OPERATING AGREEMENT
OF
ETERNAL PURPOSE RECOVERY
CENTER LLC
This Operating Agreement of ETERNAL PURPOSE RECOVERY CENTER LLC, a California
limited liability company (the “Company”), is made and entered into as of September 1 st , 2022, by
CTE Holdings Company LLC, by and through its Managing Member Dustin Johnson residing at
300 Cabbage Inlet Lane, Wilmington, NC 28409, Michael Cioffi, an individual residing at 16300
Devonshire St, Granada Hills, CA 91324, Brian Morgan, an individual residing at, 314 Southridge
Rd, Delray Beach, FL 33444, Barnhorn Capital LLC, a corporation located at,
, and, C Mackey INC by and through its
President, Colin Mackey residing at 1331 S Federal Highway APT 114 Boynton Beach, FL 33435,
Ryan Korchick, an individual, residing at 114 S Main St, Medford, NJ 08055 (individually
“Member” and if more than one, collectively “Members”) and the principals of each Member
(“Principals”) shall be bound to certain covenants as described in this Agreement.
W I T N E S S E T H
WHEREAS, this Operating Agreement is to provide for the operation of the Company, the
allocation and distribution of profits and losses thereof, management of the day to day operations,
and such other matters as are set forth in this Agreement;
NOW, THEREFORE, the Members agree as follows:
ARTICLE I
DEFINITIONS
The following terms have the definitions hereinafter indicated whenever used in this Agreement
with initial capital letters:
” Act” shall mean the California Revised Uniform Limited Liability Company Act.
“Adjusted Basis” shall mean, as of any date of determination, the Company’s adjusted basis in any
asset as of such date, as determined for Federal income tax purposes pursuant to Code Section
1011.
“Affiliate” shall mean, with respect to any Person, any other Person who, directly or indirectly,
controls or is controlled by or is under common control with such first Person. As used in this
definition, “Control” (including, with their correlative meanings, the terms “controlled by” and
“under common control with”) shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person (whether through ownership
of securities or partnership or other ownership interests, by contract or otherwise).
“Agreement” shall mean this Operating Agreement as originally executed and any future
amendments approved by all parties.
“Applicable Law” shall mean each applicable law, statute, treaty, rule, code, ordinance, regulation,
consent, certificate, order, interpretation, exemption, license and permit of any governmental
authority and each judgment, decree or injunction, writ, order or like action of any court, arbitrator
or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction
(including, without limitation, any pertaining to health, safety or the environment).
“Assignee” means a transferee of a Membership Interest who has not been admitted as a Substitute
Members. An Assignee shall have the rights and obligations of an Assignee as set forth in Section
8.02 hereof.
“Capital Account” shall mean, with respect to each Member, the capital account established and
maintained for such Member pursuant to Section 3.03.
“Capital Contribution” shall mean, with respect to each Member, all cash and other property
contributed by such Members to the capital of the Company pursuant to this Agreement.
“Code” shall mean the United States Internal Revenue Code of 1986, as the same has been or may
hereafter be amended from time to time.
“Company” shall mean ETERNAL PURPOSE RECOVERY CENTER LLC, a California limited
liability company.
“Depreciation” shall mean, for each fiscal year, an amount equal to the depreciation, amortization,
or other cost recovery deduction allowable with respect to an asset for such fiscal year, except that
if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes
at the beginning of such fiscal year, Depreciation shall be an amount which bears the same ratio to
such beginning Gross Asset Value as the federal income tax depreciation, amortization or other
cost recovery deduction for such fiscal year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of
such fiscal year is zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Members.
“Distributable Funds” shall mean, with respect to any period, all cash (i) derived by the Company
from normal business operations, (ii) received as proceeds from any Company financing,
refinancing or other extraordinary event (including cash received from the sale of all or
substantially all the Company’s assets and excluding Capital Contributions and loans from
Members) or (iii) withdrawn from Reserves during such period, minus (w) all expenses (other than
depreciation and other similar noncash expenses) incurred incident to the normal operation of the
Company’s business, (x) all capital expenditures made during such period, (y) all payments of
principal and interest made during such period with respect to Company loans, including Member
Loans, and (z) all funds set aside during such period for the creation or addition to such Reserves
as the Members deem necessary for the reasonable needs and prudent operation of the Company’s
business. “Economic Interest” shall mean a person’s right to share in the Profit, Loss or similar
items of, and to receive distributions from, the Company.
“Fair Market Value” shall mean, with respect to any property, the value that would be obtained
therefor in an arm’s length transaction or sale (for cash) between an informed and willing purchaser
and an informed and willing seller, neither being under any compulsion to buy or sell (and being
determined without regard to any liabilities secured by or encumbering such property),
which value shall be determined by agreement among the Members or, failing such agreement, by
an independent appraiser.
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income
tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Member to the
Company shall be the gross fair market value of such asset, as determined by the
contributing Members and the Company, provided that the initial Gross Asset
Values of the assets contributed to the Company pursuant to Section 3. 01 hereof
shall be as set forth in Exhibit A;
(ii) The Gross Asset Values of all Company assets shall be adjusted to equal
their respective gross fair market values, as determined by the Company as of the
following times: (a) the acquisition of an additional interest by any new or existing
Members in exchange for more than a de minimis contribution of property
(including money); (b) the distribution by the Company to a Member of more than
a de minimis amount of property as consideration for a Membership Interest or
Economic Interest; and (c ) the liquidation of the Company within the meaning of
Regulations Section 1. 704-1(b)(2)(ii)(g); provided, however, that adjustments
pursuant to clauses (a) and (b) above shall be made only if the Company reasonably
determines that such adjustments are necessary or appropriate to reflect the relative
economic interests of the Members in the Company;
(iii) The Gross Asset Value of any Company asset distributed to any Members
shall be adjusted to equal the gross fair market value of such asset on the date of
distribution as determined by the distributee and the Company; and
(iv) The Gross Asset Values of Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that
such adjustments are taken into account in determining Capital Accounts pursuant
to Regulation Section 1.704-1 (b)(2)(iv)(m) and Section 3.03 of this Agreement and
subparagraph (iv) under the definition of Net Profits and Net Losses; provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent the Company determines that an adjustment
pursuant to subparagraph (ii) of this definition is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment pursuant
to this subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (i), (ii) or (iv) of this definition, then such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to such
asset for purposes of computing Profit and Loss.
“Liquidating Trustee” shall have the meaning ascribed thereto pursuant to Section 9.07.
“Majority In Interest” shall have the meaning ascribed thereto pursuant to Section 6.04.
“Members” shall mean CTE Holdings Company LLC, by and through its Managing Member,
Dustin Johnson, C Mackey Inc., by and through its President Colin Mackey, Michael Cioffi,
Ryan Korchick, Brian Morgan, and Barnhorn Capital, by and through its managing member
and any other person that is hereafter admitted as a Member pursuant to
Section 8.02 hereof.
“Member Loan” shall have the meaning ascribed thereto pursuant to Section 3.04.
“Membership Interest” shall mean, with respect to any Member, such Member’s entire ownership
interest in the Company at any particular time, including, without limitation, such Member’s right
to share in Profits and Loss and to receive distributions of Distributable Funds pursuant to this
Agreement and any and all benefits to which such Members may be entitled as provided in this
Agreement and the Act, including, without limitation, the right to vote or participate in
management of the Company, and the right to information concerning the business and affairs of
the Company, together with the obligation of such Members to comply with all the terms and
provisions of this Agreement.
“Net Agreed Value” shall mean (i) in the case of any Capital Contribution other than cash, the Fair
Market Value of such property at the time of contribution reduced by any indebtedness secured by
such property and assumed or taken subject to by the Company upon such contribution under Code
Section 752; and (ii) in the case of any property (other than cash) distributed to Members, the-Fair
Market Value of such property at the time of such distribution reduced by any indebtedness secured
by such property and assumed or taken subject to by such Members upon such distribution under
Code Section 752.
“Percentage Interest” shall mean, as to each Member, its percentage interest as set forth in Exhibit
A, as such Exhibit A may be modified or supplemented from time to time pursuant to
this Agreement.
“Person” shall mean an individual, corporation, limited liability company, partnership, limited
liability partnership, joint venture, trust, unincorporated organization or any other entity, including
a government (domestic or foreign) or any agency or political subdivision thereof, and the heirs,
executors, administrators, legal representatives, successors and assigns of such Person where the
context so admits.
“Profit” and “Loss” shall mean for each taxable year of the Company an amount equal to the
Company’s net taxable income or loss for such year as determined for federal tax purposes
(including separately stated items) in accordance with the accounting method and rules used by the
Company and in accordance with Section 703 of the Code with the following adjustments:
(i) Any items of income, gain, loss and deduction which are specifically
allocated to Members shall not be taken into account in computing Profit or Loss
under this Agreement;
(ii) Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Profit and Loss (pursuant to this
definition) shall be included in determining Profit or Loss hereunder by adding such
amount of income to taxable income or subtracting such amount of income from
taxable loss;
(iii) Any expenditure of the Company described in Section 705(a)(2)(B) of the
Code and not otherwise taken into account in computing Profit and Loss (pursuant
to this definition) shall be included in determining Profit or Loss hereunder
by deducting such expenditure from such taxable income or adding such
expenditure to taxable loss;
(iv) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to clause (ii) or (iii) of the definition of Gross Asset Value, the amount of
such adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Profit and Loss;
(v) In lieu of the depreciation, amortization and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be taken
into account Depreciation for such fiscal year; and
(vi) To the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Section 734(b) of the Code or Section 743(b) of the Code is required
pursuant to Section 1.704-I (b)(2)(iv)(m)(4) of the Treasury Regulations to be taken
into account in determining Capital Accounts as a result of a distribution other than
in liquidation of a Membership Interest or Economic Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment decreases the basis
of the asset) from the disposition of the asset and shall be taken into account for
purposes of computing Profit or Loss.
“Reserves” shall mean funds set aside from Capital Contributions or gross cash revenues or loan
proceeds of the Company as reserves. Such Reserves shall be maintained in amounts reasonably
deemed sufficient by the Company for working capital and the payment of taxes, insurance, debt
service, repairs, replacements, renewals or other costs or expenses incident to the operation of the
Company.
“Reserve Account” shall mean the account of the Majority in Interest choosing to hold
the Reserves of the Company.
“Substituted Members” means a Person to whom a Membership Interest has been transferred and
who has been admitted to all of the rights of Membership pursuant to Section 8.02 hereof.
“Treasury Regulations” shall mean the United States Income Tax Regulations (including
temporary, but not proposed, regulations) promulgated under the Code as amended from time to
time.
“Vesting Event” shall mean for each Member, the moment that they provide their respective
initial Capital Contribution as stated on Exhibit A. Should a Member fail to contribute their Capital
Contribution before the date of September 51, 2021, their Membership Interest shall not vest and
shall be automatically be returned to the Company.
“Voting Member” shall mean CTE Holdings Company LLC, by and through its Managing
Member, Dustin Johnson, Ryan Korchick, Barnhorn Capital, Brian Morgan, C Mackey Inc, by and
through its President, Colin Mackey, and Michael Cioffi who are the exclusive holders of voting
Member Interest in the Company. The Voting Member shall have the exclusive right to vote on
any matters which affect the Company except as well as all other benefits of ownership listed in
this Agreement and expressly required by law.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.01. Matters Respecting Formation. The Company had been formed by the filing of the
Certificate of Formation of the Company with the Secretary of State of the State of Delaware
pursuant to the Act. The Members shall cause the execution, delivery and filing of, any necessary
or advisable amendments or restatements to the Certificate of Formation consistent with the terms
of this Agreement, and any other certificates, notices, statements or other instruments (and any
amendments or statements thereof) necessary or advisable for the operation of the Company in all
jurisdictions where the Company may elect to do business.
Section 2.02. Name. The name of the Company shall be ELEVATIONS SUBSTANCE ABUSE
FACILITY LLC.
Section 2.03. Initial Members. The Members of the Company are CTE Holdings Company
LLC, by and through its Managing Member Dustin Johnson, C Mackey Inc, by and through its
President Colin Mackey, Barnhorn Capital by and through its managing member ,
Brian Morgan, Ryan Korchick and Michael Cioffi who are admitted to the Company as Members
effective contemporaneously with their execution of this Agreement. The Members agree that
while they may hold a Membership Interest in the Company, their respective Membership Interest
will not vest until the Vesting Event has occurred. For the purpose of clarification, should a Vesting
Event fail to occur for a Member, they will be automatically stripped of any rights pursuant
to this Agreement and will cooperate in good faith in order to sign the necessary agreements to
effectuate the loss of Membership Interest.
Section 2.04. Principal Office; Registered Agent. The principal office of the Company shall be
located at such location as the Members shall determine. The registered office of the Company
shall be as set forth in the Certificate of Formation of the Company, or at such other place as the
Members may determine from time to time.
Section 2.05. Purpose. The purpose of the Company shall be to engage in any lawful business
for which a limited liability company may be organized under the Act. The Company shall have
the power to do and perform any and all acts necessary, appropriate, proper or advisable for, or
incidental to, the furtherance and accomplishment of the foregoing purpose.
Section 2.06. Duration. The Company commenced on the date the Articles of Organization were
filed with the Secretary of State of the State of Delaware and shall continue until it is dissolved in
accordance with the provisions of this Agreement or by operation of law.
Section 2.07. Tax Status. The Members intend that the Company shall be treated as a partnership
for Federal and state income tax purposes, rather than as an association taxable as a corporation,
during any period in which it has more than one Member.
ARTICLE III
CAPITAL CONTRIBUTIONS: CAPITAL ACCOUNTS
Section 3.01. Capital Contributions. The Members and their respective Percentage Interests are
set forth on Exhibit A hereto. As detailed in Section 1 and 2 above, the Members must provide
their Capital Contribution by the date of September 5th, 2022.
Section 3.02. Matters Respecting Capital.
(a) No Member shall be entitled to withdraw or reduce any part of its Capital expressly
provided Contributions to, or to receive any distributions from, the Company except as
provided in this Agreement. No Member shall be entitled to demand or receive interest on
its Capital Contributions or on any balance in its Capital Account. Managing Members shall
have priority over any other Members with respect to the return of any Capital
Contribution.
(b) No Member may resign, withdraw or otherwise dissociate from the Company
without the consent of the other Members prior to the dissolution, liquidation and winding
up of the Company as herein provided, and any such resignation or withdrawal or attempt
to so resign or withdraw shall be wrongful. Any Member purporting to resign or withdraw
in violation of this provision shall have no right to demand a distribution of his Capital
Account balance or return of all or any portion of his Capital Contributions prior to the
dissolution of the Company. Furthermore, notwithstanding anything contained herein or in
the Act to the contrary, the Company may, but at no time shall be obligated to, purchase
the Membership Interest of a Member who resigns, withdraws or disassociates.
Section 3.03. Capital Accounts.
(a) A Capital Account shall be established for each Member and shall be maintained in
accordance with the capital account maintenance rules set forth in Treasury Regulations
Section 1.704-l(b)(2)(iv). In general, a Member’s Capital Account shall be credited with the
cash and the fair market value of property contributed by such Member to the Company
(net of liabilities secured by such contributed property that the Company is considered to
assume or take subject to under Code Section 752), and his distributive share of
the Company’s income and gain (or items thereof), including income and gain exempt from
tax and income and gain described in Treasury Regulations Section 1.704-1(b)(2)(iv)(g),
but excluding income and gain described in Treasury Regulations Section 1.704-1(b)(4)(i);
and shall be debited with the cash and the fair market value of property distributed to him
(net of liabilities secured by such distributed property and that such Member is considered
to assume or take subject to under Code Section 752), his distributive share of allocations
of Company loss and deduction (or items thereof), including loss and deduction described
in Treasury Regulations Section 1. 704-1 (b)(2)(iv)(g) but excluding items described in
Treasury Regulations Section 1.704-1(b)(4)(i) or (b)(4)(iii), and his distributive share of
expenditures of the Company described in Code Section 705(a)(2)(B). Each Member shall
have a single Capital Account reflecting his entire Membership Interest in the Company,
regardless of the time or times and the manner in which such Membership Interest was
acquired.
(b) A transferee of a Membership Interest will succeed to the Capital Account (or such
portion thereof) relating to the transferred Membership Interest, and there shall be
no adjustment to the Capital Accounts as a result of such transfer except as otherwise
required under Treasury Regulation Section 1.704-1. If the transfer causes a
termination of the Company, the Capital Account of the transferee and the other Members
of the terminated Company shall carry over to the new Company that is formed as a result
of the termination of the Company. Moreover, the deemed distribution and contribution
of assets of the terminated Company pursuant to Treasury Regulations Section 1.708-
1(b)(I)(iv) are disregarded for purposes of determining the effect of the transfer on the
Capital Accounts of the Members.
Section 3.04. Additional Funds. In the event the Members reasonably determine, at any time,
that the Company requires funds in addition to those provided pursuant to Sections 3.01 and 3.05
hereof, the Company shall have the right to borrow additional funds from a Members or, subject
to the terms of this Agreement, a third-party lender upon such terms and conditions as the
Company and such Members or third-party lender deem reasonable and appropriate under
the circumstances; provided, however, that no Member shall be required to loan funds to the
Company. Any loan made by a Member pursuant to this Section 3.04 (“Member Loan”) shall not
be treated as a Capital Contribution nor increase the Capital Account of any Members
engaging in the transaction.
Section 3.05. Additional Capital Contributions. Additional Capital Contributions shall be made by
the Members from time to time whenever a Majority inof Interest of the Members determine that
such additional Capital Contributions are necessary or desirable to accomplish the purposes and
objectives of the Company (“Additional Capital Contributions”). Additional Capital Contributions
shall be payable by each of the Members on a pro-rata basis in accordance with their Percentage
Interests in proportion to those who contribute. Those who do not contribute in accordance with
this Section 3.05 will have their Membership Interest diluted in proportion with their initial Capital
Contribution. In the event that any Additional Capital Contribution is paid in a form other than
cash, such non-cash Additional Capital Contribution shall be valued at its fair market value as
agreed upon by a Majority in Interest of the Members.
Section 3.06. Third-Party Beneficiaries. The provisions of this Article III are not intended to be
for the benefit of and shall not confer any rights on any creditor or other Person (other than a
Member in such Member’s capacity as a Member) to whom any debts, liabilities or obligations are
owed by the Company or any of the Members.
ARTICLE IV
PROFIT AND LOSS
Section 4.01. Allocations of Profit and Loss.
(a) Profit and Loss shall be allocated among the Members in the following order:
i. First, if there is a Member loan with an outstanding balance, then in
accordance with the terms set forth in the Member Loan;
ii. Second, if there is no remaining Member Loan, then if a Profit or Loss to each
Member in accordance with their Percentage Interest.
(b) Notwithstanding the provisions of Section 4.01(a) above, if any Member
contributes property to the Company which, on the date such contribution is made,
has a Fair Market Value either in excess of or lower than the Adjusted Basis of the
property, any subsequent gain or loss on the sale of such property shall be allocated
to the contributing Members up to an amount equal to the built-in gain or built-in
loss attributable to such property on the date of such contribution as required under
the applicable provisions of the Code. The term “built-in gain” shall mean
the excess of the fair market value of the property over the tax basis of the property
and the term “built-in loss” shall mean the excess of the tax basis of the property
over the fair market value of the property.
(c) Minimum Annual Return After 24 Months: Each Member shall receive a minimum
24% annual return on its capital investment after 24 months (2 years) of operating,
which shall be distributed in accordance with all other applicable provisions of this
Operating Agreement.
Section 4.02. Transfers. In the event that a Membership Interest is transferred during any year,
the Company shall determine whether to prorate each item of income, gain, loss, credit or
deduction according to the portion of the year for which a Member was a Member of the Company
or whether to close the books on an interim basis and divide such fiscal year into two or more
segments. However, notwithstanding the preceding sentence, gain or loss from the disposition of
any assets of the Company, whether at liquidation or otherwise, shall be allocated only to those
Members which own Membership Interests on the date the event giving rise to such gain or loss
occurs.
Section 4.03. Additional Allocations.
(a) Notwithstanding any other provision of this Article IV, in the event any Member
unexpectedly receives an adjustment, allocation or distribution described in clause (4), (5)
or (6) of Treasury Regulation Section 1.704-l (b)(2)(ii)(d) that results in such Members
having a negative balance in its Capital Account at the close of such year in excess of the
amount that it is required to restore on a liquidation of the Company at the close of such
year, or for any other reason has a deficit Capital Account balance in excess of
such amount, such Members shall be allocated Profit (and other income and gain) in an
amount and manner sufficient to eliminate such excess as promptly as possible. This
Section4.03(a) is intended to constitute a “qualified income offset” within the meaning of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(3).
(b) Notwithstanding the provisions of Section 4.01 hereof, if the applicable provisions
of the Code and Treasury Regulations require that any item of Profit or Loss be allocated
in a manner different than as provided in Section 4.01 hereof, then the allocation shall be
made in accordance with the applicable Code or Treasury Regulation provision to
the extent, and only to the extent, so required.
Section 4.04. Negative Capital Accounts. In no event shall any Member be obligated to pay to
the Company or any creditor of the Company any deficit balance in its Capital Account.
ARTICLE V
DISTRIBUTIONS AND OTHER PAYMENTS TO MEMBERS
Section 5.01. Distributable Funds. The Company shall distribute its Distributable Funds at any
time a Member requests so in writing, however, the amount must first be agreed to by a Majority
In Interest of the Members. Furthermore, the Distributable Funds must be distributed as follows:
First, an amount of cash necessary to allow the Members to pay any federal, state and local income
taxes payable by each Member on the items of taxable income of the Company allocable to such
Members for such fiscal year assuming that all Members are subject to the highest effective tax
rates applicable to individuals (“Tax Distribution Amount”), which amount shall be paid in four
installments on or before the first day of April, June, September, and January of each year;
provided, however, that if the amount of Distributable Funds is insufficient to pay each Member’s
Tax Distribution Amount, the amount available shall be paid to the Members in accordance with
their Percentage Interests. Second, as agreed upon by approval from the Majority in Interest of the
Members of the Company.
Section 5.02. Dissolution. Notwithstanding Section 5.01 hereof, upon dissolution of the
Company all distributions of Distributable Funds shall be made in accordance with Section 9.07
hereof.
Section 5.03. Withholding. All amounts withheld pursuant to the Code or any provision of state
or local law with respect to any distribution of Distributable Funds shall be treated as amounts
distributed to holders of Membership Interests for all purposes of this Agreement.
Section 5.04. Division Among Members. If there is a change in a Member’s Membership Interest
in the company during the fiscal year, any distributions thereafter shall be made so as to take into
account the varying Membership Interests of the Members during the period to which the
distribution relates in any manner chosen by the Members that is provided in Code Section 706(d)
and the Treasury Regulations thereunder.
ARTICLE VI
MANAGEMENT: MANAGING MEMBERS
Section 6.01. Management by Members. The Members who have a minimum of thirty percent
(30%) membership interest in the Company and are Voting Members (“Managing Member”),
within the authority granted by the Act and the terms of this Agreement shall have the complete
power and authority to manage and operate the Company. and make all decisions affecting its
business and affairs. For the purposes of clarification, only Managing Members as defined in this
Agreement can take any action whatsoever that would affect the Company’s business and affairs.
Except as otherwise provided in this Agreement, all decisions and documents relating to
the management and operation of the Company shall be made and executed by a duly authorized
Managing Member(s). Third parties dealing with the Company shall be entitled to rely
conclusively upon the power and authority of a duly authorized Managing Member(s) to manage
and operate the business and affairs of the Company. Whenever in this Agreement reference is
made to the decision, consent, approval, judgment, or action of the Members, unless otherwise
expressly provided in this Agreement, such decision, consent, approval, judgment, or action shall
mean a Managing Member. Each Managing Member shall have the right to see all documents
from any and all parties that are sent over to the Company, a Member or Principal that relate to
the Company. If it is determined that a Managing Member or Managing Members shall be
compensated for their management of the Company, the combined salary payable to all the
Managing Members shall in no way exceed $600,000.00.
Section 6.02. Limitation upon Managing Members Authority. Without first obtaining consent
from sixty percent (60%) of the Membership In Interest of the Voting Members, the duly
authorized a Managing Member (s) shall not:
(a) Do any act in contravention of this Agreement;
(b) Do any act that would make it impossible to carry on the ordinary business of the
Company.
(c) Require any member to contribute to the capital of the Company except as
expressly provided in this Agreement;
(d) Spend more than $5,000.00 Dollars of the Company’s cash, or any other liquid
assets during any given month.
The foregoing limitations are in addition to, and do not supersede any other limitations of
prohibitions expressly imposed upon the Members under this Agreement or by the Act. For the
purpose of clarification, none of the above Section 6.02 can be completed until the Vesting Event
has occurred.
Section 6.03. Additional Members. Additional Persons may be admitted to the Company
as Members and Membership Interests may be created and issued to those Persons and to existing
Members upon the approval of the Members holding a Majority of Interest of the Company, and
such Persons shall be admitted upon such terms and conditions as the Majority in Interest of the
Members may determine, consistent with this Agreement and any applicable provision of law.
Section 6.04. Majority in Interest. Except as otherwise expressly provided in the Act or in this
Agreement, whenever any matter is required or allowed to be decided, determined or approved by
the Members under the Act or this Agreement, such matters shall be considered decided,
determined or approved upon the affirmative vote in excess of sixty (60%) of the Percentage
Interests of all Voting Members entitled to vote on such matter (“Majority In Interest”). Until
admitted as a Substituted Member, Assignees shall not be considered Members entitled to vote for
the purpose of determining a Majority in Interest.
Section 6.05. Management Rights. All Voting Members shall be entitled to vote on any matter
submitted to a vote of the Members. Except as otherwise provided in the Act or this Agreement,
the powers of the Company shall be under the authority of, and the business and affairs of the
Company shall be managed under the direction of the Managing Members, and shall be allowed to
do the following:
(a) Enter into, make and perform contracts, agreements and other undertakings binding
the Company that may be necessary, appropriate or advisable in furtherance of the purposes
of the Company and making all decisions and waivers thereunder;
(b) Maintain the assets of the Company in good condition and repair; Collecting sums
due the Company;
(c) To the extent that funds of the Company are available therefore, paying debts and
obligations of the Company;
(d) Obtaining insurance for the Company;
(e) Compromise claims by or against the Company;
(f) Engage in any kind of activity and performing and carrying out contracts of any
kind necessary to, or in connection with, or incidental to the accomplishment of the
purposes of the Company, as may be lawfully carried on or performed by a limited liability
company under the laws of the State of Delaware.
Section 6.06. Actions requiring a Majority in Interest of the Members. A Majority of Interest of
the Members shall be required for the following actions:
(a) to permit a Members to withdraw from the Company;
(b) to sell additional Membership Interests; and
(c) to continue the Company after an event set forth in Section 9.02.
Section 6.07. Withdrawal and Retirement. A Member does not have the right or power
to withdraw or retire from the Company as a Member without approval of a Majority of Interest of
the Members.
Section 6.08. Meetings of Members.
(a) The Members shall hold at least one meeting per Fiscal Year, during the month of
April, unless otherwise determined by the Members from time to time, for the purposes of
(i) reviewing the business and affairs of the Company, and (ii) conducting any other lawful
business.
(b) Any Member may call a special meeting at any time and for any purpose.
(c) All meetings of the Members shall be held at the principal place of business of the
Company or at such other place which shall be agreed to by a Managing Member.
(d) The holders of Membership Interests in excess of fifty percent (50%) represented at
a meeting shall constitute a quorum. The affirmative vote of a Majority In Interest at a
meeting of Members at which a quorum is present shall be the act of the Members.
Section 6.09. Action by Written Consent or Telephone Conference.
(a) Any action required or permitted to be taken at any meeting of Members may be
taken without a meeting and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holder or holders of not less than the minimum
Membership Interests that would be necessary to take such action at a meeting at which the
holders of all Membership Interests entitled to vote on the action were present and voted.
Delivery shall be by hand or certified or registered mail, return receipt requested. A
telegram, telex, cablegram or similar transmission by a Member, or a photographic,
photostatic, facsimile or similar reproduction of a writing signed by a Member, shall be
regarded as signed by the Members for purpose of this Section.
(b) Members entitled to vote may participate in and hold meetings by conference
telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting., except where a Person
participates in the meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE VII
LIABILITY, EXPENSES AND INDEMNIFICATION
Section 7 .01. Liability of Members. No Member shall be liable, responsible or accountable in
damages or otherwise to the Company or any other Members for any action taken or failure to act
on behalf of the Company within the scope of authority conferred upon such Members, unless such
action or omission was performed or omitted fraudulently or in bad faith, or constituted wanton
and willful misconduct or gross negligence or recklessness, or was in violation of the Act. No
Member shall be liable for the debts, liabilities, contracts or any other obligations of the Company.
No Member shall have any personal liability for the repayment of the Capital Contribution of any
other Members. Any obligation of a Members to return or repay funds to the Company hereunder
or under the Act shall be the obligation of such Members and not of the remaining Members. Upon
dissolution and termination of the Company, the Members shall not be obligated to contribute to
the Company any amount of any deficit in their Capital Accounts.
Section 7 .02. Liability of the Company’s Members and Agents . The Members and
the Company’s other agents shall not be liable, responsible or accountable in damages or otherwise
to the Company or any Members for any action taken or failure to act on behalf of the Company
within the scope of authority conferred upon them, unless such action or omission was performed
or omitted fraudulently or in bad faith, or constituted wanton and willful misconduct or
gross negligence or recklessness. If the company is named in an action or proceeding due to an
action or omission by a Member which was performed or omitted fraudulently or in bad
faith, or constituted wanton and willful misconduct or gross negligence or recklessness, then the
Company will pay the settlement/deductible and this amount will be withheld debited against their
Capital Account and withheld from their future distributions.
Section 7.03. Indemnification of Members and Agents. The Company and its successors and
assigns shall indemnify the Members and the agents of the Company (collectively, the
“Indemnified Parties”) from and against any losses, claims, demands, costs, damages, liabilities,
expenses of any nature (including reasonable attorneys’ fees and disbursements), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which the Indemnified
Party was involved or may be involved, or threatened to be involved, as a party or otherwise, arising
out of or incidental to the business of the Company, to the fullest extent permitted by law. The
indemnification shall continue as to a Person who/that has ceased to be a Member or agent of the
Company, and shall inure to the benefit of the heirs, successors and/or personal representatives of
such former Members or agent.
Section 7.04. Advance Payment of Expenses. The Company shall pay expenses incurred by an
Indemnified Party in defending a civil or criminal action, suit or proceeding as they are incurred in
advance of the final disposition of the action, suit or proceeding, if it receives an undertaking by or
on behalf of the Indemnified Party to repay any portion of amounts advanced under this Section in
excess of the amount ultimately determined to be payable by the Company to the Indemnified
Party under Section 7.03 above. This provision shall not affect any other right of any
Person for advancement of expenses under any other provision of this Agreement, any
other agreement, or otherwise by law.
Section 7.05. No Member Liability. Any indemnification under this Article VII shall be satisfied
solely out of the assets of the Company. No Member shall be subject to personal liability
or required to fund or to cause to be funded any obligation by reason of these
indemnification provisions.
ARTICLE VIII
TRANSFER OF MEMBERSHIP INTERESTS
Section 8.01. Lack of Transferability of Membership Interests.
(a) Except as otherwise permitted by this Agreement, during the term of this
Agreement, no Member shall, directly or indirectly, voluntarily or involuntarily, transfer,
sell, assign, pledge, hypothecate, give, encumber or otherwise dispose of (“Transfer”) all or
any portion of its Membership Interest in the Company without the express prior written
consent of a Majority in Interest of the Members; provided, however, that each Member
shall have the right to Transfer its Membership-Interest to any Affiliate and such Affiliate
shall become a Substituted Members with respect to such transferred Membership Interest.
Any Transfer in violation of this Section 8.01 shall be void in all respects, and
such Members shall be liable to the Company and the other Members for all damages that
they may sustain as a result of such attempted or suffered Transfer. To effectuate the
purpose of this Article VIII, each Member agrees that to the extent such Membership
Interest is at any time held by a partnership, corporation, trust or other entity, that Members
will seek to Transfer such Membership Interest only directly and in the manner
contemplated in this Article VIII, and that no Transfer or other disposition of any stock or
partnership interest or other beneficial interest in any entity that holds such
Membership Interest will be effected, directly or indirectly, without the written consent
of a Managing Member, and any attempt to do so shall be void. Each Member hereby
acknowledges the reasonableness of the restrictions on sale and gift of Membership
Interests imposed by this Agreement in view of the Company’s purposes and the
relationship of the Members. Accordingly, the restrictions on sale and gift contained herein
shall be specifically enforceable.
(b) Each Member hereby agrees not to petition any court for the involuntary dissolution
of the Company in the event that other Members refuse to approve the Transfer of
Membership Interests pursuant to Section 8.01(a) hereof.
Section 8.02. Substituted Members.
(a) No Assignee shall become a Substituted Members or have any of the rights of a
Member, except that an Assignee shall be entitled to receive the share of Profit and Loss of
the Company, distributions of Distributable Funds, and any other payments to which its
transferring Members would have been entitled. The Assignee of a Member’s Membership
Interest, or any portion thereof, may be admitted to the Company as a Substituted Members
in the place and stead of, or together with, as the case may be, the Member who
has Transferred all or part of his Membership Interest upon satisfaction of all of the
following conditions:
(i) The assignor and the Assignee must execute and deliver any
instruments as the Members may deem reasonably necessary or desirable to
effect such admission, including acceptance of and agreement by the
Assignee to be bound by the provisions of this Agreement;
(ii) Except in the case of a transfer or assignment permitted under
Section 8.01(a) a Managing Member must provide written consent to such
substitution, the granting or denial of which shall be within the sole
discretion of each Member;
(iii) such transfer shall not cause:
(A) a violation of the Securities Act of 1933, as amended from
time to time, or any other applicable Federal or state securities laws;
or
(B) a breach or violation of or an event of default under, or give
rise to a right to accelerate, any obligation of the Company; or
(C) the Company, directly or indirectly, (y) to be classified as a
Person other than a partnership for purposes of the Code or (z) to be
treated as a “publicly traded partnership” within the meaning of
Code Section 7704; and
(iv) there shall have been delivered to the Company an opinion of
reputable counsel as to the matters set forth in subparagraph (iii) above.
(b) After all of the foregoing conditions have been fulfilled and the Assignee has been
admitted to the Company as a Member, this Agreement shall be amended to reflect
the Assignee’s admission to the Company as a Member.
Section 8.03. Matters as it relates to the use of illegal substances or alcohol.
(a) The following applies to all Members:
i. While any Member is admitted to the Company, they will refrain from the use
of illegal substances. The Members agree that this restriction is material and
that the Members have relied on this commitment before agreeing to form
the Company.
ii. At any point during the term of the Company, either Member can require the
other one to prove that their abstinence from illegal drugs. Once a Member
provides the other Member with a request to prove their abstinence, they will
have 72 hours to go to a clinic of the requesting parties choosing, which shall
not be more than fifty miles from the Company Address. Each Member agrees
to only request the other Member get tested in good faith and should any
Member be found to be abusing this process, that Member will lose his right for
a year to request the other Member be tested. The Members agree that after a
positive test result, that Member who tested positive cannot be requested
to test again until after a month has passed from the positive result.
iii. Should any Member test positive more than three (3) times during their
Membership in the Company, they will be obligated to sell their Membership
Interest back to the Company in accordance with the process set forth in Section
9.06.
Section 8.04. Matters as it relates to conviction for a healthcare related conviction and sexual
encounters with clients.
(a) The following applies to all Members:
i. While any Member is admitted to the Company, they shall refrain from
committing any healthcare related crime or having a sexual encounter and/or
sexual, intimate, or social relationship with any client of the business.
The Members agree that these restrictions are material and that the Members
have relied upon this commitment both in the past and as to any new Member
currently or prospectively.
ii. Termination of Membership For Misconduct. Notwithstanding any other
provision in this Agreement to the contrary, in the event that a Member has
committed conduct which is against the Goals and Purposes of the Company,
including financial misconduct against the Company, criminal or sexual
misconduct or an intimate, social, personal and/or sexual relationship with
any client of the business, or a healthcare related crime or misconduct, that
Member shall be removed as a member or owner, and/or as an agent or
employee of the Company, immediately, without advance notice, and the
original investment of that Member shall be returned in its original amount,
without offset or deduction, and without any increase or adjustment in value
on any basis and for any time period, within ten (10) days of the Termination.
ARTICLE IX
DISSOLUTION AND WINDING UP AFFAIRS
Section 9.01. Term. Unless the Company is earlier terminated as provided in Section 9.02, the term
of the Company shall be perpetual.
Section 9 .02. Dissolution. No act, occurrence, event or circumstance shall cause or result in the
dissolution of the Company, except that the Company shall dissolve upon the occurrence of anyone
or more of the following events:
(a) The sale of all or substantially all the operating assets and business of the Company; or
(b) An agreement in writing by all the Members.
Section 9.03. Requirement to Purchase Incompetent or Bankrupt Member’s Membership
Interest. Upon the incompetence or bankruptcy of a Member, the Company shall purchase all, but
not less than all, of the Membership Interest of such Members over a period of one year following
the date of determination and upon the terms and conditions set forth in this Section 9.06. In the
event of death, the company has decided to assign Heirs which are set forth in this Section 9.06.
Section 9.04. Sale of Membership Interest. A Member may at any time make an offer to sell his
Membership Interest by notifying all other Members (“Other Members”) and the Company
in writing (the “Initiation Notice”) of the exercise of this right. Within 60 days of the giving of the
Initiation Notice, the Other Members, by majority vote, must elect to (i) dissolve the Company in
accordance with the procedures of Section 9.07; (ii) purchase the Initiating Member’s Membership
Interest, collectively or individually, in any combination therewith; or (iii) compel the Company to
purchase all, but not less than all, of the Initiating Member’s Membership Interest in accordance
with subsection 9.06. If no response is given within the 60-day period, the Other Members shall be
deemed to have elected option (iii). If the Members can’t agree to a purchase price, then the value
shall be determined in accordance with Section 9.06. the Company shall have a period of two years
to pay the purchase price to the Selling Member. Under no circumstances may a Member sell his
Membership Interests to anyone but the Company or its Members. The Company shall have first
right of Refusal over the Other Members to purchase the Membership Interest and the Selling
Member shall not be allowed to vote to determine which options set forth in this Section
9.04 the Company will choose.
Section 9.05. Conversion to Corporation. If, in connection with the exercise of the right under
Section 9.04 or an Initial Public Offering, the Majority In Interest of the Members desire to change
the federal income tax treatment of the Company from that of a “partnership” to that of
a “corporation” (within the meaning of Treas. Reg. § 301.7701-2(b)), then the Members must first
discuss: the terms and conditions of the bona fide third party offer or the initial public offering, (b)
the plan for changing the federal income tax treatment of the Company, and (c) a obtain a short
written statement from a tax professional as to why changing the income tax treatment of the
Company will be taken as a part of such transaction. Following such notice and a majority vote or
consent by the Members, the Members shall be authorized to take all actions on behalf of the
Company and the Members to file an election by the Company with the Internal Revenue Service
that will cause the Company to be treated for federal income tax purposes as a corporation, and/or
cause the Company to be reorganized pursuant to a plan that results in the Members owning the
Company (or its successor that owns substantially all of the assets and liabilities of the Company)
in a form that is treated as a corporation for federal income tax purposes.
Section 9.06. Valuation. Upon incompetence, bankruptcy or request of a Member (the “Selling
Members”), the Company shall purchase all, but not less than all, of the Members Interest of the
Selling Members upon the terms and conditions set forth herewith. The Company and the Selling
Members or his legal representative shall each employ, at his own expense, a qualified appraiser
(an Appraiser”) experienced in appraising entities similar in kind to the Company to appraise the
fair market value of the Company (the “Value”) to be used in determining the purchase price of the
Membership Interest subject to purchase. Each Appraiser shall submit its appraisal of the value of
the Company within sixty (60) days (the “First Appraisal Period”) following the end of the
Negotiation Period and if the values of the two appraisals are within twenty percent (20%) of each
other, the Value of the Company shall be the average of the values contained in the two appraisals.
If the values contained in the two appraisals are more than twenty (20%) apart, a third Appraiser
represented by Wachovia Bank, or if not available then a third Appraiser chosen by Wachovia,
shall be employed within ten (10) days following the delivery of the first two appraisals and the
third Appraiser shall determine the value of the Company within forty-five (45) days after the date
of his employment as the third Appraiser. The third Appraiser shall furnish a copy of his appraisal
of the value to the Company and to the Selling Members or his legal’ representative. The cost of
the third Appraisal shall be divided equally between the Company and the Selling Members. If a
third appraisal is obtained, the Value of the Company shall be the value determined by the third
Appraiser. After the Value of the Company is determined, the Purchase Price for the
Membership Interest shall be equal to the percentage interest in the Company allocable to the said
Membership Interest subject to purchase multiplied by the sum of the Value of the Company. The
closing of the purchase and sale of the Membership Interest shall take place at the office of the
Company on a date convenient to the Company and the Selling Members or his legal representative
within thirty (30) days following the date the Value of the Company is determined. The Purchase
Price shall be payable by an installment promissory note of the Company payable to the Selling
Members (the “Note”). The Note shall provide for the payment of the said balance of the Purchase
Price over a five (5) year period in equal monthly installments including principal and interest at a
floating rate equal to the prime rate announced from time to time by the Wall Street Journal (or, if
not available, any similar publication). The Note shall further provide that the first installment
payment shall be due and payable on the tenth (l0th) day of the second calendar month following
the calendar month in which the closing occurs. The Note shall also provide for (i) prepayments,
in whole or in part, at any time and from time to time, without penalty, with all prepayments to be
applied first to accrued and unpaid interest and then to principal installments in inverse order of
their maturity dates, (ii) an acceleration of the unpaid principal balance of the Note plus accrued
interest upon the failure to make an installment payment within ten (10) days following its due date
and (iii) the payment of costs and expenses, including reasonable fees of counsel, in seeking to
collect the amounts payable under the Note. The Selling Members or his legal representative shall
execute whatever legal documents may be requested by counsel for the Company to transfer legal
and equitable title to the said Membership Interest free and clear of all liens and
encumbrances, which shall be delivered to the said Company at the closing against delivery of the
consideration payable for the Membership Interest as provided for herein. The sale of the
Membership Interest shall have no effect on the right of the seller or other person entitled thereto
to receive the allocable portion of the Profit or Loss distribution of Distributable Funds attributable
to the Membership Interest sold for the taxable year in which the sale occurs as provided in Section
4.1 above. Any proceeds resulting from a key-man or similar insurance policy shall not
be calculated as part of the Value of the Company.
In the event of death, the Company has chosen to assign Heirs to inherit the respective members’
shares The Members may make amendments to the below selected heirs at any time in writting .
Breakdown of heirs is as follows:
C Mackey Inc, by and through its President Colin Mackey chooses to assign their shares in full to
Keriann C Mackey, date of birth 09/28/1994.
CTE Holdings Company LLC, by and through its Managing Member Dustin Johnson, chooses to
assign their shares in full to Natalia Stathi, date of birth 01/19/1993, and Kristen Johnson, date of
birth 09/08/1994.
Michael Cioffi chooses to assign their shares in full to .
Ryan Korchick chooses to assign their shares in full to
Brian Morgan chooses to assign their shares in full to .
Barnhorn Capital chooses to assign their shares in full to .
Section 9.07. Winding Up. Upon dissolution of the Company, the Members shall proceed to
wind up the affairs of the Company and to liquidate the remaining assets of the Company;
provided, however, that the Members may select a liquidator to wind up the affairs of the Company
and to liquidate the remaining assets. The Person or Persons actually conducting such winding up
and liquidation shall hereinafter be referred to in this Agreement as the “Liquidating Trustee.” The
Liquidating Trustee shall have and may exercise, without further authorization or consent of any
of the parties hereto, all the powers necessary or desirable in the good faith judgment of
the Liquidating Trustee to carry out the duties and functions of the Liquidating Trustee hereunder
(including the establishment of reserves for liabilities that are contingent or uncertain in amount)
for and during such period of time as shall be reasonably required in the good faith judgment of
the Liquidating Trustee to complete the winding up and liquidation of the Company as provided
for herein. Upon complete liquidation of the assets and compliance with the distribution plan set
forth in Section 9.08, the existence of the Company shall cease and the Liquidating Trustee shall
execute, acknowledge and cause to be filed all certificates evidencing dissolution and termination
of the Company.
Section 9.08. Distributions upon Dissolution.
(a) The Liquidating Trustee shall cause a full accounting of the assets and liabilities of
the Company to be taken and shall cause the assets to be liquidated and the business of the
Company to be wound up as promptly as possible. To the extent permitted by the Act, the
proceeds of such liquidation shall be applied in the following order of priority:
(i) First, to creditors in satisfaction of liabilities of the Company (whether by
payment or by making of reasonable provision for payment) other than liabilities
for distribution to Members in respect of their respective Capital Accounts or in
respect of Members Loans;
(ii) Second, to the repayment of the principal balance of, and any and all
accrued interest on, Member Loans and any other amounts due to Members, other
than in respect of their Capital Accounts;
(iii) Third, to the Members having positive balances in their respective Capital
Accounts pro rata and to the extent thereof (determined after giving effect to all
allocations required to be made under Article IV) and;
(iv) Fourth, to the Members in accordance with their Percentage Interests.
(b) If upon termination and liquidation of the Company, the Liquidating Trustee
determines that (i) an immediate sale of part or all the assets would cause undue loss to
the
Members and (ii) the assets would be readily susceptible to division for distribution in kind
to the Members, then, to that extent (but subject to the order of priorities in Section 9.08(a)),
the Liquidating Trustee may distribute such assets to the Members in kind; provided that
all Members consent to such action.
Section 9.09. Orderly Liquidation. A reasonable time shall be allowed for the orderly liquidation
of the assets of the Company and the discharge of liabilities so as to minimize the losses normally
attendant upon liquidation.
Section 9.10. Articles 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 Members, Articles of Dissolution shall be executed
in duplicate and verified by the Person signing the Articles, which Articles shall set forth
the information required by the Act. Duplicate originals of such Articles of Dissolution shall
be delivered to the Delaware Secretary of State. Upon filing of the Articles of Dissolution,
the existence of the Company shall cease, except for the purpose of suits, other proceedings
and appropriate action as provided in the Act. The Members shall have authority to distribute any
Company property discovered after dissolution and take such other action as may be necessary on
behalf of and in the name of the Company.
Section 9.11. Claims of Members. The Members and former Members shall look solely to the
Company’s assets for the return of their capital contributions, and if the assets of the Company
remaining after payment of or due provision for all debts, liabilities and obligations of the
Company are insufficient to return such capital contributions, the Members and former Members
shall have no recourse against the Company or any other Members. Furthermore, if upon
liquidation any Member has a negative balance in its Capital Account such Members shall have no
obligation to make any Capital Contribution and the negative balance of such Member’s Capital
Account shall not be considered a debt owed by such Members to the Company or to any other
Person for any purpose whatsoever.
ARTICLE X
ACCOUNTING AND REPORTS
Section 10.01. Inspection by Members. Each Member shall have the right, upon written demand,
at reasonable times during usual business hours, to inspect the assets of the Company, to request
and obtain data relating to the financial condition of the Company, to obtain any and all reports as
requested by such Members which shall then be prepared by the Company relating to the business
and operations of the Company, to observe the Company’s operations and to examine, audit and
make copies of the books of account and other books and records of the Company, other books and
records relating to the reserves, assets and expenses of the Company and expenditures made by the
Members and agents of the Company on behalf of the Company and to obtain any such other
information regarding the affairs of the Company. Such right may be exercised through any agent
or employee of a Member designated in writing by it or by an independent certified public
accountant, engineer, attorney or other consultant so designated. The Members making the request
shall bear all expenses incurred in any inspection, audit or examination made at such Member’s
behest.
Section 10.02. Tax Matters Members. CTE Holdings Company, by and through its Managing
Member, Dustin Johnson, is hereby designated as the “tax matters partner” for purposes of Code
Section 6231(a)(7) with respect to all taxable years of the Company.
ARTICLE XI
CONFIDENTIALITY AND NON-USE
Section 11.01. Restrictions on Disclosure. Each of the Members understands and acknowledges
that, by virtue of his affiliation with the Company, he may have access to certain Confidential
Information, the disclosure of which may damage the Company or its Affiliates. Each Member
covenants and agrees for itself and its respective Principals, Affiliates and its and their respective
successors and assigns that all Confidential Information (as defined in Section 13.04) is and shall
remain the sole property of the Company, and that it shall not, unless authorized in writing by the
Company, disclose to any Person and shall hold in the strictest of confidence any Confidential or
proprietary information, whether of a technical, financial, commercial or other nature, received
directly or indirectly from the Company or any other Members, at all times and for a five (5) year
period of time after the Member’s affiliation with the Company terminates, except:
(a) to employees, attorneys, accountants and other professionals of such Members to
whom, and only to the extent that, such disclosure is necessary in furtherance of
the purposes of this Agreement; provided, however, that the disclosing party shall be
responsible for ensuring that such Persons comply with the confidentiality and non-use
undertakings in this Article XI and shall take reasonable precautions to ensure such
compliance whether by agreement, establishment of internal regulations, or otherwise;
(b) to the extent required by Applicable Law, but in the event of proposed disclosure,
the Members from which disclosure is required or sought shall seek the assistance of the
other Members to protect information in which any of such Members has an interest to the
maximum extent achievable.
Section 11.02. Restrictions on Use. Each of the Members and Principals covenant and agrees for
itself and its respective Affiliates and its and their respective successors and assigns that it shall
not use any proprietary or Confidential Information received from the Company or the
other Members for his own benefit or that of any third party other then the Company or its
Affiliates, except as specifically provided in this Agreement or as otherwise expressly authorized
in writing by the Company and the Members.
Section 11.03. Violations. The Members and Principals agree that any violation of the obligations
of confidentiality and non-use set forth herein would be likely to be highly injurious to
the Company. The Members consent and agree that if a Members violates any of the provisions. of
this Article XI, the Company and the remaining Members shall be entitled, in addition to any other
rights and remedies that they may have, including money damages, to apply to any court of law or
equity of competent jurisdiction for specific performance and for injunctive or other relief in order
to enforce or prevent any continuing violation of the provisions hereof.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF MEMBERS
Section 12.01. Authority. Each Member hereby represents and warrants, each on its own behalf
only, that the execution and delivery by such Members of this Agreement and all related
agreements and the performance of such Member’s obligations hereunder: (a) are within
such Member’s power; (b) are not in contravention of the terms of any indenture, agreement
or undertaking to which such Member is a party or by which such Member or any of its property
is bound; (c) do not, as of the date of execution hereof, require the consent, registration or approval
of or with any Person; and (d) do not contravene any contractual restriction or restriction of any
governmental authority binding upon such Member, or any statute, regulation, judgment, order,
writ, decree, or injunction currently applicable to such Member. This Agreement constitutes a duly
authorized, valid and binding agreement of such Member enforceable against it in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors’ rights and to general equitable principles.
ARTICLE XIII
[Intentionally left blank]
ARTICLE XIV
AMENDMENT PROCEDURE
Section 14.01. Amendments. Amendments to this Agreement may be proposed by any Member
from time to time. Any proposed amendment to this Agreement will be adopted and effective only
if it is approved in writing by a Majority in Interest of the each Voting Members to this Operating
Agreement.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Title to Company Property. All assets shall be deemed to be owned by the
Company as an entity, and no Member, individually, shall have any ownership of such property.
The Company shall hold all assets in its own name.
Section 15.02. Waiver of Partition and Dissolution Right. To the extent permitted by law, each
Member hereby waives its right to bring or maintain in any court an action for partition pertaining
to any assets of the Company or an action seeking dissolution of the Company, unless the Members
have consented to such dissolution pursuant to Section 9.02.
Section 15.03. Notices. All notices, consents, requests, approvals and other communications
provided for herein shall be validly given, if in writing and delivered personally; by confirmed
facsimile transmission or sent by registered mail or nationally recognized air courier service,
postage prepaid, to the addresses of the Company and Members as set forth in the Company’s
records or to such other address as any party may, from time to time, designate in a written notice
given in a like manner, and any such notice or communication shall be deemed to have been given
on the fifth business day after the date so sent, unless actually received earlier.
Section 15.04. GOVERNING LAW. THE TERMS OF THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE AND, SPECIFICALLY, THE ACT.
Section 15.05. Captions. The captions and section headings appearing in this Agreement are
included solely for convenience of reference and are not intended to affect the interpretation of any
provision of this Agreement.
Section 15.06. Further Assurances. Each Member shall from time to time execute such deeds,
assignments, endorsements, evidences of transfer and other instruments and documents and shall
give such further assurances as shall be necessary to perform its obligations hereunder.
Section 15.07. Severability. In the event any provision of this Agreement shall be held to
be invalid, illegal or unenforceable in any respect by a court, arbitration tribunal or administrative
body of competent jurisdiction, then, unless otherwise agreed, this Agreement shall continue in full
force and effect except for such provision, which shall be deemed to be excised from this
Agreement ab initio. In such event, the Parties agree to use their commercially reasonable best
efforts to agree on substitute provisions which will achieve as closely as possible the same
economic effects for the Parties as the invalid provision(s) without being invalid under applicable
law.
Section 15.08. Waivers. No waiver of any breach of any of the terms of this Agreement shall be
effective unless such waiver is in writing and signed by the Members against whom such waiver
is claimed. No waiver of any breach shall be deemed to be a waiver of any other or subsequent
breach.
Section 15.09. Counterparts. This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument and any of the parties hereto
may execute this Agreement by signing any such counterpart.
Section 15.10. Successors and Assigns. The terms of this Agreement shall be binding on each
Member’s heirs, legal representatives, successors and assigns.
Section 15.11. Entire Agreement. This Agreement constitutes the entire agreement of the parties
with respect to the transactions contemplated hereby and supersedes all prior agreements
or understandings among the parties hereto with respect to the subject matter hereof.
Section 15.12. Creditors. None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditors of the Company.
Section 15.13. 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.
Section 15.14. Assignability. Subject to Article VIII above, neither this Agreement nor any of
the benefits or rights hereunder shall, directly or indirectly, in any manner whatsoever or by
operation of law, be assigned, transferred, divided, shared or sublicensed by any Members
to any other person.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement this 1 st day of
September, 2021 (“Effective Date”).
CTE Holdings Company LLC C Mackey Inc, by and through its
By and Through Its Managing President, Colin Mackey
Member, Dustin Johnson
Ryan Korchick, Member Michael Cioffi, Member
Barnhorn Capital By and Through Its Managing
Member,
Brian Morgan, Member
EXHIBIT A
Member Capital Contribution Percentage of Membership
Interest
- Dustin Johnson $180,000.00 44.38%
CTE Holdings Company LLC - Colin Mackey $50,000.00 8.37%
C Mackey INC - Ryan Korchick $100,000.00 16.75%
- Micheal Cioffi $75,000.00 14.25%
- Barnhorn Capital $240,000.00 10%
- Brian Morgan $150,000.00 6.25%
5
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