This Limited Liability Company Operating Agreement (the "Agreement"), dated as of [[Effective Date]], is made by and between [[DAO ENTITY NAME]] LLC, a limited liability company organized under the laws of the State of Delaware (together with the decentralized organization, [[DAO Name]], rooted on the [[Blockchain Name]] with chainId:[[ChainId]], at the public key [[DAO Public Key]] and collectively referred to as the "DAO"), KaliCo LLC d/b/a KaliDAO, a corporation organized under the laws of the State of Wyoming (the “Initial Service Provider”), and the parties who execute this Agreement, whether in counterpart, by the Subscription Agreement, or otherwise, and are admitted to the DAO as Members in accordance with the provisions hereof.
WHEREAS, the DAO was formed by filing the Certificate of Formation with the Secretary of State of the State of Delaware on [[DAO Entity Formation Date]] to build a limited liability decentralized organization utilizing [[Blockchain Name]] network;
WHEREAS, the parties hereto desire to build a smart contract based democratically managed organization to to make, develop, and invest in digital assets and non-fungible token offerings via the Member’s efforts in digital asset-related projects.
NOW, THEREFORE, in consideration of the foregoing premises, the covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein have the meanings ascribed to them in Exhibit A hereto.
(a) Continuation of DAO. The DAO was formed on [[DAO Entity Formation Date]] to carry on a limited liability company in accordance with the Limited Liability Company Act of the State of Delaware, as amended from time to time (the "Delaware Act"). The rights and liabilities of the Members shall be determined pursuant to the Delaware Act and this Agreement. To the extent that the rights or obligations of any Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Delaware Act, control all actions taken by the DAO, the Service Provider, or their respective agents to effect the formation of the DAO, including, without limitation, the execution and filing of the Certificate of Formation by the authorized signatory identified therein and the execution and filing of an Application for an Employer Identification Number (Form SS-4), are hereby approved, ratified, confirmed, and adopted in all respects.
(b) Name. The name of the company is "[[DAO ENTITY NAME]] LLC." The DAO shall have the exclusive ownership of and right to use such name as long as the DAO is in existence. The Service Provider may change the name of the DAO in accordance with the requirements of the Delaware Act. The DAO may direct the Service Provider to be the exclusive licensee of any trademark(s) owned by the DAO or acquired by the DAO and enter into sub-licensing agreements as required by the DAO.
(c) Registered Office and Agent. The registered office of the DAO in the State of Delaware is located at [[DAO Entity Address]]. The DAO’s registered agent at that address is [__] who shall be appointed by the Service Provider. The Service Provider may change the registered agent or registered address of the DAO (which need not be a place of business of the DAO in the State of Delaware) at any time in the manner provided by applicable law.
(d) Principal Office; Other Offices. The principal office of the DAO shall be at such place as the Service Provider may designate from time to time, which need not be in the State of Delaware. The initial principal office of the DAO is located at [__]. The DAO may change its principal office or have such other offices as the Service Provider may designate from time to time.
(e) Purpose. The primary purpose of the DAO is (a) [__] ("DAO Investments" or "Investments"); (b) to acquire, hold, manage, and dispose of DAO Investments; and (c) to hold, invest, and manage Investment assets in the possession of the DAO, in each case in accordance with the terms of this Agreement. Not in limitation of the foregoing, the DAO is to function as a limited liability for-profit decentralized smart-contract based organization, denominated in cryptocurrency, through which the Members may elect to invest in a variety of underlying projects for which investments will be denominated in cryptocurrency. The DAO shall have the power to do any and all acts necessary, appropriate, desirable, incidental, or convenient to or in furtherance of the purposes described in this Section 2.e, including, without limitation, any and all of the powers that may be exercised on behalf of the DAO by the Members or Service Provider pursuant to this Agreement. Except as otherwise expressly provided to the contrary in this Agreement, the purpose and scope of the DAO shall also include any other lawful action or activity permitted by a limited liability company agreement formed pursuant to the Delaware Act.
(f) Term. Unless terminated earlier in accordance with the provisions of Section 12.a, the term of the DAO (the "Term") shall be perpetual from the Effective Date. Notwithstanding the foregoing, each Member agrees to be bound by the terms and obligations of this Agreement for as long as such Member holds Units and/or DAO Tokens.
(g) Base Currency. Except as otherwise agreed in writing by Members acting by a Majority Vote: (a) the base currency of the DAO shall be digital assets, including but not limited to, Ethereum, Bitcoin, stablecoins (DAI, USDC, USDT etc) or any digitally wrapped derivate of such digital asset thereof (a "Digital Asset"); (b) each reference to "dollars," "$," or "cash" (or any derivation thereof) in this Agreement shall be interpreted to mean the equivalent of such amount in an applicable Digital Asset; (c) all subscriptions, withdrawal proceeds (if any), and distributions shall be paid in the base currency determined by the DAO; and (d) the Membership interests in the form of Units shall simultaneously be denominated as the DAO Tokens.
(a) Membership interests in the DAO are represented by units ("Units"), with each Unit representing a fractional part of the Membership interests of all Members (or the permitted assignees, as the case may be) equal to the quotient of one divided by the total number of Units outstanding at any time. Units shall be expressed in whole or in fractions and shall be represented as [[DAO Token]], which are cryptographically secured tokens utilizing the [[Blockchain Name]] network ("DAO Tokens") and operated by each member to record their transactions in the DAO on the Dapp.
(b) As of the date hereof, there shall be [[DAO Unit Total Supply]] Units authorized for issuance by the DAO. The DAO shall issue to each Member, [[Number of Units Issued]] Units for a minimum of [[Unit Purchase Amount]] of Capital Commitments made by such Member, unless otherwise agreed to by the Members via a vote occurring through the Dapp. Notwithstanding the foregoing, the DAO shall issue Units to Members in accordance with Exhibit B (Schedule of Members).
(c) Limited Liability.
(i) Except as otherwise provided in this Agreement, the Subscription Agreement, or the Delaware Act, the parties agree and acknowledge that no Member (or former Member) shall be liable for the obligations of the DAO for any amounts in excess of the amount of its capital contributions to the DAO (or the amount of capital contributions that were required to be made to the DAO, if greater), plus such Member’s share of the undistributed profits of the DAO, plus, to the extent required by law, or as otherwise described in this Agreement, any amounts distributed by the DAO to such Member; provided, that the foregoing shall not be construed in any way to alleviate a Member’s obligations to the DAO, including any obligations owed by such Member in connection with any breach of this Agreement or the Subscription Agreement by such Member.
(ii) Notwithstanding anything else herein to the contrary, to satisfy any liability of the DAO, each Member or former Member shall, as determined by the Members acting by Majority Vote, and on not less than ten (10) Business Days’ advance written notice, be required to return distributions up to, but in no event in excess of, the aggregate amount of distributions actually received by each such Member from the DAO (less any such amounts already recalled and not redistributed); provided, that the Members may not require such returns of distributed amounts after the third (3rd) anniversary of the final liquidating distribution of the DAO, unless the Members previously have been notified prior to such third (3rd) anniversary of the potential for such return.
(d) No Control of the DAO. No Member shall have the right or power to: (a) cause the dissolution and winding up of the DAO; or (b) demand or receive property, other than cash, in return for its Capital Committments, except as otherwise provided herein.
(e) Admission of Additional Members; Increase of Capital Commitments.
(i) Subject to the provisions of this Agreement, including, without limitation, Section 3.f, the Members are authorized, but not obligated, to accept additional Capital Commitments from one or more Members, and to admit other Persons to the DAO as additional Members (each such additional Member, and such existing Member with respect to an increase in its Capital Commitment, an "Additional Member"). Unless otherwise determined by the Members, any such additional Capital Commitments shall be accepted, and any such Additional Members shall be admitted to the DAO, only if such Member or Additional Member contributes, on the date of its additional Capital Commitment or admission to the DAO, capital contributions equal to the full amount of its Capital Commitment or the increase in its Capital Commitment, as applicable. All Members admitted via the Dapp and underlying smart contracts prior to this Agreement shall be considered Members. For Additional Members, each Additional Member shall be deemed a Member on the date the Additional Member’s Ethereum address is whitelisted and processed pursuant to the DAO’s underlying smart contracts and governance process.
(ii) Accession to Agreement. Each Person who is to be admitted as an additional or substitute Member pursuant to this Agreement shall agree to be bound by this Agreement by executing a counterpart signature page to this Agreement providing for such admission or a Subscription Agreement to such effect.
(iii) Participation in Investments. Each Additional Member shall participate in all DAO Investments made at or prior to its admission, subject to the DAO’s governance process. Following the permitted withdrawal of all of a Member’s Undeployed Capital pursuant to Section 7.a, such Member shall not participate in any DAO Investments made on or after such Withdrawal Date.
(f) Maximum Ownership Percentage. Notwithstanding anything herein to the contrary, no Member shall be permitted to have a Capital Commitment in excess of [__] of all then- current Capital Commitments to the DAO (the "Ownership Percentage Restriction"). The Service Provider is hereby authorized (but not required) to take any action it determines in good faith to be necessary, desirable, or appropriate in order that the Ownership Percentage Restriction not be violated with respect to any Member, including, without limitation:
(i) canceling or reducing the Capital Commitment of any Member; and/or
(ii) requiring the sale, in whole or in part, of any Member’s Units in the DAO, or otherwise requiring the withdrawal, in whole or in part, of any Member from the DAO.
(g) No Interest on Contributions. No interest shall accrue on any capital contribution made by a Member, unless the Members acting by Majority Vote elect to make Temporary Investments subject to Section 5.a below.
(h) Benefit Plan Investors. Prior to the closing date of the DAO’s initial DAO Investment, the Service Provider may, in its sole and absolute discretion, cause any capital contributions effected by "benefit plan investors" (within the meaning of Section 3(42) of Title I of ERISA) to be paid into an escrow account, including, without limitation, such portions of the capital contributions as may be attributable to any such Member’s pro rata portion of Service Provider Fees and DAO Expenses. For the avoidance of doubt, the Members intend (i) to limit equity participation by "benefit plan investors" to less than twenty-five percent (25%) of the total value of each class of equity interests in the DAO; or (ii) to structure investments of the DAO and operate the DAO in such a manner so as to qualify the DAO as a "venture capital operating company" so that the underlying assets of the DAO should not constitute "plan assets" of "benefit plan investors."
(a) Management by Members.
(i) Except as otherwise expressly required in this Agreement, the business and affairs of the DAO shall be carried on and managed exclusively by the Members, who shall have sole and absolute discretion with respect thereto.
(ii) Except as otherwise expressly required in this Agreement or in the Delaware Act, whenever any action, including any approval, consent, determination, resolution, or decision is to be taken or given by the Members or the DAO under this Agreement or under the Act, it shall be authorized by a Majority Vote or Super Majority Vote (as may be applicable) of the Members. Such an authorization may be evidenced by a vote recorded via a Dapp and facilitated, in part, by one or more smart contracts or by a written consent, in accordance with this Agreement. Any such written consent shall set forth the action taken and be signed by Members holding the minimum Units necessary to authorize such action. The Members and the Service Provider intend that any action taken by the Members via a Dapp and facilitated, in part, by one or more smart contracts shall be treated as a written consent for purposes of this Agreement and the Delaware Act, and no Member or the Service Provider shall challenge the authority or validity of any such action based solely on such fact. Further, the Members and the Service Provider intend that any action (which has been duly approved in accordance with this Agreement) taken by the DAO via a Dapp, a smart contract, or the [[Blockchain Name]], including with respect to any Potential DAO Investment or DAO Investment, shall be a valid action of the Members or the DAO, as applicable, and no Member or the Service Provider shall challenge the authority or validity of any such action based solely on such fact. The Members expressly intend to give the fullest effect to Section 18-113 of the Delaware Act.
(iii) Except as otherwise expressly required in this Agreement or in the Delaware Act, no single Member (in his, her, or its capacity as a Member) shall have authority to bind the DAO in any way or to enter into any agreement or contract obligating the DAO in any way.
(iv) Notwithstanding any provision of this Agreement to the contrary, whenever this Agreement provides that a Member is not entitled to vote with respect to an applicable matter, such requisite percentage-in-interest (including Majority Vote) shall be calculated as if the Units held by such applicable Member did not exist.
(v) To the extent that the Members have approved a document in accordance with the terms of this Agreement and the Delaware Act, any one of the five (5) largest Members (based
on Capital Commitments) or the Service Provider is hereby authorized to execute and deliver such document on behalf of the DAO. To the extent that the Members have approved a Potential DAO Investment, the Proposing Member is authorized to execute and deliver all documentation related to such then-approved DAO Investment on behalf of the DAO; provided, that such documentation is consistent with all information provided to and approved by the Members in connection with the approval of such DAO Investment. The parties hereto acknowledge and agree that any duly authorized Representative of the Service Provider is authorized to execute and deliver such documentation on behalf of the DAO.
(vi) A Member may appoint a proxy to vote or otherwise act for the Member with regards to the DAO within the Dapp.
(b) Meetings of the Members.
(i) Although it is anticipated that all approvals, consents, determinations, resolutions, or decisions of the Members will be approved via the Dapp and facilitated, in part, by one or more smart contracts, meetings of Members may be called and resolved at any time by a Majority Vote of the Members. In addition, the Service Provider may, but is not required to, call a meeting of the Members on behalf of the DAO.
(ii) Except as otherwise provided by law, written notice of each meeting of Members shall be given no less than one day (1) nor more than sixty (60) days before the date of the meeting to each Member entitled to vote at such meeting. The notices of all meetings shall state the place, date, and hour of the meeting. The notice of a meeting shall state, in addition, the purpose or purposes for which the meeting is called. The notices of all meetings shall be delivered to the Members in the manner described in Section 19.a.
(iii) Except as otherwise provided by law, the Members holding a majority-in- interest of the Units outstanding at the time of a meeting and entitled to vote at the meeting, present in person shall constitute a quorum for the transaction of business.
(iv) Any meeting of Members may be adjourned to any other time by Members acting by Majority Vote present. At the adjourned meeting, the DAO may transact any business that might have been transacted at the original meeting.
(v) All meetings of the Members shall be held by, and any Member may attend any meeting by, telephone conference call, video conference, or through similar or any digital communications equipment by means of which all persons participating in the meeting can hear and be heard by each other. Participation by such means shall constitute presence in person at such meeting.
(c) Service Provider.
(i) The DAO shall delegate certain administrative responsibilities to Service Providers, pursuant to the terms of a certain Service Provider Agreement as applicable.
(ii) The Members acknowledge and agree that Service Provider(s) shall have no investment discretion or authority with respect to the operation and management of the DAO or the DAO Investments.
(iii) Notwithstanding anything in this Agreement to the contrary, there shall be no requirement that the terms of the Service Provider Fee or any agreement with the Service Provider be negotiated on an arm’s-length basis.
(d) Other Authority of the Members.
(i) The Members, acting by and with a Majority Vote are hereby authorized (but not required) to take any action they have determined in good faith to be necessary, desirable, or appropriate in order that (i) the DAO not be in violation of the Investment Company Act; (ii) the DAO’s assets not be treated as "plan assets" for purposes of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); (iii) the Members and Service Provider not be in violation of the Advisers Act; (iv) each of the DAO, the Members, and the Service Provider and each of their respective Affiliates not be subject to a material adverse effect as a result of their Units in the DAO or services provided to the DAO, as applicable; or (v) each of the DAO, the Members, and the Service Provider, and each of their respective Affiliates, not be in material violation of any law or regulation applicable to such party, including, without limitation:
(1) making structural, operating, or other changes in the DAO by amending this Agreement; provided that any such amendment may be made only if such amendment does not have a material adverse effect on the Members as a whole;
(2) cancelling or reducing the Capital Commitment of any Member;
(3) requiring the sale, in whole or in part, of any Member’s Units in the DAO, or otherwise requiring the withdrawal, in whole or in part, of any Member from the DAO; or
(4) dissolving the DAO.
(e) Reliance by Third Parties. Persons dealing with the DAO are entitled to rely conclusively upon the power and authority of the Members (and any Person to whom the Members delegated any such power and authority pursuant to this Agreement).
(f) Other Activities; Conflicts of Interest.
(i) The Members and their respective Affiliates and Representatives may provide services to, make investments in, and provide financing to, present or future investment funds, DAO Investments, targets, or entities. The Service Provider(s) and its Affiliates and Representatives may engage in other business ventures and activities of every kind and description and shall not be limited by the terms of this Agreement.
(ii) Each Member acknowledges and agrees that in addition to transactions specifically contemplated by this Agreement, and subject to applicable law, the Members, the DAO, and their respective Affiliates and Representative are each hereby authorized to purchase property or obtain services from, to sell property or provide services to, or otherwise enter into any transaction with any Member, any Portfolio Project, or any Affiliate or Representative of any of the foregoing Persons.
(iii) Neither the DAO nor any Member shall have any right to participate in, or to receive the benefits of, any other activity or venture of any other Member, the Service Provider(s), or their respective Representatives, as a result of this Agreement or being a Member in the DAO.
(iv) The DAO may invest in entities, securities, financing, or projects in which a Member and its respective Affiliates and Representatives have directly or indirectly participated or invested.
(g) No Sales Charges. No sales charges shall be payable by the Members to the Service Provider or the DAO in connection with the offering of Units.
(a) Temporary Investments. The Members acting by Majority Vote shall have the right, but not the obligation, to elect to invest capital contributions made to the DAO in one or more of the following investments ("Temporary Investments"): (a) Ether; (b) Bitcoin; and/or (c) fee or interest bearing Digital Assets; or (d) or any other Digital Assets, including, but not limited to non-fungible tokens.
(b) Member Identification and Approval of Investments.
(i) Any Member (the "Proposing Member") that identifies a potential investment opportunity for the DAO (a "Potential DAO Investment") shall propose to the other Members the opportunity to invest in such investment opportunity through the Dapp.
(ii) The Proposing Member shall notify the other Members of the opportunity to invest in the Potential DAO Investment through the Dapp and shall provide to the other Members sufficient information to assess the DAO Investment (the "Potential DAO Investment Notice"). Such Potential DAO Investment Notice shall be delivered to such other Members through the Dapp. If Members acting by the voting mechanism provided by the Dapp and the underlying DAO smart contracts elect to invest in such Potential DAO Investment within four (4) days following delivery of the Potential DAO Investment Notice, then the DAO shall invest in such Potential DAO Investment. Such approval shall be communicated to the Proposing Member and the other Members through the Dapp.
(iii) If a Potential DAO Investment has been approved in accordance with Section 5.b.ii, then the DAO shall invest in such opportunity and each then-current Member (other than a Member that has permissibly withdrawn all of its Undeployed Capital in accordance with Section 7.a) shall participate in such DAO Investment on a pro rata basis, based on the relative Units of such Members. For the avoidance of doubt, every then-current Member (other than a Member that has permissibly withdrawn all of its Undeployed Capital in accordance with Section 7.a) shall participate in each Potential DAO Investment that has been approved in accordance with 5.b.ii, regardless of whether such Member voted in favor of such investment. Notwithstanding anything in this Section 5.b.iii to the contrary, a Member may be relieved of its obligation to participate in a DAO Investment if, in the sole and absolute discretion of the applicable Service Provider(s), such participation would cause such Member to violate any law or regulation applicable to such Member.
(c) Tax Classification of DAO Investments. Unless otherwise agreed by the Members via a vote on the Dapp, if the DAO elects to invest in legal entities, only entities treated as C- corporations for U.S. federal income tax purposes shall be eligible for proposal as a Potential DAO Investment.
(d) Limitation on Borrowing. The DAO does not intend to employ leverage or borrow money, unless otherwise agreed to by the Members via a vote occurring through the Dapp.
(e) Valuation. The calculation of the value of any DAO assets or DAO Investments shall be made by the DAO in its sole and absolute discretion (taking into account factors that reasonably might affect the sales price of the asset in question, including, without limitation, if and as appropriate,
any arm’s-length transaction involving unrelated parties and substantially similar securities of the same portfolio company, the existence of a control block, the lack of a market for such asset, the appropriateness of a discount with respect to the disposition of significant positions involving marketable securities, and the impact on present value of factors such as the length of time before any such sales may become possible and the cost and complexity of any such sales), and such valuation shall be final and conclusive upon the Majority Vote of the Members via a vote occurring through the Dapp and the DAO's underlying smart contracts.
The Service Provider may, but is not obligated to, recommend to the Members to apply any reasonable valuation policies to calculate the value of DAO assets or DAO Investments (including methods for the valuation of: illiquid investments, discounts and marketability of tokens to be vested or distributed, staking and yield-producing activities, and other valuation methods to support DAO Investments, etc.), provided that, the Members approve, or approve with modification, the Service Provider’s valuation policies via a vote occurring through the Dapp and the DAO’s underlying smart contracts.
(a) AIVs and SPVs. The DAO, if authorized by the Members by a Majority Vote, may form one or more vehicles to accommodate legal, tax, regulatory, or other needs of particular investors to invest in the DAO, including, without limitation, one or more feeder funds. If the Members acting by Majority Vote determine in good faith that it is in the interest of the DAO (whether for legal, tax, regulatory considerations, or otherwise), all or a part of the DAO’s or any Member’s participation in a DAO Investment may be structured or restructured outside of the DAO, including, without limitation, (i) by requiring some or all of the Members to make such investment through a partnership, a limited liability company, or an alternate investment vehicle (an "AIV") that shall invest (directly or indirectly via a special purpose vehicle ("SPV")) in lieu of the DAO; or (ii) by causing all or any portion of the DAO’s investment in such transaction to be made through an SPV and/or AIV.
(b) Co-Investment. The DAO may offer any Member, any Member’s Affiliates, and/ or any other Person (including the Service Provider, its Affiliates, and their respective Representatives) the right to co-invest with the DAO (directly or indirectly) in any DAO Investment. For the avoidance of doubt, the DAO (a) shall not be obligated to offer any Member or any Affiliate thereof the right to co-invest with the DAO; (b) may offer such right to third parties and/or to some, but not all, Members or Affiliates thereof; and (c) may determine how to allocate any such co-investment opportunities as determined by the Members acting by Majority Vote.
(a) Limited Right to Withdraw Undeployed Capital. A Member may withdraw all or any portion of its Undeployed Capital at any time through notice provided to the DAO via the Dapp. The withdrawal shall be facilitated and executed, in part, using one or more smart contracts and shall be effective as of the date indicated by the withdrawing Member in the notice provided to the DAO via the Dapp.
(i) Each date on which a Member may withdraw all or any portion of its Undeployed Capital is referred to herein as a "Withdrawal Date."
(ii) If a Member has multiple subscriptions, the withdrawal request shall be deemed to apply with respect to each subscription in the order in which they were made (i.e., on a "first- in-first-out" basis).
(iii) The Units of a Member to be withdrawn shall remain invested in the DAO after such Member has given notice of its intention to withdraw and until the Withdrawal Date (if different from the date on which the withdrawal notice is provided via the Dapp). Following such Withdrawal Date, the number of Units held by such Member and such Member’s Capital Commitment shall be proportionally reduced to reflect the withdrawal of such applicable portion of such Member’s Undeployed Capital.
(iv) Payments of withdrawal proceeds shall be facilitated by one or more smart contracts executed, in part, via the Dapp. Notwithstanding the foregoing regarding the payment of withdrawal proceeds or anything else to the contrary in this Agreement, the applicable Service Provider may establish limited reserves and holdbacks for estimated DAO Expenses, liabilities, and/or contingencies attributable to any period prior to the applicable Withdrawal Date, including general reserves for unspecified contingencies, which will reduce the amount of a distribution upon withdrawal.
(v) Any withdrawal is irrevocable and may only be rescinded with the consent of the Members acting by Majority Vote (excluding the Member seeking to rescind such withdrawal notice). Any transaction expenses that are incurred by the DAO with respect to such revoked withdrawal request, may be charged to such Member as determined by the Members acting by Majority Vote (excluding the rescinding Member).
(b) No Other Withdrawal Rights. Except as set forth in Section 7.a, or as otherwise agreed in writing by the Members acting by Majority Vote (other than the Member seeking to withdraw), no Member shall have the right to withdraw its capital or profits from the DAO, or to demand and receive any DAO property, in exchange for such Member’s Units in the DAO. Each Member acknowledges and agrees that DAO Investments are illiquid.
(c) Compulsory Withdrawal. Not in limitation of Section 4.d, upon written notice delivered to such Member, the Members acting by Majority Vote may cause a Member to be compulsorily withdrawn from the DAO to the extent that such Members, in their reasonable discretion, determine it to be necessary, desirable, or appropriate, including, without limitation, to comply with applicable law or regulations, or to avoid a material adverse effect on the DAO or the other Members. For the avoidance of doubt, the Member proposed to be compulsorily withdrawn shall be entitled to vote with respect to any vote of the Members regarding such compulsory withdrawal.
(a) Organizational and Offering Expenses. The DAO shall bear all of its organizational and offering costs and expenses ("Organizational and Offering Expenses") and may amortize these expenses for accounting and/or tax purposes. Such Organizational and Offering Expenses include, without limitation, the costs and expenses incurred in connection with the DAO’s structuring, formation, and qualification and the offering and sale of the Units, including, but not limited to, legal and accounting fees and expenses, registration fees, filing fees, and all costs and expenses incurred in connection with the preparation of offering documents, marketing materials, organizational documents, operating documents (including this Agreement), and similar materials and the costs of qualifying, reproducing, amending, supplementing, mailing, and distributing offering materials.
(b) Operating Expenses.
(i) The DAO shall bear all costs and expenses relating to its activities, operations, and maintenance (to the extent not reimbursed in connection with a DAO Investment), including, without limitation, all fees, costs, and expenses associated (directly or indirectly) with the sourcing, originating, acquiring, holding, monitoring, and disposing of its investments or proposed investments (including, without limitation, consulting services, advertising and marketing, due diligence, "broken" deal, as well as all fees and expenses due to any legal, regulatory, financial, accounting, consulting, or other advisors, or any finders, placement agents, or investment banks in connection with the sourcing, acquiring, holding, monitoring, and disposing of investments or proposed investments), all entity-level taxes, fees, or other governmental charges (including any entity-level taxes, fees, or other governmental charges levied against any AIV or SPV) and any withholding on the DAO not attributable to a particular Member, the costs of any insurance, expenses incurred in collecting monies or digital assets owed to the DAO, extraordinary expenses (including, without limitation, litigation-related and indemnification expenses), other professional fees and expenses, the costs of any administrator, the costs of any reporting to investors and meetings of investors, expenses of any administrative proceedings undertaken by the applicable Member in its capacity as the Partnership Representative, the maintenance of the DAO’s books and records, expenses incurred in connection with the dissolution, liquidation, and termination of the DAO, the Service Provider Fee, and other expenses related to the DAO as determined by the Members by Majority Vote (collectively, and together with Organizational and Offering Expenses, the "DAO Expenses").
(ii) DAO Expenses shall be allocated to and funded by the Members pro rata in accordance with their relative Capital Commitments; provided, that DAO Expenses attributable to a DAO Investment will be allocated to and fund by only those Members participating in such DAO Investment, pro rata in accordance with their relative Capital Commitments invested in such DAO Investment. With respect to a DAO Investment for which any AIV or SPV is formed, the DAO Expenses attributable to such AIV or SPV shall be allocated to and funded by only those Members who participate in such AIV or SPV. The Members, acting by Majority Vote, also may determine that any one or more DAO Expenses shall be allocated on an alternative basis, provided that such alternative basis is more equitable.
(c) Expense Reserve. Each Member acknowledges and agrees that a portion of his, her, or its capital contributions may be reserved for payment of DAO Expenses and shall not be available for investment in any DAO Investment.
(d) Service Provider Fee. The DAO shall enlist and pay the Service Provider to operate the Dapp and perform obligations as defined in this Agreement and in a certain Service Provider Agreement. The DAO shall pay the Service Provider, a Service Provider Fee for such services, as set forth in the Service Provider Agreement executed with the Service Provider at or around the time of the Effective Date. The Members may agree to or define the Service Provider Fee via a vote occurring through the Dapp and the DAO's underlying smart contracts. The DAO shall pay the applicable Service Provider, a Service Provider Fee for such services, as set forth in the applicable Service Provider Agreement. ARTICLE IX
(a) Amount, Timing, and Form. Except as otherwise provided in this Agreement, the Members shall determine the amount, timing, and form (whether in cash, in kind, in cryptocurrency, or in any Digital Asset) of all distributions made by the DAO via a vote in the DAO’s underlying smart contracts facilitated through the Dapp. No distribution shall occur before all Units in the DAO are issued, unless otherwise agreed to by the Members via a vote occurring through the Dapp.
(b) Distributions in Kind. Each class of securities to be distributed in kind shall be distributed to the Members in proportion to their respective share of the proposed distribution, as provided in this ARTICLE IX, or in Section 12.b, as the case may be, except to the extent that a disproportionate distribution of such securities is necessary to avoid distributing fractional shares.
(c) Discretionary Distributions. Distributable Proceeds shall be distributed on a Member-by-Member basis on a pro rata basis based on the relative Units held by each Member.
(i) If a Member does not participate in a DAO Investment (which, for the avoidance of doubt, may occur solely in accordance with Section 3.e.iii or Section 5.b.iii), such Member shall not be entitled to any distributions with respect to such DAO Investment and the distributions made to each of the other Members shall be modified accordingly.
(d) Tax Withholding. If the DAO incurs any obligation to pay any amount in respect of taxes (including withholding taxes and/or any interest, penalties, or additions to tax) imposed on income of or distributions made to any Member or former Member, any amount so required to be paid by the DAO with respect to such Person shall be treated for all purposes of this Agreement as if it had been loaned to such Person, and the applicable Service Provider shall give prompt written notice to such Person of the date and amount of such loan. Each Member covenants, for itself, its successors, assigns, heirs, and personal representatives, that such Person shall pay to the DAO at any time after notice of the loan has been given, but not later than five (5) Business Days after the applicable Service Provider delivers a written demand to such Person for such repayment (which demand may be made at any time prior to or after the dissolution of the DAO or the withdrawal of such Person or its predecessors from the DAO); provided, however, that if any such repayment is not made within such five (5) Business Day period: (i) such Person shall pay interest to the DAO at a rate equal to eight percent (8%) for the entire period commencing on the date on which the DAO paid such amount and ending on the date on which such Person repays such amount to the DAO together with all accrued but previously unpaid interest; and (ii) the DAO as determined by the Members by Majority Vote may (a) collect such unpaid amounts (including interest) from any DAO distributions that otherwise would be made to such Person.
(e) Certain Distributions Prohibited. Notwithstanding anything in this ARTICLE IX to the contrary notwithstanding: (a) no distribution shall be made to any Member if, and to the extent that, such distribution would not be permitted under the Delaware Act; and (b) no distribution shall be made to any Member to the extent that such distribution, if made, would cause the deficit balance in the Capital Account of such Member.
(f) No Reinvestment of Distributable Proceeds (No Recycling). For the avoidance of doubt, unless otherwise determined by Members acting by Majority Vote, the DAO shall not reinvest (or retain for investment) any Distributable Proceeds to effect DAO Investments, but shall be permitted to
retain Distributable Proceeds to pay DAO Expenses or to fund reserves for reasonably anticipated DAO Expenses, liabilities, or reserves.
(g) No Recall of Distributions. Distributions shall not be recalled from the Members.
(a) Capital Accounts. A Capital Account shall be established and maintained for each Member in accordance with the following provisions:
(i) To each Member’s Capital Account, there shall be credited such Member’s capital contributions, such Member’s distributive share of Profits, and any items in the nature of income or gain that are specially allocated pursuant to this Agreement, and the amount of any liabilities of the DAO that are assumed by such Member, or that are secured by any assets of the DAO distributed to such Member.
(ii) To each Member’s Capital Account, there shall be debited the amount of cash and the Gross Asset Value of any DAO assets distributed to such Member pursuant to any provision of this Agreement, such Member’s distributive share of Losses, and any items in the nature of expenses or losses that are specially allocated pursuant to this Agreement, and the amount of any liabilities of such Member assumed by the DAO or that are secured by any property contributed by such Member to the DAO.
(iii) If ownership of any Unit in the DAO is assigned in accordance with the terms of this Agreement, the assignee shall succeed to the Capital Account of the assignor to the extent it relates to the assigned Unit.
(iv) In determining the amount of any liability for purposes of Subsections 10.a.i and 10.a.ii above, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Treasury Regulations.
(v) To each Member’s Capital Account, there shall be debited or credited, as the case may be, such adjustments as are necessary to reflect a revaluation of DAO assets to reflect the Gross Asset Value of all DAO assets, as required by Regulations Section 1.704-1(b)(2)(iv)(f) and Section 9.b hereof.
The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Code Section 704 and Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations. The DAO shall make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of DAO capital reflected on the DAO’s balance sheet as computed for book purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(q).
(b) Revaluations of DAO Property. The "Gross Asset Value" of any asset of the DAO shall be equal to the asset’s adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Member to the DAO shall be the gross fair market value of such asset, as determined by the contributing Member and the Members (other than the contributing Member) by Majority Vote.
(ii) The Gross Asset Values of all DAO assets shall be adjusted to equal their respective gross fair market values in connection with (and to be effective immediately prior to) the following events: (i) the acquisition of an additional Units in the DAO by any new or existing Member in exchange for more than a de minimis capital contribution; (ii) the distribution by the DAO to a Member of more than a de minimis amount of property (including cash) as consideration for an interest in the DAO; (iii) the grant of an interest in the DAO (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the DAO by an existing Member acting in the capacity of a Member or by a new Member acting in the capacity of a Member or in anticipation of being a Member; or (iv) the liquidation of the DAO within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that an adjustment pursuant to clauses (i), (ii), or (iii) above shall be made only if such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the DAO.
(iii) The Gross Asset Value of any DAO asset distributed to any Member shall be the gross fair market value of such asset on the date of distribution.
(iv) The Gross Asset Values of DAO assets shall be increased (or decreased) to reflect any adjustments to the adjusted bases of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and Section 10.a hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this Subsection to the extent they were adjusted pursuant to Subsections 9.b above, in connection with a transaction that otherwise would result in an adjustment pursuant to this Subsection.
(v) If the Gross Asset Value of an asset has been determined or adjusted pursuant to this Section 9.b, 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.
(c) Allocations of Net Profit or Loss. After giving effect to the special allocations set forth in Section 11.a and subject to the other provisions of ARTICLE XI, Profits or Losses for any Accounting Period shall be allocated among the Members in such a manner that as closely as possible gives economic effect to the provisions in ARTICLE IX.
(a) Special Allocations. Notwithstanding the provisions of Section 10.c or any other provision of this Agreement, the Members shall have the discretion to modify the allocations of profits and losses, and all items of income, gain, loss, deduction, and credit in such manner as the Members shall determine to be necessary or appropriate to comply with the Code section 704 and Treasury Regulations promulgated thereunder.
(b) Code Section 704(c). The Members shall make such allocations for tax purposes, and any modifications to this Agreement, as may be required to comply with Code section 704(c) and the Treasury Regulations thereunder.
(c) Other Allocation Rules.
(i) Except as otherwise provided in this Agreement, items of taxable income, gain, loss, deduction, and credit shall be allocated among the Members for income tax purposes in a manner consistent with the allocations made for "book purposes" under Section 10.c and this ARTICLE XI. Taxable income or loss for any accounting period that is not allocated pursuant to the preceding sentence and that is not otherwise allocated pursuant to Section 10.c or this ARTICLE XI shall be allocated among the Members for tax purposes in the same proportion that profit or loss has been allocated for that accounting period under Section 10.c.
(ii) Notwithstanding the other provisions of Section 10.c or this ARTICLE XI, the Members are authorized to make any adjustment in the allocation of profits or losses provided for therein if the Members consider in good faith that the adjustment is necessary and equitable address issues not specifically dealt with therein to correct errors in allocations caused by errors in unaudited financial information or to correct inequities that may arise under this Agreement.
(a) General.
(i) The DAO shall be dissolved and its affairs shall be wound up upon the earliest to occur of:
(1) a determination of the Members by Majority Vote, with the prior written consent of the Service Provider;
(2) the entry of a decree of judicial dissolution pursuant to the Delaware Act; or
(3) following disposition of all of the assets of the DAO.
(ii) At dissolution, the DAO’s assets shall be liquidated in an orderly manner. A Person appointed by the Members acting by Majority Vote shall be the liquidator to wind up the affairs of the DAO, pursuant to this Agreement. Any such liquidator shall be a "liquidating trustee" within the meaning of the Delaware Act.
(iii) The DAO shall not be dissolved in the event of the dissolution, death, bankruptcy, insolvency, incompetence, disability, substitution, or admission of any Member, or any other similar event involving the existence, status, or organization of a Member.
(b) Liquidating Distributions. The liquidator(s) shall pay, or provide for the satisfaction of, the DAO’s liabilities and obligations to creditors, or reasonable provisions shall be made for such satisfaction and there shall be withheld such reserves as are required by applicable law and such other reserves established in the sole and absolute discretion of the liquidator(s). In performing their duties, the liquidator(s) are authorized to sell, exchange, or otherwise dispose of the assets of the DAO, in such reasonable manner as the liquidator(s) shall determine to be in the best interests of the Members. Any Profit or Loss or other items realized in connection with the liquidation of the DAO’s assets shall be allocated among the Members pursuant to ARTICLE X, and the remaining assets of the DAO shall be distributed to the Members in cash (to the extent feasible), in kind, or in cryptocurrency in accordance with the applicable distribution provisions of ARTICLE IX.
(c) Reserves.
(i) A Member’s right to distributions shall not be reduced by an amount on account of any contingency, transaction, or claim until its final settlement or such earlier time as the liquidator(s) shall determine, in its reasonable discretion. The DAO may retain from sums otherwise due such Member an amount that the liquidator(s) estimates to be sufficient to cover the share of such Member of any probable loss or liability on account of such contingency or the probable value of the transaction or claim. Any unused portion of such reserve shall be distributed (without interest accrued thereon) after the liquidator(s) shall have determined that the need therefor shall have ceased.
(ii) Upon determination by the liquidator(s) that circumstances no longer require the retention of sums as provided in Section 12.c, the liquidator(s) shall, at the earliest practicable time, pay such sums or distribute such assets or the proceeds realized from the sale of such assets to each Member from which such sums or assets have been withheld.
(d) Expenses of Liquidator(s). The expenses incurred by the liquidator(s) in connection with winding up the DAO, all other losses or liabilities of the DAO incurred in accordance with the terms of this Agreement, and reasonable compensation for the services of the liquidator(s) shall be borne by the DAO.
(e) Duration of Liquidation. A reasonable time shall be allowed for the winding up of the affairs of the DAO, in order to minimize any losses otherwise attendant upon such winding up. The liquidator(s) shall use its reasonable best efforts to carry out the liquidation in conformity with the timing requirements of Treasury Regulation section 1.704-1(b)(2)(ii)(g), but shall not be bound to do so, or liable in any way to any Member for failure to do so.
(f) No Liability for Return of Capital. The liquidator(s), the Service Provider, the Members, their respective Affiliates, and their respective Representatives shall not be personally liable for the return of the capital contributions of any Member. No Member shall be obligated to restore to the DAO any amount with respect to a negative Capital Account; provided, however, that this provision in no way shall affect the obligations of Members to make their-agreed-upon capital contributions and other required payments to the DAO.
(g) Goodwill and Intangible Assets. In making any determination of the fair value of the assets of the DAO, no allowance of any kind shall be made for goodwill or of the DAO’s office records, files, and statistical data, or any intangible assets of the DAO in the nature of or similar to goodwill.
(a) Transfers of Units. No assignment, pledge, mortgage, hypothecation, gift, sale, or other disposition or encumbrance of (collectively, "Transfer") of Units, in whole or in part, shall be made, other than pursuant to this Section 13.a, except for a Transfer made pursuant to Section 13.c.v. Any attempted Transfer of all or any part of Units without compliance with this Agreement shall be null and
void. Every Transfer shall be subject to all of the terms, conditions, restrictions, and obligations set forth in this Agreement. Unless the Members determine via a Majority Vote that interests in the DAO are not a security under the U.S. Securities Act of 1933, as amended, or any other applicable securities laws, including the Investment Company Act, the prior written consent of the Members (other than the Member seeking to Transfer) by Majority Vote shall be required for any Transfer of part or all of any Member’s Units; provided, that any Member may Transfer its Units to any other then-current Member without such consent, subject to the Ownership Percentage Restriction. Members may vote to allow or disallow the ability of Members to transfer their Units via a vote occurring through the Dapp. Each Transfer shall be evidenced by a written agreement that is executed by the transferor and the transferee(s), and that includes such representations of the transferor and the transferee as the Members shall request.
(b) Required Reimbursement and Indemnification. The transferor of any interest in the DAO hereby agrees to reimburse the DAO for any expenses reasonably incurred by the DAO in connection with such Transfer, including any legal, accounting, and other expenses ("Transfer Expenses"), whether or not such Transfer is consummated. If the transferor has not reimbursed the DAO for any Transfer Expenses incurred by the DAO in consummating a Transfer within five (5) Business Days after the Service Provider has delivered to such Member written demand for payment, the Service Provider may cause the DAO to reduce the transferee’s right to distributions by any such Transfer Expenses. In addition, the transferor and transferee shall indemnify the DAO and the Service Provider against any loss, claim, damage or liability to which such party may become subject arising out of, related to, or in connection with any false representation or warranty made by, or breach or failure to comply with any covenant or agreement of, such transferring Member or such transferee.
(c) Admission of Substituted Members.
(i) Any transferee of Units transferred in accordance with the provisions of this ARTICLE XIII shall be admitted as a substituted Member.
(ii) The DAO shall not recognize for any purpose any purported Transfer of all or any part of a Member’s Units in the DAO, and no purchaser, assignee, transferee, or other recipient of all or any part of such Units shall become a substituted Member hereunder unless:
(1) the provisions of Sections 13.a through 13.b shall have been complied with;
(2) the Service Provider is furnished with the documents effecting such Transfer, in form reasonably satisfactory to the Service Provider, executed and acknowledged by both the seller, assignor, or transferor and the purchaser, assignee, transferee, or other recipient;
(3) such purchaser, assignee, transferee, or other recipient shall have represented that such Transfer was made in accordance with all applicable laws and regulations;
(4) to the extent required by the Service Provider, in its sole and absolute discretion, the transferor shall have provided an opinion of counsel, satisfactory in form and substance to the Service Provider, to the effect that such Transfer shall not violate the U.S. Securities Act of 1933, as amended, or any other applicable securities laws, including the Investment Company Act;
(5) such Transfer, alone or together with any other Transfers, shall not cause the DAO to be a "publicly traded partnership" under Code Section 7704 and the Treasury Regulations promulgated thereunder; and
(6) all necessary governmental consents and acknowledgments (if any) shall have been obtained in respect of such Transfer.
(iii) In addition, no transfer shall be permitted until the DAO is provided with such information establishing that the DAO will not have a requirement to withhold under Code Section 1446(f) as a result of the transfer, as the Service Provider reasonably determines.
(iv) The transferee of Units transferred pursuant to this ARTICLE XIII that is admitted to the DAO as a substituted Member shall succeed to the rights and liabilities of the transferor Member with respect to such transferred Units and, after the effective date of such admission, the Capital Commitment, capital contributions, and Capital Account of the transferor with respect to such transferred Units shall become the Capital Commitment, capital contributions, and Capital Account, respectively, of the transferee, to the extent of the Units transferred.
(v) Permitted Transfers. The provisions of Section 13.c.ii and Section 13.c .iii shall not apply to a Transfer approved by the Service Provider, of all or any part of a Member’s Units in the DAO, in accordance with this Section and the following requirements:
(1) the Service Provider confirms that the transferee is an entity under the majority control or affiliated by the transferor Member;
(2) the Service Provider is furnished with the acceptable documents effectuating such Transfer, in a form reasonably satisfactory to the Service Provider, executed and acknowledged by both the seller, assignor, or transferor and the purchaser, assignee, transferee, or other recipient;
(3) the transferee entity itself passes all necessary Know Your Customer and/or Anti-Money Laundering and other accreditation requirements that the Service Provider, in its absolute discretion, deems necessary; and
(4) the Service Provider, transferor Member, and transferee Member effect the Transfer of Units under this Section in accordance with the other relevant requirements of ARTICLE XIII’s provisions, other than those omitted or excepted ("Permitted Transfers").
(d) Effect of Death, Dissolution, or Bankruptcy. Upon the death, incompetence, bankruptcy, insolvency, liquidation, or dissolution of a Member, the rights and obligations of that Member under this Agreement shall accrue to that Member’s successor(s), estate, or legal representative, and each such Person shall be treated as an unadmitted transferee of that Member’s Units, as described in the Delaware Act, unless and until admitted as a Member by Members acting by a Majority Vote.
(e) Drag-Along Rights.
(i) Drag Along Sale. If one or more Members (the "Dragging Members") desires to effect any Transfer of Units representing in excess of seventy-five percent (75%) of the Units to any Person(s) through any transaction or series of related transactions (including, without limitation, pursuant to a purchase of Units, tender offer, other business combination transaction, or otherwise), then
the Members acting by a Majority Vote, may require each non-Dragging Member (each, a " Drag Along Member") to sell the Drag Along Percentage of the Units held by such Drag Along Member, on the same terms and conditions as apply to the Units to be sold by the Dragging Members, and/or to vote in favor of such sale of assets, as applicable. "Drag Along Percentage" means a fraction expressed as a percentage (x) the numerator of which is the aggregate Units being sold by the Dragging Members in such applicable transaction(s); and (y) the denominator of which is the total Units held by the Dragging Members at the time of such applicable transaction(s). A "Drag Along Sale" means a transfer of interests described in the first sentence of this Section 13.e.
(ii) Drag Along Notice; Drag Along Consideration. The Dragging Members shall give written notice to all of the Drag Along Members disclosing in reasonable detail (i) the Units to be subject to the Drag Along Sale; (ii) the proposed amount and type of consideration and the material terms and conditions of payment that the Dragging Members intend to accept; and (iii) the name and address of the prospective purchaser. The consideration paid in connection with a Drag Along Sale shall be paid to the applicable Drag Along Members participating in such Drag Along Sale on the same terms and conditions as the Dragging Members.
(iii) DAO Transactions. If the Members by a Majority Vote desire to effect any merger, business combination, or sale of all or substantially all of the assets of the DAO, to the extent that a vote of the Members is required, each Member agrees to vote in support of such transaction (a Drag Along Sale or any such merger, business combination, or sale of all or substantially all of the assets of the DAO, a "Drag Along Transaction").
(iv) Drag Along Support. Each Member agrees to cooperate to effect any Drag Along Transaction expeditiously, and to execute and deliver all documents necessary or reasonably requested in connection with such Drag Along Transaction, and enter into any instrument, undertaking, or obligation necessary or reasonably requested in connection with such Drag Along Transaction. Subject to the terms and conditions of this Section 13.e and without limiting the generality of the foregoing, each Member shall take or cause to be taken all reasonable actions, and do, or cause to be done, on behalf and in respect of the DAO any and all actions, that may be reasonably requested consistent with this Section 13.e in connection with any Drag Along Transaction. In addition, if requested by the Dragging Members or applicable purchaser in connection with a Drag Along Sale, each Drag Along Member shall execute and deliver a definitive purchase and sale agreement, in substantially the same form and substance as the definitive agreement executed and delivered by the Dragging Members; provided, however (i) that any indemnification obligation of any Drag Along Member in connection with the sale shall be several and not joint, and (ii) the Drag Along Members shall only be obligated to make such representations and warranties with respect to himself, herself, or itself (as opposed to the business and condition of the other Members or the DAO).
(v) Irrevocable Proxy. Solely for purposes of this Section 13.e and in order to secure the performance of each Member’s obligations under this Section 13.e, each Member hereby irrevocably appoints the Service Provider as the attorney-in-fact and proxy of such Member (with full power of substitution) to vote, provide a written consent, or take any other action with respect to such Member’s Units in connection with such Drag Along Transaction. This power of attorney and proxy shall be irrevocable and coupled with an interest sufficient at law to create an irrevocable proxy and power of attorney, and each Member shall take such further action and execute such other instruments as may be necessary to effectuate the intent of this power of attorney or proxy and hereby revokes any power of attorney and proxy previously granted by it with respect to the matters set forth in this Section 13.e with respect to the Units owned by such Member. The proxy and power of attorney granted hereby is attached to the Units in connection with such Drag Along Transaction owned by such Member and shall be binding upon any holder thereof, and shall survive the duration of this Agreement.
(f) Tag Along Rights.
(i) If one or Members representing in excess of seventy-five percent (75%) of the Units (the "Tag Offeror") proposes to make a Transfer, directly or indirectly, to one or more Persons (other than an Affiliate of such Member or solely for tax or trusts and estates planning purposes) ("Tag Purchaser"), in one or more series of related transactions, other than a transaction in which the Drag Along Members have exercised rights pursuant to Section 13.e, then each other Member (each, a "Tagging Member") shall have tag-along rights with respect to such Tagging Member’s Units, as set forth herein (the "Tag-Along Rights"). "Tag Along Percentage" means a fraction expressed as a percentage (x) the numerator of which is the aggregate Units being sold by the Tag Offeror(s) in such applicable transaction(s); and (y) the denominator of which is the total Units held by the Tag Offeror(s) at the time of such applicable transaction(s).
(ii) If circumstances occur which give rise to the Tag-Along Rights, the Tag Offeror shall provide written notice to each of the other Members not less than fifteen (15) days prior to the closing of the proposed Transfer. A Tagging Member may exercise the Tag-Along Rights by giving written notice to the Service Provider and the Tag Offeror at least ten (10) days prior to the closing of the proposed Transfer, and such written notice shall state the portion of his, her, or its Units that such Member wishes to sell, up to the Tag Along Percentage of such Member’s Units. If the Tag Purchaser decline(s) to purchase all of the Units of the Tag Offeror and each Tagging Member, the applicable Units to be sold by each Tag Offeror and each Tagging Member shall be reduced on a proportionate basis. Each Tagging Member shall be obligated to sell the applicable portion of his, her, or its Units identified in such Tagging Member’s written acceptance (as may be reduced pursuant to the immediately preceding sentence) for the consideration and upon substantially similar terms by which the Tag Offerors are selling to the Tag Purchaser, such obligation to be conditioned upon and contemporaneous with completion of the transaction of purchase and sale with the Tag Offeror.
(a) Maintenance of Records; Inspection.
(i) At all times, the Service Provider shall cause to be kept proper and complete books of account in which shall be entered fully and accurately the transactions of the DAO, and which may be maintained via the Dapp or available via block explorers on the [[Blockchain Name]] network. All decisions as to accounting principles, accounting methods, and other accounting matters shall be made by the Members acting by Majority Vote.
(ii) Subject to ARTICLE XVI, books and records of the DAO that are not otherwise available via the Dapp shall be available, upon reasonable advance notice to the Service Provider, for inspection at the location determined by the Service Provider (or digitally, if determined by the Service Provider, in its sole discretion) at reasonable times during ordinary business hours on any Business Day by each Member or its duly authorized agents or representatives solely to the extent permitted by the Act, including for a purpose reasonably related to such Member’s Units in the DAO. Each Member agrees that (i) such books and records contain confidential information relating to the DAO and its affairs, and (ii) the Service Provider shall have the right, except as prohibited by the Delaware Act, to prohibit or otherwise limit, in its reasonable discretion, the making of any copies of such books and records.
(b) Schedules K-1. The Service Provider shall transmit to each Member such Member’s Schedule K-1 (Internal Revenue Service Form 1065), indicating such Member’s share of all items of income or gain, expense, loss, or other deduction, and tax credit of the DAO for such year, as well as the status of its Capital Account as of the end of such year, and such additional information as it reasonably may request to enable it to complete its tax returns or to fulfill any other reporting requirement.
(c) Tax Elections; Accounting and Related Determinations. The Members acting by Majority Vote shall be empowered to make or revoke any election now or hereafter required or permitted to be made by the Code or any state or local tax law, and to decide in a fair and equitable manner all accounting procedures and other matters arising with respect to the DAO or under this Agreement that are not expressly provided for in this Agreement.
(d) Accounting Provisions. The fiscal year of the DAO shall be the calendar year, or such other year as may be required by the Code. The DAO shall use the accrual method of accounting for U.S. federal income tax purposes. The DAO’s independent public accountants shall be a recognized independent public accounting firm selected by the Members acting by Majority Vote.
(e) Partnership Audit Rules.
(i) The Service Provider is designated the Partnership Representative; provided, that the Service Provider may elect to appoint a different Partnership Representative in accordance with the applicable Treasury Regulations upon the approval of the Members by Majority Vote. With respect to any period in which any non-individual is the Partnership Representative, the DAO shall appoint an individual eligible to be a "designated individual" under the Partnership Audit Rules (the "Designated Individual") through whom the Partnership Representative shall act for all purposes of the Partnership Audit Rules. The DAO is hereby authorized to take any actions necessary under the Partnership Audit Rules or other guidance to designate the Partnership Representative and appoint the Designated Individual with respect to each taxable year of the DAO (and the Partnership Representative and the Designated Individual are authorized to take any actions specified under the Partnership Audit Rules or any applicable state statute or local law). In exercising its authority as DAO Partnership or the Designated Individual under the Partnership Audit rules, the Tax Representative shall at all times be subject to the direction of the Members acting by Majority Vote.
(ii) Each Member shall indemnify and hold the Partnership Representative and the Designated Individual (collectively, the "Tax Representative"), and the DAO harmless for such Member’s respective portion of the financial burden of any "imputed underpayment" (as determined under Code Section 6225) and associated interest, adjustments to tax and penalties arising from a company-level adjustment that are imposed on the DAO. In furtherance thereof, each Member agrees (A) to pay such amount to the DAO within fifteen (15) days following the DAO’s request for payment (and any failure to pay such amount shall result in interest on such amount calculated at the prime rate plus two percent (2%) and (B) that any amounts otherwise distributable to such Member may be applied in satisfaction of such obligations. Except with the express written consent of the Members acting by Majority Vote, each Member shall be jointly and severally liable with their predecessors in interest, if any, for amounts owed hereunder in respect of any predecessor in interest to such Member.
(iii) By executing this Agreement or a counterpart hereof, each Member (i) expressly authorizes the Tax Representative and the DAO to take any and all action that is reasonably necessary under applicable federal income tax law (as such law may be revised from time to time) to cause the DAO to make the election set forth in Code Section 6226(a) if the Tax Representative decides to make such election, and (ii) expressly agrees to take any action, and furnish the Tax Representative with any information necessary, to give effect to such election. No Member shall file a notice with the IRS under Code Section 6222(c)(1)(B) in connection with such Member’s intention to treat an item on such Member’s federal income tax return in a manner that is inconsistent with the treatment of such item on the DAO’s federal income tax return unless such Member has, not less than thirty (30) days prior to the filing of such notice, provided the Tax Representative with a copy of the notice and thereafter in a timely manner provides such other information related thereto as the Tax Representative shall reasonably request.
(iv) The fees and expenses incurred by the DAO in connection with any audit or investigation of the DAO, and all subsequent administrative and judicial proceedings arising out of such audit, including, without limitation tax counsel to the DAO, and all expenses incurred by the Tax Representative in serving as such, shall be DAO Expenses and shall be paid by the DAO. Notwithstanding the foregoing, it shall be the responsibility of each Member, at their expense, to employ tax counsel to represent their respective separate interests.
(v) If the Tax Representative is required by law or regulation to incur fees and expenses in connection with tax matters not affecting each of the Members, then the Tax Representative may, in its reasonable discretion, seek reimbursement from those Members on whose behalf such fees and expenses were incurred or reduce the amount of distribution table to such Members.
(vi) The provisions of this Section 14.e shall survive the termination of the DAO or the termination of any interests in the DAO and shall remain binding on the Members for as long a period of time as is necessary to resolve with the Internal Revenue Service any and all matters regarding the federal income taxation of the DAO or the Members (relating to the operations of the DAO).
(a) Indemnification.
(i) The DAO is permitted, to the extent required by any applicable agreement, to indemnify the Service Providers to the DAO, including the Initial Service Provider and any liquidating trustee. Further, with respect to the disposition of DAO Investments and pursuant to any applicable transaction agreement, to the extent required, the DAO shall indemnify the buyers of DAO Investments in certain circumstances.
(ii) Except as expressly set forth in this ARTICLE XV, in the event that any Member initiates any Proceeding against the DAO and a judgment or order not subject to further appeal or discretionary review is rendered in respect of such Proceeding, as the case may be, such Member shall be solely liable for all costs and expenses related to the Proceeding.
(b) Limitation by Law. No provision of this Agreement shall be construed to provide for the indemnification for any liability to the extent (but only to the extent) that such indemnification
would be in violation of applicable law, but instead shall be construed so as to effectuate the provisions thereof to the fullest extent permitted by law.
(c) Waiver of Fiduciary Duties. To the fullest extent permitted by applicable law (including Section 18-1101 of the Act), notwithstanding any other provision of this Agreement or otherwise of applicable law, including any in equity or at law, no Member shall have any fiduciary duty to the DAO or any Member by reason of this Agreement or in its capacity as a Member, except that the Members shall be subject to the implied contractual covenant of good faith and fair dealing. The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of the Members otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of the Members.
Each Member acknowledges and agrees that: (a) certain information related to the DAO and the Members shall be disclosed due to the DAO’s reliance on the smart contracts operated by the Dapp and the [[Blockchain Name]] network to record, manage, and facilitate DAO Investments; and (b) Members may voluntarily disclose other information related to their identity and or voting history via the Dapp. Nevertheless, to maintain the privacy of those Members who do not wish to disclose their identity, unless agreed to in writing by the Members (other than the Member seeking to disclose such information) by Majority Vote, each Member agrees not to use (other than for purposes reasonably related to its Units in the DAO or for other matters required by law) or to disclose to any Person (other than such Member’s accountants, attorneys, and other professional advisors (including financial advisors) responsible for matters relating to the DAO who agree to be bound by the confidentiality provisions described in this Agreement or who are otherwise bound by professional obligations of confidentiality), and to keep confidential (i) the identity of any Member that has not voluntarily disclosed his, her, or its identity pursuant to the Dapp, and (ii) all other information provided to the Member or its Representatives with respect to the DAO that otherwise is not available via the Dapp.
Each Member does hereby constitute and appoint the Initial Service Provider as its true and lawful representative and attorney-in-fact, in its name, place, and stead to make, execute, sign, deliver, and file (a) the Certificate of Formation and any amendment thereof required because of an amendment to this Agreement or to effectuate any change in the membership of the DAO; (b) any amendment to this Agreement made in accordance herewith; and (c) all such other instruments, documents, and certificates that may from time to time be required by applicable law to effectuate, implement, or continue the valid and subsisting existence of the DAO or to dissolve the DAO; provided, that the power of attorney granted pursuant to this ARTICLE XVII may be used only if such use is consistent with the other provisions of this Agreement, including, without limitation, with respect to any amendment or waiver of this Agreement, which may be executed if (but only if) any prior approval required to be obtained under this Agreement shall have been obtained.
The power of attorney granted pursuant to this ARTICLE XVII is coupled with an interest and (x) shall survive and not be affected by the subsequent incapacity, disability, dissolution, termination, or bankruptcy of the Member granting such power of attorney or the Transfer of all or any portion of such Member’s Units in the DAO; and (y) extend to such Member’s successors, permitted assigns, and legal representatives.
(a) Amendments.
(i) Except as otherwise provided herein, the terms and provisions of this Agreement may be amended only with the prior written of Members acting by a Majority Vote. Notwithstanding the foregoing, (i) any provision of this Agreement requiring the written vote or consent of a percentage in interest of the Members greater than a Majority Vote may be amended only with such greater percentage-in-interest of the Members as is required by such provision; (ii) no amendment may adversely affect the Service Provider without the prior written consent of the Service Provider; and (iii) no amendment shall directly reduce or increase the Capital Commitment of any Member, without the written consent of such Member.
(ii) Notwithstanding the other provisions of this Section 18.a, the Initial Service Provider acting on behalf of the DAO and the Members may amend any provision of this Agreement: (i) to change the name of the DAO; (ii) to reflect changes in the Members of the DAO and the capital contributions or Capital Commitments by any Member in accordance with the terms of this Agreement; (iii) to make changes to ensure that the DAO shall not be treated as an association taxable as a corporation or a "publicly traded limited partnership" for U.S. federal income tax purposes; (iv) to ensure that the Service Provider Fees conform to any applicable requirements of law (whether pursuant to a requirement of the Securities and Exchange Commission or another regulatory authority, or otherwise); (v) to cure any manifest error or ambiguity in the terms of this Agreement, including amendments to correct typographical errors and/or eliminate ambiguities; (vi) to prevent the DAO from becoming an investment company required to be registered under the Investment Company Act; (vii) to accommodate the creation of any holding vehicle, AIV, or SPV for the purpose of facilitating DAO Investments, investments by Members, or otherwise in connection with the operations and affairs of the DAO; and (viii) to make any change required by any governmental body or agency or to comply with any applicable requirements of law that are deemed by the Service Provider to be for the benefit or protection of the Members as a whole.
(iii) The Service Provider shall furnish to all Members promptly upon adoption copies of any amendment to this Agreement, including by providing a copy via the Dapp.
(a) Notices.
(i) Subject to Section 5.b, all notices required to be delivered under this Agreement shall be effective only if sent by electronic mail or other form of electronic communication through the Dapp.
(ii) In computing the period of time for the giving of any notice, the day on which the notice is given shall be excluded, and the day on which the matter noticed is to occur shall be
included. If notice is given by electronic means, it shall be deemed given when sent; provided, that the sending party does not have reason to believe that such notice was not delivered.
(b) Further Assurance. Each Member agrees to perform all further acts and to execute, acknowledge, and deliver any document (including tax forms and information) that may reasonably be necessary to carry out the provisions of this Agreement.
(c) Interpretation. Unless otherwise indicated to the contrary herein by the context or use thereof:
(i) The words, "herein," "hereto," "hereof," and words of similar import refer to this Agreement as a whole and not to any particular section or paragraph hereof; words importing the masculine gender shall include the feminine and neutral genders, and vice versa; and words importing the singular shall include the plural, and vice versa.
(ii) Plural forms of singular defined terms shall have corresponding meanings and singular forms of plural defined terms shall have corresponding meanings.
(iii) The section headings contained in this Agreement are for reference purposes only and shall not affect the interpretation of this Agreement.
(iv) References to statutes or regulations include amendments and successor or replacement statutes or regulations.
(d) Severability. If any term or provision of this Agreement or any application of this Agreement shall be declared or held invalid, illegal, or unenforceable, in whole or in part, whether generally or in any particular jurisdiction, such provision shall be deemed amended to the extent, but only to the extent, necessary to cure such invalidity, illegality, or unenforceability, and the validity, legality, and enforceability of the remaining provisions, both generally and in every other jurisdiction, shall not in any way be affected or impaired thereby.
(e) Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, successors, permitted assigns, trustees, and legal representatives
(f) Creditors. None of the provisions of this Agreement shall be for the benefit of, or enforceable by, any creditor of any Member or of the DAO. No creditor who makes a loan to the DAO may have or acquire, as a result of making the loan, any direct or indirect interest in the profits, capital, or property of the DAO (other than as a result of being a secured creditor).
(g) Waiver. Any term or condition of this Agreement may be waived at any time by the party or parties entitled to the benefit thereof, but only by a writing signed by the party or parties waiving such term or condition. No waiver of any provision of this Agreement or of any right or benefit arising hereunder shall be deemed to constitute or shall constitute a waiver of any other provision of this Agreement (whether or not similar), nor shall any such waiver constitute a continuing waiver, unless otherwise expressly so provided in writing.
(h) Waiver of Partition; No Bill for DAO Accounting. Each Member hereby irrevocably waives any and all rights that it may have to maintain an action for partition of any of the DAO’s property. Each Member covenants that it shall not file a bill for DAO accounting.
(i) Governing Law; Jurisdiction; Venue. Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all of the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of Delaware, without giving effect to the principles of choice or conflicts of laws thereof that would require that this Agreement be governed by the laws of another state. Each of the parties hereto consents and agrees to the exclusive personal jurisdiction of any state or federal court sitting in Delaware, and waives any objection based on venue or forum non conveniens with respect to any action instituted therein, and agrees that any dispute concerning the conduct of any party in connection with this Agreement shall be heard only in the courts described above.
(j) Entire Agreement. This Agreement (including the exhibits hereto) supersedes any and all other understandings and agreements, either oral or in writing, among the parties with respect to the subject matter hereof and constitutes the sole agreement among the parties with respect thereto.
(k) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed and delivered by electronic transmission by each Member, including, without limitation, via the Dapp, and upon such delivery, the cryptographic key signature electronically on the [[Blockchain Name]] network shall be deemed to have the same effect as if the original signature had been delivered to the other party.
(l) Representation. Each Member acknowledges that this Agreement was prepared by counsel to the Service Provider and (a) its individual interests may be different than the interests of the DAO; and (b) it would be in each such Member’s best interest to retain its own counsel for the purpose of advising such Member with respect to this Agreement’s effect on such Member’s personal interests.
(m) Securities Laws Matters. THE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, STATE SECURITIES LAWS OR THE LAWS OF ANY COUNTRY OUTSIDE THE UNITED STATES. TO THE EXTENT THE UNITS ARE CLASSIFIED AS SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (A) ISSUANCE OF THE UNITS IS MADE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION AND (B) THE UNITS CANNOT BE SOLD, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED IN COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION THEREFROM. TRANSFER OF THE UNITS IS RESTRICTED PURSUANT TO THIS AGREEMENT. NO DIRECTED SELLING EFFORTS (AS DEFINED IN RULE 902 OF REGULATION S UNDER THE SECURITIES ACT) HAVE BEEN MADE BY ANY OF THE DAO, ANY OF ITS AFFILIATES OR ANY PERSON ACTING ON ITS BEHALF WITH RESPECT TO ANY UNITS THAT ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1903; AND NONE OF SUCH PERSONS HAS TAKEN ANY ACTIONS THAT WOULD RESULT IN THE SALE OF THE UNITS TO THE MEMBERS UNDER THIS AGREEMENT REQUIRING REGISTRATION UNDER THE SECURITIES ACT OF 1903. THE MEMBER MAKES THE FOLLOWING REPRESENTATIONS RELATED TO REGULATION S UNDER THE SECURITIES ACT: (I) IT IS NOT A “U.S. PERSON” AS THAT TERM IS DEFINED IN RULE 902 OF REGULATION S UNDER THE SECURITIES ACT OF 1903; AND RECEIVED ALL COMMUNICATIONS RELATING TO THE ISSUANCE OF THE SHARES, AND EXECUTED ALL DOCUMENTS RELATING THERETO, OUTSIDE THE UNITED STATES; AND (II) IT AGREES TO RESELL THE UNITS ONLY IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND FURTHER AGREES NOT TO ENGAGE IN HEDGING TRANSACTIONS WITH REGARD TO SUCH SECURITIES UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. THE TERM "REGULATION S" SHALL MEAN RULES 901 THROUGH 904, INCLUSIVE, UNDER THE SECURITIES ACT OF 1933, AS SUCH RULES MAY FROM TIME TO TIME BE AMENDED.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
[[DAO ENTITY NAME]] LLC
{{signature of Member}}
By: Name: [[Member Name]] Date of Signature: [[Effective Date]]
[Signatures of the Members Appear Separately]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
KALICO LLC d/b/a KALIDAO (“Initial Service Provider”)
{{signature of authorized representative}}
Name: [] Title: [_]
"Accounting Period" means the following fiscal periods: the initial Accounting Period shall commence on the day on which a Certificate of Formation is filed with the State of Formation. Each subsequent Accounting Period shall commence immediately after the close of the next preceding Accounting Period. Each Accounting Period shall close at the close of business on the first to occur of (a) the last day of a fiscal year of the DAO; (b) the day immediately preceding the effective date of the acceptance of a capital contribution from a new or existing Member, other than a capital contribution that is pro rata among all existing Members; (c) the day immediately preceding the grant of an interest in the DAO (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the DAO by an existing Member acting in the capacity of a Member or by a new Member acting in the capacity of a Member or in anticipation of being a Member; (d) the effective date of the partial or complete withdrawal of a Member; or (e) the date of the DAO’s liquidation.
"Additional Member" means each Member admitted or, solely with respect to any increase in its Capital Commitment, each Member increasing its Capital Commitment at any closing after the Initial Closing.
"Advisers Act" means the Investment Advisers Act of 1940, as amended.
"Affiliate" means, with respect to any Person, any other Person controlling, controlled by, or under common control with such Person; in such context, "control" means the possession, directly or indirectly, of the power to direct the management or policies of another, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Limited Liability Company Agreement of the DAO. "AIV" has the meaning ascribed to that term in Section 6.a. "Business Day" means each day other than a Saturday, Sunday, or day on which banking institutions in the City of New York, New York, are required or permitted by law to remain closed.
"Capital Account" means, with respect to any Member, the amount of such Member’s initial capital contribution, increased or decreased as provided in this Agreement.
"Capital Commitment" means, with respect to any Member at any time, the amount specified as such Member’s Capital Commitment at the time such Member was admitted to the DAO (adjusted as provided in this Agreement including in connection with any increase in such Member’s Capital Commitment pursuant to Section 3.e.i), which amount shall be recorded and evidenced on the [[Blockchain Name]] network.
"Certificate of Formation" means the Certificate of Formation of the DAO filed with the State of Delaware, as it may be amended.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"DAO" means [[DAO Entity Name]] LLC, a Delaware limited liability company (together with the decentralized organization, [[DAO Name]], rooted on the [[Blockchain Name]] with chainId:[[ChainId]], at the public key [[DAO Public Key]].
"DAO Expenses" has the meaning ascribed to that term in Section 8.b.i.
"DAO Investment" means any investment made by the DAO, including Temporary Investments and investments in any underlying Portfolio Project.
"Dapp" means Kali, an online portal or other interactive software offered and maintained by the Initial Service Provider and its Affiliates, utilized by the DAO to deploy and operate the smart contract based democratically managed organization and where applicable, such Dapp may include additional services offered by other Service Providers and managed by the Initial Service Provider.
"Delaware Act" has the meaning ascribed to that term in Section 2.a.
"Depreciation" has the meaning ascribed to that term in the definition of "Profits and Losses." "Designated Individual" has the meaning ascribed to that term in Section 14.e.i. "Distributable Proceeds" means all cash or cryptocurrency received by the DAO that is attributable to any DAO Investment that has not previously been distributed to the Members (including payments of interest, dividends, and principal, and proceeds from the sale of any DAO Investment), and any other cash or cryptocurrency that the Initial Service Provider determines is otherwise available for distribution to the Members after the payment of, provision for payment, or reserve for payment, by the DAO of all expenses incurred by the DAO in connection with disposing of such DAO Investment (including, but not limited to brokers’ fees and other selling expenses) and in collecting any amounts then owed to the DAO and so attributable. In addition, Distributable Proceeds shall also include any DAO Investments that the Members acting by Majority Vote determine to distribute in kind.
"Dragging Members" has the meaning ascribed to that term in 13.e.i.
"Drag Along Member" has the meaning ascribed to that term in Section 13.e.i. "Drag Along Percentage" has the meaning ascribed to that term in Section 13.e.i. "Drag Along Sale" has the meaning ascribed to that term in Section 13.e.i. "Drag Along Transaction" has the meaning ascribed to that term in 13.e.iii. "ERISA" has the meaning set forth in Section 4.d. "Gross Asset Value" has the meaning ascribed to that term in Section 10.b. "Initial Closing" means the first date on which Members are admitted to the DAO. “Initial Service Provider” means KaliCo LLC d/b/a KaliDAO, the operator of the Dapp. "Investment Company Act" means the Investment Company Act of 1940, as amended.
"Majority Vote" means the approval of Members holding at least a majority-in-interest, i.e. 50% or more, of all Units.
"Member" means each Person executing this Agreement as a member or subsequently admitted as a member pursuant to the terms of this Agreement to acquire Units in the DAO, but does not include any Person that has ceased to be a Member of the DAO. If at any time there is only one Member, then all references to "Members" shall be deemed to mean "Member."
"Membership Interest" means the entire interest of a Member in the DAO, including, without limitation, rights to distributions (liquidating or otherwise), allocations, information, and any right to vote on, consent to, or otherwise participate in any decision or action of or by the Members granted by this Agreement or the Delaware Act.
"Organizational and Offering Expenses" has the meaning ascribed to that term in Section 8.a. "Ownership Percentage Restriction" has the meaning ascribed to that term in Section 3.f. "Partnership Audit Rules" means the provisions of Subchapter C of Chapter 63 of the Code, as revised by Section 1101 of the 2015 Budget Act, as such provisions may thereafter be amended and including U.S. Treasury Regulations or other guidance issued thereunder.
"Partnership Representative" has the meaning provided to such term in the Partnership Audit Rules.
"Person" means an individual, corporation, association, partnership, joint venture, limited liability company, estate, trust, or any other legal entity.
"Portfolio Project" means an entity in which the DAO has made a DAO Investment. "Potential DAO Investment" has the meaning ascribed to such term in Section 5.b.i. "Potential DAO Investment Notice" has the meaning ascribed to such term in Section 5.b.ii. "Proceeding" means any action, claim, suit, investigation, or proceeding by or before any court, arbitrator, governmental body, self-regulatory agency, or other agency.
"Profits and Losses" means, for each Accounting Period, an amount equal to the DAO’s taxable income or loss for such Accounting Period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
Income that is exempt from federal income tax and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss.
Any expenditures of the DAO described in Code Section 705(a)(2)(B), or that are treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profits and Losses pursuant to this definition, shall be subtracted from such taxable income or loss.
If the Gross Asset Value of any asset is adjusted pursuant to Section 9.b or Section 9.c, 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 and Losses.
Gain or loss resulting from any disposition of assets 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 assets disposed of (as adjusted under this Agreement), notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value.
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 Accounting Period as defined hereinafter. For such purposes "Depreciation" means, for each Accounting Period, an amount equal to the depreciation, amortization, or other cost-recovery deduction allowable with respect to an asset for such Accounting Period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Accounting Period, Depreciation shall be any amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost-recovery deduction for such Accounting Period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost-recovery deduction for such Accounting Period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the DAO.
To the extent an adjustment to the adjusted tax basis of any asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the DAO, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Profits and Losses.
Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to Section 11.a shall not be taken into account in computing Profits and Losses. The amounts of the items of DAO income, gain, loss, or deduction available to be so specially allocated shall be determined by applying rules analogous to those set forth in this definition.
The DAO’s distributive share of any Profits and Losses (as defined herein) from any partnership (including any limited liability company or other entity treated as a partnership for tax purposes) in which it holds an interest, adjusted to avoid taking into account any items otherwise reflected in the DAO’s Profits and Losses, shall be included in the DAO’s Profits and Losses.
"Proposing Member" has the meaning ascribed to that term in Section 5.b.i.
"Representative" means an authorized member, manager, officer, director, partner, employee, or agent.
"Service Provider" means any Person appointed by the Members acting by a Majority Vote as the Service Provider of the DAO and shall include the term Initial Service Provider (as the context may require).
"Service Provider Fee(s)" means a fee paid by the DAO to the applicable Service Provider in consideration of the services rendered by the Service Provider to the DAO, as agreed to separately by and between the Members and the applicable Service Provider for such services, as set forth in the applicable Service Provider Agreement.
"SPV" has the meaning ascribed to that term in Section 6.a.
"Subscription Agreement" means, with respect to any Member, the agreement executed by the Member and accepted by the Service Provider, through which the Member subscribes for Units.
"Tag Along Percentage" has the meaning ascribed to that term in Section 13.f.i. "Tag-Along Rights" has the meaning ascribed to that term in Section 13.f.i. "Tag Offeror" has the meaning ascribed to that term in Section 13.f.i. "Tag Purchaser" has the meaning ascribed to that term in Section 13.f.i. "Tagging Member" has the meaning ascribed to that term in Section 13.f.i. "Tax Representative" has the meaning ascribed to that term in Section 14.e.ii. "Temporary Investments" has the meaning ascribed to that term in Section 5.a. "Term" has the meaning ascribed to that term in Section 2.f. "Transfer" has the meaning ascribed to that term in Section 13.a. "Transfer Expenses" has the meaning ascribed to that term in Section 13.b. "Treasury Regulations" means the regulations promulgated by the U.S. Department of the Treasury under the Code, as amended.
"Undeployed Capital" means, with respect to a Member, (i) the amount of capital contributions made by such Member less (ii) (A) the amount of capital contributions made by such Member that have been invested in a DAO Investment or that have been committed to a DAO Investment that has been approved by the Members (i.e., if such DAO Investment has been approved by the Members pursuant to Section 5.b.ii and such capital contributions have not yet been paid over or transferred to facilitate a DAO Investment or an applicable Portfolio Project or seller, or used to pay expenses in connection with such DAO Investment), plus (B) the amount of capital contributions made by such Member that have been expended by the DAO to pay DAO Expenses, plus (C) the amount of capital contributions made by such Member that have been reserved to pay DAO Expenses pursuant to Section 8.c.
"Withdrawal Date" has the meaning ascribed to that term in Section 7.a.i.