sale, exchange, condemnation or other disposition of all or any part of the assets of the Company; the proceeds of any loan to the Company; the proceeds of any mortgage or refinancing of any mortgage on all or any part of the assets of the Company; the proceeds of any insurance policy for fire or other casualty damage payable to the Company; and the proceeds from the liquidation of assets of the Company following termination.
The term “capital transactions” shall mean any of the following: the sale of all or any part of the assets of the Company; the refinancing of mortgages or other liabilities of the Company; the receipt of insurance proceeds; and any other receipts or proceeds are attributable to capital.
A “Capital Account” for the Member shall be maintained by the Company. The Member’s Capital Account shall reflect the Member’s capital contributions and increases for any net income or gain of the Company. The Member’s Capital Account shall also reflect decreases for distributions made to the Member and the Member’s share of any losses and deductions of the Company.
Initially Contributed Asset: All members can contribute assets to the company. The contributing member shall provide the assets value, justify the use case of the asset, provide the source where the asset is acquired. After the information is agreed by all other members, the asset can be listed on the capital account as the member’s contribution.
Consent to Capital Contribution Withdrawals and Distributions. Members shall not be allowed to withdraw any part of their capital contributions or to receive distributions, whether in property or cash, except as otherwise allowed by this agreement and, in any case, only if such withdrawal is made with the written consent of all members.
Distriubution of profits and losses. Except as otherwise provided in the Articles of Organization, Certificate of Formation or a similar organizational document, or this Operating Agreement, no member shall be given priority or preference with respect to other members in obtaining a return of capital contributions, distributions or allocations of the income, gains, losses, deductions, credits or other items of the LLC. Except as otherwise provided in the Articles of Organization, Certificate of Formation or a similar organizational document, or this Operating Agreement, the profits and losses of the LLC, and all items of its income, gain, loss, deduction and credit shall be allocated to members according to each member’s capital interest in this LLC.
Allocation and Distribution of Cash to Members. Cash from LLC business operations, as well as cash from a sale or other disposition of LLC capital assets, may be allocated and distributed from time to time to members in accordance with each member’s capital interest in the LLC, as may be decided by a unanimous vote of the members.
Allocation of Noncash Distributions. If proceeds consist of property other than cash, the members shall decide the value of the property and allocate such value among the members in accordance with each member’s capital interest in the LLC. If such noncash proceeds are later reduced to cash, such cash may be distributed among the members according to the distribution cash allocations provisions in this agreement.
Allocation and Distribution of Liquidation Proceeds. Regardless of any other provision in this agreement, if there is a distribution in liquidation of this LLC, or when any member’s interest is liquidated, all items of income and loss shall be allocated to the members’ capital accounts, and all appropriate credits and deductions shall then be made to these capital accounts before any final distribution is made. A final distribution shall be made to members only to the extent of, and in proportion to, any positive balance in each member’s capital account.
- Digital Assets
All digital assets, including but not limited to documents, design files, software source codes, software applications, test data, audio, video, communication history shall be handled by methods or services agreed by all members.
- Bank Accounts
All funds of the Company shall be deposited in the Company’s name in a bank account or accounts as chosen by the Members. One or more members of the LLC shall be designated with the consent of all members to deposit and withdraw funds of the LLC, and to direct the investment of funds from, into and among such accounts. Withdrawals from any bank accounts shall be made only in the regular course of business of the Company and shall be made upon such signatures as the Members from time to time may designate. The funds of the LLC, however and wherever deposited or invested, shall not be commingled with the personal funds of any members of the LLC.
- Books, Records and Tax Returns
The Company shall maintain complete and accurate books and records of the Company’s business and affairs as required by the Statutes and such books and records shall be kept at the Company’s Registered Office and shall in all respects be independent of the books, records, and transactions of the Members.
The Company’s fiscal year shall be the calendar year with an ending month of January.
- Tax Classification of LLC.
It is understood that all members may agree to change the tax treatment of this LLC by signing, or authorizing the signature of, IRS Form 8832, Entity Classification Election, and filing it with the IRS and, if applicable, the state tax department within the prescribed time limits.
- Tax Matters Member.
If required under Internal Revenue Code provisions or regulations, this LLC shall designate from among its members a “tax matters partner” in accordance with Internal Revenue Code Section 6231(a)(7) and corresponding regulations, who will fulfill this role by being the spokesperson for the LLC in dealings with the IRS as required under the Internal Revenue Code and Regulations, and who will report to the members on the progress and outcome of these dealings.
- Annual Income Tax Returns and Report
Within 60 days after the end of each tax year of the LLC, a copy of the LLC’s state and federal income tax returns for the preceding tax year shall be mailed or otherwise provided to each member of the LLC, together with any additional information and forms necessary for each member to complete his or her individual state and federal income tax returns. This additional information shall include a federal (and, if applicable, state) Form K-1 (Form 1065—Partner’s Share of Income, Credits, Deductions) or equivalent income tax reporting form, as well as a financial report, which shall include a balance sheet and profit and loss statement for the prior tax year of the LLC.
- MEMBERSHIP & MANAGEMENT PROVISIONS
- Management of the Company
The business and affairs of the Company shall be conducted and managed by members in accordance with this Agreement and the laws of the Commonwealth of Massachusetts.
Except as expressly provided elsewhere in this Agreement, all decisions respecting the management, operation, and control of the business and affairs of the Company and all determinations made in accordance with this Agreement shall be made by a vote of the Members unanimously.
Notwithstanding any other provision of this Agreement, the Members shall not, without the prior authorization of the Members unanimously in favor to sell, exchange, lease, assign or otherwise transfer all or substantially all of the assets of the Company; sell, exchange, lease (other than space leases in the ordinary course of business), assign or transfer the Company’s assets; mortgage, pledge or encumber the Company’s assets other than is expressly authorized by this Agreement; prepay, refinance, modify, extend or consolidate any existing mortgages or encumbrances; borrow money on behalf of the Company; lend any Company funds or other assets to any person; establish any reserves for working capital repairs, replacements, improvements or any other purpose; confess a Judgment against the Company; settle, compromise or release, discharge or pay any claim, demand or debt, including claims for insurance; approve a merger or consolidation of the Company with or into any other limited liability company, corporation, partnership or other entity; or change the nature or character of the business of the Company.
The Members shall receive such sums for compensation as Members of the Company as may be determined from time to time by the affirmative vote or consent of Members holding a majority of the Members’ Percentage Interests.
- Nonliability of Members.
No member of this LLC shall be personally liable for the expenses, debts, obligations or liabilities of the LLC, or for claims made against it.
All expenditures shall be reported. The expenditure(s) costs more than 10% of company’s monthly free cash flow in a calendar month shall have all members written consent.
- Members’ Meetings
The LLC shall not provide for regular members’ meetings. However, any member may call a meeting by communicating his or her wish to schedule a meeting to all other members. Such notification may be in person or in writing, or by telephone, facsimile machine, or other form of electronic communications reasonably expected to be received by a member, and the other member(s) shall then agree, either personally, in writing, or by telephone, facsimile machine or other form of electronics communication to the member calling the meeting, to meet at a mutually acceptable time and place.
Notice of the business to be transacted at the meeting need not be given to members by the member calling the meeting, and any business may be discussed and conducted at the meeting.
If all members cannot attend a meeting, it shall be postponed to a date and time when all members can attend, unless all members who do not attend have agreed in writing to the holding of the meeting without them. If a meeting is postponed, and the postponed meeting cannot be held either because all members do not attend the postponed meeting or the nonattending member(s) have not signed a written consent to allow the postponed meeting to be held without them, a second postponed meeting may be held at a date and time announced at the first postponed meeting. The date and time of the second postponed meeting shall also be communicated to any members not attending the first postponed meeting.
Written notice of the decisions or approvals made at this second postponed meeting shall be mailed or delivered to each nonattending member promptly after the holding of the second postponed meeting.
Written minutes of the discussions and proposals presented at a members’ meeting, and the votes taken and matters approved at such meeting, shall be taken by one of the members or a person designated at the meeting. A copy of the minutes of the meeting shall be placed in the LLC’s records book after the meeting.
- Membership Certificates
This LLC shall be authorized to obtain and issue certificates representing or certifying membership interests in this LLC. Each certificate shall show the name of the LLC and the name of the member and shall state that the person named is a member of the LLC and is entitled to all the rights granted members of the LLC under the Articles of Organization, Certificate of Formation or a similar organizational document, this Operating Agreement, and provisions of law. Each membership certificate shall be consecutively numbered and signed by each of the current members of this LLC. The certificates shall include any additional information considered appropriate for inclusion by the members on membership certificates.
In addition to the above information, all membership certificates shall bear a prominent legend on their face or reverse side stating or summarizing any transfer restrictions that apply to memberships in this LLC under the Articles of Organization, Certificate of Formation or a similar organizational document and/or this Operating Agreement, and the address where a member may obtain a copy of these restrictions upon request from this LLC.
The records book of this LLC shall contain a list of the names and addresses of all persons to whom certificates have been issued, show the date of issuance of each certificate, and record the date of all cancellations or transfers of membership certificates by members or the LLC.
- Admission of New Members
Except as otherwise provided in this agreement, a person or entity shall not be admitted into membership in this LLC unless each member consents in writing to the admission of the new member. The admission of new members into this LLC who have been transferred, or wish to be transferred, a membership interest in this LLC by an existing member of this LLC is covered by separate provisions in this Operating Agreement.
- Withdrawal of Members
A member may withdraw from this LLC by giving written notice to all other member(s) at least 30 days before the date the withdrawal is to be effective. In the event of such withdrawal, the LLC shall pay the departing member the fair value of his or her LLC interest, less any amounts owed by the member to the LLC. The departing and remaining members shall agree at the time of departure on the fair value of the departing member’s interest and the schedule of payments to be made by the LLC to the departing member, who shall receive payment for his or her interest within a reasonable time after departure from the LLC. If the departing and remaining member(s) cannot agree on the value of departing member’s interest, they shall select an appraiser, who shall determine the current value of the departing member’s interest. This appraised amount shall be fair value of the departing member’s interest and shall form the basis of the amount to be paid to the departing member.
- Restrictions on the Transfer of Membership
Notwithstanding any other provision of this agreement, a member shall not transfer his or her membership in the LLC unless all of the non-transferring LLC members first agree in writing to approve the admission of the transferee into this LLC. Further, no member may encumber a part or all of his or her membership in the LLC by mortgage, pledge, granting of a security interest, lien or otherwise, unless the encumbrance has first been approved in writing by all other members of the LLC.
Notwithstanding the above provision, upon reasonable notice to all members, any member shall be allowed to assign an economic interest in his or her membership to another person without the approval of the other members. Such an assignment shall not include a transfer of the member’s voting or management rights in this LLC, and the assignee shall not become a member of the LLC. If a purported assignment or purported delegation is made in violation of this section, it is void.
Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
- Ownership of Company Property.
The Company’s assets shall be deemed owned by the Company as an entity, and the Member shall have no ownership interest in such assets or any portion thereof. Title to any or all such Company assets may be held in the name of the Company.
- Non-competing clause
The member shall not engage in any business ventures overlapping with the Purpose or in direct competition against the Company without obtaining the written consent from all other members.
- DISSOLUTION PROVISIONS
- Dissolution and Liquidation
The Company shall dissolve and its affairs shall be wound up on the first to occur of
(i) At a time, or upon the occurrence of an event specified in the Articles of Organization or this Agreement. (ii) The determination by the Member that the Company shall be dissolved.
Upon the death of all members, the Company shall be dissolved. By separate written documentation, the members shall designate and appoint the individual who will wind down the Company’s business and transfer or distribute the members’ Interests and Capital Account as designated by the members or as may otherwise be required by law.
Upon the disability of a Member, the Member may continue to act as Manager hereunder or appoint a person to so serve until the Member’s Interests and Capital Account of the Member have been transferred or distributed.
The member is entitled to receive the Initially Contributed Asset listed on the Capital Account under the member’s name.
- Winding Up and Distribution of Property
Upon the occurrence of a Triggering Event, the Company promptly shall commence to wind up its affairs. To the extent not inconsistent with the foregoing, all covenants and obligations, including provisions as to allocations and distributions, shall continue in full force and effect until such time as the Company’s assets have been distributed pursuant to this Section, and the Company’s certificate of organization has been canceled in accordance with the applicable laws. The net proceeds from liquidation of the Company’s assets pursuant to its dissolution and termination shall be distributed in the following proportions and order of priority:
a) First: to pay all of the liabilities of the Company, including liabilities to Parties who are creditors of the Company, in the order of priority required by applicable law;
b) Second: to establish any reserves necessary for any unpaid, future or contingent liabilities or obligations of the Company, as reasonably determined by the Parties; and
c) Third: to the Members pro rata in accordance with their respective Membership Percentages.
The Member (including, for purposes of this Section, any estate, heir, personal representative, receiver, trustee, successor, assignee and/or transferee of the Member) shall not be liable, responsible or accountable, in damages or otherwise, to the Company or any other person for: (i) any act performed, or the omission to perform any act, within the scope of the power and authority conferred on the Member by this agreement and/or by the Statutes except by reason of acts or omissions found by a court of competent jurisdiction upon entry of a final judgment rendered and un-appealable or not timely appealed (“Judicially Determined”) to constitute fraud, gross negligence, recklessness or intentional misconduct; (ii) the termination of the Company and this Agreement pursuant to the terms hereof; (iii) the performance by the Member of, or the omission by the Member to perform, any act which the Member reasonably believed to be consistent with the advice of attorneys, accountants or other professional advisers to the Company with respect to matters relating to the Company, including actions or omissions determined to constitute violations of law but which were not undertaken in bad faith; or (iv) the conduct of any person selected or engaged by the Member.
The Company, its receivers, trustees, successors, assignees and/or transferees shall indemnify, defend and hold the Member harmless from and against any and all liabilities, damages, losses, costs and expenses of any nature whatsoever, known or unknown, liquidated or unliquidated, that are incurred by the Member (including amounts paid in satisfaction of judgments, in settlement of any action, suit, demand, investigation, claim or proceeding (“Claim”), as fines or penalties) and from and against all legal or other such costs as well as the expenses of investigating or defending against any Claim or threatened or anticipated Claim arising out of, connected with or relating to this Agreement, the Company or its business affairs in any way; provided, that the conduct of the Member which gave rise to the action against the Member is indemnifiable under the standards set forth herein.
Upon application, the Member shall be entitled to receive advances to cover the costs of defending or settling any Claim or any threatened or anticipated Claim against the Member that may be subject to indemnification hereunder upon receipt by the Company of any undertaking by or on behalf of the Member to repay such advances to the Company, without interest, if the Member is Judicially Determined not to be entitled to indemnification as set forth herein.
All rights of the Member to indemnification under this Agreement shall (i) be cumulative of, and in addition to, any right to which the Member may be entitled to by contract or as a matter of law or equity, and (ii) survive the dissolution, liquidation or termination of the Company as well as the death, removal, incompetency or insolvency of the Member.
The termination of any Claim or threatened Claim against the Member by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not, of itself, cause the Member not to be entitled to indemnification as provided herein unless and until Judicially Determined to not be so entitled.
This Agreement and the rights and liabilities of the parties hereunder shall be governed by and determined in accordance with the laws of the Commonwealth of Massachusetts. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions of this Agreement, which shall remain in full force and effect.
The captions in this Agreement are for convenience only and are not to be considered in construing this Agreement. All pronouns shall be deemed to be the masculine, feminine, neuter, singular or plural as the identity of the person or persons may require. References to a person or persons shall include partnerships, corporations, limited liability companies, unincorporated associations, trusts, estates and other types of entities.
This Agreement, and any amendments hereto may be executed in counterparts all of which taken together shall constitute one agreement.
This Agreement sets forth the entire agreement of the parties hereto with respect to the subject matter hereof. It is the intention of the Members that this Agreement shall be the sole agreement of the parties, and, except to the extent a provision of this Agreement provides for the incorporation of federal income tax rules or is expressly prohibited or ineffective under the Statutes, this Agreement shall govern even when inconsistent with, or different from, the provisions of any applicable law or rule. To the extent any provision of this Agreement is prohibited or otherwise ineffective under the Statutes, such provision shall be considered to be ineffective to the smallest degree possible in order to make this Agreement effective under the Statutes.
Subject to the limitations on transferability set forth above, this Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, executors, administrators, successors and assigns.
No provision of this Agreement is intended to be for the benefit of or enforceable by any third party.
IN WITNESS WHEREOF, the parties have executed this Agreement this 26th day of August 2021.
Tidalloft Avionics Research LLC
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