Notifications and Requests to Modify a License
DCFoC -LIC r-m027 (Amended 2/22)
State of California, Department of Cannabis Control
Licensee Notification and Request Form
This form is for use by licensees who need to provide a notification to the Department or request approval from the Department, as required under the regulations. Directions for completing the form and providing supporting documents can be found below under Form Instructions.
Licensee Name:
License Number:
License Expiration Date:
Email a completed copy of this form and supporting documents to [email protected] to update any of the following:
Labor Peace Agreement -§ 15023(b)
Change in Ownership -§ 15023(c)
Change in Financial Interest Holders -§ 15023(d)
Change in Contact Information -§ 15023(e)(1)
Change in Legal Name of Owner or Legal Business Name -§ 15023(e)(2) Change in Business Trade Name/“Doing Business As” (DBA) or Fictitious Business Name (FBN) -§ 15023(e)(3)
Change in Bond -§ 15023(e)(4)
Add A or M Designation (excluding cultivators) - § 15023(f) Microbusiness: Add or Remove an Activity - § 15023(g)
Death, Incapacity, Receivership, Assignment of Creditors, or Other Event Rendering an Owner Incapable -§ 15024(a)
Notifications and Requests to Modify a License 1DCC-LIC-027 (Amended 2/22)
Physical Modification of Premises (excluding cultivators) - § 15027 Criminal Conviction of Any Owner -§ 15035(a)
Civil Penalty or Judgement Against Licensee or Any Owner -§ 15035(b) Administrative Order or Civil Judgement for Violation of Labor Standards -§ 15035(c) Revocation of a Local License, Permit, or Other Authorization -§ 15035(d) Use space below for additional information, as needed.
Disclosures
Mandatory Submission
Submission of the requested information is mandatory unless otherwise noted in regulation.
Failure to provide any of the required information may result in disciplinary action.
Notifications and Requests to Modify a License
DCC-LIC-027 (Amended 2/22)2
Please see attached for all specified changes.
November 22, 2024
Department of Cannabis Control
2920 Kilgore Road
Rancho Cordova, CA 95670
[email protected]
Subject: Request for Approval of Ownership Changes, Authentic Fairfield LLC C10-0001009- LIC
Hello Department of Cannabis Control,
Authentic Fairfield LLC (“Licensee”) is requesting to amend the Notification and Request to Modify a License form (“Form 27”) initially submitted to the Department of Cannabis Control on April 18, 2024, as the information was incomplete. Licensee is now requesting an amended approval of ownership changes to Licensee’s storefront retail license no. C10-0001009-LIC
The addition of the following entity owner in accordance with CCR Title 4 §15003(b):
• STIIIZY Inc., a Delaware corporation
• SGI Management LLC, a California limited liability company • Brian Mitchell, an individual
• Tony Huang, an individual
The removal of the following owner of the license record:
• Gregory Fink
• SGI Retail LLC
For avoidance of doubt the following individuals and entity remain owners of Licensee:
• James Kim
• Tak Sato
• Susan Hoy
• SGI Management LLC
Updated Disclosure
Pursuant to the Amended and Restated Operating Agreement of Authentic Fairfield LLC dated July 1, 2021 the following actions took place:
• Brian Mitchell, Albert Mitchell, James Kim, Tony Huang, and Jon Avidor were admitted as members of Licensee;
• Each were allocated a portion of SGI Retail LLC’s membership and SGI Retail LLC ceased to be a member of Licensee, thus serving as the basis for its removal; • SGI Management LLC was appointed as manager of Licensee.
On or around February 10, 2022, Albert Mitchell unfortunately lost his battle with cancer and passed away. His membership interest in Licensee was distributed among the remaining members; memorialized in an Action by Written Consent of the Manager of Authentic Fairfield LLC dated March 1, 2022.
The Second Amended and Restated Operating Agreement of Authentic Fairfield LLC dated April 6, 2022, accounts for the withdrawal of Jon Avidor as a member of Licensee and serves as the current document accounting for the membership of the company, serving as the ultimate basis for the inclusion of the individuals Brian Mitchell and Tony Huang as owners of Licensee.
Licensee’s manager remains SGI Management LLC a wholly owned subsidiary of STIIIZY Inc.
Original Disclosure
On March 14, 2023, Shryne Group, Inc. (“Shryne”) changed its state of incorporation from California to Delaware via a merger (the “Merger”) whereby Shryne merged into STIIIZY Inc. (“STIIIZY”), with STIIIZY continuing as the surviving entity. By virtue of the Merger, all assets, liabilities and equity interests of Shryne were assumed by STIIIZY. The separate existence and corporate organization of the Shryne in California was terminated, pursuant to the Certificate of Ownership and Merger filed with the Delaware Secretary of State on March 28, 2023
Mr. Gregory Fink resigned from his role as CFO of STIIIZY effective July 21, 2023. He replaced by James Kim as CFO of Licensee on September 26, 2023.
STIIIZY’s Directors are James Kim, Sunny Sassoon, and Chaudhry Ali. STIIIZY’s Officers are James Kim, Chief Executive Officer and Secretary; Tak Sato, President; and Isaac Kim, Chief Financial Officer.
Neither Sunny Sassoon, Isaac Kim, or Chaudhry Ali participate in the direction or control of Licensee.
Supporting Documentation:
1. Amended and Restated Operating Agreement of Authentic Fairfield LLC dated July 1, 2021
2. Action by Written Consent of the Manager of Authentic Fairfield LLC dated March 1, 2022
3. Second Amended and Restated Operating Agreement of Authentic Fairfield LLC dated April 6, 2022
4. Certificate of Ownership and Merger Merging Shryne Group, Inc. A California Corporation, into STIIIZY Inc., a Delaware Corporation, dated March 28, 2023
5. Bylaws of STIIIZY Inc., dated March 11, 2023
6. Gregory Fink Resignation Letter, dated July 21, 2023
7. Action by Written Consent of the Manager of Authentic Fairfield LLC, dated September 26, 2023
8. Attestation Letter, dated March 4, 2024
AMENDED AND RESTATED OPERATING AGREEMENT OF
AUTHENTIC FAIRFIELD LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
This Operating Agreement (the "Agreement") of Authentic Fairfield LLC (the "Company"), effective as of July 1, 2021 (the "Effective Date"), is entered into by and between the Persons listed on Exhibt A hereto as Members of the Company.
WHEREAS, the Company was formed as a limited liability company on September 2, 2020 by the filing of the Company’s Articles of Organization with the California Secretary of State pursuant to and in accordance with the California Revised Uniform Limited Liability Company Act (Cal. Corp. Code §§ 17701.01 et seq.), as amended from time to time ("RULLCA"); and
WHEREAS, on September 3, 2020 SGI Retail LLC (the “Original Member”) entered into the original operating agreement setting forth the terms and conditions of the Company (“Original Agreement”);
WHEREAS, the Original Member of the Company wishes to admit additional Members (“Admitted Members”) pursuant to the terms of the Original Agreement;
WHEREAS, the Original Member wishes to distribute its membership interest in the Company to the Admitted Members in accordance to Exhibit A and withdraw as a member of the Company;
WHEREAS, the Admitted Members agree that the membership in and management of the Company shall be governed by the terms set forth herein.
NOW, THEREFORE, the Admitted Members and the Company agree as follows:
1. Name. The name of the Company is Authentic Fairfield LLC.
2. Purpose. The purpose of the Company is to engage in any lawful act or activity for which limited liability companies may be organized under RULLCA and to engage in any and all activities necessary or incidental thereto.
3. Powers. The Company shall have all the powers necessary or convenient to carry out the purposes for which it is organized, including the powers granted by RULLCA.
4. Principal Office; Office and Agent for Service of Process.
a. Principal Office. The location of the principal office of the Company shall be 728 E.
Commercial St., Los Angeles, CA 90012.
b. Office and Agent for Service of Process. The office and agent for service of process on the Company in the State of California shall be the office of and the initial agent named in the Articles of Organization or such other office (which need not be a place of business of the Company) or person as the Manager may designate in the manner provided by RULLCA.
5. Members.
a. The name and the business, residence, or mailing address of the Members are detailed in Exhibit A attached hereto.
b. Additional Members. One or more additional members may be admitted to the Company with the consent of the Member. Prior to the admission of any such additional members to the Company, the Member shall amend this Agreement or adopt a new operating agreement to make such changes as the Member shall determine to reflect the fact that the Company shall have such additional members. Each additional member shall execute and deliver a supplement or counterpart to this Agreement, as necessary.
c. No Membership Interests; Certificates. The Company will not issue any certificates to evidence ownership of the membership interests.
6. Management of the Company. The Company shall be manager-managed by the Manager, which shall initially be SGI Management LLC, a California limited liability company. Subject to the provisions of Section 6(a) and except as otherwise provided by RULLCA or this Agreement, the business, property, activities, and affairs of the Company shall be managed by the Manager. The actions of the Manager taken in accordance with the provisions of this Agreement shall bind the Company. The Member shall not have any authority or right to act on behalf of or bind the Company, unless otherwise provided herein or unless specifically authorized by the Manager pursuant to a duly adopted resolution expressly authorizing such action.
a. Actions Requiring Approval of Members. Without the written approval of the Member, the Manager shall not have the authority to do or take any of the following actions ("Major Decisions"):
i. Amend, modify, or waive any provisions of the Articles of Organization or this Agreement;
ii. Issue additional Membership Interests, or, except in connection with a Transfer of Membership Interests that complies with the applicable provisions of this Agreement, admit additional Members to the Company.
iii. The borrowing of any money by the Company or the granting of any lien, claim, encumbrance, or security interest by the Company with respect to any asset of the Company, as security for the debts and obligations of the Company or otherwise or the modification, extension, renewal, or prepayment in whole or in part of any borrowing;
iv. The acquisition, by purchase, exchange, lease, or otherwise, of any real or personal property by the Company (other than acquisition of the Project);
v. The sale or exchange of all or substantially all of the assets of the Company;
vi. Any change in nature of the business of the Company or the entrance by the Company
into any business other than the business described in Section 2;
vii. The entering into or amendment, modification or termination of any contracts, agreements, or arrangements with any affiliates of the Manager; viii. The merger, consolidation, dissolution, or winding-up of the Company provided that any merger or conversion requires the consent of the Member; or
ix. The filing by the Company of a voluntary petition for reorganization or liquidation under any federal or state law for the relief of debtors or the consent or acquiescence to the filing of any involuntary petition for liquidation or reorganization under any federal or state law for the relief of debtors.
b. Officers. The Manager may appoint individuals as officers of the Company (the "Officers") as the Manager deems necessary or desirable to carry on the business of the Company and may delegate to such Officers such power and authority as the Manager deems advisable.
An Officer is not required to be a Member of the Company. Any individual may hold two or more offices of the Company. Each Officer shall hold office until his or her successor is designated by the Manager or until his or her earlier death, resignation, or removal. Any Officer may resign at any time upon written notice to the Manager. Any Officer may be removed by the Manager at any time, with or without cause. A vacancy in any office occurring because of death, resignation, removal, or otherwise may, but need not, be filled by the Manager.
c. Removal of Manager. The Member may remove the Manager in accordance with Section 6(d) upon the happening of any of the following events (each, a "Removal Event")
i. The Manager is in default of any payment obligation hereunder, or is in breach of any other material obligation under this Agreement and such default or breach is not corrected within fifteen (15) days after written notice thereof from the Member; provided that if such default or breach is willful, flagrant, and material and not susceptible of cure, then no notice or grace period shall be required;
ii. The Manager shall commit an act involving fraud, willful misconduct, or gross negligence in connection with any of its obligations hereunder;
iii. Any transfer by the Manager in violation of the provisions of section 6(a);
iv. The misappropriation of funds or property of the Company by the Manager or any of its respective affiliates; or
v. The bankruptcy or dissolution of the Manager.
vi. By the consent of a majority of the members without cause.
d. If a Removal Event has occurred, the Member shall have the right, by written notice delivered to the Manager within thirty (30) days after obtaining actual awareness of the occurrence of the Removal Event (such notice, the "Removal Notice"), to remove the Manager from managing the Company and to designate a new manager of the Company.
The Removal Notice shall specify with particularity the basis for removal and shall become effective the later of (i) ten (10) days after the date of the Removal Notice; or (ii) the date set forth in the Removal Notice (the "Removal Date"). In such event, (x) the powers and authorities granted to the Manager hereunder shall terminate and be of no force or effect; and (y) until such time as a new manager is approved pursuant to Section 6(g), the Member shall manage the LLC. If the Manager has been removed pursuant to this Section, the Member shall have all rights, remedies, and recourses available to it hereunder for any breach or default by any replacement manager of the Company, as if such replacement manager were the Manager, as that term is used in this Section 6 and any related defined terms, including, without limitation, Removal Event.
e. Upon removal of the Manager:
i. The Manager shall no longer transact any business on behalf of the Company and shall no longer be the Manager of the Company;
ii. All contracts, agreements, or arrangements between the Company and the Manager and/or any of its affiliates shall immediately terminate as of the Removal Date, without penalty or termination fees;
iii. The Manager shall take such action as may be necessary, or as a replacement manager may direct, for the transfer, protection, and/or preservation of company assets that is in the possession or control of the Manager and in which the Company have or may acquire an interest;
iv. The Manager shall cooperate fully with a replacement manager and the Company to effect an orderly transition of management responsibilities to the new manager;
v. The Manager shall be released of all duties, obligations, rights and powers as manager of the Company first arising or occurring after the Removal Date; provided, however, that the Manager shall not be released from any duties or obligations arising prior to the Removal Date; and
vi. The Manager shall have no right to subsequently cure or remedy the event or cause that was the basis for removal in order to resume being the Manager.
f. Resignation of Manager. The Manager may resign by giving written notice of its resignation to the Company at least thirty (30) days prior to the effective date of such resignation.
g. Appointment of New Manager. If the Manager ceases to be a Manager as a result of any event set forth in Section 6(c) or 6(f), a successor Manager shall be appointed by a majority of the Members.
7. Liability of Member and Manager; Indemnification.
a. Liability of Member and Manager. Except as otherwise required by RULLCA, the debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise,
shall be solely the debts, obligations, and liabilities of the Company, and neither the Member nor Manager shall not be obligated personally for any such debt, obligation, or liability of the Company solely by reason of acting as a member or manager or otherwise participating in the management of the Company.
b. Indemnification. To the fullest extent permitted under RULLCA (after waiving all RULLCA restrictions on indemnification other than those which cannot be eliminated), the Member and Manager (irrespective of the capacity in which the Member or Manager acts) shall be entitled to indemnification and advancement of expenses from the Company for and against any loss, damage, claim, or expense (including attorneys' fees) whatsoever incurred by the Member or Manager relating to or arising out of any act or omission or alleged acts or omissions (whether or not constituting negligence or gross negligence) performed or omitted by the Member or Manager on behalf of the Company; provided, however, that any indemnity under this Section 7(b) shall be provided out of and to the extent of Company assets only, and neither the Member nor any other person shall have any personal liability account thereof.
8. Term. The term of the Company shall be perpetual unless the Company is dissolved and terminated in accordance with Section 11.
9. Capital Contributions. The Members hereby agrees to contribute to the Company such cash, property, or services as determined by the Manager; provided that, absent such determination, the Member is under no obligation, express or implied, to make any such contribution.
10. Tax Status; Income and Deductions.
a. Tax Status. As long as the Company has only one member, it is the intention of the Company and the Member that the Company be treated as a disregarded entity for federal and all relevant state tax purposes and neither the Company nor the Member shall take any action or make any election which is inconsistent with such tax treatment. All provisions of this Agreement are to be construed so as to preserve the Company's tax status as a disregarded entity.
b. Income and Deductions. All items of income, gain, loss, deduction, and credit of the Company (including, without limitation, items not subject to federal or state income tax) shall be treated for federal and all relevant state income tax purposes as items of income, gain, loss, deduction, and credit of the Member.
c. Distributions. Distributions shall be made to the Member at the times and in the amounts determined by the Member.
11. Dissolution; Liquidation.
a. Dissolution Events. The Company shall dissolve, and its affairs shall be wound up, upon the first to occur of the following: (i) the written consent of the Member or (ii) any other event or circumstance giving rise to the dissolution of the Company under Article 7 of RULLCA, unless the Company's existence is continued pursuant to RULLCA.
b. Winding Up. Upon dissolution of the Company, the Company shall immediately commence to wind up its affairs and the Manager shall (i) if required by RULLCA, file a certificate of dissolution with the California Secretary of State in accordance with RULLCA and (ii) promptly liquidate the business of the Company. During the period of the winding up of the affairs of the Company, the rights and obligations of the Member under this Agreement shall continue. The Manager or other person winding up the affairs of the Company shall give written notice of the commencement of winding up to all known creditors and claimants of the Company in accordance with RULLCA.
c. Distribution of Proceeds. In the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of the Company in an orderly manner), and the assets of the Company shall be applied as follows:
(i) first, to creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof); and (ii) second, to the Member.
d. Certificate of Cancellation. Upon the completion of the winding up of the Company, the Manager shall file a certificate of cancellation with the California Secretary of State in accordance with RULLCA.
12. Miscellaneous.
a. Amendments. Amendments to this Agreement may be made only with the written consent of the Member.
b. Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by and interpreted, construed, and enforced in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.
c. Severability. If any provision of this Agreement shall be declared to be invalid, illegal, or unenforceable in any jurisdiction, such provision shall survive to the extent it is not so declared, and the validity, legality, and enforceability of the other provisions hereof shall not in any way be affected or impaired thereby, unless such action would substantially impair the benefits to any party of the remaining provisions of this Agreement.
d. No Third-Party Beneficiaries. Nothing in this Agreement, either express or implied, is intended to or shall confer upon any person other than the parties hereto, and their respective successors and permitted assigns, any rights, benefits, or remedies of any nature whatsoever under or by reason of this Agreement
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the date first written above.
COMPANY
Authentic Fairfield LLC, a California
limited liability company
SGI Management LLC, a California
limited liability company
By: ___________________________
Name: James Kim
Its: Manager
EXHIBIT A
Name Mailing Address Membership Interest
Brian Mitchell 120 Via Trieste
Newport Beach, CA 92663
30%
Albert Mitchell 2216 Fieldcrest Ct.
Fairfield, CA 94534
30%
James Kim 728 E. Commercial St.
Los Angeles, CA 90012
11.5%
Tony Huang 728 E. Commercial St.
Los Angeles, CA 90012
27%
Jon Avidor 728 E. Commercial St.
Los Angeles, CA 90012
1.5%
ACTION BY WRITTEN CONSENT
OF THE
MANAGER
OF
AUTHENTIC FAIRFIELD LLC
The undersigned constituting the manager (the “Manager”) of Authentic Fairfield LLC, a California limited liability company (the “Company”), does hereby adopt the following resolutions and consent to the following actions, effective as of March 1, 2022 (the “Effective Date”):
Distribution of Membership Interest of Albert Mitchell
WHEREAS, on February 10, 2022, Albert Mitchell passed away and prior to his death Albert Mitchell owned thirty percent (30%) of the Company.
WHEREAS, the Manager deems it in the best interest of the Company to distribute the membership interest formerly held by Albert Mitchell’s among the remaining members of the Company.
NOW, THEREFORE, BE IT RESOLVED, the distribution of Albert Mitchell’s membership interest is hereby in all respected ratified, confirmed, and approved.
RESOLVED FURTHER, a complete schedule of membership interest in the Company as of the Effective Date is attached hereto as Exhibit A.
[Signature Page Follows]
[Signature Page to the Action by Written Consent of the Manager of Authentic Fairfield LLC] IN WITNESS WHEREOF, the undersigned has duly executed this Action by Written Consent as of the date first set forth above.
COMPANY:
Authentic Fairfield LLC, a California
limited liability company
MANAGER:
SGI Management LLC, a California
limited liability company
By: _____________________
Name: James Kim
Title: Manager
EXHIBIT A
MEMBERSHIP INTEREST OF AUTHENTIC FAIRFIELD LLC
AS OF
MARCH 1, 2022
Name Membership Interest
Brian Mitchell 40%
Tony Huang 38.5%
James Kim 20%
Jon Avidor 1.5%
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF
AUTHENTIC FAIRFIELD LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
(a C corporation for federal income tax purposes)
THIS OPERATING AGREEMENT (“Agreement”) is made as of April 6, 2022 (“Effective Date”), by and among the Persons listed on Exhibit A hereto as Members of the Company, and each of those Persons who become a Member and/or Manager in accordance with the terms of this Agreement, with reference to the following facts:
WHEREAS, on September 2, 2020, the Articles of Organization for Authentic Fairfield LLC (the “Company”), a limited liability company organized under the laws of the State of California, were filed with the California Secretary of State;
WHEREAS, on September 3, 2020, the Members entered into the original operating agreement setting forth the terms and conditions of the Company and the Member (“Original Agreement”); WHEREAS, on July 1, 2021, the Members entered into an Amended and Restated Operating Agreement setting forth amended terms and conditions of the Company and the Members (“First Amended and Restated Operating Agreement”);
WHEREAS, the Members of the Company wish to enter into this Agreement setting forth the amended terms and conditions of the Company and the Members and to have this Agreement replace in its entirety the First Amended and Restated Operating Agreement; and
WHEREAS, Jon Avidor wishes to withdraw as a member of the Company as of the Effective Date with his remaining membership interest distributed to the remaining members; WHEREAS, the parties hereto desire, effective as of the Effective Date, to adopt and approve this Agreement for the Company.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS AND
UNDERTAKINGS SPECIFIED IN THIS AGREEMENT AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES TO THIS AGREEMENT AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings specified below or elsewhere in this Agreement and when not so defined shall have the meanings specified in the Act (such terms are equally applicable to both the singular and plural derivations of the terms defined):
1.1 “Act” means the California Revised Uniform Limited Liability Company Act.
1.2 “Affiliate” of a Person means any Person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with such Person, and, in the case of any such Person who is an individual, such Person’s Family Members. The term “control,” as used in the immediately preceding sentence, shall mean with respect to a corporation, limited liability company or limited partnership, the right to exercise, directly or indirectly, at least fifty percent (50%) of the voting power of the controlled corporation, limited liability company or limited partnership, and, with respect to any individual, general partnership, trust, association or other entity, the
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possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.
1.3 “Agreement” means this Operating Agreement, as originally executed and as amended from time to time.
1.4 “Articles” means the Articles of Organization for the Company originally filed with the California Secretary of State and as amended from time to time.
1.5 “Assignee” means the owner of one or more Units who has not been admitted as a substitute Member in accordance with Article VII.
1.6 “Capital Contributions” means the total amount of cash and the fair market value of property contributed to the Company by Members in accordance with this Agreement.
1.7 "Capital Transaction" means a financing, refinancing, sale, disposition, or involuntary conversion (e.g., condemnation or casualty) of (i) all or a substantial portion of the Company’s property, or of any portion of the Company’s property not in the ordinary course of the Company’s business, or (ii) all or a substantial portion of the property of any subsidiary of the Company, or of any portion of the subsidiary’s property not in the ordinary course of the subsidiary’s business.
1.8 “Change of Control” means, with respect to any Person, any transaction or series of related transactions that results in, or that is in connection with, (i) the sale of all or substantially all of the assets of such Person to a third party purchaser or group of related third party purchasers which were not Affiliate(s) of such Person prior to such transaction or series of transactions; (ii) any third party purchaser or group of related third party purchasers which were not Affiliate(s) of such Person prior to such transaction or series of transactions acquiring beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the ownership interests of such Person in such transactions or series of transactions; or (iii) a merger, consolidation, recapitalization or reorganization of such Person with or into a third party which is not an Affiliate of such Person if and only if such event results in the owners of such Person immediately prior to such transaction or series of transactions owning not more than fifty percent (50%) of the ownership interests of the surviving entity in such merger, consolidation, recapitalization or reorganization.
1.9 “Class” means, when referring to each class of Units, the Units having the relative rights, powers, and duties set forth in this Agreement.
1.10 “Class A Member” means a holder of Class A Units as set forth on Exhibit A.
1.11 “Class A Units” means Units having the relative rights, powers, and duties of the Class A Units set forth in this Agreement.
1.12 “Class E Member” means a holder of Class E Units as may be set forth on Exhibit A.
1.13 “Class E Units” means Units having the relative rights, powers, and duties of the Class E Units set forth in this Agreement. Class E Units will be non-voting units, except as otherwise expressly provided in this Agreement (including, without limitation, Section 5.11).
1.14 “Code” means the Internal Revenue Code of 1986, as amended from time to time, the provisions of succeeding law, and to the extent applicable, the Regulations.
1.15 “Company” has the meaning set forth in the Recitals.
1.16 “Confidential Information” has the meaning ascribed to it in Section 12.27A(i).
1.17 “Disclosing Party” has the meaning ascribed to it in Section 12.27A(i).
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1.18 “Dissolution Event” has the meaning ascribed to it in Section 10.1.
1.19 “Distributable Cash” means the amount of cash which the Manager deems available for distribution to the Members and Assignees, taking into account all debts, liabilities, and obligations of the Company then due, and working capital and other amounts which the Manager, in its reasonable discretion, deem necessary for the Company’s business or to place into reserves for customary and usual claims with respect to such business. Distributable Cash shall not include Net Proceeds from a Capital Transaction.
1.20 “Economic Interest” means the right to receive distributions of the Company’s assets, including cash, but shall not include any other rights of a Member, including, without limitation, the right to vote or participate in the management of the Company, or except as provided in the Act, any right to information concerning the business and affairs of the Company.
1.21 “Effective Date” has the meaning set forth in the Preamble.
1.22 “Family Member” means with respect to any individual, such individual’s spouse, parent, sibling, in-law, child or grandchild (whether natural, adopted or in the process of adoption).
1.23 “Fiscal Year” means the Company’s fiscal year, which shall be the calendar year.
1.24 “Former Member” has the meaning ascribed to it in Section 8.2.
1.25 “Former Member’s Units” has the meaning ascribed to it in Section 8.2.
1.26 “Initial Manager” means SGI Management, LLC.
1.27 “Majority Interest” means those Members who hold more than fifty percent (50%) of the Voting Interests, and means those Members who hold more than fifty percent (50%) of a particular class of Units where specifically references the approval of such Class entitled to vote on a matter.
1.28 “Manager” means the respective manager as set forth herein or as otherwise appointed by a Majority Interest of Class A Members and also means each other Person that succeeds the Manager as a manager of the Company. The existing Manager is listed in Exhibit A.
1.29 “Member” means the Persons listed on Exhibit A hereto as Members of the Company or a Person who otherwise acquires a Unit of Membership Interest in the Company in accordance with this Agreement, for so long as such Person remains a Member.
1.30 “Membership Interest” means a Member’s or Assignee’s entire interest in the Company, denominated in Units, and shall include an Economic Interest, Voting Interest (if any), and the right to vote on or participate in the management (if any), and the right to receive information concerning the business and affairs, of the Company, in each instance subject to the terms of this Agreement.
1.31 “Net Proceeds from a Capital Transaction” means the proceeds received by the Company as a result of a Capital Transaction reduced by (i) all costs and expenses of the Capital Transaction, (ii) payment (or reserves for) any capital expenditures or other expenses for which the proceeds are used, (iii) the satisfaction of any debt being refinanced or discharged or any other debts, liabilities or obligations of the Company for which the Manager decides to use the same, and (iv) the setting aside of any reserves the Manager determines are reasonably necessary to meet anticipated expenditures or to provide for contingent liabilities that may not be met by anticipated receipts. The Manager shall reasonably trace proceeds attributable to a Capital Transaction effected by a subsidiary of the Company and treat any such net proceeds as Net Proceeds from a Capital Transaction.
1.32 “Optional Purchase Event” has the meaning set forth in Section 8.1.
1.33 “Parties” means the Company, the Manager and the Members.
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1.34 “Percentage Interest” shall mean as of any date with respect to any Member or Assignee, the percentage obtained when such Member’s or Assignee’s Units are divided by the aggregate number of Units held by all Members and Assignees, as such percentage may be adjusted from time to time pursuant to the terms of this Agreement.
1.35 “Permitted Transfer” has the meaning ascribed to that term in Section 7.4.
1.36 “Person” means an individual, partnership, limited partnership, limited liability company, corporation, trust, estate, association, or any other entity.
1.37 “Regulated Member” means any member who, by virtue of the amount of his or her interest in the capital or profits of the Company at any time is required by any Regulatory Law to provide information regarding such Member and such Member’s spouse, owners or other Affiliates and/or to execute, acknowledge or file any documents with any Regulatory Authority in order for the Company to obtain and maintain any licenses and/or any right to purchase, store and serve to customers any products, without or without qualification or restriction as may be determined by the Manager.
1.38 “Regulations” unless the context clearly indicates otherwise, means the regulations in force as final or temporary regulations that have been issued by the U.S. Department of Treasury pursuant to its authority under the Code, and any successor regulations.
1.39 “Regulatory Authorities” means any governmental agency, body or authority and/or any other applicable governmental body or authority having jurisdiction over the Company.
1.40 “Regulatory Laws” shall mean any regulations issued by any Regulatory Authorities and/or any applicable zoning or land-use planning laws or regulations, each as it may be in effect from time to time.
1.41 “Remaining Members” has the meaning ascribed to it in Section 8.2.
1.42 “Transfer” or “Transferred” means any sale, exchange, assignment, transfer, conveyance, pledge, hypothecation, or other disposition voluntarily or involuntarily, by operation of law, with or without consideration, or otherwise (including, without limitation, by way of intestacy, will, gift, bankruptcy, receivership, levy, execution, charging order or other similar sale or seizure by legal process) of all or any portion of a Member’s or Assignee’s Units (provided, however that for purposes of clarification, component parts of a Unit (e.g., voting rights or economic rights) cannot be separated or Transferred separate from the Unit). Without limiting the generality of the foregoing, the Transfer of an interest or interests representing at least fifty percent (50%) of the voting power of such Member (whether accomplished by the sale, exchange or issuance of equity interests), if a Member is a corporation, or the Transfer of an interest or interests representing at least fifty percent (50%) in the capital or profits of a Member (whether accomplished by the sale, exchange or issuance of equity interests), if a Member is a partnership or limited liability company, or the cumulative Transfer of such interests in a Member which effectively equal the foregoing (including Transfer of interests followed by the incorporation of a Member and subsequent stock Transfers, or Transfers of stock followed by the liquidation of a Member and subsequent Transfers of interests) will be deemed to constitute a Transfer of the Member’s entire Membership Interest.
1.43 “Unit” means the entire Membership Interests, including all Economic Interest and Voting Interest associated with such Membership Interest; provided that any class or group of Units issued will have relative rights, powers and duties set forth in this Agreement and the interests represented by such class or group of Units will be determined in accordance with such relative rights, powers and duties set forth in this Agreement. Membership Interests are denominated in Units; and Units shall include all Class A Units and Class E Units.
1.44 “Voting Interest” means, for any Member, at any given time, the number of Units held by such Member divided by the aggregate number of outstanding Units of all Members (and, for the avoidance of doubt, Units held by Assignees who are not admitted as Members shall not be included in this calculation).
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ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation
The Initial Manager filed the Articles with the California Secretary of State on September 2, 2020, and, from that date until the Effective Date, the Company's limited operations have been conducted by the Initial Manager without a written operating agreement. As of the Effective Date, the Members hereby replace in its entirety (and hereby amend and restate in its entirety) any oral operating agreement of the Company. The rights and liabilities of the Members and Manager shall be determined pursuant to the Act and this Agreement. To the extent that the rights or obligations of any Member or Manager are different because of any provision of this Agreement than those rights or obligations would be in the absence of such provision, this Agreement shall control to the extent permitted by the Act.
2.2 Name
The name of the Company is “Authentic Fairfield LLC”. The business of the Company may be conducted under that name or, upon compliance with applicable laws, any other name that the Manager deems appropriate or advisable. The Manager shall file any fictitious name certificates and similar filings, and any amendments thereto, that the Manager considers appropriate or advisable. The Company’s name shall be the exclusive property of the Company, and no Member shall have any rights in the name or any derivation thereof.
2.3 Term
The Company’s existence commenced on September 2, 2020 and shall continue until terminated as provided in this Agreement.
2.4 Registered Office and Agent
The Company shall continuously maintain a registered office (“Office”) in the State of California and registered agent (“Agent”) in the State of California. If the Agent ceases to act as such for any reason or the Company changes the Office’s location, the Manager shall promptly designate a replacement Agent and/or notify the Secretary of State of the new Office location (a “Notification”). If the Manager fails to designate a replacement Agent or notify the Secretary of State of the new Office location, a Majority Interest of Class A Members may file a Notification with the Secretary of State, specifying the Agent and/or Office, as the case may be.
2.5 Principal Place of Business
The Company’s principal place of business may be changed from time to time as the Manager may determine.
The Manager shall give notice to each Member of any change in the Company's principal place of business within a reasonable time after any such change occurs. The Company may also have such offices, anywhere within and without the State of California, as the Manager may determine from time to time, or the business of the Company may require.
2.6 Member and Manager Information
The name and address of each Member and Manager and the Voting Interest and Percentage Interest owned by each Member and Assignee is set forth in Exhibit A. A Member may change his or her address in the Company’s books and records upon written notice thereof to the Manager, given in accordance with Section 12.14, specifying that such change is for purposes of this Section.
2.7 Purpose and Business of the Company
The purpose of the Company is to own, operate, and/or manage a cannabis business and to engage in any related legal act or activity for which limited liability companies may be organized under the California Revised
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Uniform Limited Liability Company Act as set forth in the Act. The Company shall possess and may exercise all of the powers and privileges granted by the Act or by any other law or by this Agreement, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business purposes or activities of the Company.
2.8 Amount of Authorized Units
The Company has authorized One Hundred Thousand (100,000) Units. Currently, the Company has authorized: (i) Twenty Thousand (20,000) Class A Units all of which are issued and outstanding and (ii) Eighty Thousand (80,000) Class E Units, all of which are issued and outstanding.
2.9 Taxation. The Members intend that the Company shall be treated as an association taxable as a corporation for U.S. federal (and applicable state and local) income tax purposes. The Managing Member shall timely execute and file, or cause to be filed, a U.S. Internal Revenue Service Form 8832 electing to classify the Company as an association taxable as a corporation pursuant to Treasury Regulations Section 301.7701-3. The Company shall not change its classification as an association taxable as a corporation for U.S. federal (and applicable state and local) income tax purposes without the prior written consent of a majority of Class A Members.
2.10 Certification. No certificates will be issued by the Company evidencing the Membership Interests held by such Member.
2.11 UCC Article 8 Opt-In.
The Membership Interests shall be considered a “security” as defined in Article 8 of the UCC, and this statement shall constitute an express provision that each such Membership Interest is a security governed by Article 8 of the UCC, solely for the purposes of establishing the applicability thereto of the provisions of Article 8 governing securities.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Initial Capital Contributions
As of the Effective Date, the Members have made the Capital Contributions in the amounts set forth next to each Member's name on Exhibit A, attached to this Agreement and incorporated into this Agreement by this reference.
3.2 Additional Capital Contributions Prior to Payout.
A. The Manager is authorized (but not required) to cause the Company to sell membership interests in the Company in exchange for Capital Contributions.
B. In the event the Manager determines that additional Capital Contributions are to be made, the Manager shall provide each Member with written notice at least fifteen (15) days prior to the date such additional Capital Contributions are to be made. Each Member shall have a right, but not the obligation, to make such additional Capital Contributions in proportion to its then Percentage Interest. All Capital Contributions made pursuant to this Section 3.2 shall be made in cash or immediately available federal funds (or as the Manager may reasonably determine otherwise).
C. Immediately following such Capital Contributions and issuance of Class A Units in exchange therefore, the Percentage Interests shall be adjusted by the Manager to reflect the new relative proportions of Units of the Members. The Manager shall revise Exhibit A further to reflect any Capital Contributions made in accordance with Section 3.2 and the change (if any) in Percentage Interests that takes place as a result of such Capital Contributions.
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D. Upon payment of a Capital Contribution by a new Member, the Company shall issue additional Units to each such new Member, each new Unit issued for its fair market value, as reasonably determined by the Manager. The fair market value of an additional Unit issued pursuant to this paragraph shall be determined by dividing (x) the Company’s fair market value immediately prior to such additional Capital Contribution, by (y) the number of Units outstanding immediately prior to such issuance. The fair market value of the Company shall be reasonably determined by the Manager after consulting with either an independent appraiser reasonably selected by the Manager or the Company’s accountants and financial advisors, if any.
E. Other than the Capital Contributions required to be made under Section 3.1 and which may be required to be made pursuant to subscriptions under Section 3.2A, no Member shall be required to make any additional Capital Contribution; provided, however, that the Manager may permit any Member (or Members) selected by the Manager (subject to approval pursuant to Section 5.11) to make cash advances (consistent with the terms of Company loans pursuant to Section 3.6) to fund the operating expenses of the Company (an “Advance”), without acquiring additional membership interests in the Company. Notwithstanding any other provision of this Agreement, such Advances shall be reimbursed by the Company before any distributions are made to Members pursuant to Section
6.9. F. Notwithstanding anything herein to the contrary, any costs and expenses needed by the Company for the operation and management of the Company’s cannabis business, including, without limitation, operating costs, expenses related to the build-out of the real property where the business is located, and expenditures related to obtaining any license and/or conditional use permit required to operate the business, shall be borne exclusively by the Class A Member and shall be treated as a loan to the Company, and shall not (i) result in the issuance of any additional equity, Membership Interest, or Units to the contributor, (ii) cause any corresponding increase in the number of Units held by the Class A Member, or (iii) impact the Percentage Interest of any Member or Assignee. Any such loan shall bear an interest rate at [4]%.
3.3 Withdrawal and Return of Capital
No Member or Assignee shall be entitled to withdraw or to demand the return of any or all of that Member’s or Assignee’s Capital Contribution, except as specifically provided in this Agreement.
3.4 No Priority Return
Except as otherwise provided in this Agreement, no Member or Assignee shall have priority over any other Member or Assignee regarding the return of a Capital Contribution.
3.5 Loans & Guaranties.
A. Any Member, Manager or Affiliate of a Member or Manager may lend money to the Company with the prior written consent of the Manager, subject to Section 5.11. The loan shall not be treated as a Capital Contribution by the lender and, to the extent the lender is a Member or Assignee, shall not entitle the lending Member or Assignee to an increase in such lender’s Units, or Percentage Interest. The loan amount shall be a debt due from the Company, repayable out of the Company’s assets, and shall bear interest at a rate of 4% per annum, and be on such other terms as the Company and the lender agree. Notwithstanding the foregoing, no Member, Assignee, Manager or Affiliate of a Member or Manager shall be required to make any loans to the Company.
B. Any Member, Manager or Affiliate of a Member or Manager may guaranty the payment or performance of any Company obligation. Any guaranty shall not be treated as a Capital Contribution by the guarantor or entitle the guarantor to an increase in any Percentage Interest, but if a Person makes any guaranty at the request of the Company and pays any monies in satisfaction of such Person's obligations under such guaranty, such monies shall become a debt of the Company owed to such Person. Notwithstanding the foregoing, no Member, Manager or Affiliate of a Member or Manager shall be required to make any guaranty of the payment or performance of any Company obligation.
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C. The Manager is hereby authorized to have the Company, in connection with a loan to Shryne Group Inc. (or its Affiliates) and/or any related documents (“SGI Loan”) to (i) guaranty loans, (ii) to grant security interests in the Company pursuant to the terms of a pledge agreement or subsidiary guaranty (iii) to enter into and perform any other obligations under a SGI Loan to which it is or a SGI requests that it be a party and (iv) to undertake any and all actions, as are necessary or appropriate, as determined in the discretion of the Manager, to perform any and all obligations under any SGI Loan, including, without limitation, performing any and all such acts as the Manager may deem necessary or advisable in order to secure the security interests assigned, pledged or granted under any SGI Loan documents.
3.6 The undersigned, in its capacity as Member of the Company, wishes to waive any provisions of the Operating Agreement which may purport to restrict the pledging of the Company’s membership interests or assets in connection with SGI Loan documents;
3.7 The undersigned Member hereby consents, in connection with any SGI Loan documents (i) to the creation of the security interests set forth in any pledge agreement or subsidiary guaranty and (ii) that a lender, or collateral agent on behalf of such lender, shall upon enforcement of a pledge agreement in accordance with its terms, be permitted to succeed to SGI’s membership interests and management authority without further action by the Company, the Manager or the Member, and shall be admitted to the Company as a Member and Manager with full rights, powers and duties of a Member and Manager.
3.8 The undersigned Member hereby waives the Transfer Restrictions and all provisions of the Agreement that conflict with the terms of any pledge agreement, subsidiary guaranty, or any other SGI Loan document or that prohibit or restrict the security interest grant or any related enforcement that the Manager of the Company be, and hereby is, authorized and directed to execute and deliver all of the SGI Loan documents and to take all actions he or she deems appropriate to carry out the purposes of the foregoing resolutions, including, without limitation, the payment of all charges and expenses incident to or arising out of the foregoing. The Manager will have the right in his or her sole discretion to approve such additional or different terms and conditions required by the SGI Loan documents the Manager believes are in the Company’s best interests and to execute any amendments, modifications, and extensions to the SGI Loan documents as the Manager may deem desirable or necessary or may otherwise be required.
The execution and delivery by the Manager of any of items in connection with the SGI Loan documents shall be conclusive evidence of such authority.
ARTICLE IV
MEMBERS
4.1 Limited Liability
Except as expressly set forth in this Agreement or as required by law, no Member or Manager shall be personally liable for any debt, obligation, or liability of the Company, whether that liability or obligation arises in contract, tort, or otherwise.
4.2 Issuance of Additional Membership Interests; Admission of Additional Members Subject to Section 5.11, the Manager may cause the Company to issue Units to, and to admit any Person, as a Member on such terms as are provided in this Agreement or as reasonably determined by the Manager. The Manager shall amend this Agreement, and the Members and Assignees hereby consent to such amendment, to reflect (a) the sale of additional Units, (b) the admission of additional Members, and (c) any necessary change in Percentage Interests or Voting Interests (but all Voting Interests and Percentage Interests shall be calculated by rounding them to the nearest ten-thousandth of a percent) in light of the admission of the additional Member(s). Notwithstanding the foregoing, Assignees may only be admitted as substitute Members in accordance with Article VII. The Manager shall amend Exhibit A on the admission of additional Members to set forth the Members’ names, addresses, taxpayer identification numbers, Capital Contributions, Voting Interests, and Percentage Interests.
4.3 Withdrawals or Resignations
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No Member may withdraw, resign or retire as a Member from the Company. In case a Member wants to retire from the Company, the provisions of Article VII will apply.
4.4 Termination of Membership Interest
Upon (a) the Transfer of a Member’s Units in violation of Article VII, (b) the occurrence of an Optional Purchase Event as to such Member, or (c) the withdrawal, resignation or retirement of a Member in violation of Section
4.3, the Membership Interest (denominated in Units) of a Member shall be terminated by the Manager and thereafter that Member shall only be an Assignee unless such Membership Interest is purchased by the Company and/or the remaining Members as provided in Article VIII. Each Member acknowledges and agrees that such termination or purchase of a Membership Interest upon the occurrence of any of the foregoing events is not unreasonable under the circumstances existing as of the date of this Agreement.
4.5 Transactions with the Company
Subject to any limitations set forth in this Agreement and with the prior approval of the Manager, a Member or an Affiliate of a Member may transact business with the Company so long as the transaction is not expressly prohibited by this Agreement and so long as (a) the terms and conditions of such transaction, on an overall basis, are fair and reasonable to the Company and are at least as favorable to the Company as those terms and conditions that are generally available in similar transactions from Persons operating at arm’s length and, in the case of services, from Persons capable of performing similar services, or (b) such transaction is approved or consented to by a Majority Interest of Class A Members. This Section 4.5 shall not apply to any transaction authorized under any other provision of this Agreement, including, without limitation, Section 5.12. Subject to other applicable laws, such Member has the same rights and obligations with respect thereto as a Person who is not a Member.
4.6 Remuneration to Members
Except as otherwise specifically provided in or authorized in accordance with this Agreement, no Member or an Affiliate of a Member is entitled to remuneration for services rendered or goods provided to, or on behalf of, the Company.
4.7 Members Are Not Agents
Pursuant to Section 5.1, the management of the Company is vested in the Manager. The Members shall have no power to participate in the management of the Company except as expressly authorized by this Agreement and except as expressly required by the Act. No Member, acting solely in the capacity of a Member, is an agent of the Company nor does any Member, unless expressly and duly authorized in writing to do so by the Manager, have any power or authority to (a) bind or act on behalf of the Company in any way, (b) pledge its credit, (c) execute any instrument on its behalf, or (d) render it liable for any purpose. Each Member shall indemnify, defend and hold harmless the Company, the Manager and the other Members from and against any and all loss, cost, expense, liability or damage arising from or relating to any action by such Member in contravention of this Section 4.7.
4.8 Voting, Approval & Consent Rights
Except as expressly provided in this Agreement, the Articles or required by law, Members shall have no voting, approval or consent rights and, to the extent permitted by applicable law, each Member waives that Member’s right to vote on, consent to or approve any matters other than as set forth in the Articles or this Agreement.
Notwithstanding any other provision of this Agreement and to the maximum extent permitted by the Act, for purposes of any vote, approval or consent of Members and for purposes of the calling of any meeting of Members sought under this Agreement, the Voting Interest of a Person who is a transferring Member under Article VII at the time of such vote, approval or consent and the Voting Interest of any Person who is a Former Member under Article VIII at the time of such vote, approval or consent shall not be counted as a Voting Interest. For the purpose of facilitating ease of reference only, it is noted that, under Section 7.7, no Assignee is entitled to vote on, approve or consent to any matter.
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A. Approval of Members
Except where a different level of vote, approval or consent of Members is specified elsewhere in this Agreement for any matter, in all other matters in which a vote, approval or consent of the Members is required, a vote, consent or approval of a Majority Interest shall be sufficient to constitute Member authorization or approval of such matter. Notwithstanding the foregoing, the Manager shall not have the power and authority to make any decision to compromise the obligation of a Member (other than the Manager or Affiliate of a Manager) to make a Capital Contribution or return money or property paid or distributed in violation of the Act.
B. Approval Standard
Except as otherwise specifically provided in this Agreement, all votes, approvals or consents of the Members or Manager must be given in good faith and not withheld, conditioned or delayed.
4.9 Meetings of Members.
A. Date, Time and Place of Meetings of Members; Secretary Notwithstanding any other provision of this Agreement, no annual, regular or other meetings of Members are required. Meetings of Members may be held at such date, time and place within or without the State of California as the Manager may fix from time to time. At any such meeting, the Manager shall appoint a person to preside at the meeting and a person to act as secretary of the meeting, which persons need not be Members. The secretary of the meeting shall prepare minutes of the meeting which shall be placed in the records of the Company.
B. Power to Call Meetings
For the purpose of addressing any matters on which the Members may vote, meetings of the Members may be called by the Manager or upon written demand of Members representing at least sixty percent (60%) of the Voting Interests.
C. Notice of Meeting
Written notice of a meeting of Members shall be sent or otherwise given to each Member with a Voting Interest not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and the general nature of the business to be transacted. No other business may be transacted at this meeting. Upon written request to the Manager by any Person or Persons entitled to call a meeting of Members, the Manager shall immediately cause notice to be given to the Members entitled to vote that a meeting will be held at a time requested by the Person calling the meeting, not less than ten (10) days nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after the receipt of the request, the Person or Persons entitled to call the meeting may give the notice.
D. Manner of Giving Notice; Affidavit of Notice
Notice of any meeting of Members shall be given in the manner specified in Section 12.14. An affidavit of the mailing or other means of giving any notice of any meeting shall be executed by the Manager and shall be filed and maintained in the records of the Company.
E. Validity of Action
Any action approved at a meeting, other than by unanimous approval of those entitled to vote, shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice.
F. Quorum
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The presence in person or by proxy of a Majority Interest shall constitute a quorum at a meeting of Members.
The Members present at a duly called or held meeting at which a quorum is present may not continue to do business at such a meeting after the loss of a quorum.
G. Adjourned Meeting; Notice
Any Members’ meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of the Majority Interest represented at that meeting, either in person or by proxy, but in the absence of a quorum, no other business may be transacted at that meeting.
H. Waiver of Notice or Consent
The actions taken at any meeting of Members however called and noticed, and wherever held, have the same validity as if taken at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the Members entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or consents to the holding of the meeting or approves the minutes of the meeting. All such waivers, consents or approvals shall be filed with the Company records or made a part of the minutes of the meeting. Attendance of a Person at a meeting shall constitute a waiver of notice of that meeting, except when the Person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters not included in the notice of the meeting if that objection is expressly made at the meeting.
Neither the business to be transacted nor the purpose of any meeting of Members need be specified in any written waiver of notice except as provided in Section 4.9E.
I. Action by Written Consent Without a Meeting
Any action that may be taken at a meeting of Members may be taken without a meeting, if a consent in writing setting forth the action so taken, is signed and delivered to the Company within sixty (60) days of the record date for that action by Members having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all Members entitled to vote on that action at a meeting were present and voted. All such consents shall be filed with the Manager and shall be maintained in the Company records. Any Member giving a written consent, or the Member’s proxy holders, may revoke the consent by a writing received by the Manager before written consents of the number of votes required to authorize the proposed action have been filed.
Unless the consents of all Members entitled to vote have been solicited in writing, (i) notice of any Member approval of an amendment to the Articles or this Agreement, a dissolution of the Company, or a merger of the Company, without a meeting by less than unanimous written consent, shall be given at least ten (10) days before the consummation of the action authorized by such approval; and (ii) prompt notice shall be given of the taking of any other action approved by Members without a meeting by less than unanimous written consent, to those Members entitled to vote who have not consented in writing.
J. Telephonic Participation by Member at Meetings
Members may participate in any Members’ meeting through the use of any means of conference telephones or similar communications equipment as long as all Members participating can hear one another. A Member so participating is deemed to be present in person at the meeting.
K. Record Date
In order that the Company may determine the Members of record entitled to notices of any meeting or to vote, or entitled to receive any distribution or to exercise any rights in respect of any distribution or to exercise any rights in respect of any other lawful action, the Manager may fix, in advance, a record date, that is not more than sixty (60) days nor less than ten (10) days prior to the date of the meeting and not more than sixty (60) days prior to any other action.
L. Proxies
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The use of proxies in connection with this Article IV shall be governed in the same manner as the proxy provisions for corporations formed under the General Corporation Law.
4.10 Articles of Membership Interest.
A. Articles
Membership Interest may (but need not) be represented by a certificate of membership. The exact contents of a certificate of membership may be determined by the Manager. Each certificate of membership shall be otherwise in such form as may be determined by the Manager.
B. Cancellation of Articles
Except as provided in this Agreement with respect to lost, stolen, or destroyed certificates, no new certificates of membership shall be issued in lieu of previously issued certificates of membership until former certificates for a like number of Membership Interests shall have been surrendered and cancelled. All certificates of membership surrendered to the Company for transfer shall be cancelled.
C. Replacement of Lost, Stolen, or Destroyed Articles
Any Member claiming that his or her certificate of membership is lost, stolen, or destroyed may make an affidavit or affirmation of that fact and request a new certificate. Upon the giving of a satisfactory indemnity to the Company and surety bond as the Manager may require, a new certificate may be issued of the same tenor and representing the same Voting Interest and Percentage Interest of membership as was represented by the certificate alleged to be lost, stolen, or destroyed.
4.11 Licenses and Permits
At such times as the Manager may request from time to time, each Regulated Member shall promptly provide to the Company in writing any information regarding such Member or Manager and such Member's or Manager’s Affiliates as may, in the reasonable opinion of the Manager, be required of the Company by any Regulatory Authority under any Regulatory Law and promptly execute and provide to the Company for filing with any Regulatory Authority or in the Company records any and all applications, certificates and other documents the Manager deems necessary or helpful to the Company in order to obtain, amend and maintain any license or permit deemed by the Manager to be useful in connection with the Business, including but not limited to any license and/or conditional use permit.
ARTICLE V
MANAGEMENT AND CONTROL OF THE COMPANY
5.1 Management of the Company by the Manager.
A. Exclusive Management by Manager
Subject to the provisions of the Articles and this Agreement relating to actions required to be approved by the Members, the business, property and affairs of the Company shall be managed and all powers of the Company shall be exercised by or under the direction of the Manager. A Majority Interest of Class A Members appoint the Manager.
5.2 Election and Removal of Manager.
A. Number, Term, Vacancy & Qualifications
As of the Effective Date, the Manager of the Company is SGI Management, LLC. The Manager shall hold office indefinitely unless the Manager dies, dissolves, resigns or is removed from office under Section 5.2C. Any
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vacancy occurring for any reason on the Manager shall be filled by a vote of the Majority Interest. A Manager need not be a Member, an individual, a resident of the State of California, or a citizen of the United States.
B. Resignation
The Manager may resign at any time by giving written notice to the Company without prejudice to the rights, if any, of the Company under any contract to which the Manager is a party. The resignation of the Manager shall take effect upon receipt of that notice or at such later time as shall be specified in the notice. Unless otherwise specified in the notice, the acceptance of the resignation shall not be necessary to make it effective. The resignation of the Manager who is also a Member shall not (i) affect the Manager’s rights as a Member; (ii) constitute a withdrawal of the Member; or (iii) affect any rights the Manager or the Manager’s Affiliate may have under any written agreement with the Company.
C. Removal
The Manager may be removed for Cause only if such Cause is found and agreed to by the affirmative vote of a Majority Interest. For the purposes of this section, “Cause” shall mean (i) the Manager’s continuing negligence or willful misconduct in performing his or her duties hereunder only if such conduct continues for a period of 10 days after notice of such conduct is provided by any Member; (ii) the Manager’s incapacity or inability to perform the necessary functions of the position, and such incapacity is not merely temporary; (iii) the Manager’s conviction of a felony, being found guilty of fraud, financial or investment deceit, embezzlement or misappropriation of corporate assets; (iv) the Manager’s material violation of law that is directly related to Manager’s duties under this Agreement; and/or (v) the commission of any intentional act that jeopardizes any state or municipal license to sell, own, operate or otherwise engage in the cannabis business.
5.3 Powers of Manager.
A. Powers of Manager Without limiting the generality of Section 5.1, and subject to the express limitations set forth elsewhere in this Agreement, the Manager shall have the exclusive right, authority, and all necessary powers to manage, control, and carry out the purposes, business, property, and affairs of the Company, including, but not limited to the right, authority, and power to make all decisions, and take all actions affecting the Company and the Company’s business and affairs, and to do so on behalf of the Company, all things that the Manager determines are necessary or appropriate to manage the Company's business, activities, and affairs to achieve the Company's purposes. In addition, the Manager has the right and power, in its sole discretion, to enter into, perform, carry out or reject any transaction except as may be expressly required otherwise in this Agreement.
5.4 Devotion of Time
The Manager (and no Affiliate of the Manager) is not obligated to devote all of its time or business efforts to the affairs of the Company. The Manager shall devote whatever time, effort, and skill it deems appropriate, in its sole discretion, for the management and operation of the Company.
5.5 Remuneration to Managers and their Affiliates. Except as otherwise specifically provided in or authorized in accordance with this Agreement, neither the Manager nor its Affiliates are entitled to remuneration for services rendered or goods provided to the Company, but no Manager or Affiliate of a Manager shall be prevented from receiving any fee or other remuneration because the Manager (or any of its Affiliates) is also a Member of the Company. The Manager and its Affiliates shall receive the following payments and benefits: the Company shall pay or reimburse the Manager and its Affiliates for all reasonable and necessary business expenses incurred or paid by such Manager and its Affiliates on the Company’s behalf, upon presentation to the Company of invoices or other acceptable documentation substantiating such expenses, and the Company will enter into an inventory management and logistics agreement with an Affiliate subject to a fee based on net revenue, in the form attached hereto as Exhibit B.
5.6 Membership Interests of Manager
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Except as otherwise provided in this Agreement, Membership Interests, if any, held by a Manager as a Member shall entitle them to all the rights of a Member, including without limitation the economic, voting, information and inspection rights of a Member.
5.7 Fiduciary Duties of Managers
Notwithstanding any other provision of this Agreement, the only fiduciary duties a Manager owes to the Company and the Members are the duty of loyalty and the duty of care set forth in subsections A and B below:
A. A Manager’s duty of loyalty to the Company and the Members is limited to the following:
To account to the Company and hold as trustee for the Company any property, profit, or benefit derived by the Manager in the conduct or winding up of the Company’s business or derived from any use by the Manager of Company property.
B. A Manager’s duty of care to the Company and the Members is limited to refraining from engaging in conduct that constitutes fraud, gross negligence or willful misconduct, or a knowing violation of law, the sole remedy for which, as to Manager, is set forth in Section 5.2C.
5.8 Limitation of Liability.
A. Liability of Managers Limited
No Person who is a Manager shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the Company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being a Manager.
5.9 Reasonable Reliance
The Manager (and its Affiliates) may rely on any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other document it believes to be genuine and to have been signed or presented by the proper party or parties. The Manager (and its Affiliates) may consult with any attorneys, accountants, appraisers, management consultants, investment bankers and other consultants (“Advisors”) it selects (who may also serve as Advisors for the Company). An opinion by any Advisor on a matter which the Manager (or any of its Affiliates) believes to be within the Advisor’s professional competence shall be complete protection as to any action or omission by the Manager (or any of its Affiliates) based in good faith on the opinion. No Manager (and no Affiliate of the Manager) shall be responsible for the misconduct, negligence, acts or omissions of any Advisor, agent or employee of the Company and assumes no obligations as to these Advisors, agents or employees except to use due care in selecting them.
5.10 Officers
The Manager may, from time to time as they deem advisable, appoint Officers and assign in writing titles (including, without limitation, Chief Executive Officer, Chief Operating Officer, Chief Cultivation Officer, Chief Financial Officer, and President) to any such person. Unless the Manager decides otherwise, if the title is one commonly used for officers of a business corporation formed under the Act, the assignment of such title shall constitute the delegation to such person of the authorities and duties that are normally associated with that office. Any delegation pursuant to this Section 5.10 may be revoked at any time by the Manager. Any compensation to any such Officers shall be subject to prior approval pursuant to Section 5.11.
5.11 Limitation on Power of Manager.
Notwithstanding anything herein to the contrary, the Manager will not have the authority to take, or to delegate to any other Person the authority to take, any of the following actions or enter into any of the following
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transactions without the prior consent of the Class E Members:
A. do any act that would make it impossible to carry on the business of the Company or otherwise cause the Company to undertake a fundamental change in its line of business; B. amend the Company’s articles of organization or this Agreement if such action would adversely affect the rights of other Members under this Agreement (including, without limitation, any amendment to the interest rate set forth in Section 3.6A, or this Section 5.11); C. issue additional Units, or otherwise create a new class of Units that adversely impact the Class E Member’s right to receive distributions pursuant to Section 6.9; or D. make any distribution pursuant to Section 6.9 in any form other than cash; or
5.12 Inventory Management Agreement.
The Manager shall have the authority to cause the Company to enter into an inventory management and logistics agreement with an Affiliate (the “IM Affiliate”).
ARTICLE VI
DISTRIBUTIONS
6.1 Distributions.
A. Subject to Section 6.2, distributions of Distributable Cash shall be made at least quarterly by the Company, and distributions of Net Proceeds from a Capital Transaction shall be made by the Company within sixty (60) days of such Capital Transaction. Distributions shall be made by the Company to the Members in accordance with their Percentage Interests.
6.2 Reimbursement of Members
In the event a Member makes an Advance or loan to the Company, such Advance or loan shall be fully reimbursed by the Company before the Members receive any distributions of Distributable Cash.
6.3 Form of Distribution
A Member, regardless of the nature of the Member’s Capital Contribution, has no right to demand and receive any distribution from the Company in any form other than money. Except as provided in Section 10.4, no Member may be compelled to accept from the Company (a) a distribution of any asset in kind in lieu of a proportionate distribution of money being made to other Members, or (b) a distribution of any asset in kind.
6.4 Restriction on Distribution.
A. No distribution shall be made if, after giving effect to the distribution, the Company would not be able to pay its debts as they become due in the usual course of business or if the Company has not set aside adequate cash reserves to cover anticipated Company expense or costs of improvements necessary for any Company property.
B. A Member or Manager who votes for a distribution in violation of this Agreement or the Act is personally liable to the Company for the amount of the distribution that exceeds what could have been distributed without violating this Agreement or the Act if it is established that the Member or Manager did not act in compliance with this Agreement. Any Member or Manager who is so liable shall be entitled to compel contribution from (i) each other Member or Manager who also is so liable; and (ii) each Member for the amount the Member received with knowledge of facts indicating that the distribution was made in violation of this Agreement or the Act.
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6.5 Return of Distributions
Members and Assignees who receive distributions made in violation of the Act or this Agreement shall return such distributions to the Company. Except for those distributions made in violation of the Act or this Agreement, no Member or Assignee shall be obligated to return any distribution to the Company or pay the amount of any distribution for the account of the Company or to any creditor of the Company. The amount of any distribution returned to the Company by a Member or Assignee or paid by a Member or Assignee for the account of the Company or to a creditor of the Company shall be added to the account or accounts from which it was subtracted when it was distributed to the Member or Assignee.
6.6 Inclusion of Assignee. For purposes of this Article VI, except for voting purposes, the term Member used throughout Article VI shall include an Assignee.
ARTICLE VII
TRANSFER OF INTERESTS
7.1 Restrictions on Transfer
No Member shall Transfer all or any of such Member’s Units except with the prior written consent of the Manager, not to be unreasonably conditioned, delayed, or withheld. Transfers in violation of this Article VII shall be effective only to the extent set forth in Section 7.7. After the consummation of any Transfer of any Units, the Units so Transferred shall continue to be subject to the terms and provisions of this Agreement and any further Transfers must comply with all the terms and provisions of this Agreement. For the avoidance of doubt, a Unit may only be Transferred in its entirety and the component parts comprising a Unit (e.g., economic rights, voting rights, etc.) may not be Transferred unless Transferred with the Unit.
7.2 Further Restrictions on Transfer of Units
In addition to other restrictions provided for in this Agreement, no Member shall Transfer all or any of that Member’s Units without compliance with applicable securities laws.
7.3 Substitution of Members
An Assignee of a Membership Interest shall have the right to become a substitute Member only if (i) the requirements of Sections 7.1 and 7.2 are met; (ii) the Manager has consented to such substitution in its sole discretion; (iii) the Assignee executes an instrument satisfactory to the Manager accepting and adopting the terms and provisions of this Agreement; and (iv) the Assignee pays any reasonable expenses in connection with such Assignee’s admission as a new Member as determined by the Manager. The admission of an Assignee as a substitute Member shall not result in the release of the Member who assigned the Membership Interest from any liability that such Member may have to the Company.
7.4 Permitted Transfers
Subject to compliance with Section 7.2, a Member may Transfer that Member’s Membership Interest as follows (each, a “Permitted Transfer”):
A. Any Transfer by any Member to a trustee of a trust solely for the benefit of such Member or any one or more Family Members of such Member, or both, provided that such Member alone (or together with such Member's spouse), is (are) the only trustee(s) of such trust during such time as such Member is alive and not disabled;
B. Any transfer made in connection with a pledge of the Company’s assets, subject to a limitation on the transfer of Class E Units.
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C. Any Transfer by any Member by will or intestate succession or distribution or other Transfer by reason of death to any one or more Family Members of such Member; and D. Any Transfer by any Member, the Manager or any Affiliate of the Manager to one or more of the following: any Member, the Manager, any Affiliate of the Manager and any employee of the Company; it being agreed that, in executing this Agreement, the Manager and the Members have consented to such Transfers.
7.5 Effective Date of Transfers
Any Transfer of all or any portion of an Economic Interest which complies with this Article VII shall be effective as of the later of (a) the date determined by the Transfer documentation or (b) the date upon which the requirements of Sections 7.1, 7.2 and 7.3 (collectively, “Transfer Requirements”) have been met. The Company shall provide the Members with written notice of such Transfer as promptly as possible after the Transfer Requirements have been met. Any transferee of a Membership Interest shall take subject to the restrictions on Transfer imposed by this Agreement.
7.6 Rights of Legal Representatives
If a Member who is an individual dies or is adjudged by a court of competent jurisdiction to be incompetent to manage the Member’s person or property, the Member’s executor, administrator, guardian, conservator, or other legal representative may exercise all of the Member’s rights for the purpose of settling the Member’s estate or administering the Member’s property, including any power the Member has under the Articles or this Agreement to give an assignee the right to become a Member. If a Member is a corporation, trust, or other entity and is dissolved or terminated, the powers of that Member may be exercised by his or her legal representative or successor.
7.7 No Effect to Transfers in Violation of Agreement.
A. Upon any Transfer of a Membership Interest in violation of this Article VII, the transferee shall have no right to vote on, approve or consent to any matter or participate in the management of the business, property and affairs of the Company or to exercise any rights of a Member. Such transferee shall only be entitled to rights relating to the Economic Interest that the holder of such Membership Interests would otherwise be entitled.
B. Except as otherwise provided in Section 7.4, on and contemporaneously with any Transfer of a Member’s Economic Interest which does not at the same time Transfer the balance of the rights associated with the Membership Interest Transferred by the Member (including, without limitation, the rights of the Member to vote or participate in the management of the business, property and affairs of the Company), the Company shall purchase from the Member, and the Member shall sell to Company for a purchase price of $100, all remaining rights and interests retained by the Member (including voting and inspection rights) that immediately before the Transfer were associated with the Transferred Economic Interest. Such purchase and sale shall not, however, result in the release of the Member from any liability to the Company as a Member.
C. Each Member acknowledges and agrees that the right of the Company to purchase such remaining rights and interests from a Member who Transfers a Membership Interest in violation of this Article VII is not unreasonable under the circumstances existing as of the date hereof.
7.8 Right of First Negotiation
The Company and the other Class A Members shall have a right of first offer on any Membership Interest that a Member desires to Transfer, other than a Transfer pursuant to Section 7.4. If any Member desires to Transfer all or any part of his or her Membership Interest other than pursuant to Section 7.4, such Member shall notify the Company and the other Members in writing of such desire and, for a period of thirty (30) days thereafter, the Members and the Company shall negotiate with respect to the purchase of such Member’s Membership Interest. During such period, the Member desiring to Transfer his or her Membership Interest may not solicit a transferee for such Membership Interest and may not continue any pending negotiations for the sale of the Membership Interest with third parties other than the Company.
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7.9 Right of First Refusal
If the period described in Section 7.8 expires without an agreement being reached as to the purchase of the Membership Interest referred to therein, the Member desiring to transfer his or her Membership Interest may solicit bona fide transferees. In such event, each time a Member proposes to transfer all or any part of his or her Membership Interest (or as required by operation of law or other involuntary transfer to do so) other than pursuant to Section 7.4, such Member shall first offer such Membership Interest to the Company and the non-transferring Class A Members in accordance with the following provisions:
A. Notice of Proposed Transfer
Such Member shall deliver a written notice (“Option Notice”) to the Company and the Members stating (i) such Member’s bona fide intention to transfer such Membership Interest; (ii) the Membership Interest to be transferred; (iii) the purchase price and terms of payment for which the Member proposes to transfer such Membership Interest; (iv) the nature of the proposed transfer (e.g., sale or pledge); and (v) the name and address of the proposed transferee, if any. The Member shall use commercially reasonable efforts to cause the Option Notice to be signed by the proposed transferee, if any, confirming the accuracy of the information contained therein. The proposed transferee shall not be an Affiliate of a Member unless the Manager approves otherwise in writing.
B. Company Option
Within thirty (30) days after receipt of the Option Notice, the Company shall have the right, but not the obligation, to elect to purchase all or any part of the Membership Interest upon the price and terms of payment designated in the Option Notice. If the Option Notice provides for the payment of non-cash consideration, the Company may elect to pay the consideration in cash equal to the good faith estimate of the present fair market value of the non-cash consideration offered as determined by the Manager. If the Company exercises such right within such thirty (30)-day period, the Manager shall give written notice of that fact to the transferring and non-transferring Members within seven (7) calendar days after the expiration of the thirty (30)-day period.
C. Members’ Option
If the Company fails to elect to purchase the entire Membership Interest proposed to be transferred within the thirty (30)-day period described in Section 7.9B, the non-transferring Class A Members shall have the right, but not the obligation, to elect to purchase any remaining share of such Membership Interest at the same price and on the same terms and conditions granted to the Company in Section 7.9B upon the same the price and terms of payment designated in the Option Notice. If the Option Notice provides for the payment of non-cash consideration, such purchasing Members each may elect to pay the consideration in cash equal to the good faith estimate of the present fair market value of the non-cash consideration offered as determined by the Manager. Within sixty (60) days after receipt of the Option Notice, each non-transferring Member shall notify the Manager in writing of his or her desire to purchase a portion of the Membership Interest proposed to be so transferred. The failure of any Members to submit a notice within the applicable period shall constitute an election on the part of that Members not to purchase any of the Membership Interest which may be so transferred. Each non-transferring Member so electing to purchase shall be entitled to purchase a portion of such Membership Interest in the same proportion that the Percentage Interest of such Members bears to the aggregate of the Percentage Interests of all of the Members electing to so purchase the Membership Interest being transferred. In the event any non-transferring Member elects to purchase none or less than all of his or her pro rata share of such Membership Interest, then the other non-transferring Members can elect to purchase more than their pro rata share.
D. Closing
If the Company and the other Members collectively elect to purchase or obtain all of the Membership Interest designated in the Option Notice, then the closing of such purchase shall occur within ninety (90) days after the Company’s receipt of the Option Notice. The Transferring Member, the Company and/or the other Members shall execute such documents and instruments and make such deliveries as may be reasonably required to consummate such purchase as determined by the Manager.
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E. Failure to Exercise Options
If the Company and the non-transferring Class A Members elect not to purchase or obtain, or default in their obligation to purchase or obtain, all of the Membership Interest designated in the Option Notice, then the transferring Member may transfer all of the Membership Interest described in the Option Notice to the proposed transferee providing such transfer (i) is completed within thirty (30) days after the expiration of the Company’s and the non- transferring Members’ right to purchase such Membership Interest; (ii) is made on the terms designated in the Option Notice; and (iii) complies with Sections 7.1, 7.2 and 7.3; it being acknowledged by the Members that compliance with Sections 7.8 and 7.9A-D does not modify any of the transfer restrictions in Article VII or otherwise entitle a Member to transfer his or her Membership Interest other than in the manner prescribed by Article VII. If such Membership Interest is not so transferred, the transferring Member must give notice in accordance with this Section prior to any other or subsequent transfer of such Membership Interest.
ARTICLE VIII
OPTIONAL PURCHASE EVENTS & TERMINATION OF MEMBERSHIP INTEREST
8.1 Optional Purchase Event Defined
As used in this Article VIII, “Optional Purchase Event” means, with respect to any Member the occurrence of any of the following events:
A. The death, withdrawal, resignation, retirement, insanity, bankruptcy or dissolution of a Member;
B. The failure of a Member to make the Member’s full initial Capital Contribution pursuant to the provisions of Section 3.1 of this Agreement;
C. The occurrence of any other event that is, or that would cause, a Transfer in contravention of this Agreement;
D. The filing by a Member of an action seeking a decree of judicial dissolution; or E. The failure of a Regulated Member to comply fully with the requirements of Section 4.11 or if, after disclosure of any information required under Section 4.11, any Regulatory Authority declines to issue to the Company any license or permit requested by the Company or states its intention to suspend or revoke any license or permit of the Company or states it intention to issue or permit to remain in effect any license or permit of the Company but only on a limited or conditional basis if such Member continues to be a Member.
8.2 Optional Purchase Event
Upon the occurrence of an Optional Purchase Event that is not a Permitted Transfer, the Company and/or the Members (“Remaining Members”) shall have the option to purchase, and if such option is exercised, the Member whose actions or conduct resulted in the Optional Purchase Event (“Former Member”) or such Former Member’s legal representative shall sell, the Former Member’s Units (“Former Member’s Units”) as provided in this Article VIII. Each Former Member agrees to give prompt notice of the Optional Purchase Event to the Manager.
8.3 Purchase Price.
Except as expressly provided otherwise in this Agreement, the purchase price for the Former Member’s Units shall be based on the fair market value of the Company’s assets as mutually agreed upon in good faith by the Former Member (or the Former Member’s legal representative) and the Manager. After determining the fair market value of the Company, the purchase price for the Former Member’s Units shall be calculated as an amount equal to the amount that would have been distributed to the Former Member if a sale of the Company’s asset for the fair market value occurred as of the date of the delivery of the notice of the Optional Purchase Event and all proceeds were distributed
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to the Members as set forth in Section 5.1(b), taking into account the repayment of all liabilities of the Company, the adjustment and prorations of accrued receivables and payables of Company and any sales taxes or other transfer taxes customarily paid by the seller in the jurisdiction where the Company’s assets are located and deemed sold.
A. If the Former Member and the Manager are unable to agree upon a fair market value of Company’s assets, then the price shall be the fair market value as determined by an independent appraiser mutually selected by the Manager and Former Member. Notwithstanding the foregoing, if the Optional Purchase Event results from a breach of this Agreement by the Former Member, the purchase price shall be reduced by an amount equal to any damages suffered by the Company, Company Affiliates, or the Remaining Members as a result of such breach and, as may be applicable, shall then be further reduced.
B. Notwithstanding the foregoing, if a Regulated Member is an entity, then prior to the Company taking any action under this section pursuant to 8.1(E), such Regulated Member shall be granted a sufficient amount of time to adjust its ownership structure to avoid any conflict with any Regulatory Authority.
8.4 Notice of Intent to Purchase
Within seven (7) days after the purchase price of the Former Member’s Units is determined in accordance with Section 8.3, the Manager (other than a Manager who is the Former Member) shall notify each Remaining Member of such price. Within fifteen (15) days after the Manager has notified the Remaining Members as to the purchase price of the Former Member’s Units determined in accordance with Section 8.3, each Remaining Member shall notify the Manager in writing of his or her desire to purchase a portion of the Former Member’s Units. The failure of any Remaining Member to submit a notice within the applicable period shall constitute an election on the part of the Member not to purchase any of the Former Member’s Units. Each Remaining Member so electing to purchase shall be entitled to purchase a portion of the Former Member’s Units in the same proportion that the Percentage Interest of the Remaining Member bears to the aggregate of the Percentage Interests of all of the Remaining Members electing to purchase the Former Member’s Units. Any Remaining Member may assign any or all of his or her purchase rights under this Article VIII to the Manager (other than a Manager who is the Former Member) and/or any other Remaining Members.
8.5 Election to Purchase Less than All of the Former Member’s Units If any Remaining Member elects to purchase none or less than all of his or her pro rata share of the Former Member’s Units, then the Remaining Members may elect to purchase more than their pro rata share. If the Remaining Members fail to purchase the entire Interest of the Former Member, the Company may purchase any remaining share of the Former Member’s Unites. If the Remaining Members and the Company do not elect to purchase all of the Former Member’s Units, such Interest shall be that of an Economic Interest only.
8.6 Payment of Purchase Price.
The purchase price shall be payable, at the option of the Manager, (i) in all cash at closing, or (ii) twenty percent (20%) cash at closing and the remainder pursuant to a four (4)-year nonnegotiable promissory note bearing interest at the Applicable Federal Rate for loans of an applicable duration, compounded annually on each anniversary of the note. The note shall be payable in monthly installments of principal and interest accrued to date, with payments as are necessary to fully amortize the note with equal payments of principal and interest over the four (4)-year term of the note. Interest shall be computed on the basis of a computational year of 360 days of equal 30-day months.
8.7 Closing of Purchase of Former Member’s Units
Unless court approval is required, the closing (“Closing”) for the sale of a Former Member’s Units pursuant to this Article VIII shall be held at 10:00 a.m. at the principal office of Company on a date selected by the Manager (other than a Manager who is the Former Member) that is not later than sixty (60) days after the determination of the purchase price, except that if the Closing date falls on a Saturday, Sunday, or California legal holiday, then the Closing shall be held on the next succeeding business day. If court approval is required, (i) the Closing of the sale of a Former Member’s Units shall occur not later that five (5) business days after entry of the order approving such sale; (ii) the
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Former Member or such Former Member’s legal representative shall file the application seeking court approval within thirty (30) days following the determination of the purchase price; and (iii) the parties to the court proceeding shall make every effort to obtain the court’s approval in an expeditious manner. At the Closing, the Former Member or such Former Member’s legal representative shall deliver to the Company and/or the Remaining Members an instrument of Transfer (containing warranties of title and no encumbrances) conveying the Former Member’s Units.
The Former Member or such Former Member’s legal representative, the Company and the Remaining Members shall do all things and execute and deliver all papers as may be necessary to consummate fully such sale and purchase in accordance with the terms and provisions of this Agreement.
8.8 Purchase Terms Varied by Agreement
Nothing contained in this Agreement is intended to prohibit Members from agreeing upon other terms and conditions for the purchase by the Company or any Member of the Membership Interest of any Member in the Company desiring to retire, withdraw or resign, in whole or in part, as a Member; provided that any such agreement must be approved in writing by the Manager (other than a Manager who is the Former Member).
ARTICLE IX
ACCOUNTING, RECORDS AND REPORTS
9.1 Books and Records. The accounting records of the Company shall be kept, and the financial position and the results of its operations recorded, in accordance with the accounting methods followed for federal income tax purposes. The books and records of the Company shall reflect all the Company transactions and shall be appropriate and adequate for the Company’s business. The Company shall maintain at its principal office in California all of the following:
A. A current list of the full name and last known business or residence address of each Member and Assignee set forth in alphabetical order, together with the Capital Contributions, Voting Interest, and Percentage Interest owned by each Member and Assignee;
B. A current list of the full name and business or residence address of the Manager; C. A copy of the Articles and any and all amendments thereto together with executed copies of any powers of attorney pursuant to which the Articles or any amendments thereto have been executed; D. Copies of the Company’s federal, state, and local income tax or information returns and reports, if any, for the six (6) most recent taxable years; E. A copy of this Agreement and any and all amendments thereto together with executed copies of any powers of attorney pursuant to which this Agreement or any amendments thereto have been executed; F. Copies of the financial statements of the Company, if any, for the six (6) most recent Fiscal Years; and
G. The Company’s books and records as they relate to the internal affairs of the Company for at least the current and past seven (7) Fiscal Years.
9.2 Delivery to Members and Inspection.
A. Upon the request of any Member or Assignee for purposes reasonably related to the interest of that Person as a Member or Assignee, the Manager shall promptly deliver to the requesting Member or Assignee, at the expense of the Company, a copy of the information required to be maintained under Sections 9.1A, B and D, and a copy of this Agreement.
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B. Each Member, Manager and Assignee has the right upon reasonable request, for purposes reasonably related to the interest of the Person as Member, Manager or Assignee, to:
(i) inspect and copy during normal business hours any of the Company records described in Sections 9.1A through G; and
(ii) obtain in writing from the Company, promptly after their becoming available, a copy of the Company’s federal, state, and local income tax or information returns for each Fiscal Year.
C. Any request, inspection or copying by a Member or Assignee under this Section 9.2 may be made by that Person or that Person’s agent or attorney.
D. The Manager shall promptly furnish (physically or by electronic transmission) to a Member a copy of any amendment to the Articles or this Agreement executed by the Manager pursuant to a power of attorney from the Member.
9.3 Annual Statements
The Manager shall cause to be prepared at least annually, at Company expense, information necessary for the preparation of the Members’ and Assignees’ federal and state income tax returns.
9.4 Financial and Other Information
The Manager shall provide or make available for inspection such financial and other information relating to the Company or any other Person in which the Company owns, directly or indirectly, an equity interest, as the Manager may deem appropriate. If the Company has more than thirty-five (35) Members, the Manager shall also provide such additional information as may be required by the Act.
9.5 Filings
The Manager, at Company expense, shall cause the income tax returns for the Company to be prepared and timely filed with the appropriate authorities. The Manager, at Company expense, shall also cause to be prepared and timely filed, with appropriate federal and state regulatory and administrative bodies, amendments to, or restatements of, the Articles and all reports required to be filed by the Company with those entities under the Act or other then current applicable laws, rules, and regulations. If the Manager required by the Act to execute or file any document fails, after demand, to do so within a reasonable period of time or refuses to do so, a Majority Interest may prepare, execute and file that document with the California Secretary of State.
9.6 Depository Accounts
The Manager shall maintain the funds of the Company in one or more separate bank, brokerage or other financial institution accounts in the name of the Company, and shall not permit the funds of the Company to be commingled in any fashion with the funds of any other Person.
9.7 Accounting Decisions and Reliance on Others
All decisions as to accounting matters, except as otherwise specifically set forth herein, shall be made by the Manager. The Manager may rely upon the advice of the Company's accountants as to whether such decisions are in accordance with accounting methods followed for federal income tax purposes.
9.8 Tax Returns
The Manager shall cause the Company’s tax preparers to prepare and timely file all federal, state and local tax returns required of the Company or any Affiliate, as applicable. The Manager shall from time to time cause the Company to make such income tax elections as it deems to be in the best interests of the Company and the Members.
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If there is a dispute as to the content of the Company’s tax returns, such returns shall be filed as directed by the Manager. All other Company tax return matters shall be handled by the Manager.
ARTICLE X
DISSOLUTION AND WINDING UP
10.1 Dissolution
The Company shall dissolve, its assets disposed of, and its affairs wound up on the first to occur of the following (each, a “Dissolution Event”):
A. Upon the entry of a decree of judicial dissolution pursuant to Act; B. Upon the affirmative vote, consent or approval of a Majority Interest, the Manager; C. The sale, condemnation or other disposition of all or substantially all of the Company's assets;
D. The happening of any event that makes it unlawful or impossible to carry on the business of the Company.
10.2 Articles of Dissolution
As soon as possible following the occurrence of a Dissolution Event, the Manager who has not wrongfully dissolved the Company (or, if none, the Members) shall execute an Articles of Dissolution in such form as shall be prescribed by the California Secretary of State and file such Articles as required by the Act. When all debts, liabilities, and obligations have been paid and discharged or adequate provisions have been made therefore and all of the remaining property and assets have been distributed to the Members, as noted below, the Manager (or, if none, the Members) shall execute an “Articles of Cancellation” in such form as shall be prescribed by the California Secretary of State and file such Articles as required by the Act.
10.3 Winding Up
Upon the occurrence of a Dissolution Event, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors, but the Company’s separate existence shall continue until a “Articles of Cancellation” has been filed with the California Secretary of State or until a decree dissolving the Company has been entered by a court of competent jurisdiction. The Manager who has not wrongfully dissolved the Company or, if none, the Members, shall be responsible for overseeing the winding up and liquidation of Company, shall take full account of the liabilities of Company and assets, shall either cause its assets to be sold or distributed, and if sold as promptly as is consistent with obtaining the fair market value thereof, shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in Section
10.4. The Persons winding up the affairs of the Company shall give written notice of the commencement of winding up by mail to all known creditors and claimants whose addresses appear on the records of the Company. The Manager or Members winding up the affairs of the Company shall be entitled to reasonable compensation for such services, which shall be deemed to be Two Hundred Fifty Dollars ($250) per hour of services rendered.
10.4 Order of Payment upon Dissolution.
After determining that all known debts and liabilities of the Company, including, without limitation, Advances, debts and liabilities to Members who are creditors of the Company, have been paid or adequately provided for, the remaining assets shall be distributed to the Members in accordance with Section 6.1 of this Agreement.
10.5 Limitations on Payments Made in Dissolution
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Except as otherwise specifically provided in this Agreement, each Member shall have no recourse for his or her Capital Contribution (upon dissolution or otherwise) against the Manager or any other Member.
10.6 No Action for Dissolution
Except as expressly permitted in this Agreement, a Member shall not take any voluntary action that directly causes a Dissolution Event. The Members acknowledge that irreparable damage would be done to the goodwill and reputation of the Company if any Member should bring an action in court to dissolve the Company under circumstances where dissolution is not required by Section 10.1. This Agreement has been drawn carefully to provide fair treatment of all parties and equitable payment in liquidation of the Economic Interests. Accordingly, except where the Manager has failed to liquidate the Company as required by this Article X, each Member hereby waives and renounces his or her right to initiate legal action to seek the appointment of a receiver or trustee to liquidate the Company or to seek a decree of judicial dissolution of the Company on the ground that (a) it is not reasonably practicable to carry on the business of the Company in conformity with the Articles or this Agreement, or (b) dissolution is reasonably necessary for the protection of the rights or interests of the complaining Member. Damages for breach of this Section 10.7 shall be monetary damages only (and not specific performance), and the damages may be offset against distributions by the Company to which such Member would otherwise be entitled.
ARTICLE XI
INDEMNIFICATION, INSURANCE & EXCULPATION
11.1 Indemnification of Agents
The Company shall Indemnify the Manager and the officers, directors, managers, partners, agents, shareholders, members and equity owners of the manager (each, a “Manager Party”) and may indemnify any other Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was a Member, Manager, Manager Party, employee or other agent of the Company or that, being or having been such a Member, Manager, Manager Party, employee or agent, he or she is or was serving at the request of the Company as a manager, director, officer, partner, employee or other agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to hereinafter as an “agent”), to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may hereafter from time to time permit. The Manager shall be authorized, on behalf of the Company, to enter into indemnity agreements from time to time with any Person entitled to be indemnified by the Company hereunder, upon such terms and conditions as the Manager deems appropriate in its business judgment.
11.2 Insurance
The Company shall have the power to purchase and maintain insurance on behalf of any Person who is or was an agent of the Company against any liability asserted against such Person and incurred by such Person in any such capacity, or arising out of such Person’s status as an agent, whether or not the Company would have the power to indemnify such Person against such liability under the provisions of this Article XI or the Act. In the event a Person shall receive payment from any insurance carrier or from the plaintiff in any action against such Person with respect to indemnified amounts after payment on account of all or part of such indemnified amounts having been made by the Company pursuant to this Article XI, such Person shall reimburse the Company for the amount, if any, by which the sum of such payment by such insurance carrier or such plaintiff and payments by the Company to such Person exceeds such indemnified amounts; provided, however, that such portions, if any, of such insurance proceeds that are required to be reimbursed to the insurance carrier under the terms of its insurance policy shall not be deemed to be payments to such Person hereunder. In addition, upon payment of indemnified amounts under the terms and conditions of this Agreement, the Company shall be subrogated to such Person’s rights against any insurance carrier with respect to such indemnified amounts (to the extent permitted under such insurance policies). Such right of subrogation shall be terminated upon receipt by the Company of the amount to be reimbursed by such Person pursuant to the second sentence of this Section 11.2.
11.3 Exculpation
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Notwithstanding any other provision of this Agreement, no Manager and no Manager Party shall be liable, responsible or accountable in damages or otherwise to the Company or any Member for any loss, liability, damage or expense incurred by reason of any act or omission performed or omitted by such Person either on behalf of the Company or in furtherance of the interests of the Company, and in a manner believed in good faith by such Person to be within the scope of the authority granted to such Person by this Agreement or by law, so long as such Person is not determined to be guilty, by a final adjudication of a court of competent jurisdiction, of gross negligence or gross misconduct with respect to such act or omission.
ARTICLE XII
MISCELLANEOUS
12.1 Counsel to the Company
Counsel to the Company may also be counsel to the Manager or any Affiliate of a Manager. The Manager may execute on behalf of the Company and the Members and the other Managers any waiver of conflicts of interest and any consents to the representation of the Company that any such counsel (“Company Counsel”) may request pursuant to the California Rules of Professional Conduct or similar rules in any other jurisdiction (“Rules”). Each Member and Manager acknowledges that Company Counsel does not represent any Member, Manager or any other Person in the absence of a clear and explicit written agreement to such effect between Company Counsel and such Member, Manager or other Person (as the case may be) and that in the absence of any such agreement Company Counsel shall owe no duties directly to any Member, Manager or other Person. Each Member and Manager acknowledges and agrees that such Member or Manager is represented by other independent legal counsel in connection with the preparation and execution of this Agreement to the extent such Member or Manager so chooses.
Notwithstanding any adversity that may develop, in the event any dispute or controversy arises between any Member or Manager and the Company, or between any Member or the Company, on the one hand, and the Manager (or Affiliate of the Manager) that Company Counsel represents, on the other hand, then each Member and Manager agrees that Company Counsel may represent either the Company or Manager (and/or Manager’s Affiliate), or both, in any such dispute or controversy to the extent permitted by the Rules, and each Member and Manager hereby consents to such representation.
12.2 Complete Agreement
This Agreement and the Articles constitute the complete and exclusive statement of agreement among the Members and Manager with respect to the subject matter herein and therein and replace and supersede all prior written and oral agreements or statements by and among the Members and Manager or any of them. No representation, statement, condition or warranty not contained in this Agreement or the Articles will be binding on the Members or Manager or have any force or effect whatsoever. To the extent that any provision of the Articles conflict with any provision of this Agreement, the Articles shall control.
12.3 Binding Effect
Subject to the provisions of this Agreement relating to transferability, this Agreement will be binding upon and inure to the benefit of the Members and Manager, and their respective successors and assigns.
12.4 Parties in Interest
Except as expressly provided in the Act, nothing in this Agreement shall confer any rights or remedies under or by reason of this Agreement on any Persons other than the Members and Manager and their respective successors and assigns nor shall anything in this Agreement relieve or discharge the obligation or liability of any third person to any party to this Agreement, nor shall any provision give any third person any right of subrogation or action over or against any of the Parties.
12.5 Pronouns; Statutory References
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All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine, or neuter, singular or plural, as the context in which they are used may require. Any reference to the Code, the Regulations, the Act, the Act or other statutes or laws will include all amendments, modifications, or replacements of the specific sections and provisions concerned.
12.6 Headings
All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.
12.7 References to this Agreement
Numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of this Agreement unless otherwise expressly stated.
12.8 Governing Law; Dispute Resolution and Jurisdiction A. This Agreement is governed by and shall be construed in accordance with the laws of the State of California, excluding any conflict-of-laws rule or principle that might refer the governance or the construction of this Agreement to the law of another jurisdiction. The parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation between the Members and the Manager. Any party may give the other written notice of the dispute not resolved in the normal course of business. Within 15 days after delivery of the notice, the receiving party shall submit to the other a written response. The notice and response shall include with reasonable particularity (a) a statement of each party's position and a summary of arguments supporting that position, and (b) the name and title of the person who will represent that party and of any other person who will accompany the executive. Within 30 days after delivery of the notice, the both parties shall meet at a mutually acceptable time and place.
B. Unless otherwise agreed in writing by the negotiating parties, the above-described negotiation shall end at the close of the first meeting of Members described above ("First Meeting"). Such closure shall not preclude continuing or later negotiations, if desired.
C. All offers, promises, conduct and statements, whether oral or written, made in the course of the negotiation by any of the parties, their agents, employees, experts and attorneys are confidential, privileged and inadmissible for any purpose, including impeachment, in arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non- discoverable as a result of its use in the negotiation.
D. At no time prior to the First Meeting shall either side initiate an arbitration or litigation related to this Agreement except to pursue a provisional remedy that is authorized by law or by AAA Rules or by agreement of the parties. However, this limitation is inapplicable to a party if the other party refuses to comply with the requirements of Paragraph 1 above.
E. All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedures specified in Paragraphs 1 and 2 above are pending and for 15 calendar days thereafter.
The parties will take such action, if any, required to effectuate such tolling.
F. If the negotiation set forth above is not successful the Parties shall then attempt to mediate the dispute in good faith through mediation before a retired judge. The Parties shall select a mediator within ten (10) calendar days from the date a party requests mediation in writing. Mediation shall be scheduled within thirty (30) days from the time the mediator is selected. In the event a party fails to mediate before seeking arbitration or filing an action, that party shall not be entitled to recover attorney’s fees if that party would otherwise have been entitled to them as a prevailing party.
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G. If the negotiation and mediation process set forth above is not successful any dispute shall be finally determined by arbitration in the city of Los Angeles, California in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then in effect (the “Rules”), except as modified herein. There shall be one arbitrator who shall be agreed upon by the Parties within twenty (20) calendar days of receipt by respondent(s) of a copy of the demand for arbitration. If any arbitrator is not appointed within the time limit provided herein, such arbitrator shall be appointed by the AAA in accordance with the listing, striking and ranking procedure in the Rules, with each Party being given a limited number of strikes, except for cause. Any arbitrator appointed by the AAA shall be a retired California federal or state court judge. The arbitration hearing on the merits shall be commenced within ninety (90) calendar days of the appointment of the arbitrator(s) or as soon thereafter as practicable. In rendering an award, the arbitral tribunal shall be required to follow the laws of the State of California and allow discovery in accordance with the California Code of Civil Procedure. The award shall be in writing and shall state the findings of fact and conclusions of law on which it is based. The arbitrator(s) shall be permitted to award any relief permitted under the Act, including damages and any form of temporary or permanent injunctive relief, but shall not be permitted to award special, indirect, punitive or incidental damages or damages for lost profits or any other consequential damages or damages based on multiples or similar valuation techniques. The award shall be final and binding upon the Parties and shall be the sole and exclusive remedy between the Parties regarding any claims, counterclaims, issues or accounting presented to the arbitrator. Judgment upon the award may be entered in any court having jurisdiction over any Party or any of its assets. Any costs or fees (including attorneys’ fees and expenses) incident to enforcing the award shall be charged against the Party or Parties resisting such enforcement.
H. The Members and Manager agree, and the appointed arbitrator shall agree as part of his/her acceptance of nomination, to keep confidential and not disclose to persons not connected with the arbitration the details of the arbitration and all information received by them in connection therewith, except as may be required by process of law. Except as may be required by law or required to secure a judgment on the arbitration award, neither the Parties nor the arbitrator shall disclose the existence, content or results of any arbitration conducted hereunder without the prior written consent of the Parties.
I. The Parties recognize that cannabis related businesses are illegal under United States federal law, but are permitted under California law if in compliance with California statutes and regulations. The Parties agree not to raise any defense or make any argument against the enforceability or performance of this Agreement based on the illegality of cannabis under United States federal law, or the law of any other state. To further effectuate the intent of the immediately preceding sentence, the Parties agree that an arbitrator shall dismiss any claim or defense based on illegality of cannabis under federal law or the law of any other state, and that the arbitrator shall sustain objection to and shall strike any argument or evidence based on such illegality and shall not consider such illegality in rendering any decision or making any order.
12.9 Attorneys’ Fees
If any dispute between or among any of the Parties arises out of or relating to this Agreement, any transaction contemplated by this Agreement, the Company and/or the business or operations of the Company, whether to enforce any of the terms or conditions of this Agreement or otherwise, the prevailing party in any suit or other proceedings shall, as an additional item of damages, recover its reasonable attorneys’ fees and court costs, expert witness, consultant and like costs, or costs of such other proceedings as may be fixed by any court, or other judicial or quasi- judicial body having jurisdiction thereof, including without limitation any costs incurred in any appeal and in any collection effort, whether or not such litigation or proceedings proceed to a final judgment or award.
12.10 Exhibits
All Exhibits attached to this Agreement are incorporated and shall be treated as if set forth herein.
12.11 Severability
If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby.
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12.12 Specific Performance
The Members and Manager agree that irreparable damage will result if this Agreement is not performed in accordance with its terms, and the Members and Manager agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, the provisions hereof and the obligations of the Members and Manager hereunder shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement shall, however, be cumulative and not exclusive and shall be in addition to any other remedies that a Member or Manager may have under this Agreement, at law or in equity.
12.13 Additional Documents and Acts
Each Member and Manager agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreement and the transactions contemplated hereby.
12.14 Notices
All notices, requests, demands, and other communications required to or permitted to be given under this Agreement shall be in writing and shall be conclusively deemed to have been duly given (1) when hand delivered to the other party; or (2) when sent by electronic mail (“email”) (provided, however, that notices given by email shall not be effective unless either (a) an electronic return receipt is requested and received, or (b) the receiving party delivers a written confirmation of receipt for such notice either by any method permitted under this paragraph; additionally, any notice given by email shall be deemed received on the next business day if such notice is received after 5:00 p.m. (recipient's time) or on a nonbusiness day; or (3) when received when sent by telex or facsimile (provided, however, that notices given by facsimile shall not be effective unless either (a) a duplicate copy of such facsimile notice is promptly given by depositing same in a United States post office with first-class postage prepaid and addressed to the parties, or (b) the receiving party delivers a written confirmation of receipt for such notice either by facsimile or any other method permitted under this paragraph; additionally, any notice given by telex or facsimile shall be deemed received on the next business day if such notice is received after 5:00 p.m. (recipient's time) or on a nonbusiness day); or (4) the next business day after same have been deposited with a national overnight delivery service reasonably approved by the parties (Federal Express and DHL WorldWide Express being deemed approved by the parties), postage prepaid with the next-business-day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. Any and all attachments to email shall be in a commonly acceptable electronic format, which, unless otherwise agreed to by confirming email, shall be limited to the following; MS Word document (.doc); Adobe Acrobat (.pdf); and HTML (.html). Attachments in any other format shall not constitute Notice for the purpose of this Agreement. In the case of the Employee, notices shall be sent to the street addresses, facsimile numbers or electronic mail addresses, which Employee most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be sent to the Manager at the street addresses, facsimile numbers or electronic mail addresses address of the Company’s headquarters.
12.15 Amendments
Except as otherwise expressly provided in this Agreement (including Section 5.11), all amendments to this Agreement will be in writing and approved and signed by the Manager, except that any Amendment that (1) effects a Member’s Distribution Percentage and/or the distribution preference set forth in Article 6, or (2) materially and adversely affect the rights hereunder of any of the Members in a manner that is disproportionate to its effect on the rights of the other Members, shall require the affirmative vote or written consent of the impacted Member, provided that this section will not apply to decisions that impact all Members generally. In the absence of any opinion of counsel as to the effect thereof, no amendment to this Agreement or the Articles shall be made which violates the Act.
Notwithstanding anything to the contrary in this Agreement, (a) no such amendment shall eliminate any requirement in this Agreement for an affirmative vote of a Majority Interest unless such modification is approved by the Manager and by the specified affirmative vote of a Majority Interest, and (b) this Agreement may be amended by the Manager without the vote, consent, or approval of any Member, to amend Exhibit A, in accordance with Section 3.2.
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12.16 Reliance on Authority of Person Signing Agreement If a Member is not a natural person, neither the Company nor any other Member will (a) be required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of such entity or to determine any fact or circumstance bearing upon the existence of the authority of such individual; or (b) be responsible for the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf of such entity.
12.17 No Interest in Company Property; Waiver of Action for Partition No Member or Assignee has any interest in specific property of the Company. Without limiting the foregoing, each Member and Assignee irrevocably waives during the term of the Company any right that he or she may have to maintain any action for partition with respect to the property of the Company.
12.18 Multiple Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
12.19 Remedies Cumulative
The remedies under this Agreement are cumulative and shall not exclude any other remedies to which any person may be lawfully entitled.
12.20 Special Power of Attorney.
A. Attorney-in-Fact
Each Member hereby grants the Manager (and its successor Manager, if any), a special power of attorney irrevocably making, constituting, and appointing each of them as the Member’s attorney-in-fact, with full power of substitution and with all power and authority to act in the Member’s name and on the Member’s behalf to execute, acknowledge and deliver and swear to in the execution, acknowledgement, delivery and filing of the following documents:
(i) Any amendment to this Agreement as provided in Section 4.2; (ii) Assignments of Units or other documents of transfer to be delivered pursuant Section 7.7 or Article VIII;
(iii) Any other instrument or document that may be reasonably required by the Manager in connection with any of the foregoing or to reflect any reduction in the Member’s Percentage Interest pursuant to Section 3.3;
(iv) Any other instrument or document that may be required to be filed by the Company under appropriate state law or by any governmental agency or authority or that the Manager deems it in the best interest of the Company to so file;
(v) Any waiver of any conflicts of interest and any consent to the representation of the Company by any legal counsel selected by the Manager as described in Section 12.1; and (vi) Any amendment to this Agreement and/or the Articles as may be necessary or appropriate to give effect to any or all of the following transactions following any necessary approvals or consents of the Members: (a) admissions of additional Members; (b) transfers of Membership Interests; (c) withdrawals or distributions of Capital Contributions or Distributable Cash; (d) contributions of additional capital; or (e) changes in the amount of Capital Contribution, Voting Interest, or Percentage Interest of any Member.
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Each Member authorizes each such attorney in fact to take any action necessary or advisable in connection with the foregoing, hereby giving each attorney in fact full power and authority to do and perform each and every act or thing whatsoever requisite or advisable to be done in connection with the foregoing as fully as such Member might or could do so personally, and hereby ratifying and confirming all that any such attorney in fact shall lawfully do or cause to be done by virtue thereof or hereof.
B. Irrevocable Power
This power of attorney is a special power of attorney coupled with an interest and (a) is irrevocable; (b) may be exercised by any such attorney in fact by listing the Member executing any agreement, certificate, instrument, or other document with the single signature of any such attorney-in-fact acting as attorney-in-fact for such Members; (c) shall survive the death, disability, legal incapacity, bankruptcy, insolvency, dissolution, or cessation of existence of a Member; and (d) shall survive the delivery of an assignment by a Member of the whole or a portion of his Membership Interest in the Company, except that where the assignment is of such Member’s entire Membership Interest in the Company and the Assignee is admitted as a Member under the terms of this Agreement, the power of attorney shall survive the delivery of such assignment for the sole purpose of enabling any such attorney in fact to effect such substitution.
12.21 Estoppel Articles
Each Member shall, within ten (10) days after written request by the Manager, deliver to the requesting Person a certificate stating, to the Member’s knowledge, that: (a) this Agreement is in full force and effect; (b) this Agreement has not been modified except by any instrument or instruments identified in the certificate; and (c) there is no default hereunder by such Member, the Company or the Manager, or if there is a default, the nature or extent thereof.
12.22 Waiver. No waiver by any party to this Agreement of any breach of, or default under, this Agreement by any other party shall be construed or deemed a waiver of any other breach of or default under this Agreement, and shall not preclude any party from exercising or asserting any rights under the Agreement with respect to any other breach or default.
12.23 Limited Appraisal or Dissenters' Rights
Each Member hereby waives any and all statutory appraisal or dissenters' rights described in the Act to the fullest extent permitted by the Act, except for any conversion or merger that does not require the approval of all Members and is a merger in which any Member would become personally liable for any obligations of a constituent limited liability company or constituent other business entity as a result of the transaction, including but not limited to a conversion of the Company into, or the merger of the Company with, a limited partnership, the terms of which would otherwise require any Member to become a general partner of a limited partnership.
12.24 Consent of Spouse
Each Member shall cause his or her spouse to execute the form of consent attached to this Agreement when such Member executes this Agreement. Immediately after any individual Member marries or re-marries, such Member shall cause his or her spouse to execute the form of consent attached to this Agreement.
12.25 Confidentiality.
A. Each Member and the Manager hereby undertakes and agrees (with respect to such Member or Manager and not with respect to the other Members) to:
(i) treat and hold as confidential any information concerning the business or affairs of the Company (the “Disclosing Party”) that is not already generally available to the public or does not become generally available to the public following the date hereof (the “Confidential Information”);
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(ii) refrain from using any of the Confidential Information except in connection with this Agreement; and
(iii) deliver promptly to the Company, or destroy, at the request and option of the Company, all embodiments (including all copies) of the Confidential Information which are in such Member’s or Manager’s possession or under such Member’s or Manager’s control.
B. For the avoidance of doubt, the restrictions of this Agreement on the use and disclosure of Confidential Information by each Member or Manger shall not apply to information that:
(i) was publicly known at the time of Disclosing Party’s communication thereof to such Member or Manager;
(ii) becomes publicly known through no action or fault of such Member or Manager subsequent to the time of Disclosing Party’s communication thereof to such Member or Manager; or (iii) was otherwise disclosed with the written permission of Disclosing Party.
C. In the event that any Member or Manager is requested or required (by oral question or request for information or documents in any proceeding, or by interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, such Member or Manager shall notify the Company promptly in writing of the request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Section 12.25C.
D. If, in the absence of a protective order or the receipt of a waiver hereunder, any Member or Manager is, on the written advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, such Member or Manager may disclose the Confidential Information to the tribunal; provided, that such disclosing Member or Manager shall use best efforts to obtain, at the request and sole cost and expense of the Company, an order or other assurance that confidential treatment shall be accorded to such portion of the Confidential Information required to be disclosed as the Company shall designate. [Signature Page Follows]
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IN WITNESS WHEREOF, the parties have signed this Agreement on the date first written above and each of the individuals signing below warrants that he or she has the authority to sign for and on behalf of the respective parties.
Class A Member
By: _____________________________
Name: James Kim
Class E Member
By: _____________________________
Name: Brian Mitchell
By: _____________________________
Name: Tony Huang
Manager
By:_____________________________
James Kim, Manager SGI Management, LLC
728 E. Commercial Ave.
Los Angeles, CA 90012
[email protected]
EXHIBIT A
NAMES, ADDRESSES, UNIT CLASS, CAPITAL CONTRIBUTIONS, UNITS, VOTING INTERESTS, AND PERCENTAGE INTERESTS OF
MEMBERS AND ASSIGNEES
AND NAMES AND ADDRESSES OF MANAGER
Member’s Name and Address Unit Class Number of Units Percentage Interest James Kim
2001 S. Alameda St.
Los Angeles, CA 90058
Class A 20,000 20%
Brian Mitchell
120 Via Trieste
Newport Beach, CA 92663
Class E 40,000 40%
Tony Huang
3726 Las Vegas Blvd.
S Unit 2012 W
Las Vegas, NV 89158
Class E 40,000 40%
TOTAL 100,000 100%
MANAGER
Manager's Name
Manager’s Address
SGI Management, LLC 728 E. Commercial Ave.
Los Angeles, CA 90012
EXHIBIT B
Inventory Management Agreement
See attached.
CONSENT OF SPOUSE
The undersigned spouse(s) of the party (parties) to the foregoing Agreement acknowledge(s) on his or her own behalf that: I have read the foregoing Agreement and I know and understand its contents. I have been given the opportunity to review the Agreement with my own independent legal counsel. I am aware that by the provisions of the Agreement, my spouse grants the Company and/or the other Members and/or the Manager an option to purchase all of his or her Membership Interest, including my community and other interests (if any) in it. I hereby consent to the sale, approve of all of the terms, conditions and provisions of the Agreement, and agree (a) that such Membership Interest and my interest in it are subject to the provisions of the Agreement, (b) that my spouse may join in any future modifications and amendments of the foregoing Agreement without any further signature, acknowledgment, agreement or consent on my part, and (c) that any interest I may have in such Membership Interest and/or rights under the Agreement shall be subject to the provisions of the foregoing Agreement, and (c) that I will take no action at any time to hinder operation of the Agreement on such Membership Interest or my interest (if any) in it.
Signature
Print Name
For Office Use Only
-FILED-
File No.: BA20230556144
Date Filed: 3/28/2023
BYLAWS
OF
STIIIZY INC.
(A DELAWARE CORPORATION)
1. ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in the State of Delaware shall be as set forth in the Certificate of Incorporation.
Section 2. Other Offices. The corporation will also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal. The Board of Directors may adopt a corporate seal. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS’ MEETINGS
Section 4. Place of Meetings. Meetings of the stockholders of the corporation may be held at such place, either within or without the State of Delaware, as may be determined from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting will not be held at any place, but may instead be held solely by means of remote communication as provided under the Delaware General Corporation Law (the “DGCL”).
Section 5. Annual Meeting.
(a) The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other business as may lawfully come before it, will be held on such date and at such time as may be designated from time to time by the Board of Directors. Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the corporation’s notice of meeting of stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the corporation who was a stockholder of record at the time of giving of notice provided for in the following paragraph, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section.
(b) At an annual meeting of the stockholders, only such business will be conducted as has been properly brought before the meeting. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a) of this Section, (i) the stockholder must have given timely notice thereof in writing to the Secretary of the corporation, (ii) such other business must be a proper matter for stockholder action under the DGCL and applicable law, (iii) if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the corporation with a Solicitation Notice (as defined in this paragraph), such stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to
2. holders of a percentage of the corporation’s voting shares reasonably believed by such stockholder or beneficial owner to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the Solicitation Notice, and (iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this Section, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section. To be timely, a stockholder’s notice will be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. In no event will the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice will set forth: (A) as to each person whom the stockholder proposed to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”), and Rule 14a-4(d) thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the corporation that are owned beneficially and of record by such stockholder and such beneficial owner, and (iii) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of the proposal, at least the percentage of the corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the corporation’s voting shares to elect such nominee or nominees (an affirmative statement of such intent, a “Solicitation Notice”). (c) Notwithstanding anything in the second sentence of paragraph (b) of this Section to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.
(d) Only such persons who are nominated in accordance with the procedures set forth in this Section (or elected or appointed pursuant to Article IV of these Bylaws) will be eligible to serve as directors and only such business will be conducted at a meeting of stockholders as has been brought before the meeting in accordance with the procedures set forth in this Section. Except as otherwise provided by law, the chair of the meeting will have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with
3. these Bylaws, to declare that such defective proposal or nomination will not be presented for stockholder action at the meeting and will be disregarded.
(e) Notwithstanding the foregoing provisions of this Section, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders’ meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Nothing in these Bylaws is deemed to affect any rights of stockholders to request inclusion of proposals in the corporation proxy statement pursuant to Rule 14a-8 under the 1934 Act. (f) For purposes of this Section, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13, 14 or 15(d) of the 1934 Act.
Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the Chair of the Board of Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors pursuant to a resolution adopted by directors representing a quorum of the directors then serving on the Board of Directors or (iv) the holders of shares entitled to cast not less than 25% of the votes at the meeting, and will be held at such place, on such date, and at such time as the Board of Directors will fix. At any time or times that the corporation is subject to Section 2115(b) of the California General Corporation Law (the “CGCL”), stockholders holding 5% or more of the outstanding shares will have the right to call a special meeting of stockholders as set forth in Section 18(b) of these Bylaws. (b) If a special meeting is properly called by any person or persons other than the Board of Directors, the request must be in writing, specifying the general nature of the business proposed to be transacted, and must be delivered personally or sent by certified or registered mail, return receipt requested, or by telegraphic or other facsimile transmission to the Chair of the Board of Directors, the Chief Executive Officer, or the Secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The Board of Directors will determine the time and place of such special meeting, which will be held not less than 35 nor more than 120 days after the date of the receipt of the request. Upon determination of the time and place of the meeting, the officer receiving the request will cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of Section 7 of these Bylaws. Nothing contained in this paragraph (b) is to be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held.
Section 7. Notice of Meetings. Except as otherwise provided by law, notice, given in accordance with Section 232 the DGCL, of each meeting of stockholders will be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, if any, date and hour, in the case of special meetings, the purpose or purposes of the meeting, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at any such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation. Notice of the time, place, if any, and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof or by electronic transmission by such person, either before or after such meeting, and will be waived by any stockholder by such stockholder’s attendance thereat in person, by remote communication, if applicable, or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any
4. stockholder so waiving notice of such meeting will be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, the presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote will constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chair of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business will be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, the affirmative vote of a majority of shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the meeting and entitled to vote generally on the subject matter will be the act of the stockholders. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, directors will be elected by a plurality of the votes of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the meeting and entitled to vote generally on the election of directors. Where a separate vote by a class or classes or series is required, except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series, present in person, by remote communication, if applicable, or represented by proxy duly authorized, will constitute a quorum entitled to take action with respect to that vote on that matter. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, the affirmative vote of the majority (plurality, in the case of the election of directors) of shares of such class or classes or series present in person, by remote communication, if applicable, or represented by proxy at the meeting will be the act of such class or classes or series.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chair of the meeting or by the vote of a majority of the shares present in person, by remote communication, if applicable, or represented by proxy. When a meeting is adjourned to another time or place (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication), if any, notice need not be given of the adjourned meeting if the time and place, if any, thereof are (a) announced at the meeting at which the adjournment is taken, (b) displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxy holders to participate in the meeting by means of remote communication or (c) set forth in the notice of meeting of stockholders. At the adjourned meeting, the corporation may transact any business that might have been transacted at the original meeting pursuant to the Certificate of Incorporation, these Bylaws or applicable law. If the adjournment is for more than 30 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting.
Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as provided in Section 12 of these Bylaws, will be entitled to vote at any meeting of stockholders. Every person entitled to vote or execute consents will have the right to do so either in person, by remote communication, if applicable, or by an agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a stockholder. No proxy will be voted after three years from its date of creation unless the proxy provides for a longer period.
5. Section 11. Joint Owners of Stock. If shares or other securities having voting power stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship where it is so provided, their acts with respect to voting (including giving consent pursuant to Section 13) will have the following effect: (a) if only one votes, such person’s act binds all; (b) if more than one votes and the vote is not evenly split, the act of the majority so voting binds all; (c) if more than one votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the DGCL, Section 217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) will be a majority or even-split in interest.
Section 12. List of Stockholders. The Secretary will prepare, no later than the tenth day before each meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list will be open to the examination of any stockholder for any purpose germane to the meeting for a period of ten days ending on the day before the meeting date, on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation.
Section 13. Action Without Meeting.
(a) Unless otherwise provided in the Certificate of Incorporation, any action required by statute to be taken at any annual or special meeting of the stockholders, or any action that may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents setting forth the action so taken, will be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. (b) A consent must be set forth in writing or in an electronic transmission. No consent will be effective to take the corporate action referred to therein unless consents signed by a sufficient number of stockholders to take action are delivered to the corporation in the manner required by the DGCL within 60 days of the first date on which a consent is so delivered to the corporation. All references to a consent in this Section mean a consent permitted by Section 228 of the DGCL.
(c) Prompt notice of the taking of the corporate action without a meeting by less than unanimous consent will be given to those stockholders who have not consented and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that consents signed by a sufficient number of stockholders to take action were delivered to the corporation as provided in Section 228 of the DGCL. If the action to which the stockholders consented is such as would have required the filing of a certificate under any section of the DGCL if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section must state, in lieu of any statement required by such section concerning any vote of stockholders, that consent has been given in accordance with Section 228 of the DGCL.
(d) A consent permitted by this Section shall be delivered: (i) to the principal place of business of the corporation; (ii) to an officer or agent of the corporation having custody of the book in which proceedings
6. of meetings of stockholders are recorded; (iii) to the registered office of the corporation in the State of Delaware by hand or by certified or registered mail, return receipt requested; (iv) subject to the next sentence, in accordance with Section 116 of the DGCL to an information processing system, if any, designated by the corporation for receiving such consents; or (v) when delivered in such other manner that complies with the DGCL. In the case of delivery pursuant to the foregoing clause (iv), such consent must set forth or be delivered with information that enables the corporation to determine the date of delivery of such consent and the identity of the person giving such consent, and, if such consent is given by a person authorized to act for a stockholder or member as proxy, such consent must comply with the applicable provisions of Section 212(c)(2) & (3) of the DGCL. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. A consent may be documented and signed in accordance with Section 116 of the DGCL, and when so documented or signed shall be deemed to be in writing for purposes of the DGCL; provided that if such consent is delivered pursuant to clause (i), (ii) or (iii) of subsection (d)(1) of Section 228 of the DGCL, such consent must be reproduced and delivered in paper form.
Section 14. Organization.
(a) At every meeting of stockholders, the Chair of the Board of Directors, or, if a Chair has not been appointed or is absent, the Chief Executive Officer, or, if the Chief Executive Officer is absent, a chair of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, will act as chair. The Secretary, or, in the Secretary’s absence, an Assistant Secretary directed to do so by the Chief Executive Officer, will act as secretary of the meeting. (b) The Board of Directors is entitled to make such rules or regulations for the conduct of meetings of stockholders as it deems necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chair of the meeting has the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chair, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies and such other persons as the chair permits, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters that are to be voted on by ballot. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting will be announced at the meeting. Unless and to the extent determined by the Board of Directors or the chair of the meeting, meetings of stockholders will not be required to be held in accordance with rules of parliamentary procedure.
7. ARTICLE IV
DIRECTORS
Section 15. Number and Term of Office. The authorized number of directors of the corporation will be fixed by the Board of Directors from time to time. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the directors have not been elected at an annual meeting, they may be elected as soon thereafter as convenient.
Section 16. Powers. The business and affairs of the corporation will be managed by or under the direction of the Board of Directors, except as otherwise provided by statute or by the Certificate of Incorporation.
Section 17. Term of Directors.
(a) Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, directors will be elected at each annual meeting of stockholders to serve until such director’s successor is duly elected and qualified or until such director’s death, resignation or removal. No decrease in the number of directors constituting the Board of Directors will shorten the term of any incumbent director.
(b) No person entitled to vote at an election for directors may cumulate votes to which such person is entitled, unless, at the time of such election, the corporation is subject to Section 2115(b) of the CGCL.
During such time or times that the corporation is subject to Section 2115(b) of the CGCL, every stockholder entitled to vote at an election for directors may cumulate such stockholder’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such stockholder’s shares are otherwise entitled, or distribute the stockholder’s votes on the same principle among as many candidates as such stockholder thinks fit. No stockholder, however, will be entitled to so cumulate such stockholder’s votes unless (i) the names of such candidate or candidates have been placed in nomination prior to the voting and (ii) the stockholder has given notice at the meeting, prior to the voting, of such stockholder’s intention to cumulate such stockholder’s votes. If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.
Section 18. Vacancies.
(a) Unless otherwise provided in the Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors will, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships will be filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director; provided, however, that whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series will, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships must be filled by stockholders, be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. Any director elected in accordance with the preceding sentence will hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor has been elected and
8. qualified. A vacancy in the Board of Directors will be deemed to exist under this Bylaw in the case of the death, removal or resignation of any director.
(b) At any time or times that the corporation is subject to Section 2115(b) of the CGCL, if, after the filling of any vacancy, the directors then in office who have been elected by stockholders constitute less than a majority of the directors then in office, then
(i) any holder or holders of an aggregate of 5% or more of the total number of shares at the time outstanding having the right to vote for those directors may call a special meeting of stockholders; or (ii) the Superior Court of the proper county will, upon application of such stockholder or stockholders, summarily order a special meeting of the stockholders, to be held to elect the entire board, all in accordance with Section 305(c) of the CGCL, the term of office of any director will terminate upon that election of a successor.
Section 19. Resignation. Any director may resign at any time by delivering such director’s notice in writing or by electronic transmission to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it will be deemed effective at the pleasure of the Board of Directors. When one or more directors resigns from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, will have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations become effective, and each director so chosen will hold office for the unexpired portion of the term of the director whose place is vacated and until such director’s successor has been duly elected and qualified.
Section 20. Removal.
(a) Subject to any limitations imposed by applicable law and unless otherwise provided in the Certificate of Incorporation, the Board of Directors or any director may be removed from office at any time, with or without cause, by the affirmative vote of the holders of a majority of the voting power of all then- outstanding shares of capital stock of the corporation entitled to vote generally at an election of directors. (b) During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or any individual director may be removed from office at any time without cause by the affirmative vote of the holders of a majority of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board of Directors is removed, no individual director may be removed when the votes cast against such director’s removal, or not consenting in writing to such re moval, would be sufficient to elect that director if voted cumulatively at an election in which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director’s most recent election were then being elected.
Section 21. Meetings
(a) Regular Meetings. Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of Directors may be held at any time or date and at any place within or without the State of Delaware that has been designated by the Board of Directors and publicized among all directors, either orally or in writing, including a voice-messaging system or other system designated to record and communicate messages, facsimile, or by electronic mail or other electronic means. No further notice will be required for a regular meeting of the Board of Directors.
9. (b) Special Meetings. Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chair of the Board of Directors, the Chief Executive Officer (if a director), the President (if a director) or any director.
(c) Meetings by Electronic Communications Equipment. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means constitutes presence in person at such meeting. (d) Notice of Special Meetings. Notice of the time and place of all special meetings of the Board of Directors will be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least 24 hours before the date and time of the meeting. If notice is sent by US mail, it will be sent by first class mail, postage prepaid at least three days before the date of the meeting. Notice of any meeting may be waived in writing or by electronic transmission at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. (e) Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, will be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present who did not receive notice signs a written waiver of notice or waives notice by electronic transmission. All such waivers will be filed with the corporate records or made a part of the minutes of the meeting.
Section 22. Quorum and Voting.
(a) Unless the Certificate of Incorporation requires a greater number, a quorum of the Board of Directors will consist of a majority of the total number of directors then serving; provided, however, that such number will never be less than 1/3 of the total number of directors authorized except that when one director is authorized, then one director will constitute a quorum. At any meeting, whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting. If the Certificate of Incorporation provides that one or more directors will have more or less than one vote per director on any matter, every reference in this Section to a majority or other proportion of the directors will refer to a majority or other proportion of the votes of the directors. (b) At each meeting of the Board of Directors at which a quorum is present, all questions and business will be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation or these Bylaws.
Section 23. Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent in writing or by electronic transmission, and such writing or writings or transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. A consent may be documented, signed and delivered in any manner permitted by Section 116 of the DGCL. Such filing will be in paper form if the minutes are maintained in paper form and will be in electronic form if the minutes are maintained in electronic form.
10. Section 24. Fees and Compensation. Directors will be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained is to be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor.
Section 25. Committees.
(a) Executive Committee. The Board of Directors may appoint an Executive Committee to consist of one or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors, will have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee will have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any bylaw of the corporation. (b) Other Committees. The Board of Directors may, from time to time, appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors will consist of one or more members of the Board of Directors and will have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event will any such committee have the powers denied to the Executive Committee in these Bylaws. (c) Term. The Board of Directors, subject to any requirements of any outstanding series of Preferred Stock and the provisions of paragraphs (a) or (b) of this Section may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member will terminate on the date of such member’s death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
(d) Meetings. Unless the Board of Directors otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section will be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place that has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
Unless otherwise provided by the Board of Directors in the resolutions authorizing the creation of the
11. committee, a majority of the authorized number of members of any such committee will constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present will be the act of such committee.
Section 26. Duties of Chair of the Board of Directors. The Chair of the Board of Directors, when present, will preside at all meetings of the stockholders and the Board of Directors. The Chair of the Board of Directors will perform other duties commonly incident to the office and will also perform such other duties and have such other powers as the Board of Directors designates from time to time. If there is no Chief Executive Officer and no President, then the Chair of the Board of Directors will also serve as the Chief Executive Officer of the corporation and will have the powers and duties prescribed in Section 29(b).
Section 27. Organization. At every meeting of the directors, the Chair of the Board of Directors, or, if a Chair has not been appointed or is absent, the Chief Executive Officer (if a director), or if the Chief Executive Officer is not a director or is absent, the President (if a director), or if the President is not a director or is absent, the most senior Vice President (if a director) or, in the absence of any such person, a chair of the meeting chosen by a majority of the directors present, will preside over the meeting. The Secretary, or in the Secretary’s absence, any Assistant Secretary directed to do so by the Chief Executive Officer or President, will act as secretary of the meeting.
ARTICLE V
OFFICERS
Section 28. Officers Designated. The officers of the corporation will include, if and when designated by the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the Controller, all of whom will be elected or appointed from time to time by the Board of Directors. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents with such powers and duties as it deems necessary. The Board of Directors may assign such additional titles to one or more of the officers as it deems appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the corporation will be fixed by or in the manner designated by the Board of Directors.
Section 29. Tenure and Duties of Officers.
(a) General. All officers will hold office at the pleasure of the Board of Directors and until their successors have been duly elected or appointed and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors, or by the Chief Executive Officer or other officer if so authorized by the Board of Directors. (b) Duties of Chief Executive Officer. The Chief Executive Officer will preside at all meetings of the stockholders and (if a director) at all meetings of the Board of Directors, unless the Chair of the Board of Directors has been appointed and is present. The Chief Executive Officer will be the chief executive officer of the corporation and will, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The Chief Executive Officer will perform other duties commonly incident to the office and will also perform such other duties and have such other powers as the Board of Directors designates from time to time.
12. (c) Duties of President. In the absence or disability of the Chief Executive Officer or if the office of Chief Executive Officer is vacant, the President will preside at all meetings of the stockholders and (if a director) at all meetings of the Board of Directors, unless the Chair of the Board of Directors has been appointed and is present. If the office of Chief Executive Officer is vacant, the President will be the chief executive officer of the corporation (including for purposes of any reference to Chief Executive Officer in these Bylaws) and will, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The President will perform other duties commonly incident to the office and will also perform such other duties and have such other powers as the Board of Directors designates from time to time.
(d) Duties of Vice Presidents. The Vice Presidents may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents will perform other duties commonly incident to their office and will also perform such other duties and have such other powers as the Board of Directors or the President designates from time to time.
(e) Duties of Secretary. The Secretary will attend all meetings of the stockholders and of the Board of Directors and will record all acts and proceedings thereof in the minute book of the corporation. The Secretary will give notice in conformity with these Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary will perform all other duties provided for in these Bylaws and other duties commonly incident to the office and will also perform such other duties and have such other powers as the Board of Directors will designate from time to time. The Chief Executive Officer may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary will perform other duties commonly incident to the office and will also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer designates from time to time. (f) Duties of Chief Financial Officer. The Chief Financial Officer will keep or cause to be kept the books of account of the corporation in a thorough and proper manner and will render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the Chief Executive Officer. The Chief Financial Officer, subject to the order of the Board of Directors, will have the custody of all funds and securities of the corporation. The Chief Financial Officer will perform other duties commonly incident to such office and will also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer designate from time to time. The Chief Executive Officer may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller will perform other duties commonly incident to the office and will also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer designates from time to time.
Section 30. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.
Section 31. Resignations. Any officer may resign at any time by giving notice in writing or by electronic transmission notice to the Board of Directors or to the Chief Executive Officer or to the President or to the Secretary. Any such resignation will be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation will become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation will not be necessary to make it effective. Any resignation will be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer.
13. Section 32. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written or electronic consent of the directors in office at the time, or by any committee or superior officers upon whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 33. Execution of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to sign on behalf of the corporation the corporate name, or to enter into contracts on behalf of the corporation, except as otherwise provided by law or these Bylaws, and such execution or signature will be binding upon the corporation. All checks and drafts drawn on banks or other depositaries of funds to the credit of the corporation or on special accounts of the corporation will be signed by such person or persons as the Board of Directors authorizes so to do.
Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee will have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
Section 34. Voting of Securities Owned by the Corporation. All stock and other securities of other corporations owned or held by the corporation for itself, or for other parties in any capacity, will be voted, and all proxies with respect thereto will be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chair of the Board of Directors, the Chief Executive Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
Section 35. Form and Execution of Certificates. The shares of the corporation will be represented by certificates, or will be uncertificated. Certificates for the shares of stock, if any, of the corporation will be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of shares of stock in the corporation represented by certificate will be entitled to have a certificate signed by or in the name of the corporation by any two authorized officers of the corporation, including but not limited to the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by such holder in the corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue.
Section 36. Lost Certificates. A new certificate or certificates will be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or the owner’s legal representative, to agree to indemnify the corporation in such manner as it requires or to give the corporation
14. a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 37. Restrictions on Transfer.
(a) No holder of any of the shares of stock of the corporation (or of any Interest therein) may engage in and/or consummate any Prohibited Transaction, or enter into any agreement, arrangement, understanding or commitment with respect to any Prohibited Transaction, without the prior written consent of the corporation, upon duly authorized action of its Board of Directors. The corporation may withhold consent to a Prohibited Transaction for any legitimate corporate purpose, as determined by the Board of Directors.
In the case of any Prohibited Transaction consented to by the corporation, the transferee, assignee, or other recipient shall receive and hold the stock or other applicable securities subject to the provisions of this Section 37, and there shall be no further Prohibited Transaction with respect to such stock or other applicable securities except in accordance with this Section 37. (b) A “Prohibited Transaction” means any of the following:
(1) any sale, transfer, conveyance, assignment, pledge, hypothecation, loan, other disposal or encumbering of, or any contract to sell, any shares of stock of the corporation or any Interest therein, whether, directly or indirectly, voluntarily or by operation of law, by gift or otherwise (a “Transfer”);
(2) any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of stock of the corporation; (3) any transaction (or series of transactions) which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of any stock of the corporation, even if any stock of the corporation would be disposed of by someone other than the stockholder (including as a result of any change of control of such stockholder or any transfer or assignment of any shares of stock of such stockholder, or of any direct or indirect legal or beneficial right or interest in such stockholder); (4) any transaction (or series of transactions) involving any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any security of the corporation or with respect to any security that includes, relates to, or derives any significant part of its value from any stock of the corporation, or any other action otherwise reducing risk related to ownership of such stock including without limitation through hedging, forward contracts or other derivative instruments; or
(5) any grant of any proxy with respect to shares of the corporation other than (i) the granting of a revocable proxy to (x) officers or directors of the corporation at the request of the Board of Directors or (y) any other person with specific direction to vote such shares as directed by the holder of such shares, without discretion, or (ii) pursuant to an agreement (including, without limitation, a voting agreement) to which the corporation is party and which has been approved by the Board of Directors. (c) “Interest” means any legal or beneficial right or interest in the stock of the corporation, including without limitation rights to vote (including depositing any shares of stock into a voting trust) or to receive or participate in dividends or other income with respect thereto. (d) Any repurchase of stock by the corporation (i) at the original purchase price per share or less (as adjusted for any stock combination, stock split, stock dividend, recapitalization or other similar transaction), upon the termination of employment or services, or (ii) at any price pursuant to the corporation’s exercise
15. of a right of first refusal to repurchase such shares shall be deemed to have been consented to for purposes of this Section 37.
(e) If a stockholder desires to enter into a Prohibited Transaction, then the stockholder will first give written notice to the corporation. The notice must name all other parties to the proposed Prohibited Transaction and state the number of shares or other securities or other rights or Interests that are proposed to be subject to the proposed Prohibited Transaction, the proposed consideration, and all other terms and conditions of the proposed Prohibited Transaction. Any shares proposed to be subject to a Transfer to which such Transfer the corporation has consented pursuant to paragraph (a) of this Section will first be subject to the corporation’s right of first refusal located in Section 38 of these Bylaws. (f) At the option of the corporation, the stockholder will be obligated to pay to the corporation a reasonable fee related to the costs and time of the corporation and its legal and other advisors related to any proposed Prohibited Transaction.
(g) Any Prohibited Transaction, or purported Prohibited Transaction, not made in strict compliance with this Section will be null and void, will not be recorded on the books of the corporation and will not be recognized by the corporation. Any transfers of record of shares of stock of the corporation will be made only upon its books by the holders thereof, in person or by attorney duly authorized, and, in the case of stock represented by certificate, upon the surrender of a properly endorsed certificate or certificates for a like number of shares.
(h) The restriction on Prohibited Transactions set forth in Section 37(a) will terminate upon the date securities of the corporation are first offered to the public pursuant to a registration statement filed with, and declared effective by, the SEC under the Securities Act of 1933, as amended. (i) The certificates representing shares of stock of the corporation that are subject to the restriction on Prohibited Transactions set forth in Section 37(a) will bear on their face the following legend so long as the foregoing restriction on Prohibited Transactions is in effect:
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A TRANSFER RESTRICTION, AS PROVIDED IN THE
BYLAWS OF THE CORPORATION.”
Section 38. Right of First Refusal. No stockholder will Transfer any of the shares of stock of the corporation, except by a Transfer that meets the requirements set forth in this Section 38, in addition to any other restrictions or requirements set forth under applicable law or these Bylaws:
(a) If the stockholder desires to Transfer any of the stockholder’s shares of stock, then the stockholder must first give written notice thereof to the corporation. The notice must name the proposed transferee and state the number of shares to be transferred, the proposed consideration, and all other terms and conditions of the proposed transfer.
(b) For 30 days following receipt of such notice, the corporation has the option to purchase up to all the shares specified in the notice at the price and upon the terms set forth in such notice. In the event of a gift, property settlement or other Transfer in which the proposed transferee is not paying the full price for the shares, and that is not otherwise exempted from the provisions of this Section, the price will be deemed to be the fair market value of the stock at such time as determined in good faith by the Board of Directors.
In the event the corporation elects to purchase all of the shares or a lesser portion of the shares, it will give written notice to the transferring stockholder of its election and settlement for said shares will be made as provided below in paragraph (d) of this Section.
16. (c) The corporation may assign its rights hereunder. (d) In the event the corporation and/or its assignee(s) elect to acquire any of the shares of the transferring stockholder as specified in said transferring stockholder’s notice, the Secretary of the corporation will so notify the transferring stockholder and settlement thereof will be made in cash within 30 days after the Secretary of the corporation receives said transferring stockholder’s notice; provided that if the terms of payment set forth in said transferring stockholder’s notice were other than cash against delivery, the corporation and/or its assignee(s) will pay for said shares on the same terms and conditions set forth in said transferring stockholder’s notice.
(e) In the event the corporation and/or its assignees(s) do not elect to acquire all of the shares specified in the transferring stockholder’s notice, said transferring stockholder may, subject to the corporation’s approval and all other restrictions on Transfer located in Section 37 of these Bylaws, within the 60-day period following the expiration or waiver of the option rights granted to the corporation and/or its assignees(s) herein, Transfer the shares specified in said transferring stockholder’s notice that were not acquired by the corporation and/or its assignees(s) as specified in said transferring stockholder’s notice.
All shares so sold by said transferring stockholder will continue to be subject to the provisions of this Section 38 in the same manner as before said Transfer.
(f) Anything to the contrary contained herein notwithstanding, the following transactions are exempt from the right of first refusal contained in this Section 38:
(1) A stockholder’s Transfer of any or all shares held either during such stockholder’s lifetime or on death by will or intestacy to such stockholder’s immediate family or to any custodian or trustee for the account of such stockholder or such stockholder’s immediate family or to any limited partnership or limited liability company of which the stockholder, members of such stockholder’s immediate family or any trust for the account of such stockholder or such stockholder’s immediate family will be the general or limi ted partner(s) of such partnership or the controlling member(s) of such limited liability company. “Immediate family” as used herein means spouse, life partner or similar statutorily-recognized domestic partner, lineal descendant, father, mother, brother, or sister of the stockholder making such Transfer; (2) A stockholder’s bona fide pledge or mortgage of any shares with a commercial lending institution, provided that any subsequent Transfer of said shares by said institution will be conducted in the manner set forth in this Section 38;
(3) A stockholder’s Transfer of any or all of such stockholder’s shares to the corporation or to any other stockholder of the corporation;
(4) A stockholder’s Transfer of any or all of such stockholder’s shares to a person who, at the time of such Transfer, is an officer or director of the corporation; (5) A corporate stockholder’s Transfer of any or all of its shares pursuant to and in accordance wit h the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate stockholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate stockholder; (6) A corporate stockholder’s Transfer of any or all of its shares to any or all of its stockholders; or (7) A Transfer by a stockholder that is a limited or general partnership to any or all of its partners or former partners in accordance with partnership interests.
17. In any such case, the transferee, assignee, or other recipient will receive and hold such stock subject to the provisions of this Section and any other restrictions set forth in these Bylaws, and there will be no further Transfer of such stock except in accord with this Section and the other provisions of these Bylaws. (g) The provisions of this Section 38 may be waived with respect to any Transfer either by the corporation, upon duly authorized action of its Board of Directors, or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the corporation (excluding the votes represented by those shares to be transferred by the transferring stockholder). This Section 38 may be amended or repealed either by a duly authorized action of the Board of Directors or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the corporation. (h) Any Transfer, or purported Transfer, of securities of the corporation will be null and void unless the terms, conditions, and provisions of this Section 38 are strictly observed and followed. (i) The foregoing right of first refusal will terminate upon the date securities of the corporation are first offered to the public pursuant to a registration statement filed with, and declared effective by, the SEC under the Securities Act of 1933, as amended.
(j) The certificates representing shares of stock of the corporation that are subject to the right of first refusal contained in this Section 38 will bear on their face the following legend so long as the foregoing right of first refusal remains in effect:
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF
THE CORPORATION AND/OR ITS ASSIGNEE(S), AS PROVIDED IN
THE BYLAWS OF THE CORPORATION.”
(k) To the extent this Section conflicts with any written agreements between the corporation and the stockholder attempting to Transfer shares, such agreement will control.
Section 39. Fixing Record Dates.
(a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date will not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date will, subject to applicable law, not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders will be at the close of business on the day immediately preceding the day on which notice is given, or if notice is waived, at the close of business on the day immediately preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders will apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders entitled to consent to corporate action without a meeting in accordance with Section 228 of the DGCL, the Board of Directors may fix a record date, which record date will not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date will not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action without a meeting in accordance with Section 228 of the DGCL will, by written notice to the Secretary, request the Board of Directors to fix a record date.
18. The Board of Directors will promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action without a meeting, when no prior action by the Board of Directors is required by applicable law, will be the first date on which a signed consent setting forth the action taken or proposed to be taken is delivered to the corporation in accordance with the DGCL. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action without a meeting will be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date will not precede the date upon which the resolution fixing the record date is adopted, and which record date will be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose will be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 40. Registered Stockholders. The corporation is entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and is not bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it has express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 41. Execution of Other Securities. All bonds, debentures and other corporate securities of the corporation, other than stock certificates (covered in Section 35 of these Bylaws), may be signed by the Chair of the Board of Directors, the Chief Executive Officer, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security is authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security is issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, will be signed by the Treasurer or an Assistant Treasurer of the corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who has signed or attested any bond, debenture or other corporate security, or whose facsimile signature appears thereon or on any such interest coupon, has ceased to be such officer before the bond, debenture or other corporate security so signed or attested has been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile signature has been used thereon had not ceased to be such officer of the corporation.
19. ARTICLE IX
DIVIDENDS
Section 42. Declaration of Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation and applicable law, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and applicable law.
Section 43. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors thinks conducive to the interests of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
FISCAL YEAR
Section 44. Fiscal Year. The fiscal year of the corporation will be fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 45. Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents.
(a) Directors and Executive Officers. The corporation will indemnify its directors and executive officers (for the purposes of this Article, “executive officers” has the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the fullest extent not prohibited by the DGCL or any other applicable law; provided, however, that the corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers; and, provided, further, that the corporation will not be required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the DGCL or any other applicable law or (iv) such indemnification is required to be made under paragraph (d) of this Section.
(b) Other Officers, Employees and Other Agents. The corporation will have power to indemnify its other officers, employees and other agents as set forth in the DGCL or any other applicable law. The Board of Directors will have the power to delegate the determination of whether indemnification will be given to any such person except executive officers to such officers or other persons as the Board of Directors determines.
20. (c) Expenses. The corporation will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or executive officer of the corporation, or is or was serving at the request of the corporation as a director or executive officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding, provided, however, that, if the DGCL requires, an advancement of expenses incurred by a director or officer in such director’s or officer’s capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) will be made only upon delivery to the corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it is ultimately determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this Section, no advance will be made by the corporation to an executive officer of the corporation (except by reason of the fact that such executive officer is or was a director of the corporation, in which event this paragraph will not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by a majority vote of a quorum consisting of directors who were not parties to the proceeding, even if not a quorum, or (ii) by a committee of such directors designated by a majority of such directors, even though less than a quorum, or (iii) if there are no such directors, or such directors so direct, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.
(d) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and executive officers under this Section will be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the corporation and the director or executive officer. Any right to indemnification or advances granted by this Section to a director or executive officer will be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within 90 days of request therefor. The claimant in such enforcement action, if successful in whole or in part, will be entitled to be paid also the expense of prosecuting the claim. In connection with any claim for indemnification, the corporation will be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the DGCL or any other applicable law for the corporation to indemnify the claimant for the amount claimed. In connection with any claim by an executive officer of the corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a director of the corporation) for advances, the corporation will be entitled to raise as a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that such person’s conduct was lawful. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because such person has met the applicable standard of conduct set forth in the DGCL or any other applicable law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, will be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct.
21. (e) Non-Exclusivity of Rights. The rights conferred on any person by this Section are not exclusive of any other right that such person may have or hereafter acquire under any applicable statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the DGCL or any other applicable law. (f) Survival of Rights. The rights conferred on any person by this Section will continue as to a person who has ceased to be a director or executive officer and will inure to the benefit of the heirs, executors and administrators of such a person.
(g) Insurance. To the fullest extent permitted by the DGCL, or any other applicable law, the corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Section. (h) Amendments. Any repeal or modification of this Section is only prospective and does not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the corporation. (i) Saving Clause. If this Section or any portion hereof is invalidated on any ground by any court of competent jurisdiction, then the corporation will nevertheless indemnify each director and executive officer to the full extent not prohibited by any applicable portion of this Bylaw that has not been invalidated, or by any other applicable law. If this Section is invalid due to the application of the indemnification provisions of another jurisdiction, then the corporation will indemnify each director and executive officer to the full extent under applicable law.
(j) Certain Definitions. For the purposes of this Section, the following definitions apply:
(1) The term “proceeding” is to be broadly construed and includes, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.
(2) The term “expenses” is to be broadly construed and includes, without limitation, court costs, attorneys’ fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding. (3) The term the “corporation” includes, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger that, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, stands in the same position under the provisions of this Section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
(4) References to a “director,” “executive officer,” “officer,” “employee,” or “agent” of the corporation include, without limitation, situations where such person is serving at the request of the corporation as,
22. respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.
(5) References to “other enterprises” include employee benefit plans; references to “fines” include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” include any service as a director, officer, employee or agent of the corporation that imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan is deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Section.
ARTICLE XII
NOTICES
Section 46. Notices.
(a) Notice to Stockholders. Written notice to stockholders of stockholder meetings will be given as provided in Section 7 of these Bylaws. Without limiting the manner by which notice may otherwise be given effectively to stockholders under any agreement or contract with such stockholder, and except as otherwise required by law, written notice to stockholders for purposes other than stockholder meetings may be sent by United States mail or nationally recognized overnight courier, or by facsimile, telegraph or telex or by electronic mail or other electronic means.
(b) Notice to Directors. Any notice required to be given to any director may be given by the method stated in paragraph (a) of this Section, or as provided for in Section 21 of these Bylaws. If such notice is not delivered personally, it will be sent to such address as such director has filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such director. (c) Affidavit of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected or other agent, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, will in the absence of fraud, be prima facie evidence of the facts therein contained. (d) Methods of Notice. It is not necessary that the same method of giving notice be employed in respect of all recipients of notice, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others. (e) Notice to Person with Whom Communication Is Unlawful . Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful, the giving of such notice to such person is not required and there is no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting that is taken or held without notice to any such person with whom communication is unlawful has the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the DGCL, the certificate will state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
23. (f) Notice to Stockholders Sharing an Address. Except as otherwise prohibited under DGCL, any notice given under the provisions of DGCL, the Certificate of Incorporation or the Bylaws will be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Such consent is deemed to have been given if such stockholder fails to object in writing to the corporation within 60 days of having been given notice by the corporation of its intention to send the single notice. Any consent is revocable by the stockholder by written notice to the corporation.
ARTICLE XIII
AMENDMENTS
Section 47. Amendments. The Board of Directors is expressly empowered to adopt, amend or repeal Bylaws of the corporation. The stockholders also have power to adopt, amend or repeal the Bylaws of the corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the corporation required by law or by the Certificate of Incorporation, such action by stockholders requires the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class.
ARTICLE XIV
LOANS TO OFFICERS
Section 48. Loans to Officers. Except as otherwise prohibited under applicable law, the corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors approves, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws is deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
ARTICLE XV
MISCELLANEOUS
Section 49. Annual Report.
(a) Subject to the provisions of paragraph (b) of this Section, the Board of Directors will cause an annual report to be sent to each stockholder of the corporation not later than 120 days after the close of the corporation’s fiscal year. Such report will include a balance sheet as of the end of such fiscal year and an income statement and statement of changes in financial position for such fiscal year, accompanied by any report thereon of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that such statements were prepared without audit from the books and records of the corporation. When there are 100 or more stockholders of record of the corporation’s shares, as determined by Section 605 of the CGCL, additional information as required by Section 1501(b) of the CGCL will also be contained in such report, provided that if the corporation has a class of securities registered under Section 12 of the 1934 Act, the 1934 Act will take precedence. Such report will be sent to
24. stockholders at least 15 (or, if sent by third-class mail, 35) days prior to the next annual meeting of stockholders after the end of the fiscal year to which it relates. (b) If and so long as there are fewer than 100 holders of record of the corporation’s shares, the requirement of sending of an annual report to the stockholders of the corporation is hereby expressly waived.
Section 50. Forum. Unless the corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation; (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation’s stockholders; (iii) any action asserting a claim against the corporation or any director or officer or other employee of the corporation arising pursuant to any provision of the DGCL, the certificate of incorporation or the Bylaws of the corporation; or (iv) any action asserting a claim against the corporation or any director or officer or other employee of the corporation governed by the internal affairs doctrine.
STIIIZY INC.
CERTIFICATE OF SECRETARY
I hereby certify that:
I am the duly elected and acting Secretary of STIIIZY Inc., a Delaware corporation (the “Company”); and
Attached hereto is a complete and accurate copy of the Bylaws of the Company as duly adopted by the Board of Directors of the Company by Unanimous Written Consent dated ___________________ and said Bylaws are presently in effect.
This Certificate of Secretary may be executed via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and will be deemed to have been duly and validly delivered and be valid and effective for all purposes. Signed on ___________________.
James Kim
Secretary
March 11, 2023
March 11, 2023
July 21, 2023
Dear Board of Directors of S8iizy Inc.,
Please accept this as my leAer of resigna8on as Chief Financial Officer of S8iizy Inc. and its subsidiaries and affiliates (the “Company”). I have decided to spend more 8me with my family and that requires me to relocate back to Virginia. The decision to resign is personal in nature and I wish you and the Company the best in your future endeavors.
Yours truly,
Greg Fink
DocuSign Envelope ID: 43066697-FBE7-46D7-9DD4-34704E7039AA
ACTION BY WRITTEN CONSENT
OF THE MANAGER
OF
AUTHENTIC FAIRFIELD LLC
The undersigned, constituting the manager (the “Manager”) of Authentic Fairfield LLC, a California limited liability company (the “Company”), does hereby adopt the following resolutions and consent to the following actions, effective as of September 26, 2023 (the “Effective Date”):
Appointment of Officers
WHEREAS, the Manager of the Company believes it to be advisable and in the best interest of the Company to appoint, and/or make certain changes to, the elected officers of the Company; now, therefore, be it
RESOLVED, that the Manager hereby removes Gregory Fink from any office held prior to the Effective Date, and appoints and ratifies each person named below to the offices set forth opposite such person’s name to serve at the pleasure of the Company, and to hold such office(s) until such person’s successor is duly elected and qualified or until their earlier death, resignation or removal, such that as of the Effective Date, the all of the officers of the Company shall be as follows:
James Kim Chief Executive Officer, Chief Financial Officer, Secretary
Tak Sato President
General Resolutions
RESOLVED FURTHER, that the Manager of the Company hereby authorizes any officer of the Company to sign and execute in the name and on behalf of the Company all applications, contracts, leases and other deeds, documents or instruments of writing, whatsoever in nature, as may be required in the ordinary course of business of the Company and as may be necessary to secure for operation of the corporate affairs, governmental permits and licenses for, and incidental to, the lawful operation of the business of the Company, and to do such acts and things as such officers deem necessary or advisable to fulfill such legal requirements as are applicable to the Company and its business;
RESOLVED FURTHER, that the Manager and each officer of the Company hereby are authorized and empowered to take any and all other actions as the Manager or any officer of the Company may determine to be necessary or appropriate to effectuate the foregoing resolutions; and RESOLVED FURTHER, that any and all acts taken by the Manager or any officer of the Company prior to the adoption of the foregoing resolutions and in furtherance thereof hereby are ratified, confirmed, adopted and approved.
DocuSign Envelope ID: 7ACBF65A-D06C-4D0E-A8A3-41C0032F95A4
This Action by Written Consent will be added to the records of the Company and made a part thereof, and the resolutions set forth above will have the same force and effect as if adopted at a meeting duly noticed and held.
[Signature page follows]
DocuSign Envelope ID: 7ACBF65A-D06C-4D0E-A8A3-41C0032F95A4
IN WITNESS WHEREOF, the undersigned has duly executed this Action by Written Consent as of the date first set forth above.
MANAGER:
SGI Management LLC,
a California limited liability company
By: ______________________
Name: James Kim
Title: Manager
DocuSign Envelope ID: 7ACBF65A-D06C-4D0E-A8A3-41C0032F95A4
March 4, 2024
Department of Cannabis Control
2920 Kilgore Road
Rancho Cordova, CA 95670
Re: Cannabis Retail Licensee Authentic Fairfield LLC Cl 0-0001009-LIC To Whom it May Concern,
I am writing this letter in conjunction with ownership changes reported for cannabis non storefront retail licensee Authentic Fairfield LLC ("Licensee"). I attest that the individuals Sunny Sassoon, Chaudhry Ali, and Isaac Kim have no direct oversight or control of Licensee.
Therefore, these individuals should not be considered owners of Licensee.
Regards,
James Kim, CEO
STIIIZY, Inc.
(213)567-4201
j [email protected]