Financial Agreement to Operating Agreement

FINANCIAL AGREEMENT TO OPERATING AGREEMENT

This Financial Agreement to Operating Agreement (the Agreement) is entered into as of the day of , , by and between Company Name: , a limited liability company (the Company), and Member Name: (the Member).

RECITALS

WHEREAS, the Company and the Member are parties to that certain Operating Agreement dated day of , (Operating Agreement);

WHEREAS, the parties desire to set forth certain financial terms, capital contribution obligations and allocation and distribution provisions that supplement and modify the Operating Agreement with respect to capital accounts, contributions, loans and distributions; and

WHEREAS, the parties intend that this Agreement govern their financial rights and obligations among themselves and be binding upon successors and permitted assigns.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1 Defined Terms. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings given in the Operating Agreement. In addition, the following terms shall have the meanings set forth below:

"Capital Contribution" means the cash, property or services contributed by a Member to the Company as specified in Section 2. "Capital Account" means the account maintained for a Member in accordance with the provisions of the Internal Revenue Code and the Operating Agreement.

2. CAPITAL CONTRIBUTIONS

2.1 Initial Contribution. Member shall contribute to the Company, as an initial capital contribution, the amount of USD on or before the day of , .

2.2 Additional Contributions. No Member shall be required to make additional capital contributions except upon the unanimous written consent of the Members or as expressly provided in this Agreement. Any voluntary additional contribution shall be credited to the contributing Member's Capital Account and recorded in the Company's books.

2.3 Failure to Contribute. If a Member fails to timely provide a required contribution, the Company may (a) treat the unpaid amount as a loan by the Company to the Member under Section 7, (b) reduce the defaulting Member's allocation and distribution rights pro rata until the deficiency is cured, or (c) pursue any remedy available at law or equity, provided that the non-defaulting Members give the defaulting Member thirty (30) days' written notice and an opportunity to cure.

3. ALLOCATIONS OF PROFITS AND LOSSES

3.1 Tax and Book Allocations. Except as otherwise provided herein, the Company's profits and losses for each fiscal year shall be allocated among the Members in accordance with their respective Percentage Interests as set forth in the Operating Agreement. Allocations shall be made in a manner consistent with the Internal Revenue Code and applicable Treasury Regulations.

3.2 Special Allocations. To the extent required to maintain Capital Accounts in accordance with the Operating Agreement and applicable tax principles, the parties agree that special allocations shall be made for items of income, deduction, gain and loss as necessary to correct disparities among Capital Accounts.

4. DISTRIBUTIONS

4.1 Timing and Priority. Distributions of available cash shall be made at such times and in such amounts as determined by the Managers, subject to any priority return described in the Operating Agreement. Unless otherwise agreed in writing, distributions shall be made pro rata in accordance with the Members' respective Percentage Interests.

4.2 Mandatory Withholding. The Company may withhold amounts required by applicable law from distributions. Any amount withheld shall be treated as distributed to the Member for all purposes of this Agreement.

5. ACCOUNTING AND RECORDS

5.1 Fiscal Year. The fiscal year of the Company shall end on unless otherwise determined by the Managers.

5.2 Financial Statements. The Company shall prepare and deliver to each Member, within ninety (90) days after the end of each fiscal year, an annual financial statement and a statement of income, expenses, assets and liabilities prepared in accordance with generally accepted accounting principles applied consistently.

5.3 Tax Returns. The Company shall prepare and file all required federal, state and local tax returns and furnish each Member with necessary information for preparation of the Member's tax returns within sixty (60) days after the end of the Company's fiscal year.

6. CAPITAL ACCOUNTS; WITHDRAWALS

6.1 Capital Account Maintenance. Capital Accounts shall be maintained in accordance with the Operating Agreement and applicable tax rules. Each Member's Capital Account shall be adjusted to reflect contributions, allocations, distributions and other items as required by the Operating Agreement.

6.2 Withdrawals. Except as expressly permitted in this Agreement or the Operating Agreement, no Member shall withdraw or be entitled to withdraw capital from the Company prior to dissolution and winding up. Any permitted withdrawal shall be subject to adjustment to maintain compliance with the Company's obligations to creditors and other Members.

7. LOANS AND ADVANCES

7.1 Member Loans. A Member may make loans to the Company pursuant to a written promissory note specifying the principal amount, interest rate and repayment terms. Unless otherwise agreed, loans by Members shall be subordinated to the Company's obligations to third-party creditors.

7.2 Interest. Interest on Member loans shall accrue at the rate set forth in the applicable note. In the absence of a stated rate, interest shall accrue at the lesser of the statutory maximum rate or three percent (3%) per annum.

8. REPRESENTATIONS AND WARRANTIES

8.1 Mutual Representations. Each party represents and warrants to the other that: (a) it is duly organized and in good standing under the laws of the jurisdiction of its formation; (b) it has the power and authority to enter into this Agreement; and (c) the execution, delivery and performance of this Agreement have been duly authorized by all necessary action.

8.2 No Conflicts. Each party represents that the execution and performance of this Agreement will not conflict with or result in a breach of any agreement, law or order applicable to such party.

9. DEFAULT; REMEDIES

9.1 Events of Default. An Event of Default shall include a Member's failure to make a required capital contribution, breach of material covenant or insolvency. Upon an Event of Default, the non-defaulting party may pursue any remedy available at law or equity, subject to the cure periods and procedures set forth herein.

9.2 Cure. A defaulting Member shall have thirty (30) days from written notice of default to cure the default. If not cured within such period, the non-defaulting Members may enforce remedies including equitable relief, reallocation of distributions, or forced redemption of the defaulting Member's interest in accordance with the Operating Agreement.

10. AMENDMENTS; WAIVER

10.1 Amendments. This Agreement may be amended only by a written instrument executed by the Company and the Member whose rights are affected, and by any other Members whose consent is required under the Operating Agreement.

10.2 Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom enforcement is sought. No delay or omission by any party in exercising any right shall operate as a waiver.

11. NOTICES

Notices shall be in writing and shall be deemed given when delivered personally, sent by certified mail, return receipt requested, or delivered by nationally recognized overnight courier, to the address set forth above or to such other address as a party may designate by written notice in accordance with this Section.

12. GOVERNING LAW; VENUE

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to conflict of law principles. The parties submit to the exclusive jurisdiction of the state and federal courts located in that State for resolution of disputes arising under this Agreement.

13. ENTIRE AGREEMENT; SEVERABILITY

13.1 Entire Agreement. This Agreement, together with the Operating Agreement, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether written or oral.

13.2 Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and the remaining provisions shall be construed so as to effectuate the intent of the parties to the fullest extent permitted by law.

14. COUNTERPARTS; FURTHER ASSURANCES

14.1 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

14.2 Further Assurances. Each party shall execute and deliver such further instruments and take such further actions as may be reasonably necessary to carry out the provisions and intent of this Agreement.

15. MISCELLANEOUS PROVISIONS

15.1 Assignment. No party may assign its rights or delegate its duties under this Agreement without the prior written consent of the other party, except that the Company may assign rights in connection with a sale of substantially all of its assets or an assignment of interests in accordance with the Operating Agreement.

15.2 Interpretation. The headings in this Agreement are for convenience only and shall not affect the interpretation of any provision. Whenever the context requires, the singular shall include the plural and vice versa.

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