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HomeMy WebLinkAboutOwnerEntityInfo1- OPERATING AGREEMENT BoRoth LLC OPERATING AGREEMENT OF BoRoth LLC A Montana Limited Liability Company The undersigned members, desiring to form a limited liability company under the Montana Limited Liability Company Act, hereby agree as follows: ARTICLE 1 FORMATION 1.1 Name. The name of the limited liabilLW\ cRPSaQ\ (Whe ³LLC´) BoRoth LLC. 1.2 Articles of Organization. Articles of organization were filed with Secretary of State of Montana. 1.3 Duration. The LLC shall exist perpetually unless earlier dissolved as provided for in this Operating Agreement. 1.4 Principal Place of Business. The principal office of the LLC shall initially be at 2218 Iron Horse Road Bozeman MT, 59715. The managers may relocate the principal office or establish additional offices from time to time. 1.5 Registered Office and Registered Agent. The LLC¶V LQLWLaO UegLVWeUed RffLce VhaOO be aW 3675 Bozeman Trail Rd, Bozeman MT 59715. And the name of its initial registered agent at such address shall be James Stuart. ARTICLE 2 MEMBERS, CONTRIBUTORS AND INTERESTS 2.1 Names and Addresses. The names and addresses of the members of the LLC, the agreed value of their initial capital contributions and their initial percentage ownership interests are: Name and Address Contribution Percentage Borraez Family Trust 3629 Roselawn Ave Glendale, CA 91208 ___50_ _ Rothgeb 2010 Trust 4239 Oakwood Ave La Canada, CA 91011 ____50__ __ Each PePbeU¶V SeUceQWage RZQeUVhLS LQWeUeVW aW aQ\ WLPe VhaOO be Whe UaWLR Rf WhaW PePbeU¶V caSLWaO cRQWULbXWLRQ WR aOO PePbeUV¶ caSLWaO cRQWULbXWLRQV. 2.2 Other Business of Members. Any member may engage independently or with others in other business and investment ventures of every nature and description and shall have no obligation to account to the LLC for such business or investments or for business or investment opportunities. 2.3 Additional Members. Additional members shall not be admitted except with the consent of all members. 2- OPERATING AGREEMENT BoRoth LLC 2.4 Additional Contributors. Additional capital contributors shall be accepted from existing members only if the managers unanimously approve and set the maximum total amount of the additional capital contributors. If the managers do so, the members shall have the opportunity (but not the obligation), to make such additional capital contributions on a pro rata basis in accordance with theLU RZQeUVhLS LQWeUeVWV. If aQ\ PePbeU eOecWV WR PaNe OeVV WhaQ Whe PePbeU¶V SUR UaWa VhaUe of any additional capital contributions, the others may contribute the difference on a pro rata basis in accordance with their ownership interests or on any other basis they may agree upon. 2.5 No Interest on Capital Contributions. No interest shall be paid on capital contributions. 2.6 Capital Accounts. An individual capital account shall be maintained for each member. Each PePbeU¶V caSLWaO accRXQW VhaOO be (a) cUedLWed ZLWh aOO caSLWaO cRQWULbXWLRQV b\ VXch PePbeU aQd Whe PePbeU¶V dLVWULbXWLYe VhaUe Rf aOO LQcRPe aQd gaLQ LQcOXdLQg aQ\ LQcRPe e[ePSW fURm federal LQcRPe Wa[); aQd (b) chaUged ZLWh Whe aPRXQW Rf aOO dLVWULbXWRUV WR VXch PePbeU aQd Whe PePbeU¶V distributive share of losses and deductions. Capital accounts shall be maintained in accordance with federal income tax accounting principals as set forth in Treas. Reg. § 1.704-1 (b)(2)(iv) or any successor provision. ARTICLE 3 MEMBER MEETINGS 3.1 Meetings. A meeting of members shall be held (a) if it is called by the managers or (b) if members holding a least fifty percent (50%) of the ownership interests sign, date and deliver to the LLC¶V SULQcLSaO RffLce a ZULWWeQ dePaQd fRU Whe PeeWLQg deVcULbLQg Whe SXUSRVe RU SXUSRVeV fRU ZhLch it is to be held. Meetings of members shall be held at the principal office of the LLC or any other place specified in the notice of meeting. 3.2 Notice of Meeting. NRWLce Rf Whe daWe, WLPe aQd SOace Rf each PePbeU¶V PeeWLQg VhaOO be given to each member not earlier than 60 days nor less than 10 days before the meeting date. The notice must include a description of the purpose or purposes for which the meeting called. 3.3 Record date. The SeUVRQV eQWLWOed WR QRWLce Rf aQd WR YRWe aW a PePbeUV¶ PeeWLQg aQd WheLU respective ownership interests, shall be determined as of the record date for the meeting. The record date shall be a date not earlier than 70 days or less than 10 days before the meeting selected by the managers. If the managers do not specify a record date, the record date shall be the date on which notice of the meeting was first mailed or otherwise delivered. 3.4 Quorum. The presence, in person or by proxy, of members holding at least fifty-one percent (51%) of the ownership interests shall constitute a quorum. 3.5 Proxies. A member may be represented at a meeting in person or by written proxy. 3.6 Voting. On each matter requiring action by members, each member shall be entitled to vote Whe PePbeU¶V RZQeUVhLS LQWeUeVW. E[ceSW aV RWheUZLVe VWaWed LQ Whe aUWLcOeV Rf RUgaQL]aWLRQ, WhLV Operating Agreement, or applicable law, a matter submitted to a vote of the members shall be deemed approved if the ownership interests voted in favor exceed those voted against the matter. 3- OPERATING AGREEMENT BoRoth LLC ARTICLE 4 MANAGEMENT 4.1 Management of Company. The management and control of the Company and its business and affairs are exclusively in the members. The members, or any of them, have all the powers that may be possessed by a member in a limited liability company without managers pursuant to the Act. 4.2 Operating Manager. Notwithstanding Section 4.1, the Members may agree among themselves that, except as otherwise proved in Section 4.3, in connection with major decisions (defined in Section 4.3), the right to manage the day-to-day operations of the Company may rest ZLWh aQ ³OSeUaWLQg MaQageU´. CRQVLVWeQW ZLWh aQd VXbMecW WR Whe fRUegRLQg, Whe RSeUaWLQg PaQageU has all the rights and powers that may be possessed by a manager in a limited liability company with managers pursuant to the Act, and such rights and powers as are otherwise conferred by law RU aUe QeceVVaU\, adYLVabOe, RU cRQYeQLeQW WR Whe dLVchaUge Rf Whe OSeUaWLQg MaQageU¶V dXWLeV XQdeU this Agreement and to the management of the business and affairs of the Company. 4.3 Authority. Subject to restrictions that may be imposed from time to time by the managers or members, each manager shall be an agent of the LLC with authority to bind the LLC in the ordinary course of business. The managers shall have no authority to bind the LLC as to the following matters without first obtaining approval by vote of the members. (a) Sale, lease, exchange, mortgage, pledge or other transfer of disposition of all or substantially all of the assets of the LLC; (b) Merger of the LLC with another entity; (c) Amendment to the articles of organization; (d) Incurrence of indebtedness by the LLC other than in the ordinary course of business; (e) A transaction involving an actual or potential conflict of interest between a member or manager and the LLC; or (f) A change in the nature of the business of the LLC. 4.4 Other Activities. Managers may have other business interests and may engage in other acWLYLWLeV LQ addLWLRQ WR WhRVe UeOaWLQg WR Whe CRPSaQ\. ThLV VecWLRQ dReV QRW chaQge each PaQageU¶V duty to act in a manner that the manager reasonably believes to be in the best interest of the LLC. 4.5 Meetings/Notices/Quorum/Voting. Meetings of the managers may be called by any manager. Meetings shall be held at the place fixed by the managers or, if no such place can be fixed, at the principal office of the LLC. Oral or written notice of the date, time and place of any meeting shall be given in at least 24 hours in advance. Written notice may be delivered personally, given by facsimile or other form of wired communication, or by mail or private carrier to each PaQageU¶V bXVLQeVV RU hRPe addUeVV. WULWWeQ QRWLce VhaOO be effecWLYe aW Whe eaUOLeVW Rf Whe following: (a) when received, (b) when sent by facsimile or other form of wire communication, or (c) 4- OPERATING AGREEMENT BoRoth LLC two business days after being mailed. A majority of the managers shall constitute a quorum. Each manager shall be entitled to one vote. A matter submitted to a vote of the managers shall be deemed approved if the votes in favor exceed those against the matter. 4.6 Resignation. A manager may resign at any time by delivering written notice to the other managers or to the members. The resignation is effective when the notice is effective under the Montana Limited Liability Company Act, unless the notice specifies a later effective date. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the managers. The UeVLgQaWLRQ Rf a PaQageU ZhR LV aOVR a PePbeU VhaOO QRW affecW Whe PaQageU¶V ULghWV aV a PePbeU and shall not constitute a withdrawal of the member. 4.7 Removal of a Manager by Members. The members may remove one or more managers with or without cause. A manager may be removed by the members only at a meeting called for the purpose of removing the manager and the meeting notice must state that the purpose or one of the purposes of the meeting is removal of the manager. 4.8 Vacancy. If a vacancy occurs in the number of managers: (a) The members may fill the vacancy; or (b) The remaining managers may fill the vacancy (whether or not the remaining managers constitute a quorum). A vacancy that will occur at a specific later date may be filled before the vacancy occurs, but the new manager may not take office until the vacancy occurs. 4.9 Salaries. The salaries and other compensation of the managers shall be fixed from time to time by vote of the members. A manager shall not be precluded from receiving a salary because the manager is also a member. 4.10 Other Agents. The managers may, by vote, authorize any agent to enter into any lawful contract or to otherwise act on behalf of the LLC. Such authority may be general or be confined to specific instances. ARTICLE 5 ACTIONS WITHOUT NOTICE, WITHOUT MEETING OR BY TELEPHONE 5.1 Meeting of all Members or Managers. Notwithstanding any other provisions of this Operating Agreement, if all of the members or managers shall hold a meeting at any time and place, such meeting shall be valid without call or notice, and any lawful action taken at such meeting shall be the action of the members or managers, respectively. 5- OPERATING AGREEMENT BoRoth LLC 5.2 Action Without Meeting. Any action required or permitted to be taken by the members or the managers at a meeting may be taken without a meeting if a consent in writing describing the action taken, is signed by members holding more than fifty-one percent (51%) of the ownership interests or by all of the managers, as the case may be, and is included in the minutes or filed with Whe LLC¶V UecRUds of meetings. 5.3 Meetings by Telephone. Meetings of the members or managers may be held by conference telephone or by any other means of communication by which all participants can hear each other simultaneously during the meeting, and such participation shall constitute presence in person at the meeting. ARTICLE 6 ACCOUNTING AND RECORDS 6.1 Books of Account. The LLC¶V bRRNV aQd UecRUdV, a UegLVWeU VhRZLQg Whe QaPeV, addUeVVeV and ownership interests of the members, and this Operating Agreement shall be maintained by the managers. Each member shall have access thereto at all reasonable times. The managers shall keep bRRNV aQd UecRUdV Rf Whe RSeUaWLRQ Rf Whe LLC ZhLch aUe aSSURSULaWe aQd adeTXaWe fRU Whe LLC¶V business and for the carrying out this agreement. 6.2 Fiscal Year. The fiscal year of the LLC shall be the calendar year. 6.3 Accounting Reports. Within 90 days after the close of each fiscal year, the managers shall cause each member to receive a financial report of the activities of the LLC for the preceding fiscal year, including a copy of a balance sheet of the LLC as of the end of such year and a statement of income or loss for such year. 6.4 Tax Returns. The managers shall cause all required federal and state income tax returns for the LLC to be prepared and timely filed with the appropriate authorities. Within the filing deadline of September 15th, and within the filing deadline of October 15th after the end of each fiscal year, each PePbeU VhaOO be fXUQLVhed a VWaWePeQW VXLWabOe fRU XVe LQ Whe SUeSaUaWLRQ Rf Whe PePbeU¶V income tax return, showing the amounts of any distributions, contributions, gains, losses, profits or credits allowed to the member during such fiscal year. ARTICLE 7 ALLOCATIONS AND DISTRIBUTIONS 7.1 Allocations of Income and Loss for Tax Purposes. All items of income, gain, loss, deduction and credit shall be allocated among all members in proportion to their ownership interests. 7.2 Distribution to Pay Tax Liabilities. Within 90 days after the end of each fiscal year, the LLC Pa\ PaNe a dLVWULbXWLRQ LQ aQ aPRXQW eTXaO WR aW OeaVW (a) Whe LLC¶V QeW Wa[abOe LQcRPe dXULQg the fiscal year multiplied by (b) the lessor of (i) thirty-five percent (35%) or (ii) the sum of the maximum federal and state individual income tax rates of any member in effect for the fiscal year (taking into account the deductibility of state taxes for federal income tax purposes), less (c) the 6- OPERATING AGREEMENT BoRoth LLC amount of any distributions made by the LLC during the fiscal year (other than distributions made during the fiscal year that were required to be made under the provisions of this section with respect WR a SULRU fLVcaO \eaU). FRU SXUSRVeV Rf WhLV VecWLRQ, aQ LLC¶V QeW Wa[abOe LQcRPe VhaOO be Whe Qe[W excess of items of recognized income and gain over the items of recognized loss and deduction UeSRUWed RQ Whe LLC¶V fedeUaO LQcRPe Wa[ UeWXUQ fRU Whe Wa[abOe \eaU ZLWh UeVSecW WR ZhLch Whe dLVWULbXWLRQ LV beLQg Pade. The LLC¶V RbOLgaWLRQ WR PaNe VXch a dLVWULbXWLRQ Ls subject to the restrictions governing distributions under the Montana Limited Liability Company Act. ARTICLE 8 WITHDRAWAL AND DISSOULUTION 8.1 Withdrawal. Each member agrees not to withdraw from the LLC without consent of all other members. A voluntary withdrawal in violation of this section shall be effective after one PRQWh¶V ZULWWeQ QRWLce deOLYeUed WR Whe PaQageUV, bXW VhaOO cRQVWLWXWe a bUeach Rf WhLV OSeUaWLQg Agreement for which the LLC and other members shall have the remedies provided under applicable law. 8.2 Events of Dissolution. Except as otherwise provided in this Operating Agreement, the LLC shall dissolve upon the earlier of: (a) the time, if any, for dissolution specified in the articles of organization; (b) the death, incompetence, withdrawal, expulsion, bankruptcy or dissolution of any member; or (c) approval of dissolution by a vote of the members. 8.3 Effect of Death of a Member. In the event of the death of a member, the remaining members may within 120 days, elect to: (a) CRQWLQXe Whe LLC aQd adPLW Whe deceaVed PePbeU¶V VSRXVe, eVWaWe RU other beneficiary as a member in place of the deceased member; or (b) If there are at least two remaining members, continue the LLC among the surviving members and purchase the interest of the deceased member pursuant to the provisions of Sections 8.6 and 8.7. 8.4 Effect of Withdrawal or Other Event. Upon the incompetence, withdrawal, expulsion, bankruptcy or dissolution of a member, if there are at least two remaining members, the remaining members may, within 120 days, without waiving any remedies in the case of voluntary withdrawal, elect to continue the LLC among themselves and to purchase the interest of the affected member pursuant to the provisions of Section 8.6 and 8.7. The elections shall be the sole discretion of the remaining members and shall require their unanimous consent. If remaining members do not so elect, the LLC shall be dissolved. 8.5 Liquidation Upon Dissolution and Winding Up. Upon the dissolution of the LLC, the managers shall wind up the affairs of the LLC. A full account of the assets and liabilities of the LLC shall be taken. The assets shall be promptly liquidated and the proceeds thereof applied as required by the Montana Limited Liability Company Act. With approval by vote of the members, the LLC may, in the process of winding up the LLC, elect to distribute certain property in kind. 7- OPERATING AGREEMENT BoRoth LLC 8.6 ValXaWion of Member¶V InWereVW. Upon an election by the LLC to purchase the interest Rf a PePbeU SXUVXaQW WR SecWLRQ 8.3 aQd 8.4, Whe YaOXe Rf Whe affecWed PePbeU¶V LQWeUeVW VhaOO be deWeUPLQed b\ PXOWLSO\LQg Whe PePbeU¶V SeUceQWage RZQeUVhLS LQWeUeVW b\ Whe fair market value of all LLC assets. The fair market value if the LLC assets shall be determined by agreement between Whe UePaLQLQg PePbeUV (acWLQg b\ YRWe) aQd Whe affecWed PePbeU RU Whe affecWed PePbeU¶V personal representative. In the event agreement aV WR VXch YaOXe caQQRW be RbWaLQed, Whe LLC¶V assets shall be valued by a third party appraiser acceptable to both the LLC and the affected PePbeU RU affecWed PePbeU¶V SeUVRQaO UeSUeVeQWaWLYe. 8.7 Pa\menW for Member¶V InWereVW. The purchase price fRU a PePbeU¶V LQWeUeVW SXUchaVed pursuant to Section 8.3 or 8.4 shall be paid in 24 substantially equal, consecutive monthly payments, including principal and interest. Interest shall accrue at the prime rate in effect on the date of the event giving rise to the election to purchase as quoted by the Wall Street Journal, or if that publication becomes unavailable, another reputable source chosen by vote of the members. The first payment shall be made not later than 90 days following such date. The LLC may prepay the remaining amount of the purchase price at any time. 8.8 EffecW of PXrchaVe of Member¶V InWereVW. A member shall cease to be a member upon Whe LLC¶V eOecWLRQ WR SXUchaVe Whe PePbeU¶V LQWeUeVW SXUVXaQW WR SecWLRQ 8.3 RU 8.4. DXULQg Whe period in which the LLC is making payments to the former member, the former member shall have no rights as a member in the LLC. ARTICLE 9 INDEMNIFICATION 9.1 Indemnification. The LLC shall indemnify each of its managers to the fullest extent permissible under Montana law, as the same exists or may hereafter be amended, against all liability, loss and costs (including, without limitation, attorney fees) incurred or suffered by such person by reason of or arising from the fact that such person is or was a manager of the LLC, or is or was serving at the request of the LLC as a manager, director, officer, partner, trustee, employee or agent of another foreign or domestic limited liability company, corporation, partnership, joint venture, trust, benefit plan or other enterprise. The LLC may, by action of the members or managers, provide indemnification to employees and agents of the LLC who are not managers. The indemnification provided in this section shall not be exclusive of any other rights to which any person may be entitled under any statute, bylaw, agreement, resolution of members of managers, contract or otherwise. 9.2 Limitation of Liability. Managers of the LLC shall not be liable to the LLC or its members for monetary damages for conduct as managers except to the extent that the Montana Limited Liability Company Act, as it now exists or may hereafter be amended, prohibits elimination or limitation of manager liability. No repeal or amendment of this section or of the Montana Limited Liability Company Act shall adversely affect any right or protection of a manager for actions or omissions prior to the repeal or amendment. 8- OPERATING AGREEMENT BoRoth LLC ARTICLE 10 AMENDMENTS 10.1 By Members. The members may amend or repeal the provisions of this Operating Agreement by unanimous agreement set forth in writing or by action taken at a meeting of members called for that purpose. This Operating Agreement may not be amended or repealed by oral agreement of the members. 10.2 By Managers. The managers may not amend or repeal the provisions of this Operating Agreement. ARTICLE 11 MISCELLANEOUS 11.1 Additional Documents. Each member shall execute such additional documents and take such actions as are reasonably requested by the managers in order to complete or confirm the transactions contemplated by this Operating Agreement. 11.2 Arbitration. Any dispute among the members or among the members and the LLC concerning this Operating Agreement shall be settled by arbitration before a single arbitrator, using the rules of commercial arbitration of the American Arbitration Association. Arbitration shall occur in Bozeman, Montana. The parties shall be entitled to conduct discovery in accordance with the Federal Rules of Civil Procedure, subject to limitation by the arbitrator to secure just and efficient resolution of the dispute. If the amount in coQWURYeUV\ e[ceedV $10,000, Whe aUbLWUaWRU¶V decLVLRQ VhaOO LQcOXde a statement specifying in reasonable detail the basis for and computation of the amount of the award, if any. A party substantially prevailing in the arbitration shall also be entitled to recover such amount for its costs and attorney fees incurred in connection with the arbitration as shall be determined by the arbitrator. Judgment upon arbitration award may be entered in any court having jurisdiction. Nothing herein, however, shall prevent a member from resort to a court of competent jurisdiction in those instances where injunctive relief may be appropriate. 11.3 Counterparts. This Operating Agreement may be executed in two or more counterparts, which together shall constitute an agreement. 11.4 Governing Law. This Operating Agreement shall be governed by Montana law. 11.5 Headings. Headings in this Operating Agreement are for convenience only and shall not affect its meaning. 11.6 Severability. The invalidity or enforceability of any provisions of this Operating Agreement shall not affect the validity or enforceability of the remaining provisions. 11.7 Third-Party Beneficiaries. The provisions of this Operating Agreement are intended solely for the benefit of the members and shall create no rights or obligations enforceable by any third party, including creditors of the LLC, except as otherwise provided by applicable law. UNANIMOUS WRITTERN CONSENT IN LIEU OF MEETING OF THE DIRECTORS OF JBRC, INC. EFFECTIVE AS OF NOVEMBER 16, 2016 I, the undersigned, being the sole director of the above-named California corporation, do hereby consent to the adoption of the following resolutions, which resolutions shall be effective as of November 16, 2016: Election of Officers RESOLVED that the following officers are elected: James R. Rothgeb President Julie Blakely Rothgeb Secretary, and Treasurer/Chief Financial Officer Transfer of Shares RESOLVED that the officers of this corporation be, and they hereby are, authorized transfer on the books of the corporation from Julie Blakely Rothgeb (as community property) to the following person the number of shares of capital stock of this corporation and for the consideration indicated opposite each name: Name Number of Shares Type and Amount of Consideration James R. Rothgeb 50 shares 0.00 (confirmation of community property) _______________________________ Julie Blakely Rothgeb 1- OPERATING AGREEMENT LuRoth LLC OPERATING AGREEMENT OF LuRoth LLC A Montana Limited Liability Company The undersigned members, desiring to form a limited liability company under the Montana Limited Liability Company Act, hereby agree as follows: ARTICLE 1 FORMATION 1.1 Name. The name of the limited liabiliW\ cRPSaQ\ (Whe ³LLC´) LuRoth LLC. 1.2 Articles of Organization. Articles of organization were filed with Secretary of State of Montana. 1.3 Duration. The LLC shall exist perpetually unless earlier dissolved as provided for in this Operating Agreement. 1.4 Principal Place of Business. The principal office of the LLC shall initially be at 3655 Bozeman Trail Road Bozeman MT, 59715. The managers may relocate the principal office or establish additional offices from time to time. 1.5 Registered Office and Registered Agent. The LLC¶V iQiWiaO UegiVWeUed Rffice VhaOO be aW 3655 Bozeman Trail Road Bozeman MT, 59715. And the name of its initial registered agent at such address shall be Matthew Lukens. ARTICLE 2 MEMBERS, CONTRIBUTORS AND INTERESTS 2.1 Names and Addresses. The names and addresses of the members of the LLC, the agreed value of their initial capital contributions and their initial percentage ownership interests are: Name and Address Contribution Percentage Lukens, Lukens, and Leach LLC 3655 Bozeman Trail Road Bozeman MT, 59715 ____50__ __ Rothgeb 2010 Trust 4239 Oakwood Ave La Canada, CA 91011 ____50__ __ Each PePbeU¶V SeUceQWage RZQeUVhiS iQWeUeVW aW aQ\ WiPe VhaOO be Whe UaWiR Rf WhaW PePbeU¶V caSiWaO cRQWUibXWiRQ WR aOO PePbeUV¶ caSiWaO cRQWUibXWiRQV. 2.2 Other Business of Members. Any member may engage independently or with others in other business and investment ventures of every nature and description and shall have no obligation to account to the LLC for such business or investments or for business or investment opportunities. 2.3 Additional Members. Additional members shall not be admitted except with the consent of all members. 2- OPERATING AGREEMENT LuRoth LLC 2.4 Additional Contributors. Additional capital contributors shall be accepted from existing members only if the managers unanimously approve and set the maximum total amount of the additional capital contributors. If the managers do so, the members shall have the opportunity (but not the obligation), to make such additional capital contributions on a pro rata basis in accordance with theiU RZQeUVhiS iQWeUeVWV. If aQ\ PePbeU eOecWV WR PaNe OeVV WhaQ Whe PePbeU¶V SUR UaWa VhaUe of any additional capital contributions, the others may contribute the difference on a pro rata basis in accordance with their ownership interests or on any other basis they may agree upon. 2.5 No Interest on Capital Contributions. No interest shall be paid on capital contributions. 2.6 Capital Accounts. An individual capital account shall be maintained for each member. Each PePbeU¶V caSiWaO accRXQW VhaOO be (a) cUediWed ZiWh aOO caSiWaO cRQWUibXWiRQV b\ VXch PePbeU aQd Whe PePbeU¶V diVWUibXWiYe VhaUe Rf aOO iQcRPe aQd gaiQ iQcOXdiQg aQ\ iQcRPe e[ePSW fURm federal iQcRPe Wa[); aQd (b) chaUged ZiWh Whe aPRXQW Rf aOO diVWUibXWRUV WR VXch PePbeU aQd Whe PePbeU¶V distributive share of losses and deductions. Capital accounts shall be maintained in accordance with federal income tax accounting principals as set forth in Treas. Reg. § 1.704-1 (b)(2)(iv) or any successor provision. ARTICLE 3 MEMBER MEETINGS 3.1 Meetings. A meeting of members shall be held (a) if it is called by the managers or (b) if members holding a least fifty percent (50%) of the ownership interests sign, date and deliver to the LLC¶V SUiQciSaO Rffice a ZUiWWeQ dePaQd fRU Whe PeeWiQg deVcUibiQg Whe Surpose or purposes for which it is to be held. Meetings of members shall be held at the principal office of the LLC or any other place specified in the notice of meeting. 3.2 Notice of Meeting. NRWice Rf Whe daWe, WiPe aQd SOace Rf each PePbeU¶V Peeting shall be given to each member not earlier than 60 days nor less than 10 days before the meeting date. The notice must include a description of the purpose or purposes for which the meeting called. 3.3 Record date. The persons entitled to notice Rf aQd WR YRWe aW a PePbeUV¶ PeeWiQg aQd WheiU respective ownership interests, shall be determined as of the record date for the meeting. The record date shall be a date not earlier than 70 days or less than 10 days before the meeting selected by the managers. If the managers do not specify a record date, the record date shall be the date on which notice of the meeting was first mailed or otherwise delivered. 3.4 Quorum. The presence, in person or by proxy, of members holding at least fifty-one percent (51%) of the ownership interests shall constitute a quorum. 3.5 Proxies. A member may be represented at a meeting in person or by written proxy. 3.6 Voting. On each matter requiring action by members, each member shall be entitled to vote the PePbeU¶V RZQeUVhiS iQWeUeVW. E[ceSW aV RWheUZiVe VWaWed iQ Whe aUWicOeV Rf RUgaQi]aWiRQ, WhiV Operating Agreement, or applicable law, a matter submitted to a vote of the members shall be deemed approved if the ownership interests voted in favor exceed those voted against the matter. 3- OPERATING AGREEMENT LuRoth LLC ARTICLE 4 MANAGEMENT 4.1 Management of Company. The management and control of the Company and its business and affairs are exclusively in the members. The members, or any of them, have all the powers that may be possessed by a member in a limited liability company without managers pursuant to the Act. 4.2 Operating Manager. Notwithstanding Section 4.1, the Members may agree among themselves that, except as otherwise proved in Section 4.3, in connection with major decisions (defined in Section 4.3), the right to manage the day-to-day operations of the Company may rest ZiWh aQ ³OSeUaWiQg MaQageU´. CRQViVWeQW ZiWh aQd VXbMecW WR Whe fRUegRiQg, Whe RSeUaWiQg PaQageU has all the rights and powers that may be possessed by a manager in a limited liability company with managers pursuant to the Act, and such rights and powers as are otherwise conferred by law RU aUe QeceVVaU\, adYiVabOe, RU cRQYeQieQW WR Whe diVchaUge Rf Whe OSeUaWiQg MaQageU¶V dXWieV XQdeU this Agreement and to the management of the business and affairs of the Company. 4.3 Authority. Subject to restrictions that may be imposed from time to time by the managers or members, each manager shall be an agent of the LLC with authority to bind the LLC in the ordinary course of business. The managers shall have no authority to bind the LLC as to the following matters without first obtaining approval by vote of the members. (a) Sale, lease, exchange, mortgage, pledge or other transfer of disposition of all or substantially all of the assets of the LLC; (b) Merger of the LLC with another entity; (c) Amendment to the articles of organization; (d) Incurrence of indebtedness by the LLC other than in the ordinary course of business; (e) A transaction involving an actual or potential conflict of interest between a member or manager and the LLC; or (f) A change in the nature of the business of the LLC. 4.4 Other Activities. Managers may have other business interests and may engage in other acWiYiWieV iQ addiWiRQ WR WhRVe UeOaWiQg WR Whe CRPSaQ\. ThiV VecWiRQ dReV QRW chaQge each PaQageU¶V duty to act in a manner that the manager reasonably believes to be in the best interest of the LLC. 4.5 Meetings/Notices/Quorum/Voting. Meetings of the managers may be called by any manager. Meetings shall be held at the place fixed by the managers or, if no such place can be fixed, at the principal office of the LLC. Oral or written notice of the date, time and place of any meeting shall be given in at least 24 hours in advance. Written notice may be delivered personally, given by facsimile or other form of wired communication, or by mail or private carrier to each PaQageU¶V bXViQeVV RU hRPe addUeVV. WUiWWeQ QRWice VhaOO be effecWiYe aW Whe eaUOieVW Rf Whe following: (a) when received, (b) when sent by facsimile or other form of wire communication, or (c) 4- OPERATING AGREEMENT LuRoth LLC two business days after being mailed. A majority of the managers shall constitute a quorum. Each manager shall be entitled to one vote. A matter submitted to a vote of the managers shall be deemed approved if the votes in favor exceed those against the matter. 4.6 Resignation. A manager may resign at any time by delivering written notice to the other managers or to the members. The resignation is effective when the notice is effective under the Montana Limited Liability Company Act, unless the notice specifies a later effective date. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the managers. The UeVigQaWiRQ Rf a PaQageU ZhR iV aOVR a PePbeU VhaOO QRW affecW Whe PaQageU¶V UighWV aV a PePbeU and shall not constitute a withdrawal of the member. 4.7 Removal of a Manager by Members. The members may remove one or more managers with or without cause. A manager may be removed by the members only at a meeting called for the purpose of removing the manager and the meeting notice must state that the purpose or one of the purposes of the meeting is removal of the manager. 4.8 Vacancy. If a vacancy occurs in the number of managers: (a) The members may fill the vacancy; or (b) The remaining managers may fill the vacancy (whether or not the remaining managers constitute a quorum). A vacancy that will occur at a specific later date may be filled before the vacancy occurs, but the new manager may not take office until the vacancy occurs. 4.9 Salaries. The salaries and other compensation of the managers shall be fixed from time to time by vote of the members. A manager shall not be precluded from receiving a salary because the manager is also a member. 4.10 Other Agents. The managers may, by vote, authorize any agent to enter into any lawful contract or to otherwise act on behalf of the LLC. Such authority may be general or be confined to specific instances. ARTICLE 5 ACTIONS WITHOUT NOTICE, WITHOUT MEETING OR BY TELEPHONE 5.1 Meeting of all Members or Managers. Notwithstanding any other provisions of this Operating Agreement, if all of the members or managers shall hold a meeting at any time and place, such meeting shall be valid without call or notice, and any lawful action taken at such meeting shall be the action of the members or managers, respectively. 5- OPERATING AGREEMENT LuRoth LLC 5.2 Action Without Meeting. Any action required or permitted to be taken by the members or the managers at a meeting may be taken without a meeting if a consent in writing describing the action taken, is signed by members holding more than fifty-one percent (51%) of the ownership interests or by all of the managers, as the case may be, and is included in the minutes or filed with Whe LLC¶V Uecords of meetings. 5.3 Meetings by Telephone. Meetings of the members or managers may be held by conference telephone or by any other means of communication by which all participants can hear each other simultaneously during the meeting, and such participation shall constitute presence in person at the meeting. ARTICLE 6 ACCOUNTING AND RECORDS 6.1 Books of Account. The LLC¶V bRRNV aQd UecRUdV, a UegiVWeU VhRZiQg Whe QaPeV, addUeVVeV and ownership interests of the members, and this Operating Agreement shall be maintained by the managers. Each member shall have access thereto at all reasonable times. The managers shall keep bRRNV aQd UecRUdV Rf Whe RSeUaWiRQ Rf Whe LLC Zhich aUe aSSURSUiaWe aQd adeTXaWe fRU Whe LLC¶V business and for the carrying out this agreement. 6.2 Fiscal Year. The fiscal year of the LLC shall be the calendar year. 6.3 Accounting Reports. Within 90 days after the close of each fiscal year, the managers shall cause each member to receive a financial report of the activities of the LLC for the preceding fiscal year, including a copy of a balance sheet of the LLC as of the end of such year and a statement of income or loss for such year. 6.4 Tax Returns. The managers shall cause all required federal and state income tax returns for the LLC to be prepared and timely filed with the appropriate authorities. Within the filing deadline of September 15th, and within the filing deadline of October 15th after the end of each fiscal year, each PePbeU VhaOO be fXUQiVhed a VWaWePeQW VXiWabOe fRU XVe iQ Whe SUeSaUaWiRQ Rf Whe PePbeU¶V income tax return, showing the amounts of any distributions, contributions, gains, losses, profits or credits allowed to the member during such fiscal year. ARTICLE 7 ALLOCATIONS AND DISTRIBUTIONS 7.1 Allocations of Income and Loss for Tax Purposes. All items of income, gain, loss, deduction and credit shall be allocated among all members in proportion to their ownership interests. 7.2 Distribution to Pay Tax Liabilities. Within 90 days after the end of each fiscal year, the LLC may make a distribution in an amount equal to at least (a) the LLC¶V QeW Wa[abOe iQcRPe dXUiQg the fiscal year multiplied by (b) the lessor of (i) thirty-five percent (35%) or (ii) the sum of the maximum federal and state individual income tax rates of any member in effect for the fiscal year (taking into account the deductibility of state taxes for federal income tax purposes), less (c) the 6- OPERATING AGREEMENT LuRoth LLC amount of any distributions made by the LLC during the fiscal year (other than distributions made during the fiscal year that were required to be made under the provisions of this section with respect WR a SUiRU fiVcaO \eaU). FRU SXUSRVeV Rf WhiV VecWiRQ, aQ LLC¶V QeW Wa[abOe iQcRPe VhaOO be Whe Qe[W excess of items of recognized income and gain over the items of recognized loss and deduction UeSRUWed RQ Whe LLC¶V fedeUaO iQcRPe Wa[ return for the taxable year with respect to which the diVWUibXWiRQ iV beiQg Pade. The LLC¶V RbOigaWiRQ WR PaNe VXch a diVWUibXWiRQ iV VXbMecW WR Whe restrictions governing distributions under the Montana Limited Liability Company Act. ARTICLE 8 WITHDRAWAL AND DISSOULUTION 8.1 Withdrawal. Each member agrees not to withdraw from the LLC without consent of all other members. A voluntary withdrawal in violation of this section shall be effective after one PRQWh¶V ZUiWWeQ QRWice deOiYeUed WR Whe PaQageUV, bXW VhaOO cRQVWiWXWe a bUeach Rf WhiV Operating Agreement for which the LLC and other members shall have the remedies provided under applicable law. 8.2 Events of Dissolution. Except as otherwise provided in this Operating Agreement, the LLC shall dissolve upon the earlier of: (a) the time, if any, for dissolution specified in the articles of organization; (b) the death, incompetence, withdrawal, expulsion, bankruptcy or dissolution of any member; or (c) approval of dissolution by a vote of the members. 8.3 Effect of Death of a Member. In the event of the death of a member, the remaining members may within 120 days, elect to: (a) CRQWiQXe Whe LLC aQd adPiW Whe deceaVed PePbeU¶V VSRXVe, eVWaWe RU other beneficiary as a member in place of the deceased member; or (b) If there are at least two remaining members, continue the LLC among the surviving members and purchase the interest of the deceased member pursuant to the provisions of Sections 8.6 and 8.7. 8.4 Effect of Withdrawal or Other Event. Upon the incompetence, withdrawal, expulsion, bankruptcy or dissolution of a member, if there are at least two remaining members, the remaining members may, within 120 days, without waiving any remedies in the case of voluntary withdrawal, elect to continue the LLC among themselves and to purchase the interest of the affected member pursuant to the provisions of Section 8.6 and 8.7. The elections shall be the sole discretion of the remaining members and shall require their unanimous consent. If remaining members do not so elect, the LLC shall be dissolved. 8.5 Liquidation Upon Dissolution and Winding Up. Upon the dissolution of the LLC, the managers shall wind up the affairs of the LLC. A full account of the assets and liabilities of the LLC shall be taken. The assets shall be promptly liquidated and the proceeds thereof applied as required by the Montana Limited Liability Company Act. With approval by vote of the members, the LLC may, in the process of winding up the LLC, elect to distribute certain property in kind. 7- OPERATING AGREEMENT LuRoth LLC 8.6 ValXaWiRn Rf MembeU¶V InWeUeVW. Upon an election by the LLC to purchase the interest Rf a PePbeU SXUVXaQW WR SecWiRQ 8.3 aQd 8.4, Whe YaOXe Rf Whe affecWed PePbeU¶V iQWeUeVW VhaOO be deWeUPiQed b\ PXOWiSO\iQg Whe PePbeU¶V SeUceQWage RZnership interest by the fair market value of all LLC assets. The fair market value if the LLC assets shall be determined by agreement between Whe UePaiQiQg PePbeUV (acWiQg b\ YRWe) aQd Whe affecWed PePbeU RU Whe affecWed PePbeU¶V personal representative. IQ Whe eYeQW agUeePeQW aV WR VXch YaOXe caQQRW be RbWaiQed, Whe LLC¶V assets shall be valued by a third party appraiser acceptable to both the LLC and the affected PePbeU RU affecWed PePbeU¶V SeUVRQaO UeSUeVeQWaWiYe. 8.7 Pa\menW fRU MembeU¶V InWeUeVW. The SXUchaVe SUice fRU a PePbeU¶V iQWeUeVW SXUchaVed pursuant to Section 8.3 or 8.4 shall be paid in 24 substantially equal, consecutive monthly payments, including principal and interest. Interest shall accrue at the prime rate in effect on the date of the event giving rise to the election to purchase as quoted by the Wall Street Journal, or if that publication becomes unavailable, another reputable source chosen by vote of the members. The first payment shall be made not later than 90 days following such date. The LLC may prepay the remaining amount of the purchase price at any time. 8.8 EffecW Rf PXUchaVe Rf MembeU¶V InWeUeVW. A member shall cease to be a member upon Whe LLC¶V eOecWiRQ WR SXUchaVe Whe PePbeU¶V iQWeUeVW SXUVXaQW WR SecWiRQ 8.3 Rr 8.4. During the period in which the LLC is making payments to the former member, the former member shall have no rights as a member in the LLC. ARTICLE 9 INDEMNIFICATION 9.1 Indemnification. The LLC shall indemnify each of its managers to the fullest extent permissible under Montana law, as the same exists or may hereafter be amended, against all liability, loss and costs (including, without limitation, attorney fees) incurred or suffered by such person by reason of or arising from the fact that such person is or was a manager of the LLC, or is or was serving at the request of the LLC as a manager, director, officer, partner, trustee, employee or agent of another foreign or domestic limited liability company, corporation, partnership, joint venture, trust, benefit plan or other enterprise. The LLC may, by action of the members or managers, provide indemnification to employees and agents of the LLC who are not managers. The indemnification provided in this section shall not be exclusive of any other rights to which any person may be entitled under any statute, bylaw, agreement, resolution of members of managers, contract or otherwise. 9.2 Limitation of Liability. Managers of the LLC shall not be liable to the LLC or its members for monetary damages for conduct as managers except to the extent that the Montana Limited Liability Company Act, as it now exists or may hereafter be amended, prohibits elimination or limitation of manager liability. No repeal or amendment of this section or of the Montana Limited Liability Company Act shall adversely affect any right or protection of a manager for actions or omissions prior to the repeal or amendment. 8- OPERATING AGREEMENT LuRoth LLC ARTICLE 10 AMENDMENTS 10.1 By Members. The members may amend or repeal the provisions of this Operating Agreement by unanimous agreement set forth in writing or by action taken at a meeting of members called for that purpose. This Operating Agreement may not be amended or repealed by oral agreement of the members. 10.2 By Managers. The managers may not amend or repeal the provisions of this Operating Agreement. ARTICLE 11 MISCELLANEOUS 11.1 Additional Documents. Each member shall execute such additional documents and take such actions as are reasonably requested by the managers in order to complete or confirm the transactions contemplated by this Operating Agreement. 11.2 Arbitration. Any dispute among the members or among the members and the LLC concerning this Operating Agreement shall be settled by arbitration before a single arbitrator, using the rules of commercial arbitration of the American Arbitration Association. Arbitration shall occur in Bozeman, Montana. The parties shall be entitled to conduct discovery in accordance with the Federal Rules of Civil Procedure, subject to limitation by the arbitrator to secure just and efficient resolution Rf Whe diVSXWe. If Whe aPRXQW iQ cRQWURYeUV\ e[ceedV $10,000, Whe aUbiWUaWRU¶V deciViRQ VhaOO iQcOXde a statement specifying in reasonable detail the basis for and computation of the amount of the award, if any. A party substantially prevailing in the arbitration shall also be entitled to recover such amount for its costs and attorney fees incurred in connection with the arbitration as shall be determined by the arbitrator. Judgment upon arbitration award may be entered in any court having jurisdiction. Nothing herein, however, shall prevent a member from resort to a court of competent jurisdiction in those instances where injunctive relief may be appropriate. 11.3 Counterparts. This Operating Agreement may be executed in two or more counterparts, which together shall constitute an agreement. 11.4 Governing Law. This Operating Agreement shall be governed by Montana law. 11.5 Headings. Headings in this Operating Agreement are for convenience only and shall not affect its meaning. 11.6 Severability. The invalidity or enforceability of any provisions of this Operating Agreement shall not affect the validity or enforceability of the remaining provisions. 11.7 Third-Party Beneficiaries. The provisions of this Operating Agreement are intended solely for the benefit of the members and shall create no rights or obligations enforceable by any third party, including creditors of the LLC, except as otherwise provided by applicable law. 1- OPERATING AGREEMENT VanRoth LLC OPERATING AGREEMENT OF VanRoth LLC A Montana Limited Liability Company The undersigned members, desiring to form a limited liability company under the Montana Limited Liability Company Act, hereby agree as follows: ARTICLE 1 FORMATION 1.1 Name. The name of the limited liabilLW\ cRPSaQ\ (Whe ³LLC´) VanRoth LLC. 1.2 Articles of Organization. Articles of organization were filed with Secretary of State of Montana. 1.3 Duration. The LLC shall exist perpetually unless earlier dissolved as provided for in this Operating Agreement. 1.4 Principal Place of Business. The principal office of the LLC shall initially be at 2220 Ironhorse Rd Lot 4 Bozeman MT, 59715. The managers may relocate the principal office or establish additional offices from time to time. 1.5 Registered Office and Registered Agent. The LLC¶V LQLWLaO UegLVWeUed RffLce VhaOO be aW 3675 Bozeman Trail Rd Bozeman MT, 59715. And the name of its initial registered agent at such address shall be James Stuart. ARTICLE 2 MEMBERS, CONTRIBUTORS AND INTERESTS 2.1 Names and Addresses. The names and addresses of the members of the LLC, the agreed value of their initial capital contributions and their initial percentage ownership interests are: Name and Address Contribution Percentage Vanneman Family Trust 2654 Prospect Ave La Crescenta, CA 91214 50 Rothgeb Family Trust 4239 Oakwood Ave La Canada, CA 91011 ____50 Each PePbeU¶V SeUceQWage RZQeUVhLS LQWeUeVW aW aQ\ WLPe VhaOO be Whe UaWLR Rf WhaW PePbeU¶V caSLWaO cRQWULbXWLRQ WR aOO PePbeUV¶ caSLWaO cRQWULbXWLRQV. 2.2 Other Business of Members. Any member may engage independently or with others in other business and investment ventures of every nature and description and shall have no obligation to account to the LLC for such business or investments or for business or investment opportunities. 2.3 Additional Members. Additional members shall not be admitted except with the consent of all members. 2- OPERATING AGREEMENT VanRoth LLC 2.4 Additional Contributors. Additional capital contributors shall be accepted from existing members only if the managers unanimously approve and set the maximum total amount of the additional capital contributors. If the managers do so, the members shall have the opportunity (but not the obligation), to make such additional capital contributions on a pro rata basis in accordance with their ownership interests. If any mePbeU eOecWV WR PaNe OeVV WhaQ Whe PePbeU¶V SUR UaWa VhaUe of any additional capital contributions, the others may contribute the difference on a pro rata basis in accordance with their ownership interests or on any other basis they may agree upon. 2.5 No Interest on Capital Contributions. No interest shall be paid on capital contributions. 2.6 Capital Accounts. An individual capital account shall be maintained for each member. Each PePbeU¶V caSLWaO accRXQW VhaOO be (a) cUedLWed ZLWh aOO caSLtal contributions by such member and the PePbeU¶V dLVWULbXWLYe VhaUe Rf aOO LQcRPe aQd gaLQ LQcOXdLQg aQ\ LQcRPe e[ePSW fURP fedeUaO LQcRPe Wa[); aQd (b) chaUged ZLWh Whe aPRXQW Rf aOO dLVWULbXWRUV WR VXch PePbeU aQd Whe PePbeU¶V distributive share of losses and deductions. Capital accounts shall be maintained in accordance with federal income tax accounting principals as set forth in Treas. Reg. § 1.704-1 (b)(2)(iv) or any successor provision. ARTICLE 3 MEMBER MEETINGS 3.1 Meetings. A meeting of members shall be held (a) if it is called by the managers or (b) if members holding a least fifty percent (50%) of the ownership interests sign, date and deliver to the LLC¶V SULQcLSaO RffLce a ZULWWeQ dePaQd fRU Whe PeeWLQg deVcULbLQg Whe Surpose or purposes for which it is to be held. Meetings of members shall be held at the principal office of the LLC or any other place specified in the notice of meeting. 3.2 Notice of Meeting. NRWLce Rf Whe daWe, WLPe aQd SOace Rf each PePbeU¶V Peeting shall be given to each member not earlier than 60 days nor less than 10 days before the meeting date. The notice must include a description of the purpose or purposes for which the meeting called. 3.3 Record date. The persons entitled to notice Rf aQd WR YRWe aW a PePbeUV¶ PeeWLQg aQd WheLU respective ownership interests, shall be determined as of the record date for the meeting. The record date shall be a date not earlier than 70 days or less than 10 days before the meeting selected by the managers. If the managers do not specify a record date, the record date shall be the date on which notice of the meeting was first mailed or otherwise delivered. 3.4 Quorum. The presence, in person or by proxy, of members holding at least fifty-one percent (51%) of the ownership interests shall constitute a quorum. 3.5 Proxies. A member may be represented at a meeting in person or by written proxy. 3.6 Voting. On each matter requiring action by members, each member shall be entitled to vote the PePbeU¶V RZQeUVhLS LQWeUeVW. E[ceSW aV RWheUZLVe VWaWed LQ Whe aUWLcOeV Rf RUgaQL]aWLRQ, WhLV Operating Agreement, or applicable law, a matter submitted to a vote of the members shall be deemed approved if the ownership interests voted in favor exceed those voted against the matter. 3- OPERATING AGREEMENT VanRoth LLC ARTICLE 4 MANAGEMENT 4.1 Management of Company. The management and control of the Company and its business and affairs are exclusively in the members. The members, or any of them, have all the powers that may be possessed by a member in a limited liability company without managers pursuant to the Act. 4.2 Operating Manager. Notwithstanding Section 4.1, the Members may agree among themselves that, except as otherwise proved in Section 4.3, in connection with major decisions (defined in Section 4.3), the right to manage the day-to-day operations of the Company may rest ZLWh aQ ³OSeUaWLQg MaQageU´. CRQVLVWeQW ZLWh aQd VXbMecW WR Whe fRUegRLQg, Whe RSeUaWLQg PaQageU has all the rights and powers that may be possessed by a manager in a limited liability company with managers pursuant to the Act, and such rights and powers as are otherwise conferred by law RU aUe QeceVVaU\, adYLVabOe, RU cRQYeQLeQW WR Whe dLVchaUge Rf Whe OSeUaWLQg MaQageU¶V dXWLeV XQdeU this Agreement and to the management of the business and affairs of the Company. 4.3 Authority. Subject to restrictions that may be imposed from time to time by the managers or members, each manager shall be an agent of the LLC with authority to bind the LLC in the ordinary course of business. The managers shall have no authority to bind the LLC as to the following matters without first obtaining approval by vote of the members. (a) Sale, lease, exchange, mortgage, pledge or other transfer of disposition of all or substantially all of the assets of the LLC; (b) Merger of the LLC with another entity; (c) Amendment to the articles of organization; (d) Incurrence of indebtedness by the LLC other than in the ordinary course of business; (e) A transaction involving an actual or potential conflict of interest between a member or manager and the LLC; or (f) A change in the nature of the business of the LLC. 4.4 Other Activities. Managers may have other business interests and may engage in other acWLYLWLeV LQ addLWLRQ WR WhRVe UeOaWLQg WR Whe CRPSaQ\. ThLV VecWLRQ dReV QRW chaQge each PaQageU¶V duty to act in a manner that the manager reasonably believes to be in the best interest of the LLC. 4.5 Meetings/Notices/Quorum/Voting. Meetings of the managers may be called by any manager. Meetings shall be held at the place fixed by the managers or, if no such place can be fixed, at the principal office of the LLC. Oral or written notice of the date, time and place of any meeting shall be given in at least 24 hours in advance. Written notice may be delivered personally, given by facsimile or other form of wired communication, or by mail or private carrier to each PaQageU¶V bXVLQeVV RU hRPe addUeVV. WULWWeQ QRWLce VhaOO be effecWLYe aW Whe eaUOLeVW Rf Whe following: (a) when received, (b) when sent by facsimile or other form of wire communication, or (c) 4- OPERATING AGREEMENT VanRoth LLC two business days after being mailed. A majority of the managers shall constitute a quorum. Each manager shall be entitled to one vote. A matter submitted to a vote of the managers shall be deemed approved if the votes in favor exceed those against the matter. 4.6 Resignation. A manager may resign at any time by delivering written notice to the other managers or to the members. The resignation is effective when the notice is effective under the Montana Limited Liability Company Act, unless the notice specifies a later effective date. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the managers. The UeVLgQaWLRQ Rf a PaQageU ZhR LV aOVR a PePbeU VhaOO QRW affecW Whe PaQageU¶V ULghWV aV a PePbeU and shall not constitute a withdrawal of the member. 4.7 Removal of a Manager by Members. The members may remove one or more managers with or without cause. A manager may be removed by the members only at a meeting called for the purpose of removing the manager and the meeting notice must state that the purpose or one of the purposes of the meeting is removal of the manager. 4.8 Vacancy. If a vacancy occurs in the number of managers: (a) The members may fill the vacancy; or (b) The remaining managers may fill the vacancy (whether or not the remaining managers constitute a quorum). A vacancy that will occur at a specific later date may be filled before the vacancy occurs, but the new manager may not take office until the vacancy occurs. 4.9 Salaries. The salaries and other compensation of the managers shall be fixed from time to time by vote of the members. A manager shall not be precluded from receiving a salary because the manager is also a member. 4.10 Other Agents. The managers may, by vote, authorize any agent to enter into any lawful contract or to otherwise act on behalf of the LLC. Such authority may be general or be confined to specific instances. ARTICLE 5 ACTIONS WITHOUT NOTICE, WITHOUT MEETING OR BY TELEPHONE 5.1 Meeting of all Members or Managers. Notwithstanding any other provisions of this Operating Agreement, if all of the members or managers shall hold a meeting at any time and place, such meeting shall be valid without call or notice, and any lawful action taken at such meeting shall be the action of the members or managers, respectively. 5- OPERATING AGREEMENT VanRoth LLC 5.2 Action Without Meeting. Any action required or permitted to be taken by the members or the managers at a meeting may be taken without a meeting if a consent in writing describing the action taken, is signed by members holding more than fifty-one percent (51%) of the ownership interests or by all of the managers, as the case may be, and is included in the minutes or filed with Whe LLC¶V UecRUds of meetings. 5.3 Meetings by Telephone. Meetings of the members or managers may be held by conference telephone or by any other means of communication by which all participants can hear each other simultaneously during the meeting, and such participation shall constitute presence in person at the meeting. ARTICLE 6 ACCOUNTING AND RECORDS 6.1 Books of Account. The LLC¶V bRRNV aQd UecRUdV, a UegLVWeU VhRZLQg Whe QaPeV, addUeVVeV and ownership interests of the members, and this Operating Agreement shall be maintained by the managers. Each member shall have access thereto at all reasonable times. The managers shall keep bRRNV aQd UecRUdV Rf Whe RSeUaWLRQ Rf Whe LLC ZhLch aUe aSSURSULaWe aQd adeTXaWe fRU Whe LLC¶V business and for the carrying out this agreement. 6.2 Fiscal Year. The fiscal year of the LLC shall be the calendar year. 6.3 Accounting Reports. Within 90 days after the close of each fiscal year, the managers shall cause each member to receive a financial report of the activities of the LLC for the preceding fiscal year, including a copy of a balance sheet of the LLC as of the end of such year and a statement of income or loss for such year. 6.4 Tax Returns. The managers shall cause all required federal and state income tax returns for the LLC to be prepared and timely filed with the appropriate authorities. Within the filing deadline of September 15th, and within the filing deadline of October 15th after the end of each fiscal year, each PePbeU VhaOO be fXUQLVhed a VWaWePeQW VXLWabOe fRU XVe LQ Whe SUeSaUaWLRQ Rf Whe PePbeU¶V income tax return, showing the amounts of any distributions, contributions, gains, losses, profits or credits allowed to the member during such fiscal year. ARTICLE 7 ALLOCATIONS AND DISTRIBUTIONS 7.1 Allocations of Income and Loss for Tax Purposes. All items of income, gain, loss, deduction and credit shall be allocated among all members in proportion to their ownership interests. 7.2 Distribution to Pay Tax Liabilities. Within 90 days after the end of each fiscal year, the LLC may make a distribution in an amount equal to at least (a) the LLC¶V QeW Wa[abOe LQcRPe dXULQg the fiscal year multiplied by (b) the lessor of (i) thirty-five percent (35%) or (ii) the sum of the maximum federal and state individual income tax rates of any member in effect for the fiscal year (taking into account the deductibility of state taxes for federal income tax purposes), less (c) the 6- OPERATING AGREEMENT VanRoth LLC amount of any distributions made by the LLC during the fiscal year (other than distributions made during the fiscal year that were required to be made under the provisions of this section with respect WR a SULRU fLVcaO \eaU). FRU SXUSRVeV Rf WhLV VecWLRQ, aQ LLC¶V QeW Wa[abOe LQcRPe VhaOO be Whe Qe[W excess of items of recognized income and gain over the items of recognized loss and deduction UeSRUWed RQ Whe LLC¶V fedeUaO LQcRPe Wa[ return for the taxable year with respect to which the dLVWULbXWLRQ LV beLQg Pade. The LLC¶V RbOLgaWLRQ WR PaNe VXch a dLVWULbXWLRQ LV VXbMecW WR Whe restrictions governing distributions under the Montana Limited Liability Company Act. ARTICLE 8 WITHDRAWAL AND DISSOULUTION 8.1 Withdrawal. Each member agrees not to withdraw from the LLC without consent of all other members. A voluntary withdrawal in violation of this section shall be effective after one PRQWh¶V ZULWWeQ QRWLce deOLYeUed WR the managers, but shall constitute a breach of this Operating Agreement for which the LLC and other members shall have the remedies provided under applicable law. 8.2 Events of Dissolution. Except as otherwise provided in this Operating Agreement, the LLC shall dissolve upon the earlier of: (a) the time, if any, for dissolution specified in the articles of organization; (b) the death, incompetence, withdrawal, expulsion, bankruptcy or dissolution of any member; or (c) approval of dissolution by a vote of the members. 8.3 Effect of Death of a Member. In the event of the death of a member, the remaining members may within 120 days, elect to: (a) CRQWLQXe Whe LLC aQd adPLW Whe deceaVed PePbeU¶V VSRXVe, eVWaWe RU other beneficiary as a member in place of the deceased member; or (b) If there are at least two remaining members, continue the LLC among the surviving members and purchase the interest of the deceased member pursuant to the provisions of Sections 8.6 and 8.7. 8.4 Effect of Withdrawal or Other Event. Upon the incompetence, withdrawal, expulsion, bankruptcy or dissolution of a member, if there are at least two remaining members, the remaining members may, within 120 days, without waiving any remedies in the case of voluntary withdrawal, elect to continue the LLC among themselves and to purchase the interest of the affected member pursuant to the provisions of Section 8.6 and 8.7. The elections shall be the sole discretion of the remaining members and shall require their unanimous consent. If remaining members do not so elect, the LLC shall be dissolved. 8.5 Liquidation Upon Dissolution and Winding Up. Upon the dissolution of the LLC, the managers shall wind up the affairs of the LLC. A full account of the assets and liabilities of the LLC shall be taken. The assets shall be promptly liquidated and the proceeds thereof applied as required by the Montana Limited Liability Company Act. With approval by vote of the members, the LLC may, in the process of winding up the LLC, elect to distribute certain property in kind. 7- OPERATING AGREEMENT VanRoth LLC 8.6 ValXaWiRn Rf MembeU¶V InWeUeVW. Upon an election by the LLC to purchase the interest Rf a PePbeU SXUVXaQW WR SecWLRQ 8.3 aQd 8.4, Whe YaOXe Rf Whe affecWed PePbeU¶V LQWeUeVW VhaOO be determined by PXOWLSO\LQg Whe PePbeU¶V SeUceQWage RZQeUVhLS LQWeUeVW b\ Whe faLU PaUNeW YaOXe Rf all LLC assets. The fair market value if the LLC assets shall be determined by agreement between the remaining members (acting by vote) and the affected member or the affected PePbeU¶V SeUVRQaO UeSUeVeQWaWLYe. IQ Whe eYeQW agUeePeQW aV WR VXch YaOXe caQQRW be RbWaLQed, Whe LLC¶V assets shall be valued by a third party appraiser acceptable to both the LLC and the affected PePbeU RU affecWed PePbeU¶V SeUVRQaO UeSUeVeQWaWLYe. 8.7 Pa\menW fRU MembeU¶V InWeUeVW. The SXUchaVe SULce fRU a PePbeU¶V LQWeUeVW SXUchaVed pursuant to Section 8.3 or 8.4 shall be paid in 24 substantially equal, consecutive monthly payments, including principal and interest. Interest shall accrue at the prime rate in effect on the date of the event giving rise to the election to purchase as quoted by the Wall Street Journal, or if that publication becomes unavailable, another reputable source chosen by vote of the members. The first payment shall be made not later than 90 days following such date. The LLC may prepay the remaining amount of the purchase price at any time. 8.8 EffecW Rf PXUchaVe Rf MembeU¶V InWeUeVW. A member shall cease to be a member upon Whe LLC¶V eOecWLRQ WR SXUchaVe Whe PePbeU¶V LQWeUeVW SXUVXaQW WR SecWLRQ 8.3 RU 8.4. DXULQg Whe period in which the LLC is making payments to the former member, the former member shall have no rights as a member in the LLC. ARTICLE 9 INDEMNIFICATION 9.1 Indemnification. The LLC shall indemnify each of its managers to the fullest extent permissible under Montana law, as the same exists or may hereafter be amended, against all liability, loss and costs (including, without limitation, attorney fees) incurred or suffered by such person by reason of or arising from the fact that such person is or was a manager of the LLC, or is or was serving at the request of the LLC as a manager, director, officer, partner, trustee, employee or agent of another foreign or domestic limited liability company, corporation, partnership, joint venture, trust, benefit plan or other enterprise. The LLC may, by action of the members or managers, provide indemnification to employees and agents of the LLC who are not managers. The indemnification provided in this section shall not be exclusive of any other rights to which any person may be entitled under any statute, bylaw, agreement, resolution of members of managers, contract or otherwise. 9.2 Limitation of Liability. Managers of the LLC shall not be liable to the LLC or its members for monetary damages for conduct as managers except to the extent that the Montana Limited Liability Company Act, as it now exists or may hereafter be amended, prohibits elimination or limitation of manager liability. No repeal or amendment of this section or of the Montana Limited Liability Company Act shall adversely affect any right or protection of a manager for actions or omissions prior to the repeal or amendment. 8- OPERATING AGREEMENT VanRoth LLC ARTICLE 10 AMENDMENTS 10.1 By Members. The members may amend or repeal the provisions of this Operating Agreement by unanimous agreement set forth in writing or by action taken at a meeting of members called for that purpose. This Operating Agreement may not be amended or repealed by oral agreement of the members. 10.2 By Managers. The managers may not amend or repeal the provisions of this Operating Agreement. ARTICLE 11 MISCELLANEOUS 11.1 Additional Documents. Each member shall execute such additional documents and take such actions as are reasonably requested by the managers in order to complete or confirm the transactions contemplated by this Operating Agreement. 11.2 Arbitration. Any dispute among the members or among the members and the LLC concerning this Operating Agreement shall be settled by arbitration before a single arbitrator, using the rules of commercial arbitration of the American Arbitration Association. Arbitration shall occur in Bozeman, Montana. The parties shall be entitled to conduct discovery in accordance with the Federal Rules of Civil Procedure, subject to limitation by the arbitrator to secure just and efficient resolution Rf Whe dLVSXWe. If Whe aPRXQW LQ cRQWURYeUV\ e[ceedV $10,000, Whe aUbLWUaWRU¶V decLVLRQ VhaOO LQcOXde a statement specifying in reasonable detail the basis for and computation of the amount of the award, if any. A party substantially prevailing in the arbitration shall also be entitled to recover such amount for its costs and attorney fees incurred in connection with the arbitration as shall be determined by the arbitrator. Judgment upon arbitration award may be entered in any court having jurisdiction. Nothing herein, however, shall prevent a member from resort to a court of competent jurisdiction in those instances where injunctive relief may be appropriate. 11.3 Counterparts. This Operating Agreement may be executed in two or more counterparts, which together shall constitute an agreement. 11.4 Governing Law. This Operating Agreement shall be governed by Montana law. 11.5 Headings. Headings in this Operating Agreement are for convenience only and shall not affect its meaning. 11.6 Severability. The invalidity or enforceability of any provisions of this Operating Agreement shall not affect the validity or enforceability of the remaining provisions. 11.7 Third-Party Beneficiaries. The provisions of this Operating Agreement are intended solely for the benefit of the members and shall create no rights or obligations enforceable by any third party, including creditors of the LLC, except as otherwise provided by applicable law.