This excerpt taken from the KDE 10-K filed Mar 16, 2007.
Each Member hereby represents and warrants to, and agrees with, the Management Committee, the other Members, and the Company as follows:
12.1 Preexisting Relationship or Experience. (i) Such Member has a preexisting personal or business relationship with the Company or one or more of its Managers, officers or control persons, or (ii) by reason of such Members business or financial experience, or by reason of the business or financial experience of such Members financial advisor who is unaffiliated with and who is not compensated, directly or indirectly, by the Company or any Affiliate or selling agent of the Company, such Member is capable of evaluating the risks and merits of an investment in the Units and of protecting such Members own interests in connection with this investment.
12.2 No Advertising. Such Member has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, newspaper or magazine article or advertisement, radio or television advertisement, or any other form of advertising or general solicitation with respect to the sale of the Units.
12.3 Investment Intent. Such Member is acquiring the Units for investment purposes for such Members own account only, and not with a view to or for sale in connection with any distribution of all or any part of the Units. No other person will have any direct or indirect beneficial interest in or right to such Members Units.
12.4 Purpose of Entity. If the Member is a corporation, partnership, limited liability company, trust or other Entity, it was not organized for the specific purpose of acquiring the Units.
12.5 Residency. Such Member is a resident of, or, if the Member is an entity, has its principal place of business in, the state in which such Members address as set forth on Exhibit A attached hereto is located.
12.6 Economic Risk. Such Member is financially able to bear the economic risk of an investment in the Units, including the total loss thereof.
12.7 No Registration of Units. Such Member acknowledges that the Units have not been registered under the Securities Act, or qualified under the California Corporate Securities Law of 1968, as amended, or any Delaware or other applicable blue sky laws in reliance, in part, on such Members representations, warranties and agreements herein. Such Member represents, warrants, and agrees that the Company and the Managers are under no obligation to register or qualify the Membership Interest under the Securities Act or under any state securities law, or to assist such Member in complying with any exemption from registration and qualification.
12.8 Restricted Securities. Such Member understands that the Units are restricted securities under the Securities Act in that the Units will be acquired from the Company in a transaction not involving a public offering, and that the Units may be resold without registration under the Securities Act only in certain limited circumstances, and that otherwise the Units must be held indefinitely.
12.9 No Disposition in Violation of Law. Without limiting the representations set forth above, and without limiting Article 8 of this Agreement, such Member will not make any disposition of all or any part of such Members Membership Interest which will result in the violation by such Member or by the Company of the Securities Act, the California Corporate Securities Law of 1968, or any Delaware or other applicable securities laws. Without limiting the foregoing, such Member agrees not to make any disposition of all or any part of the Units unless and until:
(a) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement and any applicable requirements of state securities laws; or
(b) Such Member has (i) notified the Company of the proposed disposition and has furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Manager, such Member has furnished the Company with a written opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of any securities under the Securities Act or the consent of or a permit from appropriate authorities under any applicable state securities law.
12.10 Legends. Such Member understands that the certificates (if any) evidencing the Units may bear one or all of the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION ARE NOT REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH IN THIS COMPANYS OPERATING AGREEMENT.
(b) Any legend required by applicable state securities laws.
12.11 Investment Risk. Such Member acknowledges that the Units are a speculative investment which involves a substantial degree of risk of loss by such Member, that such Member understands and takes full cognizance of the risk factors related to the purchase of the Units, and that the Company is newly organized.
12.12 Information Reviewed. Such Member has received and reviewed all information such Member considers necessary or appropriate for deciding whether to purchase the Units. Such Member has had an opportunity to ask questions and receive answers from the Company and its Managers, officers and employees regarding the terms and conditions of purchase of the Units and regarding the business, financial affairs and other aspects of the Company, and has further had the opportunity to obtain all information (to the extent the Company possesses or can acquire such information without unreasonable effort or expense) which such Member deems necessary to evaluate the investment and to verify the accuracy of information otherwise provided to such Member.
12.13 No Representations by Company. Neither the Management Committee or any agent or employee of the Company, or any other Person has at any time expressly or implicitly represented, guaranteed or warranted to such Member that a percentage of profit and/or amount or type of consideration will result from an investment in the Units, that past performance or experience on the part of the Manager or their Affiliates or any other Person in any way indicates the predictable results of the ownership of the Units or of the overall Company business, that any cash distributions from Company operations or otherwise will be made to the Members by any specific date or will be made at all, or that any specific tax benefits will accrue as a result of an investment in the Company.
12.14 Consultation with Attorney. Such Member has been advised to consult with such Members own attorney regarding all legal matters concerning an investment in the Company and the tax consequences of participating in the Company, and has done so, to the extent such Member considers necessary.
12.15 Tax Consequences. Such Member acknowledges that the tax consequences to such Member of investing in the Company will depend on such Members particular circumstances, and neither the Company, the Managers, the Members, nor the partners, shareholders, members, managers, agents, officers, directors, employees, Affiliates or consultants of any of them will be responsible or liable for the tax consequences to such Member of an investment in the Company. Such Member will look solely to, and rely upon, such Members own advisers with respect to the tax consequences of this investment.
12.16 No Assurance of Tax Benefits. Such Member acknowledges that there can be no assurance that the Code or the Treasury Regulations will not be amended or interpreted in the future in such a manner so as to deprive the Company and the Members of some or all of the tax benefits they might now receive, or that some of the deductions claimed by the Company or the allocations of items of income, gain, loss, deduction or credits among the Members may not be challenged by the Internal Revenue Service.
12.17 Indemnity. Each Member shall indemnify, hold harmless and defend the Company, the Managers, each and every other Member, and any officers, directors, shareholders, managers, members, employees, partners, agents, attorneys and control persons of any such entity who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of or arising from any misrepresentation, misstatement of facts or omission to represent or state facts made by such Member in this Article 12, against losses, liabilities, and expenses of the Company, the Managers, each and every other Member, and any officers, directors, shareholders, managers, members, employees, partners, attorneys, accountants, agents and control persons of any such Person (including attorneys fees, judgments, fines and amounts paid in settlement) incurred by such person in connection with such action, suit, proceeding or the like.