VIEWS: 70 PAGES: 29 CATEGORY: Operating Agreement POSTED ON: 2/3/2013
A limited liability company (LLC) is a separate legal entity that can conduct business just like a corporation with many of the advantages of a partnership. It is taxed as a partnership. Its owners are called members and receive income from the LLC just as a partner would. There is no tax on the LLC entity itself. The members are not personally liable for the debts and obligations of the entity like partners would be. Basically, an LLC combines the tax advantages of a partnership with the limited liability feature of a corporation. An LLC is formed by filing articles of organization with the secretary of state in the same type manner that articles of incorporation are filed. The articles must contain the name, purpose, duration, registered agent, and principle office of the LLC. The name of the LLC must contain the words limited liability company or LLC. An LLC is a separate legal entity like a corporation. Management of an LLC is vested in its members or managers. An operating agreement is executed by the members and operates much the same way a partnership agreement operates. Profits and losses are shared according to the terms of the operating agreement.
Operating Agreement of Manager-Managed Limited Liability Company with One Manager THE UNITS DESCRIBED AND REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS (“STATE ACTS”) AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE ACT AND APPLICABLE STATE ACTS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE ACTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. This Agreement made (date) between (Name of Limited Liability Company), a limited liability company organized pursuant to the (Name of State Limited Liability Act), hereinafter called the Company, (Name of Member One), of (street address, city, state, zip code), hereinafter called Member One, and (Name of Member Two), of (street address, city, state, zip code), hereinafter called Member Two, and (Name of Member Three), of (street address, city, state, zip code), hereinafter called Member Three, Member One, Member Two, and Member Three hereinafter called the Initial Members. For and in consideration of the mutual covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the Company and each Member, the Members, all Persons subsequently becoming Members, and the Company agree as follows: I. Formation. A. Organization. The Members hereby organize the Company as a (Name of State) Limited Liability Company pursuant to the provisions of the (Name of State) Limited Liability Act. B. Agreement, Effect of Inconsistencies with Act. 1. It is the express intention of the Members that this Company Agreement shall be the sole source of Agreement of the parties, and, except to the extent a provision of this Company Agreement expressly incorporates federal income tax rules by reference to sections of the Code or Regulations or is expressly prohibited or ineffective under the Act, this Company Agreement shall govern, even when inconsistent with, or different than, the provisions of the Act or any other law or rule. To the extent any provision of this Company Agreement is prohibited or ineffective under the Act, this Company Agreement shall be considered amended to the smallest degree possible in order to make the Agreement effective under the Act. If the Act is subsequently amended or interpreted in such a way to make any provision of this Company Agreement that was formerly invalid, valid, such provision shall be considered to be valid from the effective date of such interpretation or amendment. 2. The Members agree that each Member and Manager shall be entitled to rely on the provisions of this Company Agreement, and no Member shall be liable to the Company or to any Member for any action or refusal to act taken in good faith reliance on the terms of this Company Agreement. The Members and the Company agree that the duties and obligations imposed on the Members as such shall be those set forth in this Company Agreement, which is intended to govern the relationship among the Company, the Members, notwithstanding any provision of the Act or common law to the contrary. C. Name. The name of the Company is (Name) and all business of the Company shall be conducted under that name or under any other name, but in any case, only to the extent permitted by applicable law. D. Effective Date. This Company Agreement shall become effective upon the filing of the Articles with the Secretary of State. E. Term. The term of the Company shall be perpetual and shall continue until dissolved in accordance with the Act and this Company Agreement. F. Agent for Service of Process and Office. The agent for the service of process and the registered office shall be that Person and location reflected in the Articles as filed in the office of the Secretary of State. The Manager may, from time to time, change the agent for service of process or office through appropriate filings with the Secretary of State. If the agent for service of process ceases to act as such for any reason, or the registered office shall change, the Manager shall promptly designate a replacement agent for service of process or file a notice of change of address, as the case may be. If the Manager shall fail to designate a replacement agent for service of process or change of address of the registered office, any Member may designate a replacement agent for service of process or file a notice of change of address. G. Principal Office. The principal office of the Company shall be located at: (street address, city, state, zip code). II. Definitions. For purposes of this operating Agreement, unless the context clearly indicates otherwise, the following terms shall have the following meanings: A. Act means the (Name of State) (Name of Limited Liability Company Statute) and all amendments to the Act. B. Additional Member means a Member other than an Initial Member who has acquired a Unit from the Company. C. Admission Agreement means the Agreement between an Additional Member and the Company described in Article VII. D. Affiliate of any Member or Manager means any Person that, directly or indirectly controls, is controlled by or is under common control with such Member or Manager. As used in this Agreement, “control” or words of similar import means: (i) the ownership (direct or indirect) of more than ____ % of the equity interests of an Entity; or (ii) the possession (direct or indirect) of voting power with respect to such Entity sufficient to allow direction of the management and policies of such Entity. E. Articles means the Articles of Organization of the Company as properly adopted and amended from time to time by the Members and filed with the Secretary of State. F. Bankruptcy means the Bankruptcy of a Person shall be deemed to have occurred upon the happening of any of the following: 1. The valid appointment of a receiver or trustee to administer all or a substantial portion of a Person's assets or a Person's Units; 2. The filing by a Person of a voluntary petition for relief under the Bankruptcy Code or of a pleading in any court of record admitting in writing its ability to pay its debts as they become due; 3. The making by a Person of a general assignment for the benefit of creditors; 4. The filing by a Person of an answer admitting the material allegations of, or its consenting to or defaulting in answering, a petition for relief filed against it in any proceeding under the Bankruptcy Code; or 5. The entry of an order, judgment or decree by any court of competent jurisdiction, granting relief against a Person in a proceeding under the Bankruptcy Code. G. Book Value means, with respect to Property Contributed to the Company or Company Property which has been revalued, the fair market value of the Property at the time of Contribution or Revaluation as adjusted for depreciation, depletion, amortization, and gain or loss, as computed in accordance with 26 C.F.R. § 1.704-1(b)(2)(iv)(g) of the Regulations. H. Capital Account means the account maintained for a Member determined in accordance with Article VII. I. Capital Contribution means any Contribution or contribution of services made by or on behalf of a Member as consideration for Units. J. Code means the Internal Revenue Code of 1986 as amended from time to time. K. Commitment means the obligation of a Member to make a Capital Contribution in the future. L. Company means (Name of Limited Liability Company), a Limited Liability Company formed under the laws of (Name of State), and any successor limited liability company. M. Company Agreement means this Operating Agreement including all amendments adopted in accordance with this Company Agreement and the Act. N. Company Liability means any enforceable debt or obligation for which the Company is liable or which is secured by any Company Property. O. Company Minimum Gain means an amount determined by first computing for each Company Nonrecourse Liability any gain the Company would realize if it Disposed of Company Property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains. The amount of Company Minimum Gain includes such minimum gain arising from a conversion, refinancing, or other change to a debt instrument, only to the extent a Member is allocated a share of that minimum gain. For any Taxable Year, the net increase or decrease in Company Minimum Gain is determined by comparing the Company Minimum Gain on the last day of the immediately preceding Taxable Year with the Minimum Gain on the last day of the current Taxable Year. Notwithstanding any provision to the contrary contained in this Agreement, Company Minimum Gain increases and decreases in Company Minimum Gain are intended to be computed in accordance with 26 U.S.C.A. § 704 of the Code and the Regulations issued under it, as the same may be issued and interpreted from time to time. A Member's share of Company Minimum Gain at the end of any Taxable Year equals: the sum of Nonrecourse Deductions allocated to that Member (and to that Member's predecessors in interest) up to that time and the Distributions made to that Member (and to that Member's predecessors in interest) up to that time of proceeds of a nonrecourse liability allocable to an increase in Company Minimum Gain minus the sum of that Member's (and of that Member's predecessors in interest) aggregate share of the net decreases in Company Minimum Gain plus their aggregate share of decreases resulting from Revaluations of Company Property subject to one or more Company Nonrecourse Liabilities. P. Company Nonrecourse Liability means a Company Liability to the extent that no Member or Related Person bears the economic risk of loss (as defined in 26 C.F.R. § 1.752-2 of the Regulations) with respect to the liability. Q. Company Property means any Property owned by the Company. R. Contributing Members means those Members making Capital Contributions as a result of the failure of a Delinquent Member to perform a Commitment. S. Contribution means any contribution of Property made by or on behalf of a Member as consideration for Units. T. Default Interest Rate means the higher of the legal rate or the then- current prime rate quoted by the largest commercial bank in the jurisdiction of the Principal Office plus ____%. U. Delinquent Member means a Member who has failed to meet the Commitment of that Member. V. Distribution means a transfer of Property to a member on account of the Member's Units as described in Article VIII. W. Disposition or Dispose means any sale, assignment, transfer, exchange, mortgage, pledge, grant, hypothecation, or other transfer, absolute or as security or encumbrance (including dispositions by operation of law). X. Initial Contribution means the Contribution agreed to be made by the Initial Members as described in Article VII. Y. Initial Members means those persons identified on the attached Exhibit A who have executed this Company Agreement. Z. Manager means a Member selected to manage the affairs of the Company under Article VI of this Agreement. AA. Member means an Initial Member, Substituted Member or Additional Member, including, unless the context expressly indicates to the contrary, a Manager. BB. Member Minimum Gain means an amount determined by first computing for each Member Nonrecourse Liability any gain the Company would realize if it Disposed of Company Property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains. The amount of Member Minimum Gain includes such minimum gain arising from a conversion, refinancing, or other change to a debt instrument, only to the extent a Member is allocated a share of that minimum gain. For any Taxable Year, the net increase or decrease in Member Minimum Gain is determined by comparing the Member Minimum Gain on the last day of the immediately preceding Taxable Year with the Minimum Gain on the last day of the current Taxable Year. Notwithstanding any provision to the contrary contained in this Agreement, Member Minimum Gain increases and decreases in Member Minimum Gain are intended to be computed in accordance with 26 U.S.C.A. § 704 of the Code and the Regulations issued under that Section, as the same may be issued and interpreted from time to time. CC. Member Nonrecourse Liability means any Company Liability to the extent the liability is nonrecourse under state law, and on which a Member or Related Person bears the economic risk of loss under 26 C.F.R. § 1.752-2 of the Regulations because, for example, the Member or Related Person is the creditor or a guarantor. DD. Members Owning a Majority Interest means Members owning Units in excess of one-half of the Units then outstanding. EE. Money means Cash or other legal tender of the United States, or any obligation that is immediately reducible to legal tender without delay or discount. Money shall be considered to have a fair market value equal to its face amount. FF. Net Profit or Net Loss means the taxable income or loss for any period determined in accordance with 26 U.S.C.A. § 703(a) of the Code. Net Profits and Net Loss shall include all items of income, gain, loss, or deduction, regardless of whether they are computed without reference to separately stated items and shall include items described in 26 U.S.C.A. § 705(a)(1)(B), (2)(B) of the Code. GG. Nonrecourse Liabilities means nonrecourse liabilities including Company Nonrecourse Liabilities and Member Nonrecourse Liabilities. HH. Notice means written notice given in accordance with the Company Agreement. Notice to the Company shall be considered given when mailed by first class mail postage prepaid addressed to any Manager in care of the Company at the address of Principal Office. Notice to a Member shall be considered given when mailed by first class mail postage prepaid addressed to the Member at the address reflected in this Company Agreement unless the Member has given the Company a Notice of a different address. II. Organization means a Person other than a natural person. Organization includes, but is not limited to, corporations (both nonprofit and other corporations), partnerships (both limited and general), joint ventures, limited liability companies, and unincorporated associations, but the term does not include joint tenancies and tenancies by the entirety. JJ. Organization Expenses means those expenses incurred in the organization of the Company including the costs of preparation of this Company Agreement and Articles. LL. Permitted Transferee means, with respect to a Member, the Member's spouse, children (including natural, adopted and stepchildren), grandchildren, and parents, or an Organization controlled by such Member or by the Member's spouse, children (including natural, adopted and stepchildren), grandchildren, and parents. MM. Pro Rata in Proportion to Units means the proportion that a Member's Units bears to all Units then outstanding (or in the case of Remaining Members, the proportion that a Member's Units bears to all Units held by Remaining Members). NN. Proceeding means any judicial or administrative trial, hearing or other activity, civil, criminal or investigative, the result of which may be that a court, arbitrator, or governmental agency may enter a judgment, order, decree, or other determination which, if not appealed and reversed, would be binding upon the Company, a Member or other Person subject to the jurisdiction of such court, arbitrator, or governmental agency. OO. Property means any property real or personal, tangible or intangible (including goodwill), including Money and any legal or equitable interest in such property, but excluding services and promises to perform services in the future. PP. Person means an individual, trust, estate, or any incorporated or unincorporated organization permitted to be a member of a limited liability company under the laws of (name of state). UU Regulations, except where the context indicates otherwise means, the permanent, temporary, proposed, or proposed and temporary regulations of Department of the Treasury under the Code as such regulations may be lawfully changed from time to time. WW. Related Person means a person having a relationship to a Member that is described in 26 C.F.R. § 1.752-4(b) of the Regulations. XX. Remaining Managers means, in the case of a Manager who has any potential conflict of interest or transaction between a Manager and the Company, the Managers not having the potential conflict of interest or participating in the transaction. YY. Remaining Members means, in the case of a Manager or Member who has any potential conflict of interest or transaction between a Manager who, coincidentally, is a Member of the Company, the Members not having the potential conflict of interest or participating in the transaction, and, in the case of a Sale of Units, the Members other than the Selling Member. ZZ. Remaining Members Owning a Majority Interest means Remaining Members owning Units equal to more than one-half of the Units owned of all the Remaining Members. AAA. Removal means the act of the Members by which a Manager is removed. BBB. Resignation means the act of the Manager by which such Member ceases to be a Manager but continues to be a Member. CCC. Revaluation means the adjustment to the Book Value of Company Property as provided in Section VII-G of this Company Agreement. DDD. Revaluation Date means the date on which a Revaluation Event occurs. EEE. Revaluation Event means: 1. A Contribution (other than a de minimis amount); 2. A Distribution (other than a de minimis amount) to a Member as consideration for a Unit; or 3. A liquidation of the Company. FFF. Sale (Sell) means, with respect to a Unit, a voluntary Transfer of the Unit for consideration. GGG. Section, where the term is capitalized and does not refer to the Code or Regulations, refers to a section of this Company Agreement. HHH. Taxable Year means the taxable year of the Company as determined pursuant to 26 U.S.C.A. § 706 of the Code. III. Taxing Jurisdiction means any state, local, or foreign government that collects tax, interest or penalties, however designated, on any Member's share of the income or gain attributable to the Company. JJJ. Transfer means, with respect to a Unit, a Disposition by which the ownership of the interest changes. Transfer does not include a Disposition by mortgage, pledge, hypothecation, or other transfer as security or encumbrance. LLL. Transferee means, with respect to a Unit, the Person who acquires ownership of a Unit as a result of a Transfer. MMM. Units means a Member's share of the Company's Net Profits, Net Loss and Distributions pursuant to this Company Agreement and the Act; share in allocations of income, gain, loss, deduction in or credit or similar items; Capital Account; and right to participate in the management or affairs of the Company. Unless otherwise identified, Unit shall refer to both Class A Units and Class B Units. III. Nature of Business. The Company may engage in any lawful business permitted by the Act or the laws of any jurisdiction in which the Company may do business. The Company shall have the authority to do all things necessary or convenient to accomplish its purpose and operate its business as described in this Article III. The Company exists only for the purpose specified in this Article III, and may not conduct any other business without the unanimous consent of the Members. The authority granted to the Members under this Agreement to bind the Company shall be limited to actions necessary or convenient to this business. IV. Accounting and Records A. Records To Be Maintained. The Managers shall maintain the following records at the Principal Office: 1. A current list of the full name and last known business address of each Member, former Member and other holder of a Unit; 2. A copy of the Articles and all amendments, together with executed copies of any powers of attorney pursuant to which Articles has been executed; 3. Copies of the Company's federal, foreign, state and local income tax returns and reports, if any, for the three most recent years; 4. Copies of this Company Agreement, including all amendments; 5. Any financial statements of the Company for the (number) most recent years; 6. If not set forth in this Company Agreement, a writing or other data compilation from which information can be obtained through retrieval devices into reasonably usable form setting forth the following: a. The amount of cash and a description and statement of the agreed value of the other property or services contributed by each Member and which each Member has agreed to contribute; b. The times at which, or events, on the happening of which any additional Commitments agreed to be made by each Member are to be made; c. Any right of a Member to receive, or the Company to make, Distributions which include a return of all or any part of the Member's Capital Contribution; and d. Any events upon the happening of which the Company is to be dissolved and its affairs wound up. B. Member's Access to Records. The Managers shall provide Members and their agents and attorneys access for proper purposes to records. The Company may impose a reasonable charge, limited to the costs of labor and material, for copies of records furnished. C. Reports to Members. 1. The Managers shall provide reports at least annually to the Members at such time and in such manner as the Managers may determine reasonable. 2. The Managers shall provide all Members with those information returns required by the Code and the laws of any state. V. Names and Addresses of Members and Managers The names and addresses of the Initial Members and the designation of Managers are as reflected on Exhibit A. VI. Management A. Management. The business and affairs of the Company shall be managed by its Managers. Except for situations in which the approval of the Members is expressly required by this Company Agreement or by nonwaivable provisions of applicable law, the Managers shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business to the extent provided or limited by this Article VI. B. Number, Tenure and Qualifications. The Company shall initially have one Manager. The number of Managers shall be fixed from time to time by the affirmative vote of Members Owning a Majority Interest, but in no instance shall there be less than one Manager. Each Manager shall hold office until the Manager ceases to be a Manager pursuant to Section VI-G. Managers shall be appointed by the affirmative vote of Members Owning a Majority Interest. Managers need not be Members or residents of (name of state). C. Certain Powers of Managers and Restrictions on Authority of the Managers. 1. Subject to Subsections VI-C-2 and VI-C-4 of this Agreement, the Manager (or if there is more than one Manager, a Majority of the Managers) shall have power and authority to take the following actions on behalf of the Company: a. To do and perform all other acts as may be necessary or appropriate to carry out the Company's purpose, including any action which this Company Agreement provides is to be taken by the Managers; b. To issue Units and set the consideration for Units, provided that the Managers shall not issue Units at any time there are more than (number) Units outstanding without the consent of Members Owning a Majority Interest; c. To locate or relocate a place of business for the Company; d. To execute, or to appoint officers and agents with such designation as the Managers may determine to execute, on behalf of the Company all instruments and documents, including, but not limited to, checks; drafts; notes and other negotiable instruments; mortgages or deeds of trust; security Agreements; financing statements; documents providing for the acquisition, mortgage, investment or Disposition of property, including the licensing of intellectual property; e. To appoint and fix compensation for officers and other agents for the Company; f. To acquire property from any Person as the Managers may determine. The fact that a Manager or a Member is directly or indirectly affiliated or connected with any such Person shall not prohibit the Managers from dealing with that Person provided that the Member or Manager shall fully disclose the affiliation or connection and the transaction has been approved by the Remaining Members Owning a Majority Interest after such disclosure; g. To open bank accounts in the name of the Company, and the Managers shall be the sole signatory on such bank accounts, unless the Managers determine otherwise; h. To borrow money for the Company from banks, other lending institutions, the Managers, Members, or Affiliates of the Managers or Members, on such terms as the Managers and Members Owning a Majority Interest deem appropriate, and in connection with such borrowing, to hypothecate, encumber and grant security interests in Company Property to secure repayment of the borrowed sums. No debt shall be contracted or liability incurred by or on behalf of the Company except by the Managers subject to the approval of Members Owning a Majority Interest, or to the extent permitted under the Act, by agents or employees of the Company expressly authorized to contract such debt or incur such liability pursuant to the Act; i. To purchase liability and other insurance to protect the Company's property and business; j. To invest any Company funds (by way of example but not limitation) in time deposits, short-term governmental obligations, commercial paper or other investments; l. To confess a judgment against the Company; m. To cause the Company to incur any liabilities, including borrowing capital; l. To cause the Company to make any capital expenditure; and m. To employ accountants, legal counsel, managing agents or other experts to perform services for the Company and to compensate them from Company funds. 2. Subject to Subsection VI-C-3 and only with the consent of Members Owning a Majority Interest, any Manager shall have power and authority, on behalf of the Company: (i) To consent to the issuance of additional Units at any time there are more than (number) Units; (ii) To initiate a proceeding for the Bankruptcy of the Company; (iii) To cause a change in the purpose of the Company; (iv) To do any act which would make it impossible to fulfill the purpose of the Company; (v) To amend this Company Agreement or take any action in violation of this Company Agreement; (vi) To cause the Company to voluntarily initiate a proceeding under which the Company would become a Debtor under the United States Bankruptcy Code; and (vii) To sell, exchange or otherwise Dispose of all, or substantially all, of the Company Property other than in the ordinary course of the Company's business. 3. Notwithstanding any other provision of this Section VI-C, neither the Manager nor any Member or Members shall have the authority to amend this Company Agreement or take any action that would have a Material Adverse Effect on a similarly situated group of Members (the Affected Group) without the consent of Members of the Affected Group owning a majority of the Units held by all Members within the Affected Group, or, if the Material Adverse Affect does not affect a group of Members in the same way, by each Member who would suffer a Material Adverse Affect. For purposes of this Subsection Section VI-C, a Material Adverse Affect is any increase in the obligation to make contributions, any modification of the allocation to the Affected Member or Affected Group of Net Profits, Net Losses, income, gain, loss or credit for tax purposes or for determination of Capital Accounts or any modification in a Member's right to Distributions. Notwithstanding the foregoing, no increase or decrease of the number of outstanding Units or allocation of Net Profits, Net Losses, income, deduction or credit required by the Code shall be considered a Material Adverse Affect. D. Liability for Certain Acts. The Managers do not, in any way, guarantee the return of the Members' Capital Contributions or a profit for the Members from the operations of the Company. A Manager's duty of care in the discharge of the Manager's duties to the Company and the other Members is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. In discharging its duties, a Manager shall be fully protected in relying in good faith upon the records required to be maintained under Article IV and upon such information, opinions, reports or statements by any of its other Members, or agents, or by any other person, as to matters the Manager reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of Company Property from which Distributions might properly be paid. E. Managers and Members Have No Exclusive Duty to Company. No Manager shall be required to manage the Company as its sole and exclusive function and it (and any Manager and/or Member) may have other business interests and may engage in other activities in addition to those relating to the Company. Neither the Company nor any Member shall have any right, by virtue of this Company Agreement, to share or participate in such other investments or activities of the Manager and/or Member or to the income or proceeds derived from the same. Neither the Manager nor any Member shall incur any liability to the Company or to any of the Members as a result of engaging in any other business or venture. F. Indemnity of the Managers, Employees and Other Agents. The Company shall indemnify the Managers and make advances for expenses to the maximum extent permitted under the Act. The Company shall indemnify its employees and other agents who are not Managers to the fullest extent permitted by law, provided that such indemnification in any given situation is approved by the Managers. Notwithstanding any other provision of this Company Agreement, no Manager shall be liable to any Member of the Company with respect to any act performed or neglected to be performed in good faith and in a manner which such Manager believed to be necessary or appropriate in connection with the ordinary and proper conduct of the Company's business or the preservation of its property, and consistent with the provisions of this Company Agreement. The Company shall indemnify the Managers for and hold them harmless from any liability, whether civil or criminal, and any loss, damage, or expense, including reasonable attorneys' fees, incurred in connection with the ordinary and proper conduct of the Company's business and the preservation of its business and property, or by reason of the fact that such person is or was a Manager; provided the Manager to be indemnified acted in good faith and in a manner such Manager believed to be consistent with the provisions of this Company Agreement; and provided further that with respect to any criminal action or proceeding, the Manager to be indemnified had no reasonable cause to believe the conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that indemnification is not available under this Agreement. The obligation of the Company to indemnify any Manager under this Agreement shall be satisfied out of Company Property only, and if the Company Property is insufficient to satisfy its obligation to indemnify any Manager, such Manager shall not be entitled to contribution from any Member. G. Cessation as Manager. Any Manager shall cease to be a Manager on the Manager's Bankruptcy, death, dissolution, incompetence, Resignation or Removal, but not on the merger or conversion of the Manager. A Manager may resign at any time by giving written notice to the Members. The Resignation of any Manager shall take effect upon receipt of notice of such resignation or at such later time as shall be specified in such notice; and, unless otherwise specified in the notice, the acceptance of such Resignation shall not be necessary to make it effective. All or any lesser number of Managers may be Removed at any time with or
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