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HomeMy WebLinkAboutPROOF OF OWNERSHIP - CB Shop LLC - 21-00322 - Westmark Credit Union - 940 N 2nd E - CUP for Bank in Light Industrial (LI)SDA IRS DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE CINCINNATI OH 45999-0023 Date of this notice: 03-07-2017 Employer Identification Number: 82-0716023 Form: SS -4 CB SHOP LLC Number of this notice: CP 575 B JEFF CHRISTENSEN MBR 225 N FREMONT AVE For assistance you may call us at: SUGAR CITY, ID 83448 1-800-829-4933 IF YOU WRITE, ATTACH THE STUB AT THE END OF THIS NOTICE. WE ASSIGNED YOU AN EMPLOYER IDENTIFICATION NUMBER Thank you for applying for an Employer Identification Number (EIN). We assigned you EIN 82-0716023. This EIN will identify you, your business accounts, tax returns, and documents, even if you have no employees. Please keep this notice in your permanent records. When filing tax documents, payments, and related correspondence, it is very important that you use your EIN and complete name and address exactly as shown above. Any variation may cause a delay in processing, result in incorrect information in your account, or even cause you to be assigned more than one EIN. If the information is not correct as shown above, please make the correction using the attached tear off stub and return it to us. Based on the information received from you or your representative, you must file the following form(s) by the date(s) shown. Form 1065 03/15/2018 If you have questions about the form(s) or the due date(s) shown, you can call us at the phone number or write to us at the address shown at the top of this notice. If you need help in determining your annual accounting period (tax year), see Publication 538, Accounting Periods and Methods. We assigned you a tax classification based on information obtained from you or your representative. It is not a legal determination of your tax classification, and is not binding on the IRS. If you want a legal determination of your tax classification, you may request a private letter ruling from the IRS under the guidelines in Revenue Procedure 2004-1, 2004-1 I.R.B. 1 (or superseding Revenue Procedure for the year at issue). Note: Certain tax classification elections can be requested by filing Form 8832, Entity Classification Election. see Form 8832 and its instructions for additional information. A limited liability company (LLC) may file. Form 8832, Entity Classification Election, and elect to be classified as an association taxable as a corporation. If the LLC is eligible to be treated as a corporation that meets certain tests and it will be electing S corporation status, it must timely file Form 2553, Election by a Small Business Corpozation. The LLC will be treated as a corporation as of the effective date of the S corporation election and does not need to file Form 8832. To obtain tax forms and publications, including those referenced in this notice, visit our Web site at www.irs.gov. If you do not have access to the Internet, call 1-800-829-3676 (TTY/TDD 1-800-829-4059) or visit your local IRS office. (IRS USE ONLY) 575B 03-07-2017 CBSH B 9999999999 SS -4 INMRTANT REMINDERS: * Keep a copy of this notice in your permanent records. This notice is issued only one time and the IRS will not be able to generate a duplicate copy for you. You may give a copy of this document to anyone asking for proof of your EIN. * Use this EIN and your name exactly as they appear at the top of this notice on all your federal tax forms. * Refer to this EIN on your tax -related correspondence and documents. If you have questions about your EIN, you can call us at the phone number or write to us at the address shown at the top of this notice. If you write, please tear off the stub at the bottom of this notice and send it along with your letter. If you do not need to write us, do not complete and return the stub. Your name control associated with this EIN is CBSH. You will need to provide this information, along with your EIN, if you file your returns electronically. Thank you for your cooperation. Keep this part for your records. CP 575 B (Rev. 7-2007) Return this part with any correspondence so we may identify your account. Please CP 575 B correct any errors in your name or address. 9999999999 Your Telephone Number Best Time to Call DATE OF THIS NOTICE: 03-07-2017 - EMPLOYER IDENTIFICATION NUMBER: 82-0716023 FORM: SS -4 NOBOD INTERNAL REVENUE SERVICE CB SHOP LLC CINCINNATI OH 45999-0023 JEFF CHRISTENSEN MBR I�I��LLIJ,I„IJ��LL�IL��IL„�J�LJI�I�Ld 225 N FREMONT AVE SUGAR CITY, ID 83448 OPERATING AGREEMENT OF CB SHOP LLC This Operating Agreement (Agreement) of CB Shop LLC, an Idaho limited liability company (Company), is made by the Members to provide for the governance and operations of the Company and the rights and obligations of each Member regarding the Company. This Agreement is effective as of March 6, 2017, and will apply to any Additional Members admitted in accordance with its terms. In consideration of the mutual promises in this Agreement, the parties to this Agreement agree to be legally bound by its terms. ARTICLE ONE ORGANIZATIONAL MATTERS Section 1.01 Company Formation The Company became a limited liability company under the laws of the State of Idaho, and specifically under the Idaho Uniform Limited Liability Company Act, upon filing the Certificate of Organization as required by the Idaho Uniform Limited Liability Company Act. Section 1.02 Company's Name The Company's name is CB Shop LLC. The Members may change the name of the Company, subject to the terms of this Agreement and Applicable Law. Section 1.03 Company's Purpose The Company's purpose is to engage in any lawful act or activity for which limited liability companies may be formed under the Act and all activities necessary or incidental to that purpose. The Company has all the powers necessary or convenient to carry out its purposes, including the powers granted by the Act. Section 1.04 Company's Principal Office and Location of Records The street address of the principal office in the United States where the Company maintains its records is 225 North Fremont, Sugar City, Idaho 83448. Section 1.05 Registered Agent and Registered Office The Company's initial Registered Agent is Jeff Christensen, and the Company's initial registered office is located at 225 North Fremont, Sugar City, Idaho 83448. Section 1.06 Company's Term The Company's duration is perpetual. The Company began on the date the Certificate of Organization was filed with the Idaho Secretary of State and will continue until terminated or dissolved as provided in this Agreement. OPERATING AGREEMENT OF CB SHOP LLC 1 OF 27 ARTICLE TWO TAX MATTERS Section 2.01 Taxation as a Partnership The Members intend to establish an entity that is subject to federal and state income taxation as a partnership. Unless the Members elect not to be treated as a partnership for federal income tax purposes, the federal income tax basis of a Member's Interest and all other matters relating to the distributive share and taxation of items of income, gain, loss, deduction, depreciation, and credit will be as established by Code Subchapter K. Section 2.02 Company Representative The Company must designate a Member with a substantial presence in the United States to serve as the Company representative within the meaning of Code Section 6223 (Company Representative). The Company Representative must be a Member. The Company Representative has the sole authority to act on behalf of the Company in connection with Internal Revenue Service audits and adjustments. Jeff Christensen is designated to serve as the Company Representative. If Jeff Christensen is or becomes unwilling or unable to serve for any reason, the Members shall promptly appoint a Member to serve as Company Representative in accordance with Code requirements. (a) Obligations and Discretion as to Tax Matters The Company Representative shall notify all of the Members upon receipt of any notice regarding any examination by any federal, state, or local authority about the Company's tax compliance. The Company Representative must obtain the approval of a Supermajority Vote of the Members before taking any binding action in connection with any Internal Revenue Service proceeding. Upon obtaining this approval, the Company Representative may: determine whether to contest any proceedings, how to pursue any proceedings, and whether and on what terms to settle any dispute with the Internal Revenue Service; determine whether to elect to apply the audit procedures under the Bipartisan Budget Act of 2015 to any return of the partnership filed for partnership taxable years beginning after November 2, 2015, and before January 1, 2018; select the forum for any tax disputes involving the Company; and extend the statute of limitations for assessing tax deficiencies against the Members with respect to adjustments to the Company's federal, state, local, or foreign tax returns. (b) Company Representative to Preserve Tax Classification Unless the Members elect not to be treated as a partnership for federal income tax purposes, the Company Representative shall take all reasonable steps necessary to classify the Company as a partnership for tax purposes under the Code and Treasury Regulations. The Company Representative shall prepare and file any forms necessary or appropriate to classify the Company as a partnership for tax purposes under the laws of any jurisdiction in which the Company transacts business. Any time after the date of this Agreement, if the Company has only one Member or for any other reason may not be taxed as a partnership, the Company Representative may classify the Company as a corporation, sole proprietorship, disregarded entity, or any other type of entity OPERATING AGREEMENT OF CB SHOP LLC 2 OF 27 that the Company Representative determines to be most advantageous to the Company and the Member. Section 2.03 Coordination with TEFRA Audit Rules If any audit or adjustment of the Company is governed by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) audit rules, the Company Representative designated under Section 2.02 shall serve as the tax matters partner within the meaning of Code Section 6231(a)(7). Section 2.04 Election under Code Section 6221(b) The Company may elect for Code Section 6221(b) to apply for any taxable year that the Company meets the requirements to elect out of Company -level treatment under Code Section 6221(b). The election must be made with a timely filed return for that taxable year. The election must include the name and taxpayer identification number of each Member. The Company must notify each Member of the election in the manner prescribed by the Secretary of Treasury. Section 2.05 Consistent Treatment Each Member shall, on the Member's income tax return, treat each item of income, gain, loss, deduction, or credit attributable to the Company in a manner consistent with the treatment of the income, gain, loss, deduction, or credit on the Company income tax return. Section 2.06 Adjustment in Future Tax Years If any tax proceeding results in adjustment in the amount of any item of income, gain, loss, deduction, or credit of the Company—ter any Member's distributive share thereof—for a prior year, the Company may take corrective action. If the Company elects to apply Code Section 6226 within 45 days from the date of the notice of final partnership adjustment, the Company may issue the statement described in Code Section 6226(a)(2) to the Internal Revenue Service and to each Member that held an interest in the year in question. The statement must describe the Member's share of any adjustment to income, gain, loss, deduction, or credit (as determined in the notice of final partnership adjustment issued by the internal Revenue Service). Upon receipt of the statement, each Member must take the adjustments described on the statement into account as provided in Code Section 6226(b). Alternatively, the Company may require each Member that held an interest in the Member during the prior year file to file an amended tax return reporting the Member's distributive share of the tax adjustments and to pay any taxes resulting from the adjustments in accordance with Code Section 6225(c). Each Member must submit the amended returns and pay all related taxes not later than 270 days from the date on which the notice of a proposed partnership adjustment is mailed to the Company. This Section and the Member's obligations under Section 2.05 survive the Company's termination, dissolution, liquidation, and winding up and the Member's withdrawal from the Company or transfer of its Interest. Section 2.07 Legal and Accounting Costs for Tax Matters The Company shall pay all legal and accounting costs associated with any Internal Revenue Service proceeding regarding the Company's tax returns. OPERATING AGREEMENT of CB SHOP LLC 3 OF 27 ARTICLE THREE MEMBERS' INTERESTS Section 3.01 Members' Interests in the Company The Members' interests in the Company are represented by Interests. The Company may issue certificates to the Members representing the Interest held by each Member. Section 3.02 Schedule of Members The Company shall maintain a schedule of all Members and the percentage and type of Interests held by them (Schedule of Members). The Company shall update the Schedule of Members upon the issuance or transfer of any Interests to any new or existing Member. The Schedule of Members as of the execution of this Agreement is attached as Schedule A. Section 3.03 Spouse's Interest The Members' spouses join in the execution of this Agreement in order to bind them as to any community property interest in the capital contributed by the Members the spouses may have. However, the spouses' execution of this Agreement is not intended to grant to a spouse a right in the capital contributed by a Member or to enlarge a spouse's right in the capital contributed by a Member. Section 3.04 Adjustment for Non Pro Rata Contributions and Distributions Interests will be adjusted from time to time to account for non pro rata additional Capital Contributions by and non pro rata distributions to the Members. If non pro rata Capital Contributions or distributions are made, the adjustment to each Member's Interest will be determined by dividing the Capital Account of each Member by the aggregate of the then existing Capital Accounts, after adjusting the Members' Capital Accounts as provided in Article Five. Section 3.05 Admitting New Members Subject to the requirements of Article Twelve, Additional Members may be admitted when the Company issues new Interests or a Member transfers its Interest. Upon compliance with Article Twelve, a person will be admitted as an Additional Member, listed as such on the Company's books, and issued the Interest. The Company shall adjust the Capital Accounts of the Members as necessary under Article Five. The Company may adopt and revise rules, conventions, and procedures as the Company determines appropriate regarding the admission of Additional Members to reflect the Interests at the end of the calendar year in accordance with the Members' intentions. Section 3.06 Transferability of Interest The transferability of each Member's Interest is restricted by Article Twelve. OPERATING AGREEMENT OF CB SHOP LLC 4OF27 ARTICLE FOUR CAPITALIZATION Section 4.01 Initial Capital Contributions As their initial Capital Contributions to the Company, the Members have contributed all of their right, title, and interest in and to the property described on the Schedule of Members. The Members agree that the property described on the Schedule of Members has the Fair Market Value (net of liabilities assumed or taken subject to or by the Company) listed opposite the described property. Section 4.02 Mandatory Additional Capital Contributions Prohibited The Company has no authority to require additional Capital Contributions. ARTICLE FIVE CAPITAL ACCOUNTS Section 5.01 Establishing and Maintaining Capital Accounts A Capital Account will be established for each Member and will be maintained at all times during the Company's existence in compliance with the Code and Treasury Regulations. Each Member's Capital Account will be created with an initial credit equal to the Fair Market Value of the property contributed by the Member in exchange for the Member's interest in the amount described on the Schedule of Members. Each Capital Account will be maintained according to the following provisions. (a) Credits to Member's Interest Each Member's Interest will be credited with the Fair Market Value of the Member's Capital Contribution, the Member's distributive share of profits, and the amount of any Company liabilities that are assumed by the Member. (b) Debits to Member's Interest Each Member's Capital Account will be debited the amount of cash and the Fair Market Value of any property distributed to the Member under this Agreement, the Member's share of losses, and the amount of any liabilities of the Member that are secured by any property contributed by the Member to the Company. (c) Assumption of Liability As provided in Treasury Regulation Section 1. 704- 1 (b)(2)(iv)(c): Any unsecured liability the Company assumes will be treated as a distribution of money to the Member, and the Company shall adjust the Member's Capital Account accordingly. Any unsecured liability of the Company a Member assumes will be treated as a cash Capital Contribution to the Company. The amount of any liability assumed under this provision will be determined according to Code Section 752(c). (d) Non -Cash Distribution Adjustments If noncash assets are distributed to a Member, the Company shall adjust the Capital Accounts of the Members to reflect the hypothetical book gain or loss that would have been realized by the Company if the distributed assets had been sold at Fair Market Value in a cash sale. OPERATING AGREEMENT OF CB SHOP LLC 5 of 27 (e) Adjusting the Fair Market Value on Transfer of Interest If an existing or new Member acquires an Interest from the Company, the Company shall adjust the Capital Accounts of the Members to reflect Fair Market Value of all properties held by the Company. Section 5.02 Adjustment for Company's Constructive Termination If the Company is constructively terminated under Code Section 708, the Company shall adjust the Members' Capital Accounts to reflect Fair Market Value of all properties held by the Company as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(b). Section 5.03 Revaluation Adjustment The Company shall adjust the Members' Capital Accounts to reflect any revaluation of Company property (including intangible assets such as goodwill) under this Section. (a) Adjustment Based on Fair Market Value Any revaluation adjustment to a Member's Capital Account is based on the Fair Market Value of Company property on the date of the adjustment (taking into account Code Section 7701(g)). (b) Adjustment for Unrealized Items The Company shall adjust the Members' Capital Accounts to reflect the manner in which any unrealized income, gain, loss, or deduction inherent in the Company's property (to the extent that it has not been previously reflected in the Members' Capital Accounts) would be allocated among all the Members if there were a taxable disposition of this property for Fair Market Value on the adjustment date. (c) Events Triggering Revaluation Adjustment Without limiting the events that trigger the application of this Section, this Section will be triggered by the Company's liquidation, an in-kind distribution Company property, a Capital Contribution (other than a de minimis amount) as consideration for an Interest, a distribution (other than a de minimis amount) by the Company to a retiring or continuing Member as consideration for an Interest, or the termination of the Company for federal income tax purposes within the meaning of Code Section 708(b)(1)(13). Section 5.04 Negative Capital Accounts If the Company or a Member's Interest is liquidated, no Member will be required to restore a deficit in his or her Capital Account. Section 5.05 Assignment of Capital Account Except as otherwise required by the Code or Treasury Regulations, if any Interest is assigned or treated as having been assigned under this Agreement, the Assignee will be treated as having made all of the Capital Contributions and as having received all of the distributions of the Assignor. The Assignee will succeed to the Capital Account of the Assignor to the extent that it relates to the assigned Interest. If the assignment of Interest causes a termination of the Company under Code Section 708(b)(1)(13), the Capital Account that carnes over to the Assignee will be adjusted according to Treasury Regulation Section 1. 704-1 (b)(2)(iv)(e). OPERATING AGREEMENT OF CB SHOP LLC 6OF27 ARTICLE SIX ALLOCATIONS Section 6.01 Pro Rata Allocations After making the allocations set forth in Section 6.02, net profits and net losses for any Taxable Ycar will be allocated to the Members in proportion to their Interests. Section 6.02 Special and Regulatory Allocations The Company shall make the following special and regulatory allocations. (a) Losses No losses will be allocated to a Member under Section 6.01 that would cause the Member to have an Adjusted Capital Account Deficit at the end of any fiscal year. Any losses not allocated to a Member due to this limitation must be specially allocated to the Members with positive Capital Account balances in proportion to their respective Capital Account balances until all such Capital Account balances have been reduced to zero, and any remainder will be allocated to the Members in proportion to their respective Interests. (b) Allocations Related to Contributed Property For any property contributed to the capital of the Company, the Company shall allocate income, gain, loss, and deductions among the Members under Code Section 704(c) to account for any variation between the adjusted basis of the property to the Company for federal income tax purposes and its Fair Market Value on the date of the Capital Contribution. If the Company adjusts the Fair Market Value of any Company asset, then in making subsequent allocations of income, gain, loss, and deductions regarding that asset, the Company shall account for any variation between the adjusted basis of the asset for federal income tax purposes and the asset's Fair Market Value in the same manner provided under Code Section 704(c). (c) Member Non -Recourse Deduction Allocations The Company shall allocate all Member Non -Recourse Deductions for each Taxable Year to the Member or Members who bear the economic risk of loss regarding the Member Non - Recourse Debt to which any Member Non -Recourse Deductions are attributable. The ratio reflects the Member's economic risk of loss and complies with Treasury Regulation Section 1.704-2(i)(1). (d) Company Minimum -Gain Chargeback If the Company Minimum Gain has a net decrease during any Company Taxable Year, the Company shall allocate items of Company income and gain for the year (and, if necessary, for any subsequent years) in proportion to the respective amounts required to be allocated to each Member under Treasury Regulation Section 1.704-2(f) and (g). This provision is intended to comply with the minimum -gain chargeback requirement of Treasury Regulation Section 1.704-2. To the extent permitted by Treasury Regulation Section 1.704-2 and for purposes of this provision only, the Company shall determine any deficit in each Member's Capital Account before any other allocations under this Article with regard to the Taxable Year and without regard to any net decrease in Member Minimum Gain during the Taxable Year. OPERATING AGREEMENT OF CB SHOP LLC 7 OF 27 (e) Member Minimum -Gain Chargeback If the Member Minimum Gain has a net decrease attributable to Member Non -Recourse Debt during a Taxable Year after the Company computes and accounts for Company Minimum - Gain Chargeback above, the Company shall allocate items of income and gain for that year (and, if necessary, for any subsequent years) to any Member who has a share of the Member Minimum Gain attributable to that Member's Non -Recourse Debt at the beginning of the year. The amount and proportions of the allocations must satisfy Treasury Regulation Section 1.704-2(i). (f) Qualified Income Offset If any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), the Company shall allocate items of Company income and gain to the Member to eliminate any deficit in the affected Members' Capital Accounts to the extent required by Treasury Regulations as quickly as possible. The Company shall make an allocation under this provision only to the extent that an affected Member would have a remaining Capital Account deficit after all other allocations under this Article have been computed. This provision is intended to comply with the qualified income offset requirement of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3). (g) Gross Income Allocation to Restore Capital Account Deficit If any Member has a Capital Account deficit at the end of any Company Taxable Year that exceeds the sum of the amount the Member is obligated to restore under this Agreement and the amount the Member is obligated to restore under the Treasury Regulations, then the Company shall allocate items of Company income and gain in the amount of the excess as quickly as is practicable. The Company shall make an allocation under this provision only to the extent that an affected Member would have a remaining Capital Account deficit after all other allocations under this Article have been computed. (h) Allocation from Disposition of Property Not Revalued If properties of the Company are not revalued under Treasury Regulation Section 1.704- 1(b)(2)(iv)(f) and the Capital Accounts of the Members are not adjusted accordingly upon the admission of a Member or the liquidation of Interest, the Company shall allocate gain or loss recognized upon the sale or other disposition of Company property among the Members. This allocation must take into account the variation between the adjusted basis of the property and the property's Fair Market Value on the date the Member was admitted or the Interest was liquidated, as the case may be, under Code Section 704(c). (i) Allocation Related to Adjustments in Tax Basis If Code Section 734(b) or 743(b) requires an adjustment to the adjusted tax basis of any Company asset, Treasury Regulation Section 1.704-1(b)(2)(iv)(m) must be taken into account in determining the Capital Accounts. The amount of the adjustment to the Capital Accounts must be treated as an item of gain (if the adjustment increases the asset's basis) or loss (if the adjustment decreases the asset's basis). The Company shall allocate this gain or loss to the Members consistent with Treasury Regulation Section 1.704-1. OPERATING AGREEMENT OF CB SHOP LLC 8OF27 0) Allocation Related to Capital -Event Adjustments If the gross Book Value of any asset of the Company is increased or decreased for special events, the Company shall allocate gain or loss as required for Capital Account purposes. The Company shall take into account any difference between the asset's adjusted basis for federal income tax purposes and the asset's gross Book Value for any later allocations of income, gain, loss, or deductions regarding any adjusted asset. (k) Allocation Consistent with Distributions The Company shall allocate net profits and net losses in a manner consistent with: the requirements for distributions of cash described elsewhere in this Agreement; the requirements for distribution of assets upon its dissolution and winding up in accordance with Capital Account balances as specified in the procedures described below; and the requirements of applicable Regulations under Code Section 704(b). (1) Allocations to Comply with Regulations and Intentions of Members The allocations of net income, gains, net losses, and deductions set forth in this Agreement are intended to comply with Treasury Regulation Section 1.704-1(b), Treasury Regulation Section 1.704- 1 (b)(4)(iv), and Treasury Regulation Section 1.704-2, and are intended to have substantial economic effect within the meaning of those Regulations. The allocations could be inconsistent with the Members' intentions. Accordingly, the Members are authorized to allocate net profits, net losses, and other economic items among the Members to prevent the allocations from distorting the manner in which distributions are intended to be divided among the Members under this Article. In general, the Members anticipate that these allocations will be accomplished by specially allocating other net profits, net losses, and items of income, gain, loss, and deductions among the Members so that the net amount of the allocations and any special allocations to the Member is zero. If, for any reason, the Members determine that the allocation provisions of this Agreement are unlikely to be recognized for federal income tax purposes, the Members may amend this Agreement's allocation provisions to the minimum extent necessary to give effect to the plan of allocations and distributions in this Agreement. Section 6.03 Determining Net Profits and Net Losses For purposes of this Article, the terms net profits and net losses mean the amount of the Company's taxable income or loss for any year or period, determined under Code Section 703(a). All items of income, gain, loss, or deduction required to be stated separately under Section 703(a)(1) will be included in taxable income or loss. Any items that are specially allocated under this Article will not be taken into account in computing net profits and net losses. Section 6.04 Allocation of Gain and Loss on Liquidation Upon liquidation of the Company, the Company shall allocate the Company's estimated net loss for the year and any loss realized by the Company on liquidation, including any book adjustment loss, and its estimated net gain for the year and any gain realized upon liquidation, including any book adjustment gain, under Article Five and Article Six. OPERATING AGREEMENT OF CB SHOP LLC 9 OF 27 ARTICLE SEVEN DISTRIBUTIONS Section 7.01 Distributions to Members Subject to Section 7.02, the Members may determine the amounts and timing of distributions to the Members. Distributions may be made to the Members on a pro rata or non pro rata basis. Section 7.02 No Unlawful Distributions Despite any provision to the contrary in this Agreement, the Company must not make any distribution that would violate any contract or agreement to which the Company is then a party or any law, rule, regulation, order or directive of any Governmental Authority then applicable to the Company. ARTICLE EIGHT COMPANY MANAGEMENT Section 8.01 Management by Members The Company is managed by the Members. The Members may take all actions necessary, useful, or appropriate for the ordinary management and conduct of the Company's business. The Members have the exclusive authority to manage the Company's operations and affairs, subject in all cases to Applicable Law. Section 8.02 Member's Agency Authority Each Member has the right and the authority to bind the Company in contracts and other dealings with Third Parties in the ordinary course of the Company's business. No Member has the right or authority to bind the Company with respect to any other matter without a vote of the Members in accordance with Section 10.02. Except with the vote of the other Members in accordance with Section 10.02, no Member may make any representation about the Company that is likely to have a material impact on the Company's business or reputation. Section 8.03 Member's Fiduciary Duties The only fiduciary duties a Member owes to the Company and the other Members are the fiduciary duties of loyalty and care stated in Subsections (a) and (b). (a) Duty of Loyalty A Member's duty of loyalty is limited to the following: to account to the Company and to hold as its trustee any property, profit, or benefit derived by the Member in the conduct or winding up of the Company's activities, from a use of the Company's property by the Member, or from the appropriation of a Company business opportunity; to refrain from dealing with the Company in the conduct or winding up of the Company's activities as or on behalf of a person having an interest adverse to the Company; and to refrain from competing with the Company in the conduct of the Company's activities before the Company's dissolution. OPERATING AGREEMENT OF CB SHOP LLC 10oF27 (b) Duty of Care Subject to Section 17.01, a Member's duty of care in the conduct and winding up of the Company's activities is limited to the duty to act with the care that a person in a litre position would reasonably exercise under similar circumstances and in a manner the Member reasonably believes to be in the best interests of the Company, A Member shall discharge the duties under this Agreement or under the Act and exercise any rights consistent with the contractual obligation of good faith and fair dealing. A Member does not violate a duty or obligation under this Agreement merely because the Member's conduct furthers the Member's own interest. If this Agreement expressly relieves a Member of a responsibility that the Member would otherwise have and imposes the responsibility on one or more other Members, those Members are treated as the Member under this Section with respect to that responsibility. ARTICLE NINE MEMBER RIGHTS AND OBLIGATIONS Section 9.01 Limited Liability of Members Except as required by Applicable Law, a Member's status as a Member does not personally obligate the Member for any debt, obligation, or liability of the Company or of other Members whether arising in contract, tort, or otherwise. Section 9.02 Power of Members The Members have the power to exercise all rights or powers granted to Members under the express terms of this Agreement and the Act. Section 9.03 Restrictions on Withdrawal or Dissociation Rights As long as a Member continues to hold any Interest in the Company, the Member does not have the ability to withdraw, dissociate, or resign as a Member or receive a return of any Capital Contributions before the Company's dissolution and winding up under this Agreement and Applicable Law. A Member does not dissociate;, withdraw, or otherwise cease to be a Member because of the Member's bankruptcy or because of any event specified in the Act. Section 9.04 Company Continues after a Member's Death A Member's death will not cause the Company to dissolve. If a Member dies, the remaining Member or Members will continue the Company and its business. Section 9.05 No Partition Rights Title to the Company's assets is vested solely in the Company and not owned by any Member. Each Member, individually and on behalf of the Member's successors and assigns, expressly waives any right to have any Company property partitioned. Section 9.06 Member Expulsion The Company may not expel a Member under any circumstances. OPERATING AGREEMENT OF CB SHOP LLC 11 OF 27 ARTICLE TEN MEMBER MEETINGS AND NOTICE Section 10.01 Member Meetings The Members may designate when and where they meet. Meetings of the Members are not required. For any meeting of the Members, a quorum requires the presence of Members holding at least two-thirds of the Interests entitled to vote at the meeting. Any time the Members are conducting business at a meeting of the Members, a quorum of the Members must be present. Section 10.02 Annual Company Valuation On an annual basis at the conclusion of the Company's fiscal year, the Members shall determine in writing the present value of the Company, as shown on the attached Schedule B (the Annual Company Valuation). The Members shall execute a new Schedule B for each fiscal year of the Company's existence. Section 10.03 Voting Rights Each Member has the right to vote the holder's proportionate Interest in the Company regarding all matters that have a right to vote under this Agreement or by Applicable Law. Example: A Member that holds 35.5% of all of the Interests entitled to vote on a matter will have a 35.5% Voting Interest in the Company and will have 35.5 votes out of 100 votes that may be cast on that matter. Unless provided otherwise by this Agreement or Applicable Law, any action of the Members requires a Supermajority Vote of the Members in favor of the action. Section 10.04 Action by Written Consent Any action required or permitted to be taken at a meeting of the Members may be taken without a meeting if the action is taken by all the Members entitled to vote on the action. Section 10.05 Presence Any Member may participate in any meeting using any means of communication by which all Members participating may simultaneously hear each other during the meeting. Any Member participating in this way is considered present in person at the meeting. ARTICLE ELEVEN BOOKS, RECORDS, AND BANK ACCOUNTS Section 11.01 Books and Records The Company shall keep books of account regarding the operation of the Company at the principal office of the Company or at any other place the Company determines. Section 11.02 Accounting and Taxable Year The Company shall keep books of account consistent with any method authorized or required by the Code and as determined by the Members. The Company shall close and balance the books at OPERATING AGREEMENT OF CB SHOP LLC 12 OF 27 the end of each Taxable Year, The Members may choose any period authorized or required by the Code for the Company's Taxable Year. Section 11.03 Reports Within a reasonable time after each Taxable Year ends, the Company shall provide the information required to prepare and file individual tax returns to all Members. The Company shall prepare these financial statements at the Company's expense. Section 11.04 Member Inspection Rights Upon reasonable notice from each Member, the Company shall—and steal l cause its officers, and employees to—provide reasonable access to each Member to Company Information during normal business hours. Company Information is the information accessible to the Member by exercising the inspection right to examine and copy the corporate, financial, and similar records, reports, and documents of the Company, including all books and records, minutes of proceedings, internal management documents, operations reports, reports of adverse developments, management correspondence, and communications with the Member. ARTICLE TWELVE TRANSFER OF INTERESTS Section 12.01 Transferability of Interests No Member may transfer any Interest either voluntarily or involuntarily by any means without the unanimous written consent of the Members. The Members may transfer any Interest without the unanimous written consent of the Members if the transfer is permitted under Section 12.02. The Members are not required to consent to any attempted transfer and will not be subject to any liability for withholding consent. Any attempted transfer of an Interest or the admission of an Additional Member in violation of this Section and Section 12.06 is null and void ab initio. Section 12.02 Permitted Transfers Despite the transfer restrictions in Section 12.01, a Member may transfer an Interest without the unanimous written consent of the Members if: the transferee is a revocable or irrevocable trust for the sole benefit of the transferor during his or her life or transferor's Immediate Family. A transfer to a transferee otherwise permitted by this Section will only be permitted if- the fthe transfer does not cause the Company to terminate for federal income tax purposes; the transfer does not result in any event of default as to any secured or unsecured obligation of the Company; the transfer does not cause a reassessment of any real property owned by the Company; and the transfer does not cause any adverse material impact to the Company. For a trust to be considered a Permissible Transferee, the trustee must be specifically and irrevocably prohibited from gifting, selling, or distributing the Interest held by the trust to a person other than Immediate Family. OPERATING AGRFEMFNT OF CB SHOP LLC 13 OF 27 Section 12.03 Effect of Permitted Transfer The Permitted Transferee of a transfer of Interest permitted by Section 12.02 will be admitted as an Additional Member only in compliance with Section 12.06. As a condition of admission as Additional Member, the Company may require the transferee to accept this Agreement in writing. Section 12.04 Transferee Treated as an Assignee until Admitted as an Additional Member The transferee of an Interest will hold the interest only as an Assignee until the transferee satisfies all the requirements of Section 12.06 to become an Additional Member. As an Assignee, the transferee will have only those rights in Section 12.05. Section 12.05 Assignee's Rights, Limitations, and Obligations An Assignee may receive distributions from the Company to the same extent that the transferring Member would receive distributions under this Agreement, but otherwise has substantially fewer rights than a Member. An Assignee only holds a right to receive economic benefits when actually distributed by the Company in respect to the assigned Interest. Regardless of whether an Assignee is admitted as a Member, an Assignee is subject to all of the obligations of a Member. Section 12.06 Requirements to Become an Additional Member An Assignee or other prospective Additional Member will not become an Additional Member and will not have any rights as a Member without the unanimous written consent of all Members. The prospective Additional Member must sign all agreements and instruments requested by the Manager. Any attempt to admit a Member that violates this Article will be null and void ab initio. Section 12.07 Voting Rights of Transferred Interests A Member who transfers an Interest to an Assignee will continue to hold all voting rights associated with the assigned Interest until the Assignee of the transferred Interest satisfies all of the requirements to become an Additional Member under Section 12.06. If an Assignee acquires an Interest due to the death of a Member, the voting rights associated with the transferred Interest will be suspended and disregarded for purposes of calculating votes until the Assignee of the transferred Interest satisfies all of the requirements to become an Additional Member under Section 12.06. ARTICLE THIRTEEN BUY -SELL OBLIGATIONS Section 13.01 Surviving Members' Option to Purchase Interest Upon Death Upon the death of any Member, the surviving Members have the option to purchase all, but not less than all, of the Interest owned by the deceased Member at the time of death. This option to purchase shall exist in favor of the surviving Members in perpetuity after the date of the death of such Member. The price will be determined by operation of Article Fourteen and by the other OPERATING AGREEMENT OF CB SHOP LLC 14 OF 27 terms in this Agreement. This option is exercised by giving notice to the deceased Member's estate or successors in interest. If the option is exercised, the surviving Members must purchase the deceased Member's Interest in the proportion that the number of Interest owned by each of them bears to the total number of Interest that these surviving Members own, determined as of the date of the deceased Member's death unless the surviving Members agree among themselves to a different allocation. Section 13.02 Company's Option to Purchase Interest Upon Disability If a Member is totally disabled, as determined under Section 18.14, the Company has the option to purchase all, but not less than all, of the Interest that the disabled Member owns for a period of 12 months after the disabled Member first becomes totally disabled as determined under Section 18.14. The price is determined by operation of Article Fourteen and by the other terms in this Agreement. This option is exercised by giving the notice to the disabled Member within the time period provided. If not exercised, the option expires at the end of this period. For a period of 180 days following the expiration of the offer period, the disabled Member may then sell his or her Interest to any person or entity; provided, however, that such transferee shall be subject to the same terms and conditions as the transferor Member under the provisions of this Agreement. In the case of a sale under this paragraph, the purchase price offered to any third party buyer may not be less than, and the terms of purchase for the Interest may not be more favorable than, the purchase price and the terms of purchase that would have been applicable to the Company and the nondisabled Members had they accepted the offer and purchased the Interest pursuant to the original offer. If the Member is totally disabled, as determined under Section 18.14, and sells his or her Interest as provided in this Article Thirteen, then in addition to the disabled Member, the disabled Member's spouse must sell, and the same purchaser must purchase, all of the interest in the Company that the disabled Member's spouse owns. The purchase price is determined by operation of Article Fourteen as of the date the disabled Member is first determined totally disabled, and the sale is subject to the other terms in this Agreement. Section 13.03 Company's Option to Purchase Interest Upon Bankruptcy or Insolvency If a Member becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceeding, the Company has the option to purchase all, but not less than all, of the Interest that the insolvent Member owns for a period of 12 months after the insolvent Member first becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceeding. The price is determined by operation of Article Fourteen and by the other terms in this Agreement. This option is exercised by giving the notice to the insolvent Member within the time period provided. If not exercised, the option expires at the end of this period. For a period of 180 days following the expiration of the offer period, the insolvent Member may then sell his or her Interest to any person or entity; provided, however, that such transferee shall be subject to the same terms and conditions as the transferor Member under the provisions of this Agreement. In the case of a sale under this paragraph, the purchase price offered to any third party buyer may not be less than, and the terms of purchase for the Interest may not be more favorable than, the purchase price and the terms of purchase that would have been applicable to OPERATING AGREEMENT OF CB SHOP LLC 15 Or 27 the Company and the other Members had they accepted the offer and purchased the Interest pursuant to the original offer. If the insolvent Member sells his or her Interest as provided in this Article Thirteen, then in addition to the insolvent Member, the insolvent Member's spouse must sell, and the same purchaser must purchase, all of the Interest in the Company that the insolvent Member's spouse owns. The purchase price is determined by operation of Article Fourteen as of the date the insolvent Member becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceeding, and the sale is subject to the other terms in this Agreement. Section 13.04 Insurance Policies to Fund Buy -Sell Agreement All life insurance policies owned by the nondisabled Members on the life of a disabled Member must be kept in full force and effect during the buyout period under this Article, and for any period of time during which an amount remains owed to the disabled Member as a result of the purchase of the disabled Member's Interest. If the disabled Member dies after the buyout period referred to in this Article ends but before receiving full payment for his or her Interest, the net death benefits received by the non -disabled Members shall be applied against any remaining balance owed to the disabled Member by the nondisabled Members under this Article. Any insurance proceeds received in excess of the amount due to the disabled Member shall be retained by the nondisabled Members owning such policies. ARTICLE FOURTEEN BUY -SELL PURCHASE PRICE Section 14.01 Determination of Purchase Price Except as otherwise provided in this Agreement, the purchase price for each Member's Interests purchased under Article Thirteen will be determined by first valuing the entire Company and then multiplying that value by the percentage Interest held by the Member (but not the voting interest). That value shall be paid to the selling Member. The total value of the Company for all purposes of this Agreement will equal the Annual Company Valuation, or, if the Members have not signed an Annual Company Valuation within the thirteen (13) months immediately preceding the month in which an option or obligation to purchase arises, the total value of the Company will be determined by a Qualified Appraisal. The parties to this Agreement agree that valuation discounts for lack of marketability or lack of control shall not be used in determining the purchase price of a Member's Interest for any purpose under this Agreement. Section 14.02 Valuation Disputes If any party disagrees with a valuation of his or her Interest or the valuation of Interest that he or she has the right to purchase (Objecting Party) that results from a Qualified Appraisal made by a Qualified Appraiser selected by the Company, the Objecting Party may select a disinterested Qualified Appraiser to make another Qualified Appraisal as expeditiously as possible. If the two appraised values of the Objecting Party's Interest differ by less than 10% of the lower appraised value of the Interest, the average of the two appraised values will be the value of the Interest for OPERATING AGREEMENT OF CB SHOP LLC 16 OF 27 purposes of this Agreement. If the two appraised values of the Objecting Party's Interest differ by greater than 10% of the lower appraised value of the Interest, then the two disinterested Qualified Appraisers will select a third disinterested Qualified Appraiser to perform a Qualified Appraisal. The valuation made by the Qualified Appraiser or Qualified Appraisers finally chosen (or the average valuation described above) will be conclusive and bind all parties. The Objecting .Party and the Company will share equally all costs of a Qualified Appraiser mutually selected by the Objecting Party and the Company or by the two disinterested Qualified Appraisers. All costs of an individually selected Qualified Appraiser will be borne by the party selecting the Qualified Appraiser. Section 14.03 Insurance Policies Excluded For purposes of valuing the insured Member's Interest, any cash surrender value or death benefits received or to be received with respect to life insurance policies or disability buy-out policies insuring the selling Member that are owned by the Company are specifically excluded from the Company's assets and shall not be added to the Company's valuation. ARTICLE FIFTEEN BUY -SELL PAYMENT TERMS Section 15.01 Payment Due at Closing Except as otherwise provided in this document, when a purchaser becomes obligated to purchase Interest under this Agreement, the purchaser shall pay the seller the purchase price for the Interest by delivering to the seller at closing the down payment in cash, and a signed promissory note payable to the seller's order for the balance due (Note). Section 15.02 Time to Close Closing must take place within 60 days after the date the purchaser becomes obligated to purchase the Interest. If the purchaser becomes obligated to purchase as a result of an offer made under this Agreement, closing must take place within 60 days after the date of the expiration or acceptance of the offer. Section 15.03 Down Payment Amount The down payment will be 5% of the purchase price for the Interest purchased. If a purchase is due to the death of a Member, the down payment must not be less than the amount of the life insurance proceeds on the life of the deceased Member received by the purchaser, but not greater than the entire purchase price. If the purchaser receives these insurance proceeds after closing, the proceeds in excess of the amount paid at closing as the down payment must be paid to the noteholder as a prepayment on the Note. Section 15.04 Promissory Note Payments The Note must be paid in 80 consecutive quarterly payments of principal and interest. The Note will bear interest from its execution date. OPERATING AGREEMENT OF CB SHOP LLC 17OF27 Section 15.05 Interest Rate The interest rate on the Note is the lowest applicable federal rate that would apply to such a Promissory note as established under Code Section 1274(d), as amended, applicable at closing, compounded quarterly. Section 15.06 Security Interest Each Note provided for in this Agreement must be secured by a valid and perfected security interest in all Interest transferred by the seller to the purchaser under the terms of this Agreement. The purchaser shall sign a security and pledge agreement evidencing that interest at closing. Section 15.07 Delivery of Closing Documents At closing, the selling Member shall deliver the properly endorsed purchased Interest to the purchaser, together with all instruments necessary to accomplish this transfer. These instruments include powers of attorney, letters testamentary, or letters of administration. The Company shall immediately thereafter transfer the ownership of this Interest to the purchaser in the proportions set forth in this Agreement. The Company shall promptly issue a certificate or other appropriate legal document in the name of each purchaser evidencing the transferred Interest and deliver the certificate or document to the seller if he or she; holds Interest as security for payment of a Note. Except as provided in this Agreement, transfer of this Interest must be made free and clear of all taxes, debts, claims, or other encumbrances other than those incurred for a corporate purpose and approved in advance by the Members. Section 15.08 Default If a default of payment of amounts due under a Note occurs, within 15 days' written notice to the Company, the seller or the seller's Personal. Representative, successors, or assigns, have the right to examine the books and records of the Company during reasonable business hours and in a manner that will not unreasonably interfere with the business of the Company, and to receive copies of all accounting reports and tax returns prepared for or on behalf of the Company. The seller or his or her Personal Representative, successors, or assigns shall keep confidential all information disclosed by any examination of the books, records, accounting reports, and tax returns of the Company provided for in this Section. ARTICLE SIXTEEN DISSOLUTION AND LIQUIDATION Section 16.01 Dissolution Events The Company may only be dissolved by the Members, subject to any special vote required by the Operating Agreement or by a court. After dissolution, the Company may only conduct activities necessary to wind up its affairs. Section 16.02 Liquidation After dissolution, the Company will pay outstanding debts, set up any reserves required for anticipated future expenses, and distribute any remaining assets to the Members in proportion to their positive Capital Account balances. OPERATING AGREEMENT Of CB SHOP LLC 18OF27 Section 16.03 Company Property Sole Source Company property is the sole source for the payment of any debts or liabilities owed by the Company. Any return of Capital Contributions or liquidation amounts to the Members will be satisfied only to the extent that the Company has adequate assets. If the Company does not have adequate assets to return the Capital Contributions, the Members will not have any recourse against the Company or any other Members, except to the extent that other Members may have outstanding debts or obligations owing to the Company. ARTICLE SEVENTEEN EXCULPATION AND INDEMNIFICATION Section 17.01 Exculpation of Protected Persons No Protected Person is liable to the Company or any other Protected Person for any loss, damage, or claim incurred because of any action taken or not taken by the Protected Person in good -faith reliance on the provisions of this Agreement. Section 17.02 Indemnification of Protected Persons The Company shall indemnify, hold harmless, defend, pay, and reimburse any Protected Person against all losses, claims, damages, judgments, fines, or liabilities, including reasonable legal fees or other expenses incurred in their investigation or defense, that arise in connection with any actual or alleged act, omission, or forbearance performed or omitted on behalf of the Company or any Member in connection with the Company's business. Section 17.03 Unprotected Acts The exculpation and indemnification provisions of this Article are only effective if the action or omission is not an Unprotected Act and do not protect any Member from a court order to purchase the Interest of another Member who successfully contends that the Member committed actionable, oppressive acts against the other Member. Section 17.04 Other Rights The exculpation and indemnification provisions of this Article are not exclusive of any other rights to a Protected Person may be entitled under any other instrument or by reason of any other action or otherwise. ARTICLE EIGHTEEN GENERAL MATTERS Section 18.01 Legal Counsel Jeff Christensen was represented exclusively and independently by Beard St. Clair Gaffney PA in entering this Agreement. The Company and other Members are advised to obtain their own independent legal counsel prior to entering this Agreement, and, by entering this Agreement, the Company and other Members represent either that they were represented by their own independent legal counsel or that they knowingly and voluntarily chose not to have legal representation in entering this Agreement. The parties to this Agreement expressly acknowledge OPERATING AGREEMENT OF CB SHOP LLC 19 OF 27 they did not receive or rely on legal advice from any other party's counsel in entering this Agreement. The parties to this Agreement agree they shall bear their own respective costs, expenses, and fees incurred in studying, investigating, evaluating, negotiating, entering, and performing the obligations of this Agreement. Section 18.02 Expenses Except as otherwise expressly provided in this Agreement, the Company must pay all expenses (including fees and disbursements of counsel, financial advisors, and accountants) incurred in making any amendment or waiver to this Agreement and completing the transactions contemplated by it. Section 18.03 Binding Effect Subject to the restrictions on transfer in this Agreement, this Agreement binds and inures to the benefit of the Members and to their respective successors, personal representatives, heirs, and assigns. Section 18.04 Further Assurances In connection with this Agreement and the transactions contemplated by it, the Company and each Member agree to provide further assurances if requested by the Company or any other Member. These further assurances include signing and delivering any additional documents, instruments, conveyances, and other assurances or taking any further actions necessary to cant' out the provisions of or transactions contemplated by this Agreement. Section 18.05 No Waiver Any Member's failure to insist upon strict performance of any provision or obligation of this Agreement for any period is not a waiver of that Member's right to demand strict compliance in the future. An express or implied consent to or waiver of any breach or default in the performance of any obligations under this Agreement is not a consent to or waiver of any other breach or default in the performance of the same or of any other obligation. Section 18.06 Governing Law This Agreement is governed, construed, and administered according to the laws of Idaho, as from time to time amended, and any applicable federal law. No effect is given to any choice -of - law or conflict -of -law provision or rule (whether of the State of Idaho or any other jurisdiction) that would cause the application of the law of any jurisdiction other than those of the State of Idaho. Section 18.07 Attorneys' Fees If any party to this Agreement institutes any legal cause of action—including arbitration— against another party arising out of or relating to this Agreement, the prevailing party will be entitled to the costs incurred in conducting the cause of action, including reasonable attorneys' fees and expenses and court costs. OPERATING AGREEMENT OF CB SHOP LLC 20 OF 27 Section 18.08 Remedies Cumulative Except to the extent this Agreement expressly provides otherwise, the rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other rights and remedies available at law, in equity, or otherwise. Section 18.09 Notices All notices provided for in this Agreement must be in writing, duly signed by the party giving the notice, and must be delivered, telecopied, or mailed by registered or certified mail, as follows: if given to the Company, to the Company's principal place of business; or if given to any Member, to the Member's address as reflected in the Company's books or at any other address the Member may later designate in writing. Section 18.10 Severability The invalidity or unenforceability of any provision of this Agreement does not affect the validity or enforceability of any other provision of this Agreement. If a court of competent jurisdiction determines that any provision is invalid, the remaining provisions of this Agreement are to be construed as if the invalid provision had never been included in this Agreement. Section 18.11 Entire Agreement This Agreement, together with the Certificate of Organization, and all related Exhibits, Schedules, and other agreements specifically referred to in this Agreement, constitutes the sole and entire agreement of its parties with respect to the Agreement's subject matter. This Agreement supersedes all prior and contemporaneous understandings, agreements, representations, and warranties with respect to the subject matter. As between or among the parties, oral statements or prior written material not specifically incorporated in this Agreement have no force or effect. The parties specifically acknowledge that, in entering into and executing this Agreement, each is relying solely upon the representations and agreements contained in this Agreement and no others. Section 18.12 Amendments No provision of this Agreement may be amended or modified except by a written instrument executed by all of the Members. Despite the foregoing, amendments to the Schedule of Members after any new issuance, redemption, repurchase, or transfer of Interest in accordance with this Agreement may be made by the Company without the consent of or execution by the Members. Section 18.13 Multiple Originals; Validity of Copies This Agreement may be signed in any number of counterparts, each of which will be deemed an original. Any person may rely on a copy of this Agreement that any Member certifies to be a true copy to the same effect as if it were an original. Section 18.14 Determination of Disability For purposes of this Agreement, a Member or other person is disabled or totally disabled if he or she is treated as disabled under any disability insurance policy owned by the purchaser for purposes of providing funds to buy a disabled Member's Interest upon his or her disability. The OPERATING AGREEMENT OF CB SHOP LLC 21 OF 27 Member's total disability continues until the Member is no longer treated as totally disabled for the purposes of the policy. If disability buyout insurance is not acquired or maintained, a Member or other person is considered totally disabled when, as a result of physical or mental illness or injury, he or she has been unable to perform the customary duties of his or her employment for a period of 24 months, and presents (or there is presented) to the Company a certificate from a physician licensed to practice medicine in the state of Idaho or the state of the Member's residency that the condition will more likely than not be permanent. Within 30 days of the presentation of the certificate, either the Company, the Member or other person claiming disability or any other Member will be entitled to request a second medical opinion. The physician providing the second opinion must provide a certificate to the Company and the Member describing the nature, extent, and likely duration of the disability. The failure to make a request for the second certificate within the 30 -day period waives the review process. Every Member agrees to submit to examinations as may be necessary to determine the nature and extent of any disability. If, after a second opinion is requested, the two physicians providing certificates are in conflict as to the nature, extent, and likely duration of any disability, then they must select a third physician and the affected Member must submit to an additional examination by the third physician. The third physician must also provide a certificate describing the nature, extent, and likely duration of the disability to the Company and the Members, and a concurring determination of any two of the three physicians will be controlling. Section 18.15 Determination of Fair Market Value The Fair Market Value of any asset is the purchase price that a willing buyer having reasonable knowledge of relevant facts would pay a willing sellcr for that asset in an arm's length transaction on any date, without time constraints and without being under any compulsion to buy or sell. Fair Market Value is a good -faith determination made by the Company based on factors the Company, in its reasonable business judgment, considers relevant. The foregoing notwithstanding, no valuation discounts for lack of marketability or lack of control shall be used in determining the value of a Member's Interest for any purpose under this Agreement. ARTICLE NINETEEN DEFINITIONS AND INTERPRETATION Section 19.01 Definitions For purposes of this Agreement, the following terms have the following meanings. (a) Act Act means the Idaho Uniform Limited Liability Company Act, as amended from time to time. (b) Additional Member Additional Member means any person not previously a Member who acquires an Interest and is admitted as a Member. (c) Adjusted Capital Account Deficit Adjusted Capital Account Deficit means the negative balance in a Member's Capital Account at the end of a Taxable Year after: OPERATING AGREEMENT OF CB SHOP LLC 22 OF 27 increasing the Capital Account by the amount, if any, of such negative balance the Member is obligated to restore under this Agreement and the amount of such negative balance the Member is deemed to be obligated to restore under Treasury Regulations sections 1.704-2(g)(1) and 1.704-2(i)(5); and reducing the Capital Account with the items described in Treasury Regulations sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6). (d) Agreement Agreement means this Operating Agreement, as amended from time to time. (e) Annual Company Valuation Annual Company Valuation means the Members' written determination of the Company's present value at the conclusion of each fiscal year during the Company's existence, as shown on the attached Schedule B. (t) Applicable Law Applicable Law means the Act, the Code, the Securities Act, all pertinent provisions of any agreements with any Governmental Authority and all pertinent provisions of any Governmental Authority's: constitutions, treaties, statutes, laws, common law, rules, regulations, decrees, ordinances, codes, proclamations, declarations, or orders; consents or approvals; and orders, decisions, advisory opinions, interpretative opinions, injunctions, judgments, awards, and decrees. (g) Assignee Assignee means the recipient of an Interest by assignment. (h) Book Value With respect to any Company property, Book Value means 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)(d)-(g). The Book Value of each Company asset must be adjusted as of the date of this Agreement under Treasury Regulation Section 1.704-1(b)(2)(iv)(f) in a manner determined by the Company so that the aggregate Book Value of the Company's assets (net of the Company's liabilities) as of this date is equal to the aggregate Capital Account balances of the Members as of this date. (i) Capital Account Capital Account means the account established and maintained for each Member under Section 5.01 and under Treasury Regulation Section 1.704- 1 (b)(2)(iv), as amended from time to time. (j) Capital Contribution Capital Contribution means the total cash and other consideration contributed and agreed to be contributed to the Company by each Member. Each initial Capital Contribution is shown in the Schedule A, attached and incorporated into this Agreement. Additional Capital Contribution means the total cash and other consideration contributed to the Company by each Member (including any Additional Member) other than the initial Capital Contribution. Any reference in this Agreement to the Capital Contribution of a current Member includes OPERATING AGREEMENT OF CB SHOP LLC 23 OF 27 any Capital Contribution previously made by any prior Member regarding that Member's Interest. The value of a Member's Capital Contribution is the amount of cash plus the Fair Market Value of other property contributed to the Company. (k) Code References to the Code or to its provisions are to the Internal Revenue Code of 1986, as amended from time to time, and any corresponding Treasury Regulations. References to the Treasury Regulations are to the Treasury Regulations under the Code in effect. If a particular provision of the Code is renumbered or a subsequent federal tax law supersedes the Code, any reference is to the renumbered provision or to the corresponding provision of the subsequent law, unless the result would be clearly contrary to the Members' intent as expressed in this Agreement. The same rule applies to Treasury Regulations references. (1) Company Company means CB Shop LLC, an Idaho limited liability company, (m) Company Minimum Gain Company Minimum Gain means the minimum amount of gain that would be realized by the Company if the Company disposed of all Company property subject to the liabilities in full satisfaction of those liabilities, computed under Treasury Regulation Section 1.704-2(b) and (d). (n) Company Representative Company Representative is defined in Section 2.02. (o) Certificate of Organization Certificate of Organization means the Certificate of Organization filed with the Idaho Secretary of State as required by the Act, or any other similar instrument required to be filed by the laws of any other state in which the Company intends to conduct business. (p) Fair Market Value Fair Market value is defined in Section 18.14. (q) Governmental Authority Governmental Authority means any local, state, federal, or foreign government or its political subdivision; any agency or instrumentality of a government or its political subdivision; or any self -regulated organization or other nongovernmental regulatory authority or quasi - Governmental Authority whose rules, regulations, or orders have the force of law. Governmental Authority also means any arbitrator, court, or tribunal of competent jurisdiction. (r) immediate Family Immediate Family means any Member's spouse (but not a spouse who is legally separated from the person under a decree of divorce or separate maintenance), parents, parents-in-law, descendants (including descendants by adoption), spouses of descendants (but not a spouse who is legally separated from the person under a decree of divorce or separate maintenance), brothers, sisters, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law, and grandchildren -in-law. OPERATING AGREEMENT OF CB SHOP LLC 24 OF 27 (s) Interest Interest means the ownership interest and rights of a Member in the Company, including the Member's right to a distributive share of the profits and losses, the distributions, and the property of the Company and the right to consent or approve Company actions. All Interests are subject to the restrictions on transfer imposed by this Agreement. Each Member's Interest is personal property and no Member will acquire any interest in any of the assets of the Company. Interests may be adjusted from time to time under Article Three. (t) Majority Vote; Supermajority Vote Majority Vote means a ratio of more than 50 votes out of every 100 votes that may be cast will determine the matter subject to the vote. Supermajority Vote means a ratio of at least 65 votes per 100 votes that may be cast will determine the matter subject to the vote. (u) Member Member means any person designated in this Agreement as a Member or any person who becomes a Member under this Agreement. (v) Member Minimum Gain Regarding a Member Non -Recourse Debt, Member Minimum Gain means the least amount of gain that the Company would realize if the Company disposed of the encumbered Company property in full satisfaction of the encumbrance. (w) Member Non -Recourse Debt and Member Non -Recourse Deductions Member Non -Recourse Debt means nonrecourse Company debt for which one or more Members bear economic risk of loss as defined in Treasury Regulation Section 1.704-2(b)(4). Member Non -Recourse Deductions means for each Taxable Year, the Company deductions that are attributable to Member Non -Recourse Debt and are characterized as Member Non - Recourse Deductions under Treasury Regulation Section 1.704-2(b). (x) Protected Person Protected Person means: each Member; each Member's employees or agents; and each of the Company's employees, and agents. (y) Qualified Appraiser and Qualified Appraisal A Qualified Appraiser means an appraiser who is a member of the American Society of Appraisers, Business Valuations Division, and accredited to perforin business appraisals or valuations by this organization; or, alternatively, a certified public accountant accredited in business valuation by the American Institute of Certified Public Accountants. A Qualified Appraisal means any appraisal performed by a Qualified Appraiser. (z) Securities Act Securities Act refers to the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations under it that are in effect at the time. (aa) Taxable Year Taxable Year means the calendar year or any other accounting period selected by the Members. Taxable Year is synonymous with fiscal year for all purposes of this Agreement. OPERATING AGREEMENT OF CB SHOP LLC 25 OF 27 (bb) Unprotected Act Unprotected Act means any act, omission, or forbearance by a Protected Person that: is not in good faith or is not in a manner believed by the Protected Person to be in, or not opposed to, the Company's best interests; with respect to any criminal proceeding, the Protected Person would have reasonable cause to believe was unlawful; or constitutes fraud or willful misconduct. Section 19.02 Interpretation The following general provisions and rules of construction apply to this Agreement. (a) Singular and Plural; Gender Unless the context requires otherwise, words denoting the singular may be construed as plural and words of the plural may be construed as denoting the singular. Words of one gender may be construed as denoting another gender as is appropriate within the context. The word or, when used in a list of more than two items, may function as both a conjunction and a disjunction as the context requires or permits. (b) Headings of Articles, Sections, and Subsections The headings of Articles, Sections, and Subsections used within this Agreement are included solely for the reader's convenience and reference. They have no significance in the interpretation or construction of this Agreement. (c) Include, Includes, and Including In this Agreement, the words include, includes, and including mean include without limitation, includes without limitation, and including without limitation, respectively. Include, includes, and including are words of illustration and enlargement, not words of limitation or exclusivity. (d) Words of Obligation and Discretion Unless otherwise specifically provided in this Agreement or by the context in which used, the word shall is used to impose a duty, to command, to direct, or to require. Terms such as may, is authorized to, is permitted to, is allowed to, has the right to, or any variation or other words of discretion are used to allow, to permit, or to provide the discretion to choose what should be done in a particular situation, without any other requirement. Unless the decision of another party is expressly required by this Agreement, words of permission give the decision -maker the sole and absolute discretion to make the decision required in the context. (e) No Presumption against Drafting Party This Agreement is to be construed without giving force to any presumption or rule requiring construction or interpretation against the drafting party. No party may claim that an ambiguity in this Agreement should be construed against any other parry or that there was any coercion, duress (economic or otherwise), negligent misrepresentation, or fraud (including fraud in the inducement) affecting the validity or enforcement of this Agreement. OPERATING AGRF,EMENT OF CB SHOP LLC 26 OF 27 Sighed: MEMBERS: Jeff Christensen Troy Christensen MEMBERS' SPOUSES Holly Christensen, as to any community property interest she may have due to her marriage to Jeff Christensen OPERATING AGREEMENT OF CB SHOP LLC 27 of 27 SCHEDULE A SCHEDULE OF MEMBERS Member i Ownership Jeff Christensen 1 60% Interest Troy Christensen 1 40`?io Interest OPERATING AGREEMENT OF CB SHOP LLC SCHEDULE OF MEMBERS I OF I SCHEDULE B ANNUAL COMPANY VALUATION The Members of CB Shop LLC, an Idaho limited liability company (Company), hereby confirm and agree that as of the end of fiscal year 20 , the value of the Company is The Members of the Company, acting without notice or a meeting, waive all notice, whether required by statute or otherwise, of the meeting of the Members of the Company and under the Idaho Uniform Limited Liability Company Act of Idaho, and consent to, adopt, and vote in favor of the above valuation of the Company. This consent has the same effect as the unanimous vote at a duly convened meeting of the Members of the Company. This annual valuation of the Company is approved as actions of the Members of the Company without formal meeting, all as of --,20- Jeff ,20 Jeff Christensen Troy Christensen OPERATING AGREEMENT OF CB SHOP LLC ANNUAL COMPANY VALUATION 1 OF 1