IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION BOW & TRUSS LLC, Plaintiff, Case No. 17 L 1160 3 v. : Judge James E. Snyder MARCUS LEMONIS and ML FOOD GROUP, LLC, Defendants. a MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ SECTION 2-619.1 MOTION TO DISMISS PLAINTIFF’S COMPLAINT. Defendants Marcus Lemonis and ML Food Group, LLC (“ML Foods” and together with Mr. Lemonis, the “Defendants”), by their attorneys, submit their Memorandum of Law in support of their Section 2-619.1 motion to dismiss. INTRODUCTION Plaintiff Bow & Truss, LLC (“Bow é& Truss”) and Defendant ML Foods entered into a Letter of Intent (“LOI”) in connection with ML Foods’ potential acquisition of Bow & Tru assets. Bow & Truss—having failed to run a successful business and having failed to fraudulently induce ML. Foods to ‘out—now seeks to blame everyone but itself for its own mismanagement. In its Complaint, Bow & Truss asserts scurrilous allegations against the Defendants in a eraven attempt to find a source of finds to stabilize its faltering business. ‘This Court should not countenance Bow & ‘Truss’ attempt to turn the judicial system into a market where it can hedge its deal with ML Foods by claiming fraud when the deal does not turn out as anticipated. Bow & Truss’ claims against Defendants are either negated by affirmative matter or are legally insufficient to state valid claims. Bow & Truss cannot enforce the LOI because it was notexecuted by someone with authority to bind Bow & Truss. Bow & Truss also fails to specifically allege facts to support its conclusory allegations of fraud, consumer fraud, and tortious interference. Finally, Bow & Truss’ breach of fiduciary duty claim against Mr. Lemonis is absurd on its face—Mr. Lemonis was never an officer, director, shareholder, or member of Bow & Truss and never owed Bow & Truss any fiduciary duties. Bow & Truss cannot foist fiduciary duties onto Mr, Lemonis when none exist. ML Foods ceased further negotiations contemplated by the LOI after it discovered that the financial and other information Bow é& Truss provided about its business was materially inaccurate and downright fraudulent. Among other things, Bow & Truss’ actual debt grossly exceeded the amounts it represented to ML Foods; Bow & Truss was in default on most, if not all, of the leases for its coffee shops; Bow & Truss did not even own all the property in its own coffee shops; and Bow & Truss apparently skimmed money from its employees to cover its expenses, Thus, regardless of the outcome of Defendants’ motion, Defendants will pursue counterclaims and third-party claims against Bow & Truss and Mr. Tadros based upon their fraudulent conduct, Defendants also reserve their rights to seek sanctions pursuant to Illinois Supreme Court Rule 137. RELEVANT ALLEGATIONS On or about December 15, 2016, Bow & Truss and ML Foods entered into the LOT to discuss and negotiate the potential purchase of Bow & Truss’ assets. (Compl. 45.) The LOI was executed on Bow & Truss’ behalf by Philip Tadros as “Owner.” (Compl. at Ex. 1.) That same day, Mr. Lemonis announced that ML Foods had purchased Bow & Truss and that Mr. Lemonis was the CEO. (Id. at $17.) The LOI, however, contained no binding obligation on the part of Bow & Truss or ML Foods to consummate the proposed transaction. (Id. at 48.) At the time the parties entered into the LOI, Bow & Truss was having significant cashflow issues and needed an immediate infusion of funds to remain in business. (Compl. { 13.) Among other things, Bow & Truss represented that it owed $2.3 million in debt. (Jd. at Ex. 1 Outline of Basic Transaction Terms and ‘Conditions, 3.) Given Bow & Truss’ dire financial predicament, an ML Foods’ affiliate advanced $97,000 to Bow & Trust, and on or about December 29, 2016, Bow & Truss requested an additional $180,000. (Id, at $915, 18.) Defendants refused to make this second advancement without consideration, and Bow & Truss was unable to make payroll on a timely basis. (Id. at $9 19-21.) Bow & Truss alleges that, prior to the termination of the LOI, Defendants met with Bow & Truss’ employees and contacted Bow & Truss’ landlords, (Compl. §§11-12.) After Defendants conducted due diligence, and after Bow & Truss requested additional advancements of money, Defendants reported that they were no longer interested in consummating the proposed transaction because, among other things, Bow & Truss had failed to disclose all liabilities, and Defendants had uncovered financial irregularities and mismanagement, (Id. at 9923-24.) Bow & Truss alleges that Defendants made such comments to embarrass and harm Bow & Truss and to depress the purchase price. (Id. at § 30.) Bow & Truss further alleges that, on January 12, 2017, its employees walked out, and Bow & Truss closed its retail stores for one week. (Compl. § 33.) By January 23, 2017, Defendants announced that they were bringing their Los Angeles, California coffee business to Chicago rather than purchase Bow & Truss’ assets and that, because Bow & Truss was behind in its payroll, Defendants would have jobs available. (/d. at 439.) STANDARD OF REVIEW Defendants move to dismiss Bow & Truss’ Complaint pursuant to Section 2-619.1. See 735 ILCS 5/2-619.1 (“Motions with respect to pleadings under Section 2-615 [and] motions under Section 2-619 ... may be filed together as a single motion in any combination.”)‘A motion under Section 2-619(a)(9) seeks dismissal because the claim is “barred by other affirmative matter avoiding the legal effect of or defeating the claim.” 735 ILCS 5/2-619(a)(9), “An affirmative matter within the meaning of [Section 2-619(a)(9)] is ‘something in the nature of a defense that negates an alleged cause of action completely ....”” In re Bajonski, 129 Ill. App. 3d 361, 365 (Ist Dist. 1984) (citations omitted); see also Cove Mgmt. v. AFLAC, Inc., 2013 IL App (Ist) 120884, $29 (affirming 2-619(a)(9) dismissal where undisputed facts established lack of authority to execute lease on behalf of defendant), “A section 2-619 motion to dismiss admits the sufficiency of the complaint, but asserts a defense outside the complaint that defeats it.” Patrick Eng'g, Inc. v. City of Naperville, 2012 IL 113148, {31 (2012); see also Bloomingdale State Bank v. Woodland Sales Co., 186 Ill, App. 3d 227, 232 (2d Dist. 1989) (court may consider “the pleadings, affidavits and deposition evidence” when ruling on a Section 2-619 motion). ‘A Section 2-615 motion attacks the legal sufficiency of the Complaint. Hirsch v. Fewer, 299 Ill. App. 3d 1076, 1081 (Ist Dist. 1998), To avoid dismissal, Bow & Truss must “allege facts sufficient to bring [its] claims within the scope of the cause of action asserted.” Jd. While “all well-pleaded facts in the complaint are taken as true,” Bow & Truss “cannot rely simply on mere conclusions of law or fact unsupported by specific factual allegations.” Jd “[I]f after deleti ig the conclusions that are pleaded there are not sufficient allegations of fact which state a cause of action against the defendant, the motion must be granted ....” Knox College v. Celotex Corp., 88 Ill. 2d 407, 424, 426 (1982). ARGUM! Bow & Truss asserts five claims against Defendants: (1) breach of the LOI (Count I); (2) common law fraud (Count I); (3) consumer fraud (Count IID; (4) tortious interference (Count IV); and (5) breach of fiduciary duty (Count V). As set forth below, each of these claims should be dismissed with prejudice.I, THE LOUIS UNENFORCEABLE AS A MATTER OF LAW ‘This Court should dismiss Count I of Bow & Truss’ Complaint under Section 2-619(a)(9) because the LOI is not an enforceable agreement. Bow & Truss seeks to recover the $162,500 break-up fee set forth in the LOI because ML Foods allegedly “discontinued good faith discussions” with Bow & Truss prior to the LOI’s termination date. (Compl. $¥ 40, 42.) The LOI was executed by Phillip Tadros, “Owner,” on behalf of Bow & Truss: ‘ACCEPTED AND AGREED: Bow & Truss, LLC _o Nassar Pip Tadios Tide: Owner (Compl. Ex. A.) Mr, Tadros, however, was not authorized to bind Bow & Truss to @ contract. (See Bow & Truss’ Sixth Amended and Restated Limited Liability Company Agreement (the “Operating Agreement”), attached hereto as Exhibit A; Secretary of State Filings, attached hereto as Exhibit B,) Under the Operating Agreement, only the Manager—Funded Foods, LLC or Doejo LLC—had such authority, (Ex. A, Operating Agreement at $5.2; Ex. B.) It is well-settled that a “contract executed by a party that does not have authority is void ab initio.” Alliance Property Management, Ltd. v. Forest Villa of Countryside Condominitun Assoc., 2015 IL (Ist) 150169 29. And, when a contract is void ab initio, “it is as if it never existed.” Id; see also Rudnitsky v, Rudnitsky, C.A. No. 17446, 2000 Del. Ch. LEXIS 165, *15 (Del. Ch. Nov. 14, 2000 (agreements executed without authority were void ab initio). Bow & Truss cannot, as a matter of law, seek to enforce any provision of the void LOT it never properly executed and, consequently, cannot recover the break-up fee against ML Foods.Il. BOW & TRUSS FAILS TO PLEAD FRAUD WITH PARTICULARITY This Court also should dismiss Bow & Truss’ fraud claim (Count I1) pursuant to Section 2-615 because it fails to set forth sufficient facts to state a claim. And, given that Bow & Truss readily admits that it was int financial trouble—ineluding cash flow and payroll issues—Bow & Truss would be hard-pressed to amend its fraud claim with the necessary allegations. After all, Ilinois courts are not a futures market that permits businesses to hedge their deals by claiming fraud when the deal does not turn out as anticipated. To sustain a cause of action for fraud, Bow & Truss must plead each of the following elements with specificity: “(I) a false statement of material fact; (2) known or believed to be false by the party stating it; (3) intent to induce the other party to act; (4) action in reliance by the other party; and (5) damage as a result of that reliance.” Hirsch, 299 Ill. App. 3d at 1085. “The facts which constitute an alleged fraud must be pleaded with specificity and particularity, including ‘what misrepresentations were made, when they were made, who made the misrepresentations and to whom they were made.” Prime Leasing, Inc. v. Kendig, 332 Ill. App. 3d 300, 309 (Ist Dist. 2002) (citation omitted); see also Dloogatch v. Brincat, 396 Ill. App. 3d 842, 847 (Ist Dist. 2009) (citing Board of Education v. A, C & S, Inc., 131 IN. 2d 428, 457 (1989)) (“our supreme court has held that common law fraud demands a ‘higher standard’ when it comes to pleading”), Bow & Truss’ allegations fail to meet these pleading requirements. AL There Was No False Statement of Material Fact Bow & Truss fails to specifically allege a false statement of material fact. Bow & Truss alleges that Defendants “represented orally and in writing that they were interested in purchasing the plaintiff for the terms set forth in the LOI,” but “never intended to purchase the plaintiff on the terms set forth in the LOI.” (Compl. $45, 47.) This purported representation—about some future act—cannot constitute fraud. See Bank of Lincolnwood v. Comdisco, Ine., 111 Il. App. 3d822, 828 (Ist Dist. 1982) (a “promise to perform an act, though accompanied at the time with an intention not to perform it, is not such a false representation as will constitute fraud”). Bow & Truss also fails to support its conclusory allegations of Defendants’ purported “fraudulent scheme.” Instead, Bow & Truss relies solely on conclusions in an attempt to show that Defendants sought to undermine and destroy Bow & Truss. As Bow & Trust admits, however, it was in deep financial trouble and could not even make payroll. (Compl. 21.) And, only after Bow & Truss was unable to make payroll, closed its retail stores for a week, and failed to disclose liabilities to Defendants, (Compl. # 24, 33), Defendants refused to consummate the proposed transaction. This Court “is not required to reach unreasonable and unwarranted conclusions or to draw unreasonable and unwarranted inferences in order to sustain the sufficiency of the complaint,” but should view “those facts against the background of common sense and experience.” Butitta v. First Mortgage Corp., 218 Ill. App. 34 12, 15 (Ist Dist. 1991); see also Bank of Lincolnwood, 111 Ill. App. 3d at 829 (“To sustain unsupported allegations of a plan or scheme as sufficient .,. would only invite this type of pleading every time multiple parties, who are jointly obligated under a contract, elect not to perform. B. The Allegations Do Not Show That Defendants Knew The Representations Were False or That Bow & Truss Relied Bow & Truss also fails to allege specific facts to support its conclusory allegations that Defendants knew or believed such representations were false when made, or that Bow & Truss relied on such representations, Instead, Bow & Truss merely alleges that “defendants never intended to purchase the plaintiff on the terms set forth in the LOI,” but sought to “gain access for the purpose of undermining or destroying the plaintiff” (Compl. {¥ 46-47.) These conclusory allegations are insufficient to state a fraud claim. See Small v. Sussman, 306 Ill. App.3d 639, 646 (Ist Dist. 1999) (“Conclusory allegations will not substitute for well-plead facts.”) Bow & Truss, moreover, could not have relied on Defendants’ purported representations because it admits that “there was no binding obligation on the part of the plaintiff ... to consummate the purchase and sale of the plaintiff.” (Compl. § 8.) Without sufficient facts to support its conclusory allegations, Bow & Truss has not (and cannot) state a valid fraud claim. Il. BOW & TRUST CANNOT STATE A VALID CONSUMER FRAUD CLAIM This Court also should dismiss Bow & Truss’ Consumer Fraud claim (Count Ill) pursuant to Section 2-615, Bow & Truss is not a consumer under the Consumer Fraud and Deceptive Business Practices Act (the “Act”), 815 ILCS 505/1 ef seg., and Bow & Truss fails to sufficiently allege the essential elements of its claim. “To state a claim under the Act, a complaint must set forth specific facts showing: (1) a deceptive act or practice by the defendant; (2) the defendant's intent that the plaintiff rely on the deception; (3) the deception occurred in the course of trade or commerce; and (4) the consumer fraud proximately caused the plaintiff's injury.” Phillips v. DePaul University, 2014 IL App (Ast) 122817, $0. A. Bow & Truss Is Not a Consumer Entitled to Relief Bow & Truss is not entitled to relief under the Act. “Under the Act, a consumer is defined as ‘any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household.” Prime Leasing, Inc., 332 Ill. App. 3d at 313 (quoting 815 ILCS $05/1), Bow & Truss, however, was attempting to sell its assets to Defendants; it was not attempting to purchase merchandise for its use, and cannot be a “consumer” entitled to relief. See id. (“Prime, as the lessor, sold its services to Ben Franklin; it was not a consumer and, as such, cannot be granted relief under the Act.”)B. Even If Bow & Truss Is a Consumer, It Fails to Plead a Consumer Fraud Claim Bow & Truss fails to allege that Defendants intended for if to rely on any purportedly deceptive acts, that it was actually deceived, or that any deceptive act proximately caused its alleged damages. Defendants’ purported “public announcement that they had purchased the plaintiff and that Mr. Lemonis was CEO” could not have deceived Bow & Truss, nor could the Defendants’ have intended for Bow & Truss to rely on such a statement. See People ex rel. Madigan v. United Construct. of America, Inc., 2012 IL App (1st) 120308, {7 8-9 (plaintiff must plead that defendant intended for the plaintiff to rely on the deception); DeBouse v. Bayer AG, 235 Ill. 2d 544, 554 (2009) (“to maintain an action under the Act, the plaintiff must actually be deceived by a statement or omission that is made by the defendant”), Bow & Truss undoubtedly knew that Defendants had not actually purchased Bow & Truss and that Mr. Lemonis was not actually the CEO. (See Compl. § 8 (“Mr, Lemonis never was and never became the CEO ....")) Moreover, as part of the same “public announcement” that Bow & Truss contends was “deceptive,” Mr. Tadros also stated publically that Mr. Lemonis was a “Great partner” and did not otherwise correct of contradict Mr. Lemonis’ purportedly “deceptive” statement. (See December 15, 2016 Crain’s article, attached hereto as Exhibit C.') Bow é& Truss also cannot allege that Defendants’ purported misrepresentations proximately caused it to suffer any damages. “The element of proximate cause contains two requirements; the cause-in-fact and the legal cause ... the relevant inquiry [for cause-in-fact] is whether the harm would have occurred absent the defendant’s conduct, Legal cause requires that "The article is available at: http/www.chicagobusiness.convarticl. buys-tadros-bow-trussil 201612the alleged injury be a foreseeable consequence of the alleged misrepresentation.” Phillips, 2014 IL App (Ist) 122817, 451. Bow & Truss does not allege that Defendants’ purported misrepresentations caused it harm, but that it incurred significant harm “when the defendants backed out of the deal and then started to disparage the plaintiff to the press and in social media.” (Compl. 158.) Bow & Truss also readily admits that it “was having cash flow issues and needed an immediate fusion of funds” at the time the parties entered into the LOI, that it requested a total of $277,000 from Defendants to pay its bills and make payroll, and that it had at least $2 million in debt, (Compl. $f 13, 15, 18, 21, Ex. 1 Outline of Basie Transaction Terms and Conditions, 3.) By its own allegations, Bow & Truss’ alleged damages did not occur but for the Defendants’ purportedly deceptive acts or refusal to consummate the transaction, but began well before the parties even entered into the LOI. Thus, Bow & Truss cannot allege proximate cause because it cannot allege any specific facts linking the Defendants’ alleged conduct to its alleged injuries. See Phillips, 2014 IL App (Ist) 122817, $952, 55 (plaintiffs failed to allege that, but for the deceptive conduct, they would have realized their desired jobs and lifetime earnings upon graduation and failed to allege that it was a foreseeable consequence). IV. BOW & TRUSS’ TORTIOUS INTERFERENCE CLAIM IS INSUFFICIENT, ‘This Court should dismiss Bow & Truss’ tortious interference claims (Count V1) pursuant to Section 2-615 because Bow & Truss fails to sufficiently state each of the required elements to support its cause of action, To state a cause of action for tortious interference, Bow & Truss must plead specific facts to establish: (1) that it had a valid business relationship or expectancy; (2) the Defendants’ knowledge of the relationship or expectancy; (3) an intentional or malicious interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage. See IK Corp. v. One Financial Place Partnership, 200 Ill. App. 34 802, 818 (Ist Dist, 1990); see also Grund v. Donegan, 298 ll. App. 3d 1034, 1038 (Ist Dist. 1998) -10-(setting forth elements of tortious interference with contract); J Eck and Sons, Inc. v. The Rueben H. Donnelley Corp., 213 Ill. App. 3d 510, 513 (Ist Dist: 1991) (setting forth elements of tortious interference with economic advantage). “In addition, defendant's interference must be directed toward a third party.” Douglas Theater Corp. v. Chicago Title & Trust Co., 288 Ill App. 3d 880, 887 (Ist Dist. 1997). Nowhere, however, does Bow & Truss allege specific facts to support its conclusion that Defendants knew of Bow & Truss’ alleged business relationships or expectancies, nor does Bow & Truss allege specific facts to support its conclusion that Defendants directed any action towards the party with whom Bow & Truss expected to do business. See Grund, 298 Il. App. at 1039 (affirming dismissal of tortious interference claim where complaint failed to allege facts to support conclusion that defendant directed his actions to party whom plaintiff expected to do business); see also IK Corp., 200 Ill. App. 3d at 819 (“the acts that form the basis of a tortious interference must be acts directed at parties other than the plaintiff”). Bow & Truss’ allegations that Defendants interfered with its employees or creditors—who, according to Bow & Trust's own allegations, were not being paid—or with Bow & Truss’ customers—who, according to Bow & Truss, were unable to spend money after Bow & Truss closed its retail stores—do not stand up to common sense. See Butitta, 218 Ill. App. 3d at 15 (courts are to view allegations “against the background of common sense and experience”). Bow & Truss also fails to allege any specific facts to support its conclus Defendants intended to deprive Bow & Truss of business opportunities or otherwise acted purposefully or with malice. See J. Eck and Sons, Inc., 213 Ill. App. 3d at 515 (“This cause of action is a ‘purposely’ caused tort, and therefore, a plaintiff must set forth facts which suggest that defendant acted with the purpose of injuring plaintiff's expectancies.”), Without the -lenecessary factual support for Bow & Truss? conclusory allegations, Bow & Truss cannot state a valid claim for tortious interference. Y. MR. LEMONIS OWED NO FIDUCIARY DUTIES TO BOW & TRUSS Finally, this Court should dismiss Bow & Truss’ breach of fiduciary duty claim (Count V) pursuant to Section 2-615. Bow & Truss does not allege that Mr. Lemonis was an actual officer, director, shareholder, or member of Bow & Truss. Indeed, Bow & Truss’ own allegations that “[Mr.] Lemonis never was and never became or held any other position with” Bow & Truss belie its breach of fiduciary duty claim. (See Compl. { 8.) “In order to state a claim for breach of fiduciary duty, it must be alleged that a fiduciary duty exists, that the fiduciary duty was breached, and that such breach proximately caused the injury of which the plaintiff complains.” Prime Leasing, Inc., 332 Ill. App. 3d at 313 (citations omitted), “A fiduciary duty may arise as a matter of law from the existence of a particular relationship, such as an attorney-client or principal-agent relationship,” or “as a result of special circumstances of the parties’ relationship.” Jd. (citations omitted). Bow & Truss does not allege that Mr, Lemonis agreed to become a fiduciary of Bow & ‘Truss or that he owed Bow & Truss a fiduciary duty as a matter of law. Instead, Bow & Truss attempts to foist a fiduciary duty upon Mr. Lemonis because he held “himself out as an owner and CEO.” (Compl. 474.) Such an allegation is insufficient in the context of an arm's length business transaction, especially when Bow & ‘Truss itself knew that Defendants had not yet agreed to complete the proposed transaction and knew—in fact, alleges—that Mr. Lemonis was not the CEO of Bow & Truss. Bow & Truss also stated in the LOI that it would continue to conduct its business in the regular and ordinary course consistent with past practices. And, where “the parties to a purported fiduciary relationship deal with each other at arm’s length, the party allegedly subject to influence is fully capable of attending to its business affairs, and there e128is no evidence that the alleged fiduciary agreed to exercise its judgment on behalf of the alleged dependent party, no fiduciary relationship is deemed to exist.” De Witt County Public Building Commission v. County of De Witt, 128 I, App. 3d 11, 26 (4th Dist. 1984); see also Schuppenhauer v, Peoples Gas Light & Coke Co., 30 Ill. App. 3d 607, 613 (Ist Dist. 1975) (“The fact that business transactions are conducted does not justify an inference of a fiduciary relationship. Bow & Truss cannot foist fiduciary obligations on Mr. Lemonis where none exist. As such, this Court should dismiss Count V of the Complaint. CONCLUSION For the foregoing reasons, this Court should grant Defendants’ motion and dismiss Bow & Truss’ Complaint with prejudice. MARCUS LEMONIS and ML FOOD GROUP, LLC wo LIA, One offTheir Attorneys Robert Radasevich Athanasios Papadopoulos Jason A. Frye NEAL, GERBER & EISENBERG LLP Two North LaSalle Street Suite 1700 Chicago, IL 60602-3801 (312) 269-8000 Firm ID 13739 radasevich@nge.com tpapadopoulos@nge.com frye@nge.com Dated: February 17, 2017 ong33 0010.25892156.6 seEXHIBIT AFrom: Giovanni Senafe [giovanni@bentleyspetstuff.com] Sent: ‘Wednesday, December 21, 2076 12:30 PM To: ‘Thelen, Betsy; Gerber, Robert G. Ce: Marcus Lemonis; Jeremy Dombroski Subject: Bow Truss Operating Agreement Attachments: ‘ATT00001 him: image001 jpg; 8th ABR Operating Agt (BT) 151215.paf; ATTOO0O2.htm From: Philip Tadros /ednesday, December 21, 2016 12:29 PM jovani Senafe Subject: Fwd: OA for BT Philip Tadros doejo.com Dogjo | Smarter product development with sprint based doejo.com We fuel ideas that grow. Doejo is an innovation studio powered by a collective of problem solvers. We create platforms, experiences, spaces, and companies that build space.doejo.comSpace | Co-working Office & Event Space Chicago space.doejo.com Join the co-working community that gives you the space for success. fundedfoods.com We invest in teams to create brands that scale physical or digital products & experiences. Begin forwarded message: From: "Asbahi, Mazen" Date: December 21, 2016 at 12:22:17 PM CST To: "mark@bowtruss.com" , "phil@doejo.com" Subject: OA for BT Mazen Asbahi identi an intended sl or the usec the inavdual er enty to whom thy ae ad {eooive ths eatin ero lease notly the sender. This meeeage contains conden ovmaten and intended ol forthe nual thanames adrestoe you enous hat seminal, sinbtor copy tis al Pease oy he sender shmedatl by ema you hav ‘mctane ond dest his ema fom your system, Ifyou se nt fe ntandedraciplent you are noid that econng, copying, dstbving o tke ay acon ‘lance onthe contents of his formation is sty promt, vet it: ‘This emai an any tls wansBOW & TRUSS, LLC SIXTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT Dated as of December 15, 2015 ‘THE COMPANY INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY: AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES. SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANY OTHER APPLICABLE. SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED. OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION, UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.BOW & TRUSS, LLC SIXTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT THIS SIXTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of December 15, 2015, is entered into by and among Bow & Truss, LLC (the “Company”) and the Unitholders, and amends and restates in its entirety that certain Fifth Amended and Restated Limited Liability Company Agreement dated as of November 12, 2015. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE 1 CERTAIN DEFINITIONS Capitalized terms used but not otherwise defined herein shall have the following meanings: “Additional Unitholder” means a Person admitted to the Company as a Unitholder pursuant 10 Section 11.2 “Additional Securities” shall have the meaning set forth in Section 3.2, “Adjusted Capital Account Deficit” means with respect to any Capital Account as of the end of any Taxable Year, the amount by which the balance in such Capital Account is less than zero, For this purpose, such Person’s Capital Account balance shall be () reduced for any items described in Treasury Regulation Section —1.704- 1(b)(2)GI)(A)(4), (5), and (6), and (ii) increased for any amount such Person is obligated to contribute or is treated as being obligated to contribute to the Company pursuant to Treasury Regulation Section 1.704- 1(6)(2)(ii)(C) (relating to partner liabilities to a partnership) or 1,704-2(g)(1) and 1.704-2()(5) (relating to Minimum Gain), “Affiliate” of any particular Person means (i) any other Person controlling, controlled by, or under common control with such particular Person, whete “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, by contract, or otherwise and (ji) if such Person is a partnership, any partner thereof.“Agreement” means this Limited Liability Company Agreement, as amended or modified from time to time in accordance with the terms hereof. “Assignee” means a Person to whom a Company Interest has been transferred in accordance with the terms of this Agreement and the other agreements contemplated hereby, but who has not become a Unitholder pursuant to Article XI. “Book Value” means, with respect to any Company property, the Company’s adjusted basis for federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(@)-(2). “Capital Account” means the capital account maintained for a Unitholder pursuant to Section 3 “Capital Contributions” means any cash, cash equivalents, promissory obligations, or the Fair Market Value of other property that a Unitholder contributes or is deemed to have contributed to the Company with respect to any Unit pursuant to Si jons 3.1 or 3.3 (with it being understood that if the adjusted basis of any Company property is different from its fair market value at the ‘ime of contribution, such Capital Contribution shall be valued at the fair market value of such property) “Certifi of Illinois. 2” means the Company's Certificate of Formation as filed with the Secretary of State “Code” means the United States Internal Revenue Code of 1986, as amended. Such term shall, at the Manager's sole discretion, be deemed to include any future amendments to the Code and any corresponding provisions of succeeding Code provisions. “Doejo” means Dogjo, LLC. “Distribution” means each distribution made by the Company to a Unitholder with respect to such Person's Units, whether in cash, property or securities of the Company and whether by liquidating distribution, redemption, repurchase, or otherwise; provided that any recapitalization or exchange or conversion of securities of the Company (including any exchange of Units) and any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units shall not be deemed a Distribution. “Fait Market Value” means, with respect to any asset or equity interest, its fair market value determined according to Article XIV. “Fiscal Quarter” means each calendar quarter ending March 31, June 30, September 30 and December 31 scal_Year” means the Company's annual accounting period established pursuant to Section “Lllinois Act” means the Illinois Limited Liability Company Act, as it may be amended from time to time, and any successor to the Illinois Act.“Incentive Liquidation Value” means as of the date of determination and with respect to the relevant new Incentive Units to be issued, the aggregate amount that would be Distributed to the Members pursuant to Section 4.2, if, immediately prior to the issuance of the relevant new Incentive Units, the Company sold all of its assets for Fair Market Value and immediately liquidated, the Company's debts and liabilities were satisfied and the proceeds of the liquidation were Distributed pursuant to Section 13.2. “Incentive Units” means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to the “Incentive Units” in this Agreement and includes both Restricted Incentive Units and Unrestricted Incentive Units. “Liens” means any mortgage, pledge, security interest, encumbrance, lien, or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against the Company or any Affiliate thereof, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party of property leased to the Company or any Affiliate under a lease which is not in the nature of a conditional sale or title retention agreement, or any subordination arrangement in favor of another Person (other than any subordination arising in the ordinary course of business). “Company” means Bow & Truss, LLC, an Illinois limited liability company. “Company Interest” means the interest of a Unitholder in Profits, Losses, and Distributions. “Losses” means items of Company loss and deduction determined according to Section 3.3(b). “Manager” means the manager designated in accordance with Section 5.2, who will be deemed “manager” as defined in the Illinois Act. “Minimum Gain” means the partnership minimum gain determined pursuant to Treasury Regulation Section 1.704-2(d) “Officers” means each person designated as an officer of the Company to whom authority and duties have been delegated pursuant to Section 5.1(c), subject to any resolution of the Manager appointing such person as an officer or relating to such appointment, “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a governmental entity “Proceeding” has the meaning set forth in Section 7.2. “Profits Interest Hurdle” means an amount set forth in each Award Agreement reflecting the Incentive Liquidation Value of the relevant Incentive Units at the time the units are issued. “profits” means items of Company income and gain determined according to Section 3.3(b).curities Act” means the Securities Act of 1933, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules, or regulations. Any reference herein to a specific section, rule, or regulation of the Securities Act shall be deemed to include any corresponding provisions of future law. “Substituted Unitholder” means a Person that is admitted as a Unitholder to the Company pursuant to Section 11.1. “Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, or other withholding, of other tax, of any kind whatsoever, including any interest, penalties, or additions to tax or additional amounts in respect of the foregoing “Tax Distribution” has the meaning set forth in Section 4.1(b). “Tax Matters Partner” has the meaning set forth in Section 9.3. “Taxable Year” means the taxable period required pursuant to Section 706 of the Code and the Treasury Regulations promulgated thereunder. “Transaction Documents” means this Agreement, and all other agreements, promissory notes, instruments, certificates, and other documents to be entered into or delivered by any Unitholder in connection with the transactions contemplated to be consummated pursuant to this Agreement, “Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange, lypothecation, grant of a security interest or other direct or indirect disposition or encumbrance of an interest Gncluding, without limitation, by operation of law) or the acts thereof, but explicitly excluding conversions ot exchanges of one class of Unit to or for another class of Unit. The terms “Transferee,” “Transferred,” and other forms of the word “Transfer” shall have correlative meanings. “Treasury Regulations” means the income tax regulations promulgated under the Code and effective as of the date hereof. Such term shall, at the Manager’s sole discretion, be deemed to include any future amendments to such regulations and any corresponding provisions of succeeding regulations (whether or not such amendments and corresponding provisions are ‘mandatory or discretionary; provided, however, that if they are discretionary, the term “Treasury Regulations” shall not include them if including them would have a material adverse effect on any Unitholder), “Unit” means a Company Interest of @ Unitholder or an Assignee in the Company representing a factional part of the Company Interests of all Unitholders and Assignees, including the common Units and the Incentive Units; provided that any class or group of Units issued shall have the relative rights, powers, and duties set forth in this Agreement and the Company Interest represented by such class or group of Units shall be determined in accordance with such relative rights, powers, and duties set forth in this Agreement 4“Unitholder” means any owner of one-or more Units as reflected on the Company's books and records, and any person admitted to the Company as an Additional Unitholder or Substituted Unitholder; but only for so long as such person is shown on the Company's books and records as the owner of one or more Units. As used herein, a “Unitholder” shall be deemed a “member” as such term is used in the Illinois Act. ARTICLE IL ORGANIZATIONAL MATTERS Section 2.1 Formation. The Company has been organized as an Illinois limited liability company by the filing with the Secretary of State of the State of Illinois of the Certificate under ‘and pursuant to the Illinois Act and shali be continued in accordance with this Agreement. Section 2.2 ‘The Certificate, Ete. The Certificate was filed with the Secretary of State of the State of Illinois on November 30, 2011. ‘The Unitholders hereby agree to execute, file and record all such other certificates and documents, including amendments to the Certificate, and to do such other acts as may be appropriate to comply with all requirements for the formation, continuation and operation of a limited liability company, the ownership of property, and the conduct of business under the laws of the State of Illinois and any other jurisdiction in which the ‘Company may own property or conduct business. Section 2.3 Name, The name of the Company shall be Bow & Truss, LLC. The Manager may change the name of the Company at any time and from time to time. Notification of any such change shall be given to all Unitholders. The Company’s business may be conducted under its name and/or any other name or names deemed advisable by the Manager. Section 2.4 Purpose. The purpose and business of the Company shall be to serve as an incubator for the development of food products under the label “Bow & Truss,” including (i) providing goods and services in and pertaining to coffee bean sourcing, roasting, distribution, marketing and sales in both retail and wholesale commercial settings (the “POC Business”) and ii) any other purpose in addition to the stated purposes which may be conducted by a limited liability company formed pursuant to the Illinois Act and to engage in all activities necessary or incidental to the foregoing. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of Ilinois, Section 2.5 Powers of the Company. Subject to the provisions of this Agreement and the agreements contemplated hereby, the Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, convenient or incidental to or for the furtherance of the purposes set forth in Section 2.4. ection 2.7. Principal Office: Registered Office. ‘The principal office of the Company shall be located at such place as the Manager may from time to time designate, and all business and activities of the Company shall be deemed to have occurred at its principal office. The Company may maintain offices at such other place or places as the Manager deems advisable, Theregistered office of the Company required by the Illinois Act to be maintained in the State of Illinois shall be the office of the initial registered agent named in the Certificate or such other office (which need not be a place of business of the Company) as the Manager may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Illinois shall be the initial registered agent named in the Certificate or such other Person or Persons as the Manager may designate from time to time in the manner provided by law, Section 2.8 Term. The term of the Company commenced upon the filing of the Certificate in accordance with the Ilinois Act and shall continue in existence until termination and dissolution thereof in accordance with the provisions of Article XIIIARTICLE III UNITS; CAPITAL ACCOUNTS. Section 3.1 Unitholders. (a) General, Each Person named on Schedule A attached hereto has made Capital Contributions to the Company in exchange for the Units specified thereon, and each Unitholder’s initial Capital Account established pursuant to such Capital Contribution, Any reference in this, ‘Agreement to Schedule A shall be deemed to be a reference to Schedule A as amended and in effect from time to time. The Company and each Unitholder shall file all tax returns, including any schedules thereto, in a manner consistent with such initial Capital Accounts. Each Person listed on Schedule A upon (i) his, her or its execution of this Agreement or a counterpart thereto and (ii) receipt (or deemed receipt) by the Company of such Person's Capital Contribution, is hereby admitted to the Company as a Unitholder of the Company. Each Unitholder’s interest in the Company, including such Unitholder’s interest in Profits, Losses and Distributions of the Company and the right to vote on certain matters as provided in this Agreement, shall be represented by the Units owned by such Unitholder. ‘The ownership of Units shall entitle each Unitholder to allocations of Profits and Losses and other items and distributions of cash and other property as set forth in Article IV hereof. The Manager may in its discretion issue certificates to the Unitholders representing the Units held by each Unitholder. (b) No Liability of Unitholders. Except as otherwise required by applicable law and as expressly set forth in this Agreement, no Unitholder shall have any personal liability whatsoever in such Unitholder’s capacity as a Unitholder, whether to the Company, to any of the other Unitholders, to the creditors of the Company or to any other third party, for the debts, liabilities, commitments or any other obligations of the Company or for any losses of the ‘Company. Each Unitholder shall be liable only to make such Unitholder’s Capital Contribution to the Company and the other payments provided expressly herein. (©) Contribution of Intellectual Property. In connection with the formation of this ‘Company, each Unitholder hereby assigns to the Company all right, title and interest in and to all designs, inventions, processes, techniques, know-how and other information, whether or not copyrightable or patentable, related to the POC Business. Such assignment includes any intellectual property rights Dogjo may have in the name “Bow & Truss,” as part of Doejo’s Capital Contribution. (d) Basic Representations of the Unitholders. Funded Foods, LLC is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Illinois. Each Unitholder has full right, power, capacity and authority to execute, deliver and perform this Agreement and neither the execution nor the performance of this Agreement shall in any material respect, violate, conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under, any legal requirement or arrangement to which he or it may be a party. Section 3.2 Issuance of Additional Units and Interests; Authorization and Issuance of Incentive Units.(a) Subject to compliance with the provisions of this Agreement, the Manager may cause the Company to issue or sell to any Person (including Unitholders and Affiliates) any of the following (which for purposes of this Agreement shall be “Additional Securities”): (i) additional Units or other interests in the Company (including other classes or series thereof having different rights), (ii) obligations, evidences of indebtedness, o other securities or interests convertible or exchangeable into Units ot other interests in the Company, and (iii) warrants, options, or other rights to purchase or otherwise acquire Units or other interests in the Company. Subject to the provisions of this Agreement, the Manager may determine the terms and conditions governing the issuance of such Additional Securities, including the number and designation of such Additional Securities, the preference (with respect to distributions, liquidations, or otherwise) over any other Units and any required or deemed contributions in connection therewith. Any Person who acquires Units may be admitted to the Company as @ Unitholder pursuant to the terms of Section 11.2 hereof. If any Person acquires additional Units of other interests in the Company or is admitted to the Company as an additional Unitholder, Schedule A shall be amended to reflect such additional issuance and/or Unitholder, as the case may be. (6) The Manager is hereby authorized to issue Incentive Units to employees, consultants or other service providers of the Company (collectively, “Service Providers”), The Manager is hereby authorized and directed to adopt a written plan pursuant to which all Incentive Units shall be granted in compliance with Rule 701 of the Securities Act or another applicable exemption (such plan as in effect from time to time, the “Incentive Plan”). In connection with the adoption of the Incentive Plan and issuance of Incentive Units, the Manager is hereby authorized to negotiate and enter into award agreements with each Service Provider to whom it grants Incentive Units (such agreements, “Award Agreements”). Each Award Agreement shall include such terms, conditions, rights and obligations as may be determined by the Manager, in its sole discretion, consistent with the terms herein. The Manager shall establish such vesting criteria for the Incentive Units as it determines in its discretion and shall include such vesting criteria in the Incentive Plan and/or the applicable Award Agreement for any grant of Incentive Units. As used in this Agreement: () any Incentive Units that have not vested pursuant to the terms of the Incentive Plan and any associated Award Agreement are referred to as “Restricted Incentive Units”; and (ii) any Incentive Units that have vested pursuant to the terms of the Incentive Plan and any associated Award Agreement are referred to as “Unrestricted Incentive Units.” (©) Immediately prior to each subsequent issuance of Incentive Units following the initial issuance described in the second sentence of Section 3.2(b), the Manager shall determine in good faith the Incentive Liquidation Value. In each Award Agreement that the Company enters into with a Service Provider for the issuance of new Incentive Units, the Manager shall include an appropriate Profits Interest Hurdle for such Incentive Units on the basis of the Incentive Liquidation Value immediately prior to the issuance of such Incentive Units. (@)__ The Company and each Member hereby acknowledge and agree that, with respect to any Service Provider, such Service Provider's Incentive Units constitute a "profits interest” inthe Company within the meaning of Rev. Proc. 93-27 (a "Profits Interest"), and that any and all Incentive Units received by a Service Provider are received in exchange for the provision of services by the Service Provider to or for the benefit of the Company in a Service Provider capacity or in anticipation of becoming a Service Provider. The Company and each Service Provider who receives Incentive Units hereby agree to comply with the provisions of Rev. Proc. 2001-43, and neither the Company nor any Service Provider who receives Incentive Units shall perform any act ot take any position inconsistent with the application of Rev. Proc, 2001-43 or any future Internal Revenue Service guidance or other Governmental Authority that supplements or supersedes the foregoing Revenue Procedures. (©) __ Incentive units shall receive the following tax treatment: () the Company and each Service Provider who receives Incentive Units shall treat such Service Provider as the owner of such Incentive Units from the date of their receipt, and the Service Provider receiving such Incentive Units shall take into account his Distributive share of Net Income, Net Loss, income, gain, loss and deduction associated with the Incentive Units in computing such Service Provider's income tax liability for the entire period during which such Service Provider holds the Incentive Units. (iii) each Service Provider that receives Incentive Units shall make a timely and effective election under Code Section 83(b) with respect to such Incentive Units and shall promptly provide a copy to the Company. Except as otherwise determined by the Board, both the Company and all Members shall (A) treat such Incentive Units as outstanding for tax purposes, (B) treat such Service Provider as a partner for tax purposes with respect to such Incentive Units and (C) file all tax retums and reports consistently with the foregoing. Neither the Company nor any of its Members shall deduct any amount (as wages, compensation or otherwise) with respect to the receipt of such Incentive Units for federal income tax purposes. (iv) in accordance with the finally promulgated successor rules to Proposed Regulations Section 1.83-3(1) and IRS Notice 2005-43, each Member, by executing this Agreement, authorizes and directs the Company to elect a safe harbor under which the fair ‘market value of any Incentive Units issued after the effective date of such Proposed Regulations (or other guidance) will be treated as equal to the liquidation value (within the meaning of the Proposed Regulations or successor rules) of the Incentive Units as of the date of issuance of such Incentive Units. In the event that the Company makes a safe harbor election as described in the preceding sentence, each Member hereby agrees to comply with all safe harbor requirements with respect to Transfers of Units while the safe harbor election remains effective. (For the avoidance of doubt, all Incentive Units, including Unrestricted Incentive Units, shall be subject to drag-along obligations of Unitholders set forth in Section 10.7.Section 3.3 Capital Accounts. (a) The Company shall maintain separate Capital Account for each Unitholder according to the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). For this purpose, the Company may (in the discretion of the Manager), upon the occurrence of the events specified in Treasury Regulation Section 1,704-1(b)(2)(iv)(0, increase or decrease the Capital Accounts in accordance with the rules of such regulation and Treasury Regulation Section 1.704- 1(b)(2)(iv)(g) to reflect a revaluation of Company property. Without limiting the foregoing, each Unitholder’s Capital Account shall be adjusted: (by adding any additional Capital Contributions made by such Unitholder in consideration for the issuance of Unit (i) by deducting any amounts paid to such Unitholder in connection with the redemption or other repurchase by the Company of Units; (iii) by adding any Profits allocated in favor of such Unitholder and subtracting any Losses allocated in favor of such Unitholder; and (iv) by deducting any distributions paid in cash or other assets to such Unitholder by the Company. (b) For purposes of computing the amount of any item of Company income, gain, loss, or deduction to be allocated pursuant to Article IV and to be reflected in the Capital ‘Accounts, the determination, recognition, and classification of any such item shall be the same as its determination, recognition, and classification for federal income tax purposes (including any ‘method of depreciation, cost recovery, or amortization used for this purpose); provided that: (@ The computation of all items of income, gain, loss, and deduction shall include those items described in Code Section 705(a)(1)(B) or Code Section 705(a)(2)(B) and Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not includable in gross income or are not deductible for federal income tax purposes. (ii) If the Book Value of any Company property is adjusted pursuant to ‘Treasury Regulation Section 1.704-1(b)(2)(iv}(e) or (9), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property. (iii) ‘ items of income, gain, loss, or deduction attributable to the disposition of Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the Book Value of such property. (iv) Items of depreciation, amortization, and other cost recovery deductions with respect to Company property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the property's Book Value in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv\(g). -10-(v) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Sections 732(d), 734(b) or 743(b) is required, pursuant to ‘Treasury Regulation Section 1.704-1(b)(2)(ivy(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis). Section 3.4 Negative Capital Accounts, No Unitholder shall be required to pay to any other Unitholder or the Company any deficit or negative balance which may exist from time to time in such Unitholder’s Capital Account (including upon and after dissolution of the Company). Section 3.§ No Withdrawal. No Person shall be entitled to withdraw any part of such Person's Capital Contributions or Capital Account or to receive any Distribution from the ‘Company, except as expressly provided herein o in the other agreements referred to herein. Section 3.6 Loans From Unitholders. Loans by Unitholders to the Company shall not be ‘considered Capital Contributions. If any Unitholder shall loan funds to the Company, the making of such loans shall not result in any increase in the amount of the Capital Account of such Unitholder. The amount of any such loans shall be a debt of the Company to such Unitholder and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made. ARTICLE IV DISTRIBUTIONS; REDEMPTIONS AND ALLOCATIONS Section 4.1. Distributions. (a) Distributions Generally. Except as otherwise set forth in this Sect Manager may in its sole discretion make Distributions at any time or from time to time. Subject to Section 4.1(b), all Distributions shall be made only in the following order and priority: (First, to holders of the Units (ratably among such Unitholders based upon the number of outstanding Units held by each such Unitholder immediately prior to such Distribution), until the entire amount of such holders’ cash Capital Contributions have been paid in full; and Gil) ‘ond, to all remaining amounts to the Unitholders and Incentive Unitholders (subject to Section 4.1(d)) (ratably among such Unitholders based upon the number of outstanding Units held by each such Unitholder immediately prior to such Distribution). (b) Tax Distributions, Notwithstanding any other provision herein to the contrary, $0 Jong as the Company is treated as a partnership for federal income tax purposes, at least 10 days prior to the date prescribed by the Code for calendar year corporations and individuals to pay the quarterly installment of estimated taxes for each Fiscal Quarter after the date hereof, the Company shall, to the extent funds are legally available therefor and would not impair the Sisliquidity of the Company with respect to working capital or debt service and would not be prohibited under any credit facility to which the Company is a party, distribute to the Unitholders pursuant to this Section 4.1(b) (and not pursuant to Section 4.1(a)) an aggregate amount of cash (a “Tax Distribution”) in respect of such Fiscal Quarter which in the good faith estimation of the ‘Tex Matter Partner equals the product of (x) the aggregate amount of all taxable income allocable to each Unitholder in respect of such Fiscal Quarter determined without regard to adjustments under section 743(b) of the Code, multiplied by (y) the highest maximum combined federal, foreign, state, and local income tax rate to which an individual or corporation may be subject (ie., the higher of the two regardless of whether a Unitholder is an individual or a corporation). Each Tax Distribution shall be distributed among the Unitholders on a pro rata basis according to the allocation of the Company’s taxable income determined without regard to adjustments under section 743(b) of the Code. To the extent that a Tax Distribution that would otherwise be distributable is not made for one of the reasons set forth above, the Tax Distribution shall be made as soon thereafter as cash becomes available. (©) Persons Receiving Distributions. Each Distribution shall be made to the Persons shown on the Company’s books and records as Unitholders as of the date of such Distribution; provided, however, that any transferor and transferee of Units may mutually agree as to which of them should receive payment of any Distribution under Section 4.1. In the event that restrictions on transfer or change in beneficial ownership of Units set forth herein have been breached, the ‘Company may withhold distributions in respect of the affected Units until such breach has been cured. (@) Limitations on Distributions to Incentive Units. (® Notwithstanding the provisions of Section 4(a\(ii), no Distribution (other than Distributions pursuant to Section 4(b)) shall be made to a Member on account of its Restricted Incentive Units. Any amount that would otherwise be Distributed to such a Member but for the application of the preceding sentence shall instead be retained in a segregated Company account to be Distributed in accordance with Section 4(a)(ii) by the Company and paid to such Member if, as and when the Restricted Incentive Unit to which such retained amount relates vests pursuant to Section 3.2(b) (ii) It is the intention of the parties to this Agreement that Distributions to any Service Provider with respect to his Incentive Units be limited to the extent necessary so that the related Company Interest constitutes a Profits Interest. In furtherance of the foregoing, and notwithstanding anything to the contrary in this Agreement, the Manager shall, if necessary, limit any Distributions to any Service Provider with respect to his Incentive Units so that such Distributions do not exceed the available profits in respect of such Service Provider's related Profits Interest. Available profits shall include the aggregate amount of profit and unrealized appreciation in all of the assets of the Company between the date of issuance of such Incentive Units and the date of such Distribution, it being understood that such unrealized appreciation shall be determined on the basis of the Profits Interest Hurdle applicable to such Incentive Unit In the event that a Service Provider's Distributions and allocations with respect to his Incentive Units are reduced pursuant to the preceding sentence, an amount equal to such excess Distributions shall be treated as instead apportioned to the holders of common Units and Incentive Units that have met their Profits Interest Hurdle (such Incentive Units, "Qualifying “12.Incentive Units"), pro rata in proportion to their aggregate holdings of common Units and Qualifying Incentive Units treated as one class of Units. Section 4.2 Allocations. Except as otherwise provided in Sections 3.3(b) and 4.3, Profits and Losses for any Fiscal Year shall be allocated among the Unitholders in such a manner that, as of the end of such Fiscal Year, the Capital Account of each Unitholder shall equal (a) the amount which would be distributed to them or for which they would be liable to the Company under the Illinois Act determined as if the Company were to (i) liquidate the assets of the Company for an amount equal to their Book Value and (ii) distribute the proceeds of such liquidation pursuant to Section 13.2, minus (b) the sum of (i) such Unitholder’s share of Minimum Gain (as determined according to Treasury Regulation Section 1.704-2(2) and (g)(3)) and such Unitholder’s partner ‘minimum gain (as determined according to Treasury Regulation Section 1.704-2(i)) and (ii) the amount, if any, which such Unitholder is obligated to contribute to the capital of the Company as of the last day of such Fiscal Year. Section 4.3 Special Allocations. (a)___Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). If there is a net decrease during a Fiscal Year in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such Fiscal year (and, if necessary, for subsequent Fiscal Years) shall be allocated to the Unitholders in the amounts and of such character as determined according to, and subject to the exceptions contained in, Treasury Regulation Section 1.704-2(i)(4). This Section 4.3(a) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704- 2()(4) and shall be interpreted in a manner consistent therewith, (6) Nonrecourse deductions shall be allocated to Unitholders (ratably among such Unitholders based upon the number of Units held by each such Unitholder). If there is a net decrease in Minimum Gain during any Fiscal Year, each Unitholder shall be allocated Profits for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) in the amounts and of such character as determined according to, and subject to the exceptions contained in, Treasury Regulation Section 1.704-2(f). This Section 4.3(b) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(f), and shall be interpreted in a manner consistent therewith. (©) If any Unitholder that unexpectedly receives an adjustment, allocation, or distribution described in Treasury Regulation Section 1.704-1(b)(2)(i)(¢)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Taxable Year, computed after the application of Sections 4.3(a) and 4.3(b) but before the application of any other provision of this Article IV, then Profits for such Taxable Year shall be allocated to such Unitholder in proportion to, and to the extent of, such Adjusted Capital Account Deficit. This Section 4.3(c) is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(@) and shall be interpreted in a manner consistent therewith, “13.