Mountain Bred, LLC
OPERATING AGREEMENT
_____________________________________________________________________
This Limited Liability Company Operating Agreement is for the Mountain Bred, LLC, organized under the laws of the state of West Virginia, by the filing of its organizational documents on March 27, 2008.
The parties to this agreement agree to operate a limited liability company under the following terms and conditions:
1. Company Office and Registered Agent: The members have the power to determine the
location of the limited liability company’s principal place of business. The members also have
the power to designate the limited liability company’s registered agent who may be a member.
The company’s principal place of business shall be: RR 4 Box 932, Salem, WV 26426-8917.
The name and address of the company’s Registered Agent shall be: Steven J. Garvin, RR 4
Box 932, Salem, WV 26426-8917.
2. Initial Membership: The initial members of the company and their addressed are as follows:
Mountainbred Equine Group, Inc. Steven J. Garvin
RR 4 Box 932 RR 4 Box 932
Salem, WV 26426-8917 Salem, WV 26426-8917
3. Initial Membership Interest: For accounting purposes, the total number of membership
interests shall be 21,000,000. The membership interests shall be numbered from 1. to
21-000-000. Each member’s proportionate share of the profit and loss from the LLC shall
be calculated by the total number of membership interests owned by each member.
4. Liability of Members and Managers: No members or managers of the limited liability
company shall be personally liable for any debts, obligations, expenses, liabilities, or any
claims made against the company.
5. Tax Treatment of Company: The members of the limited liability company elect to have
the company treated as a partnership for state and federal income tax purposes. The members
agree to execute and file any documents necessary to secure this tax treatment.
6. Contributions and Start-Up Capital: The start-up capital will be a total of $200.00. Each
member of the limited liability company agrees to contribute the following property, services,
other agreements, or cash to this total amount:
Name Cash/Services/Property Value Date of Delivery
Mountainbred Equine Group, Inc. ______ Cash_________ $100.00 3/17/09___
Steven J. Garvin Cash $100.00 3/17/09___
7. Other Agreements: Mountainbred Equine Group, Inc. has licensed to Mountain Bred, LLC
all of its rights to build, operate, maintain and collect profits for the project known as: The
Horse Theme Park/Attraction. Steven J. Garvin has licensed all of his rights to Mountain
Bred, LLC to build, operate, maintain and collect profits for his patent pending invention,
The Garvin Power Turbine Wheel.
8. Additional Contributions: If additional capital is required by the limited liability company,
and is determined by a unanimous vote of the members, then each member shall be required
to contribute such additional capital in proportion to each member’s interest in the limited
liability company, as set forth in this agreement.
9. Failure to Make Contributions: If any member shall fail to make his or her initial or
additional contributions as indicated by this agreement, any amendment to this agreement,
or any additional agreement between the members, then this company shall continue as a
limited liability company of only those members who have satisfied his or her contribution
requirements. Any member who has failed to satisfy his or her contribution requirements
will not be a member of this limited liability company. Each member who has made a
contribution shall then be entitled to a share of the limited liability company’s profits and
losses in proportion to his or her interest in the limited liability company as set forth in this
agreement. If any additional limited liability company contributions are necessary, such
additional contributions shall be determined by the remaining members as specified under the
terms of this agreement regarding additional contributions.
10. Interest on Capital Contributions: No interest shall be paid to any member for any
capital contributions.
11. Loans to Limited Liability Company: In addition to capital contributions, the members
may make loans to the limited liability company.
12. Share of the Limited Liability Company: Each member’s proportionate share of the
profits and losses of the limited liability company shall be as follows:
Member’s Name Share of Profits Share of Losses
Mountainbred Equine Group, Inc. 51% 51%____
Steven J. Garvin 49% 49%____
13. Distribution of Profits and Losses: Any profits or losses of the limited liability company
shall be determined and distributed to the members on an annual basis according to his or
her proportionate share of the profits and losses of the limited liability company. However,
the limited liability company shall retain enough capital for the next year’s operating
expenses, debt servicing, and reinvestment in the limited liability company.
14. Management: The management of the limited liability company shall be exclusively
Manager-managed. The manager shall have the right to manage the limited liability
company. All limited liability company decisions shall be made by a majority vote, except
the following major decisions, which must be decided by a unanimous vote as referenced in
West Virginia Code, Chapter 31B, Uniform Limited Liability Company Act.
15. Manager(s)’ Authority: One or more managers may be selected under the terms of this
Agreement. The manager(s) shall have the authority to conduct the day-to-day business of
limited liability company, without consultation with the other members. This shall include
hiring and firing of employees, signing limited liability checks, withdrawing funds from
limited liability accounts, borrowing up to the amount of $100,000.00, and maintaining the
books and records of the limited liability company. The manager(s) shall not have the
authority to make major decisions for the limited liability company that require a unanimous
approval of the members required by this agreement.
16. Date and Time of Annual Members’ Meeting: The annual limited liability meeting will
be held on May 1st of every year at 10:00 a.m. This meeting is for the purpose of assessing
the current status of the limited liability company and transacting any necessary business.
If this day is a legal holiday, the meeting will be held on the following day.
17. Place of Members’ Meeting: The place for the meeting will be the principal office of
the limited liability company.
18. Members’ Quorum: A quorum for a members’ meeting will be a majority of the
members. Once a quorum is present, business may be conducted at the meeting, even
if members leave prior to adjournment.
19. Members’ Proxies: At all meetings of members, a member may vote by signed proxy
or by power of attorney. To be valid, a proxy must be filed with the limited liability
company prior to the time of the stated meeting. No proxy may be valid for more than
eleven months, unless the proxy specifically states otherwise. Proxies may also be revoked
prior to the meeting for which it is intended. Attendance at the meeting for which a proxy
has been authorized always revokes the proxy.
20. Members Voting: A majority vote of the membership interests will be sufficient to
decide any matter, unless a greater number is required by this Agreement or by state law.
Adjournment shall be by majority vote of those shares entitled to vote.
21. Members Consent Agreements: Any action that may be taken at a company meeting may
be taken instead without a meeting if an Agreement is consented to, in writing, by all
members who would be entitled to vote.
22. Powers of the Members: The members will, jointly, have all powers available under state
law, including the power to appoint and remove managers and employees; the power to
change the offices, the power to borrow money on behalf of the limited liability company,
including the power to execute any evidence of indebtedness on behalf of the limited
liability company; and the power to enter into contracts on behalf of the limited liability
company. Such powers may be exercised by a single member, only upon the unanimous
approval of all of the members.
23. Fiduciary Duty of Members and Managers: Each member and manager owes a
fiduciary duty of good faith and reasonable care with regard to all actions taken on behalf
of the limited liability company. Each member and manager must perform her/his duties
in good faith in a manner that he/she reasonably believes to be in the best interest of the
limited liability company, using ordinary care and prudence.
24. Accounting Matters: The limited liability company will maintain accounting records
that will be open to any member for inspection at any reasonable time. These records will
include separate income and capital accounts for each member. The accounting will be
on the cash basis and fiscal year basis. The capital account of each member will consist of
no less than the value of the property, cash or services and the membership interest owned
as a result of the contributions that the member shall have contributed with his or her initial
or additional contributions to the limited liability company.
25. Bank Account: The limited liability company will maintain a business checking account
at Harrison County Bank, Lost Creek, West Virginia.
26. Loans to Managers or Members: The limited liability company may not lend any money
to a manager or member of the limited liability company unless the loan has been approved
by a majority vote of all members of the limited liability company.
27. Draws to Members: All members are entitled to semi-annual draws from the expected
profits of the limited liability company. The draws will be debited against the income
of the member. The amount of the draws shall be determined by a majority vote of the
members.
28. Salaries to Members: No members are eligible to be paid salaries for any work or
services they perform in the limited liability company businesses, unless such work is
in the capacity of the manager. All other work or services shall be considered as
contributions to the company.
29. Expense Account: No member shall have an expense account. Reimbursement for
business expenses may be made by a majority vote of the members. Each member shall
provide the limited liability company with a written record of such expenses in order to
obtain reimbursement.
30. Transfer of Limited Liability Company Interests: A member may transfer all or part
of his or her interest in the limited liability company to any other party only with unanimous
consent of the initial members and the following conditions. The transferee must become a
member of the limited liability company by contributing cash, services or property with a
value of $100.00 per membership interest to the limited liability company. The initial
member transferring all or part of his or her membership interest cannot transfer his right to
the new member to vote in new members unless he transfers all of his or her membership.
The new member shall be required to follow and be legally bound by the operating
agreement and West Virginia Code, 31B-5-503 (b). The amount of membership interest
transferred by the initial member shall be deducted from the initial member’s capital account
and transferred to the new member’s capital account. All transferred membership interest
shall be referred to by their numbered membership interest (between 1. and 21-000-000.) for
accounting purposes. A membership application form must be filed with the limited liability
company.
31. Expulsion of a Member: A member may be expelled from a limited liability company
at any time by the unanimous consent of the other members. Upon expulsion, the expelled
member shall cease to be a member and shall have no interest, rights, authority, power of
ownership in the limited liability company or any limited liability property. The expelled member
shall be entitled to receive value for his or her interest in the limited liability company as
determined by the terms of this Agreement or by West Virginia state law. The limited liability
company shall continue in business, without interruption, without the expelled member.
32. Automatic Expulsion of a Member: A member is automatically expelled from the limited
liability company at any time upon the occurrence of any of the following:
a. A member files a petition for or becomes subject to an order for relief under the Federal
Bankruptcy Code.
b. A member files for or becomes subject to any order for insolvency for any state law.
c. A member makes an assignment for the benefit of creditors.
d. A member consents to or becomes subject to the appointment of a receiver over a
substantial portion of his or her assets.
e. A member consents to or becomes subject to an attachment or execution of a substantial
portion of his or her assets.
On the date of any of the above events, the expelled member shall cease to be a member and
shall have no interest, rights, authority, power, or ownership in the limited liability company
or any limited liability company property. The expelled member shall be entitled to receive
value for his or her interest in the limited liability company as determined by the terms of this
Agreement or by West Virginia state law. The limited liability company shall continue in
business without interruption, without the expelled member.
33. Limit on Remedies of Expelled Member: The expulsion of a member shall be final and
shall not be subject to mediation, arbitration, or review of any court of jurisdiction.
34. Insurance: The members may decide by majority vote, at the annual meetings, if any
member or manager should be covered by a life insurance policy. All terms and conditions
regarding the life insurance policy shall be decided at the annual meetings.
35. Mediation or Arbitration: Except as otherwise provided by this Agreement, the members
agree that any dispute arising related to this Agreement will be settled by voluntary
mediation, if possible. The mediator or arbitrator shall be chosen by the majority vote of
the members. All costs of mediation will be shared equally, by all members involved in
the dispute.
36. Admission of a New Member: A new member may be admitted to the limited liability
company only by unanimous consent of the initial members. Admission of a new member
shall not cause the termination of the original limited liability company entity, but the
company shall continue with the additional member.
37. Responsibility of the New Member: Any new member to the limited liability company
shall be issued a certificate stating the new member’s name, number of membership interests
owned and with the signature of the manager of the limited liability company.
38. Withdrawal from Limited Liability Company: If any member withdraws from the
limited liability company for any reason (including the death or disability of the member),
the limited liability company shall continue and will be operated by the remaining members.
The withdrawing member or his or her personal representative will be obligated to sell his or
her interest to the remaining members and the remaining members will be obligated to
buy that interest. The value of the withdrawing member’s interest will be his or her
proportionate share of the total value of the limited liability company. If necessary, the
total value of the limited liability company will be assessed by an independent appraisal
made within 90 days of the member’s withdrawal. The cost of the appraisal will be shared
equally by all members, including the withdrawing member.
39. Agreement Not to Compete: During or after the operation of the limited liability
company, each member may engage in any other business activities, as long as, such
activities do not include any trade secret or proprietary information of the limited liability
company.
40. Termination of the Limited Liability Company: The limited liability company may be
terminated at any time by unanimous consent of the members. Upon termination, the
members agree to apply the assets and money of the limited liability company in the
following order:
a. To pay all of the debts and obligations of the limited liability company.
b. To distribute the members’ income accounts to the members in his or her proportionate
share.
c. To distribute the members’ capital accounts to the members in his or her proportionate
share.
d. To distribute any remaining assets to the members in his or her proportionate share.
41. Amendments to the Operation Agreement: This Operating Agreement may be amended
in any manner by a majority vote of the members.
42. Amendments to the Mountain Bred, LLC: The Articles of Organization may be
amended in any manner by a unanimous vote of the members.
43. General Provisions: This Agreement binds and benefits all members and any successors
inheritors, assigns, or representatives of the members. Time is of the essence of this
Agreement. This document is the entire Agreement between the members. Any attached
papers that are referred to in this Agreement are part of this Agreement. Any alleged oral
agreements shall have no force or effect. This Agreement is governed by the laws of the
state of West Virginia. If any portion of this Agreement is held to be invalid, void, or
unenforceable by any court of law of competent jurisdiction, the rest of this Agreement
shall remain in full force and effect.
