Exhibit 10.1
OPERATING AGREEMENT
FOR
WELL RENEWAL, LLC
A NEVADA LIMITED LIABILITY COMPANY
THE SECURITIES REPRESENTED BY THIS AMENDED AND RESTATED OPERATING
AGREEMENT HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND
SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS
IS NOT REQUIRED
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.................................................................1
1.1 "Act" ............................................................1
1.2 "Affiliate" ......................................................1
1.3 "Agreement" ......................................................1
1.4 "Articles" .......................................................1
1.5 "Bankruptcy" .....................................................2
1.6 "Capital Account" ................................................2
1.7 "Capital Contribution" ...........................................2
1.8 "Code" ...........................................................2
1.9 "Company" ........................................................2
1.10 "Company Minimum Gain" ..........................................2
1.11 "Corporations Code" .............................................2
1.12 "Dissolution Event" .............................................2
1.13 "Distributable Cash" ............................................2
1.14 "Economic Interest" .............................................2
1.15 "Economic Interest Owner" .......................................3
1.16 "Fiscal Year" ...................................................3
1.17 "Former Member" .................................................3
1.18 "Former Member's Interest" ......................................3
1.19 "Majority in Interest" ..........................................3
1.20 "Majority of Members" ...........................................3
1.21 "Manager" .......................................................3
1.22 "Member" ........................................................3
1.23 "Member Nonrecourse Debt" .......................................3
1.24 "Member Nonrecourse Deductions" .................................3
1.25 "Membership Interest" ...........................................3
1.26 "Name Assets" ...................................................3
1.27 "Net Profit" and "Net Loss" .....................................3
1.28 "Nonrecourse Liability" .........................................3
1.29 "Percentage Interest" ...........................................3
1.30 "Person" ........................................................4
1.31 "Regulations" ...................................................4
1.32 "Remaining Members" .............................................4
1.33 "Tax Matters Partner" ...........................................4
ARTICLE II
ORGANIZATIONAL MATTERS......................................................4
2.1 Formation.........................................................4
2.2 Name..............................................................4
2.3 Term..............................................................4
2.4 Office and Agent..................................................4
2.5 Addresses of the Members and Manager..............................4
2.6 Purpose of Company................................................4
ii
ARTICLE III
CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS..............................5
3.1 Initial Capital Contributions.....................................5
3.2 Additional Capital Contributions..................................5
3.3 Capital Accounts..................................................5
3.4 No Interest.......................................................6
3.5 No Right to Return of Capital.....................................6
ARTICLE IV
MEMBERS.....................................................................6
4.1 Limited Liability.................................................6
4.2 Admission of Additional Members...................................7
4.3 Withdrawals or Resignations.......................................7
4.4 Termination of Membership Interest................................7
4.5 Transactions With The Company.....................................7
4.6 Remuneration to Members...........................................7
4.7 Meetings of Members...............................................7
4.8 Members Are Not Agents............................................9
4.9 Voting Rights; Approvals..........................................9
ARTICLE V
MANAGEMENT AND CONTROL OF THE COMPANY......................................10
5.1 Management of the Company by the Manager.........................10
5.2 Election of the Manager..........................................10
5.3 Powers of the Manager............................................11
5.4 Members Have No Managerial Authority.............................11
5.5 Performance of Duties; Liability of Manager......................11
5.6 Devotion of Time.................................................12
5.7 Transactions between the Company and the Manager.................12
5.8 Manager Compensation.............................................12
5.9 Acts of the Manager as Conclusive Evidence of Authority..........12
5.10 Officers........................................................13
5.11 Limited Liability...............................................15
ARTICLE VI
ALLOCATIONS OF NET PROCEEDS AND NET LOSS AND DISTRIBUTIONS.................16
6.1 Allocations of Net Profit and Net Loss...........................16
6.2 Special Allocations..............................................17
6.3 Code Section 704(c) Allocations..................................18
6.4 Allocation of Net Profit and Loss and Distributions in Respect
of Transferred Interest..........................................18
6.5 Distribution of Distributable Cash or Assets by the Company......18
6.6 Form of Distribution; Reserves...................................19
6.7 Restriction on Distributions.....................................19
6.8 Return of Distribution...........................................20
6.9 Obligations of Members to Report Allocations.....................20
iii
ARTICLE VII
TRANSFER AND ASSIGNMENT OF INTERESTS.......................................20
7.1 Transfer and Assignment of Interests.............................20
7.2 Further Restrictions on Transfer of Interests....................20
7.3 Substitution of Members..........................................20
7.4 Permitted Transfers..............................................20
7.5 Effective Date of Permitted Transfers............................21
7.6 Right of Legal Representatives...................................21
7.7 No Effect to Transfers in Violation of Agreement.................21
7.8 Right of First Refusal...........................................22
ARTICLE VIII
CONSEQUENCE OF DEATH, DISSOLUTION, WITHDRAWAL, RETIREMENT OR BANKRUPTCY
OF MEMBER..................................................................23
8.1 Dissolution Event................................................23
8.2 Purchase of Interest.............................................23
8.3 Purchase Price...................................................23
8.4 Notice of Intent to Purchase.....................................23
8.5 Election to Purchase Less Than All of the Former Member's
Interest.........................................................24
8.6 Payment of Purchase Price........................................24
8.7 Closing of Purchase of Former Member's Interest..................24
8.8 Purchase Terms Varied by Agreement...............................25
ARTICLE IX
ACCOUNTING, RECORDS, REPORTING BY MEMBERS..................................25
9.1 Books and Records................................................25
9.2 Delivery to Members and Inspection...............................26
9.3 Annual Statements................................................26
9.4 Financial and Other Information..................................26
9.5 Filings..........................................................26
9.6 Bank Accounts....................................................27
9.7 Accounting Decisions and Reliance On Others......................27
9.8 Tax Matters for the Company Handled by Manager and Tax Matters
Partner..........................................................27
ARTICLE X
DISSOLUTION AND WINDING UP.................................................27
10.1 Dissolution.....................................................27
10.2 Certificate of Dissolution......................................28
10.3 Winding Up......................................................28
10.4 Distributions in Kind...........................................28
10.5 Order of Payment of Liabilities Upon Dissolution................29
10.6 Compliance with Regulations.....................................29
10.7 Limitations on Payments Made in Dissolution.....................29
10.8 Articles of Dissolution.........................................29
10.9 No Action for Dissolution.......................................29
ARTICLE XI
INDEMNIFICATION AND INSURANCE..............................................30
11.1 Indemnification of the Manager..................................30
11.2 Indemnification of Agents.......................................30
11.3 Insurance.......................................................31
iv
ARTICLE XII
MISCELLANEOUS..............................................................31
12.1 Counsel to the Company..........................................31
12.2 Conversion......................................................31
12.3 Complete Agreement..............................................31
12.4 Binding Effect..................................................31
12.5 Parties in Interest.............................................31
12.6 Pronouns; Statutory Reference...................................32
12.7 Headings........................................................32
12.8 Interpretation..................................................32
12.9 References to this Agreement....................................32
12.10 Jurisdiction...................................................32
12.11 Disputed Matters...............................................32
12.12 Appointment of Manager as Attorney-In-Fact.....................32
12.13 Severability...................................................33
12.14 Additional Documents and Acts..................................33
12.15 Notices........................................................33
12.16 Amendments.....................................................33
12.17 Reliance on Authorization of Person Signing Agreement..........33
12.18 No Interest in Company Property; Waiver of Action for
Partition......................................................33
12.19 Multiple Counterparts..........................................34
12.20 Attorney Fees..................................................34
12.21 Time is of the Essence.........................................34
12.22 Remedies Cumulative............................................34
Exhibit A Capital Contribution of Members and Addresses of Members and
the Manager
Exhibit B Description of Capital Contribution of Well Renewal, Inc.
Exhibit C Contract of Assignment of NCO2 Injection Machine
Exhibit D Contract of Assignment of Mineral Lease
v
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
OPERATING AGREEMENT
FOR
WELL RENEWAL, LLC
A NEVADA LIMITED LIABILITY COMPANY
This Operating Agreement ("Agreement") is made effective as of January 11, 2005,
by and among the parties listed on the signature pages hereof (collectively
referred to as the "Members" or individually as a "Member"), with reference to
the following facts.
A. On January 11, 2005, Articles of Organization for Well Renewal, LLC
(the "Company"), a limited liability company under the laws of the State of
Nevada, were filed with the Nevada Secretary of State.
B. The Members desire to adopt and approve an operating agreement for
the Company under the Nevada Limited Liability Company Act, codified in the
Nevada Revised Statutes, Sections 86.011 to 86.571, as the same may be amended
from time to time (the "Act").
C. The Members desire to elect one Manager to operate the Company, all
as provided in and in accordance with the provisions of this Agreement; and
D. On and after the effective date of this Agreement, all profits and
losses of the Company shall be allocated as provided in this Agreement.
NOW, THEREFORE, the Members by this Agreement set forth the operating
agreement for the Company under the laws of the State of Nevada upon the terms
and subject to the conditions of this Agreement.
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings set
forth below (all terms used in this Agreement that are not defined in this
Article I shall have the meanings set forth elsewhere in this Agreement):
1.1 "Act" shall mean the Nevada Limited Liability Company Act, codified in the
Nevada Revised Statutes, Sections 86.011 to 86.590, as the same may be amended
from time to time
1.2 "Affiliate" shall mean any individual, partnership, corporation, trust or
other entity or association, directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with the
Member.
1.3 "Agreement" shall mean this Operating Agreement, as originally executed and
as amended from time to time.
1.4 "Articles" shall mean the Articles of Organization for the Company
originally filed with the Nevada Secretary of State as amended from time to
time.
PAGE 1
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
1.5 "Bankruptcy" shall mean: (a) the filing of an application by a Member for,
or his consent to, the appointment of a trustee, receiver, or custodian of his
or her other assets; (b) the entry of an order for relief with respect to a
Member in proceedings under the United States Bankruptcy Code, as amended or
superseded from time to time; (c) the making by a Member of a general assignment
for the benefit of creditors; (d) the entry of an order, judgment, or decree by
any court of competent jurisdiction appointing a trustee, receiver, or custodian
of the assets of a Member unless the proceedings and the person appointed are
dismissed within ninety (90) days; or (e) the failure by a Member generally to
pay his debts as the debts become due within the meaning of Section 303(h)(1) of
the United States Bankruptcy Code, as determined by the Bankruptcy Court, or the
admission in writing of his inability to pay his debts as they become due.
1.6 "Capital Account" shall mean with respect to any Member the capital account
which the Company establishes and maintains for such Member pursuant to Section
3.3.
1.7 "Capital Contribution" shall mean the total value of cash and fair market
value of property (including promissory notes or other obligation to contribute
cash or property) contributed and/or services rendered or to be rendered to the
Company by Members.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, the provisions of succeeding law, and to the extent applicable, the
Regulations.
1.9 "Company" shall mean Well Renewal, LLC, a Nevada limited liability
company.
1.10 "Company Minimum Gain" shall have the meaning ascribed to the term
"Partnership Minimum Gain" in the Regulations Section 1.704-2(d).
1.11 "Corporations Code" shall mean Title 7, Chapter 78 of the Nevada Revised
Statutes, as amended from time to time, and the provisions of succeeding law.
1.12 "Dissolution Event" shall mean with respect to any Member one or more of
the following: the death, disability (within the meaning of Code Section
22(e)(3)) for a period of in excess of one year, Bankruptcy, withdrawal,
expulsion or occurrence of any other event which terminates the continued
membership unless the other Member consents to continue the business of the
Company pursuant to Section 8.1 and another Member is admitted to the Company,
if required by the Corporations Code.
1.13 "Distributable Cash" shall mean the amount of cash which is available for
distribution to the Members, taking into account all Company debts, liabilities,
and obligations of the Company then due and amounts which is reasonably
necessary to place into reserves for customary and usual claims with respect to
the Company's business.
1.14 "Economic Interest" shall mean a Member's or Economic Interest Owner's
share of one or more of the Company's Net Profit, Net Loss, and distributions of
the Company's assets pursuant to this Agreement and the Act, but shall not
include any other rights of a Member, including, without limitation, the right
to vote or participate in the management.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
1.15 "Economic Interest Owner" shall mean the owner of an Economic Interest who
is not a Member.
1.16 "Fiscal Year" shall mean the Company's fiscal year, which shall be the
calendar year.
1.17 "Former Member" shall have the meaning ascribed to it in Section 8.2.
1.18 "Former Member's Interest" shall have the meaning ascribed to it in Section
8.2.
1.19 "Majority in Interest" shall mean an aggregate Percentage Interest of more
than fifty percent (50%) held by Members
1.20 "Majority of Members" shall mean a Member or Members who hold an aggregate
Percentage Interest of more than fifty percent (50%) of the Company.
1.21 "Manager" shall mean Well Renewal, Inc.
1.22 "Member" shall mean each Person who (a) is an initial signatory to this
Agreement, has been admitted to the Company as a Member in accordance with the
Articles or this Agreement or is an assignee who has become a Member in
accordance with Article VII and (b) has not resigned, withdrawn, been expelled
or, if other than an individual, dissolved.
1.23 "Member Nonrecourse Debt" shall have the meaning ascribed to the term
"Partner Nonrecourse Debt" in Regulations Section 1.704-2(b)(4).
1.24 "Member Nonrecourse Deductions" shall mean items of Company loss,
deduction, or Code Section 705(a)(2)(B) expenditures which are attributable to
Member Nonrecourse Debt.
1.25 "Membership Interest" shall mean a Member's entire interest in the Company
including the Member's Economic Interest, the right to vote on or participate in
the management, and the right to receive information concerning the business and
affairs of the Company.
1.26 "Name Assets" shall have the meaning ascribed to it in Section 10.3.
1.27 "Net Profit" and "Net Loss" shall mean the income, gain, loss, deductions,
and credits of the Company in the aggregate or separately stated, as
appropriate, determined in accordance with generally accepted accounting
principles employed under the method of accounting at the close of each fiscal
year on the Company's information tax return filed for federal income tax
purposes.
1.28 "Nonrecourse Liability" shall have the meaning set forth in Regulations
Section 1.752-1(a)(2).
1.29 "Percentage Interest" shall mean the percentage of a Member set forth
opposite the name of such Member under the column "Member's Percentage Interest"
in EXHIBIT "A" hereto, as such percentage may be adjusted from time to time
pursuant to the terms of this Agreement. Percentage Interests shall be
determined annually, unless otherwise provided herein, effective as of the first
day of the Company's Fiscal Year but with all distributions under this Agreement
to be deemed to have occurred on such day immediately prior to determination of
the Percentage Interest of a Member.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
1.30 "Person" shall mean an individual, general partnership, limited
partnership, limited liability company, corporation, trust, estate, real estate
investment trust association or any other entity.
1.31 "Regulations" shall, unless the context clearly indicates otherwise, mean
the regulations currently in force as final or temporary that have been issued
by the U.S. Department of Treasury pursuant to its authority under the Code.
1.32 "Remaining Members" shall have the meaning ascribed to it in Section 8.1.
1.33 "Tax Matters Partner" shall be such person designated by the Manager
pursuant to Section 9.8.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 Formation. Pursuant to the Act, the Members have formed a Nevada limited
liability company under the laws of the State of Nevada by filing the Articles
with the Nevada Secretary of State and entering into this Agreement. The rights
and liabilities of the Members shall be determined pursuant to the Act and this
Agreement. To the extent that the rights or obligations of any Member are
different by reason of any provision of this Agreement than they would be in the
absence of such provision, this Agreement shall, to the extent permitted by the
Act, control.
2.2 Name. The name of the Company shall be "Well Renewal, LLC." The business of
the Company may be conducted under that name or, upon compliance with applicable
laws, any other name that the Manager deems appropriate or advisable. The
Company shall file any fictitious name certificates and similar filings, and any
amendments thereto, that the Manager considers appropriate or advisable.
2.3 Term. The term of this Agreement shall be co-terminus with the period of
duration of the Company provided in the Articles, unless extended or sooner
terminated as hereinafter provided.
2.4 Office and Agent. The Company shall continuously maintain an office and
registered agent in the State of Nevada as required by the Act. The principal
office of the Company shall be as the Manager may determine. The Company also
may have such offices, anywhere within and without the State of Nevada, as the
Manager from time to time may determine, or the business of the Company may
require. The registered agent shall be as stated in the Articles or as otherwise
determined by the Manager.
2.5 Addresses of the Members and Manager. The respective addresses of the
Members and the Manager are set forth on EXHIBIT A.
2.6 Purpose of Company. The purpose of the Company is to engage in any lawful
act or activity for which a limited liability company may be organized under the
Act. However, the primary business plan of the Company is to obtain revenues via
the management and operation of thirty (30) oil xxxxx located in various
locations in United States of America, State of Oklahoma, by utilizing a
nitrogen and carbon dioxide gas injection unit to "pump up" and re-pressure the
xxxxx to increase oil output.
PAGE 4
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
ARTICLE 3
CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
3.1 Initial Capital Contributions. The initial Capital Contributions and
Percentage Interests of each Member are set forth on EXHIBIT A hereto and
incorporated by reference herein. Each Member shall contribute such amount,
and/or such property, as is set forth on EXHIBIT A as his or her initial Capital
Contribution, which EXHIBIT A shall be revised to reflect the addition of new
Members in accordance with Section 4.2 and Article VII.
3.2 Additional Capital Contributions. It is anticipated that additional capital
may be required from time to time to pay expenses of the Company. The Members
have agreed that all additional Capital Contributions shall be made in the
following proportions:
Global Resource Corporation 50%
Well Renewal, Inc. 50%
Any Member who does not contribute his share of any Capital Contribution shall
be treated as a "Non-Contributing Member" as described in the following Section
3.2.A. The amount of additional capital to be contributed shall in each instance
be determined by the Manager.
A. In the event that any Member fails for any reason to contribute to
the Company his proportionate share on or before any date on which an additional
Capital Contribution is due (a "Non-Contributing Member"), then the Manager
acting for and on behalf of the Company shall give notice ("Default Notice") to
the Non-Paying Member and all other Members of the Company requiring the
defaulted amount to be paid within five (5) days thereafter.
B. If a Non-Contributing Member fails to cure the default within the
time period required by the Default Notice, then any remaining Member may make a
contribution in excess of his proportionate share (a "Paying Member") up to the
whole amount of the default, but after allowing the other Members to contribute
their proportionate amount to make up the default.
C. After the contributions are made by the Paying Member(s), the Paying
Members shall receive a priority return of all contributions made pursuant to
this Section.
3.3 Capital Accounts. The Company shall establish an individual Capital Account
for each Member. The Company shall determine and maintain each Capital Account
in accordance with the following provisions:
A. A Member's Capital Account shall be increased by that Member's
Capital Contributions, that Member's Percentage Interest of Net Profit, and any
items in the nature of income or gain that are specially allocated to that
Member pursuant to Article VI.
PAGE 5
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
B. A Member's Capital Account shall be increased by the amount of any
partnership liabilities assumed by that Member subject to and in accordance with
the provisions of Regulation Section ss.1.704-1(b)(2)(iv)(c).
C. A Member's Capital Account shall be decreased by (a) the amount of
cash distributed to that Member; (b) the fair market value of any property of
the Company so distributed, net of liabilities secured by such distributed
property that the distributee Member is considered to assume or to be subject to
under Code Section 752; and (c) the amount of any items in the nature of
expenses or losses that are specially allocated to that Member pursuant to
Article VI.
D. A Member's Capital Account shall be reduced by the Member's
Percentage Interest of any expenditures of the Company described in Code Section
705(a)(2)(B) or which are treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulation Section 1.704-1(b)(2)(iv)(i) (including syndication
expenses and losses nondeductible under Code Sections 267(a)(1) or 707(b)).
E. If any Economic Interest (or portion thereof) is transferred, the
transferee of such Economic Interest or portion shall succeed to the
transferor's Capital Account attributable to such interest or portion.
F. The principal amount of a promissory note that is not readily traded
on an established securities market and that is contributed to the Company by
the maker of the note shall not be included in the Capital Account of any Person
until the Company makes a taxable disposition of the note or until (and to the
extent) principal payments are made on the note, all in accordance with
Regulation Section 1.704-1(b)(2)(iv)(d)(2).
G. Each Member's Capital Account shall be increased or decreased as
necessary to reflect a revaluation of the Company's property assets in
accordance with the requirements of Regulation Sections 1.704-1(b)(2)(iv)(f) and
1.704-1(b)(2)(iv)(g), including the special rules under Regulation Section
1.701-1(b)(4), as applicable. The provisions of this Agreement respecting the
maintenance of Capital Accounts are intended to comply with Regulation Section
1.704-1(b) and shall be interpreted and applied in a manner consistent with
those Regulations.
3.4 No Interest. No Member shall be entitled to receive any interest on Capital
Contributions.
3.5 No Right to Return of Capital. No Member shall have the right to receive a
return of his or her Capital Account unless a Majority in Interest of the
Members consent thereto.
ARTICLE 4
MEMBERS
4.1 Limited Liability. Except as required under the Act or as expressly set
forth in this Agreement, no Member shall be personally liable for any debt,
obligation, or liability of the Company, whether that liability or obligation
arises in contract, tort, or otherwise.
PAGE 6
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
4.2 Admission of Additional Members. Additional Members may be admitted to the
Company only upon the approval or consent of a Majority in Interest of the
Members. Each additional Member's Capital Contribution, Membership Interest,
Percentage Interest, Net Profit, Net Loss, and distributions of the Company
shall be determined and approved by a Majority in Interest of the Members. No
Person shall be admitted as an additional Member unless such Person executes,
acknowledges and delivers to the Company such instruments as the Manager may
deem necessary or advisable to effect the admission of such Person as an
additional Member, including, without limitation, the written acceptance and
adoption by such Person of the provisions of this Agreement. Upon the admission
of additional Members, EXHIBIT A to this Agreement will be revised accordingly.
Notwithstanding the foregoing, substitute Members may only be admitted in
accordance with Article VII.
4.3 Withdrawals or Resignations. No Member may withdraw or resign from the
Company at any time. Notwithstanding the foregoing, or in the event this Section
4.3 is deemed invalid, or in the event of any such withdrawal, such Member's
Membership Interest shall also be subject to purchase and sale as provided in
Section 8.2.
4.4 Termination of Membership Interest. Upon the transfer of a Member's
Membership Interest in violation of this Agreement or the occurrence of a
Dissolution Event as to such Member which does not result in the dissolution of
the Company, the Membership Interest of a Member may be purchased by the Company
or Remaining Members as provided herein. Each Member acknowledges and agrees
that such purchase of a Membership Interest upon the occurrence of any of the
foregoing events is not unreasonable under the circumstances existing as of the
date hereof.
4.5 Transactions With The Company. Subject to any limitations set forth in this
Agreement and with the prior approval of the Manager after full disclosure of
the Member's involvement, a Member may lend money to and transact other business
with the Company. Subject to other applicable law, such Member has the same
rights and obligations with respect thereto as a Person who is not a Member.
4.6 Remuneration to Members. Except as otherwise authorized in, or pursuant to,
this Agreement, no Member is entitled to remuneration for acting in the Company
business, subject to (a) the entitlement of Manager or Members winding up the
affairs of the Company to reasonable compensation pursuant to Section 10.3, (b)
the entitlement of the Manager to receive reimbursement pursuant to Section 5.8,
and (c) the entitlement of officers to receive compensation pursuant to Section
5.10.
4.7 Meetings of Members.
4.7.1 Date, Time and Place of Meetings of Members. Meetings of Members
may be held at such date, time and place within or without the State of Nevada
as the Members or Manager may fix from time to time. No annual or regular
meetings of Members is required. At any Members' meeting, the Manager shall
appoint a person to preside at the meeting and a person to act as secretary of
the meeting. The secretary of the meeting shall prepare minutes of the meeting
which shall be placed in the minute books of the Company.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
A. Power to Call Meetings. Unless otherwise prescribed by the Act or by
the Articles, meetings of the Members may be called upon by the Manager or upon
written demand of Members holding more than a ten percent (10%) Percentage
Interest for the purpose of addressing any matters.
B. Notice of Meeting. Written notice of a meeting of Members shall be
sent or otherwise given to each Member, either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
Member at the address of that Member appearing on the books of the Company or
given by the Member to the Company for the purpose of notice, not less than ten
(10) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date and hour of the meeting and the general nature of
the business to be transacted. No other business may be transacted at this
meeting. Upon written request to the Manager by any person entitled to call a
meeting of Members, the Manager shall immediately cause notice to be given to
the Members entitled to vote that a meeting will be held at a time requested by
the person calling the meeting, not less than ten (10) days nor more than sixty
(60) days after the receipt of the request. If the notice is not given within
twenty (20) days after the receipt of a request by any person entitled to call a
meeting, the person entitled to call the meeting may give the notice. An
affidavit of the mailing or other means of giving any notice of any meeting
shall be executed by a Manager or any secretary, assistant secretary or any
transfer agent of the Company giving the notice, and shall be filed and
maintained in the minute book of the Company.
C. Quorum. The presence in person or by proxy of a Majority in Interest
shall constitute a quorum at a meeting of Members.
D. Waiver of Notice or Consent. The actions taken at any meeting of
Members however called and noticed, and wherever held, have the same validity as
if taken at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after the
meeting, each of the Members entitled to vote, who was not present in person or
by proxy, signs a written waiver of notice or consents to the holding of the
meeting or approves the minutes of the meeting. All such waivers, consents or
approvals shall be filed with the Company records or made a part of the minutes
of the meeting.
Attendance of a person at a meeting shall constitute a waiver
of notice of that meeting, except when the person objects, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters not included in
the notice of the meeting if that objection is expressly made at the meeting.
E. Action by Written Consent Without a Meeting. Any action that may be
taken at a meeting of Members may be taken without a meeting. Unless the
consents of all Members entitled to vote have been solicited in writing, (i)
notice of any Member's approval of an amendment to the Articles or this
Agreement, a dissolution of the Company, or a merger of the Company, without a
meeting and by less than unanimous written consent, shall be given at least ten
(10) days before the consummation of the action authorized by such approval, and
(ii) prompt notice shall be given of the taking of any other action approved by
Members without a meeting by less than unanimous written consent, to those
Members entitled to vote who have not consented in writing.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
F. Telephonic Participation by Member at Meetings. Members may
participate in any Members' meeting through the use of any means of conference
telephones or similar communications equipment as long as all Members
participating can hear one another. A Member so participating is deemed to be
present in person at the meeting.
G. Record Date. The record date for determining Members entitled to
notice of or to vote at a meeting of Members shall be set by the Manager or, if
no date is set, then the close of business on the business day next preceding
the day on which notice is given or, if notice is waived, at the close of
business on the business day next preceding the day on which the meeting is
held. The record date for determining Members entitled to give consent to
Company action in writing without a meeting shall be the day on which the first
written consent is given.
H. Proxies. Every Member entitled to vote shall have the right to do so
either in person or by one or more agents authorized by a written proxy signed
by the person and filed with the Manager or the secretary, if any, of the
Company. No proxy shall be valid after the expiration of eleven (11) months from
the date of the proxy, unless otherwise provided in the proxy. The revocability
of a proxy that states on its face that it is irrevocable shall be governed by
the provisions of Corporations Code.
I. No Requirement of Meetings. The provisions of this Section 4.7
govern meetings of the Members if the Members elect, in their discretion, to
hold meetings. However, nothing in this Section 4.7 or in this Agreement is
intended to require that meetings of Members be held, it being the intent of the
Members that meetings of Members are not required.
4.8 Members Are Not Agents. Pursuant to Section 5.1 and the Articles, the
management of the Company is vested in the Manager. No Member, acting solely in
the capacity of a Member, is an agent of the Company, nor can any Member, in
such capacity, bind or execute any instrument on behalf of the Company.
4.9 Voting Rights; Approvals. Except as otherwise expressly provided in this
Agreement or the Articles, the Members shall have no voting, approval or consent
rights.
A. Approval by All Members. The following matters shall require the
approval or consent of all Members:
(i) A decision to compromise the obligation of a Member
to make a Capital Contribution or return money or property paid or distributed
in violation of the Act shall require the unanimous vote, approval or consent of
all Members who are not the subject of a Dissolution Event or an assignor of a
Membership Interest; and
(ii) Any amendment to the articles or this Agreement.
B. Majority Approval. The following matters shall require the approval
or consent of a Majority of Members:
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
(i) At any time prior to one year from the date of this
Agreement, the sale, exchange or other disposition of all, or substantially all,
of the Company's assets occurring as part of a single transaction or plan, or in
multiple transactions over a twelve (12) month period, except in the orderly
liquidation and winding up of the business of the Company upon its duly
authorized dissolution, provided, however, that each Member, by execution of
this Agreement, hereby approves of and consents to a conversion or
reorganization as described in Section 12.2, and the Manager may effectuate a
conversion or reorganization as described in Section 12.2 without any further
action on the part of any Member. Notwithstanding the foregoing provisions of
this paragraph, following the expiration of the one year period from the date of
this Agreement, the Manager shall have the authority to sell, exchange or
dispose of all, or substantially all, of the Company's assets occurring as part
of a single transaction or plan, or in multiple transactions over a twelve (12)
month period without the approval or consent of a Majority of Members;
(ii) The merger of the Company with another limited
liability company or limited partnership; provided in no event shall a Member be
required to become a general partner in a merger with a limited partnership
without his express written consent or unless the agreement of merger provides
each Member with the dissenter's rights described in the Act.
(iii) The merger of the Company with a corporation or a
general partnership or other Person, provided, however, that each Member, by
execution of this Agreement, hereby approves of and consents to a conversion or
reorganization as described in Section 12.2, and the Manager may effectuate a
conversion or reorganization as described in Section 12.2 without any further
action on the part of any Member;
(iv) An alteration of the primary purpose of the Company
as set forth in Section 2.6;
(v) Transactions between the Company and a Manager or one
or more of such Manager's Affiliates or related parties, or transactions in
which a Manager, or one or more of any Manager's Affiliates or related parties,
has a material financial interest; and
(vi) Any act which would make it impossible to carry on
the ordinary business of the Company.
ARTICLE 5
MANAGEMENT AND CONTROL OF THE COMPANY
5.1 Management of the Company by the Manager. The business and affairs of the
Company shall be managed by the Manager. The Company shall have one (1) Manager.
All decisions concerning the management and operation of the Company's business,
other than day to day affairs which are delegated to officers of the Company,
shall be determined by the Manager.
5.2 Election of the Manager.
A. Initial Manager. Well Renewal, Inc. is hereby designated as the initial
Manager and shall be referred to herein as the "Founding Manager."
PAGE 10
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
B. Resignation. The Manager may resign at any time by giving written notice
to the Members without prejudice to the rights, if any, of the Company under any
contract to which the Manager is a party. The resignation of the Manager shall
take effect upon receipt of that notice or at such later time as shall be
specified in the notice; and, unless otherwise specified in the notice, the
acceptance of the resignation shall not be necessary to make it effective. The
resignation of the Manager who is also a Member shall not affect the Manager's
rights as a Member and shall not constitute a withdrawal of a Member.
C. Removal. A Founding Manager or Manager may be removed by a Majority in
Interest of the Members.
D. Vacancies. If the Founding Manager resigns or dies, a Majority in
Interest of the Members shall select a Person to fill the vacancy by an
affirmative vote or written consent. Any other vacancy occurring for any reason
in the position of a Manager shall be filled by the affirmative vote or written
consent of Members holding a Majority in Interest.
E. Election of non-Founding Manager. A non-Founding Manager shall be
elected annually by a Majority in Interest of the Members.
F. Change in the Number of Managers. A decision to change the number of
Managers shall be made only be the unanimous vote, approval or consent of the
Members.
5.3 Powers of the Manager. Without limiting the generality of Section 5.1, but
subject to this Section 5.3, to the express limitations set forth elsewhere in
this Agreement and to the powers and duties of the chairperson or President of
the Company, the Manager shall have all necessary powers to manage and carry out
the purposes, business, property, and affairs of the Company, including, without
limitation, the power to exercise on behalf and in the name of the Company all
of the powers described in Corporations Code.
5.4 Members Have No Managerial Authority. The Members, as Members, shall have no
power to participate in the management of the Company except as expressly
authorized by this Agreement or the Articles and except as expressly required by
the Act. Unless expressly and duly authorized in writing to do so by the
Manager, or unless acting in the capacity of an officer of the Company, no
Member shall have any power or authority to bind or act on behalf of the Company
in any way, to pledge its credit, or to render it liable for any purpose.
5.5 Performance of Duties; Liability of Manager. The Manager shall not be liable
to the Company or to any Member for any loss or damage sustained by the Company
or any Member, unless the loss or damage shall have been the result of fraud,
deceit, gross negligence, reckless or intentional misconduct, or a knowing
violation of law or of this Agreement by the Manager. The Manager shall perform
his managerial duties in good faith, in a manner that he reasonably believes to
be in the best interests of the Company and its Members, and with such care,
including reasonable inquiry, as an ordinarily prudent person in a like position
would use under similar circumstances. A Manager who so perform the duties of a
Manager shall not have any liability by reason of being or having been a Manager
of the Company.
In performing such duties, the Manager shall be entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, of the following persons or groups unless the Manager
has knowledge concerning the matter in question that would cause such reliance
to be unwarranted and provided that the Manager acts in good faith and after
reasonable inquiry when the need therefor is indicated by the circumstances:
PAGE 11
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
A. One or more officers, employees or other agents of the Company who the
Manager reasonably believes to be reliable and competent in the matters
presented;
B. Any attorney, independent accountant, or other person as to matters
which the Manager reasonably believes to be within such person's professional or
expert competence; or
C. A committee upon which the Manager does not serve, duly designated in
accordance with a provision of the Articles or this Agreement, as to matters
within its designated authority, which committee the Manager reasonably believes
to merit competence.
5.6 Devotion of Time. The Manager is not obligated to devote all of his time or
business efforts to the affairs of the Company; provided, however, that any
Manager that is also an officer of the Company shall devote all of such
Manager's time and business efforts to the affairs of the Company. The Manager
shall devote whatever time, effort, and skill as he deems appropriate for the
operation of the Company.
5.7 Transactions between the Company and the Manager. Notwithstanding that it
may constitute a conflict of interest, Manager may, and may cause one of his
Affiliates and/or related parties to, engage in any transaction (including,
without limitation, the purchase, sale, lease, or exchange of any property or
the rendering of any service, or the establishment of any salary, other
compensation, or other terms of employment) with the Company so long as such
transaction is not expressly prohibited by this Agreement and so long as the
terms and conditions of such transaction, on an overall basis, are fair and
reasonable to the Company and are at least as favorable to the Company as those
that are generally available from Persons capable of similarly performing them
and in similar transactions between parties operating at arm's length, and
provided that a Majority of Members having no direct or indirect interest in
such transaction (other than their interests as Members) affirmatively vote or
consent in writing to approve the transaction.
5.8 Manager Compensation.
A. Compensation for Services. No Manager shall be entitled to compensation
for services rendered to the Company as a Manager; provided, however, that any
Manager who is also an officer of the Company may be compensated for services
rendered as an officer.
B. Reimbursement. The Company shall reimburse each Manager for,
pre-approved by a Majority in Interest, out-of-pocket expenses incurred in
connection with services rendered to the Company as a Manager.
5.9 Acts of the Manager as Conclusive Evidence of Authority. Any note, mortgage,
evidence of indebtedness, contract, certificate, statement, conveyance, or other
instrument in writing, and any assignment or endorsement thereof, executed or
entered into between the Company and any other person, when signed by the
Manager is not invalidated as to the Company by any lack of authority of the
signing persons in the absence of actual knowledge on the part of the other
person that the signing persons had no authority to execute the same.
PAGE 12
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
5.10 Officers.
A. Appointment of Officers. The Manager may appoint officers at any time.
The officers of the Company, if deemed necessary by the Manager, may include a
chairperson, president, vice president, secretary, and chief financial officer.
The officers shall serve at the pleasure of the Manager, subject to all rights,
if any, of an officer under any contract of employment or as otherwise provided
in this Agreement. Any individual may hold any number of offices. No officer
need be a resident of the State of Nevada or citizen of the United States. The
officers shall exercise such powers and perform such duties as specified in this
Agreement and as shall be determined from time to time by the Manager.
B. Removal, Resignation and Filling of Vacancy of Officers. Subject to the
rights, if any, of an officer under a contract of employment, any officer may be
removed, either with or without cause, by the Manager at any time.
Any officer may resign at any time by giving written notice to the
Manager. Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Company under any contract to which the officer is a
party.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
this Agreement for regular appointments to that office.
C. Compensation and Operating Expenses. The Members of the Company
intend to utilize the $150,000 Capital Contribution of Global Resources
Corporation to fund any necessary "start-up" expenses associated with "pumping
up" the xxxxx and any required remedial work to the xxxxx. Upon the completion
of the initial "start-up of the xxxxx and any required remedial work, the
monthly operating expenses of the Company, including the compensation of
Officers, agents and employees, shall not exceed $16,875 without the prior
consent of a Majority in Interest of the Members.
D. Duties and Powers of the Chairperson. The chairperson, if such an
officer be appointed, shall, if present, preside at meetings of the Members.
Xxxxxxx X. Xxxxx shall be the initial chairman. The chairperson shall in
addition be the chief executive officer of the Company.
E. Duties and Powers of the President. Subject to such supervisory
powers, if any, as may be given by the Manager to the chairperson, the president
shall be the chief operating officer of the Company, and shall, subject to the
control of the Manager, have general and active day-to-day management of the
business of the Company and shall see that all orders and resolutions of the
Members and the Manager are carried into effect.
PAGE 13
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
Xxxxxxx X. Xxxxx shall be the initial president. The president shall
have the general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the Manager or this Agreement.
The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Company, except where required or
permitted by law to be otherwise signed and executed, and except where the
signing and execution thereof shall be expressly delegated by the Manager to
some other officer or agent of the Company.
F. Duties and Powers of Vice-President. The vice-president, or if there
shall be more than one, the vice-presidents in the order determined by a
resolution of the Manager, shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president and shall perform
such other duties and have such other powers as the Manager by resolution may
from time to time prescribe.
Xxxxx Xxxxxxx and Xxxxxxx X. Xxxx shall be the initial vice-presidents.
The vice-presidents shall have the general powers and duties of management
usually vested in the office of vice-president of a corporation, and shall have
such other powers and duties as may be prescribed by the Manager or this
Agreement.
G. Duties and Powers of Secretary. The secretary shall attend all
meetings of the Members and, upon election of the Manager, the meetings of the
Manager (if any), and shall record all the proceedings of the meetings in a book
to be kept for that purpose, and shall perform like duties for the standing
committees when required. The secretary shall give, or cause to be given, notice
of all meetings of the Members and shall perform such other duties as may be
prescribed by the Manager. The secretary shall have custody of the seal, if any,
and the secretary shall have authority to affix the same to any instrument
requiring it, and when so affixed, it may be attested by his or her signature.
The Manager may give general authority to any other officer to affix the seal of
the Company, if any, and to attest the affixing by his or her signature.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the Company's transfer agent or registrar,
as determined by resolution of the Manager, a register, or a duplicate register,
showing the names of all Members and their addresses, and their Percentage
Interests. The secretary shall also keep all documents described in Section 9.1
and such other documents as may be required under the Act. The secretary shall
perform such other duties and have such other authority as may be prescribed
elsewhere in this Agreement or from time to time by the Manager. The secretary
shall have the general duties, powers and responsibilities of a secretary of a
corporation.
Xxxxx Xxxxxxx shall be the initial secretary.
H. Duties and Powers of Chief Financial Officer. The chief financial
officer shall keep and maintain, or cause to be kept and maintained, adequate
and correct books and records of accounts of the properties and business
transactions of the Company, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, Membership Interests, and
Economic Interests. The books of account shall at all reasonable times be open
to inspection by any Member and the Manager.
PAGE 14
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
The chief financial officer shall have the custody of the funds and
securities of the Company, and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Company, and shall deposit all
moneys and other valuable effects in the name and to the credit of the Company
in such depositories as may be designated by the Manager.
The chief financial officer shall disburse the funds of the Company as
may be ordered by the Manager, taking proper vouchers for such disbursements,
and shall render to the president, and the Manager, at their respective regular
meetings, or when the Manager so requires, an account of all his or her
transactions as treasurer and of the financial condition of the Company.
The chief financial officer shall perform such other duties and shall
have such other responsibility and authority as may be prescribed elsewhere in
this Agreement or from time to time by the Manager. The chief financial officer
shall have the general duties, powers and responsibility of a chief financial
officer of a corporation, and shall be the chief financial and accounting
officer of the Company.
Xxxxx Xxxxxxx shall be the initial chief financial officer.
I. Acts of Officers as Conclusive Evidence of Authority. Any note,
mortgage, evidence of indebtedness, contract, certificate, statement,
conveyance, or other instrument in writing, and any assignment or endorsement
thereof, executed or entered into between the Company and any other Person, when
signed by the chairperson of the board, the president or any vice president and
any secretary, any assistant secretary, the chief financial officer, or any
assistant treasurer of the Company, is not invalidated as to the Company by any
lack of authority of the signing officers in the absence of actual knowledge on
the part of the other Person that the signing officers had no authority to
execute the same.
J. Operator of Xxxxx. Pursuant to the business purpose of the Company
described in Paragraph 2.6 above, the Members agree that Well Renewal, Inc.
shall be initially responsible for the management and operation of the oil
xxxxx. If Well Renewal, Inc. fails or is otherwise unable to properly manage
and/or operate the oil xxxxx, the Manager may replace Well Renewal, Inc. with a
new Person for the management and operation of the oil xxxxx. All costs and
expenses associated with locating, hiring and paying any new Person for the
management and operation of the xxxxx shall be deducted from, and prior to, any
distribution of any Net Profit, described in Paragraph 6.1, then payable to Well
Renewal, Inc.
5.11 Limited Liability. No person who is a Manager or officer or both a Manager
and officer of the Company shall be personally liable under any judgment of a
court, or in any other manner, for any debt, obligation, or liability of the
Company, whether that liability or obligation arises in contract, tort, or
otherwise, solely by reason of being a Manager or officer or both a Manager and
officer of the Company.
PAGE 15
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
ARTICLE 6
ALLOCATIONS OF NET PROCEEDS AND NET LOSS AND DISTRIBUTIONS
6.1 Allocations of Net Profit and Net Loss.
A. Net Loss. Net Loss shall be allocated to the Members in proportion to
their Percentage Interests.
Notwithstanding the previous sentence, loss allocations to a Member
shall be made only to the extent that such loss allocations will not create
a deficit Capital Account balance for that Member in excess of an amount,
if any, equal to such Member's share of Company Minimum Gain that would be
realized on a foreclosure of the Company's property. Any loss not allocated to a
Member because of the foregoing provision shall be allocated to the other
Members (to the extent the other Members are not limited in respect of the
allocation of losses under this Section 6.1(A)). Any loss reallocated under this
Section 6.1(A) shall be taken into account in computing subsequent allocations
of income and losses pursuant to this Article VI, so that the net amount of any
item so allocated and the income and losses allocated to each Member pursuant to
this Article VI, to the extent possible, shall be equal to the net amount that
would have been allocated to each such Member pursuant to this Article VI if no
reallocation of losses had occurred under this Section 6.1(A).
B. Net Profit. Net Profit shall be allocated to the Members at such times
and in such amounts as it becomes available from time to time, or at the
reasonable request of any Member, and subject to payments, obligations and a
reasonable reserve, as follows:
FIRST, one hundred percent (100%), pro-rata, to each Paying
Member which has made contributions pursuant to Section 3.2.B
until such time as each Paying Member has been repaid in full,
the contributions made pursuant to Section 3.2.B.
SECOND, seventy percent (70%) to Global Resource Corporation
and thirty percent (30%) to Well Renewal, Inc. until such time
as Global Resource Corporation's entire Capital Contribution
as described in EXHIBIT A is repaid in full.
THIRD, seventy percent (70%) to Well Renewal, Inc. and thirty
percent (30%) to Global Resource Corporation until such time
as Well Renewal, Inc. has been paid the full purchase price of
$100,000 for the "Machine" as described in the Contract of
Assignment of NCO2 Injection Machine by and between Well
Renewal, Inc. and the Company.
FOURTH, fifty percent (50%) to Well Renewal, Inc. and fifty
percent (50%) to Global Resource Corporation.
PAGE 16
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
6.2 Special Allocations.
A. Minimum Gain Chargeback. Notwithstanding Section 6.1, if there is a net
decrease in Company Minimum Gain during any Fiscal Year, each Member shall be
specially allocated items of Company income and gain for such Fiscal Year (and,
if necessary, in subsequent Fiscal Years) in an amount equal to the portion of
such Member's share of the net decrease in Company Minimum Gain that is
allocable to the disposition of Company property, subject to a Nonrecourse
Liability, which share of such net decrease shall be determined in accordance
with Regulations Section 1.704-2(g)(2). Allocations pursuant to this Section
6.2A shall be made in proportion to the amounts required to be allocated to each
Member under this Section 6.2A. The items to be so allocated shall be determined
in accordance with Regulations Section 1.704-2(f). This Section 6.2A is intended
to comply with the minimum gain chargeback requirement contained in Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.
B. Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt.
Notwithstanding Section 6.1 of this Agreement, if there is a net decrease in
Company Minimum Gain attributable to a Member Nonrecourse Debt, during any
Fiscal Year, each member who has a share of the Company Minimum Gain
attributable to such Member Nonrecourse Debt (which share shall be determined in
accordance with Regulations Section 1.704-2(i)(5)) shall be specially allocated
items of Company income and gain for such Fiscal Year (and, if necessary, in
subsequent Fiscal Years) in an amount equal to that portion of such Member's
share of the net decrease in Company Minimum Gain attributable to such Member
Nonrecourse Debt that is allocable to the disposition of Company property
subject to such Member Nonrecourse Debt (which share of such net decrease shall
be determined in accordance with Regulations Section 1.704-2(i)(5)). Allocations
pursuant to this Section 6.2B shall be made in proportion to the amounts
required to be allocated to each Member under this Section 6.2B. The items to be
so allocated shall be determined in accordance with Regulations Section
1.704-2(i)(4). This Section 6.2B is intended to comply with the minimum gain
chargeback requirement contained in Regulations Section 1.704-2(i)(4) and shall
be interpreted consistently therewith.
C. Nonrecourse Deduction. Notwithstanding Section 6.1, any nonrecourse
deductions (as defined in Regulations Section 1.704-2(b)(1)) for any Fiscal Year
or other period shall be specially allocated to the Members in proportion to
their Percentage Interests.
D. Member Nonrecourse Deductions. Notwithstanding Section 6.1, those items
of Company loss, deduction, or Code Section 705(a)(2)(B) expenditures which are
attributable to Member Nonrecourse Debt for any Fiscal Year or other period
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such items are attributable
in accordance with Regulations Section 1.704-2(i).
PAGE 17
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
E. Qualified Income Offset. Notwithstanding Section 6.1, if a Member
unexpectedly receives any adjustments, allocations, or distributions described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), or any other event
creates a deficit balance in such Member's Capital Account in excess of such
Member's share of Company Minimum Gain, items of Company income and gain shall
be specially allocated to such Member in an amount and manner sufficient to
eliminate such excess deficit balance as quickly as possible. Any special
allocations of items of income and gain pursuant to this Section 6.2E shall be
taken into account in computing subsequent allocations of income and gain
pursuant to this Article VI so that the net amount of any item so allocated and
the income, gain, and losses allocated to each Member pursuant to this Article
VI to the extent possible, shall be equal to the net amount that would have been
allocated to each such Member pursuant to the provisions of this Section 6.2E if
such unexpected adjustments, allocations, or distributions had not occurred.
6.3 Code Section 704(c) Allocations. Notwithstanding any other provision in this
Article VI, in accordance with Code Section 704(c) and the Regulations
promulgated thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its fair market value on the date of contribution. Allocations
pursuant to this Section 6.3 are solely for purposes of federal, state and local
taxes. As such, they shall not affect or in any way be taken into account in
computing a Member's Capital Account or share of profits, losses, or other items
of distributions pursuant to any provision of this Agreement.
6.4 Allocation of Net Profit and Loss and Distributions in Respect of
Transferred Interest. If any Membership Interest is transferred, or is increased
or decreased by reason of the admission of a new Member or otherwise, during any
Fiscal Year of the Company, each item of income, gain, loss, deduction, or
credit of the Company for such Fiscal Year shall be assigned pro rata to each
day in the particular period of such Fiscal Year to which such item is
attributable (i.e., the day on or during which it is accrued or otherwise
included) and the amount of each such item so assigned to any such day shall be
allocated to the Member based upon his respective Membership Interest at the
close of such day.
However, for the purpose of accounting convenience and simplicity, the
Company shall treat a transfer of, or an increase or decrease in, a Membership
Interest which occur at any time during a semi-monthly period (commencing with
the semi-monthly period including the date hereof) as having been consummated on
the last day of such semi-monthly period, regardless of when during such
semi-monthly period such transfer, increase, of decrease actually occurs (i.e.,
sales and dispositions made during the first fifteen (15) days of any month will
be deemed to have been made on the 15th day of the month).
Notwithstanding any provision above to the contrary, gain or loss of
the Company realized in connection with a sale or other disposition of any of
the assets of the Company shall be allocated solely to the parties owning
Membership Interests as of the date such sale or other disposition occurs.
6.5 Distribution of Distributable Cash or Assets by the Company. Subject to
applicable law and any limitations contained elsewhere in this Agreement
(including Section 10.5), the Manager may elect from time to time to, or any
Member may request that the Manager, distribute Distributable Cash or assets to
the Members in proportion to their Percentage Interests. Neither the Company nor
any Manager shall incur any liability for making distributions in accordance
with this Section 6.5.
PAGE 18
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
6.6 Form of Distribution; Reserves. A Member, regardless of the nature of
the Member's Capital Contribution, has no right to demand and receive any
distribution from the Company in any form other than money. No Member may be
compelled to accept from the Company a distribution of any asset in kind in lieu
of a proportionate distribution of money being made to other Members. Except
upon a dissolution and the winding up of the Company, no Member may be compelled
to accept a distribution of any asset in kind.
Pending distribution, the Company shall keep reserves for working
capital and investment, the amount of which shall be determined by the Manager.
6.7 Restriction on Distributions.
A. No distribution shall be made if, after giving effect to the
distribution:
(i) The Company would not be able to pay its debts as they become due
in the usual course of business.
(ii) The Company's total assets would be less than the sum of its
total liabilities plus, unless this Agreement provides otherwise, the amount
that would be needed, if the Company were to be dissolved at the time of the
distribution, to satisfy the preferential rights of other Members, if any, upon
dissolution that are superior to the rights of the Member receiving the
distribution.
B. The Manager may base a determination that a distribution is not
prohibited on any of the following:
(i) Financial statement prepared on the basis of accounting practices
and principles that are reasonable in the circumstances.
(ii) A fair valuation.
(iii) Any other method that is reasonable in the circumstances.
Unless otherwise provided by the Corporations Code, the effect of a
distribution is measured as of the date the distribution is authorized if the
payment occurs within 120 days after the date of authorization, or the date
payment is made if it occurs more than 120 days of the date of authorization.
C. A Member or Manager who votes for a distribution in violation of this
Agreement or the Act is personally liable to the Company for the amount of the
distribution that exceeds what could have been distributed without violating
this Agreement or the Act if it is established that the Member or Manager did
not act in compliance with Section 6.7 B or Section 10.4. Any Member or Manager
who is so liable shall be entitled to compel contribution from (i) each other
Member or Manager who also is so liable and (ii) each Member for the amount the
Member received with knowledge of facts indicating that the distribution was
made in violation of this Agreement or the Act.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
6.8 Return of Distribution. Except for distributions made in violation of the
Act or this Agreement, no Member or Economic Interest Owner shall be obligated
to return any distribution to the Company or pay the amount of any distribution
for the account of the Company or to any creditor of the Company. The amount of
any distribution returned to the Company by a Member or Economic Interest Owner
or paid by a Member or Economic Interest Owner for the account of the Company or
to a creditor of the Company shall be added to the account or accounts from
which it was subtracted when it was distributed to the Member or Economic
Interest Owner.
6.9 Obligations of Members to Report Allocations. The Members are aware of the
income tax consequences of the allocations made by this Article VI and hereby
agree to be bound by the provisions of this Article VI in reporting their shares
of Company income and loss for income tax purposes.
ARTICLE 7
TRANSFER AND ASSIGNMENT OF INTERESTS
7.1 Transfer and Assignment of Interests. No Member shall be entitled to
transfer, assign, convey, sell, encumber or in any way alienate all or any part
of his Membership Interest except as permitted in Sections 7.4 and 7.8 below or
with the prior written consent of all of the other Members, which consent may be
given or withheld, conditioned or delayed (as allowed by this Agreement or the
Act), as the other Members may determine in their sole discretion. Transfers in
violation of this Article VII shall only be effective to the extent set forth in
Section 7.7. After the consummation of any transfer of any part of a Membership
Interest, the Membership Interest so transferred shall continue to be subject to
the terms and provisions of this Agreement and any further transfers shall be
required to comply with all the terms and provisions of this Agreement.
7.2 Further Restrictions on Transfer of Membership Interest. In addition to
other restrictions found in this Agreement, no Member shall transfer, assign,
convey, sell, encumber or in any way alienate all or any part of his Membership
Interest if the Membership Interest to be transferred, assigned, sold or
exchanged, when added to the total of all other Membership Interests sold or
exchanged in the preceding twelve (12) consecutive months prior thereto, would
cause the termination of the Company under the Code, as determined by the
Manager.
7.3 Substitution of Members. A transferee of a Membership Interest shall have
the right to become a substitute Member only if (i) the requirements of Sections
7.1 and 7.2 relating to unanimous consent of Members, securities and tax
requirements hereof are met, (ii) such Person executes an instrument
satisfactory to the Manager accepting and adopting the terms and provisions of
this Agreement, and (iii) such Person pays any reasonable expenses in connection
with his admission as a new Member. The admission of a substitute Member shall
not result in the release of the Member who assigned the Membership Interest
from any liability that such Member may have to the Company.
7.4 Permitted Transfers. The Membership Interest of any Member may be
transferred subject to compliance with Section 7.2, upon consent of all Members,
which shall not be unreasonably withheld, by the Member (i) by inter vivos gift
or by testamentary transfer to any spouse, parent, sibling, in-law, child or
grandchild of the Member, or to a trust for the benefit of the Member or such
spouse, parent, sibling, in-law, child or grandchild of the Member, or (ii) to
any Affiliate of the Member; it being agreed that in executing this Agreement,
each Member has consented to such transfers.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
7.5 Effective Date of Permitted Transfers. Any permitted transfer of all or any
portion of a Membership Interest shall be effective as of the date upon which
the requirements of Sections 7.1, 7.2 and 7.3 have been met. The Members shall
be provided with written notice of such transfer as promptly as possible after
the requirements of Sections 7.1, 7.2 and 7.3 have been met. Any transferee of a
Membership Interest shall take subject to the restrictions on transfer imposed
by this Agreement.
7.6 Right of Legal Representatives. If a Member who is an individual dies or is
adjudged by a court of competent jurisdiction to be incompetent to manage the
Member's person or property, the Member's executor, administrator, guardian,
conservator, or other legal representative ("Representative") may exercise all
of the Member's rights for the purpose of settling the Member's estate or
administering the Member's property, including any power the Member has under
the Articles or this Agreement to give an assignee the right to become a Member.
If the Member is a corporation, trust, or other entity and is dissolved or
terminated, the powers of that Member may be exercised by his legal
representative or successor.
7.7 No Effect to Transfers in Violation of Agreement. Upon any transfer of a
Membership Interest in violation of this Article VII, the transferee shall have
no right to vote or participate in the management of the business, property and
affairs of the Company or to exercise any rights of a Member. Such transferee
shall only be entitled to become an Economic Interest Owner and thereafter shall
only receive the share of one or more of the Company's Net Profit, Net Loss and
distributions of the Company's assets to which the transferor of such Economic
Interest would otherwise be entitled. Notwithstanding the immediately preceding
sentences, if, in the determination of the Members, a transfer in violation of
this Article VII would cause the termination of the Company under the Code, in
the sole discretion of the Members, the transfer shall be null and void and the
purported transferee shall become neither a Member nor an Economic Interest
Owner.
Upon and contemporaneously with any transfer, assignment, conveyance or
sale (whether arising out of an attempted charge upon that Member's Economic
Interest by judicial process, a foreclosure by a creditor of the Member or
otherwise) of a Member's Economic Interest which does not at the same time
transfer the balance of the rights associated with the Membership Interest
transferred by the Member (including, without limitation, the rights of the
Member to vote or participate in the management of the business, property and
affairs of the Company), the Company shall purchase from the Member, and the
Member shall sell to Company for a purchase price of $100, all remaining rights
and interests retained by the Member that immediately before the transfer,
assignment, conveyance or sale were associated with the transferred Economic
Interest. Such purchase and sale shall not, however, result in the release of
the Member from any liability to the Company as a Member.
Each Member acknowledges and agrees that the right of the Company to
purchase such remaining rights and interests from a Member who transfers a
Membership Interest in violation of this Article VII is not unreasonable under
the circumstances existing as of the date hereof.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
7.8 Right of First Refusal. Each time a Member proposes to transfer, assign,
convey, sell, encumber or in any way alienate all or any part of his Membership
Interest (or as required by operation of law or other involuntary transfer to do
so) other than pursuant to Section 7.4, such Member shall first offer such
Membership Interest to the Company and the non-transferring Members in
accordance with the following provisions:
A. Such Member shall deliver a written notice to the Company and the other
Members stating (i) such Member's bona fide intention to transfer such
Membership interest, (ii) the name and address of the proposed transferee, (iii)
the Membership Interest to be transferred, and (iv) the purchase price and terms
of payment for which the Member proposes to transfer such Membership Interest.
B. Within thirty (30) days after receipt of the notice described in Section
7.8(A), each non-transferring Member shall notify the Manager and the
transferring Member in writing of his desire to purchase a portion of the
Membership Interest being so transferred. The failure of any Member to submit a
notice within the applicable period shall constitute an election on the part of
that Member not to purchase any of the Membership Interest which may be so
transferred. Each Member so electing to purchase shall be entitled to purchase a
portion of such Membership Interest in the same proportion that the Percentage
Interest of such Member bears to the aggregate of the Percentage Interests of
all of the Members electing to so purchase the Membership Interest being
transferred. In the event any Member elects to purchase none or less than all of
his pro rata share of such Membership Interest, then the other Members can elect
to purchase more than their pro rata share. If such Members fail to purchase the
entire Membership Interest being transferred, the Company may purchase any
remaining share of such Membership Interest.
C. Within ninety (90) days after receipt of the notice described in Section
7.8(A) the Company and the Members electing to purchase such Membership Interest
shall have the first right to purchase or obtain such Membership Interest upon
the price and terms of payment designated in such notice. If such notice
provides for the payment of non-cash consideration, the Company and such
purchasing Members each may elect to pay the consideration in cash equal to the
good faith estimate of the present fair market value of the non-cash
consideration offered as determined by the Manager.
D. If the Company or the other Members elect not to purchase or obtain all
of the Membership Interest designated in such notice, then the transferring
Member may transfer the Membership Interest described in the notice to the
proposed transferee, providing such transfer (i) is completed within thirty (30)
days after the expiration of the Company's and the other Members' right to
purchase such Membership Interest, (ii) is made on terms no less favorable to
the transferring Member than as designated in the notice, and (iii) the
requirements of Sections 7.1, 7.2 and 7.3 relating to unanimous consent of
Members, securities and tax requirements hereof are met. If such Membership
Interest is not so transferred, the transferring Member must give notice in
accordance with this Section prior to any other or subsequent transfer of such
Membership Interest.
PAGE 22
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
ARTICLE 8
CONSEQUENCE OF DEATH, DISSOLUTION,
WITHDRAWAL, RETIREMENT OR BANKRUPTCY OF MEMBER
8.1 Dissolution Event. Upon the occurrence of a Dissolution Event, the Company
shall dissolve unless all of the remaining Members ("Remaining Members") consent
within ninety (90) days of the Dissolution Event to the continuation of the
business of the Company, and, if required by the Corporations Code, an
additional Member is admitted to the Company. In the event the Remaining Members
do not consent to the continuation of the business of the Company, the Company's
name and any service marks or trademarks shall be distributed to the Remaining
Members in the dissolution of the Company.
8.2 Purchase of Interest. If the Remaining Members consent to the continuation
of the business of the Company, the Company and/or the Remaining Members shall
purchase, and the Member whose actions or conduct resulted in the Dissolution
Event ("Former Member") or such Former Member's legal representative shall sell,
the Former Member's Membership Interest ("Former Member's Interest") as provided
in this Article VIII to avoid dissolution of the Company.
8.3 Purchase Price. Upon such election to purchase the Member's Interest of a
withdrawn or resigning Member, the purchase price for the Former Member's
Interests shall be the Capital Account balance of the Former Member as adjusted
pursuant to Section 3.3; provided, however, that if the Former Member, such
Former Member's legal representative or the Company, deems the Capital Account
balance to vary from the fair market value of the Former Member's Interest by
more than ten percent (10%), such party may, but shall not be obligated to
require an appraisal by providing notice of the request for appraisal within
thirty (30) days after the determination of the Remaining Members to continue
the business of the Company. "Fair market value" shall be computed by applying
an appropriate discount factor given the illiquidity of the Member's Interest
and voting or other restrictions imposed upon minority or majority interests
under this Agreement. In such event, the value of the Former Member's Interest
shall be determined by three (3) independent appraisers, one selected by the
Former Member or such Former Member's legal representative, one selected by the
Company, and one selected by the two appraisers so named. The fair market value
of the Former Member's Interest shall be the average of the two appraisals
closest in amount to each other. In the event the fair market value is
determined to vary from the Capital Account balance by less than ten percent
(10%), the party requesting such appraisal shall pay all expense of all the
appraisals incurred by the party offering to enter into the transaction at the
Capital Account valuation. In all other events, the party requesting the
appraisal shall pay one-half of such expense and the other party shall pay
one-half of such expense. Notwithstanding the foregoing, if the Dissolution
Event results from a breach of this Agreement by the Former Member, the purchase
price shall be reduced by an amount equal to the damages suffered by the Company
or the Remaining Members as a result of such breach.
8.4 Notice of Intent to Purchase. Within thirty (30) days after the Company and
the Remaining Members have been notified as to the purchase price of the Former
Member's Interest determined in accordance with Section 8.3, the Company shall
notify the Former Member in writing of its desire to purchase all or a portion
of the Former Member's Interest. The failure of the Company to submit a notice
within the applicable period shall constitute an election on the part of the
Company not to purchase any of the Former Member's Interest. The Company shall
be entitled to purchase up to 100% of the Former Member's Interest.
PAGE 23
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
8.5 Election to Purchase Less Than All of the Former Member's Interest. If the
Company elects to purchase none or less than all of the Former Member's
Interest, then the Remaining Members can elect to purchase their pro rata share.
In such instance, each Remaining Member shall notify the Former Member in
writing of his desire to purchase a portion of the Former Member's Interest. The
failure of any Remaining Member to submit a notice within the applicable period
shall constitute an election on the part of the Member not to purchase any of
the Former Member's Interest. Each Remaining Member so electing to purchase
shall be entitled to purchase a portion of the Former Member's Interest in the
same proportion that the Percentage Interest of the Remaining Member bears to
the aggregate of the Percentage Interests of all of the Remaining Members
electing to purchase the Former Member's Interest. If any Remaining Member
elects to purchase none or less than all of his pro rata share of the Former
Member's Interest, then the other Remaining Members can elect to purchase more
than their pro rata share. If the Remaining Members fail to purchase the entire
interest of the Former Member, the Company shall purchase any remaining share of
the Former Member's Interest.
8.6 Payment of Purchase Price. The purchase price shall be paid by the Company
or the Remaining Members, as the case may be, at the closing by either of the
following methods, each of which may be selected separately by the Company or
the Remaining Members:
A. The Company or the Remaining Members shall at the closing pay in the
cash the total purchase price for the Former Member's Interest; or
B. The Company or the Remaining Members shall deliver a promissory note at
the closing for the total purchase price for the Former Member's Interest, which
promissory note shall be payable in four (4) equal annual principal
installments, plus accrued interest at six percent (6%) per annum, and be
payable each year on the anniversary date of the closing. The Company and the
Remaining Members shall have the right to prepay in full or in part such
promissory note at any time without penalty. The obligation, if the Member's
Interest is purchased by a Remaining Member, shall be secured by a pledge of the
Membership Interest being purchased.
The Company may obtain "key-man" life insurance policies with respect to the
lives of any Member. In the event that the Dissolution Event is the death of the
Former Member and such "key-man" life insurance is in place, any benefits under
any such "key-man" life insurance policy which are actually paid shall be
credited towards the purchase price, irrespective of whether such benefits are
paid directly to the Company or to any beneficiary under such policy.
8.7 Closing of Purchase of Former Member's Interest. The closing for the sale of
a Former Member's Interest pursuant to this Article VIII shall be held at 10:00
a.m. at the principal office of Company no later than sixty (60) days after the
determination of the purchase price, except that if the closing date falls on a
Saturday, Sunday, or Nevada legal holiday, then the closing shall be held on the
next succeeding business day. At the closing, the Former Member or such Former
Member's legal representative shall deliver to the Company or the Remaining
Members an instrument of transfer (containing warranties of title and no
encumbrances) conveying the Former Member's Interest. The Former Member or such
Former Member's legal representative, the Company and the Remaining Members
shall do all things and execute and deliver all papers as may be necessary fully
to consummate such sale and purchase in accordance with the terms and provisions
of this Agreement.
PAGE 24
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
8.8 Purchase Terms Varied by Agreement. Nothing contained herein is intended to
prohibit Members from agreeing upon other terms and conditions for the purchase
by the Company or any Member of the Membership Interest of any Member in the
Company desiring to retire, withdraw or resign, in whole or in part, as a Member
other than pursuant to a Dissolution Event.
8.9 Offers to Purchase or Sell Membership Interest. Notwithstanding the
foregoing provisions of this Article VIII, any Member may, at any time, submit
an offer to purchase all of the other Member's Membership Interest or to sell
all of the Member's Membership Interest to the other Member on any terms and/or
at any price.
ARTICLE 9
ACCOUNTING, RECORDS, REPORTING BY MEMBERS
9.1 Books and Records. The books and records of the Company shall be kept, and
the financial position and the results of its operations recorded, in accordance
with the accounting methods followed for federal income tax purposes. The books
and records of the Company shall reflect all the Company transactions and shall
be appropriate and adequate for the Company's business. The Company shall
maintain at its principal office in Nevada all of the following:
A. A current list of the full name and last known business or residence
address of each Member and Economic Interest Owner set forth in alphabetical
order, together with the Capital Contributions, Capital Account, and Percentage
Interest of each Member and Economic Interest Owner;
B. A copy of the Articles and any and all amendments thereto together with
executed copies of any powers of attorney pursuant to which the Articles or any
amendments thereto have been executed;
C. Copies of the Company's federal, state, and local income tax or
information returns and reports, if any, for the six most recent taxable years;
D. A copy of this Agreement and any and all amendments thereto together
with executed copies of any powers of attorney pursuant to which this Agreement
or any amendments thereto have been executed;
E. Copies of the financial statements of the Company, if any, for the six
most recent Fiscal Years;
F. The Company's books and records as they relate to the internal affairs
of the Company for at least the current and past four Fiscal Years; and
G. The names and addresses of any Manager.
PAGE 25
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
9.2 Delivery to Members and Inspection.
A. Upon the request of any Member or Economic Interest Owner for purposes
reasonably related to the interest of that Person as a Member or Economic
Interest Owner, the Company shall promptly cause the Manager or his designee to
deliver to the requesting Member or Economic Interest Owner, at the expense of
the Company, a copy of the information set forth in Section 9.1 and a copy of
this Agreement.
B. Each Member and Economic Interest Owner has the right, upon reasonable
request for purposes reasonably related to the interest of the Person as Member
or Economic Interest Owner, to:
(i) inspect and copy during normal business hours any of the Company
records described in Sections 9.1(A) and (B); and
(ii) obtain from the Company, promptly after their becoming available, a
copy of the Company's federal, state, and local income tax or information
returns for each Fiscal Year.
C. Any request, inspection or copying by a Member or Economic Interest
Owner under this Section 9.2 may be made by that Person or that Person's agent
or attorney.
D. The Company shall promptly furnish to a Member a copy of any amendment
to the Articles or this Agreement executed by a Member pursuant to a power of
attorney from the Member.
9.3 Annual Statements.
A. The Manager shall cause an annual report to be sent to each of the
Members not later than 120 days after the close of the Fiscal Year. The report
shall contain a balance sheet as of the end of the Fiscal Year and an income
statement for the Fiscal Year.
B. The Manager shall cause to be prepared at least annually, at Company
expense, information necessary for the preparation of the Members and Economic
Interest Owners federal and state income tax returns. The Manager shall send or
cause to be sent to each Member or Economic Interest Owner within 90 days after
the end of each taxable year such information as is necessary to complete
federal and state income tax or information returns.
C. The Manager shall cause to be filed at least annually with the Nevada
Secretary of State the lists required under Nevada Revised Statutes, Title 7,
Chapter 86.
9.4 Financial and Other Information. The Manager shall provide such financial
and other information relating to the Company or any other Person in which the
Company owns, directly or indirectly, an equity interest, as a Member may
reasonably request.
9.5 Filings. The Manager, at Company expense, shall cause the income tax
returns for the Company to be prepared and timely filed with the appropriate
authorities. The Manager, at Company expense, shall also cause to be prepared
and timely filed, with appropriate federal and state regulatory and
administrative bodies, amendments to, or restatements of, the Articles and all
reports required to be filed by the Company with those entities under the Act or
other then current applicable laws, rules, and regulations. If the Manager are
required by the Act to execute or file any document fails, after demand, to do
so within a reasonable period of time or refuses to do so, any Member may
prepare, execute and file that document with the Nevada Secretary of State.
PAGE 26
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
9.6 Bank Accounts. The Manager shall maintain the funds of the Company in one
or more separate bank accounts in the name of the Company, and shall not permit
the funds of the Company to be commingled in any fashion with the funds of any
other Person.
9.7 Accounting Decisions and Reliance On Others. All decisions as to accounting
matters, except as otherwise specifically set forth herein, shall be made by the
Manager. The Manager may rely upon the advice of their accountants as to whether
such decisions are in accordance with accounting methods followed for federal
income tax purposes.
9.8 Tax Matters for the Company Handled by Manager and Tax Matters Partner.
Xxxx X. Xxxxxxx shall be the initial Tax Matters Partner, as defined in Code
Section 6231. The Tax Matters Partner shall from time to time cause the Company
to make such tax elections as he deems to be in the best interests of the
Company and the Members. The Tax Matters Partner shall represent the Company (at
the Company's expense) in connection with all examinations of the Company's
affairs by tax authorities, including resulting judicial and administrative
proceedings, and shall expend the Company funds for professional services and
costs associated therewith. The Tax Matters Partner shall oversee the Company
tax affairs in the overall best interests of the Company. If for any reason the
Tax Matters Partner can no longer serve in that capacity or ceases to be a
Member or Manager, the Members, by their unanimous vote or consent, may
designate another Member to be Tax Matters Partner.
ARTICLE 10
DISSOLUTION AND WINDING UP
10.1 Dissolution. The Company shall be dissolved, its assets shall be
disposed of, and its affairs wound up on the first to occur of the following:
A. Upon the happening of any event of dissolution specified in the
Articles;
B. Upon the entry of a decree of judicial dissolution;
C. Upon the vote, approval or consent of the Manager and of Members holding
a Majority in Interest in the Company;
D. The occurrence of a Dissolution Event and the failure of the Remaining
Members to consent in accordance with Section 8.1 to continue the business of
the Company within ninety (90) days after the occurrence of such event;
E. The sale of all or substantially all of the assets of the Company; or
PAGE 27
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
F. In the event Global Resource Corporation's entire Capital Contribution,
as described in EXHIBIT A, has not been is repaid in full within 15 months from
the date of this Agreement, at the written request of Global Resource
Corporation.
10.2 Certificate of Dissolution. As soon as possible following the occurrence
of any of the events specified in Section 10.1, the Manager who has not
wrongfully dissolved the Company or, if none, the Members, shall execute
Articles of Dissolution in such form as shall be prescribed by the Nevada
Secretary of State and file the Certificate as required by the Act.
10.3 Winding Up. Upon the occurrence of any event specified in Section 10.1,
the Company shall continue solely for the purpose of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors. The Manager who has not wrongfully dissolved the Company, or, if
none, the Members, shall be responsible for overseeing the winding up and
liquidation of the Company, shall take full account of the liabilities of the
Company and assets, shall either cause its assets to be sold or distributed, and
if sold as promptly as is consistent with obtaining the fair market value
thereof, shall cause the proceeds therefrom, to the extent sufficient therefor,
to be applied and distributed as provided in Section 10.5. In the event a Member
withdraws as a Member of the Company and the Remaining Members do not consent to
the continuation of the business of the Company, the Company's name and any
service marks or trademarks owned or used by the Company (the "Name Assets")
shall be distributed to the Remaining Members in the dissolution of the Company.
The Persons winding up the affairs of the Company shall give written notice of
the commencement of winding up by mail to all known creditors and claimants
whose addresses appear on the records of the Company. The Manager or Members
winding up the affairs of the Company shall be entitled to reasonable
compensation for such services.
10.4 Distributions in Kind. Any non-cash asset distributed to one or more
Members shall first be valued at its fair market value to determine the Net
Profit or Net Loss that would have resulted if such asset were sold for such
value, such Net Profit or Net Loss shall then be allocated pursuant to Article
VI, and the Members' Capital Accounts shall be adjusted to reflect such
allocations. Notwithstanding the foregoing, in the event of a dissolution of the
Company caused by the withdrawal of a Member, the Name Assets distributed to the
Remaining Members shall be valued at zero. The amount distributed and charged to
the Capital Account of each Member receiving an interest in such distributed
asset shall be the fair market value of such interest (net of any liability
secured by such asset that such Member assumes or to which such Member takes
subject). The fair market value of such asset shall be determined by the Manager
or by the Members or if any Member objects by an independent appraiser (any such
appraiser must be recognized as an expert in valuing the type of asset involved)
selected by the Manager or liquidating trustee and approved by the Members.
PAGE 28
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
10.5 Order of Payment of Liabilities Upon Dissolution.
A. After determining that all known debts and liabilities of the Company
in the process of winding-up, including, without limitation, debts and
liabilities to Members who are creditors of the Company, have been paid or
adequately provided for, the remaining assets shall be distributed: first, to
Global Resource Corporation until the balance of its Capital Account has been
repaid, second, to Well Renewal, Inc. until a total of $100,000 has been paid in
accordance with this paragraph in conjunction with paragraph 6.1B and third, to
the Members in accordance with their positive Capital Account balances, after
taking into account income and loss allocations for the Company's taxable year
during which liquidation occurs, and thereafter, to the Members in accordance
with their Percentage Interests. Such liquidating distributions shall be made by
the end of the Company's taxable year in which the Company is liquidated, or, if
later, within ninety (90) days after the date of such liquidation.
B. The payment of a debt or liability, whether the whereabouts of the
creditor is known or unknown, has been adequately provided for if the payment
has been provided for by either of the following means:
(i) Payment thereof has been assumed or guaranteed in good faith by one
or more financially responsible persons or by the United States government or
any agency thereof, and the provision, including the financial responsibility of
the Person, was determined in good faith and with reasonable care by the Members
or the Manager to be adequate at the time of any distribution of the assets
pursuant to this Section.
(ii) The amount of the debt or liability has been deposited as provided
in the Corporations Code.
This Section 10.5(B) shall not prescribe the exclusive means
of making adequate provision for debts and liabilities.
10.6 Compliance with Regulations. All payments to the Members upon the winding
and dissolution of Company shall be strictly in accordance with the positive
capital account balance limitation and other requirements of Regulations Section
1.704-l(b)(2)(ii)(d).
10.7 Limitations on Payments Made in Dissolution. Except as otherwise
specifically provided in this Agreement, each Member shall only be entitled to
look solely at the assets of Company for the return of his positive Capital
Account balance and shall have no recourse for his Capital Contribution and/or
share of Net Profit (upon dissolution or otherwise) against the Manager or any
other Member except as provided in Article XI.
10.8 Articles of Dissolution. The Manager or Members who wind up the Company
shall cause to be filed in the office of, and on a form prescribed by, the
Nevada Secretary of State, Articles of Dissolution upon the completion of the
winding up of the affairs of the Company.
10.9 No Action for Dissolution. Except as expressly permitted in this Agreement,
a Member shall not take any voluntary action that directly causes a Dissolution
Event. The Members acknowledge that irreparable damage would be done to the
goodwill and reputation of the Company if any Member should bring an action in
court to dissolve the Company under circumstances where dissolution is not
required by Section 10.1. This Agreement has been drawn carefully to provide
fair treatment of all parties and equitable payment in liquidation of the
Economic Interests. Accordingly, except where the Manager have failed to
liquidate the Company as required by this Article X, each Member hereby waives
and renounces his right to initiate legal action to seek the appointment of a
receiver or trustee to liquidate the Company or to seek a decree of judicial
dissolution of the Company on the ground that (a) it is not reasonably
practicable to carry on the business of the Company in conformity with the
Articles or this Agreement, or (b) dissolution is reasonably necessary for the
protection of the rights or interests of the complaining Member. Damages for
breach of this Section 10.9 shall be monetary damages only (and not specific
performance), and the damages may be offset against distributions by the Company
to which such Member would otherwise be entitled.
PAGE 29
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
ARTICLE 11
INDEMNIFICATION AND INSURANCE
11.1 Indemnification of the Manager. The Manager shall use ordinary care and
reasonable diligence in the management of Company business. The Manager shall
not be liable for any error of judgment or for any loss suffered by the Company
or any Member therein in connection with their management of the Company, except
a loss resulting from willful misfeasance, bad faith, or gross negligence on its
part in the performance of, or from reckless disregard of its obligations and
duties under this Agreement. The Manager shall not be liable to any Member for
any mistake or from the negligence, fraud or willful misconduct of any employee
or agent of the Company, provided that such employee or agent was selected,
engaged or retained by the Manager with reasonable care. The Company shall
indemnify and save harmless the Manager from any personal loss or damage
incurred by them by reason of any act performed by them for or on behalf of the
Company and in furtherance of its interests, in accordance with the provisions
of the Act or any amendment to the Act; provided, however, that the Members
shall not become liable for the obligations of the Company in excess of their
capital contributions to the Company. The Manager may consult with legal counsel
selected by the Company, and any action taken or omitted to be taken by them in
good faith in reliance and in accordance with the opinion or advice of such
counsel shall be full protection and justification to them with respect to the
action taken or omitted to be taken on behalf of the Company.
11.2 Indemnification of Agents. The Company shall indemnify any Person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that he is or was a
Member, Manager, officer, employee or other agent of the Company or that, being
or having been such a Member, Manager, officer, employee or agent, he is or was
serving at the request of the Company as a Manager, director, officer, employee
or other agent of another limited liability company, corporation, partnership,
joint venture, trust or other enterprise (all such persons being referred to
hereinafter as an "agent"), to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable law may
hereafter from time to time permit. The Manager may, on behalf of the Company,
enter into indemnity agreements from time to time with any Person entitled to be
indemnified by the Company hereunder, upon such terms and conditions as the
Manager deems appropriate in their business judgment.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
11.3 Insurance. The Company shall have the power to purchase and maintain
insurance on behalf of any Person who is or was an agent of the Company against
any liability asserted against such Person and incurred by such Person in any
such capacity, or arising out of such Person's status as an agent, whether or
not the Company would have the power to indemnify such Person against such
liability under the provisions of Sections 11.1, 11.2 or under applicable law.
ARTICLE 12
MISCELLANEOUS
12.1 Counsel to the Company. Counsel to the Company may also be counsel to one
or more Members or any Affiliate of a Member. The Manager may execute, on behalf
of the Company and the Members, any consent to the representation of the Company
that counsel may request pursuant to the Nevada professional conduct rules or
similar rules in any other jurisdiction ("Rules"). The Company has initially
selected Spectrum Law Group, LLP ("Company Counsel") as legal counsel to the
Company. Company Counsel also currently represents Global Resource Corporation.
The Manager and Members acknowledge that Company Counsel may have an actual or
potential conflict of interest in concurrently representing the Company and any
of its Members and hereby waive and release any claim relating to a conflict of
interest arising from, or relating to, Company Counsel's concurrent
representation of the Company and any Member. Further, the Manager and Members
acknowledge that Company Counsel does not represent Well Renewal, Inc. and in
the absence of a clear and explicit agreement to such effect between Well
Renewal, Inc. and Company Counsel, Company Counsel shall owe no duties directly
to Well Renewal, Inc.
12.2 Conversion. Upon the consent of a Majority in Interest of the Members, the
Manager may either (i) convert the Company into a corporation pursuant to the
Act, or (ii) otherwise reorganize as a corporation, whether by merger, transfer
of assets, or transfer of Membership Interests, in order to facilitate a public
offering of securities, or for other reasons which the Manager deems to be in
the best interest of the business of the Company.
12.3 Complete Agreement. This Agreement and the Articles constitute the
complete and exclusive statement of agreement among the Members and the Manager
with respect to the subject matter herein and therein and replace and supersede
all prior written and oral agreements or statements by and among the Members and
the Manager or any of them. No representation, statement, condition or warranty
not contained in this Agreement or the Articles will be binding on the Members
or the Manager or have any force or effect whatsoever. To the extent that any
provision of the Articles conflict with any provision of this Agreement, the
Articles shall control.
12.4 Binding Effect. Subject to the provisions of this Agreement relating to
transferability, this Agreement will be binding upon and inure to the benefit of
the Members, and their respective successors and assigns.
12.5 Parties in Interest. Except as expressly provided in the Act, nothing in
this Agreement shall confer any rights or remedies under or by reason of this
Agreement on any Persons other than the Members and their respective successors
and assigns nor shall anything in this Agreement relieve or discharge the
obligation or liability of any third person to any party to this Agreement, nor
shall any provision give any third person any right of subrogation or action
over or against any party to this Agreement.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
12.6 Pronouns; Statutory Reference. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, singular or
plural, as the context in which they are used may require. Any reference to the
Code, the Regulations, the Act, Corporations Code or other statutes or laws will
include all amendments, modifications, or replacements of the specific sections
and provisions concerned.
12.7 Headings. All headings herein are inserted only for convenience of
reference and are not to be considered in the construction or interpretation of
any provision of this Agreement.
12.8 Interpretation. In the event any claim is made by any Member relating to
any conflict, omission or ambiguity in this Agreement, no presumption or burden
of proof or persuasion shall be implied by virtue of the fact that this
Agreement was prepared by or at the request of a particular Member or his
counsel.
12.9 References to this Agreement. Numbered or lettered articles, sections and
subsections herein contained refer to articles, sections and subsections of this
Agreement unless otherwise expressly stated.
12.10 Jurisdiction. Each Member hereby consents to the exclusive jurisdiction of
the state and federal courts sitting in the State of California, County of
Orange, in any action on a claim arising out of, under or in connection with
this Agreement or the transactions contemplated by this Agreement. Each Member
further agrees that personal jurisdiction over him may be effected by service of
process by registered or certified mail addressed as provided in EXHIBIT A of
this Agreement, and that when so made shall be as if served upon him personally
within the State of California.
12.11 Disputed Matters. Except as otherwise provided in this Agreement, each
party hereby agrees that any suit, action or proceeding arising out of or
relating to this Agreement shall be brought in either the United States District
Court for the Central District of California or a Superior Court of the State of
California in the County of Orange, and the parties hereby irrevocably and
unconditionally submit to the jurisdiction of such courts. The parties hereby
agree to waive trial by jury in any such suit, action or proceeding. The parties
irrevocably waive and agree not to raise any objection any of them might now or
hereafter have to the bringing of any such suit, action or proceeding in any
such court including, without limitation, any objection that the place where
such court is located is an inconvenient forum. Each party agrees that any
judgment or order against that party in any such suit, action or proceeding
brought in such a court shall be conclusive and binding upon that party and
consents to any such judgment or order being recognized and enforced in the
courts of its jurisdiction of incorporation or organization or any other courts,
by registration or entry of such judgment or order, by a suit, action or
proceeding upon such judgment or order, or any other means available for
enforcement of judgments or orders.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
12.12 Appointment of Manager as Attorney-In-Fact. Each Member, by executing this
Agreement, irrevocably constitutes and appoints the Manager named herein and
such persons acting alone as such Member's true and lawful attorneys-in-fact and
agent, with full power and authority in such Member's name, place, and stead to
execute, acknowledge, and deliver, and to file or record in any appropriate
public office: (a) any certificate or other instrument that may be necessary,
desirable, or appropriate to qualify the Company as a limited liability company
or to transaction business as such in any jurisdiction in which the Company
conducts business; (b) any certificate or amendment to the Company's Articles of
Organization or to any certificate or other instrument that may be necessary,
desirable, or appropriate to reflect an amendment approved by the Members in
accordance with the provisions of this Agreement; (c) any certificates or
instruments that may be necessary, desirable, or appropriate to reflect the
dissolution and winding up of the Company; and (d) any certificates necessary to
comply with the provisions of this Agreement. This power of attorney will be
deemed to be coupled with an interest and will survive the transfer of the
Member's Economic Interest or Membership Interest. Notwithstanding the existence
of this power of attorney, each Member agrees to join in the execution,
acknowledgment, and delivery of the instruments referred to above if requested
to do so by the Manager. This power of attorney is a limited power of attorney
and does not authorize the Manager to act on behalf of a Member except as
described herein.
12.13 Severability. If any provision of this Agreement or the application of
such provision to any person or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision to persons or
circumstances other than those to which it is held invalid shall not be affected
thereby and shall remain valid and operative.
12.14 Additional Documents and Acts. Each Member agrees to execute and deliver
such additional documents and instruments and to perform such additional acts as
may be necessary or appropriate to effectuate, carry out and perform all of the
terms, provisions, and conditions of this Agreement and the transactions
contemplated hereby.
12.15 Notices. Any notice to be given or to be served upon the Company or any
party hereto in connection with this Agreement must be in writing (which may
include facsimile) and will be deemed to have been given and received when
delivered to the address specified by the party to receive the notice. Such
notices will be given to a Member at the address specified in EXHIBIT A hereto.
Any party may, at any time by giving five (5) days' prior written notice to the
other parties, designate any other address in substitution of the foregoing
address to which such notice will be given.
12.16 Amendments. All amendments to this Agreement must be agreed to by a
Majority in Interest and shall be made in writing and signed by all of the
Members.
12.17 Reliance on Authorization of Person Signing Agreement. If a Member is not
a natural person, neither the Company nor any Member will (a) be required to
determine the authority of the individual signing this Agreement to make any
commitment or undertaking on behalf of such entity or to determine any fact or
circumstance bearing upon the existence of the authority of such individual or
(b) be responsible for the application or distribution of proceeds paid or
credited to individuals signing this Agreement on behalf of such entity.
12.18 No Interest in Company Property; Waiver of Action for Partition. No Member
or Economic Interest Owner has any interest in specific property of the Company.
Without limiting the foregoing, each Member and Economic Interest Owner
irrevocably waives during the term of the Company any right that he may have to
maintain any action for partition with respect to the property of the Company.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
12.19 Multiple Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
12.20 Attorney Fees. In the event that any dispute between the Company and the
Members or among the Members should result in litigation or arbitration, the
prevailing party in such dispute shall be entitled to recover from the other
party all reasonable fees, costs and expenses of enforcing any right of the
prevailing party, including without limitation, reasonable attorneys' fees and
expenses.
12.21 Time is of the Essence. All dates and times in this Agreement are of the
essence.
12.22 Remedies Cumulative. The remedies under this Agreement are cumulative
and shall not exclude any other remedies to which any person may be lawfully
entitled.
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OPERATING AGREEMENT FOR WELL RENEWAL, LLC
IN WITNESS WHEREOF, all of the Members of Well Renewal, LLC, a Nevada limited
liability company, have executed this Agreement, effective as of the date
written above.
MEMBERS:
GLOBAL RESOURCE CORPORATION
/s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------------------
By: Xxxxxxx X. Xxxxxxxxxxx
Its: Chief Executive Officer
WELL RENEWAL, INC.
/s/ Xxxxxxx X. Xxxxx
------------------------------------
By: Xxxxxxx X. Xxxxx
Its: President
MANAGER
WELL RENEWAL, INC.
/s/ Xxxxxxx X. Xxxxx
---------------------------
By: Xxxxxxx X. Xxxxx
Its: President
PAGE 35
OPERATING AGREEMENT FOR WELL RENEWAL, LLC
