Preview
FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024
OPERATING AGREEMENT
OF
MADWELL, LLC
A NEW YORK LIMITED LIABILITY COMPANY
7/24/13
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS ................................................................................................................................ 1
1.1 Specific Definitions ................................................................................................................... 1
1.2 General Usage ........................................................................................................................... 6
SECTION 2 FORMATION ................................................................................................................................. 7
2.1 Formation and Name ............................................................................................................... 7
2.2 Term ........................................................................................................................................... ?
2.3 Purpose and Scope ............................................. ;...................................................................... 7
2.4 Principal Office ......................................................................................................................... 7
2.5 New York Office and Agent ...................................................................................................... 7
2.6 Admission of Members ............................................................................................................. 8
2.7 Names, Contact and Other Information of the Members ....................................................... 8
2.8 Additional Documents .............................................................................................................. 8
2.9 Title to Property ........................................................................................................................ 8
SECTION 3 CAPITALIZATION .................................................................................................................... :.. 8
3.1 Capital Commitments ............................................................................................................... 8
3.2 Capital Contributions ............................................................................................................... 9
3.3 Limitation on Capital Contributions .............................. ~ ......................................................... 9
3.4 Remedies for Failure to Make Capital Contribution .............................................................. 9
3.5 Withdrawal and Return ofCapita/ ......................................................................................... 10
3.6 Loans to the Company ............................................................................................................ 10
3. 7 Interest on Capital .................................................................................................................. 10
3.8 Limitation of Liability; Return/Withholding of Certain Distributions ................................. 10
SECTION 4 PROFITS AND LOSSES ............................................................................................................. I 0
4.1 Allocations of Company Profits and Losses .......................................................................... 10
4.2 Allocation Adjustments Required to Comply With Section 704(b) ofthe Code• .................. 11
4.3 General Allocation and Capital Account Maintenance Provisions ...................................... 12
4.4 Nona/location ofDistributions to Increases in Minimum Gain ........................................... 13
4.5 Allocation of Liabilities .......................................................................................................... I 3
4.6 Modifications to Preserve Underlying Economic Objectives ................................................ I 3
4. 7 Withholding Taxes .................................................................................................................. 13
4.8 Intent ofAllocations/Cash Savings Clause ........................................................................... 14
SECTION 5 DISTRIBUTIONS ........................................................................................................................ 15
5.1 Distributions ............................................................................................................................ 15
5.2 Limitation on Distributions .................................................................................................... 16
SECTION 6 ADMINISTRATION .................................................................................................................... 16
6.1 Management Powers and Authority ofthe Managing Members .......................................... 16
6.2 Designation of Managing Members ...................................................................................... 16
6.3 Managing Members' Power to Bind the Company ............................................................... 17
6.4 Action by Members ................................................................................................................. 17
6.5 Duties to the Company ........................................................................... :································ 17
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TABLE OF CONTENTS
(Continued)
6.6 Member Expenses ................................................................................................................... 17
6. 7 Tax Matters Partner ............................................................................................................... 17
6.8 Records and Financial Statements ........................................................................................ 18
6.9 Valuation of Company Assets ................................................................................................ 18
6.1 0 Indemnification of Managing Members ................................................................................ 19
6.11 Confidential Information ....................................................................................................... 19
SECTION 7 TRANSFERS AND WITHDRAWALS ....................................................................................... 20
7.1 Transfers oflnterests .............................................................................................................. 20
7.2 Withdrawal/Removal ofa Member ........................................................................................ 20
7.3 Company Right to Redeem Membership Units upon a Termination Event.......................... 20
7.4 Buy-Se11.................................................................................................................................... 20
7.5 Right of First Refusal and Co-Sale......................................................................................... 21
7.6 Drag-Along Right.................................................................................................................... 22
7. 7 Texas Shotgun ......................................................................................................................... 22
SECTION 8 DISSOLUTION AND LIQUIDATION ....................................................................................... 22
8.1 Dissolving Events .................................................................................................................... 22
8.2 Winding Up and Liquidation .................................................................................................. 23
8.3 Deficit Restoration/Liability ................................................................................................... 23
SECTION 9 DISPUTE RESOLUTION ............................................................................................................ 24
9.1 Dissolving Events .................................................................................................................... 24
9.2 Winding Up and Liquidation .................................................................................................. 24
9.3 Deficit Restoration/Liability···························································'······································· 24
SECTION 10 GENERAL PROVISIONS ......................................................................................................... 24
10.1 Meetings .................................................................................................................................. 24
. 10.2 Action Without a Meeting ofAll Members ............................................................................ 24
10.3 Entire Agreement .................................................................................................................... 24
10.4 Amendments ........... :................................................................................................................ 24
10.5 Counterparts; Binding upon Members .................................................................................. 25
10.6 No Third Party Beneficiaries ..................................................................................... :........... 25
10.7 Notices, Consents, Elections, Etc ........................................................................................... 25
10.8 Severability .............................................................................................................................. 25
10.9 Governing Law ........................................................................................................................ 25
10.10 Currency .................................................................................................................................. 26
10.11 Timing ..................................................................................................................................... 26
10.12 Status Under the Act ............................................................................................................... 26
10.13 Partnership for Tax Purposes Only ....................................................................................... 27
10.14 Miscellaneous ......................................................................................................................... 27
SCHEDULE A-Member Information
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OPERATING AGREEMENT
OF
MADWELL, LLC
A NEW YORK LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT of Madwell, LLC, a New York limited liability company, is
entered into as of July 24, 2013, 2013 (the "Effective Date").
SECTION 1
DEFINITIONS
1.1 Specific Definitions. As used in this Agreement:
(a) "Act" shall mean the Limited Liability Company Law ofthe State ofNew York.
(b) "Adjusted Capital Account Deficit" shall mean, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the relevant Fiscal Year, after
giving effect to the following adjustments:
(i) The Capital Account shall be increased by any amounts that such Member is
obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentences of each of Treasury Regulations Sections 1. 704-2(g)(1) and 1. 704-
2(i)(5); and
(ii) The Capital Account shall be decreased by the items described in Treasury
Regulations Sections 1. 704-1 (b)(2)(ii)(d)(4), 1. 704-1 (b )(2)(ii)( d)(S) and 1. 704-l(b)(2)(ii)(d)(6).
The foregoing definition of "Adjusted Capital Account Deficit" is intended to comply with the provisions of
Treasury'Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) "Agreement" shall mean this Operating Agreement of Mad well, LLC, a New York
limited liability company, including all schedules, appendices, and exhibits hereto, as amended in accordance
with the terms hereof.
(d) "Allocation Percentage" shall mean, for each Member, the percentage set forth on
Schedule A, which shall be adjusted as necessary to reflect the Members' varying interests in the Company.
The Allocation Percentages of the Members shall be adjusted to reflect a revaluation of such Members'
Capital Accounts in accordance with Section 1.1 (f)(iv).
(e) "Award" shall have the meaning set forth in Section 7.3.
(f) "Capital Account" shall mean, for each Member, a separate account that is:
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(i) Increased by: (A) the amount of such Member's Capital Contribution and
(B) allocations of Profits to such Member pursuant to Section 4; ·
(ii) Decreased by: (A) the amount of cash distributed to such Member by the
Company; (B) the Fair Mark_et Value of any. other property distributed to such Member by the Company
(determined as of the time of distribution and net of liabilities secured by such property that the Member
assumes or to which the Member's ownership of the property is subject); and (C) allocations of Losses to
such Member pursuant to Section 4;
(iii) Otherwise adjusted in accordance with the provisions ofthis Agreement; and
(iv) Revalued in connection with any event described in Section l.l(t)(i) to the
extent the Managing Members determines that a revaluation is necessary to preserve the economic
arrangement ofthe Members. In determining the amount of any liability for purposes of Section l.l(b)(i) and
Section l.I(b)(ii), there shall be taken into account Section 752(c) of the Code and any other applicable
provisions ofthe Code and Treasury Regulations.
Capital Accounts shall be maintained in accordance with Treasury
Regulations Section 1. 704-1 (b) and specifically in a manner consistent with the Member's interest in the
Company and the provisions of this Agreement shall be interpreted and applied in a manner consistent with
such regulations and intent.
(g) "Capital Commitment" shall have the meaning set forth in Section 3.l(a).
(h) "Capital Contribution" shall mean, for any Member, the sum of the net amount of
cash and the Fair Market Value of any other property (determined as of the time of contribution and net of
liabilities secured by such property that the Company assumes or to which the Company's ownership of the
property is subject) contributed by such Member to the capital of the Company. For purposes of this
Agreement, each Capital Contribution shall be deemed to have been made at the later of: (i) the Close of
Business on the due date of such Capital Contribution as determined in accordance with this Agreement; or
(ii) the Close of Business on the date on which such Capital Contribution is actually received by the
Company.
(i) "Close of Business~' shall mean 5:00p.m., local time, in New York, New York.
(j) "Code" shall mean the United States Internal Revenue Code of I 986, as amended.
(k) "Company" shall mean Madwell, LLC, a New York limited liability company.
(I) "Defaulting Member" shall have the meaning set forth in Section.3.4.
(m) "Depreciation" means, for each Fiscal Year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal
Year or other period; provided, however, that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall
be an amount that bears. the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction with respect to such asset for such Fiscal Year or
other period bears to such beginning adjusted tax basis; and provided further, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such Fiscal Year or other period is zero,
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Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable
method selected by the Managing Members.
(n) "Dissolution" shall mean, with respect to a legal entity other than a natural person,
that such entity has "dissolved" within the meaning ofthe partnership, corporation, limited liability company,
trust or other statute under which such entity was organized.
(o) "Effective Date" shall have the meaning set forth in the introductory paragraph of
this Agreement.
(p) "Expiration Date" shall have the meaning set forth in Section 7.3.
(q) "Fair Market Value" shall have the meaning set forth in Section 6.9(b).
(r) "Fiscal Period" shall mean the Fiscal Year or such shorter period as necessary to
take into account the Members' varying interests in the Company.
(s) "Fiscal Year" shall mean the period from January I through December 31 of each
year (unless otherwise required by law).
(t) "Gross Asset Value' means, with respect to any asset, such asset's adjusted basis for
federal income tax purposes, except as follows:
(i) The Gross Asset Value of all Company assets shall be adjusted to equal their
respective Fair Market Values, immediately prior to the following times: (A) the acquisition of an additional
interest in the Company by any new or existing Member in exchange for more than a de minimis Capital
Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of
Company assets as consideration for an interest in the Company; (C) the grant of an interest in the Company
(other than a de minimis interest) as consideration for the provision of services to or for the benefit of the
Company by an existing Member acting in a Member capacity, or by a new Member acting in a Member
capacity or in anticipation of becoming a member; and (D) the liquidation of the Company within the
meaning of Treasury Regulations Section 1. 704-1 (b)(2)(ii)(g); provided, however, that adjustments pursuant
to clause (A), (B) and (C) of this sentence shall be made only if the Managing Members reasonably
determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the
Members in the Company; and
(ii) The Gross Asset Value of any Company asset distributed to any Member
shall be the Fair Market Value of such asset on the date of distribution.
If the Gross Asset Value of an asset has been determined or adjusted pursuant to Section
l.l(t)(i) or Section l.l(t)(ii), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Profits and Losses.
(u) "Initial Capital Commitment" shall have the meaning set forth in Section 3.1 (a).
(v) "Interest" shall mean, for each Member, the entirety of such Member's rights, duties
and interest in respect of the Company in such Member's capacity as such (as distinguished from any other
capacity such as employee, debtor or creditor) and shall include such Member's right, if any, to vote on
Company matters, bind the Company vis-a-vis third parties, or receive distributions as well as such Member's
obligation, if any, to provide services, make Capital Contributions or take any other action.
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(w) "Majority-In-Interest of the Members," "Majority-In-Interest of the Managing
Members" or "Majority-In-Interest of the Non-Managing Members" shall mean a group of Members,
Managing Members or Non-Managing Members whose aggregate Allocation Percentages at the time of
determination exceed fifty percent (50%) of the total Allocation Percentages of all the Members, Managing
Members or Non-Managing Members, as applicable, at such time.
(x) "Managing Members" shall mean the Members designated as the Managing
Members in Section 6.2.
(y) "Member" shall mean those Persons admitted as members under this Agreement as
shown on Schedule A as such schedule may be updated from time to time. Except where the context requires
otherwise, a reference in this Agreement to ''the Members" shall mean all of the Members.
(z) "Member Nonrecourse Deduction" shall mean an item of loss, expense or
deduction attributable to a nonrecourse liability'ofthe Company for which a Member bears the economic risk
ofloss within the meaning of Treasury Regulations Section 1. 704-2(i)
(aa) "Membership Units" shall mean the number of units of each Member set forth
opposite the name of such Member under the column "Membership Units" on Schedule A hereto as such
Schedule A may be modified or amended from time to time, calculated such that a given Member's number
of Membership Units divided by the total number of Membership Units shall always equal such Member's
Allocation Percentage.
(bb) "Minimum Gain of the Company" or "Company Minimum Gain" shall, as
provided in Treasury Regulations Section I. 704-2, mean the total amount of gain the Company would realize
for federal income tax purposes if it disposed of all assets subject to nonrecourse liability for no consideration
other than full satisfaction thereof.
(cc) "Nondefaulting Members" shall have the meaning set forth in Section 3.4.
(dd) "Non-Managing Member" shall mean each Member other than the Managing
Member.
(ee) "Person" shall mean an individual, partnership, corporation, limited liability
company, unincorporated organization, trust, joint venture, governmental agency, or other entity, whether
domestic or foreign.
(ff) "Principal Office" shall have the meaning set forth in Section 2.4.
(gg) "Profits and Losses" shall mean, for each Fiscal Year or other Fiscal Period, an
amount equal to the Company's taxable income or loss for such Fiscal Year or other Fiscal Period, as
applicable, determined in accordance with Section 703(a) of the Code (but including in taxable income or
loss, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(l) ofthe Code), with the following adjustments:
(i) Any income of the Company exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such
taxable income or loss;
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(ii) Any expenditures of the Company described in Section 705(a)(2)(B) of the
Code (or treated as expenditures described in Section 705(a)(2)(B) of the Code pursuant to Treasury
Regulations Section 1. 704-1 (b )(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be subtracted from such taxable income or loss;
(iii) In the event that the Gross Asset Value of any Company asset is adjusted in
accordance with Section l.l(t)(i) or Section l.l(t)(ii), the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of any asset ofthe Company with
respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to
the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset
differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be taken into account Depreciation
for such Fiscal Year or other Fiscal Period, computed in accordance with the definition of "Depreciation"
above; and
(vi) Notwithstanding any other provision of this definition, any items that are
specially allocated pursuant to Section 4.2 or Section 4.3 shall not be taken into account in computing Profits
or Losses. ·
(hh) "Securities" shall mean debt, equity and synthetic securities of any type.
(ii) "State" shall mean any constituent state ofthe United States, as well as the District
of Columbia.
(jj) "Tax Percentage" shall have the meaning set forth in Section 5.1 (b )(ii).
(kk) "Term" shall have the meaning set forth in Section 2.2. Where not capitalized,
''term" shall mean the entire period of the Company's existence, including any period of winding-up and
liquidation following the Dissolution of the Company pursuant to Section 8.1.
(II) "Termination" shall mean, with respect to a legal entity other than a natural person,
that such entity has Dissolved, completed its process of winding-up and liquidation, and otherwise ceased to
exist.
(mm) "Termination Event" shall mean the termination of a Member's services to the
Company, whether by decision of the Managing Members, due to a voluntary termination by the Member
(including constructive voluntary termination which will occur in the event a Member fails to provide at least
15 hours of service to the Company, on average, during any four week period) or upon the death or disability
ofthe Member. The Company shall determine the date as of which any Member's services have terminated.
Notwithstanding the foregoing, a Termination Event shall not include sick leave or another bona fide leave of
absence, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon
the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a
written agreement between the Managing Members.
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(no) "Transfer" shall mean any sale, exchange, transfer, gift, assignment, pledge,
mortgage, lien, change, claim, security interest, hypothecation or other disposition or encumbrance of any
sort, whether voluntary or involuntary.
(oo) "Treasury Regulations" shall mean the regulations issued by the United States
Treasury Department and relating to a matter arising under the Code.
(pp) "Trigger Event" shall mean the inability of the Managing Members to make a
unanimous decision on any Material Dispute proposed for resolution after good-faith compliance with Section
9 ofthis agreement.
(qq) "United States" shall mean the United States of America.
(rr) "Unreturned Capital Contribution" shall mean with respect to a Member, such
Member's aggregate Capital Contributions reduced by the amount of cumulative distributions made pursuant
to Section 5.1 (a)(i).
(ss) Updated Capital Account shall mean, with respect to a Member, such Member's
Capital Account determined as if, immediately prior to the time of determination, all of the Company's assets
had been sold for Fair Market Value and any previously unallocated Profits and Losses had been allocated
pursuant to Section 4.
1.2 General Usage. The section headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement. Except where the context clearly
requires to the contrary:
(a) Each reference in this Agreement to a designated "Section," "Schedule," "Exhibit,"
or "Appendix" is to the corresponding Section , Schedule, Exhibit, or Appendix of or to this Agreement;
(b) Instances of gender or entity-specific usage (e.g., "his," "her," "its," "person" or
"individual") shall not be interpreted to preclude the application of any provision of this Agreement to any
individual or entity;
(c) The word "or" shall not be applied in its exclusive sense; (iv) "including" shall mean
"including, without limitation";
(d) References to laws, regulations and other governmental rules, as well as to contracts,
agreements and other instruments, shall mean such rules and instruments as in effect at the time of
determination (taking into account any amendments thereto effective at such time without regard to whether
such amendments were enacted or adopted after the Effective Date of this Agreement) and shall include all
successor rules and instruments thereto;
(e) References to any specific statute or similar codification of law shall mean such
statute or other codification as construed, modified, extended or enabled by any applicable binding
governmental rules or regulations;
(t) References to "law" shall mean any applicable law, whether embodied in statute,
governmental rule or regulation, case law or other legally binding format;
(g) References to"$" or "dollars" shall mean the lawful currency of the United States;
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(h) References to "federal" shall be to laws, agencies or other attributes of the United
States (and not to any State or locality thereof);
(i) The meaning ofthe terms "domestic" and "foreign" shall be determined by reference
to the United States;
U) References to "days" shall mean calendar days; references to "business days" shall
mean all days other than Saturdays, Sundays and days that are legal holidays in the State ofNew York;
(k) References to months or years shall be to the actual calendar months or years at issue
(taking into account the actual number of days in any such month or year);
(I) Days, business days and times of day shall be determined by reference to local time
in New York, New York; and
(m) The English language version of this Agreement shall govern all questions of
interpretation relating to this Agreement, notwithstanding that this Agreement may have been translated into,
and executed in, other languages.
SECTION2
FORMATION
2.1.Formation and Name.
(a) The Members hereby enter into and form the Company as a limited liability company in
accordance with the Act.
(b) The name ofthe Company shall be "Madwell, LLC."
2.2 Term. Upon the execution ofthis Agreement, the "Term" ofthe Company shall commence as of
the date first above written and shall continue until the Company is Dissolved pursuant to Section 8.1. Except
as provided in Section 8.1, the Company shall not be Dissolved.
2.3 Purpose and Scope. Within the meaning and for purposes ofthe Act, the purpose and scope of
the Company shall include any lawful action or activity permitted to a limited liability company under the
Act, as determined by the Managing Members.
2.4 Principal Office. The Company shall have a single "Principal Office" which shall at all times
be located within the United States. The Principal Office initially shall be located at 221 McKibben Street,
Unit 11, Brooklyn, New York 11206, and may thereafter be changed from time to time by the Managing
Members upon notice to the Members.
2.5 New York Office and Agent. The Company shall maintain a New York registered office and
agent for service of process as required by the Act. In the event the registered agent ceases to act as such for
any reason or the registered office shall change, the Managing Members shall promptly designate a
replacement registered agent or file a notice of change of address, as the case may be.
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2.6 Admission of Members. Each Person that has executed this Agreement and whose name is listed
under Name and Contact Information on Schedule A, as such Schedule A may be updated from time to time
by the Managing Members, is hereby admitted as a Managing Member or a Non-Managing Member, as
indicated on such Schedule.
2. 7 Names, Contact and Other Information of the Members. Set forth below the name of each
Member on Schedule A shall be appropriate contact information for such Member (including such Member's
mailing address, telephone number, and facsimile number as well as, in the case of a Member that is an entity,
the name or title of an individual to whom notices and other correspondence should be directed). Each
Member shall promptly provide the Company with the information required to be set forth for such Member
on Schedule A and shall thereafter promptly notify the Company of any change to such information.
2.8 Additional Documents. The Managing Members shall cause to be executed, filed, recorded,
published, or amended any documents, as the Managing Members in their reasonable discretion determines to ·
be necessary or advisable: (a) in connection with the formation, operation, Dissolution, winding-up, or
Termination of the Company pursuant to applicable law; or (b) to otherwise give effect to the terms of this
Agreement. The terms and provisions of each document described in the preceding sentence shall be initially
established and shall be amended as necessary to cause such terms and provisions to be consistent with the
terms and provisions ofthis Agreement.
2.9 Title to Property. Title to all Company property including the Madwell name and brand shall be
held in the name of the Company; provided, however, that publicly traded Securities may be held in "street
name" or through a similar arrangement with a reputable financial institution. Each Member acknowledges
and agrees that the Madwell name, brand and concept was developed by the Company, or was jointly
developed by Members Sojka and Eisenman and all rights thereto have been contributed to the Company,
which owns and shall own all right, title and interest therein. Each Member further acknowledges and agrees
that he shall not seek to obtain a registered trademark for the name Madwell or any variant thereof, and that he
shall not have the right to use the name following the expiration of this Agreement or the discontinuance of
the Business.
SECTION 3
CAPITALIZATION
3. I Capital Commitments.
(a) Initial Capital Commitments. Each Member hereby makes a Capital Commitment equal
to the amount set forth as such Member's Capital Commitment on Schedule A (an "Initial Capital
Commitment"). Except as specifically provided in this Agreement, the "Capital Commitment" of a
Member shall represent the maximum aggregate amount of cash and property that such Member shall be
required to contribute to the capital of the Company.
(b) Increased Capital Commitments. The Capital Commitments of the Members may be
increased (in proportion to the Members' respective Allocation Percentages) only at such times and only in
such amounts as shall be determined by the Managing Members and the Members whose Capital
Commitments are to be increased. The Members shall be promptly notified of any increase to their Capital
Commitments pursuant to this Section 3. I (b).
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3.2 Capital Contributions. Except to the extent set forth on Schedule A or provided in Section 3.8,
all Capital Contributions shall be in cash. Capital Contributions otherwise required to be made by a Member
under Section 3.2(c) shall be due and payable, upon not less than ten (10) days notice, only at such times and
in such amounts as shall be specified in one or more capital calls issued by the Managing Members.
(a) Capital Contributions in Respect of Initial Capital Commitments. Each Member shall,
within ten (1 0) days after its admission to the Company, make a Capital Contribution equal to its full Initial
Capital Commitment as provided in Section 3.1 (a). With respect to Members who become Members after the
date hereof, such Members shall mak~ their Capital Contributions equal to their full Initial Capital
Commitment as set forth in Section 3.1 (a).
(b) Adjustment of Member Allocation Percentages. Upon (i) the addition of a Member
following the date hereof or (ii) the acceptance of Capital Contributions by the Company from a Member
following contribution of such Member's initial Capital Contribution, the Managing Members shall adjust the
Allocation Percentage of each holder of Membership Units, and shall accordingly update Schedule A hereto,
so that the Allocation Percentages of the holders of Membership Units represent their Interest in the Company
taking into account a revaluation of the Company's assets, if any, and in accordance with the economic
arrangement of the Members.
(c) Capital Contributions in Respect of Increased Capital Commitments. The Members
shall make Capital Contributions in respect of, and in proportion to, any increase in their Capital
Commitments pursuant to Section 3.l{b) at such times and in such amounts as determined by the Managing
Members.
3.3 Limitation on Capital Contributions. Except as specifically provided in this Section 3, no
Person shall be permitted or required to make a contribution to the capital of the Company.
3.4 Remedies for Failure to Make Capital Contribution. In the event that any Member refuses or
fails to make a Capital Contribution as and when required under this Section 3 (the "Defaulting Member"),
the nondefaulting Members (the "Nondefaulting Members") shall have the right, but not the obligation,
(a) to contribute to the Company, as an additional Capital Contribution of such Nondefaulting Member, the
amount ofthe Defaulting Member's share of such Capital Contribution, in which case the Defaulting Member
shall forfeit his, her or its right to make such Capital Contribution to the Company, the Managing Members
shall adjust the Allocation Percentages of the Defaulting Member and the contributing Nondefaulting
Member as determined in a reasonable manner in the sole discretion of the Managing Members, and the
Capital Account of the contributing Nondefaulting Member shall be increased by the amount of the Capital
Contribution made by the Nondefaulting Member; or (b) cause the Company to pursue any remedy at law or
in equity against the Defaulting Member, including the commencement of legal or other proceedings to
compel payment of all amounts due to the Company from the Defaulting Member, together with interest
thereon, at five (5) percentage points above the Prime Rate prevailing at the time of the default, including the
recovery of all costs and expenses of collection incurred by the Company (including attorneys' fees), and
claims of relief for damages, direct, indirect and consequential, sustained by the Company
Preview
FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 OPERATING AGREEMENT OF MADWELL, LLC A NEW YORK LIMITED LIABILITY COMPANY 7/24/13 RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 TABLE OF CONTENTS Page SECTION 1 DEFINITIONS ................................................................................................................................ 1 1.1 Specific Definitions ................................................................................................................... 1 1.2 General Usage ........................................................................................................................... 6 SECTION 2 FORMATION ................................................................................................................................. 7 2.1 Formation and Name ............................................................................................................... 7 2.2 Term ........................................................................................................................................... ? 2.3 Purpose and Scope ............................................. ;...................................................................... 7 2.4 Principal Office ......................................................................................................................... 7 2.5 New York Office and Agent ...................................................................................................... 7 2.6 Admission of Members ............................................................................................................. 8 2.7 Names, Contact and Other Information of the Members ....................................................... 8 2.8 Additional Documents .............................................................................................................. 8 2.9 Title to Property ........................................................................................................................ 8 SECTION 3 CAPITALIZATION .................................................................................................................... :.. 8 3.1 Capital Commitments ............................................................................................................... 8 3.2 Capital Contributions ............................................................................................................... 9 3.3 Limitation on Capital Contributions .............................. ~ ......................................................... 9 3.4 Remedies for Failure to Make Capital Contribution .............................................................. 9 3.5 Withdrawal and Return ofCapita/ ......................................................................................... 10 3.6 Loans to the Company ............................................................................................................ 10 3. 7 Interest on Capital .................................................................................................................. 10 3.8 Limitation of Liability; Return/Withholding of Certain Distributions ................................. 10 SECTION 4 PROFITS AND LOSSES ............................................................................................................. I 0 4.1 Allocations of Company Profits and Losses .......................................................................... 10 4.2 Allocation Adjustments Required to Comply With Section 704(b) ofthe Code• .................. 11 4.3 General Allocation and Capital Account Maintenance Provisions ...................................... 12 4.4 Nona/location ofDistributions to Increases in Minimum Gain ........................................... 13 4.5 Allocation of Liabilities .......................................................................................................... I 3 4.6 Modifications to Preserve Underlying Economic Objectives ................................................ I 3 4. 7 Withholding Taxes .................................................................................................................. 13 4.8 Intent ofAllocations/Cash Savings Clause ........................................................................... 14 SECTION 5 DISTRIBUTIONS ........................................................................................................................ 15 5.1 Distributions ............................................................................................................................ 15 5.2 Limitation on Distributions .................................................................................................... 16 SECTION 6 ADMINISTRATION .................................................................................................................... 16 6.1 Management Powers and Authority ofthe Managing Members .......................................... 16 6.2 Designation of Managing Members ...................................................................................... 16 6.3 Managing Members' Power to Bind the Company ............................................................... 17 6.4 Action by Members ................................................................................................................. 17 6.5 Duties to the Company ........................................................................... :································ 17 -1- RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 TABLE OF CONTENTS (Continued) 6.6 Member Expenses ................................................................................................................... 17 6. 7 Tax Matters Partner ............................................................................................................... 17 6.8 Records and Financial Statements ........................................................................................ 18 6.9 Valuation of Company Assets ................................................................................................ 18 6.1 0 Indemnification of Managing Members ................................................................................ 19 6.11 Confidential Information ....................................................................................................... 19 SECTION 7 TRANSFERS AND WITHDRAWALS ....................................................................................... 20 7.1 Transfers oflnterests .............................................................................................................. 20 7.2 Withdrawal/Removal ofa Member ........................................................................................ 20 7.3 Company Right to Redeem Membership Units upon a Termination Event.......................... 20 7.4 Buy-Se11.................................................................................................................................... 20 7.5 Right of First Refusal and Co-Sale......................................................................................... 21 7.6 Drag-Along Right.................................................................................................................... 22 7. 7 Texas Shotgun ......................................................................................................................... 22 SECTION 8 DISSOLUTION AND LIQUIDATION ....................................................................................... 22 8.1 Dissolving Events .................................................................................................................... 22 8.2 Winding Up and Liquidation .................................................................................................. 23 8.3 Deficit Restoration/Liability ................................................................................................... 23 SECTION 9 DISPUTE RESOLUTION ............................................................................................................ 24 9.1 Dissolving Events .................................................................................................................... 24 9.2 Winding Up and Liquidation .................................................................................................. 24 9.3 Deficit Restoration/Liability···························································'······································· 24 SECTION 10 GENERAL PROVISIONS ......................................................................................................... 24 10.1 Meetings .................................................................................................................................. 24 . 10.2 Action Without a Meeting ofAll Members ............................................................................ 24 10.3 Entire Agreement .................................................................................................................... 24 10.4 Amendments ........... :................................................................................................................ 24 10.5 Counterparts; Binding upon Members .................................................................................. 25 10.6 No Third Party Beneficiaries ..................................................................................... :........... 25 10.7 Notices, Consents, Elections, Etc ........................................................................................... 25 10.8 Severability .............................................................................................................................. 25 10.9 Governing Law ........................................................................................................................ 25 10.10 Currency .................................................................................................................................. 26 10.11 Timing ..................................................................................................................................... 26 10.12 Status Under the Act ............................................................................................................... 26 10.13 Partnership for Tax Purposes Only ....................................................................................... 27 10.14 Miscellaneous ......................................................................................................................... 27 SCHEDULE A-Member Information -ii- RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 OPERATING AGREEMENT OF MADWELL, LLC A NEW YORK LIMITED LIABILITY COMPANY THIS OPERATING AGREEMENT of Madwell, LLC, a New York limited liability company, is entered into as of July 24, 2013, 2013 (the "Effective Date"). SECTION 1 DEFINITIONS 1.1 Specific Definitions. As used in this Agreement: (a) "Act" shall mean the Limited Liability Company Law ofthe State ofNew York. (b) "Adjusted Capital Account Deficit" shall mean, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (i) The Capital Account shall be increased by any amounts that such Member is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of each of Treasury Regulations Sections 1. 704-2(g)(1) and 1. 704- 2(i)(5); and (ii) The Capital Account shall be decreased by the items described in Treasury Regulations Sections 1. 704-1 (b)(2)(ii)(d)(4), 1. 704-1 (b )(2)(ii)( d)(S) and 1. 704-l(b)(2)(ii)(d)(6). The foregoing definition of "Adjusted Capital Account Deficit" is intended to comply with the provisions of Treasury'Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. (c) "Agreement" shall mean this Operating Agreement of Mad well, LLC, a New York limited liability company, including all schedules, appendices, and exhibits hereto, as amended in accordance with the terms hereof. (d) "Allocation Percentage" shall mean, for each Member, the percentage set forth on Schedule A, which shall be adjusted as necessary to reflect the Members' varying interests in the Company. The Allocation Percentages of the Members shall be adjusted to reflect a revaluation of such Members' Capital Accounts in accordance with Section 1.1 (f)(iv). (e) "Award" shall have the meaning set forth in Section 7.3. (f) "Capital Account" shall mean, for each Member, a separate account that is: RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 (i) Increased by: (A) the amount of such Member's Capital Contribution and (B) allocations of Profits to such Member pursuant to Section 4; · (ii) Decreased by: (A) the amount of cash distributed to such Member by the Company; (B) the Fair Mark_et Value of any. other property distributed to such Member by the Company (determined as of the time of distribution and net of liabilities secured by such property that the Member assumes or to which the Member's ownership of the property is subject); and (C) allocations of Losses to such Member pursuant to Section 4; (iii) Otherwise adjusted in accordance with the provisions ofthis Agreement; and (iv) Revalued in connection with any event described in Section l.l(t)(i) to the extent the Managing Members determines that a revaluation is necessary to preserve the economic arrangement ofthe Members. In determining the amount of any liability for purposes of Section l.l(b)(i) and Section l.I(b)(ii), there shall be taken into account Section 752(c) of the Code and any other applicable provisions ofthe Code and Treasury Regulations. Capital Accounts shall be maintained in accordance with Treasury Regulations Section 1. 704-1 (b) and specifically in a manner consistent with the Member's interest in the Company and the provisions of this Agreement shall be interpreted and applied in a manner consistent with such regulations and intent. (g) "Capital Commitment" shall have the meaning set forth in Section 3.l(a). (h) "Capital Contribution" shall mean, for any Member, the sum of the net amount of cash and the Fair Market Value of any other property (determined as of the time of contribution and net of liabilities secured by such property that the Company assumes or to which the Company's ownership of the property is subject) contributed by such Member to the capital of the Company. For purposes of this Agreement, each Capital Contribution shall be deemed to have been made at the later of: (i) the Close of Business on the due date of such Capital Contribution as determined in accordance with this Agreement; or (ii) the Close of Business on the date on which such Capital Contribution is actually received by the Company. (i) "Close of Business~' shall mean 5:00p.m., local time, in New York, New York. (j) "Code" shall mean the United States Internal Revenue Code of I 986, as amended. (k) "Company" shall mean Madwell, LLC, a New York limited liability company. (I) "Defaulting Member" shall have the meaning set forth in Section.3.4. (m) "Depreciation" means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year or other period; provided, however, that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be an amount that bears. the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction with respect to such asset for such Fiscal Year or other period bears to such beginning adjusted tax basis; and provided further, that if the federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Year or other period is zero, -2- RK.W FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Members. (n) "Dissolution" shall mean, with respect to a legal entity other than a natural person, that such entity has "dissolved" within the meaning ofthe partnership, corporation, limited liability company, trust or other statute under which such entity was organized. (o) "Effective Date" shall have the meaning set forth in the introductory paragraph of this Agreement. (p) "Expiration Date" shall have the meaning set forth in Section 7.3. (q) "Fair Market Value" shall have the meaning set forth in Section 6.9(b). (r) "Fiscal Period" shall mean the Fiscal Year or such shorter period as necessary to take into account the Members' varying interests in the Company. (s) "Fiscal Year" shall mean the period from January I through December 31 of each year (unless otherwise required by law). (t) "Gross Asset Value' means, with respect to any asset, such asset's adjusted basis for federal income tax purposes, except as follows: (i) The Gross Asset Value of all Company assets shall be adjusted to equal their respective Fair Market Values, immediately prior to the following times: (A) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an interest in the Company; (C) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity, or by a new Member acting in a Member capacity or in anticipation of becoming a member; and (D) the liquidation of the Company within the meaning of Treasury Regulations Section 1. 704-1 (b)(2)(ii)(g); provided, however, that adjustments pursuant to clause (A), (B) and (C) of this sentence shall be made only if the Managing Members reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (ii) The Gross Asset Value of any Company asset distributed to any Member shall be the Fair Market Value of such asset on the date of distribution. If the Gross Asset Value of an asset has been determined or adjusted pursuant to Section l.l(t)(i) or Section l.l(t)(ii), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses. (u) "Initial Capital Commitment" shall have the meaning set forth in Section 3.1 (a). (v) "Interest" shall mean, for each Member, the entirety of such Member's rights, duties and interest in respect of the Company in such Member's capacity as such (as distinguished from any other capacity such as employee, debtor or creditor) and shall include such Member's right, if any, to vote on Company matters, bind the Company vis-a-vis third parties, or receive distributions as well as such Member's obligation, if any, to provide services, make Capital Contributions or take any other action. -3- RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 (w) "Majority-In-Interest of the Members," "Majority-In-Interest of the Managing Members" or "Majority-In-Interest of the Non-Managing Members" shall mean a group of Members, Managing Members or Non-Managing Members whose aggregate Allocation Percentages at the time of determination exceed fifty percent (50%) of the total Allocation Percentages of all the Members, Managing Members or Non-Managing Members, as applicable, at such time. (x) "Managing Members" shall mean the Members designated as the Managing Members in Section 6.2. (y) "Member" shall mean those Persons admitted as members under this Agreement as shown on Schedule A as such schedule may be updated from time to time. Except where the context requires otherwise, a reference in this Agreement to ''the Members" shall mean all of the Members. (z) "Member Nonrecourse Deduction" shall mean an item of loss, expense or deduction attributable to a nonrecourse liability'ofthe Company for which a Member bears the economic risk ofloss within the meaning of Treasury Regulations Section 1. 704-2(i) (aa) "Membership Units" shall mean the number of units of each Member set forth opposite the name of such Member under the column "Membership Units" on Schedule A hereto as such Schedule A may be modified or amended from time to time, calculated such that a given Member's number of Membership Units divided by the total number of Membership Units shall always equal such Member's Allocation Percentage. (bb) "Minimum Gain of the Company" or "Company Minimum Gain" shall, as provided in Treasury Regulations Section I. 704-2, mean the total amount of gain the Company would realize for federal income tax purposes if it disposed of all assets subject to nonrecourse liability for no consideration other than full satisfaction thereof. (cc) "Nondefaulting Members" shall have the meaning set forth in Section 3.4. (dd) "Non-Managing Member" shall mean each Member other than the Managing Member. (ee) "Person" shall mean an individual, partnership, corporation, limited liability company, unincorporated organization, trust, joint venture, governmental agency, or other entity, whether domestic or foreign. (ff) "Principal Office" shall have the meaning set forth in Section 2.4. (gg) "Profits and Losses" shall mean, for each Fiscal Year or other Fiscal Period, an amount equal to the Company's taxable income or loss for such Fiscal Year or other Fiscal Period, as applicable, determined in accordance with Section 703(a) of the Code (but including in taxable income or loss, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(l) ofthe Code), with the following adjustments: (i) Any income of the Company exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss; -4- RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 (ii) Any expenditures of the Company described in Section 705(a)(2)(B) of the Code (or treated as expenditures described in Section 705(a)(2)(B) of the Code pursuant to Treasury Regulations Section 1. 704-1 (b )(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss; (iii) In the event that the Gross Asset Value of any Company asset is adjusted in accordance with Section l.l(t)(i) or Section l.l(t)(ii), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (iv) Gain or loss resulting from any disposition of any asset ofthe Company with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value; (v) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other Fiscal Period, computed in accordance with the definition of "Depreciation" above; and (vi) Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to Section 4.2 or Section 4.3 shall not be taken into account in computing Profits or Losses. · (hh) "Securities" shall mean debt, equity and synthetic securities of any type. (ii) "State" shall mean any constituent state ofthe United States, as well as the District of Columbia. (jj) "Tax Percentage" shall have the meaning set forth in Section 5.1 (b )(ii). (kk) "Term" shall have the meaning set forth in Section 2.2. Where not capitalized, ''term" shall mean the entire period of the Company's existence, including any period of winding-up and liquidation following the Dissolution of the Company pursuant to Section 8.1. (II) "Termination" shall mean, with respect to a legal entity other than a natural person, that such entity has Dissolved, completed its process of winding-up and liquidation, and otherwise ceased to exist. (mm) "Termination Event" shall mean the termination of a Member's services to the Company, whether by decision of the Managing Members, due to a voluntary termination by the Member (including constructive voluntary termination which will occur in the event a Member fails to provide at least 15 hours of service to the Company, on average, during any four week period) or upon the death or disability ofthe Member. The Company shall determine the date as of which any Member's services have terminated. Notwithstanding the foregoing, a Termination Event shall not include sick leave or another bona fide leave of absence, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written agreement between the Managing Members. -5- RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 (no) "Transfer" shall mean any sale, exchange, transfer, gift, assignment, pledge, mortgage, lien, change, claim, security interest, hypothecation or other disposition or encumbrance of any sort, whether voluntary or involuntary. (oo) "Treasury Regulations" shall mean the regulations issued by the United States Treasury Department and relating to a matter arising under the Code. (pp) "Trigger Event" shall mean the inability of the Managing Members to make a unanimous decision on any Material Dispute proposed for resolution after good-faith compliance with Section 9 ofthis agreement. (qq) "United States" shall mean the United States of America. (rr) "Unreturned Capital Contribution" shall mean with respect to a Member, such Member's aggregate Capital Contributions reduced by the amount of cumulative distributions made pursuant to Section 5.1 (a)(i). (ss) Updated Capital Account shall mean, with respect to a Member, such Member's Capital Account determined as if, immediately prior to the time of determination, all of the Company's assets had been sold for Fair Market Value and any previously unallocated Profits and Losses had been allocated pursuant to Section 4. 1.2 General Usage. The section headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. Except where the context clearly requires to the contrary: (a) Each reference in this Agreement to a designated "Section," "Schedule," "Exhibit," or "Appendix" is to the corresponding Section , Schedule, Exhibit, or Appendix of or to this Agreement; (b) Instances of gender or entity-specific usage (e.g., "his," "her," "its," "person" or "individual") shall not be interpreted to preclude the application of any provision of this Agreement to any individual or entity; (c) The word "or" shall not be applied in its exclusive sense; (iv) "including" shall mean "including, without limitation"; (d) References to laws, regulations and other governmental rules, as well as to contracts, agreements and other instruments, shall mean such rules and instruments as in effect at the time of determination (taking into account any amendments thereto effective at such time without regard to whether such amendments were enacted or adopted after the Effective Date of this Agreement) and shall include all successor rules and instruments thereto; (e) References to any specific statute or similar codification of law shall mean such statute or other codification as construed, modified, extended or enabled by any applicable binding governmental rules or regulations; (t) References to "law" shall mean any applicable law, whether embodied in statute, governmental rule or regulation, case law or other legally binding format; (g) References to"$" or "dollars" shall mean the lawful currency of the United States; -6- FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 (h) References to "federal" shall be to laws, agencies or other attributes of the United States (and not to any State or locality thereof); (i) The meaning ofthe terms "domestic" and "foreign" shall be determined by reference to the United States; U) References to "days" shall mean calendar days; references to "business days" shall mean all days other than Saturdays, Sundays and days that are legal holidays in the State ofNew York; (k) References to months or years shall be to the actual calendar months or years at issue (taking into account the actual number of days in any such month or year); (I) Days, business days and times of day shall be determined by reference to local time in New York, New York; and (m) The English language version of this Agreement shall govern all questions of interpretation relating to this Agreement, notwithstanding that this Agreement may have been translated into, and executed in, other languages. SECTION2 FORMATION 2.1.Formation and Name. (a) The Members hereby enter into and form the Company as a limited liability company in accordance with the Act. (b) The name ofthe Company shall be "Madwell, LLC." 2.2 Term. Upon the execution ofthis Agreement, the "Term" ofthe Company shall commence as of the date first above written and shall continue until the Company is Dissolved pursuant to Section 8.1. Except as provided in Section 8.1, the Company shall not be Dissolved. 2.3 Purpose and Scope. Within the meaning and for purposes ofthe Act, the purpose and scope of the Company shall include any lawful action or activity permitted to a limited liability company under the Act, as determined by the Managing Members. 2.4 Principal Office. The Company shall have a single "Principal Office" which shall at all times be located within the United States. The Principal Office initially shall be located at 221 McKibben Street, Unit 11, Brooklyn, New York 11206, and may thereafter be changed from time to time by the Managing Members upon notice to the Members. 2.5 New York Office and Agent. The Company shall maintain a New York registered office and agent for service of process as required by the Act. In the event the registered agent ceases to act as such for any reason or the registered office shall change, the Managing Members shall promptly designate a replacement registered agent or file a notice of change of address, as the case may be. -7- RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 2.6 Admission of Members. Each Person that has executed this Agreement and whose name is listed under Name and Contact Information on Schedule A, as such Schedule A may be updated from time to time by the Managing Members, is hereby admitted as a Managing Member or a Non-Managing Member, as indicated on such Schedule. 2. 7 Names, Contact and Other Information of the Members. Set forth below the name of each Member on Schedule A shall be appropriate contact information for such Member (including such Member's mailing address, telephone number, and facsimile number as well as, in the case of a Member that is an entity, the name or title of an individual to whom notices and other correspondence should be directed). Each Member shall promptly provide the Company with the information required to be set forth for such Member on Schedule A and shall thereafter promptly notify the Company of any change to such information. 2.8 Additional Documents. The Managing Members shall cause to be executed, filed, recorded, published, or amended any documents, as the Managing Members in their reasonable discretion determines to · be necessary or advisable: (a) in connection with the formation, operation, Dissolution, winding-up, or Termination of the Company pursuant to applicable law; or (b) to otherwise give effect to the terms of this Agreement. The terms and provisions of each document described in the preceding sentence shall be initially established and shall be amended as necessary to cause such terms and provisions to be consistent with the terms and provisions ofthis Agreement. 2.9 Title to Property. Title to all Company property including the Madwell name and brand shall be held in the name of the Company; provided, however, that publicly traded Securities may be held in "street name" or through a similar arrangement with a reputable financial institution. Each Member acknowledges and agrees that the Madwell name, brand and concept was developed by the Company, or was jointly developed by Members Sojka and Eisenman and all rights thereto have been contributed to the Company, which owns and shall own all right, title and interest therein. Each Member further acknowledges and agrees that he shall not seek to obtain a registered trademark for the name Madwell or any variant thereof, and that he shall not have the right to use the name following the expiration of this Agreement or the discontinuance of the Business. SECTION 3 CAPITALIZATION 3. I Capital Commitments. (a) Initial Capital Commitments. Each Member hereby makes a Capital Commitment equal to the amount set forth as such Member's Capital Commitment on Schedule A (an "Initial Capital Commitment"). Except as specifically provided in this Agreement, the "Capital Commitment" of a Member shall represent the maximum aggregate amount of cash and property that such Member shall be required to contribute to the capital of the Company. (b) Increased Capital Commitments. The Capital Commitments of the Members may be increased (in proportion to the Members' respective Allocation Percentages) only at such times and only in such amounts as shall be determined by the Managing Members and the Members whose Capital Commitments are to be increased. The Members shall be promptly notified of any increase to their Capital Commitments pursuant to this Section 3. I (b). -8- RKW FILED: KINGS COUNTY CLERK 04/22/2024 03:08 PM INDEX NO. 511438/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 04/22/2024 3.2 Capital Contributions. Except to the extent set forth on Schedule A or provided in Section 3.8, all Capital Contributions shall be in cash. Capital Contributions otherwise required to be made by a Member under Section 3.2(c) shall be due and payable, upon not less than ten (10) days notice, only at such times and in such amounts as shall be specified in one or more capital calls issued by the Managing Members. (a) Capital Contributions in Respect of Initial Capital Commitments. Each Member shall, within ten (1 0) days after its admission to the Company, make a Capital Contribution equal to its full Initial Capital Commitment as provided in Section 3.1 (a). With respect to Members who become Members after the date hereof, such Members shall mak~ their Capital Contributions equal to their full Initial Capital Commitment as set forth in Section 3.1 (a). (b) Adjustment of Member Allocation Percentages. Upon (i) the addition of a Member following the date hereof or (ii) the acceptance of Capital Contributions by the Company from a Member following contribution of such Member's initial Capital Contribution, the Managing Members shall adjust the Allocation Percentage of each holder of Membership Units, and shall accordingly update Schedule A hereto, so that the Allocation Percentages of the holders of Membership Units represent their Interest in the Company taking into account a revaluation of the Company's assets, if any, and in accordance with the economic arrangement of the Members. (c) Capital Contributions in Respect of Increased Capital Commitments. The Members shall make Capital Contributions in respect of, and in proportion to, any increase in their Capital Commitments pursuant to Section 3.l{b) at such times and in such amounts as determined by the Managing Members. 3.3 Limitation on Capital Contributions. Except as specifically provided in this Section 3, no Person shall be permitted or required to make a contribution to the capital of the Company. 3.4 Remedies for Failure to Make Capital Contribution. In the event that any Member refuses or fails to make a Capital Contribution as and when required under this Section 3 (the "Defaulting Member"), the nondefaulting Members (the "Nondefaulting Members") shall have the right, but not the obligation, (a) to contribute to the Company, as an additional Capital Contribution of such Nondefaulting Member, the amount ofthe Defaulting Member's share of such Capital Contribution, in which case the Defaulting Member shall forfeit his, her or its right to make such Capital Contribution to the Company, the Managing Members shall adjust the Allocation Percentages of the Defaulting Member and the contributing Nondefaulting Member as determined in a reasonable manner in the sole discretion of the Managing Members, and the Capital Account of the contributing Nondefaulting Member shall be increased by the amount of the Capital Contribution made by the Nondefaulting Member; or (b) cause the Company to pursue any remedy at law or in equity against the Defaulting Member, including the commencement of legal or other proceedings to compel payment of all amounts due to the Company from the Defaulting Member, together with interest thereon, at five (5) percentage points above the Prime Rate prevailing at the time of the default, including the recovery of all costs and expenses of collection incurred by the Company (including attorneys' fees), and claims of relief for damages, direct, indirect and consequential, sustained by the Company